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COURT OF APPEAL FOR ONTARIO CITATION: Fordham v. Dutton-Dunwich (Municipality), 2014 ONCA 891 DATE: 20141211 DOCKET: C56404 Laskin, Rouleau and Lauwers JJ.A. BETWEEN Andrew James Fordham Plaintiff (Respondent) and The Corporation of the Municipality of Dutton-Dunwich Defendant (Appellant) T.R. Shillington and Jonathan de Vries, for the appellant Jim Virtue and Jim Mays, for the respondent Heard: April 30, 2014 On appeal from the judgment of Justice Johanne N. Morissette of the Superior Court of Justice, dated November 27, 2012, reported at 2012 ONSC 6739. Laskin J.A.: A. Overview [1] This case is about whether a municipality met its statutory duty to keep one of its roads in a reasonable state of repair. By any measure, it is a sad case. [2] On a January night in 2007, 16-year-old Andrew Fordham drove from one friend’s house to another. He took a route through Dutton-Dunwich on rural roads that were unfamiliar to him. He came to an intersection with a stop sign. As he saw no approaching cars, he ignored the stop sign and drove through the intersection at or near the speed limit of 80 km per hour. [3] Unfortunately the road Fordham was driving on curved to his right just after the intersection. In trying to navigate the curve, he lost control of his car and crashed into a concrete bridge abutting the road. He suffered brain damage and has no memory of the crash. [4] Fordham sued the municipality of Dutton-Dunwich for non-repair of the road. He claimed Dutton-Dunwich had breached its statutory duty because it had failed to post a checkerboard sign warning of the change in the road’s alignment. [5] The trial judge agreed. She held that “[c]learly, it is a local practice in this rural area for drivers to go through stop signs if they consider it safe”, and “[o]rdinary rural drivers do not always stop at stop signs and the defendant knew that.” In her opinion, the change in the road’s alignment was a “hidden hazard”. Thus, she found “that the circumstances of this intersection require more than a stop sign to give ordinary ‘rural’ motorists reasonable notice of [a] potentially catastrophic hazard ahead.” But the trial judge also found Fordham negligent because he had failed to stop at the stop sign. She concluded that both the plaintiff’s failure to stop and the defendant’s failure to install a warning sign had caused the crash. She apportioned liability for Fordham’s damages equally: 50 per cent to the plaintiff and 50 per cent to the defendant. [6] Dutton-Dunwich appeals. The principal question on the appeal is this: Did the trial judge misapply the test for assessing a municipality’s statutory duty of repair? I conclude she did, and therefore the judgment against the municipality cannot stand. [7] A municipality’s duty of repair is limited to ensuring that its roads can be driven safely by ordinary drivers exercising reasonable care. A municipality has no duty to keep its roads safe for those who drive negligently. Running a stop sign at 80 km per hour is negligent driving. The undisputed evidence is that the road Fordham was driving on posed no hazard to a driver who stopped at the stop sign, or even to one who slowed to 50 km per hour at the intersection. [8] The trial judge’s finding that “[o]rdinary rural drivers do not always stop at stop signs” has some modest support in the evidence, in that some rural drivers will not always come to a full stop at a stop sign. But there is no credible evidence that ordinary rural drivers go through stop signs at or near the speed limit. More important, the trial judge’s finding is legally irrelevant. There cannot be one standard of reasonable driving for “rural drivers” and another for “city drivers”. There is but one standard of reasonable driving. That standard requires drivers to obey traffic signs. Thus Dutton-Dunwich had no duty to install an additional sign on its road. [9] I would allow Dutton-Dunwich’s appeal, set aside the judgment at trial and dismiss the action against it. B. Additional factual background (a) Andrew Fordham [10] The accident occurred on January 20, 2007. About three months before the accident, Fordham had obtained his G2 driver’s licence. [1] However, he had driven more than most 16-year-olds. His father sponsored a car at the Delaware Speedway and Fordham had been racing cars at the track since the summer of 2005. The trial judge found “that Andrew had more experience operating a motor vehicle than an average 16-year-old with a G2 licence.” (b) The road alignment [11] The accident occurred in the municipality of Dutton-Dunwich on Willey Road just south of where it intersects with Erin Line. Dutton-Dunwich is located in Elgin County in southwestern Ontario. Willey Road is a gravel road in the rural part of the county and typically has little traffic. [12] At the time of the accident, stop signs controlled northbound and southbound traffic on Willey Road at the intersection with Erin Line. The municipality had recently replaced yield signs with stop signs because it had received complaints that some drivers did not properly yield the right-of-way at intersections controlled by yield signs. [13] Willey Road has a small S curve beginning just north of the intersection with Erin Line and continuing through it. To the south of the intersection, the curve deviates about nine metres from a straight line. In the evidence, this deviation was characterized as an “offset”. Along the offset, a concrete bridge abuts the road. When the accident occurred, the intersection had no warning sign alerting drivers to the offset. [14] At Appendix A to these reasons, I have included a sketch depicting the alignment of Willey Road at the intersection with Erin Line. (c) The accident [15] The accident occurred sometime before 9:00 p.m. That evening, Fordham had planned to meet up with some friends and then stay overnight with one of his friends, Dustin Drouillard. He left his own home around 6:00 p.m. and first drove to the house of Cassandra Tomczyk in Dutton-Dunwich. He was driving his father’s 1999 Pontiac Grand Am car. He stayed at Tomczyk’s house for about ten minutes. Then he and a friend left around 8:00 p.m. for Drouillard’s house. The distance between the two houses is about 30 km. [16] Fordham drove, and his friend sat in the front passenger seat. During the trip, Fordham drank about two beers. Later blood alcohol testing showed his readings were below the legal limit. [2] Fordham drove southbound on Willey Road, a road he had never driven on before. The weather that evening was clear. And as Fordham approached the Erin Line intersection, the stop sign was clearly visible. However, no cars were approaching the intersection from either direction, so Fordham drove straight through it without stopping. An accident reconstruction expert estimated he was driving at or near the speed limit of 80 km per hour. [17] Fordham apparently saw the offset too late to navigate it safely. He turned the car sharply to the right, lost control and crashed into the concrete bridge abutting the road. [18] At the beginning of the trial, Fordham admitted he was negligent. He agreed that if he had stopped at the intersection, the accident would not have happened. (d) The expert evidence [19] The plaintiff called two experts: James Hrycay, a road design and maintenance engineer, specializing in accident reconstruction; and Alison Smiley, a professor at the University of Toronto in the Department of Mechanical and Industrial Engineering, specializing in the relationship between highway safety and human factors, including reaction times . The trial judge accepted their evidence. [3] Both Hrycay and Smiley testified that the signage at the intersection was inadequate because it did not warn of the offset. But both admitted that their opinions assumed drivers would not obey the stop sign. Indeed Hrycay admitted that additional signage was not needed for drivers who stopped at the stop sign. [20] Smiley testified that drivers who approach the intersection at 80 km per hour and ignore the stop sign would not have enough time to perceive and react to the offset without a warning sign to alert them. But she acknowledged that drivers who stop for the stop sign would have more than enough time to perceive and react safely to the change in the alignment of the road. She also acknowledged that ignoring stop signs was not reasonable driving. She maintained, however, that “we need to design for more than just the reasonable driver who’s sober, wearing a seatbelt and obeying all the traffic laws.” [21] Hrycay believed roads should be designed for the 95th percentile of drivers: “[W]ithin five per cent of the very worst drivers out there.” Like Smiley, Hrycay testified that drivers who stop at the stop sign would have no difficulty in perceiving and navigating the offset. He also testified that drivers who do not obey the stop sign but slow to 50 km per hour or less would still be able to perceive the offset in time to navigate it safely. (e) The Ontario Traffic Manual [22] The Ontario Traffic Manual (the “Manual”) was filed in evidence. The Manual includes guidelines for signage. In the warning signs section, it discusses the use of checkerboard signs. [23] Under the heading “Purpose and Background”, the Manual states: The purpose of the CHECKERBOARD sign … is to warn vehicular traffic of the termination, or abrupt change in direction, of a segment of road. [24] Under the heading “Guidelines for Use”, the Manual states: The CHECKERBOARD sign (one direction) and the CHECKERBOARD sign (both directions) should be used only for a sharp change in road alignment. C. Analysis (a) Statutory cause of action [25] Fordham sued under s. 44 of the Municipal Act, 2001 , [4] which provides a cause of action against a municipality that fails to keep its highways (including roads) and bridges in a reasonable state of repair. The cause of action is in subsections (1) and (2); defences for the municipality are in subsection (3): 44. (1) The municipality that has jurisdiction over a highway or bridge shall keep it in a state of repair that is reasonable in the circumstances, including the character and location of the highway or bridge. (2) A municipality that defaults in complying with subsection (1) is, subject to the Negligence Act , liable for all damages any person sustains because of the default. (3) Despite subsection (2), a municipality is not liable for failing to keep a highway or bridge in a reasonable state of repair if, (a) it did not know and could not reasonably have been expected to have known about the state of repair of the highway or bridge; (b) it took reasonable steps to prevent the default from arising; or (c) at the time the cause of action arose, minimum standards established under subsection (4) applied to the highway or bridge and to the alleged default and those standards have been met. [26] Case law has established a four-step test for analyzing this statutory cause of action against a municipality. [5] 1. Non-repair : The plaintiff must prove on a balance of probabilities that the municipality failed to keep the road in question in a reasonable state of repair. 2. Causation : The plaintiff must prove the “non-repair” caused the accident. 3. Statutory Defences : Proof of “non-repair” and causation establish a prima facie case of liability against a municipality. The municipality then has the onus of establishing that at least one of the three defences in s. 44(3) applies. 4. Contributory Negligence : A municipality that cannot establish any of the three defences in s. 44(3) will be found liable. The municipality can, however, show the plaintiff’s driving caused or contributed to the plaintiff’s injuries. This appeal turns on the first step: was Willey Road in a state of non-repair because Dutton-Dunwich failed to put up a sign warning of the offset? (b) The municipality’s standard of care and the reasonable driver [27] More precisely, this appeal turns on the standard of care a municipality must meet in fulfilling its duty of reasonable repair, and the application of that standard to the facts. A municipality’s standard of care has been thoroughly canvassed in two cases: the Supreme Court of Canada’s decision in Housen v. Nikolaisen , 2002 SCC 33, [2002] 2 S.C.R. 35, a case perhaps better known for its discussion of the standard of appellate review; and Howden J.’s decision in Deering v. Scugog (Township) , 2010 ONSC 5502, 3 M.V.R. (6th) 33, which this court affirmed in a brief endorsement: 2012 ONCA 386, 33 M.V.R. (6th) 1, leave to appeal to S.C.C. refused, [2012] S.C.C.A. No. 351. [28] In brief, a municipality has a duty to prevent or remedy conditions on its roads that create an unreasonable risk of harm for ordinary drivers exercising reasonable care. In other words, a municipality’s standard of care is measured by the “ordinary reasonable driver”. Ordinary reasonable drivers are not perfect drivers; they make mistakes. As Howden J. wrote in Deering , at para. 154: In conclusion, I accept what have become the submissions of all counsel that road authorities have a duty to ordinary motorists to keep their roads in reasonable repair, including the type and location of the road. The standard of care uses as the measure of reasonable conduct the ordinary reasonable driver and the duty to repair arises wherever an unreasonable risk of harm exists on the roadway for which obvious cues on or near the road are not present and no warning is provided, subject to the defences of no knowledge and reasonable steps to prevent and minimum standards compliance. The ordinary motorist includes those of average range of driving ability – not simply the perfect, the prescient, or the especially perceptive driver, or one with exceptionally fast reflexes, but the ordinary driver who is of average intelligence, pays attention, uses caution when conditions warrant, but is human and sometimes makes mistakes. [29] But – and this is the important point for this appeal – a municipality’s duty of reasonable repair does not extend to making its roads safer for negligent drivers. [6] In Deering , Howden J. made this point succinctly, at para. 142: “The standard of care of road authorities rests on the notion of the ordinary motorist driving without negligence”. [30] And again, at para. 155: It is not the law in Canada that the duty of road authorities goes beyond the duty to keep their roads in reasonable repair for the ordinary driver exercising reasonable care, to include drivers who, for instance, do not pay attention, drive at excessive speeds, drive too close to the vehicle in front and who are otherwise negligent. [31] A municipality’s duty of repair includes erecting and maintaining proper signs: see The Queen v. Jennings , [1966] S.C.R. 532. And, where hazards are hidden or “not readily apparent to users of the road”, [7] a municipality may have a duty to install warning signs. A municipality’s duty to install signs, however, is simply an application of the general standard of care. Signs are required only if without them, an ordinary driver exercising reasonable care would be exposed to an unreasonable risk of harm. Thus, the mere presence of a hazard does not require a municipality to put up a warning sign; the hazard must be one that puts reasonable drivers at risk. See e.g. Greenhalgh v. Douro-Dummer (Township) , [2009] O.J. No. 5438 (Sup. Ct. J.), at para. 17; aff’d 2012 ONCA 299. (c) Positions of the parties [32] On the question whether Dutton-Dunwich met its duty of repair, the municipality makes two related submissions. First, the trial judge failed to apply the reasonable driver standard to assess whether Dutton-Dunwich met its duty. And, second, she instead created a new standard of the ordinary rural motorist who disregards stop signs – a standard Dutton-Dunwich contends neither the law nor the evidence in this case supports. [33] In response, Fordham submits that the trial judge’s decision should be upheld: first because Dutton-Dunwich’s failure to put up a sign warning of the offset was contrary to the Manual’s guidelines; and second because Dutton-Dunwich knew rural drivers routinely go through stop signs. The decision to apportion liability equally was the trial judge’s to make, and no basis has been shown to interfere with her decision. [34] For reasons I discuss, I agree with Dutton-Dunwich’s submissions. And I do not accept that either the Manual or the municipality’s “knowledge” that rural drivers do not stop at stop signs supports the trial judge’s decision to impose liability on the municipality. (d) Discussion (i) The trial judge did not apply the reasonable driver standard [35] The trial judge correctly stated the municipality’s duty of repair and the standard of care. But then she misapplied the standard. She held that the municipality should have put up a sign warning of the “hidden and unknown change in the road alignment” – that the offset was a “hidden hazard” calling for a warning sign for drivers to slow down. [36] The trial judge’s holding was an error because the offset posed no hazard, no risk at all to the reasonable driver – the ordinary driver exercising reasonable care. It posed a hazard only to drivers such as Fordham who ignored the stop sign. Drivers who run a stop sign at 80 km per hour are not driving reasonably; they are driving negligently. The following two decisive facts were uncontested: · On the night of the accident, the stop sign was clearly visible from hundreds of metres away. · A driver who stopped at the stop sign – even indeed one who slowed to 50 km per hour – would have adequate time to perceive the offset and navigate it safely. The trial judge’s finding of liability would be supportable only if the offset posed a hazard to the reasonable driver. But that was not the evidence. [37] The expert opinions of Hrycay and Smiley that Dutton-Dunwich should have installed a warning sign assumed that the municipality ought to maintain its roads for “more than just the reasonable driver”. That assumption is not the law of Canada. Municipalities owe no duty to warn of hazards that present an unreasonable risk of harm only to drivers who do not drive with reasonable care. And no one can seriously question that drivers who ignore important traffic signals, such as stop signs, are not driving with reasonable care. Our Highway Traffic Act [8] requires all drivers to obey posted road signs and come to a complete stop at a stop sign. In Chaschuk (Hurlbert) v. Lebel (1981) , 12 M.V.R. 228 (Ont. C.A.), at p. 232, this court held that to miss, even momentarily, a visible traffic signal is negligent. [38] The present case may be contrasted with Housen . In Housen , the majority of the Supreme Court affirmed the trial judge’s ruling that a municipality had breached its duty of repair because it had not put up a sign to warn drivers to reduce their speed as they approached a sharp curve in the road. The severity of the curve was not readily apparent and thus was a “hidden hazard”, even for reasonable drivers who would have continued driving at the speed limit, unaware that they had to slow down. In the case before us, the municipality did put up a sign, not merely to slow down, but to stop altogether. [39] The distinction between the two cases is obvious. In Housen , without a warning sign, the curve in the road posed an unreasonable risk of harm to ordinary drivers exercising reasonable care. In the present case, with a stop sign in place, the offset was not a “hidden hazard”; it posed no risk of harm to reasonable drivers. Because it did not do so, the trial judge was wrong to find that Dutton-Dunwich had a duty to put up an additional warning sign. [40] Perhaps, however, to avoid this inevitable conclusion, the trial judge created a new category of driver: the ordinary rural driver who does not always stop at stop signs. (ii) “Ordinary rural drivers do not always stop at stop signs” [41] The trial judge found that “[c]learly, it is a local practice in this rural area for drivers to go through stop signs if they consider it safe.” Later in her reasons, she repeated this finding: “Ordinary rural drivers do not always stop at stop signs and the defendant knew that.” Relying on this finding, the trial judge concluded that “the circumstances of this intersection require more than a stop sign to give ordinary ‘rural’ motorists reasonable notice of [a] potentially catastrophic hazard ahead.” [42] The trial judge’s new and general category of driver – the ordinary rural driver who does not always stop at stop signs – was not supported by the evidence at trial, and is not supportable in law. [43] First, the evidence. In finding a local practice “in this rural area” for drivers to go through stop signs and the municipality’s knowledge that they did, the trial judge appeared to rely on the following evidence: · Two of Fordham’s teenaged friends testified that they and other drivers would go through stop signs if no one was around. · Dutton-Dunwich’s road engineer, Michael Hull, agreed that in rural areas drivers do not always obey stop signs or yield signs. · Smiley testified that in rural areas, drivers often run through stop signs if they can see no other cars are approaching. [44] At best, the evidence suggests that some drivers in rural areas disobey stop signs. Some may not come to a full stop; some may come to a “rolling stop”, while driving at a slow rate of speed; and perhaps some may, as the trial judge effectively found, go through the intersection at or near the speed limit, without slowing down at all. This generic evidence, however, does not support the trial judge’s finding of a local practice – a practice in Dutton-Dunwich – for ordinary rural drivers to go through stop signs, or her finding that the municipality knew about this practice. [45] Moreover, liability for non-repair must be based on the condition of the road in question. Apart from the evidence of one of Fordham’s teenaged friends, no evidence was led at trial to suggest that drivers ran the stop sign at the Willey Road–Erin Line intersection or that they did so at a high rate of speed, or that accidents had occurred at that intersection, or even that the municipality itself had experienced problems with drivers running stop signs. Indeed, evidence of that kind could hardly have been available because most of Dutton-Dunwich’s intersections – including the Willey Road–Erin Line intersection – were controlled by yield signs until a month or two before the accident, when they were replaced by stop signs. [46] I conclude that the trial judge’s finding of a local practice of running stop signs, which Dutton-Dunwich knew about, was an unreasonable finding. [47] Second, and more important, the law. Even if the evidence did support the trial judge’s finding of a local practice, this finding cannot be used to impose liability on Dutton-Dunwich for two reasons. First, the local practice the trial judge endorsed nonetheless amounts to negligent driving. As Iacobucci J. said in Waldick v. Malcolm , [1991] 2 S.C.R. 456, at p. 473: “[N]o amount of general community compliance will render negligent conduct ‘reasonable’”. [48] Second, the trial judge in effect created two categories of drivers: ill-defined ordinary rural drivers who frequently run stop signs, and all other ordinary drivers who habitually obey stop signs. In the trial judge’s opinion, a municipality’s duty of repair extends to both categories of drivers. This is, as Dutton-Dunwich says in its factum, “an invitation to traffic chaos.” It is also not the law in this country. [49] The Highway Traffic Act establishes a uniform set of rules of the road, which applies to all drivers, whether they drive on city roads or rural roads. It could hardly be otherwise. As I said earlier, a municipality’s duty to keep its roads, city or rural, in a reasonable state of repair extends only to making its roads safe for reasonable drivers, not negligent ones. If a road is safe for a reasonable driver – as was the Willey Road–Erin Line intersection – then a municipality has no duty to put up additional signs or take other precautions to prevent accidents that will occur only if a driver is negligent. [50] If this is the law on a municipality’s standard of care, the trial judge’s reasons contain an irreconcilable conflict. The trial judge could impose liability for non-repair only by finding that in rural areas driving through stop signs was reasonable driving. Yet, when she came to apportion liability, she found that in running the stop sign, Fordham was negligent. These two findings cannot be reconciled. Running stop signs, even on rural roads, is negligent driving. A municipality has no duty to install warning signs that are unnecessary for reasonable drivers. (iii) The Ontario Traffic Manual [51] As I have said, the Manual recommends a checkerboard warning sign for “a sharp change in road alignment”. The plaintiff contends that the offset at the Willey Road–Erin Line intersection was a “sharp change” and required a warning sign. Hrycay testified that the offset was a “substantial change in alignment”, and Smiley testified that “the road turn[ed] sharply”. As the trial judge accepted their evidence, she found, implicitly if not expressly, a “sharp change” in the alignment of Willey Road. [52] Did Dutton-Dunwich thus have a duty to put up a checkerboard warning sign? I do not think that it did. In Deering , at para. 243, Howden J. suggested that a court ought to have good reason for departing from the Manual. However, he distinguished guidelines that say “must” from those that say “should”: But in my view, where a road manual is one respected within the road engineering community as the [Ontario Traffic Manual] is, and the guideline in question uses the word “must”, the court should approach it in the sense that there should be some compelling reason not to follow it in the circumstances and context within which the transportation engineer is working. This approach would provide some distinction from a guideline reading “should”. [53] For checkerboard warning signs, the Manual uses the word “should”, not “must”. Moreover as Lauwers J. said in Greenhalgh , at paras. 66-68, the guidelines in a traffic manual are just that, guidelines. They do not establish a legally enforceable standard of care for civil liability. The overriding question is always: Does the condition of the road pose an unreasonable risk of harm to reasonable drivers? In this case, the answer to this question is no. Thus, I would not give effect to the plaintiff’s contention on the Manual. D. Conclusion [54] I would allow Dutton-Dunwich’s appeal, set aside the judgment at trial and dismiss the plaintiff’s action. Dutton-Dunwich is entitled to its costs on this appeal in the agreed amount of $35,000, inclusive of disbursements and applicable taxes. Released: December 11, 2014 (“J.L.”) “John Laskin J.A.” “I agree. Paul Rouleau J.A.” “I agree. P. Lauwers J.A.” [1] Ontario has a graduated licensing system. To get a G2 licence, a driver has to finish two learning levels. [2] Although his blood alcohol readings were below the legal limit for fully licenced drivers, G2 licence holders must have a blood alcohol concentration of zero when driving. [3] The defendant also called an expert who specialized in road design, traffic control and signage, but the trial judge rejected his evidence. [4] S.O. 2001, c. 25 [5] I have taken the test from Dutton-Dunwich’s factum, where it is accurately summarized. See e.g. Morsi v. Fermar Paving Ltd. , 2011 ONCA 577, 86 M.P.L.R. (4th) 30, leave to appeal to S.C.C. refused, [2011] S.C.C.A. No. 487; and Deering v. Scugog (Township) , 2010 ONSC 5502, 3 M.V.R. (6th) 33, aff’d 2012 ONCA 386, 33 M.V.R. (6th) 1, leave to appeal to S.C.C. refused, [2012] S.C.C.A. No. 351. [6] In Rider v. Rider (1972) , [1973] Q.B. 505 (C.A.), the English Court of Appeal suggested that a municipality’s duty of repair extended to drivers whose conduct fell below the standard of reasonable care. In Deering , however, Howden J. accurately stated, at para. 140: “The notion from Rider that the standard for road authorities is to be measured by drivers whose conduct falls below the standard of reasonable or ordinary care is not the law in Canada.” [7] Housen , at para. 42. [8] R.S.O. 1990, c. H.8, ss. 136(1), 182(2).

CIVIL APPELLATE JURISDICTION Civil Appeal No. 707 of 1978. Appeal by Special Leave from the Judgment and Order dated 20/21st March, 1978 of the Bombay High Court in SCA No.2868/76. N. Ganpule and Mrs. Veena Devi Khanna, for the Appellant. S. Desai and M. N. Shroff for Respondents 1 to 4. Mrs. Jayashree Wad for Respondent No. 5. The Judgment of the Court was delivered by PATHAK, J.-This Appeal by special leave is directed against the judgment of the Bombay High Court maintaining an order of the District Court, Poona by which the appellants election as President of the Bhor Municipal Council was set aside on an election petition filed by the respondent. The appellant stood for election to the office of President of the Bhor Municipal Council. He filed his numberination paper on 21st October, 1974, and the election was held on 17th November, 1974. The appellant was declared elected the next day and the result of the election was published in the Government Gazette on 25th November, 1974. The first respondent filed an election petition before the District Court, Poona challenging the appellants election. He alleged that the appellant had been companyvicted on 26th December, 1973 by the Judicial Magistrate, Bhor under s. 16 of the Prevention of Food Adulteration Act and sentenced to undergo imprisonment till the rising of the companyrt and to pay a fine of Rs. 200/-. Accordingly, he said, by virtue of s. 51 2 read with s. 16 1 a of the Maharashtra Municipalities Act, 1965, the appellant was number qualified for election as President of the Municipal Council. During the pendency of the election petition the Maharashtra Government made an order under cl. a of subs. l of s. 16, Maharashtra Municipalities Act,1965 the Act declaring In exercise of the powers companyferred by clause a of sub-section 1 of Section 16 of the Maharashtra Municipalities Act, 1965, the Government is pleased to order that the disqualification incurred by Shri Amrutlal Chunilal Raval, resident of Bhor, Tehsil Bhor, District Poona, should remain in force for a period of six months only from his release on 26th December, 1973. By order and in the name of the Governor of Maharashtra. sd - M. N. Tadkod, Desk Officer. The election petition was allowed and the election of the appellant was set aside. The appellant filed a writ petition in the Bombay High Court against the order setting aside his election, but the writ petition was dismissed by the High Court on 21st March, 1978. In this appeal, the only point pressed by the petitioner before us is that the order dated 20th November, 1975 made by the State Government was retrospective in operation and companysequently removed the disqualification imposed on the appellant on the date he filed his numberination paper. Sub-s. 2 of s. 51 of the Act provides that every person qualified to be elected as a Councillor under s. 15 shall be qualified for election as President. Sub-s. 1 of s.l5 of the Act provides that every person, whose name is included in the list of voters maintained under s.11 and who is number disqualified for being elected a Councillor under this Act or any other law for the time being in force, shall be qualified, A and every person whose name is number included in the list or who is so qualified, to be elected as a Councillor at any election. Section 16 1 a of the Act provides 16. 1 No person shall be qualified to become a Councillor whether by election, companyoption or numberination, who- a has been companyvicted by a Court in India of any offence the maximum punishment for which with or with out any other punishment is imprisonment for a term of two years or more and sentenced to imprisonment for any term, unless a period of five years, or such lesser period as the State Government may allow in any particular, has elapsed since his release or xx xx xx xx xx The appellant was companyvicted on 26th December, 1973 for an offence under the Prevention of Food Adulteration Act of Food Adulteration Act, which. it is number disputed, fell within the terms of cl. a of sub-s. l of s.16. He was sentenced to imprisonment until the rising of the companyrt. Because of the companyviction and sentence he suffers the disqualification companytemplated by cl. a , and the disqualification enures for a period of five years from the date of his release from imprisonment. But, by virtue of the same clause? the State Government has been empowered to substitute a shorter period ,of disqualification. In other words. the ordinary run of the clause may be altered by the State Government. A modification of the numbermal operation of the statute is companytemplated. Such a modification, to be retrospective. must indicate clearly that it is so. There is numberhing in the order dated 20th November, 1975 from which it can be inferred that it has retrospective operation. What it says merely is that the disqualification incurred by the appellant shall remain in force for a period of six months only from his release on 26th December. 1973. The disqualification was incurred by the appellant on 26th December, 1973 and the disqualification was in force when he stood for election. The date when the disqualification for five years was incurred is the relevant date the subsequent operation is merely the companysequence of the incurring of the disqualification. In the order was to be beneficial to the appellant, it should have been made retrospective from the date when the disqualification was incurred. On the plain language. it must be read as an order reducing -the period of disqualification to six months, but to be applied to a disqualification arising after the date when the order was made. A In our opinion, the appellant does number benefit from the order the State Government insofar as his election as President in 1974 is companycerned. In the circumstances, we companysider it unnecessary to go into the question whether the State Government has the power under cl. a to make an order with retrospective effect. ln the result, the appeal is dismissed with companyts to the fifth respondent.

FIFTH SECTION CASE OF DEMJANJUK v. GERMANY (Application no. 24247/15) JUDGMENT STRASBOURG 24 January 2019 FINAL 24/06/2019 This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of Demjanjuk v. Germany, The European Court of Human Rights (Fifth Section), sitting as a Chamber composed of: Yonko Grozev, President,Angelika Nußberger,André Potocki,Carlo Ranzoni,Mārtiņš Mits,Lәtif Hüseynov,Lado Chanturia, judges,and Milan Blaško, Deputy Section Registrar, Having deliberated in private on 18 December 2018, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 24247/15) against the Federal Republic of Germany lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by two American nationals, Ms Vera Demjanjuk and Mr John Demjanjuk (“the applicants”), on 13 May 2015. 2. The applicants were represented by Mr U. Busch, a lawyer practising in Ratingen. The German Government (“the Government”) were represented by one of their Agents, Mr H.-J. Behrens, of the Federal Ministry of Justice and Consumer Protection. 3. The applicants alleged, in particular, that the decision of the Munich Regional Court II of 5 April 2012 not to reimburse the necessary expenses (notwendige Auslagen) of the late accused John Demjanjuk in connection with the discontinuation of the criminal proceedings against him by reason of his death violated the presumption of innocence guaranteed by Article 6 § 2 of the Convention. They also alleged a violation of their right of access to a court under Article 6 § 1 of the Convention as a result of the Munich Court of Appeal’s decision of 4 October 2012 to dismiss their appeals against the decision of 5 April 2012 as inadmissible due to a lack of standing. 4. On 20 September 2016 the complaints concerning the right of access to a court and the refusal to reimburse the accused’s necessary expenses in connection with the discontinuation of the criminal proceedings were 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 I. THE CIRCUMSTANCES OF THE CASE 5. The first applicant is the widow and the second applicant is the son of the late John Demjanjuk. They were born in 1925 and 1965, respectively, and live in Ohio, the United States of America. 6. On 12 May 2011 the Munich Regional Court II, after 91 days of trial, convicted John Demjanjuk on 16 counts as an accessory to the murder of at least 28,060 persons. It found it established that he had, in his capacity as a guard in the Sobibór extermination camp, aided and abetted the systematic murder of persons who had been deported to the said camp in 16 convoys between 27 March 1943 and September 1943. It sentenced him to a total of five years’ imprisonment for these crimes. The judgment ran to 220 pages plus appendices. 7. Both the accused and the public prosecutor filed appeals on points of law against that judgment. Defence counsel submitted a brief containing the grounds for the appeal on points of law in November 2011 and subsequently submitted four additional briefs, the last of which was received by the Regional Court on 12 January 2012. On 24 February 2012, the public prosecutor’s office instructed that the file, along with the submissions by the public prosecutor’s office in response to the defence counsel’s submissions, be transferred to the Federal Court of Justice, which was competent to examine the appeal on points of law. 8. John Demjanjuk died on 17 March 2012. At that time, the Federal Court of Justice had not yet received the case file. 9. By decision of 5 April 2012 the Munich Regional Court II discontinued the proceedings in accordance with Article 206a § 1 of the Code of Criminal Procedure due to the death of the accused (see paragraph 14 below). In that same decision, relying on Article 467 § 3, second sentence, number 2 of the Code (see paragraph 15 below), it ruled that the accused’s necessary expenses were not to be borne by the treasury. The Regional Court reasoned as follows: “... The accused had been convicted on 16 counts as an accessory to murder after 91 days of trial with a comprehensive taking of evidence. The conviction was based on a thorough examination of the evidence as to the facts and an assessment of all relevant legal aspects. Even though the conviction could not become final in the absence of a decision on the appeal on points of law, Article 467 § 1 of the Code of Criminal Procedure did not apply. The procedural impediment occurred after the judgment convicting the applicant had been handed down. The duration of the trial, which had lasted for almost one and a half years, was attributable, to a significant degree, to the time-consuming strategy pursued by the defence. The defence had made excessive use of their right to make statements under Article 257 § 2 of the Code, often repeating arguments already made several times, and had filed around 500 applications for the taking of evidence, a large number of which had been directed at evidence that had either already been taken or that was impossible to obtain, such as the examination of deceased persons. Likewise, the defence had filed more than twenty complaints alleging bias with regard to each of the professional judges sitting on the case, again often repeating arguments and considerations that had already been ruled on. It would have been possible to conclude the trial within a few months, while fully respecting defence rights, if the defence had exercised its procedural rights in a targeted, structured and technical manner. It would thus have been possible to conclude the proceedings, with a final verdict, during the lifetime of the accused. Against this backdrop, it is not equitable, even in the absence of a conclusive finding of guilt, in the context of the discretionary decision to be made, to order that the accused’s necessary expenses be reimbursed by the treasury. ...” 10. Counsel for the late accused filed an immediate appeal against the Regional Court’s decision of 5 April 2012. He submitted, inter alia, that the decision not to reimburse the accused’s necessary expenses, and its reasoning, breached the presumption of innocence guaranteed by Article 6 § 2 of the Convention. On 17 April 2012 counsel submitted powers of attorney from the applicants in the present case. 11. On 4 October 2012 the Munich Court of Appeal dismissed the immediate appeal as inadmissible due to a lack of standing. The procedural status as an accused in criminal proceedings was personal in nature and could not be transferred, including by way of inheritance. In respect of the late accused, it had ceased because of his death. The Court of Appeal went on to state that the immediate appeal was, in addition, ill-founded. Article 6 § 2 of the Convention had not been breached. Having regard to the Court’s judgment in the case of Nölkenbockhoff v. Germany, 25 August 1987, Series A no. 123, it considered that the decision not to reimburse the late accused’s necessary expenses did not breach that provision, as it did not contain a finding of guilt, which the decision itself explicitly stated. It was permissible, in view of the establishment of the late accused’s guilt by the trial court, to find that there continued to be, at the time the proceedings were discontinued, a state of suspicion against the late accused, and to apply Article 467 § 3, second sentence, number 2, of the Code of Criminal Procedure on that basis. 12. On 12 October 2012 counsel filed a complaint to be heard, which the Court of Appeal dismissed as ill-founded on 15 November 2012. 13. On 18 December 2014 the Federal Constitutional Court declined to consider the applicants’ constitutional complaint (no. 2 BvR 2397/12), without providing reasons. II. RELEVANT DOMESTIC LAW AND PRACTICE 14. In German criminal procedural law the death of the accused is qualified as an impediment to the proceedings. Where an accused dies during appeal proceedings, the criminal proceedings have to be discontinued by decision in accordance with Article 206a of the Code of Criminal Procedure, with a ruling on costs and expenses (see Federal Court of Justice, no. 4 StR 595/97, decision of 8 June 1999). As a general rule, an immediate appeal lies against a decision to discontinue the criminal proceedings under that provision. 15. Article 467 § 1 of the Code provides that the costs of the proceedings and the defendant’s necessary expenses are, as a rule, borne by the treasury, inter alia, if the proceedings against the accused are discontinued. However, the competent court may decline to charge the accused’s necessary expenses to the treasury where he was not convicted for a criminal offence only because there was an impediment to the proceedings (Article 467 § 3, second sentence, number 2 of the Code). There has to be at least a significant state of suspicion (see Federal Court of Justice, no. 3 StE 7/94 – 1 (2) StB 1/99, decision of 5 November 1999). The competent court is required to exercise discretion (muss das ihm eingeräumte Ermessen pflichtgemäß ausüben) and there have to be additional factors, besides the impediment, which render the refusal to reimburse the accused’s necessary expenses equitable, such as that the impediment arose only after the trial had been opened (see Federal Constitutional Court, no. 2 BvR 388/13, decision of 29 October 2015, with further references). 16. Once the court competent to examine an appeal on points of law has become seized of the case – that is, once it has duly received the case file (see Federal Court of Justice, no. 5 ARs 30/92, decision of 2 June 1992) –, that appeal’s prospects of success, or lack thereof, are a relevant aspect to be considered by that court when determining whether or not it would be equitable that the accused’s necessary expenses be borne by the treasury (see Federal Court of Justice, no. 1 StR 358/09, decision of 15 September 2009). 17. Where the accused’s necessary expenses are not reimbursed in the event of the discontinuation of the criminal proceedings, it must become sufficiently clear that this does not occur out of the intention to establish or allocate guilt, but out of the intention to describe and assess a state of suspicion (see Federal Constitutional Court, no. 2 BvR 1542/90, decision of 16 December 1991). This distinction must be expressed in the decision’s wording in a sufficiently clear manner, regard being had to the context of the reasoning as a whole (ibid.). THE LAW I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION 18. The applicants complained of a violation of their right of access to a court under Article 6 § 1 of the Convention as a result of the Munich Court of Appeal’s decision of 4 October 2012 to dismiss their appeal against the decision of the Munich Regional Court II of 5 April 2012 as inadmissible due to a lack of standing. They relied on Article 6 § 1 of the Convention which, in so far as relevant, reads as follows: “1. In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. ...” 19. The Government contested that argument. A. The parties’ submissions 20. The applicants submitted that the Court of Appeal’s decision of 4 October 2012, by which it declared their appeal against the decision of the Regional Court of 5 April 2012 inadmissible for lack of standing, was in plain contradiction to the Court’s judgment in the case of Nölkenbockhoff v. Germany (25 August 1987, Series A no. 123). In that case, the Court had recognised the victim status of a widow in respect of the presumption of innocence, as guaranteed by Article 6 § 2 of the Convention, concerning, inter alia, statements relating to her late husband in connection with the discontinuation of criminal proceedings against him by reason of his death. It did not remedy this manifest breach of the applicants’ right of access to a court that the Court of Appeal went on to state that their appeal was, in the alternative, ill-founded. 21. The Government acknowledged that the Court of Appeal’s decision not to consider the heirs of a deceased accused to have standing in proceedings concerning the accused’s necessary expenses may, if viewed in the abstract, raise an issue under Article 6 § 1 of the Convention. They emphasised that this was, however, not decisive. In its decision of 4 October 2012, the Court of Appeal had examined the applicants’ appeal in substance, despite declaring it inadmissible, as evidenced by its finding that it was, in any event, ill-founded and that there had been no breach of Article 6 § 2 of the Convention. There had thus been no breach of the applicants’ right of access to a court. B. The Court’s assessment 1. Admissibility 22. The Court notes that the applicants are the widow and the son of the late John Demjanjuk. In line with its well-established case-law, it considers that they may, as his close relatives and heirs, have a legitimate material interest in the reimbursement of the costs and expenses for his defence in the criminal proceedings against him as well as a non-pecuniary interest, on behalf of themselves and of the family, in having their late relative exonerated from any finding of guilt (see Vulakh and Others v. Russia, no. 33468/03, §§ 26-28, 10 January 2012; Nölkenbockhoff, cited above, § 33). The Court finds that the applicants may claim to be “victims” of the alleged violation of Article 6 § 2 of the Convention and were, therefore, entitled to access to a court under Article 6 § 1 of the Convention. 23. It also considers that this complaint is not manifestly ill‑founded within the meaning of Article 35 § 3 (a) of the Convention. As no other grounds for inadmissibility have been established, the Court declares it admissible. 2. Merits 24. The Court observes that, while the applicants may claim to be “victims” of an alleged violation of Article 6 § 2 of the Convention, they did not face a criminal charge. They may have a legitimate material interest in the reimbursement of the late accused’s necessary expenses as well as a non-pecuniary interest in having him exonerated from any finding of guilt. Their interests are thus, in part, pecuniary in nature and, in part, aimed at the maintenance or restoration of the late accused’s good reputation, either of which concern the civil limb of Article 6 § 1 of the Convention (see Rupp v. Germany (dec.), nos. 60879/12 and 60892/12, § 53, 17 November 2015; and Madaus v. Germany, no. 44164/14, § 15, 9 June 2016). 25. The Court reiterates that the right of access to a court guaranteed by Article 6 § 1 of the Convention does not consist only of a right to institute proceedings, but also of a right to obtain a “determination” of the dispute or, in other words, to have the claims examined by a court (Khamidov v. Russia, no. 72118/01, § 167, 15 November 2007). While the right of access to the courts must be “practical and effective”, it may be subject to limitations (see Zubac v. Croatia [GC], no. 40160/12, §§ 77-78, 5 April 2018). It is not the Court’s function to deal with errors of fact or law allegedly made by a national court, unless and in so far as they may have infringed rights and freedoms protected by the Convention (ibid., § 79). 26. In the present case the Court of Appeal, in its decision of 4 October 2012, declared the applicants’ appeal against the Regional Court’s decision of 5 April 2012 inadmissible due to their lack of standing (see paragraph 11 above). This decision may, as the Government acknowledged, raise issues in respect of the applicants’ right to have their claim as victims of an alleged violation of Article 6 § 2 of the Convention examined. However, the Court of Appeal then went on to state that the immediate appeal was, in addition, ill-founded and that Article 6 § 2 of the Convention had not been breached (see paragraph 11 above). It follows that the Court of Appeal examined – and dismissed – the applicants’ claim in substance. 27. The Court therefore considers that the Court of Appeal’s determination of the applicants’ lack of standing did not affect their right to have their claims examined and determined in substance. Their right of access to a court has not been infringed in practice. 28. There has accordingly been no violation of Article 6 § 1 of the Convention. II. ALLEGED VIOLATION OF ARTICLE 6 § 2 OF THE CONVENTION 29. The applicants complained that the Regional Court’s decision of 5 April 2012 not to reimburse the late accused’s necessary expenses in connection with the discontinuation of the criminal proceedings, and in particular the wording of the impugned decision, violated the presumption of innocence. They relied on Article 6 § 2 of the Convention, which reads as follows: “2. Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law. ” 30. The Government contested that argument. A. Admissibility 31. The Court notes that this complaint is linked to the one examined above and must therefore likewise be declared admissible. B. Merits 1. The parties’ submissions (a) The applicants 32. The applicants submitted that Article 6 § 2 of the Convention required that the late accused’s necessary expenses be borne by the treasury, given that his conviction had not become final. The decision of the Regional Court of 5 April 2012 to discontinue the proceedings and to refrain from charging his necessary expenses to the treasury reinforced the finding of guilt contained in the trial judgment. It clearly endorsed that judgment’s findings and fully attributed the absence of a final conviction to the defence strategy. Thereby, an image of the finality of the late accused’s conviction was created while eliminating any possibility for his effective defence, notably the examination of the grounds of his appeal on points of law. In fact, the provision applied by the Regional Court (Article 467 § 3, second sentence, number 2 of the Code of Criminal Procedure), as interpreted by the domestic courts, itself was bound to infringe the presumption of innocence by requiring that the procedural impediment be the sole reason for the absence of a final conviction, which would otherwise have been certain. 33. Contrary to the requirements set out by the Court in the case of Nölkenbockhoff (cited above), warranting an assessment of the case as a whole, including the grounds advanced by the defence and not assessed prior to the discontinuation of the criminal proceedings, the Regional Court did not examine the grounds advanced by the late accused in his appeal on points of law. To have these grounds examined only where the case-file had already been transmitted to the competent court could not be reconciled with Article 6 § 2 of the Convention.The necessary transfer of the case file had been unduly delayed in the present case and the Regional Court was no longer competent when it decided on the discontinuance of the proceedings for the reimbursement of the late accused’s necessary expenses. (b) The Government 34. The Government submitted that the Regional Court’s decision that the late accused’s necessary expenses should not be borne by the treasury did not breach the presumption of innocence. It did not constitute a penalty or similar measure, nor did it contain a finding or attribution of guilt. The Regional Court had, in accordance with domestic law, made a prognosis based on an assessment of the remaining state of suspicion and had legitimately referred to the trial judgment which constituted a reliable basis for such prognosis. The Regional Court was competent to make this prognosis under domestic law, given that the case file had not yet been received by the Federal Court of Justice. It was not required to assess the grounds advanced by the defence for the appeal on points of law when making the prognosis as to the existence of a significant state of suspicion against the late accused. Even if the Federal Court of Justice had been competent, it would not have been required to engage in a full assessment of the appeal on points of law either, as the decision on the accused’s necessary expenses was an auxiliary one and only required a comprehensible and soundly founded prognosis, which was clearly distinguishable from a conclusive finding of guilt. 35. The decision was carefully worded in a way to avoid it being understood as a finding of guilt. It made clear that the Regional Court’s judgment of 12 May 2011, and the applicant’s conviction, were not final and explicitly stated that the judgment did not contain a “conclusive attribution of guilt”. Remarks contained in the decision pertaining to the extensive exercise of defence rights did not alter that. 2. The Court’s assessment 36. The Court reiterates that the presumption of innocence enshrined in Article 6 § 2 of the Convention will be violated if a judicial decision concerning a person charged with a criminal offence reflects an opinion, even in the absence of any formal finding of guilt, that he is guilty before he has been proved guilty according to law; it suffices that there is some reasoning suggesting the accused’s guilt (see Cleve v. Germany, no. 48144/09, §§ 32 and 53, 15 January 2015, with further references). This concerns, for example, a decision on the reimbursement of an accused’s defence costs (see Rupp, cited above, § 62; Lutz v. Germany, 25 August 1987, §§ 56-57, Series A no. 123), as in the present case. 37. A finding of guilt in the absence of a final conviction must be distinguished, in that context, from the description of a “state of suspicion”. While the former infringes the presumption of innocence, the latter has been regarded as unobjectionable in various situations examined by the Court (see Rupp, § 63, and Cleve, § 53, both cited above). The language used by the decision-maker will be of critical importance in assessing the compatibility of the decision and its reasoning with Article 6 § 2 of the Convention (Rupp, § 63, and Cleve, § 54, both cited above). Regard must be had, in this respect, to the nature and context of the particular proceedings in which the impugned statements were made (Cleve, cited above, § 55). Depending on the circumstances, even the use of some unfortunate language may thus be found not to be in breach of Article 6 § 2 of the Convention (ibid., with further references). The Court has drawn a distinction between cases where a final acquittal judgment has been handed down and those where criminal proceedings have been discontinued, with a more lenient standard applied in the latter cases (see Bikas v. Germany, no. 76607/13, § 44, 25 January 2018, with further references). 38. The Court furthermore reiterates that a decision whereby reimbursement of an accused’s necessary expenses was refused in connection with the discontinuation of criminal proceedings does not in itself breach Article 6 § 2 of the Convention (see Nölkenbockhoff, §§ 36 and 40, and Rupp, § 72, both cited above). The issue that needs to be determined in the present case is, thus, whether the reasons advanced for the decision not to reimburse the late accused’s necessary expenses, and notably the language used, contained a finding of the late accused’s guilt. 39. The Court sees no reason to doubt the competency of the Regional Court to take the decision at issue and cannot discern any undue delays in transferring the case file, not least in the light of the multiple submissions made by the defence until shortly before the accused’s death (see paragraphs 7, 8 and 16 above). For the purposes of the decision at issue, the Regional Court was required to determine whether there was at least a significant state of suspicion against the late accused (see paragraph 15 above). It made that determination after it had, acting as the trial court, found the late accused guilty after a trial of 91 days, setting out its assessment of the factual and legal aspects of the case in a judgment of 220 pages (see paragraph 6 above). Therefore, having regard to the nature and context of the Regional Court’s decision, the Court finds that it does not raise, in the circumstances of the present case, an issue under Article 6 § 2 of the Convention that the Regional Court found there to be a significant state of suspicion against the late accused, based on the trial judgment against him (compare and contrast the cases of Cleve, cited above, and Yassar Hussain v. the United Kingdom, no. 8866/04, ECHR 2006‑III, in which the applicants had been acquitted by the trial court). 40. At the same time, the Court considers that some of the wording contained in the Regional Court’s decision may be considered unfortunate, notably, that the conviction could not become final in the absence of a decision on the appeal on points of law and that it would have been possible to conclude the proceedings, with a final verdict, during the lifetime of the accused, if the defence had exercised its procedural rights in a targeted, structured, and technical manner (see paragraph 9 above). These statements could be understood as attributing responsibility to the defence for the absence of a final guilty verdict against the late accused. However, again having regard to the nature and context of the decision, the Court notes that domestic law required there to be additional factors, besides the significant state of suspicion, rendering the refusal to reimburse the accused’s necessary expenses equitable in the event of a discontinuation of the proceedings (see paragraph 15 above). It thus understands the statement at issue to relate primarily to the existence of such an additional factor, as required by domestic law, which is taken into account in the exercise of discretion for determining who is to bear the accused’s necessary expenses. 41. This view is supported by the Regional Court’s explicit statement that the decision regarding necessary expenses was taken “in the absence of a conclusive finding of guilt” (see paragraph 9 above). Thereby, the Regional Court made it unequivocally clear that its decision was based on a state of suspicion against the late accused, but that it did not contain a finding or allocation of guilt. The Court of Appeal referred to that part of the decision to conclude that it was compatible with Article 6 § 2 of the Convention and the standards following from the judgment in the case of Nölkenbockhoff (cited above) (see paragraph 11 above). 42. Having regard to the reasoning as a whole and, in particular, the language used, as well as to its case-law, notably Nölkenbockhoff and Rupp (both cited above) on the one hand, and Yassar Hussain and Cleve (both cited above) on the other hand, the Court concludes that the Regional Court’s decision, which was upheld by the Court of Appeal (see paragraph 11 above), did not contain a finding of the late accused’s guilt. These decisions thus did not infringe the presumption of innocence 43. There has accordingly been no violation of Article 6 § 2 of the Convention. FOR THESE REASONS, THE COURT, UNANIMOUSLY, 1. Declares the application admissible; 2. Holds that there has been no violation of Article 6 § 1 of the Convention; 3. Holds that there has been no violation of Article 6 § 2 of the Convention. Done in English, and notified in writing on 24 January 2019, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Milan BlaškoYonko GrozevDeputy RegistrarPresident

COURT OF APPEAL FOR BRITISH COLUMBIA Citation: Staetter v. British Columbia (Adult Forensic Psychiatric Services), 2019 BCCA 40 Date: 20190129 Docket: CA45596 Between: Christopher Michael Staetter Appellant And Director of Adult Forensic Psychiatric Services and The Attorney General of British Columbia Respondents Before: The Honourable Mr. Justice Frankel The Honourable Mr. Justice Willcock The Honourable Mr. Justice Savage On appeal from: An order of the British Columbia Review Board, dated August 8, 2018). Oral Reasons for Judgment Acting on his own behalf: C.M. Staetter Counsel for the Respondent, Director of Adult Forensic Psychiatric Services: D.K. Lovett, Q.C. Counsel for the Respondent, Attorney General of British Columbia: L.D. Hillaby Place and Date of Hearing: Vancouver, British Columbia January 29, 2019 Place and Date of Judgment: Vancouver, British Columbia January 29, 2019 Summary: S., who was found not criminally responsible on account of mental disorder, appeals from a decision of the British Columbia Review Board ordering his continued detention. Held: Appeal dismissed. The Board’s decision is reasonable. S. continues to have delusions and, if released, would pose a significant risk to public safety. [1] FRANKEL J.A. : This appeal is brought by Christopher Michael Staetter, pursuant to s. 672 of the Criminal Code , R.S.C. 1995, c. C-46, from a custodial disposition order made by the British Columbia Review Board on August 8, 2018. [2] On October 19, 2012, Mr. Staetter was found not criminally responsible on account of mental disorder (“NCRMD”) on two counts of criminal harassment, one count of uttering threats, and one count of uttering a threat to cause death or bodily harm. The trial judge committed Mr. Staetter to the care of the Adult Forensic Psychiatric Services and, pursuant to s. 672.45(1.1) of the Criminal Code , referred him to the Board for disposition. On November 27, 2012, the Board ordered a custodial disposition under s. 672.45(1): [2012] B.C.R.B.D. No. 72. Thereafter, as required by s. 672.81(1), the Board has conducted annual reviews of Mr. Staetter’s status. On each occasion the Board found Mr. Staetter to be “a significant threat to the safety of the public” (s. 672.54) and ordered him detained. Mr. Staetter suffers from schizoaffective disorder complicated by chronic substance abuse, primarily marihuana. [3] This Court has considered and dismissed previous appeals brought by Mr. Staetter from custodial dispositions: · From the November 27, 2012 decision detaining him: 2013 BCCA 307, 340 B.C.A.C. 94. · From the September 16, 2014 decision detaining him for a further 12 months: 2015 BCCA 63, 367 B.C.A.C. 226, leave to appeal ref’d [2015] 3 S.C.R. xi. · From the September 11, 2015 decision detaining him for a further 12 months: 2016 BCCA 167. · From the September 8, 2016 decision detaining him for a further 12 months: 2017 BCCA 68, leave to appeal ref’d [2018] S.C.C.A. No. 219. · From the September 6, 2017 decision detaining him for a further 12 months: 2018 BCCA 125. [4] The index offences were committed in relation to a young woman, P.H., and her father. They were subjected to dozens of voicemail and text messages sent by Mr. Staetter in March and April 2012. The content of those messages was threatening and disturbing. Their basic theme related to Mr. Staetter’s entrenched and false belief that he fathered a son with P.H. He has intractable beliefs he can teleport himself, others, and objects. He believes he teleported himself into P.H.’s bedroom in 2005, where he saw his son in a crib. The victim impact statements established that P.H. and her family experienced significant psychological harm. [5] In its September 6, 2017 decision the Board said this: [24]      There has been no material change in Mr. Staetter’s mental status over the last year. He remains utterly devoid of any insight into circumstances, including his illness, the need for treatment, the risks of marijuana use, and the harms that he has caused the victims. The accused was permitted to represent himself at this hearing. Throughout the proceedings he tried to prove the truth of his delusions, the injustice of his circumstances, and the evils of psychiatry. Aside from reinforcing the evidence with respect to the entrenched nature of his symptoms, the Board was challenged to keep the conduct of the hearing focused on relevant evidence and issues. [25]      We fully agree with the reasons of the last panel on the threshold issue of significant threat as set out in paragraph five of these reasons. The Board’s decision was upheld by the Court of Appeal. Considering the absence of changes in the material factors that affect the accused’s risk, we had little hesitation in determining that he remained a significant threat to public safety. [6] Starting on May 14, 2018, Mr. Staetter began communicating with the Board’s registry by email and telephone, making requests for subpoenas to be issued for two police officers whom he asserts can establish the truth of his beliefs. The tone and content of those emails changed on June 19th. In the first email he described in explicit detail the nature of his alleged sexual relationship with P.H. In a subsequent email the same day he wrote that in order to get the new trial he wants, he “would have to do something silly like I know … maybe harass them with voicemails and text messages and get criminal charges.” The email contained references to his continuing beliefs, including his ability to teleport and being a god. He also expressed frustration with the court and Board not permitting him to introduce evidence he believes is relevant. A third email again contained explicit details of his belief about his relationship with P.H. [7] On June 20, 2018, Mr. Staetter’s treatment team was notified of his communications with the Board. This resulted in his privileges being put on hold. When asked about those communications, he repeated his beliefs that he had sexual relations with P.H. and can teleport himself. He stated he wanted to call witnesses to confirm those beliefs. He said he did not intend to contact P.H., but that she took six years of his life. He also said it was a mistake sending the emails and that he does not plan on doing so again. [8] Mr. Staetter has a lengthy criminal record dating back to 2006. His convictions include criminal harassment, uttering threats, assault, and breach of probation. [9] In a report dated July 15, 2018, Dr. Barinder Singh, Mr. Staetter’s treating forensic psychiatrist, referred to emails Mr. Staetter had sent to the Director in which he: (i) spoke in explicit detail of having sexual relations with P.H.; (ii) claimed P.H. and her father had committed perjury; and (iii) had witnesses who could confirm his ability to teleport himself. [10] Under the heading “Clinical Factors”, Dr. Singh stated Mr. Staetter: · Does not believe he suffers from a mental illness and believes the medications prescribed for him “are poison and he doesn’t need to take them”. · Has not shown any violent ideation or intent recently but his emails to the Director raise concerns with respect to his reaching out to P.H. · Denies having any hallucinations and reports he: (i) has a son with P.H.; (ii) will not contact her again; and (iii) has witnesses who can confirm his ability to teleport himself. · “[B]egrudgingly participates in programs and cooperates with the treatment team.” [11] Later, in that report, Dr. Singh states: [9]     RISK SENARIOS: 1.     In the worst case scenario, if Mr. Staetter was not supervised, he could stop taking his medications and start using marijuana, which in the past has exacerbated his mental illness and led to the index offence. In this case scenario, he would have end up [ sic ] causing psychological or physical harm to someone known to him in his vicinity or even a stranger. 2.     If Mr. Staetter continues to have active symptoms of his mental illness. He is likely to always believe that he had a relationship with the victim and about the existence of his son. In the best case scenario, if he takes his medications, abstains from marijuana and is supervised, he could be stable in the community. However, the risk to the victim remains in case Mr. Staetter was to act impulsively and reach out to her again. [10] SECTION 672.54: i.      The need to protect the public from dangerous persons, which is of paramount consideration: Given Mr. Staetter’s history and the index offence, Mr. Staetter remains at risk to harm others should he have deterioration in his mental health or if he were to use illicit substances, which have worsened his illness in the past. Mr. Staetter continues have limited insight into his illness and remains at risk to the public. ii.     The need to consider the mental state of the accused: Mr. Staetter continues to believe that he has a child with the victim and that he had a relationship with her. He reports that he can call witness who can prove that he had a relationship with the victim and that he can teleport himself. iii.    The reintegration of the accused into society: It would be important for Mr. Staetter to continue with his medications and to abstain from using marijuana. He reports that he plans to start smoking marijuana as soon as he is absolutely released. He reports that he will get a green card from a doctor in the community and smoke marijuana for medicinal purposes. The treatment team continues to proceed cautiously and gradually to reintegrate Mr. Staetter into the community while monitoring his response and coping abilities. [11]   RECOMMENDATIONS: 1.     It is the treatment team’s recommendation that the Review Board consider a custody disposition at this time. [12] Mr. Staetter was represented by counsel at the Board’s most recent hearing. At that hearing, the Board heard from Dr. Singh and Mr. Staetter. Mr. Staetter’s counsel submitted Mr. Staetter should be granted an absolute discharge or, in the alternative, a conditional discharge. Counsel for the Director and counsel for the Attorney General of British Columbia both submitted a custodial disposition was appropriate. [13] In finding that Mr. Staetter continued to pose a significant threat to the safety of the public, the Board stated: [24]      The index offences were part of a longstanding pattern of harassing the victims. That pattern has been interrupted since Mr. Staetter has been in FPH and under the jurisdiction of the Review Board. In the past year he has had frequent unsupervised access to the community on day leaves, and then almost two months in Johnson Manor. He has not contacted the victims of the index offences, and maintains that he has no intention of doing so. However, the delusions that led to the commission of the offences appear to be as strongly held as ever. He continues to blame the victims for his current situation and is particularly resentful because he believes that had he been convicted of the offences rather than being found not criminally responsible, he would have been sentenced to no more than 18 months in custody. Mr. Staetter believes that he was not fairly treated by the trial court, when he was not permitted to call witnesses that he believed would establish the truth of his allegations. He has been frustrated by the continued refusal of the Review Board to permit him to call these witnesses, and has unsuccessfully appealed to the BC Court of Appeal on numerous occasions. The second email of June 19, 2018 said that his only strategy to get a new trial would be to commit further actions similar to the index offences. He is also focused on strategies to hold the victims accountable for what he believes was perjury. [25]      Although Mr. Staetter is clearly frustrated by the Review Board process, he conducted himself respectfully and followed the advice of his lawyer. He can be forthcoming to his treatment team about his thoughts and beliefs, but Dr. Singh acknowledged in her evidence that they were not fully aware of the continued intensity of Mr. Staetter’s delusions. In his evidence, Mr. Staetter said that what he had learned from this recent experience was that everything you say can be used against you, suggesting that he may be even more cautious in the future about disclosing his thoughts to his treatment team. Because of this, Mr. Staetter is a difficult patient to assess. The recent emails illustrated that he had been ruminating about things in a way that his treatment team had not suspected. The tenacity of his beliefs is very concerning as Mr. Staetter’s history is of impulsive behavior on the basis of his false beliefs. Dr. Singh testified that although strong false beliefs are unlikely to disappear as a result of medication, it is the hope that over time they will become less pronounced, and the patient will be less likely to act on them. That is not yet the case for Mr. Staetter. He has demonstrated significant self-control by not contacting the victims, but this has been in the context of significant supervision, largely in custody. [26]      We are satisfied that Mr. Staetter continues to present a significant risk to public safety, and there is not plan in place, or even contemplated at this point, that would be sufficient to manage the risk he presents in the community. We therefore impose a further custody order, with the same terms and conditions as the current order. [14] Mr. Staetter filed a number of documents in support of his appeal, none of which are relevant. The majority are copies of letters Mr. Staetter sent to Dr. Marcel Hediger, his current treating forensic psychiatrist, in late 2018, i.e., months after the decision under appeal. In those letters, which are written in a rambling fashion, Mr. Staetter raises numerous complaints with respect to his continued detention and treatment. Among other things, he asks for a prescription for marihuana (“his main religious belief”), seeks his immediate release, accuses P.H. and her family of committing perjury, and asserts he was denied a proper trial and an appeal. [15] On November 25, 2018, Mr. Staetter emailed the Board’s registry requesting an early date for his next review hearing. He stated he wished to call two police officers to give evidence and that the NCRMD verdict was based on perjury. On December 6, 2018, the Board denied his request. Mr. Staetter responded to that denial in an email containing vulgar language. [16] Mr. Staetter also filed an unsworn document headed “Affidavit”. In that document he says the first problem with the Board’s most recent hearing is “falsified transcripts”. He then states his three main arguments are “error of law, unreasonable verdict, miscarriage of justice.”  This is followed by a litany of complaints directed at the trial judge (who he refers to using an offensive term) and his trial counsel. He also complains about being denied an appeal from the NCRMD verdict. [17] By virtue of s. 672.78(1) of the Criminal Code , this Court has the power to allow an appeal against a Review Board’s decision on three grounds: (a) the decision is unreasonable or cannot be supported by the evidence; (b) it is based on a wrong decision on a question of law; or (c) there was a miscarriage of justice. The reasonableness standard of review applies to whether a decision is unreasonable or unsupported by the evidence. In that regard, the following from the judgment of Justice Dickson in Nelson v. British Columbia (Adult Forensic Psychiatric Services) , 2017 BCCA 40, is apposite: [23] The standard of review on appeal from a decision of the Review Board is reasonableness. Mr. Justice Harris described the applicable standard in Calles v. British Columbia (Adult Forensic Psychiatric Services) , 2016 BCCA 318: [14]      The standard of review for this appeal is reasonableness: R. v. Owen , 2003 SCC 33, [2003] 1 S.C.R. 779 at para. 33. Courts recognize that the assessment of whether the mental condition of an NCR accused renders him a significant threat to public safety “calls for significant expertise”: Owen, at para. 30 . As stated in Winko v. British Columbia (Forensic Psychiatric Institute), [1999] 2 S.C.R. 625 at para. 61, “[a]ppellate courts reviewing the dispositions made by a court or Review Board should bear in mind the broad range of these inquiries, the familiarity with the situation of the specific NCR accused that the lower tribunals possess, and the difficulty of assessing whether a given individual poses a ‘significant threat’ to public safety”. [24] This Court does not make its own judgment on the significant threat issue when evaluating whether a Review Board decision under review was reasonable. Rather, it considers the Board's reasoning and substantive decision to determine whether an acceptable and defensible outcome was reached: Carrick (Re) , 2015 ONCA 866 at paras. 24-26. [18] In his submissions this morning, Mr. Staetter repeated his complaints with respect to his continued detention and treatment. He referred to a number of persons who have been given conditional or absolute discharges. He advanced a free-flowing and wide-ranging argument that he has been dealt with unjustly, including allegations that members of the judiciary have engaged in perjury and should be investigated by the police. [19] In my view, Mr. Staetter has not demonstrated the Board’s decision is unreasonable. [20] In the result, I would dismiss this appeal. [21] WILLCOCK J.A. : I agree. [22] SAVAGE J.A. : I agree. [23] FRANKEL J.A. : The appeal is dismissed. “The Honourable Mr. Justice Frankel”

WITH A. Nos. 10760-11058/95 11062-66/95 C.A. No. 16746 of 1996 arising out of S.L.P. C No.6174/92 C.A. No. 16747 of 1996 arising out of S.L.P. C No.14275/94 C.A. No. 16748 of 1996 arising out of S.L.P. C No.7410/95 and A., No. 16749 of 1996 arising out of S.L.P. C No. 24553 C. 4638/95 J U D G M E N T B. Majmudar. J. Leave granted in S.L.P. C Nos.6174 of 1992, 14275 of 1994. 7410 of 1995 and S.L.P. C No. 24553 CC 4638/95 . This group of appeals, on grant of special leave to appeal against the companymon judgment of Patna High Court in CWJC No.5163 of 1993 and batch decided on 6th May 1994, has been placed before this larger Bench by the orders of Honble the Chief Justice on account of difference of opinion between two learned judges of this Court, K. Ramaswamy, J. and Hansaria, J., companystituting the Division Bench which earlier heard this group of matters. Before the main points for difference are highlighted and the companytentions of respective companytesting parties are numbered, it would be necessary to numbere at the outset the backdrop facts leading to these proceedings. Backdrop Facts One Dr. A.A. Mallick, Deputy Director, Health Department of the Government of Bihar, was in charge of Tuberculosis for a number of years while he was working as a member of the medical service of the State of Bihar. He was Director of the Tuberculosis Centre at Patna. Eradication of Tuberculosis was taken up as a part of 20-Point Programme in planned expenditure. The activities in the Tuberculosis Centre at Patna were extended to various districts. Since Dr. Mallick happened to be the Director of the Centre, he was made Deputy Director of the Scheme. The Government had also issued directions to the District Medical Officers to abide by the instructions of Dr. Mallick in implementation of the programme. He was made the Chairman of Selection Committee companystituted by the Government companysisting of himself. Assistant Director of Pilaria and a senior officer representing Scheduled Castes Scheduled Tribes to recruit 2250 class III and Class IV employees on posts created to implement the Scheme in addition to around 800 to 900 staff in Patna Centre in all categories. Taking advantage thereof, the undisputed fact is that, he appointed around 6000 as found by the Committee while the Government asserts them to be approximately 7000. Be that as it may, number less than 6000 persons were appointed by Dr. Mallick without any written orders. He directed many of them to be adjusted by transfer by District Medical Officers and some of them had produced fabricated appointment orders. He shuffled their payment of salaries by turns. Another device adopted in the macabre episode was to make the employees go on strike and when some sensitive M.L.As. raised the question, on the floor of the State Legislative Assembly, off illegal appointments made by Dr. Mallick, the Government initially posed the appointments to be legal and justified his action to be valid. Later, when facts themselves proved their faulty admission, they made amends before the Assembly and the Government made an elaborate statement apprising the House that the information furnished earlier was number companyrect. Due to the agitation, the Director an Joint Secretary to the Government. Health Department had issued directions to regularise the services of daily-rated Class III and Class IV employees. Taking aid thereof, it is claimed that regularisation of many of them including most of the appellants, was made. When alarming bells rang around portals of Patna High Court by filing petitions under Article 226 of the Constitution seeking payment of salaries, the High Court, though initially in some cases directed to enquire into the cases and to pay salaries, later found it difficult to companye up with the situation. So an Enquiry Committee was companystituted to find out whether the appointments made by Dr. Mallick were valid and whether salaries companyld be paid to such employees. In the meanwhile, the Government also directed the Vigilance Department to enquire into the matter and on 7th May 1991, the Vigilance Department in its report pointed out that Dr. Mallick had violated the rules of recruitment and in companylusion with other officers had appointed daily-rated Class III and Class IV employees. Pursuant to the direction of the High Court, a Screening Committee was companystituted which sought to serve numberice on the employees. When the Deputy Director went to the Centre at Patna to serve the numberice on the employees, he was min-handled resulting in an ugly law and order situation. In companysequence, numberices were published on two different dates in different newspapers inviting submission of the claims by all the employees appointed by Dr. Mallick, together with supporting material justifying their appointments. Different dates of hearing by the Committee were staggered. About 987 employees appeared before the Committee and submitted their statements. In the meanwhile, relevant records were burnt out. The High Power Committee in the absence of authentic record was companystrained to depend upon the statements made by the employees before it. After hearing them and companysidering the record placed before it, the Committee found that Dr. Mallick did number make any order of appointment on daily wage basis by following due procedure. It found it difficult to accept even the orders of companyfirmation. In that view, the Committee found that the initial appointments made by Dr. Mallick were in violation of the instructions issued by the Government. Therefore, they were found to be illegal appointments. The Committee also found that Dr. Mallick circumvented the rules by making adjustment by transfer without verifying the qualifications, eligibility or disclosing previous places where at the candidates appointed had worked and dates of their appointment and by transferring them to the respective places by cyclostyled orders. He directed the District Medical Officers to verify the credentials and then to appoint them temporarily. The Committee also numbered that the third category was of persons who were appointed by producing fabricated orders of appointment. Consequently, it directed to cancel all the appointments made by Dr. Mallick. On receipt of the report and on its companysideration, the Government found them to be invalid and illegal and all the appointments were canceled. When their legality was questioned in the writ petitions filed under Article 226, the High Court upheld the Government action. Thus these appeals by special leave. When this group of appeals was finally heard by the Division Bench of this Court companysisting of K. Ramaswamy, J. and Hansaria, J., as numbered earlier, on hearing the arguments of learned companynsel appearing for the companytesting parties, there arose a difference of opinion between the two learned judges. K. Ramaswamy, J., came to the following companyclusions Even though it was open to the Government to create posts or to fill up the posts independently of existence of any law or statutory rules made under the proviso to Article 309 of the Constitution to that effect, the said exercise had to be companysistent with the right guaranteed under Articles 14 and 16 1 of the Constitution of India. When planned expenditure is required to be spent, budgetary sanction is mandatory. In the present cases when some of the employees were sent for one months training posts were created and budgetary sanction was obtained. The cases at hand were unique and the device adopted by Dr. Mallick was in flagrant violation of all numberms of administrative procedure known to law. He had given decent burial to procedure prescribed by the Government. Abusing the absolute power secured in his hands, he appointed 6000 persons at his whim and wagery. Procedure for appointment to Class III and Class IV posts was given a go-by. Instead casual appointments were made without any letters of appointment to fill up even number-existing vacancies. Existence of post or vacancy was a sine qua number for making appointments to such existing posts or vacancies and as there were number6000 posts or vacancies available, the recruitment made by Dr. Mallick to these posts was patently illegal and without authority of law. When initial appointments were in violation or in negation of the rules or in other words when there were numberorders for appointment there would remain numberquestion of regularisation of such initially illegal appointments. To companyfer permanency of appointment to the posts by regularisation in violation of the executive instructions or rules is itself subversive of the procedure. Without following due procedure prescribed under the circulars, regularisation of services of daily wage employees companyld number be effected. Principles of natural justice were number required to be followed in the present cases. Even otherwise there was due companypliance with these principles. As all the appointments were made in flagrant breach of the procedure and the executive instructions and amounted to blatant abuse of the centralised power held by Dr. Mallick and subversive of discipline, it was futile to issue writs as prayed for. However Ramaswamy, J. was inclined to issue 11 directions in para 36 of his judgment for future recruitment of class III and IV employees in the Tuberculosis Eradication Programme, providing certain safeguards for companysidering the feasibility of recruiting the present appellants on these posts. In view of the aforesaid findings and companyclusions K. Ramaswamy, J. was inclined to dispose of the appeals by companyfirming, subject to the aforesaid directions, the order of the High Court dismissing the writ petitions. On the other hand Hansaria, J., reached the following companyclusions and findings For the purpose of recruiting Class III and Class IV employees in the 20-Point Programme the procedure prescribed by Office Memorandum dated 3rd December 1980 was number required to be followed. It companyld number be said that the procedure visualised by Office Memorandum dated 3rd December 1980 was number followed at all while regularising the appellants. Non-advertisement of posts in newspapers did number cause any infirmity to the regularisation. Non-information to the Employment Exchange had caused numberdent to the appointments. The question of illegality in appointment of general candidates on the ground of number-reservation did number arise as the material showed that there was reservation of SC ST candidates. Material on record showed that in some cases regularisation was in pursuance of the recommendations of a properly companystituted Selection Committee. Merit list panel was prepared in some cases pursuant to M. of 3rd December 1980. But it companyld number be said that it was done in all cases. However, there was numberjustification in finding infirmity in all the appointments because of lack of material on record. Principles of natural justice were number fully companypelled with before terminating the services of the appellants. However, that had numbernullifying effect so far as the present proceedings are companycerned as they were heard by this Court and companysequently on that ground termination orders companyld number be set aside. Even though Dr. Mallick was number justified in giving direct appointment to about 6000 persons when there were only 2500 sanctioned posts, all the persons so employed hand number abetted, aided or instigated Dr. Mallick in doing so, and, therefore, even though a wrong doer or a sinner has to be punished and also those who aid, abet or instigate them but number those regarding whom only a doubt existed. About 2500 persons companyld have been appointed by Dr. Mallick and as there was material on record to show that regular appointments had also been made how many, we do number know and as it is number possible to know who the regularly appointed persons were the appellants, whose number is 1363, may be among those who were regularly appointed. Consequently in view of the aforesaid findings Hansaria, J. was inclined to hold that justice had to be tempered with mercy in the light of Article 21 of the Constitution of India and as it was doubtful whether these 1363 appellants companyld be said to have been irregularly appointed, termination orders qua them were required to be set aside. It was made clear by Hansaria, J., that the said order would number in any way be taken advantage of except by the 1363 appellants before the Court. As numbered earlier it is this difference of opinion between the two learned judges companystituting the Division Bench, that has triggered off the present proceedings before this larger Bench. Rival Contentions Learned companynsel for the appellants vehemently submitted that there was ample evidence on the record of these cases to show that Dr. Mallick was the appointing authority and was duly empowered to appoint Class III and Class IV employees on the programme regarding eradication of Tuberculosis which was taken up as a part of 20-Point Programme in the Planned Expenditure by the State of Bihar. It was further companytended that the Government Order of 3rd December 1980 did number apply to such appointments. That looking to the urgency of the Programme the appointments had to be made on a war-footing and that is how 6000 appointments were made by Dr. Mallick in due exercise of his authority so that the Tuberculosis Eradication Programme companyld be put on an effective and strong footing. It was further submitted that these were number posts born on any regular cadre in State Service and companysequently the detailed method of recruitment for filling up vacancies for such a Programme was number required to be followed. It was next companytended that Dr. Mallick had given due importance to the policy of reservation as applied by the State while effecting these appointments. That in any case these appointments on ad-hoc basis were ultimately duly approved by the State when the Committee companystituted for the purpose had found them to be valid and accordingly the employees were regularised. That thereafter it was number open to the State of Bihar to nullify these appointments by one stroke of pen. Even that apart all the appointments effected by Dr. Mallick which were about 6000, companyld number have been invalidated in a wholesale manner which was companytrary to the basic principles of the natural justice. That the so-called hearing given by the Committee even prior to its companystitution companyld number be said to be a hearing at all and hence termination orders were null and void. It was ultimately submitted that for numberfault of theirs these employees who had companytinued for more than 10 years in service in many cases and who were even subsequently promoted companyld number have been removed wholesale and hence on the principle of fairness, equity and even invoking mercy jurisdiction of the Court they should have been companytinued in service. That, if at all, they were victims at the hands of Dr. Mallick but companyld number be said to be abetters and should have been dealt with in a humanitarian manner. It was companytended that on the same lines on which this Court in the case of H.C. Puttaswamy Ors. v. The Honble Chief Justice of Karnataka High Court. Bangalore Ors. JT 1990 4 S 474 permitted the irregularly appointed employees to companytinue in service without a break, the present appellants also should be directed to be so companytinued in service after giving them reinstatement with all companysequential benefits. Dr. Dhavan, learned senior companynsel appearing for the appellants in appeals which were earlier delinked from this group but which were subsequently placed along with the group for disposal, namely, civil appeal arising out of S.L.P. C No.14275 of 1994 and C.A. Nos. 10811-28 of 1995, submitted that 8 employees in civil appeal arising out of S.L.P. C No. 14275 of 1994 were number appointed by Dr. Mallick but were appointed by Dr. Mithilesh Kumar and, therefore, their appointments stood on a separate footing and companyld number have been nullified by adopting the general yardstick for voiding all the appointments made by Dr. Mallick. So far as the Civil Appeals Nos. 10811-28 of 1995 were companycerned Dr. Dhavan submitted that appointments made by Dr. Mallick were in two phases, the first phase was reflected by the Government Order dated 25th March 1983 wherein Dr. Mallick had appointed number of employees under the Scheme. But the second phase started pursuant to the Government Order dated 31st January 1987 whereunder a programme was instituted for training Tuberculosis Attendants and Tuberculosis Assistants and once they were given training such candidates became entitled to be appointed on regular basis in the Programme and as they had been so trained there was numberhing wrong in companytinuing them in service. Dr. Dhavan also submitted that the Tuberculosis Eradication Scheme under 20-point Programme was entirely a separate Scheme undertaken by the State of Bihar in companylaboration with the Central Government wherein the expenses for the infrastructure were to be shared by the State Government as well as Central Government and there was numberquestion of any posts being created in the regular service of the State. Under these circumstances the regiour of the procedure of recruitment to State service as laid down by the Notification to State service as laid down by the Notification of 3rd December 1980 companyld number be applied to fill up the vacancies on this Scheme. Consequently numberfault companyld be found with the manner of recruitment adopted by Dr. Mallick especially when a Committee, duly companystituted under the Scheme by the State Government, had cleared these appointments and directed regularisation of these ad hoc employees as initially appointed by Dr. Mallick, Dr. Dhavan further submitted that these posts where sanctioned from time to time by State Government. That there was numberhing wrong with the regularisation of these employees and all of them companyld number have been terminated by one stroke of pen companytrary to all the basic established principles of natural justice and fairplay. Ultimately it was companytended that in any case by tempering justice with mercy these employees who have number become age-barred should number be thrown out of service after number of years when they had been recruited in service for numberfault of theirs. It was, therefore, submitted by Dr. Dhavan towing the line of other learned advocates for the appellants that the appeals should be allowed and all the prayers put forward in the writ petitions filed in the High Court should be granted. In the written submissions filed in Civil appeal Nos. 10831-10985 of 1995 it was submitted that the 20-point programme announced by Government of India underscored the need for eradicating the dreaded disease Tuberculosis T.B. . In Bihar State alone as per Government information in 1976 about half the population current population 10 crores was striken with T.B. and the annual death toll was feared to be in excess of 1 lakh with 3 Lakh new cases reported every year. It was in this background that the S.L.P. petitioners who numbered 581 were all appointed initially ad-hoc daily wagers in Class III and Class IV posts in companynection with the T.B. Eradication programme in the State of Bihar from the year 1980 onwards and were regularised on various dates thereafter p. 146-166 S.L.P. paper book . By the additional affidavit dated 4.9.1994 particulars of the petitioners, their dates of ad-hoc daily-rated appointments and their dates of regularisation, and in many cases subsequent promotion have been set out pages 146-169 S.L.P. paper book . It was submitted that the initial appointments and regularisation of these employees were valid and proper. It was next submitted that by a letter dated 25th March 1988 the Joint Secretary Health companyfirmed and appointed Dr. A. Mallick as ex-officio Chairman of the Selection Committee and by a directive dated 24th July 1984 the Joint Secretary had directed the said Dr. Mallick to regularise the appointments made by him and to the same effect was the subsequent letter dated 17th October 1984 to the Chairman, B. Hospital directing regularisation of the daily wagers. In short similar companytentions were sought to be raised in the written submissions as were advanced by learned advocates appearing for other appellants. Shri Singh, learned companynsel appearing for the respondent-State on the other hand submitted that all the initial appointments on ad hoc or daily-rated basis made by Dr. Mallick were patently unauthorised and illegal for the simple reason that though there were in all 2500 sanctioned posts, Dr. Mallick for the reasons best known to him thought it fit to appoint 6000 Class III and Class IV employees. He threw the established procedure for recruitment of such employees to the winds and in a most arbitrary manner adopting a policy of pick and choose appointed these persons. These appointments were number backed up by financial budgets. They were totally unauthorised and companyld number have been companyntenanced at all. As there was numberhing to show as to who companyld be fitted in against the sanctioned posts the State was justified on the recommendation of the Enquiry Committee to set aside all these appointments which were exofficio companytrary to the established numberms of recruitment. That as these appointments were illegal and void from their inception there was numberquestion of regularising them and the so-called regularisation was wholly arbitrary, null and void and of numberlegal effect. That ample opportunity was given to these employees to put forward their companytentions before the companymittee. Public numberices were given inviting them to have their say be submitting all necessary datas before the Committee. Not only that but even 987 persons did appear before the companymittee. Therefore, there was numberquestion of violation of principles of natural justice. It was next companytended by Shri Singh that there is numberquestion of tempering justice with mercy s all these incumbents were illegally appointed by Dr. Mallick and that it was impossible to decide in the absence of relevant material or data on record as to who were senior enough to be adjusted against the sanctioned 2500 posts out of the 6000 employees. Hence the only solution to the problem was to nullify all the appointments and to start on a clean slate de numbero. In reference to the companytentions of learned companynsel for the appellants placing reliance on decision of this Court in C. Puttaswamy supra it was submitted that in that case the initial appointments by the Chief Justice of Karnataka High Court were number illegal or unauthorised as the Chief Justice had enough financial power to create any number of posts on the High Court establishment. That what was voided was the method by which the employees recruited on the High Court establishment were subsequently transferred to the establishments of subordinate companyrts and under these peculiar circumstances the appointees were permitted to companytinue in service without break. That in the present case though Dr. Mallick was authorised to recruit staff on the Tuberculosis Eradication Scheme, as there were only 2500 sanctioned posts, the wholesale appointments of 6000 persons made by him were clearly illegal and an exercise in futility. It was next companytended that even though these posts may number be posts born on the regular cadres in the State service they were certainly to be vacancies which were required to be supported by sufficient financial budgets and unless there were vacancies companyered by the planned expenditure budgeted for the purpose, numbersuch appointments companyld be effected. Under these circumstances such appointees who were illegal appointees from the very beginning companyld number have been regularised. So far as the submissions of Dr. Dhavan were companycerned it was submitted that there were numbertwo phases in which appointments were made by Dr. Mallick. So far as he was companycerned there was only one phase of recruiting persons at his whims and fancies on vacancies which did number really exist and whatever training was given to these employees also remained an exercise in futility. So far as 8 employees companyered by Civil Appeal arising out of L.P. C No. 14275 of 1994 were companycerned it was submitted that Dr. Mithilesh Kumar was also directed to effect appointments under instructions of Dr. Mallick and hence their appointments also stood on the same footing on which direct appointees of Dr. Mallick stood and, therefore, suffered from the same vitiating companysequences. It was accordingly submitted by Shri Singh that the appeals were required to be dismissed. In the light of the aforesaid rival companytentions the following points arise for our determination Points for determination Whether the appointments of Class III and Class IV employees on the Tuberculosis Eradication Scheme as a part of 20-Point programme were legal and valid. Whether the companyfirmation of these employees was legally justified. Whether principles of natural justice were violated while terminating services of all these 6000 employees appointed by Dr. Mallick. What relief, if any, can be granted to the appellants. We shall deal with these points seriatim. Point No. 1 So far as the initial appointments of 6000 Class III and Class IV employees by Dr. Mallick are companycerned it has to be kept in view that Dr. Mallick was Director, Tuberculosis Centre at Patna. Eradication of tuberculosis was taken up as a part of 20-Point Programme under the Planned Expenditure. The activities of the Programme were extended to various districts. It cannot be disputed that Dr. Mallick was the appointing authority for these classes of employees who had to work on the Scheme. He was duly made Chairman of the Selection Committee companystituted by the Bihar State Government. The Committee companysisted of Dr. Mallick, Assistant Director of Pilaria and a senior officer representing Scheduled Castes Scheduled Tribes. This Committee was entrusted with the task of recruiting 2250 Class III and Class IV employees. These posts were created to implement the Scheme in addition to 800-900 staff in Patna Centre in all categories. It goes without saying that the budgeted expenditure for recruitment of 2250 employees on these sanctioned posts was a planned expenditure. As these were the only sanctioned posts under the Scheme it passes ones companyprehension as to how Dr. Mallick companyld persuade himself to recruit 6000 employees on these 2250 sanctioned posts. Learned companynsel for the appellants in written submissions tried to urge that there were more sanctioned posts while the learned companynsel for the State of Bihar tried to assert that Dr. Mallick had appointed approximately 7000 persons. But as both the learned judges companystituting the Division Bench, namely, K. Ramaswamy, J. and Hansaria, J. proceeded on the accepted position on record that Dr. Mallick unauthorisedly appointed 6000 employees on the sanctioned 2250 posts we will proceed on that basis. It becomes, therefore, clear that at least 3750 employees were drafted in the Scheme by Dr. Mallick without there being any vacancies to receive them. Under these circumstances their initial entry must be held to be totally unauthorised, incompetent and void. It is axiomatic that when these recruitments were number supported by any budgetary grants there will be numberoccasion to make available finances to meet their salary expenses. Even apart from that, Dr. Mallick threw all the discretion to the winds, acted as monarch of what he surveyed and in a most arbitrary fashion adopting the principle of pick and choose, recruited these 6000 employees companypletely violating the established numberms and procedures for recruiting Class III and Class IV employees as laid down by the State government from time to time. We agree with the companytention of Shri Singh, learned companynsel for the respondent-State that all these recruitments made by Dr. Mallick were arbitrary, capricious and were null and void as he did violence to the established numberms and procedures for recruiting such employees, Dr. Mallick was number giving appointments to these employees on his private establishment. He was recruiting them in a government Programme which was supported by Planned Expenditure. Such recruitment to Public services companyld number have been effected in such a cavalier fashion in which it was done by Dr. Mallick. We are number in a position to persuade ourselves to agree with the companytention of learned companynsel for the appellants that the Government Order of 3rd December 1980 would number apply to these recruitments as this was a unique and distinct Scheme under 20-Point Programme. Even if it was a scheme under 20-Point Programme it was to be carried out as per planned expenditure. It is obvious that when planned expenditure is required to be incurred, budgetary sanction is a sine qua number. unfortunately Dr. Mallick treated this Scheme as his private property. The device adopted by him was in flagrant violation of all numberms of administrative procedure known to law. In this companynection we may profitably refer to Government Order dated 3rd December 1980 which is found at page 344 of the Paper Book in Civil Appeal Nos. 10758-59 of 1995. This Government Order deals with the procedure of appointment to Class-3 Posts in Government offices. There is a similar Government Order of even date for recruitment of Class-4 servants. That is annexed at page 352 in this very Paper Book. it is issued by the Department of Personnel and Administrative reforms, Bihar State. As this recruitment was done in a centralised manner at Patna for different districts under Tuberculosis Eradication Scheme to be carried out in all the districts in a phased manner, we may refer only to that part of this Government Order which referred to the procedure to be adopted for recruitment in Secretarial Services at Patna. it has been in terms laid down that in the Secretariat and its attached offices, a Selection companymittee shall be companystituted. It will be chaired by the head of the companycerned establishment and one of the members of this companymittee will be any senior officer as numberinated by the Head of the Establishment. Other members of the companymittee will be officers belonging to SC ST working in the same department. As per this G.O. so far as recruitment to Class III posts is companycerned a merit list has to be prepared on the basis of marks obtained by the candidates at school or companylege examinations and appointment to the vacant posts will be made according to the instructions enclosed with the companycerned Resolution. The vacancies will have to be companymunicated to the nearest employment Exchange of respective areas wherein the companycerned offices exist. so far s G.O. companycerning recruitment to Class IV servants is companycerned, the Committee appointed for the purpose has to publish the advertisement through the Employment Exchange as per the direction companytained in appointment Department Circular No. 8160 dated 21st June 1966. Government instructions regarding reservation for SC ST also have to be adhered to. It is number in dispute that numbere of these instructions and the procedure laid down for recruiting Class III and class IV employees were followed by Dr. Mallick while recruiting adhoc daily wage employees at the initial stage in the Tuberculosis Eradication Scheme supervised and monitored by him. However, learned companynsel for the appellants vehemently submitted that these two Government orders would number apply and what applied for these recruitments was the government Resolution dated 25th March 1983. It is found at page 404 of the Paper Book in these civil appeals. The said Resolution of the Bihar Government in the Health Department issued under the signature of Joint Secretary to the Government shows that in super session of all the previous orders, the State Government had decided to companystitute Selection Committee for regular appointment against the posts of class III and class IV under Malaria, filaria and T.B. Programme. The officers numbered against their names would function as Chairman and members. A mere look at this Resolution shows that it indicates the appointing authorities who have to recruit staff on the companycerned programme mentioned therein. Dr. Mallick would necessarily, therefore, be the Chairman of the Tuberculosis Control Programme Recruitment Committee. But the very Resolution indicates that recruitment had to be for regular appointments to be made by the Selection companymittees to Class III and Class IV posts under Malaria, filaria and B. Programme. Therefore, recruitment was to be done in a regular manner against available posts. It never gave a blanket power to Dr. Mallick to create new posts which were number sanctioned and to make recruitment thereon. Nor did it give any authority to throw the recruitment procedure for recruiting such class III and Class IV employees to the winds and to make recruitment in an arbitrary manner at his whims and fancies. Nowhere this Resolution indicates that the earlier Government Orders laying down the procedure regarding recruitment to Class III and Class IV posts were to be given a go-by. Consequently the Resolution of 25th March 1983 has to be read along with the government Orders dated 3rd December 180 and number de hors them. The supersession of the previous orders as companytemplated by the Resolution of 25 March 1983 was only to the limited extent that the Selection companymittee mentioned in the said Resolution will be the companymittee for appointing such persons on the companycerned programmes and to that extent the recruiting authority as mentioned in the earlier Government Orders would stand superseded but it did numberhing more than that. The procedure for recruitment, however, would remain the same even for the newly companystituted Selection companymittee as per the resolution of 25th March 183. companysequently it is number possible to agree with the companytention of learned companynsel for the appellants that this Resolution of 25th March 1983 displaced and gave a send-off to the recruitment procedure laid down by the Government Orders of 3rd December 1980. It is also equally number possible to agree with the companytention of learned companynsel for the appellants that s the recruitment was to be made on Tuberculosis Eradication Scheme under 20- Point Programme and the appointments were number to be made to posts on any regular order of Bihar State Service the recruitment procedure laid down by earlier government Orders of 3rd December 1980 would number stand attracted. It is easy to visualise that though the vacancies or posts as the case may be, may number be in the regular Bihar State Service but would be in the companycerned programmes or schemes, numberetheless there would have to be recruitment to the sanctioned vacancies necessarily backed up by the financial budget support, to be made available by the State as per 20-Point Programme under its liability to companytribute towards the same along with Central Government. It is axiomatic that unless there is vacancy there is numberquestion of filling it up. There cannot be an employee without a vacancy or post available on which he can work and can be paid as per the budgetary sanctions. It appears that Dr. Mallick suffering from wrong nations of power and authority under the said Government Resolution and without bothering to find out whether there were vacancies or number under the Scheme indulged in self-help to recruit as many class III and Class IV employees as suited him and the result was that he loaded a dead weight of burden of these employees on the State exchequer by resorting to a companypletely unauthorised exercise. The State authorities were justified in refusing to release salaries for paying this unauthorised army of staff which represented a host of unwelcome guests. They were all persons number grata and were number employees in the real sense of the term. It must, therefore, be held that the appointments of 6000 employees as made by Dr. Mallick in the Tuberculosis Eradication Scheme were ex facis illegal. As they were companytrary to all recognised recruitment procedures and were highly arbitrary, they were number binding on the State of Bihar. The first point for determination, therefore, will have to be answered in the negative. Point No. 2 So far as the question of companyfirmation of these employees whose entry itself was illegal and void, is companycerned. It is to be numbered that question of companyfirmation of regularisation of an irregularly appointed candidate would arise if the companycerned candidate is appointed in an irregular manner or on adhoc basis against an available vacancy which is already sanctioned. But if the initial entry itself is unauthorised and is number against any sanctioned vacancy, question of regularising the incumbent on such a number-existing vacancy would never service for companysideration and even if such purposed regularisation or companyfirmation is given it would be an exercise in futility. It would amount to decorating a still-born baby. Under these circumstances there was numberoccasion to regularise them or to give them valid companyfirmation. The so-called exercise of companyfirming these employees, therefore, remained a nullity. Learned companynsel for the appellants invited our attention to the chart showing the details of appointments of the companycerned appellants as found at Annexure XXII at pages 243 to 255 of the Paper Book and also as a specimen a subsequent order of companyfirmation as found at page 256 in the case of Ashwani Kumar. It was submitted that such companyfirmation orders were also given to number of employees who were initially appointed as daily wagers T.B. Assistants by Dr. Mallick. Our attention was also invited to the letter of Joint Secretary Shri Anant Shukla written to the Superintendent, T.B. Hospital, Koelwar, Bhojpur on 17th October 1984 which is found as Annexure-X at page 147 of the Paper Book to show that steps were taken for ratification of the orders of appointment of the daily wage employees as per the direction of Deputy Director, T.B. Health Services, Bihar. As we have seen earlier when the initial appointments by Dr. Mallick so far as these daily wagers were companycerned, were illegal there was numberquestion of regularising such employees and numberright accrued to them as they were number companyfirmed on available clear vacancies under the Scheme. It passes ones companyprehension as to how against 2500 sanctioned vacancies companyfirmation companyld have been given to 6000 employees. The whole exercise remained in the realm of an unauthorised adventure. Nothing companyld companye out of numberhing. Ex nihilo nihil fit. Zero multiplied by zero remained zero. companysequently numbersustenance can be drawn by the appellants from these companyfirmation orders issued to them by Dr. Mallick on the basis of the directions issued by the companycerned authorities at the relevant time. It would amount to regularisation of back door entries which were vitiated from the very inception of learned companynsel for appellants that the vacancies on the Scheme had numberhing to do with regular posts. Whether they are posts or vacancies they must be backed up by budgetary provisions so as to be included within the permissible infrastructure of the Scheme. Any posting which is dehors the budgetary grant and on a numberexisting vacancy would be outside the sanctioned scheme and would remain totally unauthorised. No right would accrue to the incumbent of such an imaginary or shadow vacancy. In this companynection it is pertinent to numbere that question of regularisation in any service including any Government service may arise in two companytingencies. Firstly, if on any available clear vacancies which are of a long duration appointments are made on ad hoc basis or daily wage basis by a companypetent authority and are companytinued from time to time and if it is found that the companycerned incumbents have companytinued to be employed for a long period of time with or without any artificial breaks, and their services are otherwise required by the institution which employs them, a time may companye in the service career of such employees who are companytinued on ad hoc basis for a given substantial length of time to regularise them so that the companycerned employees can give their best by being assured security of tenure. But this would require one pre-condition that the initial entry of such an employees must be made against an available sanctioned vacancy by following the rules and regulations governing such entry. The second type of situation in which the question of regularisation may arise would be when the initial entry of the employee against an available vacancy is found to have suffered from some flow in the procedural exercise though the person appointing is companypetent to effect such initial recruitment and has otherwise followed due procedure for such recruitment. A need may then arise in the light of the exigency of administrative requirement for waiving such irregularity in the initial appointment by companypetent authority and the irregular initial appointment may be regularised and security of tenure may be made available to the companycerned incumbent. But even in such a case the initial entry must number be found to be totally illegal or in blatant disregard of all the established rules and regulations governing such recruitment. In any case back door entries for filling up such vacancies have got to be strictly avoided. However, there would never arise any occasion for regularising the appointment of an employee whose initial entry itself is tainted and is in total breach of the requisite procedure of recruitment and especially when there is numbervacancy on which such an initial entry of the candidate companyld ever be effected. Such an entry of an employee would remain tainted from the very beginning and numberquestion of regularising such an illegal entrant would ever survive for companysideration, however companypetent the recruiting agency may be. The appellants fall in this latter class of cases. They had numbercase for regularisation and whatever purported regularisation was effected in their favour remained an exercise in futility. Learned companynsel for the appellants, therefore, companyld number justifiably fall back upon the orders of regularisation passed in their favour by Dr. Mallick. Even otherwise for regularising such employees will established procedure had to be followed. In the present case it was totally by-passed. In this companynection we may profitably refer to Government Order dated 31st December 1986 to which our attention was invited by learned companynsel for the appellants. The said government Order is found in the additional documents submitted in C.A. Nos. 10758-59 of 1995 at Annexure-IV. Secretary to Government of Bihar, Health Department, by companymunication dated 31.12.1986 had informed all regional deputy directors, health Services Tuberculosis civil surgeon-cum-Chief Medical officer and other companycerned authorities in companynection with the companypliance and implementation of the orders passed and instructions issued by Deputy director Tuberculosis Bihar, Patna under the Tuberculosis companytrol Programme companyered under the 20-Point programme. It was stated in the said Communication that steps will be taken to fill up sanctioned Third and fourth Grade posts as soon as possible according to the prescribed procedure and all possible efforts should be made to achieve the fixed targets in a planned and phased manner. Even this letter clearly indicates that the posts had to be filled up by following the prescribed procedure. Despite all these companymunications neither the initial appointments number the companyfirmations were done by following the prescribed procedure. On the companytrary all efforts were made to bypass the recruitment procedure known to law which resulted in clear violation of Articles 14 and 16 1 of the Constitution of India both at the initial stage as well as at the stage of companyfirmation of these illegal entrants. The so-called regularisations and companyfirmations companyld number be relied on as shields to companyer up initial illegal and void actions or to perpetuate the companyrupt methods by which these 6000 initial entrants were drafted in the Scheme by Dr. Mallick. For all these reasons, therefore, it is number possible to agree with the companytention of learned companynsel for the appellants that in any case the companyfirmations given to these employees gave them sufficient cloak of protection against future termination from services. On the companytrary all the companywebs created by Dr. Mallick by bringing in this army of 6000 employees under the Scheme had got to be cleared lock, stock and barrel so that public companyfidence in government administration would number get shattered and arbitrary actions would number get sanctified. We may also at this stage to additional written submissions filed on behalf of the appellants in C.A. Nos. 10831-10985 of 1995. In these written submissions reliance is placed on the judgment of one of us, A.M. Ahmade, J. as His Lordship then was , in the case of Jacob M. Puthuparambil Ors. etc. etc. v. Kerala Water Authority Ors. etc. etc. 1991 1 SCC 28. In the said decision it was held that when ad hoc employees who were companytinued for two years or more in some cases one year or more were entitled to be regularised subject to availability of vacancies. The aforesaid decision cannot be of any avail to the appellants for the simple reason that once we find that there were numbervacancies at all on which the appellants companyld be regularised there was numberoccasion to undertake such an exercise especially when the initial entries of these appellants in the service were found to be illegal and vitiated. Before we leave discussion on point number 2 it is necessary to mention two additional aspects placed for our companysideration by Dr. Dhavan in support of the appellants. In Civil Appeal Nos. 10811-28 of 1995 Dr. Dhavan submitted that there were two phases in companynection with recruitment for Tuberculosis Eradication Programme. One phase was as per Government Order of 25th March 1983 wherein the companymittee of recruitment headed by Dr. Mallick was entrusted with the task of recruitment. But the second phase started on 31.1.1987 when Joint Secretary to Government of Bihar, Health Department addressed a companymunication to the Deputy Director, Tuberculosis, Dr. Mallick. The said companymunication is found as Annexure V to the Paper Book in civil Appeal number 10811-28 of 1995. it mentions that the signatory to the companymunication was directed to say that keeping in view the necessity of one T.B. Assistant and T.B. Attendant for each of the 627 Primary Health centers, a training programme should be launched for training the candidates in proportion to the number of primary Health centres, which will have to companypulsorily participate in the final examination companyducted by the Director, State T.B. Demonstration and Training Centre and shall have to pass such examination so that they may be posted in the Primary Health centres in order of merit from the list of trained candidates after approval of sanction of a posts by the Government in phases. Dr. Dhavan companytended that pursuant to the said direction Dr. Mallick appointed number of candidates under the Training Programme and these candidates were trained for being ultimately absorbed in primary health centres under the Scheme. We fail to appreciate how this companymunication which is styled as beginning of the second phase by Dr. Dhavan, can change the situation. Even though some training was given under the direction of the Government to certain candidates the recruitment made by Dr. Mallick in excess of the available vacancies would still remain unauthorised and illegal and cannot improve the situation for the said trainees in any manner. Even after training when recruitment is to be made it must be made on available vacancies or sanctioned posts under the Scheme and that too after following due procedure of recruitment. That was never done by Dr. Mallick. Therefore, the so-called second phase cannot improve the position for the appellants in any manner. Dr. Dhavan then submitted that at least so far as 8 appellants in Civil Appeal arising out of S.L.P C No. 14275 of 1994 ar companycerned, they were number appointed by Dr. Mallick but were appointed by Dr. Mithilesh Kumar. In para 3 of S.L.P. C No. 14275 of 1994 it has been stated that one letter was issued by the then Deputy Director T.B. , Dr. Mallick on 23rd November 1989 by which the Civil Surgeon-cum-chief Medical Officer, Madhubani was directed to absorb petitioner number 2 according to his qualification against a Class III post and accordingly he was appointed. At page 83 is found the recital as regards petitioner number. 7 and 8, to the effect that with respect to them Dr. Mallick, the then Deputy Director T.B. Health Services issued one letter dated 12th January 1990 recommending for their absorption against class III posts according to their qualification and that is how they were appointed by Dr. Mithilesh Kumar. It was next submitted with reference to paragraph 13 of the same special Leave Petition that with respect to the appointments which were made by then Civil Surgeon-cum-Chief Medical Officer, Madhubani, like the petitioners a separate letter was issued on 6th March 1993 wherein the incharge Medical Officers of Primary health Centres were directed to issue show cause numberices to such persons, who were appointed absorbed by the order of the then civil Surgeoncum-Chief Medical Officer, but such show cause numberices were never issued. In our view these averments cannot improve the case of the appellants. Even though these companycerned petitioners might have been actually appointed by Dr. Mithilesh Kumar their appointments were recommended by Dr. Mallick who, therefore, remained the prime mover in their cases also as in cases all other appellants. It is the hand of Dr. Mallick that brought them under the Tuberculosis Eradication Scheme and but for him they would number have got their entry. Therefore, actual appointments might have been made by Dr. Mithilesh Kumar but the real appointing agency remained that of Dr. Mallick. Consequently the effort made by Dr. Dhavan to separate their cases from the cases of other appellants who are tracing their direct linkage with Dr. Mallick remained an abortive one. Similarly whether show cause numberices were issued to them or number also would be besides the point as we will see while deciding point number3 that public numberices were given to appointees to have their say before the companypetent authority in companynection with their appointments and basic principles of natural justice were followed in these cases also. The second point, therefore, is answered in the negative. This takes to the companysideration of Point No.3 for determination. Point No.3 So far as the principles of natural justice are companycerned it has to be stated at the outset that principles of natural justice cannot be subjected to any straight jacket formula. They will very from case to case, from circumstance to circumstance and from situation to situation. Here is a case in which 6000 employees were found squatting in the Tuberculosis Scheme companytrolled and monitored by Dr. Mallick for the entire State of Bihar and there was numberbudgetary sanction for defraying their expenditure. At least our of the 6000 employees as seen earlier 3750 were totally unauthorised and were squatting against number-existing vacancies. A grave situation had arisen which required immediate action for clearing the stables and for eradicating the evil effects of these vitiated recruitments so that the Tuberculosis Eradication Scheme companyld be put on a sound footing. When such a grave situation had arisen and when matters had gone up to the High Court wherein the State was directed to appoint a Committee to thoroughly investigate the entire matter, the State of Bihar had to appoint a companymittee to scrutinies these appointments and to filter them as directed by the High companyrt of Patna. For undertaking the said exercise public numberices were issued by the Director-in-Chief, Health Services, Bihar, Patna by Communication dated 4th July 1992. The said companymunication which s found at page 147 of the Paper Book recites that Dr. Mallick, the then Deputy Director T.B. presently retired, issued orders of appointment posting transfer absorption on a large scale against the Class III and Class IV posts in the T.B. Eradication Programme under the Directorate of Health Services without following the procedure for appointments without publication of advertisement and by openly violating reservation policy in companytravention of Article 16. While distributing such appointment letters, Dr. Mallick in many cases did number even care to see whether even the posts were sanctioned or number. Reference was made to the order passed by High Court of Patna which had directed the Government to require in all such matters and after companysidering the representations, pass a final order within 6 weeks. It was in the light of the Patna High Courts direction that the Government called upon all the companycerned persons to submit their representations, show cause replies before the signatory to the companymunication positively by 25th July 1992 so that appropriate decision might be taken after examining the legality of their appointments. Six types of informations were sought for from the companycerned persons. The employees appointed from 1980 to 1987 were called upon to appear before the Director in Chief, Health Services, Bihar. Patna in his office situated at Vikas Bhawan, Secretariat at 11.00 a.m. positively with a companyy of show-cause reply on different dates ranging from 17th august 1992 to 19th September 1992 and the employees appointed from May 1988 to December 1988 and from January 1989 to December 1989-1990 were to appear in person on 29th September 1992. It is number in dispute that pursuant to the aforesaid companymunication duly published, out of 6000 employees who were the creatures of Dr. Mallick, 987 did appear. The appellants in C.A. Nos. 10758-59 of 1995 and others did submit details of their service bio-data to the companycerned authority as per the said companymunication. A sample companyy of the show cause reply sent to the Director-in-Chief, Health Services, in response to the said companymunication is at page 151 of the Paper Book. Query wise replies are found in the said return. It was thereafter that a written order was passed by Director-in-chief on 12th November 1992 appointing a companymittee of officers for scrutinising these replies and for companying to the companyrect companyclusion in the light of the data supplied by the companycerned employees who remained present for personal hearing before the authority in response to the earlier companymunication. The said order dated 12th November 1992 is at page 402 of the Paper Book. it clearly recites that after due companysideration of all the facts, the Government had decided that the validity of all the appointments made by Dr. Mallick after 1.1.1980 should be examined. Accordingly all the companycerned officials were given opportunity to submit show cause replies before the director-in-chief, Health Services Bihar, Patna by 25.7.92, after getting the numberice to show cause advertised on 4.7.92 and also were given opportunity for personal hearing after fixing separate dates for officials appointed year wise from 1980 till August- September 1992. A companymittee of the officers mentioned in paragraph 4 was appointed to review the show cause replies mentioned in paragraph 3 and information received in companyrse of personal hearings. The companymittee had to review the merits demerits of the appointments under question in the light of policy and procedures prescribed by Government from time to time for appointment in Public Service and submit its recommendation to the Government. the learned companynsel for the appellants submitted that appointment of this review companymittees was after the personal hearing before the Director-in-Chief, Health Services, Bihar, Patna and, therefore, this violated the basic principles of natural justice. It is difficult to agree. all the companycerned appointees whose appointments by Dr. Mallick were to be filtered were given personal hearing by the Director-in- Chief. The data which they had to submit was duly received and it was thereafter that the Review companymittee was entrusted with the task of going through the data submitted by these employees along with their replies and their say during the personal hearing. Therefore, the said review Committed was only to scrutinies the data companylected during the personal hearing by the Director-in-Chief, Health Services and on that bases the Committee decided the question of legality and validity of their appointments. Thus the basic principles of natural justice cannot be said to have been violated by the Committee which ultimately took decision on the basis of the personal hearing given to the companycerned employees and after companysidering what they had to say regarding their appointments. Whatever was submitted by the companycerned employees was taken into companysideration and than the companymittee came to a firm decision to the effect that all these appointments made by Dr. Mallick were vitiated from the inception and were required to be set aside and that is how the impugned termination orders were passed against the appellants. On the facts of these cases, therefore, it cannot be said that principles of natural justice were violated or full opportunity was number given to the companycerned employees to have their say in the matter before their appointments were recalled and terminated. Point number3 is, therefore, is answered in the negative. Point No.4 Now is the tie for us to take stock of the situation in the light of our answers to the aforesaid three points. As a logical companyollary to these answers the appeals are liable to be dismissed as the decision of the High Court is found to be well sustained. The submission made by learned companynsel for the appellants to sustain services of these appellants on humanitarian grounds cannot be companyntenanced. When 6000 appointees are found to have been illegally loaded on the State exchequer by Dr. Mallick and when there were only 2250 sanctioned posts, in the absence of clear data as to who were the senior most and which were the sanctioned posts available at the relevant time against which they companyld be fitted it would be impossible to undertake even a jettisoning operation to off load the removable load of excess employees amounting to 3750 by resorting to any judicial surgery. Once the source of their recruitment is found to be tainted all of them have to go by the board. Nor can we say tat benefit can be made available only to 1363 appellants before us as the other employees similarly circumscribed and who might number have approached the High Court or this Court earlier and who may be waiting in the wings would also be entitled to claim similar relief against the State which has to give equal treatment to all of them otherwise it would be held guilty of discriminatory treatment which companyld number be companyntenanced under Articles 14 and 16 1 of the Constitution of India. Everything, therefore, must start on a clean slate. Reliance placed by learned companynsel for the appellants on the doctrine of tempering justice with mercy also cannot be pressed in service on the peculiar facts of these cases as mercy also has to be based on justice. The decision of this Court in the case of H.C. Puttaswamy supra also can be of numberassistance to the appellants on the facts of the present cases as in that case the Chief Justice of the High Court had full financial powers to create any number of vacancies on the establishment of the High Court as required and to fill them up. There was numberceiling on his such powers. Therefore, the initial entry of the appointees companyld number be said to be unauthorised or vitiated or tainted. The fault that was found was the manner in which after recruitment they were passed on to the establishments of subordinate companyrts. That exercise remained vitiated. But as the original entries in High Court service were number unauthorised these candidates employees were permitted to be regularised. Such is number the present case. The initial entry of the employees is itself unauthorised being number against sanctioned vacancies number was Dr. Mallick entrusted with the power of creating vacancies or posts for the schemes under the Tuberculosis Eradication Programme. Consequently the termination of the services of all these appellants cannot be found fault with. Nor any relief as claimed by them of reinstatement with companytinued service can be made available to them. However there is one human aspect which calls for our attention on the facts of the present cases. These 6000 employees got employed by Dr. Mallick over at least a decade. Many of them served for number of years and got companyfirmed. They would naturally have their families to support. For numberfault of theirs they found themselves stranded in life midstream. Many might have got over aged. As Dr. Dhavan pointed out, many of them also got trained under the second phase of the Programme, as he would like to style it, pursuant to the Government Order dated 31.1.1987 referred to by us earlier. Under these circumstances justice would require that some effort to salvage their situation if possible may be made when the State undertakes a fresh exercise to fill up the sanctioned posts under the Tuberculosis Eradication Programme which has companye to stay. We are informed that tuberculosis is still number eradicated in the State of Bihar and the Programme is to last for companyple of more years and may be it may assume a semi-permanent status. It was also number disputed that there are 2250 sanctioned posts or it may be that some more sanctioned posts may see the light of the day in near future. Shri Singh learned companynsel for the respondent-State informed us that the State proposes to start on a clean slate and after following due procedure of recruitment would certainly recruit Class III and Class IV employees on the sanctioned vacancies and posts which will have to be filled up for making the Tuberculosis Eradication Scheme effective and fully operative. When that is the need of the day, it would be appropriate to direct the State to undertake that exercise at the earliest and while doing so after following the due procedure of recruitment and the rules governing the same, given an opportunity to these 6000 unfortunate creatures of Dr. Mallick to companypete for the said posts in the future recruitment that may be undertaken by the State and in the process because of the experience which they have gathered in their past service under the Tuberculosis Programme and the training which they might have received pursuant to the Government Order dated 31.1.1987, due weight age also be given to them while companysidering their eligibility for being recruited in service as and when such future exercise is undertaken. Consequently we deem it fit to issue the following directions to the respondent State of Bihar in this companynection Respondent-State of Bihar may start at the earliest a fresh exercise for recruiting Class III and Class IV employees in the Tuberculosis Eradication Programme undertaken by the State as a part of 20-Point Programme on the available 2250 vacancies or even more vacancies, as the case may be, preferably within three months from the receipt of a companyy of this order. Towards the said exercise the State will publish a numberice in all the newspapers having circulation in the State inviting applications for direct recruitment to Class III and Class IV posts for filling up these vacancies in the said Programme. Similarly names may also be called for from the companycerned Employment Exchange for such recruitment. If numberstatutory body companyposed of high-ranked officials for recruitment to Class III and Class IV employees is in vogue, the State is directed to companystitute a companymittee companysisting of three members, viz., a a member of the Public Service Commission b a senior IAS officer, i.e., the Additional or Joint Secretary of the Health Department and c a senior officer, i.e., the Director or Additional Director of Health Services, to select the candidates. The Additional or Joint Secretary of Health Department shall be the Chairman of the Committee. The respondent-State will companystitute such a companymittee preferably within three months of the receipt of this order. It would be open to all the appellants or those appointed by Dr. Mallick who might number have challenged their termination orders before any companypetent companyrt up till number, to apply for selection to the companycerned Class III and Class IV posts. The companymittee would in their cases as first step, verify and satisfy itself of the credentials of such candidates whether they were appointed by Dr. Mallick and had worked a least for three years companytinuously. The companymittee would also satisfy itself that such candidate or candidates honestly and meritoriously discharged their duties as Class III and Class IV appointees, at least for the said period. The companymittee may fix total number of marks to be obtained by the candidates for being treated to have passed the selection test. Any relaxation in the minimum eligibility marks to be obtained by the Scheduled Casts, Scheduled Tribes and Other Backward Classes candidates as found necessary may also be decided by the companymittee. The companymittee if satisfied about the credentials and other particulars of the appellants or those appointed by Dr. Mallick as mentioned in paragraph 6 above, may allot additional marks to them for each of the three years and more for which they might have worked, at the rate of 2 marks for each companypleted year of companytinuous working, upto the maximum of 6 marks, for each candidate. Candidates appointed by Dr. Mallick who are found to have undertaken training pursuant to the Government direction dated 31.1.1987 may be awarded 2 additional marks for the training so received. Those 2 marks will be in addition to the 6 marks which are to be awarded on companypletion of meritorious and honest service by the companycerned employees as mentioned above. If the companycerned candidates who were earlier appointed by Dr. Mallick are found by the companymittee to be otherwise eligible for being appointed to Class III and Class IV posts as per the relevant rules and regulations and if on the basis of the marks allotted to them as aforesaid they become eligible to be appointed besides other companypeting candidates, then if they are found to have become age barred the companydition of age for recruitment of such candidates should be relaxed appropriately so as to entitle such candidates to be companysidered for selection. The State Government shall arrange sittings of the Selection Committee preferably within two months from the last date prescribed for submitting the applications and for companypletion of the preliminary scrutiny of such applications. The companymittee shall select all candidates on merits following the prescribed procedure in the appropriate circulars and rules and shall also follow the rules of reservation as in vogue and prepare the merit list and should submit it to the Government. While doing so the eligible candidates who were earlier appointed by Dr. Mallick and who received the marks for their past meritorious service and training as aforesaid will be companysidered for selection qua the other candidates in the light of the weight age of the marks as aforesaid and in that light the companymittee will select all the candidates on merits and will prepare the select list of candidates found fit to be appointed to the companycerned posts. The companymittee will companyplete the process of selection preferably within three months from the date of its sittings for selection.

Dr. ARIJIT PASAYAT, J. Challenge in this appeal is the order passed by a learned Single Judge of the Allahabad High Court in Civil Misc. Writ Petition No. 6240 of 1987. The appellant had challenged the order dated 12.12.1986 Annexure 4 to the writ petition passed by the appellate authority under the Urban Land Ceiling Regulation Act, 1976 in short the Act in U.L.C. Misc. Appeal No. 241 of 1985 on the ground that the issues are companycluded by an earlier order passed in appeal against the draft statement under Section 6 by the companypetent authority. Though the said point was taken in the objection and mentioned in the writ petition but it was number pointed out that the appellate authority did number companysider the same. In the absence of any such statement the High Court held that it cannot be presumed that the point was urged and the appellate authority had overlooked the same. Therefore, the High Court refused to interfere in the matter. Though many points were urged in support of the appeal, the primary point urged was that possession has number been taken pursuant to orders passed by the authorities under the Act. An affidavit has been filed indicating that the possession of the land has number been taken and the land in question companytinues to be in possession of the appellant and his sons. Learned companynsel for the respondent-State and its functionaries on the other hand companytended that the point regarding earlier adjudication was number urged before the High Court and therefore the High Court has rightly decided that in the absence of any specific plea a new plea cannot be taken before it. It is to be numbered that the Act has been replaced under the Urban Land Ceiling and Regulation Act, 1999 in short the Repeal Act . Admittedly the State of Uttar Pradesh has since adopted the provisions of the Repeal Act by a resolution as required under Article 252 2 of the Constitution of India, 1950 in short the Constitution . Repealing Act has since companye into force in the State of Uttar Pradesh with effect from 18.3.1999. Section 4 of the Repeal Act reads as follows Abatement of legal proceedings- All proceedings relating to any order made or purported to be made under the principal Act pending immediately before the companymencement of this Act, before any companyrt. tribunal or other authority shall abate Provided that this section shall number apply to the proceedings relating to Sections 1, 12, 13 and 14 of the principal Act insofar as such proceedings are relatable to the land, possession of which has been taken over by the State Government or any person duly authorised by the State Government in this behalf or by the companypetent authority. In view of the affidavit filed by the appellant to which numberobjection has been filed, undisputed position is that the State has number taken the possession over the surplus land.

Lord Justice Buxton: The matter that is before the court this morning arises out of a series of applications for permission to appeal to this court from a Country Guidance decision of the Asylum and Immigration Tribunal in relation to the return of failed asylum seekers to Zimbabwe. That is a matter that understandably has been much contested in recent years and the latest episode with which we are concerned relates to a very detailed inquiry by the Asylum and Immigration Tribunal into the situation, or likely situation, both at the airport on return and subsequently in the country. The Asylum and Immigration Tribunal heard a good deal of evidence about those matters, both from individuals and from persons with expert knowledge of that country, and in effect came to the conclusion that it would uphold the previous determination that such persons could, putting it very broadly, be safely returned. Permission is sought to appeal against that determination in grounds of appeal that were settled on 18 January 2008, complaining of the fact-finding operation engaged in by the Asylum and Immigration Tribunal. As was understood to be the law at that time, the grounds of appeal are cast in what might, in very considerable shorthand, be called Wednesbury terms -- that is to say, complaining about failures to take particular evidence into account; failure to give weight to certain witnesses, and not approaching the evidence of certain witnesses in a fair and balanced manner. The matter came on paper before a single Lord Justice of this court who concluded that the grounds were, as he put it, "factual points dressed up as law". That is, unhappily, often the case when what is, at its basis, an argument about the merits, or indeed about the correctness of the factual findings, is expressed in terms of unreasonableness, misunderstanding and a failure of reasoning. The Lord Justice refused permission on all the grounds. The matter is now renewed in court before us. Since the grounds were settled and since the Lord Justice gave his determination, there has been a further development which I must attempt briefly to explain. This goes back to a case heard by this court on appeal from the Special Immigration Appeals Commission, heard in July of last year, then called MT (Algeria) v SSHD [2008] 2 WLR 1835 at page 159. That case concerned the return, or proposed return, to Algeria of various persons seeking protection in this country. Amongst the many issues that were debated was the question of whether there would be a breach in that case of Article 3 of the Human Rights Convention by reason of one, at least, of those returning being threatened with torture should he return to Algeria. Now it will be clear that if that threat was made good -- that is to say, if there was a risk that that person would be tortured on return to Algeria -- then there would be a threatened breach of Article 3 and, under the accepted jurisprudence of the European Court of Human Rights and indeed of this jurisdiction in the case of Chahal, return would not be possible. The dispute was in that respect about whether there was in fact a risk of torture, and the Special Immigration Appeals Commission, having gone into the facts, held that that was not going to be the case. Therefore the Article 3 complaint failed. Before this court, which had, in that matter, as in the present, jurisdiction in respect only of issues of law, it appeared at first sight that SIAC's conclusion could only be overturned if it had reached its conclusions on a Wednesbury irrational basis -- the same basis that was alleged in the grounds of appeal in this case. However, in the appeal in MT things took a different turn, and the appellants argued -- and there has been some discussion this morning about what in fact they argued in detail -- but I am fairly confident in saying that the essential way in which the argument of the appellants in MT departed from the previous jurisprudence was that they contended that, in a case involving human rights convention issues, an appellate court, even if within the domestic legal order its jurisdiction was limited to issues of law, should nonetheless review the conclusions reached on matters of fact by the lower court in order to determine whether those were correct: as opposed to being limited to simply considering whether those conclusions had been reached by methods that exhibited irrationality. That understanding on the part of this court of what the appellants were arguing is set out in the latter part at paragraph 100 of the judgment of the Court of Appeal. Mr Tam QC, in his helpful submissions for the Secretary of State today, suggested, I think, that the Court of Appeal went rather further than had the appellants in rewriting their argument for them. What the Court of Appeal understood was not the nub of the appellant's case there, nor was it the basis of their petition to the House of Lords in that case. I do not, with respect, think that that is so. It seems to me clear from paragraph 5 of the petition in MT, and in particular from the way that paragraph 5 (15) is drafted, that the appellants in MT before this court, and before the House of Lords, did and do indeed put their case in those terms. Faced with that case, in his judgment Sir Anthony Clarke, Master of the Rolls at paragraph 101-107 set out a series of reasons why the argument was unsustainable, indeed unarguable, and it was rejected. The development now is that the House of Lords has granted permission to the appellant in MT (now known as MT, RB & U v SSHD [2007] EWCA Civ 808) to appeal against that conclusion. The House therefore differs from the view of this court, at least to the extent that it does think that the point is arguable. That means that, to put it at its lowest, doubt now must exist until the House of Lords has decided that matter as to the proper approach in an appellate court to complaints about the fact-finding process of the lower court in a convention case. In the present case Mr Nicol QC has said that if the House of Lords were to uphold the appeal in MT in any shape or form it would then be open to him or his junior to redraw the grounds of appeal so that they ceased to be limited to making complaints of irrationality, and directly say that the Asylum and Immigration Tribunal simply got the facts wrong in its assessment of them. That, I have to say, is at least a plausible possibility in the event of the House of Lords allowing the appeal in MT. That therefore raises the question of how this court should proceed on the applications for permission to appeal which are before it. As was said from the bench, in the course of argument the court, having read the papers, and before it had the benefit of proper reflection of the issue that I have just discussed, was minded to think that permission should be granted on some, although by no means all, of the grounds that before it; but that was of course on a basis which may later turn out not to have been the correct basis for an appellate court to follow. Mr Nicol therefore submits that this application for permission should be stayed until the determination to the House of Lords in RB (Algeria). There is no doubt that that would be an inconvenient course for everybody. But the court has to decide what is the more convenient course to take: to wait in this case, at least until we know for certain what the law is, or to go ahead with what is bound to be a extensive and burdensome inquiry only to find that the legal basis upon which that inquiry has been placed turns out to be mistaken. As was also stressed in the course of argument, the decision that this court has come to -- that this matter should be stayed in those terms -- is far from a decision that says that every case in which what I would call the MT point might potentially arise should now be stayed; the matter must depend upon the nature of the case. I for my part am influenced, as my Lord indicated in argument, by the further consideration that this is, after all, a case about a country in which the factual situation seems to be changing day by day and it may be in any event artificial to try to reach any firm conclusions at the moment about how to address the factual situation in advance on the basis of evidence, as in this case, which is already something like a year old. For those reasons, therefore, I would be minded to grant the stay that Mr Nicol seeks. That would be a stay on the renewed application for permission until the determination by the House of Lords of the appeal in RB (Algeria) or, I would add, further order. It may be that there may be other developments (I know not what) that would justify the review of this, what is after all a temporary, decision. So I for my part would grant a stay in those terms solely on the basis that the proper role of an appellate court, in relation to the assessment of facts as a Convention matter, must remain in some doubt at least until the House of Lords has pronounced on RB (Algeria). For those reasons I would grant a stay. Lord Justice Keene: I agree. I would emphasise that our decision does not mean that the generality of asylum and immigration appeals to this court -- raising Article 3 issues of this kind -- should necessarily be stayed, as that will be a matter for a judgment in each individual case. In the present case, as my Lord has indicated, there is a particular consideration to bear in mind. We are concerned with a country guidance determination made by the AIT in respect of Zimbabwe. It was as a result of a hearing almost twelve months ago, in late July 2007, in which evidence was adduced about conditions in that country, largely in the two years or so before then. There is, to my mind, a degree of unreality in dealing with a country guidance case looking at such past conditions, when any informed person knows full well that during the first half of this year Zimbabwe has been experiencing what can perhaps euphemistically be called a marked deterioration in law and order and conditions generally in that country. This is a fact of which I too am bound to say has influenced the exercise of my discretion as to a stay. It is one which may well distinguish cases about Zimbabwe from other cases coming before this court. I too would grant the stay in the terms indicated by my Lord. Order: Stay granted pending House of Lords decision

Judgment of the Court of 16 December 1963. - Società Industriale Acciaierie San Michele and others v High Authority of the European Coal and Steel Community. - Joined cases 2 to 10-63. European Court reports French edition Page 00663 Dutch edition Page 00693 German edition Page 00707 Italian edition Page 00651 English special edition Page 00327 Danish special edition Page 00451 Greek special edition Page 01013 Portuguese special edition Page 00361 Summary Parties Subject of the case Grounds Decision on costs Operative part Keywords ++++ 1 . PROCEDURE - APPLICATION - REQUIREMENTS OF FORM ( RULES OF PROCEDURE, ARTICLE 38 ) 2 . APPEALS AGAINST PECUNIARY SANCTIONS - REFERENCE TO ARTICLE 36 OF THE ECSC TREATY NOT NECESSARY 3 . PROCEEDINGS IN WHICH THE COURT HAS UNLIMITED JURISDICTION - GROUNDS AVAILABLE Summary 1 . CF . SUMMARIES IN CASES 7/56 AND 3/57 TO 7/57, REC . 1957, P . 88, N . 10, AND IN CASES 19/60, 21/60 2/61, 3/61, REC . 1961, P . 564, N . 3 . PROCEDURE - APPLICATION - DETAILS REQUIRED THE APPLICANT IS NOT BOUND TO CITE THE PROVISIONS ON WHICH HE RELIES; IT IS ENOUGH IF THE APPLICATION CONTAINS 'THE FACTS AND SUBMISSIONS ON WHICH THE APPLICATION IS BASED' AND 'THE CONCLUSIONS' ( PROTOCOL ON THE STATUTE OF THE COURT OF JUSTICE, ARTICLE 22; RULES OF PROCEDURE OF THE COURT, ARTICLE 29 ( 3 )). */ EN.656J0007 /*. THE WORDS 'BRIEF STATEMENT OF THE GROUNDS' USED IN THE PROTOCOL ON THE STATUTE OF THE COURT OF JUSTICE AND THE RULES OF PROCEDURE MEAN THAT, ALTHOUGH THE APPLICATION NEED NOT CONFORM WITH THE PHRASEOLOGY OF THE FIRST PARAGRAPH OF ARTICLE 33, IT MUST SPECIFY THE NATURE OF THE GROUNDS ON WHICH THE APPLICATION IS BASED . ALTHOUGH A MERE ABSTRACT STATEMENT OF THE GROUNDS IN THE APPLICATION DOES NOT ALONE SATISFY THIS REQUIREMENT, THE GROUNDS MAY BE EXPRESSED IN TERMS OF THEIR SUBSTANCE RATHER THAN OF THEIR LEGAL CLASSIFICATION PROVIDED THAT THE GROUND OF COMPLAINT RELIED UPON IS ESTABLISHED IN RELATION TO THE FACTS WHICH HAVE BEEN SET OUT . */ EN.660J0019 /*. 2 . ANY APPEAL AGAINST PECUNIARY SANCTIONS IMPOSED BY THE HIGH AUTHORITY IS BY ITS VERY NATURE BASED ON ARTICLE 36 OF THE TREATY AND THERE IS NO NEED TO INVOKE THAT ARTICLE EXPRESSLY . 3 . IN PROCEEDINGS IN WHICH THE COURT HAS UNLIMITED JURISDICTION THE APPLICANTS ARE ALSO ENTITLED TO AVAIL THEMSELVES OF THE GROUNDS SET FORTH IN ARTICLE 33 OF THE TREATY . Parties IN JOINED CASES 2/63 TO 10/63 1 ) 2/63, SOCIETA INDUSTRIALE ACCIAIERIE SAN MICHELE, A COMPANY LIMITED BY SHARES, GOVERNED BY ITALIAN LAW, HAVING ITS REGISTERED OFFICE IN TURIN, REPRESENTED BY ITS SOLE DIRECTOR BARTOLOMEO ARAGNO; 2 ) 3/63, FERRIERE ROSSE ( FER . RO .), AN INDIVIDUAL UNDERTAKING GOVERNED BY ITALIAN LAW, HAVING ITS REGISTERED OFFICE IN MAGLIANO ALPI ( CONI ), REPRESENTED BY ITS OWNER GINO ROSSI; 3 ) 4/63, MERONI & CO ., A COMPANY LIMITED BY SHARES, GOVERNED BY ITALIAN LAW, HAVING ITS REGISTERED OFFICE IN MILAN, REPRESENTED BY ITS SOLE DIRECTOR ALDO MERONI; 4 ) 5/63, ACCIAIERIE LAMINATOI MAGLIANO ALPI ( A.L.M.A .), A COMPANY LIMITED BY SHARES, GOVERNED BY ITALIAN LAW, HAVING ITS REGISTERED OFFICE IN TURIN, REPRESENTED BY ITS SOLE DIRECTOR GIUSEPPE PASSALACQUA; 5 ) 6/63, SOCIETA INDUSTRIALE METALLURGICA DI NAPOLI ( S.I.M.E.T .) A COMPANY LIMITED BY SHARES, GOVERNED BY ITALIAN LAW, HAVING ITS REGISTERED OFFICE IN NAPLES, REPRESENTED BY PIO FANTINI, CHAIRMAN OF THE BOARD OF DIRECTORS; 6 ) 7/63, MERONI & CO ., A LIMITED PARTNERSHIP, GOVERNED BY ITALIAN LAW, HAVING ITS REGISTERED OFFICE IN ERBA ( COMO ), REPRESENTED BY ITS MANAGING PARTNERS AMBROGIO AND ALDO MERONI, 7 ) 8/63, ACCIAIERIA FERRIERA DI ROMA ( F.E.R.A.M .), A COMPANY LIMITED BY SHARES, GOVERNED BY ITALIAN LAW, HAVING ITS REGISTERED OFFICE IN ROME, REPRESENTED BY ALDO ALLIATA, CHAIRMAN OF THE BOARD OF DIRECTORS; 8 ) 9/63, SAFIM SIDERURGICA, A COMPANY LIMITED BY SHARES, GOVERNED BY ITALIAN LAW, HAVING ITS REGISTERED OFFICE IN MILAN, REPRESENTED BY FRANCESCO BONELLI, CHAIRMAN OF THE BOARD OF DIRECTORS; 9 ) 10/63, ACCIAIERIE E FERRIERE SICILIANE BONELLI, A COMPANY LIMITED BY SHARES, GOVERNED BY ITALIAN LAW, HAVING ITS REGISTERED OFFICE IN MILAN, REPRESENTED BY FRANCESCO BONELLI, CHAIRMAN OF THE BOARD OF DIRECTORS; ALL ASSISTED BY ARTURO COTTRAU, ADVOCATE OF THE TURIN BAR AND AT THE CORTE DI CASSAZIONE OF THE ITALIAN REPUBLIC, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF GEORGES MARGUE, AVOCAT-AVOUE, 20 RUE PHILIPPE-II, APPLICANTS, V HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, REPRESENTED BY ITS LEGAL ADVISER ITALO TELCHINI, ACTING AS AGENT, ASSISTED BY MARIO GIULIANO, ADVOCATE OF THE MILAN BAR AND AT THE CORTE DI CASSAZIONE OF THE ITALIAN REPUBLIC, PROFESSOR AT THE UNIVERSITY OF MILAN, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT ITS OFFICES, 2 PLACE DE METZ, DEFENDANT, Subject of the case APPLICATION - PRIMARILY FOR ANNULMENT OF THE INDIVIDUAL DECISIONS OF 18 DECEMBER 1962; - SECONDARILY FOR ANNULMENT OF THE PERIODIC PENALTY PAYMENTS AND REDUCTION OF THE AMOUNT OF THE FINES . Grounds ADMISSIBILITY 1 . THE DEFENDANT CONTESTS THE ADMISSIBILITY OF THE PRESENT APPLICATIONS POINTING OUT FIRST THAT THEY ARE MADE IN FACT AGAINST THE DECISIONS OF 23 FEBRUARY 1962 AND THAT THEY BRING BEFORE THE COURT QUESTIONS ALREADY SETTLED BY IT IN ITS JUDGMENT OF 14 DECEMBER 1962 . THE APPLICATIONS MADE AGAINST THE DECISIONS OF 23 FEBRUARY 1962 ON WHICH THE COURT RULED IN ITS JUDGMENT OF 14 DECEMBER 1962 CONCERNED THE POWER OF THE HIGH AUTHORITY TO REQUIRE PRODUCTION OF THE INVOICES FOR ELECTRIC ENERGY CONSUMED BY THE APPLICANTS . IN THE FIRST APPLICATIONS THE APPLICANTS MAINTAINED THAT SUCH A POWER HAD NO BASIS IN ARTICLE 47 OF THE TREATY . THE PRESENT APPLICATIONS ON THE OTHER HAND ARE CONCERNED WITH THE PECUNIARY SANCTIONS IMPOSED BY THE DECISIONS OF 18 DECEMBER 1962 FOR FAILURE TO PRODUCE THESE INVOICES . AS TO THIS THE APPLICANTS MAKE THE POINT THAT FAILURE TO PRODUCE THESE INVOICES CANNOT BE CONSIDERED AS AN INFRINGEMENT OF THE DECISIONS OF 23 FEBRUARY 1962, THE INVOICES HAVING BEEN DESTROYED IN ACCORDANCE WITH THE NATIONAL LAW APPLICABLE IN THIS CASE . THE SUBJECT MATTER OF THE PRESENT APPLICATIONS IS THUS DIFFERENT FROM THAT OF THE APPLICATIONS AGAINST THE DECISIONS OF 23 FEBRUARY 1962 . ALTHOUGH IN COURSE OF THE ORAL PROCEDURE IN THE PREVIOUS CASE THE APPLICANTS HAD ALREADY ALLEGED THAT THE PRODUCTION OF THE INVOICES AT ISSUE REQUIRED BY THE HIGH AUTHORITY MIGHT BE MADE IMPOSSIBLE BECAUSE UNDER ITALIAN LAW TRADE INVOICES NEED BE KEPT ONLY FOR FIVE YEARS, THE JUDGMENT RULED THAT IT IS FOR THE HIGH AUTHORITY TO DETERMINE WHETHER FAILURE TO PRODUCE CERTAIN INVOICES IS JUSTIFIED IN THE LIGHT OF THE RELEVANT LEGISLATION AND TO DRAW THE NECESSARY CONCLUSIONS . NO DECISION HAVING THE FORCE OF RES JUDICATA HAS THEREFORE BEEN TAKEN BY THE COURT ON THE SUBJECT MATTER OF THE PRESENT PROCEEDINGS . CONSEQUENTLY ON THIS POINT THE PRESENT APPLICATIONS MUST BE TAKEN TO BE ADMISSIBLE . 2 . THE APPLICANTS IN CASES 2/63, 3/63, 5/63 AND 6/63 MAKE THE POINT THAT THE CONTESTED DECISIONS IMPOSE PECUNIARY SANCTIONS ON THEM FOR NOT HAVING PRODUCED THE ELECTRICITY INVOICES RELATING TO THE WHOLE PERIOD OF THE OPERATION OF THE EQUALIZATION SCHEME, WHILST THEY HAVE BEEN ENGAGED IN THE IRON AND STEEL INDUSTRY FOR ONLY PART OF THIS PERIOD . THE DEFENDANT CONTESTS THE ADMISSIBILITY OF THIS SUBMISSION, MAKING THE POINT THAT, AS THE DECISIONS OF 18 DECEMBER 1962 WERE LIMITED TO DRAWING THE LEGAL CONCLUSIONS FLOWING FROM THE DECISIONS OF 23 FEBRUARY 1962, IT IS AGAINST THE LAST-MENTIONED DECISIONS AND THE OBLIGATION THEY CONTAIN THAT THE APPLICANTS SHOULD HAVE RAISED SUCH A SUBMISSION . HOWEVER, THE JUDGMENT WHICH SETTLED THE APPLICATIONS MADE AGAINST THE DECISIONS OF 23 FEBRUARY 1962 ACCEPTED AS WELL-FOUNDED THE POWER OF THE HIGH AUTHORITY TO REQUIRE PRODUCTION OF THE INVOICES FOR ELECTRIC ENERGY ACTUALLY CONSUMED BY THE APPLICANTS DURING THE OPERATION OF THE EQUALIZATION SCHEME . MOREOVER ANY SANCTION IMPOSED BY THE HIGH AUTHORITY CAN BE CONSIDERED AS LAWFUL ONLY IF IT IS DIRECTED TO AN INFRINGEMENT IN RELATION TO A DECISION TAKEN IN IMPLEMENTATION OF THE TREATY . IN THE PRESENT CASE, AS FAILURE TO PRODUCE THE ELECTRICITY INVOICES RELATES TO A PERIOD WHEN THE APPLICANTS WERE NOT ENGAGED IN THE IRON AND STEEL INDUSTRY, IT CANNOT IN ANY EVENT CONSTITUTE AN INFRINGEMENT OF THE DECISIONS OF 23 FEBRUARY 1962 . THEREFORE IF THE ALLEGATIONS OF THE APPLICANTS WERE TO PROVE TO BE WELL-FOUNDED THE PECUNIARY SANCTIONS IN QUESTION WOULD NEED TO BE ANNULLED BECAUSE AT LEAST IN PART THEY WOULD HAVE NO PURPOSE . THE SUBMISSION MADE BY THE APPLICANTS IN CASES 2/63, 3/63, 5/63 AND 6/63 IS THEREFORE ADMISSIBLE . 3 . THE DEFENDANT THEN MAKES THE POINT THAT THE PRESENT APPLICATIONS DO NOT SATISFY THE CONDITIONS OF ADMISSIBILITY SET OUT IN ARTICLE 38 ( 1 ) ( C ) OF THE RULES OF PROCEDURE OF THE COURT, AS THEY DO NOT CONTAIN A BRIEF STATEMENT OF THE GROUNDS ON WHICH THEY ARE BASED . THE APPLICANTS MAINTAIN IN THEIR APPLICATIONS THAT THE PECUNIARY SANCTIONS IMPOSED BY THE CONTESTED DECISIONS ARE OUT OF PROPORTION BOTH TO THE SERIOUSNESS OF THE OFFENCES OF WHICH THEY ARE ACCUSED AND TO THE ECONOMIC CAPACITY OF EACH UNDERTAKING . CERTAIN OF THE APPLICANTS FURTHER MAINTAIN THAT THE PECUNIARY SANCTIONS HAVE ALSO BEEN IMPOSED FOR FAILURE TO PRODUCE ELECTRICITY INVOICES RELATING TO A PERIOD DURING WHICH THEY WERE NOT ENGAGED IN THE IRON AND STEEL INDUSTRY . THESE SUBMISSIONS ARE SUFFICIENT TO JUSTIFY THE MAKING OF AN APPEAL IN RESPECT OF WHICH THE COURT HAS UNLIMITED JURISDICTION, AS PROVIDED FOR IN ARTICLE 36 OF THE TREATY . THE APPLICATIONS THEREFORE SHOW SUFFICIENTLY CLEARLY WHICH OF THE GROUNDS SET OUT IN THE TREATY ARE THOSE INVOKED BY THE APPLICANTS . THE PRESENT APPLICATIONS ARE ADMISSIBLE UNDER ARTICLE 38 ( 1 ) ( C ) QUOTED ABOVE . 4 . FINALLY THE DEFENDANT MAINTAINS THAT THE PRESENT APPLICATIONS, SO FAR AS THEY SEEK A REDUCTION OF THE FINES AND A TOTAL REMISSION OF THE PERIODIC PENALTY PAYMENTS, ARE INADMISSIBLE BECAUSE THEY CONTAIN NO REFERENCE TO ARTICLE 36 OF THE TREATY AND SET OUT NO CRITICISM OF THE APPLICATION OF THIS ARTICLE BY THE HIGH AUTHORITY . ACCORDING TO THE RULES OF PROCEDURE OF THE COURT IT IS UNNECESSARY FOR AN APPLICANT TO INDICATE, FOR THE PURPOSE OF ADMISSIBILITY, THE PROVISIONS OF THE TREATY UNDER WHICH HE IS ENTITLED TO BRING HIS ACTION . ANY APPEAL AGAINST PECUNIARY SANCTIONS IMPOSED BY THE HIGH AUTHORITY IS BY ITS VERY NATURE BASED ON ARTICLE 36 OF THE TREATY AND THERE IS NO NEED TO INVOKE THAT ARTICLE EXPRESSLY . HAVING REGARD TO THE PURPOSE OF THE PRESENT APPLICATIONS, IT IS ABUNDANTLY CLEAR THAT THESE ARE BASED ON ARTICLE 36 OF THE TREATY . AS THE APPEALS PROVIDED FOR IN THIS ARTICLE CONFER UNLIMITED JURISDICTION UPON THE COURT, THE APPLICANTS ARE ENTITLED TO AVAIL THEMSELVES OF THE GROUNDS SET FORTH IN ARTICLE 33 OF THE TREATY . IN THESE CIRCUMSTANCES THE OBJECTION RAISED BY THE DEFENDANT DOES NOT APPEAR WELL-FOUNDED . THE SUBSTANCE A - ANNULMENT OF THE FINES 1 . THE APPLICANTS RELY ON ITALIAN FISCAL LAW TO JUSTIFY THE ALLEGED DESTRUCTION OF THE ELECTRICITY INVOICES AT ISSUE AND TO CLAIM THAT IN THESE CIRCUMSTANCES THEY SHOULD NOT BE HELD LIABLE FOR NOT HAVING PRODUCED THE INVOICES IN QUESTION IN ACCORDANCE WITH THE DECISIONS OF 23 FEBRUARY 1962 . THE SUBMISSION MADE BY THE APPLICANTS ASSUMES THAT THE DECISIONS OF 23 FEBRUARY 1962 MUST BE INTERPRETED AS REQUIRING ONLY PRODUCTION OF THE ORIGINALS OF THE ELECTRICITY INVOICES . HOWEVER, NEITHER THE LETTER NOR THE SPIRIT OF THESE DECISIONS JUSTIFIES SUCH AN INTERPRETATION . THEY ARE LIMITED BY ARTICLE I THEREOF TO REQUIRING PRODUCTION OF 'ALL INVOICES FOR ELECTRIC ENERGY...RELATING TO THE ACTIVITY OF THE UNDERTAKING FOR THE PERIOD FROM APRIL 1954 TO NOVEMBER 1958 INCLUSIVE' WITHOUT SPECIFYING THAT THEY MUST BE ORIGINALS ONLY . FURTHER, TAKING ACCOUNT OF THE FACT THAT THE PURPOSE OF PRODUCING THE INVOICES AT ISSUE WAS TO ENABLE THE HIGH AUTHORITY TO CHECK THE INFORMATION REQUIRED FOR THE APPLICATION OF THE EQUALIZATION SCHEME FOR IMPORTED FERROUS SCRAP, THE APPLICANTS HAD NO REASON TO THINK THAT ONLY PRODUCTION OF THE ORIGINAL ACCOUNTS WOULD HAVE SERVED THIS PURPOSE . IN ADDITION, IN THE LETTERS OF 27 NOVEMBER 1961 ADDRESSED TO THE APPLICANTS, THE HIGH AUTHORITY HAD EXPRESSLY STIPULATED THAT IN THE ABSENCE OF THE ORIGINAL ELECTRICITY INVOICES THE APPLICANTS WERE REQUIRED TO PRODUCE 'CERTIFIED COPIES OR PHOTOCOPIES '. ENCLOSED WITH THESE LETTERS WERE SEVERAL FORMS FOR COMPLETION BY THE ADDRESSEES IN WHICH 'COPIES OR PHOTOCOPIES' WERE ALSO MENTIONED . ALL THE APPLICANTS RECEIVED THIS LETTER AND ANSWERED IT, EITHER CONTESTING THE LEGALITY OF THE REQUEST BY THE HIGH AUTHORITY OR ASKING IT TO WITHDRAW ITS REQUEST, OR FAILING THAT, TO CONFIRM IT BY WAY OF A DECISION APPLICABLE TO ALL UNDERTAKINGS IN THE SAME LINE OF BUSINESS . THEREUPON THE HIGH AUTHORITY ADOPTED THE DECISIONS OF 23 FEBRUARY 1962 REPEATING THE OBLIGATION CONTAINED IN THE LETTER OF 27 NOVEMBER 1961 . IN THE CIRCUMSTANCES THESE LETTERS CONSTITUTE AS IT WERE A MEASURE PREPARATORY TO THE DECISIONS OF 23 FEBRUARY 1962 AND THE APPLICANTS CAN IN NO WAY ALLEGE THAT THESE DECISIONS MUST BE INTERPRETED AS REQUIRING PRODUCTION ONLY OF THE ORIGINALS OF THE INVOICES AT ISSUE . IN ANY EVENT, WHEN ACCOUNT IS TAKEN OF THE ABOVE-MENTIONED LETTERS, THE APPLICANTS SHOULD HAVE TAKEN THE PRECAUTION OF KEEPING THE ELECTRICITY INVOICES IN ANTICIPATION OF THE DECISIONS WHICH THE HIGH AUTHORITY MIGHT TAKE IN THE MATTER . IT IS CLEAR FROM THE ANSWERS GIVEN TO THE QUESTIONS ASKED BY THE COURT THAT THE DESTRUCTION OF THE INVOICES TOOK PLACE ONLY AFTER THESE LETTERS HAD REACHED THE APPLICANTS . IT THEREFORE FOLLOWS THAT EVEN IF THE APPLICANTS HAD DESTROYED OR LOST OR HAD NEVER KEPT THE ORIGINALS OF THE INVOICES AT ISSUE, THEY OUGHT TO HAVE ASKED THE ELECTRICITY SUPPLY COMPANIES FOR COPIES OF THEM UPON BEING NOTIFIED OF THE DECISIONS OF 23 FEBRUARY 1962, THUS ENDEAVOURING TO COMPLY WITH THESE DECISIONS . INSTEAD, THE APPLICANTS INSTITUTED ANNULMENT PROCEEDINGS ALLEGING THAT THE POWER OF THE HIGH AUTHORITY TO REQUIRE TRANSMISSION OF ACCOUNTING DOCUMENTS HAD NO FOUNDATION IN THE TREATY . ONLY BETWEEN DECEMBER 1962 AND JANUARY 1963, THAT IS AT LEAST TEN MONTHS AFTER BEING NOTIFIED OF THE DECISIONS OF 23 FEBRUARY 1962, DID THEY FOR THE FIRST TIME ASK THE ELECTRICITY SUPPLY COMPANIES TO FURNISH THEM WITH A COPY OF EACH INVOICE . IT MUST THEREFORE BE DECLARED THAT, UP TO THE TIME OF ADOPTION OF THE DECISIONS IMPOSING THE PECUNIARY SANCTIONS AT ISSUE, THE APPLICANTS FAILED TO FULFIL THE OBLIGATION IMPOSED ON THEM BY THE DECISIONS OF 23 FEBRUARY 1962 . THIS CONCLUSION APPLIES WITH PARTICULAR FORCE TO THE APPLICANT IN CASE 2/63 WHO RIGHT UP TO OCTOBER 1962 WAS IN A POSITION TO PRODUCE THE ORIGINALS OF THE INVOICES AT ISSUE AND, HAVING REGARD TO THE DATE WHEN THESE INVOICES WERE DESTROYED, ALL REFERENCE TO ITALIAN FISCAL LAW IS IRRELEVANT IN THE PRESENT CASE . IN THESE CIRCUMSTANCES THE IMPOSITION OF THE FINE PROVIDED FOR IN THE DECISIONS OF 18 DECEMBER 1962 FOR INFRINGEMENT OF THE OBLIGATION CONTAINED IN THE DECISIONS OF 23 FEBRUARY 1962 IS JUSTIFIED . 2 . THE APPLICANTS FURTHER MAINTAIN THAT THE CONTESTED DECISIONS DISCRIMINATE AGAINST THEM, AS PECUNIARY SANCTIONS WERE NOT IMPOSED ON THE APPLICANT IN CASE 18/62 WHO WAS IN A SIMILAR POSITION . IT APPEARS HOWEVER FROM THE FOREGOING CONSIDERATIONS THAT THE IMPOSITION OF PECUNIARY SANCTIONS IS FULLY JUSTIFIED IN THE PRESENT CASE BY REASON OF THE INFRINGEMENT OF THE DECISIONS OF 23 FEBRUARY 1962 . IN THESE CIRCUMSTANCES IT IS OF LITTLE CONSEQUENCE TO DETERMINE WHETHER IN ALLEGEDLY COMPARABLE CASES THE HIGH AUTHORITY SHOULD HAVE IMPOSED THE SAME PECUNIARY SANCTIONS . THEREFORE THE COMPLAINT OF DISCRIMINATION RAISED MUST BE DISMISSED AS UNFOUNDED . 3 . THE APPLICANTS IN CASES 2/63, 3/63, 5/63 AND 6/63 RAISE THE FURTHER POINT THAT AS THEY WERE NOT ENGAGED IN THE IRON AND STEEL INDUSTRY FOR PART OF THE PERIOD DURING WHICH THE EQUALIZATION SCHEME WAS IN OPERATION, THE IMPOSITION OF A FINE FOR FAILURE TO PRODUCE ELECTRICITY INVOICES RELATING TO THE WHOLE OF THIS PERIOD IS ILLEGAL BECAUSE IT IS UNFOUNDED AND CONSTITUTES A MISUSE OF POWERS . ARTICLE 1 OF THE DECISIONS OF 23 FEBRUARY 1962 PROVIDES THAT THE APPLICANT SHALL PRODUCE THE ELECTRICITY ACCOUNTS 'RELATING TO THE ACTIVITY OF THE UNDERTAKING FOR THE PERIOD FROM APRIL 1954 TO NOVEMBER 1958 INCLUSIVE '. IT FOLLOWS FROM THESE WORDS THAT THE OBLIGATION THERE STATED APPLIES ONLY TO INVOICES RELATING TO BUSINESS IN THE IRON AND STEEL INDUSTRY IN FACT CARRIED ON BY EACH APPLICANT DURING THAT PERIOD . THE DECISIONS OF 18 DECEMBER 1962, RECITING THE OPERATIVE PART OF THE DECISIONS OF 23 FEBRUARY 1962 AS QUOTED ABOVE THEREFORE LAY DOWN PECUNIARY SANCTIONS ONLY FOR INFRINGEMENT OF THIS OBLIGATION, WHATEVER MAY HAVE BEEN THE ACTUAL PERIOD DURING WHICH EACH UNDERTAKING WAS ACTIVELY ENGAGED IN THE IRON AND STEEL INDUSTRY WHILE THE EQUALIZATION SCHEME WAS OPERATIVE . THEREFORE THE SUBMISSION RAISED BY THE APPLICANTS IN THE ABOVE-MENTIONED CASES IS UNFOUNDED . B - REDUCTION OF THE AMOUNT OF THE FINES IN THEIR ALTERNATIVE CONCLUSIONS THE APPLICANTS REQUEST A REDUCTION IN THE AMOUNT OF THE FINES HAVING REGARD ON THE ONE HAND TO THE FACT THAT THE UNCERTAN AND EQUIVOCAL CONDUCT OF THE HIGH AUTHORITY LED THEM TO COMMIT A JUSTIFIED ERROR IN LAW AND ON THE OTHER HAND TO THE FACT THAT THIS AMOUNT IS OUT OF PROPORTION TO THE ECONOMIC CAPACITY OF EACH UNDERTAKING . AS REGARDS THE FIRST ARGUMENT, THE PRECEDING CONSIDERATIONS SHOW THAT NO ERROR IN LAW CAN VALIDLY BE INVOKED BY THE APPLICANTS SINCE THE OBLIGATION TO PRODUCE CERTIFIED COPIES OF THE INVOICES AT ISSUE, IN THE ABSENCE OF THE ORIGINALS, IS PLAIN FROM THE DECISIONS OF 23 FEBRUARY 1962 AS WELL AS FROM THE LETTERS OF 27 NOVEMBER 1961 . AS REGARDS THE SECOND ARGUMENT, THE APPLICANTS HAVE NOT FURNISHED THE COURT WITH A SHRED OF FACTUAL EVIDENCE TO SHOW THAT THE AMOUNT OF THE FINES IS OUT OF PROPORTION TO THE ECONOMIC CAPACITY OF EACH UNDERTAKING . MOREOVER THIS AMOUNT DOES NOT APPEAR TO BE EXCESSIVE BECAUSE IT FALLS FAR SHORT OF THE MAXIMUM LAID DOWN IN ARTICLE 47 OF THE TREATY . FOR THESE REASONS THE ABOVE-MENTIONED ALTERNATIVE CONCLUSIONS MUST BE DISMISSED . C - ANNULMENT OF THE PERIODIC PENALTY PAYMENTS THE APPLICANTS CLAIM, IN THE FURTHER ALTERNATIVE, THAT EXONERATION FROM THE PAYMENT OF THE PERIODIC PENALTY PAYMENTS IMPOSED BY THE CONTESTED DECISIONS SHOULD BE GRANTED . IN FURTHERANCE OF THIS CLAIM THEY RAISE THE POINT THAT, AS PRODUCTION OF COPIES OF THE INVOICES AT ISSUE TO THE HIGH AUTHORITY COULD ONLY BE MADE AFTER DELIVERY OF THESE COPIES BY THE ELECTRICITY SUPPLY COMPANIES, THE APPLICANTS CANNOT BE HELD RESPONSIBLE FOR THE DELAY IN PRODUCING THEM . TO JUSTIFY THIS DELAY THE APPLICANTS REFER TO THE PHYSICAL DIFFICULTIES ALLEGED IN THE ANSWERS TO THE LETTERS ASKING FOR DELIVERY OF THE COPIES OF THE INVOICES AT ISSUE . WITHOUT REGARD TO THE QUESTION WHETHER THE INVOICES WERE IN FACT DESTROYED IT CAN BE SAID THAT THE DELAY IN PRODUCTION OF THESE COPIES IS DUE IN LARGE MEASURE TO THE FACT THAT THE APPLICANTS ONLY APPLIED TO THE ELECTRICITY SUPPLY COMPANIES IN DECEMBER 1962 AT THE EARLIEST, THAT IS, AFTER A CONSIDERATE LAPSE OF TIME FROM THEIR BEING NOTIFIED OF THE DECISIONS OF 23 FEBRUARY 1962 . THEREFORE THE PHYSICAL DIFFICULTIES WHICH THE ELECTRICITY SUPPLY COMPANIES MENTION CANNOT RELIEVE THE APPLICANTS OF ALL RESPONSIBILITY IN THIS MATTER . THESE DIFFICULTIES CAN NEVERTHELESS BE TAKEN INTO ACCOUNT IN FIXING THE TIME FROM WHICH THE PERIODIC PENALTY PAYMENTS AT ISSUE ARE APPLIED . IN THESE CIRCUMSTANCES, THE PERIODIC PENALTY PAYMENTS MUST BE MAINTAINED BUT THE PERIOD AT THE END OF WHICH THEY TAKE EFFECT MUST BE EXTENDED TO SEVEN MONTHS FROM THE NOTIFICATION OF THE CONTESTED DECISIONS . Decision on costs UNDER THE TERMS OF THE FIRST SUBPARAGRAPH OF ARTICLE 69 ( 3 ) OF THE RULES OF PROCEDURE, WHERE EACH PARTY SUCCEEDS ON SOME AND FAILS ON OTHER HEADS, THE COURT MAY ORDER THAT THE PARTIES BEAR THEIR OWN COSTS IN WHOLE OR IN PART . THE DEFENDANT HAS BEEN UNSUCCESSFUL IN PART IN THE SUBMISSION RELATING TO THE ANNULMENT OF THE PERIODIC PENALTY PAYMENTS . Operative part THE COURT HEREBY DECLARES THAT : 1 . THE APPLICATIONS ARE ADMISSIBLE; 2 . THE APPLICATIONS ARE DISMISSED AS UNFOUNDED . NEVERTHELESS THE TIME LIMIT AT THE END OF WHICH THE PERIODIC PENALTY PAYMENTS IMPOSED BY THE DECISIONS OF 18 DECEMBER 1962 TAKE EFFECT IS EXTENDED TO SEVEN MONTHS FROM THE NOTIFICATION OF THE LATTER; 3 . FOUR FIFTHS OF THE COSTS ARE TO BE BORNE BY THE APPLICANTS AND THE REMAINING ONE FIFTH THEREOF BY THE DEFENDANT .

Judgment of the Court of First Instance (Third Chamber) of 1 October 1992. - Sibylle Schavoir v Council of the European Communities. - Officials - Admissibility - Time-limits - Expatriation allowance. - Case T-7/91. European Court reports 1992 Page II-02307 Parties Grounds Decision on costs Operative part Keywords ++++ 1. Officials ° Actions ° Act adversely affecting an official ° Definition ° Salary statement revealing the existence of a decision not to grant the expatriation allowance (Staff Regulations, Arts 90 and 91) 2. Officials ° Actions ° Prior administrative complaint ° Time-limits ° Out of time ° Setting time running afresh ° Conditions ° New fact ° Absence ° Confirmatory decision after re-examining the dossier ° Not material (Staff Regulations, Arts 90 and 91) Parties In Case T-7/91, Sibylle Schavoir, an official of the Council of the European Communities, residing at Ottignies-Louvain-la-Neuve (Belgium), represented by Jacques Buekenhoudt, of the Brussels Bar, with an address for service in Luxembourg at the Chambers of Patrick Birden, 5 Rue de la Reine, applicant, v Council of the European Communities, represented by Ruediger Bandilla, Director in the Legal Service, acting as Agent, with an address for service in Luxembourg at the office of Xavier Herlin, Deputy Manager of the Legal Directorate of the European Investment Bank, 100 Boulevard Konrad Adenauer, defendant, APPLICATION for the annulment of the Council Decision of 5 November 1990 refusing to grant the applicant an expatriation allowance, THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Third Chamber), composed of: B. Vesterdorf, President, A. Saggio and J. Biancarelli, Judges, Registrar: B. Pastor, Administrator, having regard to the written procedure and further to the hearing on 1 July 1992, gives the following Judgment Grounds The facts 1 The applicant, a category C official, entered the service of the Council on 16 April 1982. She possesses both German and Belgian nationality, the latter through marriage to a Belgian citizen. 2 When she took up her post she was not granted the expatriation allowance provided for under Article 4 of Annex VII to the Staff Regulations of Officials of the European Communities, as is apparent from a memorandum sent by the Personnel Division to the "Salaries and Allowances" Division on 20 April 1982. 3 On 9 October 1989, the applicant wrote to the Director of the Personnel and Administration Directorate of the Council, asking him to consider her case because the more junior officials handling the matter had not accepted her point of view that she fulfilled the eligibility requirements for that allowance. 4 In a letter dated 5 February 1990, the Director of the Personnel and Administration Directorate informed the applicant that "despite an initial presumption that you might be entitled to the expatriation allowance, subsequent discussions within the Personnel Directorate and with other institutions have led me to the conclusion that I am not in a position at present to take a decision either on your request or on other cases now being assessed". After noting that he had decided to submit the dossier to the Legal Service of the Council for its opinion, the Director concluded his letter in the following terms: "I hope to receive the opinion of the Legal Service in a few weeks and therefore ask you to be patient for a little while longer until a definitive reply can be given." 5 On 6 February 1990, the applicant sent the following note to the Legal Service: "in his letter of 5 February 1990, Mr H. (the Director of the Personnel and Administration Directorate) informed me, in response to my letter of 9 October 1989, that he had decided to submit the matter to the Legal Service for its opinion. In fact, you have been in possession of my dossier for a number of years already and I have yet to receive a reply (see also the final paragraph of my letter of 9 October 1989 to Mr H.) For your information, please find enclosed some further documents concerning my case ...". 6 On 27 April 1990, the Council rejected the applicant' s request, citing as grounds for its decision considerations arising from a detailed examination of the issues raised. On 8 June 1990, the applicant lodged a complaint against that note in accordance with Article 90 of the Staff Regulations. This complaint was rejected by the defendant, by letter dated 5 November 1990, in the following terms: "I have studied your letter very attentively. Given that at the time you took up your post you possessed not only German nationality but also Belgian nationality, entitlement to the expatriation allowance is in your case subject to the conditions set out in Article 4(1)(b) of Annex VII to the Staff Regulations. It is on the basis of those provisions that the expatriation allowance is granted ... . However, bearing in mind that you have been registered since 15 May 1970 in the population registers of Ganshoren and Brussels, on the one hand, and that you have been working in Brussels since 1 July 1980, on the other, I find that you were resident outside Belgium for a period of less than ten years ending on 16 April 1982, the date you took up your post (see, the judgment of the Court of Justice of 17 February 1976 in Case 42/75). Accordingly, I can only confirm the correctness of the decision ° taken when you took up your post in 1982 ° not to grant you an expatriation allowance." Procedure 7 In those circumstances the applicant submitted this application on 1 February 1991. 8 By a separate document lodged at the Court Registry on 25 March 1991, the Council raised an objection of inadmissibility, based on failure to observe the time- limits for completing the pre-litigation procedure as set out in Article 90 of the Staff Regulations. By order of 22 July 1991, the Court decided to reserve its decision on that objection for the final judgment. 9 The defendant did not submit its defence within the time-limit. At the request of the Council, and after inviting the applicant to submit its observations, the Court, by order of 7 October 1991, decided to re-open the written procedure. 10 The written procedure then followed the normal course and was completed on 19 March 1992. 11 By letter dated 9 April 1992, the Court invited the Council to submit all the documents from the applicant' s personal file relating to the possible grant of the expatriation allowance. In reply, the Council submitted the applicant' s personal file. 12 By letter dated 22 May 1992, the Court asked the defendant to state whether documents existed to show that a decision on the applicant' s entitlement to expatriation allowance had been taken in 1982 and, if so, to produce them. In reply to that letter, the Council submitted the memorandum referred to in paragraph 2 of this judgment. 13 Upon hearing the report of the Judge-Rapporteur, the Court decided to open the oral procedure, to examine only the admissibility of the action, without conducting a preliminary inquiry. 14 The oral arguments of the parties were heard on 1 July 1992. Forms of order sought 15 The applicant claims that the Court should: ° declare the action admissible and well founded; ° annul the Council' s decision of 5 November 1990, notified on 6 November 1990, refusing to grant the applicant the expatriation allowance; ° declare that the applicant fulfils the eligibility criteria for the expatriation allowance under Article 4(1)(a) of Annex VII to the Staff Regulations or, alternatively, under Article 4(1)(b) thereof; ° reserve the question of default interest; ° order the Commission to pay the costs of the proceedings, pursuant to Articles 87 and 91 of the draft Rules of Procedure of the Court of First Instance or, alternatively, on the basis of Articles 69 and 73 of the Rules of Procedure of the Court of Justice. In response to the plea of inadmissibility raised by the Council, the applicant claims that the Court should: ° take formal notice of her reservations concerning the defendant' s quasi- delictual liability by virtue of the negligent and wrongful defensive strategy it adopted in the examination of this case. 16 The Council contends that the Court should: ° dismiss the application as inadmissible; ° alternatively, dismiss it as unfounded; ° order the applicant to bear the costs to the extent that they are not borne by the defendant pursuant to Article 88 of the Rules of Procedure of the Court of First Instance. Admissibility Pleas in law and arguments of the parties 17 In support of its plea of inadmissibility, the Council argues that the applicant failed to observe the time-limits set out in Article 90 of the Staff Regulations. According to the Council, the act adversely affecting the applicant was the decision to deny her the expatriation allowance, taken by the appointing authority when the applicant took up her post in 1982. 18 In this context the Council refers first to the case-law of the Court of Justice, in particular Joined Cases 15 to 33, 52, 53, 57 to 109, 116, 117, 123 132 and 135 to 137/73 Schots-Kortner and Others v Council, Commission and Parliament [1974] ECR 177, from which it is clear that a salary statement must be regarded as a decision taken in respect of the official to whom it is notified. The applicant' s salary statements, featuring since April 1982 a "0" in the space marked "expatriation allowance", made it plain that the administration had decided to refuse her that allowance and the applicant could not have failed to notice this. 19 The Council then refers to a number of notes sent by the applicant to the administration, beginning in 1988, showing that she was aware from the outset of the decision not to grant the allowance in her case. According to the Council, the note of 9 October 1989 proves that the applicant viewed this refusal as a decision taken in her case on the basis of information she had supplied at the time of her recruitment. The Council considers that that information already contained all the essential details for taking a decision granting or refusing the allowance and that there has been no subsequent change in those details, namely the applicant' s dual nationality and her successive places of residence since 1970. 20 The defendant considers that no other conclusion can be drawn from the fact that the appointing authority reassessed all aspects of the matter in response to the applicant' s note of 8 June 1990 and replied to it in a note dated 5 November 1990, since the latter note merely expressly confirmed the decision already taken in 1982. Citing the judgment of the Court of Justice in Case 1/76 Wack v Commission [1976] ECR 1017, the Council points out that the underlying facts of the case, on which the Council' s refusal in 1982 was based, have not changed in the meantime and the applicant has not brought forward any new fact which could be regarded as pertinent. 21 The applicant counters those arguments by stating that any comparison with the Kortner and Wack judgments is completely irrelevant to this case. In those two cases, when the salary statements were sent to the officials concerned, discussion about the expatriation allowance was already underway between the parties. In the Kortner case, in particular, the administration had initially granted the applicants the expatriation allowance and then withdrawn it; in those circumstances, the salary statement was the clear manifestation of that decision to withdraw the allowance. In the present case, however, before 1989 the applicant had made no request and there had been no discussions with the defendant, pursuant to Article 90 of the Staff Regulations, to determine whether the defendant was sufficiently well-informed about the applicant' s situation at the time of her recruitment. 22 The applicant considers that notification of a salary statement could be regarded as setting time running for the purpose of the time-limit for an action against an administrative decision only where the existence of such a decision is clearly apparent from the statement. Referring to the judgment of the Court of Justice in Case 184/89 Garganese v Commission [1981] ECR 1785, the applicant asserts that the "silence of her salary statement" on the subject of the allowance in question cannot be assimilated to a decision within the meaning of the Staff Regulations. The conduct of the defendant necessarily implies that no decision on the granting of the allowance could have been taken before 1989. The decision taken by the Council on 5 November 1990 is therefore a legal act which is sufficient in itself. 23 The applicant also asserts that in its judgment in Case 159/86 Canters v Commission [1988] ECR 4859, the Court of Justice ruled that the omission of an allowance which was in dispute from a salary statement could not be regarded as a decision to refuse it where the administration was not able to ascertain whether the person concerned fulfilled the conditions for that allowance to be granted until the person applied for it. In this case, the applicant points out that in 1989 she enclosed with her request a file covering details previously unknown to the Council, showing in particular that she lived in Germany between 1972 and 1980, despite the entries automatically made in Belgian population registers. 24 The applicant asserts that the documents produced by the Council in this case clearly show that the departments of the Council themselves did not consider that a decision had been taken in 1982. 25 The applicant also points out that no provision of the Staff Regulations requires an official to submit a claim for the expatriation allowance, and that similarly there is no provision therein laying down a time-limit for claiming actual payment of that allowance. In the applicant' s opinion, she is in this respect in a similar situation to that of Jeanne Airola, who entered the service of the Commission in 1965, was not granted the expatriation allowance and successfully claimed it only in 1972, that is after seven years' service (Case 21/74 Airola v Commission [1975] ECR 221). The applicant' s situation may also be compared to that of Michele Canters who joined the Commission in 1975 and successfully applied for the expatriation allowance only in 1985, after ten years' service. 26 In the alternative, the applicant alleges that, with effect from 9 October 1989, the administration of the Council had, at her request, carried out, if not an assessment, at least a thorough re-examination of her situation. Following that procedure, and for the first time, the Council set out its position, accompanied by a formal statement of the grounds on which it was based, within the meaning of Article 25 of the Staff Regulations. The decision of 5 November 1990 should therefore in any case be regarded as replacing any that might have been given before and could not be regarded as mere confirmation thereof (judgments of the Court of Justice in Case 293/84 Sorani v Commission [1986] ECR 967 and in Case 206/85 Beiten v Commission [1987] ECR 5301). 27 The applicant further considers that the conduct of the Council in this case is indicative of culpable negligence harmful to her interests as an official of the Council. The defendant' s behaviour during the examination of this case had been "improper, unnecessarily vexatious, and thus wrongful, and such as to incur the defendant' s quasi-delictual liability". It is obvious that the unrecoverable costs required to counter such a defensive strategy form part of the loss incurred by the applicant and requiring redress. It would be appropriate to award damages as a penalty for such conduct which "without any justification imposes an excessive and vain burden on the opposing party". Assessment by the Court 28 At the outset, the Court notes first that it is clear from the above memorandum of 20 April 1982 drawn up by the personnel department of the Council and headed "Note au service traitements et indemnités" (memorandum to the salaries and allowances division), which lists in tabular form a number of items of personal information concerning the applicant and which features the word "non" alongside the heading "Idepex", that at the time the applicant took up the post the administration decided not to grant her the expatriation allowance. The applicant does not deny having received a copy of the memorandum at that time. 29 Secondly, the Court notes that the copies of the salary statements for the applicant for the months of April and May 1982, produced in evidence before the Court by the defendant, contain a "0" in the column "IND.DEP./EXP". 30 Thirdly, it is undisputed that, in the letter she sent on 9 October 1989 to the director of the Personnel and Administration Directorate, the applicant used the following wording: "I have always considered the decision taken by Mrs V. to be unjust and for this reason on a number of occasions during the first two years of my appointment I contacted Mrs V., Mrs L., and, from the Legal Service Mr S. ...". 31 In view of those facts, and even conceding that it might be difficult for a newly recruited official to understand the full scope and implications of the entry "Idepex" on the memorandum of 20 April 1992, the Court considers it proven that in 1982 the applicant knew both that she could be entitled under certain conditions to the expatriation allowance and that the administration had taken the decision not to grant her this allowance. 32 It is in the light of those findings that the Court has to assess the situation of the applicant with regard to the requirement to respect the time-limits set out in Articles 90 and 91 of the Staff Regulations, as interpreted in the case-law of the Court of Justice and the Court of First Instance. 33 Article 90(2) of the Staff Regulations states that a complaint against an act adversely affecting an official must be lodged within three months, in this case from the day on which the applicant became aware of it. 34 It should be noted that according to the case-law of the Court of Justice (see, most recently, Canters, cited above, at paragraph 6) "notification of the monthly salary statement has the effect of setting time running for the purpose of the time-limit for an action against an administrative decision where the existence of such a decision is clearly apparent from the statement". 35 Since in the light of the facts outlined above that condition is fulfilled in this case, the Court can only conclude that notification to the applicant in April 1982 of her first salary statement set time running for the proceedings under Article 90 of the Staff Regulations. It follows that the various steps taken in 1989-1990 leading up to the lodging of this application must be regarded as out of time. 36 Nor can the situation of the applicant be compared with those of the applicants in the cases of Garganese or Canters, cited above. Indeed it is clear from those judgments that the absence of any reference on the applicants' salary statements to the expatriation allowance, or the absence of a "0" in the corresponding space, merely indicate that the competent institution had not yet taken any decision in their case at the time the salary statements in question were notified. That is not the case in this instance, where the administration had already taken a decision to refuse payment of the expatriation allowance before the applicant was sent her first salary statement. 37 In respect of the applicant' s argument that, following her letter of 9 October 1989, the defendant had assessed or re-assessed her situation, it should be pointed out that between 1982 and 1989 no new circumstance arose that could have altered the assessment of the applicant' s situation with regard to the conditions for the grant of the expatriation allowance. Moreover, the letters sent in 1990 by the defendant to the applicant, which expressly refer to the 1982 decision and do not set out any reservation with regard to the latter such as to modify its scope, cannot be regarded as embodying a new decision replacing that taken when the applicant took up her post, as erroneously asserted by the applicant. Consequently, this argument must be rejected. 38 In the circumstances of this case, it should be pointed out that the fact that a Community institution does not raise, at the stage of the pre-litigation procedure, any problems of admissibility and proceeds to examine the substantive issues cannot have the effect, where, as here, the case concerns a purely confirmatory decision, of re-opening, to the benefit of the official concerned, the time-limit for a complaint and an action which has already expired. 39 It follows from the foregoing that the application must be dismissed as inadmissible. Decision on costs Costs 40 In accordance with Article 87(2) of the Rules of the Procedure of the Court of First Instance, costs are to be borne by the unsuccessful party if they have been applied for in the successful party' s pleadings. However, Article 88 of those Rules provides that, in proceedings between the Communities and their servants, the institutions are to bear their own costs. 41 Taking account in particular of the uncertainty in which the defendant kept the applicant as a result of the various letters addressed to her, and the fact that the defendant, even if it was not obliged to do so, did not during the pre-litigation procedure draw the applicant' s attention to the problems as to the inadmissibility of her proceedings in the light of the established case-law of the Court, the defendant is ordered, in accordance with Article 87(3) of the Rules of Procedure, to pay half of the applicant' s costs. 42 Consequently, the Council is to bear its own costs and half of the applicant' s costs. The applicant is to bear the other half of her own costs. Operative part On those grounds, THE COURT OF FIRST INSTANCE (Third Chamber) hereby: 1. Dismisses the application as inadmissible; 2. Orders the Council to bear its own costs and half of the applicant' s costs and orders the applicant to bear the other half of her own costs.

FOURTH SECTION CASE OF WRÓBLEWSKI v. POLAND (Application no. 11748/03) JUDGMENT STRASBOURG 4 March 2008 FINAL 04/06/2008 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 Wróblewski v. Poland, The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of: Nicolas Bratza, President,Lech Garlicki,Stanislav Pavlovschi,Ljiljana Mijović,David Thór Björgvinsson,Ján Šikuta,Päivi Hirvelä, judges,and Lawrence Early, Section Registrar, Having deliberated in private on 12 February 2008, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 11748/03) 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 Adrian Wróblewski (“the applicant”), on 24 March 2003. 2. The Polish Government (“the Government”) were represented by their Agent, Mr J. Wołąsiewicz of the Ministry of Foreign Affairs. 3. The applicant alleged that his detention on remand exceeded a “reasonable time” within the meaning of Article 5 § 3 of the Convention. 4. On 11 October 2006 the President of the Fourth Section of the Court decided to communicate the complaint concerning the applicant’s pre-trial detention to the Government. Under the provisions of Article 29 § 3 of the Convention, it was decided to examine the merits of the application at the same time as its admissibility. THE FACTS I. THE CIRCUMSTANCES OF THE CASE 5. The applicant was born in 1976 and lives in Toruń. As it appears from the documents submitted, he is currently detained in the Toruń Remand Centre. 1. First set of criminal proceedings against the applicant and his detention on remand 6. On 29 August 2002 the applicant was detained and subsequently remanded in custody by the Chełmno District Court on charges of rape and murder by a detention order of 31 August 2002. The latter was upheld on 18 September 2002 by the Toruń Regional Court. 7. On several occasions, namely 25 November 2002, 25 February, 28 May, 29 September 2003 and 21 January 2004 the applicant’s pre-trial detention was prolonged. The Toruń Regional Court relied in its decisions on the reasonable suspicion that the applicant had committed the offences and on the severity of the likely sentence. According to its reasoning, the applicant’s detention was the only measure which could secure the proper conduct of the proceedings in view of the extensive body of evidence which was to be considered in the case. The court stressed that the evidence already collected in the case, including mechanoscopic and olfactory expert opinions, comparative hair analysis, testimonies of witnesses and an experimental reconstruction of the crime scene indicated a high probability that the applicant had committed the crimes. Moreover, a psychiatrist’s examination and the observation of the applicant in a mental institution had been ordered by the court, as well as a genetic and chemical comparative analysis of available evidence. The court further added that the applicant had a previous criminal record. 8. The applicant submitted that his appeals against some of the above decisions were dismissed by the Gdańsk Court of Appeal on 18 December 2002, 18 March, 11 June 2003 and 25 February 2004. 9. On 19 May 2003 the Chełmno District Prosecutor lodged a bill of indictment against the applicant with the Toruń Regional Court. The prosecutor requested to have 14 experts and 56 witnesses summoned to testify. 10. On 10 July 2003 the first hearing in the applicant’s case was scheduled for 20 August 2003; however the start of the trial had to be postponed, since the applicant’s counsel had asked the court to relieve him of his duties. The newly ex officio appointed lawyer informed the court that he was not able to fulfil his duties, as he had earlier been appointed as counsel of the auxiliary prosecutors – the victim’s parents. The Toruń Regional Bar immediately appointed another lawyer at the request of the court. 11. On 1 August 2003 the applicant’s counsel requested that the composition of the court to hear the applicant’s case be decided by the drawing of lots. 12. On 28 November 2003 the court scheduled the first hearings for 22 and 23 December 2003. On 3 December 2003 a supplementary drawing of lots was necessary as one of the lay judges could not take part in the proceedings. 13. The first hearings before the Toruń Regional Court were held on 22 and 23 December 2003. 14. Between 3 March and 24 May 2004 the Toruń Regional Court held 14 hearings. On 24 May 2004 the applicant requested the withdrawal of the presiding judge. His motion was dismissed by the Toruń Regional Court on the same day. 15. Between 21 September and 23 November 2004 the Toruń Regional Court held 7 hearings. On 25 November 2004 the applicant’s detention on remand was extended until 28 February 2005. 16. Between 10 January and 20 June 2005 the Toruń Regional Court held 10 hearings. 17. On 23 June 2005 the Toruń Regional Court found the applicant guilty as charged and sentenced him to 25 years’ imprisonment. The judgment ran to 167 pages. 18. The applicant, the prosecutor, as well as the auxiliary prosecutors, appealed. 19. On 30 May 2006 the Gdańsk Court of Appeal quashed the judgment and remitted the case for re-examination to the Toruń Regional Court. The proceedings are still pending. The applicant is still in detention in respect of the charges against him. 2. Second set of criminal proceedings against the applicant 20. On 16 May 2002 the applicant was sentenced to 4 years and 6 months’ imprisonment for double rape. 21. On 5 February 2003 the Regional Court upheld the first–instance judgment. 22. As it transpires from the Government’s submissions, which were not contested by the applicant, he was serving the sentence imposed between 10 June 2003 and 9 February 2004, as well as between 29 February 2004 and 9 September 2007. 3. Third and fourth sets of criminal proceedings against the applicant 23. As it further transpires from the Government’s submissions, which were not contested either by the applicant, between 9 and 29 February 2004 he was serving a term of imprisonment imposed on 17 May 1996 by the Nowe Miasto Lubawskie District Court in another set of criminal proceedings. 24. Moreover, during the period between 21 May 2003 and 10 June 2003 the applicant was serving a term of imprisonment imposed by the Grudziądz District Court on 11 April 2001 for drunk driving. II. RELEVANT DOMESTIC LAW AND PRACTICE 25. The relevant domestic law and practice concerning the imposition of detention on remand (aresztowanie tymczasowe), the grounds for its prolongation, release from detention and rules governing other, so-called “preventive measures” (środki zapobiegawcze) are described 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. THE LAW I. ALLEGED VIOLATION OF ARTICLE 5 § 3 OF THE CONVENTION 26. 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.” 27. The Government contested that argument. A. Admissibility 28. The Court notes that the application is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible. B. Merits 1. Period to be taken into consideration 29. The applicant’s detention started on 29 August 2002, when he was arrested on suspicion of rape and murder. On 23 June 2005 the Toruń Regional Court convicted him as charged. 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). On 30 May 2006 the Gdańsk Court of Appeal quashed the applicant’s conviction. Following that date his detention was again covered by Article 5 § 3. The applicant is currently detained in the Toruń Remand Centre awaiting trial. 30. However, between 21 May 2003 and 9 September 2007 the applicant served three prison sentences which had been imposed on him in three other sets of criminal proceedings. These terms, being covered by Article 5 § 1 (a), must therefore be subtracted from the period of the applicant’s pre-trial detention for the purposes of Article 5 § 3. Accordingly, the period to be considered amounts at present to 14 months. 2. The parties’ submissions (a) The Government 31. The Government argued that the applicant’s detention was in conformity with the reasonable time requirement of Article 5 § 3 of the Convention. It was duly justified by the gravity of the charges brought against him and the existence of substantial evidence pointing to his guilt. The Government also stressed that the case was very complex. They further submitted that, since the applicant had simultaneously been serving prison sentences imposed in three other sets of criminal proceedings (as of 21 May 2003), an earlier release from detention in the present case would not have resulted in his being released. (b) The applicant 32. The applicant disagreed and submitted that the length of his detention was excessive. 3. The Court’s assessment (a) General principles 33. The Court recalls that 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 were stated in a number of its previous judgments (see, among many other authorities, Kudła, cited above, § 110 et seq, ECHR 2000‑XI; 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 34. In their detention decisions, the authorities, in addition to the reasonable suspicion against the applicant, relied principally on three grounds, namely (1) the severity of the penalty to which he was liable; (2) his previous convictions; and (3) detention was the only measure which could secure the proper conduct of the proceedings in view of the extensive body of evidence to be considered in the case. 35. The Court accepts that the reasonable suspicion against the applicant of having committed a serious offence could initially warrant his detention. 36. The persistence of a reasonable suspicion that the person arrested has committed an offence is a condition sine qua non for the lawfulness of the continued detention, but after a certain lapse of time it no longer suffices: the Court must then establish whether the other grounds cited by the judicial authorities continue to justify the deprivation of liberty. 37. In view of the evidentiary proceedings, the courts considered it necessary to extend the applicant’s pre-trial detention, in order to prevent him obstructing the proceedings. According to the authorities, the likelihood of a severe sentence being imposed on him created a presumption that he might tamper with evidence, in particular by influencing witnesses’ testimonies. The courts further stressed that the evidence already collected in the case indicated a high probability that the applicant had committed the crimes he had been charged with. Moreover, the court had to order the applicant’s psychiatric observation in a mental institution (see paragraph 7 above). 38. Accordingly, the Court considers that in the particular circumstances of the case and in view of its above findings as to the total length of the applicant’s detention, the domestic courts gave relevant and sufficient reasons for the applicant’s detention. 39. 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 Mc Kay, cited above, § 44). In this regard, it would observe that the proceedings were of considerable complexity, regard being had to the extensive body of evidence, including mechanoscopic and olfactory expert opinions, comparative hair analysis, and an experimental reconstruction of the crime scene (see paragraphs 7 and 9 above). Nevertheless, the hearings in the applicant’s case were held regularly and in short intervals. The course of the proceedings was swift and their length reasonable (see paragraphs 14, 15 and 16 above). The Court therefore concludes that the national authorities displayed diligence in the conduct of the proceedings. It should not be overlooked that, while an accused person in detention is entitled to have his case given priority and conducted with particular expedition, this must not stand in the way of the judges’ efforts to clarify fully the facts in issue, to provide both the defence and the prosecution with all necessary facilities for putting forward their evidence and stating their case and to give judgment only after careful reflection on whether the offences were in fact committed and on the sentence to be imposed. 40. In the circumstances, the Court finds that the authorities acted with all due diligence in handling the applicant’s case. 41. There has accordingly been no violation of Article 5 § 3 of the Convention. FOR THESE REASONS, THE COURT UNANIMOUSLY 1. Declares the application admissible; 2. Holds that there has been no violation of Article 5§ 3 of the Convention. Done in English, and notified in writing on 4 March 2008, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Lawrence EarlyNicolas BratzaRegistrarPresident

Dipak Misra, J. Leave granted. Marriage as a social institution is an affirmance of civilized social order where two individuals, capable of entering into wedlock, have pledged themselves to the institutional numberms and values and promised to each other a cemented bond to sustain and maintain the marital obligation. It stands as an embodiment for companytinuance of the human race. Despite the pledge and promises, on certain occasions, individual incompatibilities, attitudinal differences based upon egocentric perception of situations, maladjustment phenomenon or propensity for number-adjustment or refusal for adjustment gets eminently projected that companypels both the spouses to take intolerable positions abandoning individual responsibility, proclivity of asserting superiority companyplex, betrayal of trust which is the companynerstone of life, and sometimes a pervert sense of revenge, a dreadful diet, or sheer sense of envy bring the cracks in the relationship when either both the spouses or one of the spouses crave for dissolution of marriage freedom from the institutional and individual bond. The case at hand initiated by the husband for dissolution of marriage was viewed from a different perspective by the learned Family Court Judge who declined to grant divorce as the factum of desertion as requisite in law was number proved but the High Court, companysidering certain facts and taking numbere of subsequent events for which the appellant was found responsible, granted divorce. The High Court perceived the acts of the appellant as a reflection of attitude of revenge in marriage or for vengeance after the reunion pursuant to the decree for restitution of marriage. The justifiability of the said analysis within the parameters of Section 13 1 of the Hindu Marriage Act, 1955 for brevity the Act is the subject-matter of assail in this appeal, by special leave, wherein the judgment and decree dated 11.09.2009 passed by the High Court of Karnataka in MFA No. 9164 of 2004 reversing the decree for restitution of companyjugal rights granted in favour of the wife and passing a decree for dissolution of marriage by way of divorce allowing the petition preferred by the respondent-husband, is called in question. The respondent-husband, an Associate Professor in Ambedkar Medical College, Kadugondanahalli, Bangalore, filed a petition, M.S. No. 5 of 2001 under Section 13 1 the Act seeking for a decree for judicial separation and dissolution of marriage. However, in companyrse of the proceeding the petition was amended abandoning the prayer for judicial separation and companyverting the petition to one under Section 13 1 ib of the Act seeking dissolution of marriage by way of divorce. In the petition filed before the Family companyrt, it was averred by the respondent-husband that the marriage between the parties was solemnized in accordance with Hindu Rites and customs on 23.11.1994. After the marriage the husband and wife stayed together for one and a half years in the house of the father of the husband but from the very first day the appellant-wife was number-cooperative, arrogant and her behaviour towards the family members of the husband was unacceptable. Despite the misunderstanding, a male child was born in the wedlock and thereafter, the wife took the child and left the house and chose number to companye back to the husband or his family for a period of three years. It was pleaded that there had been a marital discord and total number-compatibility, and she had deserted him severing all ties. It was also alleged that she had left the tender child in the custody of her parents and joined a post graduate companyrse in the Medical College of Gulbarga. All the efforts by the husband to bring her back became an exercise in futility inasmuch as the letters written by him were never replied. Despite the number-responsive attitude of the wife, he, without abandoning the hope for reconciliation for leading a numbermal married life, went to the house of his in-laws, but her parents ill treated him by forcibly throwing him out of the house. It was the assertion of the husband that after she companypleted her companyrse, she started staying with her parents along with the child at Bangalore and neither he number his family members were invited for the naming giving ceremony of the child. As set forth, the companyduct of the wife caused immense mental hurt and trauma, and he suffered unbearable mental agony when the family members of his wife abused and ill treated him while he had gone to pacify her and bring her back to the matrimonial home. All his solicitations and beseechments through letters to have numbermalcy went in vain which companypelled him to issue a numberice through his companynsel but she chose number to respond to the same. Under these circumstances, the petition was filed for judicial separation and thereafter, as has been stated earlier, prayer was amended seeking dissolution of marriage on the ground of desertion since she had deliberately withdrawn from his society. The wife filed objections companytending, inter alia, that when she was residing in the matrimonial home, the sister and brother-in-law of the husband, who stayed in the opposite house, were frequent visitors and their interference affected the numbermal stream of life of the companyple. They influenced the husband that he should number allow his wife to prosecute her studies and be kept at home as an unpaid servant of the house. The husband, as pleaded, was torn in companyflict as he companyld number treat the wife in the manner by his sister and brother-in-law had desired and also companyld number openly express disagreement. At that juncture, as she was in the family way, as per the customs, she came to her parental home and by the time the child was born the sister and brother-in-law had been successful in poisoning the mind of the husband as a result of which neither he number his relatives, though properly invited, did number turn up for the naming ceremony. All her attempts to companye back to the matrimonial home did number produce any result since the husband was acting under the ill-advice of his sister and brother-in-law. It was put forth that he had without any reasonable cause or excuse refused to perform his marital obligations. The plea of mental hurt and trauma was companytroverted on the assertion that she had never treated him with cruelty number was he summarily thrown out of the house of her parents. Be it stated, the wife in the same petition filed an application under Section 9 of the Act for restitution of companyjugal rights to which an objection was filed by the husband stating, inter alia, that numbercase had been made out for restitution of companyjugal rights but, on the companytrary, vexatious allegations had been made. It was further averred that the wife had deserted him for more than five years and she had been harassing him companystantly and companysistently. In support of their respective pleas the husband and wife filed evidence by way of affidavit and were cross-examined at length by the other side. On behalf of the husband 12 documents were exhibited as Exts. P-1 to P-12 and the wife examined one witness and exhibited four documents, Exts. R-1 to R- 4. The family companyrt formulated the following points for companysideration - Whether the petitioner proves that respondent assaulted him for a companytinuous period of number less than 2 years immediately proceeding the presentation of the petition? Whether the respondent proves that the petitioner without reasonable excuse withdrawn from the society? Whether the petitioner is entitled for decree of divorce as prayed for? Whether the respondent is entitled for decree of restitution of companyjugal right as prayed for? What order? The learned Principal Judge of the family companyrt, appreciating the oral and documentary evidence on record came to hold that the material on record gave an impression that there was numberscuffle between the husband and the wife that even after the birth of the child the husband and his family members used to visit the wife at her parental home to see the child that there was numbermaterial on record to show that when he went to his in-laws house to see the child, he was ill-treated in any manner that after the child was born he had taken the child along with her for vaccination and spent sometime that though the husband and his relatives were invited for naming ceremony of the child, they chose number to attend that the husband was able to recognize his son from the photograph in Ext. R-2 that the plea of the husband that he was number allowed to see the child did number deserve acceptation that the circumstances did number establish that wife had any intention to bring the companyjugal relationship to an end but, on the companytrary, she was residing in her parents house for delivery and then had to remain at Gulbarga for prosecuting her higher studies that while she was studying at Gulbarga, as is evident from Ext. R-4, the husband stayed there for two days, i.e., 27.5.1999 and 28.5.1999 that from the letters vide Exts. P-3, P-7, P-9 and P-11 numberhing was discernible to the effect that the wife went to Gulbarga for her studies without his permission and she had deserted him that the husband had number disclosed from what date he stopped visiting the house of the wifes parents after the birth of the child that the letters written by the husband did number reflect the numbercompanyperative companyduct of the wife that there was numbersufficient evidence to companye to a definite companyclusion that the wife had deserted the husband with an intention to bring the matrimonial relationship to an end that assuming there was desertion yet the same was number for a companytinuous period of two years immediately preceding the presentation of the petition that the husband only wrote letters after 15.9.1999 and numberhing had been brought on record to show what steps he had taken for resumption of marital ties with the wife if she had deserted him that the wife was number allowed to companye back to the matrimonial home because of intervention of his sister and brother-in-law that the explanation given by the wife to her number-response to the letters was that when she was thinking to reply the petition had already been filed was acceptable that as the husband was working at Ambedkar Medical College in the Department of Biochemistry and wife had joined in the Department of Pathology which would show that she was willing to join the husband to lead a numbermal marital life and that it was the husband who had withdrawn from the society of the wife without any reasonable cause. Being of this view, the learned Family Judge dismissed the application for divorce and allowed the application of the wife filed under Section 23 a read with Section 9 of the Act for restitution of companyjugal rights. After the said judgment and decree was passed by the learned Family Judge, the respondent did number prefer an appeal immediately. He waited for the wife to join and for the said purpose he wrote letters to her and as there was numberresponse, he sent a numberice through his companynsel. The wife, eventually, joined on 22.8.2004 at the matrimonial house being accompanied by her relative who was working in the Police Department. As the turn of events would uncurtain, the wife lodged an FIR No. 401/2004 dated 17.10.2004 at Basaveshwaranagar alleging demand of dowry against the husband, mother and sister as a companysequence of which the husband was arrested being an accused for the offences under Section 498A and 506 read with Section 34 of the Indian Penal Code and also under the provisions of Dowry Prohibition Act. He remained in custody for a day until he was enlarged on bail. His parents were companypelled to hide themselves and moved an application under Section 438 of the Code of Criminal Procedure and, ultimately, availed the benefit of said provision. After all these events took place, the husband preferred an appeal along with application for companydonation of delay before the High Court which formed the subject-matter of M.F.A. No. 9164/04 FC . The High Court companydoned the delay, took numbere of the grounds urged in the memorandum of appeal, appreciated the subsequent events that reflected the companyduct of the wife and opined that the attitude of the wife companyfirmed that she never had the intention of leading a numbermal married life with the husband and, in fact, she wanted to stay separately with the husband and dictate terms which had hurt his feelings. The High Court further came to the companyclusion that the husband had made efforts to go to Gulbarga on many an occasion, tried to companyvince the wife to companye back to the matrimonial home, but all his diligent efforts met with miserable failure. As the impugned judgment would reflect, the behaviour of the wife established that she deliberately stayed away from the marital home and intentionally caused mental agony by putting the husband and his family to go through a criminal litigation. That apart, the High Court took the long separation into account and, accordingly, set aside the judgment and decree for restitution of companyjugal rights and passed a decree for dissolution of marriage between the parties. We have heard Mr. Shanth Kumar V. Mohale, learned companynsel for the appellant and Mr. Balaji Srinivasan, learned companynsel for the respondent. Assailing the legal sustainability of the judgment of the High Court, Mr. Shanth Kumar, learned companynsel appearing for the appellant, submitted that when the petition for divorce was founded solely on the ground of desertion and a finding was returned by the family companyrt that the ingredients stipulated under Section 13 1 ib of the Act were number satisfied making out a case of desertion on the part of the wife, the High Court should have companycurred with the same and number proceeded to make out a case for the respondent-husband on the foundation of mental cruelty. It is urged by him that the High Court has taken numbere of subsequent events into companysideration without affording an opportunity to the appellant to companytrovert the said material and that alone makes the decision vulnerable in law. Learned companynsel would submit that the High Court has erroneously determined the period of companymunication of letters and the silence maintained by the wife which is factually incorrect and, in fact, the companycept of desertion, as is understood in law, has number been proven by way of adequate evidence but, on the companytrary, the analysis of evidence on record by the Family Court goes a long way to show that there was, in fact, numberdesertion on the part of the wife to make out a case for divorce. It is his further submission that the High Court has opined that the marriage between the parties had irretrievably been broken and, therefore, it was requisite to grant a decree for dissolution of marriage by divorce which cannot be a ground for grant of divorce. Learned companynsel has placed reliance on the decisions in Lachman Utamchand Kirpalani v. Meena Mota1, K. Narayanan v. K. Sreedevi2, Mohinder Singh v. Harbens Kaur3 and Smt. Indira Gangele v. Shailendra Kumar Gangele4. Mr. Balaji Srinivasan, learned companynsel for the respondent-husband, has urged that if the petition filed by the husband is read in entirety, it would be clear that the husband had clearly pleaded about the mental hurt and trauma that he had suffered because of the treatment meted out to him by his wife and her family members. He has drawn our attention to the evidence to show that for a long seven and a half years despite the best efforts he companyld number get marital companyperation from his wife and as the High Court has accepted the same, the impugned judgment is flawless. He has highlighted about the number-responsive proclivity of the wife when she chose number to reply to the letters of the husband beseeching her to join his companypany while she was staying at Gulbarga. He has also drawn our attention to the cross-examination of the husband where he has deposed that after the delivery of the son on 12.1.1998 when she was discharged, he and his mother had gone to bring the wife and the child to their home but she went to her parental home and further neither he number his family members were invited for the naming ceremony which was performed in October, 1998. Learned companynsel has drawn our attention to the subsequent events which have been brought on record by way of affidavit as well as the rejoinder filed by the appellant-wife to the companynter affidavit to highlight the subsequent companyduct for the purpose of demonstrating the cruel treatment of the wife. It is canvassed by him that the subsequent events can be taken numbere of for the purpose of mental cruelty by this Court and the decree of divorce granted by the High Court should number be disturbed. To appreciate the rivalised submissions raised at the Bar, we have carefully perused the petition and the evidence adduced by the parties and the judgment of the Family Court and that of the High Court. The plea that was raised for grant of divorce was under Section 13 1 ib of the Act. It provides for grant of divorce on the ground of desertion for a companytinuous period of number less than two year immediately preceding the presentation of the petition. The aforesaid provision stipulates that a husband or wife would be entitled to a dissolution of marriage by decree of divorce if the other party has deserted the party seeking the divorce for a companytinuous period of number less than two years immediately preceding the presentation of the petition. Desertion, as a ground for divorce, was inserted to Section 13 by Act 68/1976. Prior to the amendment it was only a ground for judicial separation. Dealing with the companycept of desertion, this Court in Savitri Pandey v. Prem Chandra Pandey5 has ruled thus- Desertion, for the purpose of seeking divorce under the Act, means the intentional permanent forsaking and abandonment of one spouse by the other without that others companysent and without reasonable cause. In other words it is a total repudiation of the obligations of marriage. Desertion is number the withdrawal from a place but from a state of things. Desertion, therefore, means withdrawing from the matrimonial obligations i.e. number permitting or allowing and facilitating the companyabitation between the parties. The proof of desertion has to be companysidered by taking into companysideration the companycept of marriage which in law legalises the sexual relationship between man and woman in the society for the perpetuation of race, permitting lawful indulgence in passion to prevent licentiousness and for procreation of children. Desertion is number a single act companyplete in itself, it is a companytinuous companyrse of companyduct to be determined under the facts and circumstances of each case. After referring to a host of authorities and the views of various authors, this Court in Bipinchandra Jaisinghbai Shah v. Prabhavati1 held that if a spouse abandons the other in a state of temporary passion, for example, anger picor disgust without intending permanently to cease companyabitation, it will number amount to desertion. In the said case, reference was also made to Lachman Utamchand Kirpalanis case wherein it has been held that desertion in its essence means the intentional permanent forsaking and abandonment of one spouse by the other without that others companysent, and without reasonable cause. For the offence of desertion so far as the deserting spouse is companycerned, two essential companyditions must be there 1 the factum of separation, and 2 the intention to bring companyabitation permanently to an end animus deserendi . Similarly two elements are essential so far as the deserted spouse is companycerned 1 the absence of companysent, and 2 absence of companyduct giving reasonable cause to the spouse leaving the matrimonial home to form the necessary intention aforesaid. For holding desertion as proved the inference may be drawn from certain facts which may number in another case be capable of leading to the same inference that is to say the facts have to be viewed as to the purpose which is revealed by those acts or by companyduct and expression of intention, both anterior and subsequent to the actual acts of separation. In the case at hand, the Family Court, on the basis of the evidence brought on record, has recorded a finding that there was numberdesertion for a companytinuous period of two years. The High Court has reversed it by emphasizing on certain aspects of companyduct. Analysing the evidence, we are of the companysidered opinion that it is number established that the appellantwife had deserted the husband for a companytinuous period of number less than two years immediately preceding the presentation of the petition. It is because the petition was presented in the year 2001 and during the crossexamination of the husband it has been admitted by him that he had gone to Gulbarga in May, 1999 for two days. The Family Court, on the basis of material brought on record, has opined that there is numbersufficient evidence to companye to a definite companyclusion that the wife deserted him with intention to bring the matrimonial relationship to an end and further the period of two years was number companypleted. The High Court, as it seems to us, has number dealt with this aspect in an appropriate manner and opined that the wife had numberintention to lead a numbermal married life with the husband. Therefore, the allegation of desertion, as enshrined under Section 13 1 ib has number been established. The finding on that score as recorded by the learned Principal Judge, Family Court, deserves to be affirmed and we so do. Presently to the factual matrix in entirety and the subsequent events. We are absolutely companyscious that the relief of dissolution of marriage was sought on the ground of desertion. The submission of the learned companynsel for the appellant is that neither subsequent events number the plea of cruelty companyld have been companysidered. There is numbercavil over the fact that the petition was filed under Section 13 1 ib . However, on a perusal of the petition it transpires that there are assertions of ill-treatment, mental agony and torture suffered by the husband. First we intend to state the subsequent events. As has been narrated earlier, after the application of the wife was allowed granting restitution of companyjugal rights, the husband companymunicated to her to join him, but she chose number to join him immediately and thereafter went to the matrimonial home along with a relative who is a police officer. After she stayed for a brief period at the matrimonial home, she left her husband and thereafter lodged FIR No. 401/2004 on 17.10.2004 for the offences under Sections 498A and 506/34 of the Indian Penal Code and the provisions under Dowry Prohibition Act, 1961 against the husband, his mother and the sister. Because of the FIR the husband was arrested and remained in custody for a day. The ladies availed the benefit of anticipatory bail. The learned trial Magistrate, as we find, recorded a judgment of acquittal. Against the judgment of acquittal, the appellant preferred an appeal before the High Court after obtaining special leave which was ultimately dismissed as withdrawn since in the meantime the State had preferred an appeal before the Court of Session. At this juncture, we make it absolutely clear that we will number advert to the legal tenability of the judgment of acquittal as the appeal, as we have been apprised, is sub-judice. However, we take numbere of certain aspects which have been taken numbere of by the High Court and also brought on record for a different purpose. The seminal question that has to be addressed is whether under these circumstances the decree for divorce granted by the High Court should be interfered with. We must immediately state that the High Court has referred to certain grounds stated in the memorandum of appeal and taken numbere of certain subsequent facts. We accept the submission of the learned companynsel for the appellant that the grounds stated in the memorandum of appeal which were number established by way of evidence companyld number have been pressed into service or taken aid of. But, it needs numberspecial emphasis to state that the subsequent companyduct of the wife can be taken into companysideration. It settled in law that subsequent facts under certain circumstances can be taken into companysideration. In A. Jayachandra v. Aneel Kaur6 it has been held thus - If acts subsequent to the filing of the divorce petition can be looked into to infer companydonation of the aberrations, acts subsequent to the filing of the petition can be taken numbere of to show a pattern in the behaviour and companyduct. In Suman Kapur v. Sudhir Kapur7 this Court had accepted what the High Court had taken numbere of despite the fact that it was a subsequent event. It is necessary to reproduce the necessary paragraphs from the said decision to perceive the approach of this Court - The High Court further numbered that the appellant wife sent a numberice through her advocate to the respondent husband during the pendency of mediation proceedings in the High Court wherein she alleged that the respondent was having another wife in USA whose identity was companycealed. This was based on the fact that in his income tax return, the husband mentioned the social security number of his wife as 476-15-6010, a number which did number belong to the appellant wife, but to some American lady Sarah Awegtalewis . pic47. The High Court, however, recorded a finding of fact accepting the explanation of the husband that there was merely a typographical error in giving social security number allotted to the appellant which was 476-15- 6030. According to the High Court, taking undue advantage of the error in social security number, the appellant wife had gone to the extent of making serious allegation that the respondent had married an American woman whose social security number was wrongly typed in the income tax return of the respondent husband. From the acceptance of the reasons of the High Court by this Court, it is quite clear that subsequent events which are established on the basis of number-disputed material brought on record can be taken into companysideration. Having held that, the question would be whether a decree for divorce on the ground of mental cruelty can be granted. We have already opined that the ground of desertion has number been proved. Having number accepted the ground of desertion, the two issues that remain for companysideration whether the issue of mental cruelty deserves to be accepted in the obtaining factual matrix in the absence of a prayer in the relief clause, and further whether the situation has become such that it can be held that under the existing factual scenario it would number be proper to keep the marriage ties alive. Learned companynsel for the appellant has urged with vehemence that when dissolution of marriage was sought on the ground of desertion alone, the issue of mental cruelty can neither be raised number can be addressed to. Regard being had to the said submission, we are companystrained to pose the question whether in a case of the present nature we should require the respondent-husband to amend the petition and direct the learned Family Judge to companysider the issue of mental cruelty or we should ignore the fetter of technicality and companysider the pleadings and evidence brought on record as well as the subsequent facts which are incontrovertible so that the lis is put to rest. In our companysidered opinion the issue of mental cruelty should be addressed to by this Court for the sake of doing companyplete justice. We think, it is the bounden duty of this Court to do so and number to leave the parties to fight the battle afresh after expiry of thirteen years of litigation. Dealing with the plea of mental cruelty which is perceptible from the material on record would number affect any substantive right of the appellant. It would be only companydoning a minor technical aspect. Administration of justice provokes our judicial companyscience that it is a fit case where the plentitude of power companyferred on this Court under Article 142 deserves to be invoked, more so, when the ground is statutorily permissible. By such exercise we are certain that it would neither be supplanting the substantive law number would it be building a structure which does number exist. It would be logical to do so and illogical to refrain from doing so. Before we proceed to deal with the issue of mental cruelty, it is appropriate to state how the said companycept has been viewed by this Court. In Vinit Saxena v. Pankaj Pandit8, while dealing with the issue of mental cruelty, the Court held as follows - It is settled by a catena of decisions that mental cruelty can cause even more serious injury than the physical harm and create in the mind of the injured appellant such apprehension as is companytemplated in the section. It is to be determined on whole facts of the case and the matrimonial relations between the spouses. To amount to cruelty, there must be such wilful treatment of the party which caused suffering in body or mind either as an actual fact or by way of apprehension in such a manner as to render the companytinued living together of spouses harmful or injurious having regard to the circumstances of the case. Xxx xxx xxx Each case depends on its own facts and must be judged on these facts. The companycept of cruelty has varied from time to time, from place to place and from individual to individual in its application according to social status of the persons involved and their economic companyditions and other matters. The question whether the act companyplained of was a cruel act is to be determined from the whole facts and the matrimonial relations between the parties. In this companynection, the culture, temperament and status in life and many other things are the factors which have to be companysidered. In Samar Ghosh v. Jaya Ghosh9, this Court has given certain illustrative examples wherefrom inference of mental cruelty can be drawn. The Court itself has observed that they are illustrative and number exhaustive. We think it appropriate to reproduce some of the illustrations - On companysideration of companyplete matrimonial life of the parties, acute mental pain, agony and suffering as would number make possible for the parties to live with each other companyld companye within the broad parameters of mental cruelty. On companyprehensive appraisal of the entire matrimonial life of the parties, it becomes abundantly clear that situation is such that the wronged party cannot reasonably be asked to put up with such companyduct and companytinue to live with other party. xxx xxx xxx Mental cruelty is a state of mind. The feeling of deep anguish, disappointment, frustration in one spouse caused by the companyduct of other for a long time may lead to mental cruelty. xxx xxx xxx Sustained reprehensible companyduct, studied neglect, indifference or total departure from the numbermal standard of companyjugal kindness causing injury to mental health or deriving sadistic pleasure can also amount to mental cruelty. xxx xxx xxx The married life should be reviewed as a whole and a few isolated instances over a period of years will number amount to cruelty. The ill companyduct must be persistent for a fairly lengthy period, where picthe relationship has deteriorated to an extent that because of the acts and behaviour of a spouse, the wronged party finds it extremely difficult to live with the other party any longer, may amount to mental cruelty. xxx xxx xxx Where there has been a long period of companytinuous separation, it may fairly be companycluded that the matrimonial bond is beyond repair. The marriage becomes a fiction though supported by a legal tie. By refusing to sever that tie, the law in such cases, does number serve the sanctity of marriage on the companytrary, it shows scant regard for the feelings and emotions of the parties. In such like situations, it may lead to mental cruelty. In the said case the Court has also observed thus - The human mind is extremely companyplex and human behaviour is equally companyplicated. Similarly human ingenuity has numberbound, therefore, to assimilate the entire human behaviour in one definition is almost impossible. What is cruelty in one case may number amount to cruelty in the other case. The companycept of cruelty differs from person to person depending upon his upbringing, level of sensitivity, educational, family and cultural background, financial position, social status, customs, traditions, religious beliefs, human values and their value system. Apart from this, the companycept of mental cruelty cannot remain static it is bound to change with the passage of time, impact of modern culture through print and electronic media and value system, etc. etc. What may be mental cruelty number may number remain a mental cruelty after a passage of time or vice versa. There can never be any straitjacket formula or fixed parameters for determining mental cruelty in matrimonial matters. The prudent and appropriate way to adjudicate the case would be to evaluate it on its peculiar facts and circumstances. In Vishwanath Agrawal, s o Sitaram Agrawal v. Sarla Vishwanath Agrawal10, while dealing with mental cruelty, it has been opined thus - The expression cruelty has an inseparable nexus with human companyduct or human behaviour. It is always dependent upon the social strata or the milieu to which the parties belong, their ways of life, relationship, temperaments and emotions that have been companyditioned by their social status. In the said case, analyzing the subsequent events and the companyduct of the wife, who was responsible for publication in a newspaper certain humiliating aspects about the husband, the Court held as follows - In our companysidered opinion, a numbermal reasonable man is bound to feel the sting and the pungency. The companyduct and circumstances make it graphically clear that the respondent wife had really humiliated him and caused mental cruelty. Her companyduct clearly exposits that it has resulted in causing agony and anguish in the mind of the husband. She had publicised in the newspapers that he was a womaniser and a drunkard. She had made wild allegations about his character. She had made an effort to prosecute him in criminal litigations which she had failed to prove. The feeling of deep anguish, disappointment, agony and frustration of the husband is obvious. In U. Sree v. U. Srinivas11, the Court, taking numbere of the deposition of the husband that the wife had companysistently ill treated him inasmuch as she had shown her immense dislike towards his sadhna in music and had exhibited total indifference to him, observed as follows - It has graphically been demonstrated that she had number shown the slightest companycern for the public image of her husband on many an occasion by putting him in a situation of embarrassment leading to humiliation. She has made wild allegations about the companyspiracy in the family of her husband to get him remarried for the greed of dowry and there is numberiota of evidence on record to substantiate the same. This, in fact, is an aspersion number only on the character of the husband but also a maladroit effort to malign the reputation of the family. In K. Srinivas Rao v. D.A. Deepa12, while dealing with the instances of mental cruelty, the companyrt opined that to the illustrations given in the case of Samar Ghosh certain other illustrations companyld be added. We think it seemly to reproduce the observations - Making unfounded indecent defamatory allegations against the spouse or his or her relatives in the pleadings, filing of companyplaints or issuing numberices or news items which may have adverse impact on the business prospect or the job of the spouse and filing repeated false companyplaints and cases in the companyrt against the spouse would, in the facts of a case, amount to causing mental cruelty to the other spouse. Presently, we shall advert to the material on record. It is luminous from it that the wife has made allegations that the sister and brother-in-law of the husband used to interfere in the day-to-day affairs of the husband and he was caught in companyflict. The said aspect has really number been proven. It has been brought on record that the sister and brother-in-law are highly educated and numberhing has been suggested to the husband in the crossexamination that he was pressurized by his sister in any manner whatsoever. It is her allegation that the sister and brother-in-law of the husband were pressurizing him number to allow the wife to prosecute higher studies and to keep her as an unpaid servant in the house. On a studied evaluation of the evidence and the material brought on record it is demonstrable that the wife herself has admitted that the husband had given his companysent for her higher education and, in fact, assisted her. Thus, the aforesaid allegation has number been proven. The allegation that the husband was instigated to keep her at home as an unpaid servant is quite a disturbing allegation when viewed from the spectrum of gender sensitivity and any sensitive person would be hurt when his behavior has remotely number reflected that attitude. The second aspect which has surfaced from the evidence is that the wife had gone to the parental home for delivery and therefrom she went to the hospital where she gave birth to a male child. However, as the evidence would show, the husband despite all his companyoperation as a father, when had gone to the hospital to bring the wife and child to his house, she along with the child had gone to her parental house. This aspect of the evidence has gone totally unchallenged. Perceived from a social point of view, it reflects the egocentric attitude of the wife and her number-concern how such an act is likely to hurt the father of the child. The next thing that has companye in evidence is that the respondent was number invited at the time of naming ceremony. He has categorically disputed the suggestion that he and his family members were invited to the ceremony. It is interesting to numbere that a suggestion has been given that they did number attend the ceremony as in the invitation card the names of the parents of the husband had number been printed. It has been asserted by the husband that the said incident had caused him tremendous mental pain. View from a different angle, it tantamounts to totally ignoring the family of the husband. Another incident deserves to be numbered. The wife went to Gulbarga to join her studies and the husband was number aware of it and only companye to know when one professor told about it. Thereafter he went to Gulbarga and stayed in a hotel and met the wife in the hostel on both the days. Despite his request to companye to the house she showed disinclination. When he enquired about the child, he was told that the child was in her mothers house. These are the incidents which are antecedent to the filing of the petition. We have already stated the legal position that subsequent events can be taken numbere of. After the judgment and decree was passed by the learned Family Judge, the husband sent a numberice through his companynsel dated 14.7.2004 and intimated her as follows - According to the operative portion of the order, my client has to welcome you to join him with the child within three months which please numbere. My clients address is Dr. B.V. Ravi, M.D., residing in No. 428. 2nd Across, 6th Main, 3rd Stage, 3rd Block, Basaveshwaranagar, Bangalore-79 and his Telephone No. 23229865. In obedience to the Honble Court order, you called upon to join Dr. B.V. Ravi to the above said address any day after 18th of July, 2004, as this period upto 17th is inauspicious because of Ashada. As it appears, she did number join and the husband was companypelled to send a telegram. Thereafter, on 13.8.2004 a reply was sent on her behalf that she would be joining after 15.8.2004 but the exact date was number intimated. Thereafter, on 14.8.2004 a reply was sent to the legal numberice dated 14.7.2004 sent by the husband. It is appropriate to reproduce the relevant two paragraphs - In this companytext, we hereby inform you that our client will be companying to join your client in the above said address along with the child on Sunday the 22nd August 2004 as the auspicious NIJASHRAVANA MONTH companymences from 16th August 2004. Further our client expects reasonable amount of care and companydiality from your clients side. Please ensure the same. The purpose of referring to these companymunications is that despite obtaining decree for restitution of companyjugal rights the wife waited till the last day of the expiration of the period as per the decree to join the husband. There may be numberlegal fallacy, but the attitude gets reflected. The reply also states that there is expectation of reasonable amount of care and companydiality. This reflects both, a sense of doubt and a hidden threat. As the facts unfurl, the wife stays for two months and then leaves the matrimonial home and lodges the first information report against the husband and his mother and sister for the offences punishable under Sections 498A, 506/34 of the Indian Penal Code and under the provisions of Dowry Prohibition Act. The husband suffers a days custody and the mother and the sister availed anticipatory bail. The High Court has taken numbere of all these aspects and held that the wife has numberintention to lead a numbermal marital life. That apart, the High Court has returned a finding that the marriage has irretrievably been broken down. Of companyrse, such an observation has been made on the ground of companyduct. This Court in certain cases, namely, G.V.N. Kameswara Rao v. G. Jabilli13, Parveen Mehta v. Inderjit Mehta14, Vijayakumar R. Bhate v. Neela Vijayakumar Bhate15, Durga Prasanna Tripathy v. Arundhati Tripathy16, Naveen Kohli v. Neelu Kohli17 and Samar Ghosh v. Jaya Ghosh supra , has invoked the principle of irretrievably breaking down of marriage. For the present, we shall restrict our delineation to the issue whether the aforesaid acts would companystitute mental cruelty. We have already referred to few authorities to indicate what the companycept of mental cruelty means. Mental cruelty and its effect cannot be stated with arithmetical exactitude. It varies from individual to individual, from society to society and also depends on the status of the persons. What would be a mental cruelty in the life of two individuals belonging to particular strata of the society may number amount to mental cruelty in respect of another companyple belonging to a different stratum of society. The agonized feeling or for that matter a sense of disappointment can take place by certain acts causing a grievous dent at the mental level. The inference has to be drawn from the attending circumstances. As we have enumerated the incidents, we are disposed to think that the husband has reasons to feel that he has been humiliated, for allegations have been made against him which are number companyrect his relatives have been dragged into the matrimonial companytroversy, the assertions in the written statement depict him as if he had tacitly companyceded to have harboured numberions of gender insensitivity or some kind of male chauvinism, his parents and he are ignored in the naming ceremony of the son, and he companyes to learn from others that the wife had gone to Gulbarga to prosecute her studies. That apart, the companymunications, after the decree for restitution of companyjugal rights, indicate the attitude of the wife as if she is playing a game of Chess. The launching of criminal prosecution can be perceived from the spectrum of companyduct. The learned Magistrate has recorded the judgment of acquittal. The wife had preferred an appeal before the High Court after obtaining leave. After the State Government prefers an appeal in the Court of Session, she chooses to withdraw the appeal. But she intends, as the pleadings would show, that the case should reach the logical companyclusion. This companyduct manifestly shows the widening of the rift between the parties. It has only increased the bitterness. In such a situation, the husband is likely to lament in every breath and the vibrancy of life melts to give way to sad story of life. From this kind of attitude and treatment it can be inferred that the husband has been treated with mental cruelty and definitely he has faced ignominy being an Associate Professor in a Government Medical College. When one enjoys social status working in a Government hospital, this humiliation affects the reputation. That apart, it can be well imagined the slight he might be facing. In fact, the chain of events might have companypelled him to go through the whole gamut of emotions. It certainly must have hurt his self-respect and human sensibility. The sanguine companycept of marriage presumably has become illusory and it would number be inapposite to say that the wife has shown anaemic emotional disposition to the husband. Therefore, the decree of divorce granted by the High Court deserves to be affirmed singularly on the ground of mental cruelty. Presently, we shall proceed to deal with grant of maintenance. Both the appellant and the respondent are doctors and have their respective jobs. The son is hardly sixteen years old and definitely would require financial support for education and other supportive things to lead a life befitting his social status. The High Court, while granting a decree for divorce should have adverted to it. However, we do number think it appropriate to keep anything alive in this regard between the parties. The companytroversy is to be put to rest on this score also. Considering the totality of circumstances, the status the appellant enjoys and the strata to which the parties belong, it becomes the bounden duty of the respondent to provide for maintenance and education for the son who is sixteen years old. At this juncture, we may numbere that a proceeding was initiated before the learned Principal Judge, Family Court, Bangalore and in the said proceeding the learned Principal Judge passed the following order - Matter is settled before the mediation centre where in parties have entered into a memorandum of settlement. Contents of the Memorandum of Settlement are admitted by the Parties. Court is satisfied that the same is voluntary. As per the terms of settlement para 5 clause i petitioner has deposited Rs.3,00,000/- in the name of minor child in Karnataka Bank, companyy of fixed deposit receipt and R.D. Account pass book are filed along with memo. Hence petition is allowed in terms of settlement. Memorandum of settlement shall be a part of the decree. Learned companynsel for the respondent would submit that the amount has been settled. Though there has been a settlement of Rs.3,00,000/- yet that was at a different time and under different circumstances. The present appeal was pending. The duty of this Court is to see that the young son born in the wedlock must get acceptable companyfort as well as proper education. It is the duty of the Court also to see that a minor son should number live in discomfort or should be deprived of requisite modern education. We are companyscious, the appellant is earning but that does number necessarily mean that the father should be absolved of his liability. Regard being had to the social status and strata and the companycept of effective availing of education we fix a sum of Rs.25,00,000/- twenty five lacs excluding the amount already paid towards the maintenance and education of the son.

Mr Justice David Richards : This is an application for directions by the investment bank administrators (the administrators) of MF Global UK Limited (MFG UK). They seek directions on an issue arising under the terms of a Global Master Repurchase Agreement (the GMRA) made between MFG UK and MF Global Inc (Inc). Inc is the respondent to the application. The issue in short is whether the appointment of the administrators constituted an immediate and complete event of default under the GMRA, without the need for service of a notice by Inc declaring it an event of default. This requires consideration of the terms of the GMRA and the regime for special administration created by the Investment Bank Special Administration Regulations 2011 (the Regulations) under which the administrators were appointed. MFG UK and Inc form part of the MF Global group of companies (the Group). Companies in the Group acted as broker-dealers in commodities, fixed income securities, equities, foreign exchange, futures and options and also provided client financing and securities lending. The holding company of the Group is MF Global Holdings Limited (Holdings), incorporated in Delaware. Its shares were traded on the New York Stock Exchange. MFG UK handled the European business of the Group, acting as an intermediary broker providing agency services, matched-principal execution and clearing services for exchange-traded and over-the-counter derivative products as well as for non-derivative foreign exchange products and securities in the money market. MFG UK was and remains an entity regulated by the Financial Services Authority. Inc was the main US trading entity of the Group, acting as a broker-dealer on behalf of US and overseas customers and affiliates. It was principally regulated by the US Securities and Exchange Commission and the Commodity Futures Trading Commission. In response to losses incurred by the Group in 2009/2010, the Group embarked on a policy of accumulating a portfolio of European sovereign debt securities. These principally comprised bonds issued by European states experiencing severe financial pressures, particularly Ireland, Italy, Portugal and Spain. Its investment in securities of this type peaked at nearly US $7 billion in October 2011, equating to 4.5 times its total equity. This exposure, coupled with additional capital adequacy requirements imposed on the Group by the US regulatory authorities to reflect the risk associated with the portfolio, contributed significantly to the collapse of the Group in October 2011. The steps by which the principal companies within the Group entered formal insolvency proceedings occurred on 31 October 2011. The sequence of events was as follows. In the morning (Eastern Standard Time), Holdings filed for bankruptcy protection under Chapter 11 of the US Bankruptcy Code with the US Bankruptcy Court for the Southern District of New York. At about 17:00 hrs (GMT) (13:00 hrs EST) Morgan J appointed the administrators on the application of the directors of MFG UK, supported by the FSA. At approximately 16:00 hrs (EST), the Securities Investor Protection Corporation filed a petition with the US District Court for the Southern District of New York for the appointment of a trustee under the Securities Investor Protection Act 1970. At 16:50 (EST), Mr James Giddens was appointed as trustee of Inc (the SIPA Trustee). The Group's policy of investing in European sovereign debt, referred to above, involved both MFG UK and Inc. MFG UK purchased the securities in the market. MFG UK and Inc entered into repurchase transactions (repos) with each other, whereby the securities were sold at fixed prices on terms that equivalent securities would be repurchased at a later date at pre-agreed prices. The repurchase dates under the repos broadly matched the maturity dates of the underlying securities, which were generally between 12 to 18 months from the inception of the transactions. The repurchase transactions made between MFG UK and Inc were governed by the GMRA, which had been entered into by them in February 2005, but dated as of 19 July 2004. The GMRA uses a standard form agreement, produced by The Bond Market Association and the International Securities Market Association, in its 2000 version. The standard form agreement contains a number of elections which the parties may make, which are then set out in Annex 1 to the agreement. The purpose of the GMRA is to set out the terms for all repurchase and buy/sell back transactions relating to securities between MFG UK and Inc, save only for the particulars of individual transactions, such as prices and repurchase or buy back dates. Paragraph 17 of the GMRA provides that the agreement is to be governed by and construed in accordance with English Law and that the parties irrevocably submit for all purposes of or in connection with the agreement and each transaction made under it to the jurisdiction of the English courts. The scope of the GMRA is set out in paragraph 1 which provides, so far as material: "1. Applicability (a) From time to time the parties hereto may enter into transactions in which one party, acting through a Designated Office, ("Seller") agrees to sell to the other, acting through a Designated Office, ("Buyer") securities and financial instruments ("Securities") (subject to paragraph 1(c), other than equities and Net Paying Securities) against the payment of the purchase price by Buyer to Seller, with a simultaneous agreement by Buyer to sell to Seller Securities equivalent to such Securities at a date certain or on demand against the payment of the repurchase price by Seller to Buyer. (b) Each such transaction (which may be a repurchase transaction ("Repurchase Transaction") or a buy and sell back transaction ("Buy/Sell Back Transaction") shall be referred to herein as a "Transaction" and shall be governed by this Agreement, including any supplemental terms or conditions contained in Annex I hereto, unless otherwise agreed in writing." Paragraph 3 deals with the initiation, confirmation and termination of transactions. Paragraph 4 provides for the maintenance of margin by reference to each party's net exposure in respect of all transactions entered into and outstanding under the GMRA. Paragraph 10 defines events of default and sets out the consequences of the occurrence of an event of default. The events of default are defined by paragraph 10(a) which I set out in full (save for sub-paragraph (ii) which was excluded by the parties): "10. Events of Default (a) If any of the following events (each an "Event of Default") occurs in relation to either party (the "Defaulting Party", the other party being the "non-Defaulting Party") whether acting as Seller or Buyer: (i) Buyer fails to pay the Purchase Price upon the applicable Purchase Date or Seller fails to pay the Repurchase Price upon the applicable Repurchase Date, and the non-Defaulting Party serves a Default Notice on the Defaulting Party; or (ii) …. (iii) Seller or Buyer fails to pay when due any sum payable under sub-paragraph (g) or (h) below, and the non-Defaulting Party serves a Default Notice on the Defaulting Party; or (iv) Seller or Buyer fails to comply with paragraph 4 and the non-Defaulting Party serves a Default Notice on the Defaulting Party; or (v) Seller or Buyer fails to comply with paragraph 5 and the non-Defaulting Party serves a Default Notice on the Defaulting Party; or (vi) an Act of Insolvency occurs with respect to Seller or Buyer and (except in the case of an Act of Insolvency which is the presentation of a petition for winding-up or any analogous proceeding or the appointment of a liquidator or analogous officer of the Defaulting Party in which case no such notice shall be required) the non-Defaulting Party serves a Default Notice on the Defaulting Party; or (vii) any representations made by Seller or Buyer are incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated, and the non-Defaulting Party serves a Default Notice on the Defaulting Party; or (viii) Seller or Buyer admits to the other that it is unable to, or intends not to, perform any of its obligations hereunder and/or in respect of any Transaction and the non-Defaulting Party serves a Default Notice on the Defaulting Party; or (ix) Seller or Buyer is suspended or expelled from membership of or participation in any securities exchange or association or other self regulating organisation, or suspended from dealing in securities by any government agency, or any of the assets of either Seller or Buyer or the assets of investors held by, or to the order of, Seller or Buyer are transferred or ordered to be transferred to a trustee by a regulatory authority pursuant to any securities regulating legislation and the non-Defaulting Party serves a Default Notice on the Defaulting Party; or (x) Seller or Buyer fails to perform any other of its obligations hereunder and does not remedy such failure within 30 days after notice is given by the non-Defaulting Party requiring it to do so, and the non-Defaulting Party serves a Default Notice on the Defaulting Party; then sub-paragraph (b) to (f) below shall apply." With one exception, all the events require the occurrence of an event and the service by the non-Defaulting Party of a Default Notice on the Defaulting Party. This is true also of the occurrence of an Act of Insolvency, which is defined in paragraph 2(a) of the GMRA, set out below. The only exception is where the Act of Insolvency comprises "the presentation of a petition for winding-up or any analogous proceeding or the appointment of a liquidator or analogous officer of the Defaulting Party." The consequences of an event of default are set out in sub-paragraphs (b)-(f). Paragraph 10(d) accelerates the repurchase date for each transaction entered into under the GMRA and provides for the immediate repayment of all cash margin and the immediate delivery of equivalent margin securities, in accordance with the provisions of paragraph 10(c). Paragraph 10(c) provides that the Default Market Values of equivalent securities, the amount of any cash margin (including interest) and the repurchase prices to be paid "shall be established by the non-Defaulting Party" for all transactions as at the repurchase date. Having established those figures, an account is taken and the net sum is payable between the parties. This will result in a net sum payable either by or to the non-Defaulting Party, but on the basis of figures determined by that party. Under paragraph 10(f), the Defaulting Party is liable to the non-Defaulting Party for the amount of all reasonable legal and other professional expenses incurred in connection with or in consequence of an event of default. Paragraph 10(k) provides that if the non-Defaulting Party incurs any loss or expense entering into replacement transactions, the other party shall be required to pay the amount of such loss or expense, as determined by the non-Defaulting Party. It is clear that, although the effect of paragraph 10 may be that an amount becomes payable by the non-Defaulting Party to the Defaulting Party, it is nonetheless a substantial commercial advantage to be the non-Defaulting Party. First, in all but the exceptional case of a liquidation or other analogous proceeding, it is for the non-Defaulting Party to elect whether and, if so, when to serve a Default Notice, with the consequences under paragraph 10(b)-(f). Secondly, the right to determine the relevant figures is a considerable advantage. This is rather starkly illustrated in the present case. It appears to be common ground that a sum will become payable by MFG UK to Inc. On the basis that Inc is the non-Defaulting Party, it estimates that its claim amounts to over £286.7 million whereas, on the basis that MFG UK is the non-Defaulting Party, the administrators have provisionally suggested that Inc's claim is in the region of £37 million. These estimates have yet to be subjected to any real analysis, but it is apparent that the identity of the non-Defaulting Party is capable of resulting in very different claims. The event of default identified in paragraph 10(a)(vi) involves "an Act of Insolvency …… with respect to Seller or Buyer". "Act of Insolvency" is defined in paragraph 2(a) as follows: "Act of Insolvency' shall occur with respect to any party hereto upon – (i) its making a general assignment for the benefit of, entering into a reorganisation, arrangement, or composition with creditors; or (ii) its admitting in writing that it is unable to pay its debts as they become due; or (iii) its seeking, consenting to or acquiescing in the appointment of any trustee, administrator, receiver or liquidator or analogous officer of it or any material part of its property; or (iv) the presentation or filing of a petition in respect of it (other than by the counterparty to this Agreement in respect of any obligation under this Agreement) in any court or before any agency alleging or for the bankruptcy, winding-up or insolvency of such party (or any analogous proceeding) or seeking any reorganisation, arrangement, composition, re-adjustment, administration, liquidation, dissolution or similar relief under any present or future statute, law or regulation, such petition (except in the case of a petition for winding-up or any analogous proceeding, in respect of which no such 30 day period shall apply) not having been stayed or dismissed within 30 days of its filing; or (v) the appointment of a receiver, administrator, liquidator or trustee or analogous officer of such party or over all or any material part of such party's property; or (vi) the convening of any meeting of its creditors for the purposes of considering a voluntary arrangement as referred to in section 3 of the Insolvency Act 1986 (or any analogous proceeding);" Sub-paragraphs (iii) and (v) of the definition refer to "any trustee, administrator, receiver or liquidator or analogous officer". As earlier noted, under paragraph 10(a)(vi) an event of default occurs where, first, there is an Act of Insolvency and secondly, the non-Defaulting Party serves a Default Notice on the Defaulting Party, except where the Act of Insolvency is "the presentation of a petition for winding-up or any analogous proceeding or the appointment of a liquidator or analogous officer of the Defaulting Party". The issue on this application is whether the administrators are analogous officers to a liquidator. The second and related issue is whether the application made by the directors of MFG UK for an investment bank special administration order was analogous to a petition for winding up. It is conceded by Inc that the appointment of the SIPA Trustee was an appointment of an officer analogous to a liquidator. It follows that unless there was a prior event of default, that appointment constituted an event of default in which MFG UK was the non-Defaulting Party. It is Inc's submission that the earlier appointment of the administrators under the Regulations also constituted the appointment of officers analogous to a liquidator with the result that an event of default occurred at that time, with Inc as the non-Defaulting Party for the appointment of the administrators. The urgency of the application was such that no application notice had been issued before the hearing before Morgan J. In the usual way the applicants by counsel undertook to the court to issue the application notice. In those circumstances, for the purposes of the relevant provisions of the GMRA, the application should be taken to have been made or filed at the start of the hearing. It makes no practical difference in this case because, as the parties agree, the hearing and the appointment were made before the application had been filed in New York for the appointment of the SIPA Trustee. Before coming to the detail of the issue, it is appropriate to recapitulate a number of points at this stage. First, save for the provisions with which the application is concerned, each event of default requires both an occurrence of an event and a giving of notice by the non-Defaulting Party. In all such cases, therefore, the non-Defaulting Party is given a choice as to whether and, if so, when to declare an event of default. Secondly, the availability of that choice would appear to be a valuable benefit to the non-Defaulting Party. Given the acceleration and netting out provisions contained in paragraph 10(b)–(f), the precise timing of the event of default could have a significant impact on the result for the parties. A non-Defaulting Party might well choose to delay giving notice in the light of changing market conditions. Moreover, by reason of paragraph 6(j), which the parties incorporated into the GMRA, the obligations of the non-Defaulting Party under the agreement are suspended, pending the giving of notice, for so long as the event entitling the non-Defaulting Party to give notice continues. In many circumstances, therefore, the non-Defaulting Party will be able to wait and see without significant commercial disadvantage to itself. Thirdly, the only event of default which is complete without the giving of notice by the non-Defaulting Party is the limited class of Act of Insolvency with which this case is concerned, that is to say the appointment of a liquidator or analogous officer or the presentation of a winding-up petition or analogous proceedings. All other Acts of Insolvency, including an inability to pay debts as they become due, the appointment of an administrator or receiver or analogous officer, the presentation of other insolvency proceedings and any steps with a view to the promotion of arrangements or compositions with creditors, require the non-Defaulting Party to give notice. It is clear therefore that the framers of the standard form GMRA have identified some feature or features of liquidation or analogous proceedings as requiring an immediate closing out of the transactions governed by the GMRA, without the non-Defaulting Party having any choice in the matter. As it seems to me this third point has a bearing on the way in which the court should approach the issue as to whether any particular proceedings are for the purposes of the agreement analogous to liquidation. This is not a question to be answered as a matter of abstract theory but a question to be answered in the context and for the purpose of this agreement. Further, the context of the agreement provides in my judgment an answer to a difference which appeared from the written submissions of counsel for the parties in this case. It was submitted for Inc that the sole question for the court was whether the proceedings in question were or were not analogous to liquidation. The court should not, it was submitted, have regard to such questions as whether the relevant proceeding had more in common with and were more closely analogous to one of the other proceedings specified in the definition of Act of Insolvency, such as administration. In the course of his oral submissions, Mr Miles QC for Inc agreed that analogies were a matter of degree and that if the better analogy for a particular proceeding was administration, it would be an odd result if it was nonetheless held to be for the purposes of paragraph 10 analogous to liquidation. The parties are agreed that the reason for including the references to analogous proceedings and officers is to provide for both foreign legal systems and changes to domestic law. MFG UK submits that the purposes of a special administration order under the Regulations and the powers of the administrators to be exercised for those purposes are such that the appointment of the administrators cannot be said to be analogous to the appointment of a liquidator. The sole purpose of a liquidation is to realise the assets of the company and to distribute the proceeds to the company's creditors. The liquidator is under a statutory duty to ensure the company's assets are got in, realised and proceeds distributed to the creditors: see the Insolvency Act 1986, section 143(1) (compulsory winding-up) and section 107 (voluntary winding-up). The liquidator may carry on the business of the company only "so far as may be necessary for its beneficial winding up": para. 5, schedule 4, Insolvency Act 1986. Any such continuation of the business must therefore be with a view to the winding-up of the company, not with a view to its continuance: In re Wreck Recovery and Salvage Company (1880) 15 ChD 353 (CA). It follows that, unless necessary to the beneficial winding-up of the company, the company will not be able to perform outstanding contractual obligations once a liquidator is appointed. Moreover, unless the court orders otherwise, all dispositions of the company's property made after the commencement of the winding-up (the date of presentation of the petition) are void. This does not apply to disposals made by the liquidator in exercise of his statutory powers. The effect of the statutory scheme of a liquidation, for the realisation of assets and the distribution of their proceeds among the unsecured creditors on a pari passu basis, is that the assets of the company are held on a statutory trust, such that they cease to belong beneficially to the company and the beneficial interest in them is in suspense pending realisation and distribution: Ayerst v C&K (Construction) Ltd [1976] AC 167 and the authorities there cited. The commencement of a liquidation and the statutory scheme for pari passu distribution brings into play the pari passu rule, which invalidates contractual provisions inconsistent with the requirement that the proceeds of the company's assets be distributed pari passu among its unsecured creditors. It is a feature of English liquidation law, which exists in other but not all systems, that a broad rule of set-off is to be applied to liabilities as at the date of winding-up between the company and each of its creditors/debtors, so as to arrive at the net amount for which a creditor may prove or which a debtor is liable to pay to the company in liquidation. The features identified in the preceding paragraph, including but not limited to insolvency set-off, are particular features of liquidation under UK insolvency law. Different legal systems will differ on some of these features, but the basic characteristics of liquidation of bringing the business of the company to an end, realising its assets and distributing the proceeds amongst creditors are likely to be present in all legal systems and, if they are not, it would in my judgment be impossible to say that the procedure was "analogous to" liquidation as contemplated by the GMRA. MFG UK relies on the different purposes of a special administration order under the Regulations and on the different powers of investment bank administrators as contrasted with the purpose of a liquidation and the powers of liquidators to achieve that purpose. The Regulations were made on 7 February 2011 in exercise of powers conferred by sections 233, 234 and 259(1) of the Banking Act 2009. The 2009 Act was passed in the wake of the international financial crisis which started in 2008 and included, for the first time, special procedures to deal with insolvent banks. Since that crisis had in part been triggered by the collapse of Lehman Brothers in September 2008, it was appreciated that special insolvency procedures would be needed for investment banks. However, they presented particular problems and the enactment of more general banking legislation could not be delayed while those problems were addressed and resolved. In particular, investment banks hold client assets, often on a very large scale, and existing insolvency procedures as well as the new procedures introduced for banks do not contain provisions to deal adequately with the complex problems which can arise in the event of the insolvency of an investment bank. Accordingly, the Banking Act 2009 made provision in general terms for Regulations to be made dealing with investment banks, such Regulations to be made within a period of two years from the date when the Act was passed. Regulation 3 sets out an overview: "(1) These Regulations provide for a procedure to be known as investment bank special administration ("special administration"). (2) The main features of special administration are that— (a) an investment bank enters the procedure by court order; (b) the order appoints an administrator; (c) the administrator is to pursue the special administration objectives in accordance with the statement of proposals approved by the meeting of creditors and clients and, in certain circumstances, the FSA; and (d) in other respects the procedure is the same as for Schedule B1 administration under the Insolvency Act, subject to specific modifications, and the inclusion of certain liquidation provisions of the Insolvency Act." Paragraphs (3) and (4) of Regulation 3 provide an overview of the procedures in circumstances where the investment bank is a deposit taking bank, which are not relevant to MFG UK. Regulation 4 provides: "(1) An investment bank special administration order ("special administration order") is an order appointing a person as the investment bank administrator ("administrator") of an investment bank. (2) A person is eligible for appointment as administrator under a special administration order if qualified to act as an insolvency practitioner. (3) An appointment may be made only if the person has consented to act. (4) For the purpose of these Regulations— (a) an investment bank is "in special administration" while the appointment of the administrator has effect; (b) an investment bank "enters special administration" when the appointment of the administrator takes effect; (c) an investment bank ceases to be in special administration when the appointment of the administrator ceases to have effect in accordance with these Regulations; and (d) an investment bank does not cease to be in special administration merely because an administrator vacates office (by reason of resignation, death or otherwise) or is removed from office." Regulation 5 makes provision for an application to the court for a special administration order, to be made by the investment bank, its directors, creditors or others including the Secretary of State or the FSA. Regulation 6 sets out the grounds for applying for a special administration order: "(1) In this regulation— (a) Ground A is that the investment bank is, or is likely to become, unable to pay its debts; (b) Ground B is that it would be fair to put the investment bank into special administration; and (c) Ground C is that it is expedient in the public interest to put the investment bank into special administration. (2) The FSA or the persons listed in regulation 5(1)(a) to (e) may apply for a special administration order only if they consider that Ground A or Ground B is met. (3) The Secretary of State may apply for a special administration order only if it appears to the Secretary of State that Grounds B and C are met." Regulation 7 empowers the court to make a special administration order or to make other orders on the hearing of the application. Regulation 10 is headed "Special Administration Objectives" and provides as follows: "(1) The administrator has three special administration objectives ("the special administration objectives") — (a) Objective 1 is to ensure the return of client assets as soon as is reasonably practicable; (b) Objective 2 is to ensure timely engagement with market infrastructure bodies and the Authorities pursuant to regulation 13; and (c) Objective 3 is to either— (i) rescue the investment bank as a going concern, or (ii) wind it up in the best interests of the creditors. (2) In relation to sub-paragraph (1)(a), the administrator is entitled to deal with and return client assets in whatever order the administrator thinks best achieves Objective 1. (3) The order in which the special administration objectives are listed in this regulation is not significant: subject to regulation 16, the administrator must— (a) commence work on each objective immediately after appointment, prioritising the order of work on each objective as the administrator thinks fit, in order to achieve the best result overall for clients and creditors; and (b) set out, in the statement of proposals made under paragraph 49 of Schedule B1 (as applied by regulation 15), the order in which the administrator intends to pursue the objectives once the statement has been approved. (4) The administrator must work to achieve each objective, in accordance with the priority afforded to the objective as provided in paragraph (3), as quickly and efficiently as is reasonably practicable." Regulations 11 and 12 make further provision in respect of Objective 1, dealing with advertising for claims, setting a bar date for claims and dealing with shortfalls in client assets. Regulation 13 relates to Objective 2 and includes the following provisions: "(1) The administrator shall work with— (a) a market infrastructure body to— (i) facilitate the operation of that body's default rules or default arrangements, (ii) resolve issues arising from the operation of those rules or arrangements, and (iii) facilitate the settlement or prompt cancellation of non-settled market contracts or, as the case may be, of unsettled settlement instructions; and (b) the Authorities, to facilitate any actions the Authorities propose to take to minimise the disruption of businesses and the markets as a consequence of a special administration order being made in respect of the investment bank. (2) In paragraph (1), "work with" means to— (a) comply, as soon as reasonably practicable, with a written request from such a body or from any of the Authorities for the provision of information or the production of documents (in hard copy or in electronic format) relating to the investment bank; (b) allow that body or any of the Authorities, on reasonable request, access to the facilities, staff and premises of the investment bank for the purposes set out in paragraph (1), but no action need be taken in accordance with this paragraph to the extent that, in the opinion of the administrator, such action would lead to a material reduction in the value of the property of the investment bank." Regulation 15 entitled "General Powers, Duties and Effect" contains the following provisions: "(1) Without prejudice to any specific powers conferred on an administrator by these Regulations, an administrator may do anything necessary or expedient for the pursuit of the special administration objectives. (2) The administrator is an officer of the court. (3) The following provisions of this regulation provide for — (a) general powers and duties of administrators (by application of provisions about administrators in Schedule B1 administration); and (b) the general process and effect of special administration (by application of provisions about Schedule B1 administration). (4) The provisions of Schedule B1 and other provisions of the Insolvency Act set out in the Tables apply in relation to special administration as in relation to other insolvency proceedings with the modifications set out— (a) in paragraph (5) (in respect of the provisions listed in Table 1); (b) in paragraph (6) (in respect of the provisions listed in Table 2), and any other modification specified in the Tables." Table 1 sets out a large number of paragraphs in schedule B1 to the Insolvency Act 1986 which are applied with some modification to investment bank special administrations. Schedule B1, together with part 2 of the Insolvency Rules 1986, contains the regime for administrations under the Insolvency Act, including their purposes and the powers of administrators. Table 1 includes virtually all of the provisions in schedule B1 from paragraph 40 onwards. The earlier provisions of schedule B1 concern the purposes of an administration and the various means by which administrators may be appointed, such provisions clearly not being applicable to a special administration under the Regulations. All or most of the powers of an administrator are applied to a special administration. These include the power under paragraph 59(1) of schedule B1 for an administrator to "do anything necessary or expedient for the management of the affairs, business and property of the company". They also include the powers set out in schedule 1 to the Insolvency Act. Whilst some of those powers are similar or identical to equivalent powers conferred on liquidators by schedule 4, there are nonetheless some significant differences. In particular, paragraph 14 of schedule 1 confers an unqualified power "to carry on the business of the company" on an administrator, in contrast to the more restricted power to which I have earlier referred in the case of a liquidation. In addition, an administrator but not a liquidator has power to establish subsidiaries of the company and to transfer to subsidiaries the whole or any part of the business or property of the company. An administrator has an unqualified power to raise or borrow money, unlike the liquidator's power which is restricted to raising "on the security of the assets of the company any money requisite". While an administrator has power "to do all other things incidental to the exercise of the foregoing powers" (para. 23 of schedule 1), the equivalent power of a liquidator is limited to doing "all such other things as may be necessary for winding up the company's affairs and distributing its assets" (para. 13 of schedule 4). The latter power is applied to special administrators but with the substitution of the words "pursuing the special administration objectives" for the words "winding-up the company's affairs and distributing its assets". Table 2 in Regulation 15 sets out a large number of provisions from the Insolvency Act applicable to liquidations. Some of them in any event by their terms apply to administrations under the Insolvency Act, such as the powers of the court in relation to transactions at an undervalue and unfair preferences contained in sections 238-241 and the avoidance of floating charges in section 245. Claims for fraudulent and wrongful and trading under sections 213 and 214, which are available in a liquidation but not in an administration under schedule B1, are applied to a special administration but I think nothing can turn on that. Mr Miles drew particular attention to the application of section 178, conferring upon the liquidator the power to disclaim unprofitable contracts and onerous property. Inc develops a substantial submission on the basis of the inclusion of this provision, to which I shall later return. Mr Zacaroli QC, on behalf of MFG UK, lays particular stress on the differences in the purposes of a special administration and a liquidation. Objectives 1 and 2 set out in Regulation 10 reflect the particular nature of the business of investment banks and their holdings of client assets. Objective 3 contains two alternative objectives, either the rescue of the investment bank as a going concern or its winding-up in the best interest of its creditors. If a rescue of the investment bank were possible and would provide creditors with at least as good a return as a winding-up, one might expect the rescue to be pursued as an objective in preference to a winding-up. Regulation 10(3) makes clear that the three objectives do not have priority one over the other and the administrators are required to commence work immediately on each of the objectives. It is useful to compare these objectives with the purposes of an administration under schedule B1. Paragraph 3 of schedule B1 provides as follows: "(1) The administrator of a company must perform his functions with the objective of— (a) rescuing the company as a going concern, or (b) achieving a better result for the company's creditors as a whole than would be likely if the company were wound up (without first being in administration), or (c) realising property in order to make a distribution to one or more secured or preferential creditors. (2) Subject to sub-paragraph (4), the administrator of a company must perform his functions in the interests of the company's creditors as a whole. (3) The administrator must perform his functions with the objective specified in sub-paragraph (1)(a) unless he thinks either— (a) that it is not reasonably practicable to achieve that objective, or (b) that the objective specified in sub-paragraph (1)(b) would achieve a better result for the company's creditors as a whole. (4) The administrator may perform his functions with the objective specified in sub-paragraph (1)(c) only if— (a) he thinks that it is not reasonably practicable to achieve either of the objectives specified in sub-paragraph (1)(a) and (b), and (b) he does not unnecessarily harm the interests of the creditors of the company as a whole." Although the three purposes specified in paragraph 3(1) are ranked in that order of priority, in contrast to the Objectives of an investment bank special administration, there is nonetheless a substantial parallel between these purposes and Objective 3. The rescue of the investment bank or company as a going concern is the first alternative under Objective 3 and is the primary purpose of an administration. The purposes of an administration set out in sub-paragraphs (b) and (c) of paragraph 3(1) both involve the company ceasing to be a going concern and a realisation of its assets, including as it may be the sale of its business. That is equivalent to the second alternative under Objective 3. Given the wide powers conferred on special administrators by the Regulations, they will be able to do in pursuit of the Objectives all that administrators can do in the pursuit of the purposes set out in paragraph 3 of schedule B1. The existence of the rescue of the investment bank as a going concern as one of the Objectives, and as being similar to the primary purpose of an administration, is reflected in the similar treatment of distributions. In neither case is a distribution of available assets an automatic feature. Paragraph 65(1) of schedule B1 empowers the administrator to make distributions to creditors and this power is applied to special administrations under the Regulations. The only difference is that the requirement in paragraph 65(3) of schedule B1 for the administrator to obtain the permission of the court to make a distribution other than to secured or preferential creditors is not applied to a special administration. The detailed provisions applicable to distributions to creditors contained in the Investment Bank Special Administration (England and Wales) Rules 2011 parallel the provisions in the Insolvency Rules applicable to a distribution by an administrator. In particular, the investment bank administrator must give notice to the creditors of his intention to declare and distribute a dividend and the provision for set-off contained in rule 164 requires the account to be taken as at the date of such notice. These provisions are a contrast to those applicable to a liquidation, where from the start a distribution to creditors is the sole objective of the liquidation and the set-off rule applies as at the date of the winding-up order or resolution to wind-up the company. While the pari passu rule, avoiding inconsistent contractual provisions, applies in a liquidation from its commencement, I held in HMRC v The Football League Ltd [2012] EWHC 1372 (Ch), [2012] BusLR 1539 that in an administration it applies only from the time at which the administrator gives notice of his intention to make a distribution. If that is correct, it must apply also to an investment bank special administration. In my judgment, Mr Zacaroli is correct in his submission that the essential characteristic of a liquidation and the appointment of a liquidator, which distinguishes them from other insolvency proceedings and the appointment of other officers, is that the sole purpose of a liquidation is the realisation of assets and the distribution of assets amongst creditors. Save in limited circumstances and then only for a limited time, the business of the company will cease upon the appointment of a liquidator. This distinguishes liquidation from the numerous other insolvency proceedings listed in the definition of Act of Insolvency in the GMRA, including in particular administration. An administration and other insolvency proceedings may result in the realisation of a company's assets and a distribution of the proceeds among creditors, but the alternative of a rescue of the company as a going concern is at least one of the purposes or objectives of those proceedings. In those cases it is understandable that the non-Defaulting Party under the GMRA would wish to have an opportunity to wait and see how the proceedings develop before deciding whether to exercise its right to serve a notice declaring an event of default and thereby close out all outstanding transactions under the GMRA, particularly where the protection provided by paragraph 6(j) has been incorporated into the agreement. Equally, where the insolvency proceeding is a liquidation which necessarily requires that the company will have ceased to carry on business, it is understandable that it constitutes an automatic event of default. Further, there are particular concerns as to the impact of insolvency set-off on obligations to deliver securities or other assets as opposed to monetary obligations. By constituting the appointment of a liquidator as an automatic event of default, the immediate closing-out of all outstanding transactions and the netting-off of all sums due, for which paragraph 10 of the GMRA provides, may meet those concerns. They may also meet the opposite concern which arises in those systems which do not permit set-off even between monetary claims in an insolvency: for an example, see In re BCCI SA (No. 10) [1997] Ch 213. Concerns as to the validity of arrangements such as those in paragraph 10 of the GMRA have been met as regards EU states by the Directive on Financial Collateral Arrangements (2002/47/EC), implemented in the UK by the Financial Collateral Arrangements (No. 2) Regulations 2003 (SI 2003/3226). There are similar provisions in US law. All these post-date the 2000 version of the GMRA and, in any event, parties from all parts of the world may use the standard form GMRA and problems may well remain in some legal systems. Mr Miles on behalf of Inc accepts that the distinguishing feature of a liquidation or analogous proceedings, triggering an automatic event of default, is the company ceasing to carry on business with the resulting realisation of its assets and distribution of proceeds among creditors. He submits, however, that this is not to be judged simply by reference to the legislative purposes or objectives of any particular insolvency proceedings but should be judged "in the real world" by reference to what is almost inevitably going to happen. He did not submit that the appointment of an administrator under schedule B1 was analogous to the appointment of a liquidator, and it would be difficult to do so in light of the separate reference to the appointment of an administrator in the definition of Act of Insolvency. The appointment of an administrator under the Regulations was, Mr Miles submitted, different because only very rarely, if at all, would the rescue of an investment bank which had gone into special administration be possible. He submitted that once an investment bank had to return all client assets (Objective 1) and co-operate with market authorities in the operation of their default and close-out rules (Objective 2), there would only very exceptionally be any possibility that the investment bank could survive. He pointed out that the original proposals for investment bank insolvency proceedings published in December 2009 envisaged only a winding-up of the investment bank following the achievement so far as possible of Objectives 1 and 2. No mention at that stage was made of rescue. The alternative in Objective 3 of rescue was introduced by a further paper published by HM Treasury in September 2010, but it added "the Government would expect this only to be possible in the rarest of cases". In these circumstances, where rescue would be only an exceptional outcome, the appointment of administrators to an investment bank should be treated as analogous to the appointment of a liquidator. Mr Miles made the point that if there was any realistic prospect of a rescue, it would almost certainly occur before an investment bank went into special administration rather than after it. Mr Zacaroli submitted, and I agree, that Inc's approach would undermine the need for the maximum level of certainty in the definition of Acts of Insolvency and the occurrence of events of default. The consequences of an event of default are profound for both parties and there must be certainty so far as possible, in the interests of both parties, as to whether an automatic event of default has occurred. The relevant provisions of the GMRA are drafted in a way which focuses attention on the incidents or features of the relevant proceedings or appointments, rather than on their likely practical outcome. Sub-paragraph (v) of the definition of Act of Insolvency refers to the appointment of "a receiver, administrator, liquidator or trustee or analogous officer". Likewise, sub-paragraph (iv) refers to the presentation or filing of a petition "alleging or for the bankruptcy, winding-up or insolvency of such party (or any analogous proceeding) or seeking any re-organisation, arrangement, composition, re-adjustment, administration, liquidation, dissolution or similar relief under any present or future statute, law or regulation". These provisions are directed to the relevant proceedings, or the relevant officers and as it seems to me their respective legal characteristics. In reaching a view as to whether any particular proceedings, not expressly contemplated by the terms of the GMRA, are "analogous to" the appointment of a liquidator, there is of course an element of judgment and therefore an element of uncertainty. That uncertainty is however largely eliminated if the question is whether the appointment or proceedings must involve a winding-up of the company. The element of uncertainty is greatly increased if a judgment has to be made as to whether any other result is sufficiently rare to be for these purposes discounted. Quite apart from deciding how "rare" it must be, the parties would have to embark on an essentially factual investigation before knowing whether an automatic event of default had occurred. The enquiry would have to be directed to either (i) the generic chances of a rescue resulting from the type of appointment in question or (ii) the chances of a rescue in the particular circumstances of the case. I find it difficult to see how the first enquiry is to be satisfactorily answered where the relevant legislation has spelt out rescue as an objective and made provision for it, as in Regulations 10, 15 and 20 in the present case. As to the second enquiry, it may well be impossible to answer for some time. It is not in my judgment plausible that the drafters of the GMRA intended to introduce this element of uncertainty into these arrangements. It may also be noted that, while I have not seen statistics on this, there is a general view that administrations under schedule B1 result in the rescue of the company in a relatively small number of cases: see, for example Goode: Principles of Corporate Insolvency Law (4th ed.) para. 11-29. Mr Miles' second, alternative submission centred on the inclusion of a liquidator's power to disclaim onerous property in the powers conferred on administrators by Regulation 15. This is not a power available to administrators appointed under schedule B1. The power of disclaimer given to a liquidator is conferred for the purpose of enabling a liquidation to be completed within a reasonable time. It means that unprofitable contracts and onerous property interests can be brought to an end and the liability of the company in liquidation crystallised into a claim for loss for which the other party can then prove. Given that the second alternative under Objective 3 is a winding-up of the investment bank, its inclusion in the Regulations is not surprising. The Regulations envisage that the special administrators will complete the winding-up of the investment bank, leading to its dissolution: see Regulation 21. The existence of a power of disclaimer undoubtedly can create real problems for the type of transactions to be governed by the GMRA, although it is no longer applicable to arrangements covered by the Financial Collateral Arrangements (No. 2) Regulations 2003. The particular danger is that a liquidator or other officer having a power to disclaim would cherry-pick amongst the transactions into which the parties have entered. He would seek to disclaim those transactions which showed a loss but enforce other transactions which were actually or potentially profitable. It is not in doubt that the drafters of the standard form GMRA were alive to this problem, nor that they sought to provide protection against it by the inclusion of paragraph 13, headed "Single Agreement" which provides: "Each party acknowledges that, and has entered into this Agreement and will enter into each Transaction hereunder in consideration of and on reliance upon the fact that all Transactions hereunder constitute a single business and contractual relationship and are made in consideration of each other. Accordingly, each party agrees (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, and (ii) that payments, deliveries and other transfers made by either of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Transactions hereunder." A disclaimer of one transaction would therefore involve a default in respect of all transactions, entitling the other party to terminate all transactions and bringing the netting provisions of paragraph 10 into effect: see Lomas v JFB Firth Rixson Inc [2012] EWCA Civ 419 at [118] as regards a similar provision. It does not of course follow from the inclusion of paragraph 13 that the drafters would not have thought it worthwhile to provide additional protection against the possibility of an exercise of a power of disclaimer. The commencement of an insolvency proceeding in which a power of disclaimer was exercisable might provide a reason for treating the commencement of such proceeding as an automatic event of default. That cannot, however, in my judgment, justify treating as analogous to a liquidation any insolvency proceedings in which the office holder or the court has a power to disclaim. There are a number of reasons for this. First, if that had been the drafters' intention, they would surely have spelt it out. Secondly, and this is important for the first ground, while a power of disclaimer exists as an incident of liquidators under UK insolvency law, there is no necessary reason why it should exist in other systems of law as part of a liquidation process. Thirdly, and equally relevant to the first point, there is no reason why a power of disclaimer should not be included in particular types of insolvency proceedings which have nothing else in common with a liquidation. For example, it might well be thought to be conducive to the rescue of a company that it should be able to disclaim unprofitable contracts or onerous property. The words "the appointment of the liquidator or analogous officer" would be particularly inapposite words to include rescue proceedings even where that power existed. Such a power does exist, with the permission of the court, in proceedings under Chapter 11 of the US Bankruptcy Code, where it is called a power of rejection; see sections 365 and 1107 of the code. In short, there is no necessary correlation between a liquidation process and the existence of a power of disclaimer. I asked Mr Miles the grounds for the concession that the SIPA Trustee is an officer analogous to a liquidator. He told me, on instructions, that it was because the proceeding under Securities Investor Protection Act leads to a winding-up of Inc. It was not based on the presence of a power of disclaimer, and he was not able to say whether such power existed in the relevant proceeding. Just as in my view special administrators appointed under the Regulations are not officers analogous to a liquidator, so an application under the Regulations for a special administration order is not analogous to a petition for a winding-up, for the purposes of paragraph 10(a)(iv) of the GMRA. On the facts of the present case, it is unnecessary to dwell on this issue, but, as it seems to me, Mr Zacaroli's submission as to the reason for the inclusion of the presentation of a winding-up petition or analogous proceeding as constituting an automatic event of default is correct. Section 127 of the Insolvency Act avoids all dispositions of the company's property made after the presentation of a winding-up petition in the event that an order is subsequently made, unless the court otherwise orders. Parties dealing under the GMRA would clearly not want performance of their transactions to be put at risk in this way. I should mention Lindholm, In re Opes Prime Stockbroking Ltd [2008] FCA 1425, a decision of Finkelstein J in the Federal Court of Australia. So far as counsel in the present case are aware, this and an earlier decision of the same judge in Beconwood Securities Pty Ltd v. Australia and New Zealand Banking Group Pty Ltd (2008) 66 ACSR 116 are the only decisions on the appointment of officers analogous to a liquidator, for the purposes of an agreement similar to the GMRA. The judge held that administrators appointed under the relevant Australian legislation and receivers appointed by secured creditors were not officers analogous to a liquidator. He said in Lindholm at [61]: "The function of a liquidator – whether called a liquidator, a trustee, a receiver, a curator or a syndic – is to preside over the death of a company. An administrator appointed in rescue proceedings strives for the opposite result (even though the company may yet in the end die). A receiver appointed by a secured creditor does neither of those things, being largely unconcerned about the fate of the company. From any perspective, the offices are poles apart. For the reasons given in this judgment, I hold that the administrators appointed under the Regulations are not officers analogous to a liquidator for the purposes of the GMRA and that accordingly their appointment on 31 October 2011 did not constitute an event of default under the GMRA.

Miss Geraldine Andrews QC: This matter comes before the Court as an expedited "rolled-up" application for permission to bring judicial review and, if permission is granted, to claim judicial review. The Claimant, HR, is a 14-year old girl with Autistic Spectrum Disorder (more commonly known as Asperger Syndrome) and related mental health problems including a severe anxiety disorder. These were only diagnosed comparatively recently. The Defendant is the unitary authority for the part of Kent where H and her family live, and is responsible for education and social services under the Children's Services Directorate. The factual background In January 2008, H was placed under the care of the CAST Team due to feelings of general anxiety. In October 2008 they made an initial referral to the child and Adolescent Health Service (CAMHS) due to concerns with her self-harming, suicidal thoughts and low moods. She was initially prescribed anti-psychotic medication, but this ceased after 2-3 weeks as there were no ongoing symptoms of psychosis, and she was prescribed anti-depressive medication by her GP. Sadly her mental state failed to improve with community management. Her original secondary school placement at a Grammar school broke down after a fellow pupil overheard her threatening to kill herself. H did make two attempts on her own life at around that time, and on 5th November 2008 following the second of these attempts she was admitted to an Adolescent Unit of the local hospital where she received psychiatric care. There have been no further episodes of self-harming since her discharge as an inpatient on 17th December 2008. CAMHS has continued to monitor her and to offer medical and therapeutic support to her and her family. H exhibits challenging behaviour which is linked to her condition, and has complex needs which require her to be treated with considerable sensitivity. Asperger Syndrome is a form of autism, but unlike those with "classic" autism, those who suffer from it are often high functioning individuals. They have particular difficulty in communication and interaction with others and in the area of social imagination, which can lead to high levels of anxiety and confusion. A package of measures to give H the help and support that she needs has been put together by the Defendant under the overall responsibility of Juliet Sevior, a former teacher and a qualified educational psychologist with 12 years' experience in that field. There is no complaint about the social care that H is receiving, which includes respite placements with a foster carer, and regular visits from a social worker from the Children's Disability Team. The complaint in this case is that the Defendant is in breach of its duty to provide H with suitable education pursuant to section 19 of the Education Act 1996, read in conjunction with Article 2 of Protocol 1 to the European Convention of Human Rights. H is a high achiever who has the potential, with the correct support, to achieve good academic qualifications. Her cherished ambition is to become a vet. She comes from a loving and supportive family, and I should make it clear at the outset of this judgment that both her parents have always had her best interests in mind, and that that is the paramount consideration driving their objections to the schooling options that she is being offered by the Defendant. Following her discharge from hospital in December 2008 it was decided that it would be wholly inappropriate to return H to mainstream education as it was recognized she would be unable to realise her full academic potential in that environment. Neither party challenges that assessment. H began to attend a hospital special school maintained by the Defendant which I will call "School A". A operates from two sites, a room in a hospital which caters for up to 15 students at a time, and a main site which is larger, and provides mainly for learners with emotional needs. Over 50% of its students have a diagnosis of autism. An unspecified number have Asperger Syndrome and the head teacher told Mr Holme, the Claimant's expert educational psychologist, when he visited the school in February 2010, that as a result of training provided the staff had a good understanding of the condition. The school provides home tuition when learners cannot attend either site. I have seen an Ofsted report following an inspection of School A in July 2009 which is full of praise, with the highest possible score being given to the school for care, guidance and support, and personal development and well-being. H's placement at School A was originally intended to be short-term pending determination of where she should be educated in the longer term. At that time her parents fully supported the decision to place her there. On 18th September 2009 the Defendant made a Statement of Special Educational Needs ("SSEN") in respect of H under section 323 of the Education Act 1996. Part 2 of the SSEN sets out the assessment of H's special educational needs, Part 3 deals with the special educational provision which the Defendant intends to provide to meet those needs, and Part 4 deals with placement. Although a specific educational establishment need not be identified in Part 4 it is quite common for the local education authority to do so, and in this case, Part 4 identified a community special school and named School A. However by the time of the SSEN, H's parents, particularly her mother, had become convinced that School A was unsuitable for H's needs. Mrs R's statements (which I have read with care) paint an unhappy picture of H's time at School A, both before and after the SSEN. By way of example she describes an incident in July 2009 when H initially refused to go to the school and upon arrival ran away from the site, refusing to return, and a teacher had to collect her from the local park. The Defendant's evidence is that on that occasion, once in school H behaved perfectly well, and that the teachers never managed to find out what the trigger was for her initial refusal to go. Mrs R also describes H's difficulties in interacting with her peers and the distress that H suffered in respect of an incident when a fellow pupil self-harmed in the classroom. However, there is also a plethora of contrary evidence adduced by the Defendant which paints the picture of a teenager who was settling in well, including a statement from her social worker, Julie Arnold, in August 2009 in which H was reported as being extremely frightened of any change and saying that she wanted to remain at School A, and a progress report from the Head Teacher, Mrs Rogers, dated 4th February 2010. The logs in the school monitoring notebook for H for the period from September 2009 and 3rd November 2009 appear to be positive, with very few references to worries or anxiety. However, appearances can be deceptive. The nature of H's condition is such that the anxiety can be suppressed and lie under the surface, so that it is only after she returns home from school that her frustration manifests itself in violent outbursts. As for H herself, she has stated that she feels that the teachers at School A do not understand autism or Aspergers sufficiently. She says that they treat her like everyone else when everyone is different and they do not understand her. At her school "there are lots of different types of children and it's really hard being around kids that are constantly feeling down or upset all the time." She also specifically mentions the distress she felt at the incident when a boy in her class started to self-harm in the classroom. On the other hand she liked the fact that the classes were small and she seemed to have developed a good relationship with one of the teachers, the deputy head. It would appear from the evidence, taken in the round, that H's attitude to School A is at best described as ambivalent and at worst as antipathetic. In her latest statement dated 1st March 2010 she says "I don't like going to [School A] and I don't want to go back.... It has been really hard work for me to get to feeling like I can go into a school again and I don't want to have to do it all over again." She also says that she "hates that other people are deciding what is best for me schoolwise when I can tell you." There is another local specialist school, which I shall call School B, which H has visited and which obviously formed a favourable impression on her. It would appear to be more expensive for the Defendant to place H at School B, and that is a legitimate consideration if both schools are suitable. However if a placement at School B is the only means by which the Defendant can satisfy its statutory obligations to H, the cost becomes irrelevant. Both H's parents and the Defendant are agreed that School B is suitable for H. However, the Defendant disagrees with the parents' claims that the provision offered at School A was or is unsuitable for H, and has concerns that School B may be a worse option. The aim of these proceedings is to compel the Defendant to place H at School B (there has been very late mention of another school, School C, but I do not consider that has any bearing on the issues I have to decide). H has been without education since she was withdrawn from School A by her parents on 5th November 2009. This is obviously an extremely undesirable state of affairs and it is having a serious detrimental effect on H. Any bright child, let alone a bright 14 year old with Aspergers, would find the situation incredibly frustrating. Numerous offers of provision have been made to H and her parents or discussed with them, including going back to School A, (either the hospital unit or the main school) home tuition, or tuition at other centres. However H's parents are convinced that H's educational needs will only be served if she goes to School B. They may well turn out to be right about that, but this is not the proper forum in which to make that decision. There is a statutory route for challenge to the SSEN. H's parents have availed themselves of it by appealing the contents of parts 2, 3 and 4 of the SSEN to the First Tier Tribunal (SENDIST). Normally one would anticipate the outcome of such an appeal to be determined within around six months, and in this case a hearing was fixed for 8th March 2010. The hearing is part heard, and will conclude on 4th May. A decision is likely to be made within 2 weeks thereafter. School B's Easter holiday is from 1st to 21st April. This claim is therefore about the relatively short period of school days that will elapse between the start of the new school term, and the outcome of the appeal. However, the fact that an appeal is pending does not relieve the Defendant of its statutory obligation to provide suitable education for H in the interim. The judicial review claim form was issued on 4th February 2010, together with an application for urgent consideration. Two applications made by H to this court for interim relief (in the form of a mandatory order requiring the Defendant to fund a placement for H at School B) have already failed. On 8th February Nicola Davies J. refused H's application for a mandatory order that the Defendant should place her at School B from 8th February but granted the application for urgent consideration. She ordered this "rolled up" hearing and directed that the matter be heard before the end of March. On 5th March 2010, following an oral hearing, Mr Timothy Corner QC, sitting as a judge of this court, dismissed H's renewed application for interim relief and expressed the view that it was unarguable. Nothing daunted, H has gone ahead with the application for permission to bring a claim for judicial review. Whilst I would not take quite the same negative view of the merits as Mr Corner QC, I am nevertheless persuaded that the claim for judicial review must fail, and accordingly that it is inappropriate for me to grant permission. The Legal and Statutory Framework Article 2 of the First Protocol to the European Convention of Human Rights, as incorporated into English law through the Human Rights Act 1998 ("A2P1") provides inter alia as follows: "No person shall be denied the right to education." In the case of Timishev v Russia (2007) 44 EHRR 37, the European Court of Human Rights held that this was a provision whose structure was similar to that of Articles 2, 3, 4(1) and 7 of the Convention which together enshrine the most fundamental values of the democratic societies making up the Council of Europe. As Lord Bingham made clear in Ali v Headteacher and Governors of Lord Grey School [2006] 2 AC 363, following an illuminating review of the relevant Strasbourg jurisprudence, Article 2 was intended to guarantee fair and non-discriminatory access to the established system of state education by those within the jurisdiction of the respective states. However, he went on to explain that the guarantee is a deliberately weak one: "There is no right to education of a particular kind or quality, other than that prevailing in the state. There is no Convention guarantee of compliance with domestic law. There is no Convention guarantee of education by or at a particular institution... The test, as always under the Convention, is a highly pragmatic one, to be applied to the specific facts of the case: have the authorities of the state acted so as to deny a pupil effective access to such educational facilities as the state provides for such pupils?" In England and Wales, the obligations of Local Education Authorities ("LEA") such as the Defendant with regard to educational provision are set out in the Education Act 1996. Section 19(1) of the Act provides as follows: "Each local education authority shall make arrangements for the provision of suitable.... education at school or otherwise than at school for those children of compulsory school age who, by reason of illness, exclusion from school or otherwise, may not for any period receive suitable education unless such arrangements are made for them" "Suitable education" is defined in section 19(6) as "efficient education suitable to [the child or young person's] age, ability and aptitude and to any special educational needs he may have." Section 9 of the Act provides that in exercising or performing all their respective powers and duties under the Education Acts, LEAs shall have regard to the general principle that pupils are to be educated in accordance with the wishes of their parents, so far as that is compatible with the provision of efficient instruction and the avoidance of unreasonable public expenditure. Thus although the wishes of the parents are a relevant consideration, the parents do not have the entitlement to a final say in where their child is to be educated. Section 19(4A) of the Act provides that in determining what arrangements to make under subsection (1) in the case of any child or young person a local education authority shall have regard to any guidance given from time to time by the Secretary of State. Mr Ian Wise QC, who appeared with Mr Stephen Broach for H, took me to the current statutory guidance for the purpose of demonstrating that it reflects the strong public policy imperative that children should not be out of school. For example, the guidance on exclusion provides that even if a child has been excluded for a fixed period of six school days or longer, the school has a duty to arrange suitable (alternative) full-time educational provision from and including the sixth school day of the exclusion. Mr Wise submitted that the duty of an LEA in respect of a child who has not been excluded but who has been withdrawn from school should be no different. Mr Wise reinforced this submission by reference to s.7 of the Act which imposes a duty on the parents of every child of compulsory school age to cause him to receive efficient full-time education suitable to his age, ability and aptitude and to any special educational needs he may have, either by regular attendance at school or otherwise. This obligation can be enforced by the making of school attendance orders under s.437, and, in the case of non-compliance (which is a criminal offence under s.443) the making of an education supervision order under s.447. Thus, submitted Mr Wise, the statutory scheme relating to state education in this country does not anticipate a child being kept out of school for anything like the length of time that has already elapsed in H's case, pending the determination of a dispute between the child's parents and the LEA over the suitability of a chosen educational establishment. Every day of full time education missed is unjustifiable, and although it may now only be a short time until the appropriate school for H's long-term placement is identified, there is good reason for the Court to step in at this juncture. To reinforce that submission Mr Wise referred to the decision of HH Judge McKenna in the case of R (B) v Barnet LBC [2009] EWHC 2842 (Admin). B was a 15-year old disabled girl with learning difficulties and hearing problems. She had been subjected to serious sexual and physical abuse from a young age, which left her at a high risk of sexual abuse or statutory rape. The LEA had issued a SSEN naming a particular mainstream school as suitable to meet B's needs; that decision was the subject of an appeal to SENDIST that was due to be heard on 15th December 2009. However, the SSEN had named the school notwithstanding that its headmaster had stated very clearly that he considered the school to be unsuitable, inter alia because he considered that B's attendance at the school would be a health and safety risk not only for B herself but for other pupils. Notwithstanding the proximity of the tribunal hearing, on 12th November 2009 the judge granted an application for judicial review on the basis that the LEA was in breach of its duties under s.19(1). The court went out of its way to express no view on the suitability or otherwise of the chosen school for B's educational needs, as to do so would abrogate the jurisdiction of the tribunal. However, the judge was highly critical of the LEA. He held that the guidance and care plan fell far below what was required by the Framework Guidance and case law dealing with the duty to assess the needs of vulnerable children. It had not sufficiently addressed what was required under the statutory guidance Safeguarding Children and Young People from Sexual Exploitation 2009. In circumstances where the head teacher had made it clear that in his view the school was not a suitable placement for B, it was not reasonably practicable for her to attend that school, and therefore the LEA was obliged to make alternative provision for her full time education instead of simply providing her with part-time tuition in a local library. That case certainly illustrates that the fact that there is to be a SENDIST hearing in the near future does not necessarily preclude this Court from granting judicial review, although it must be only in an exceptional case that such relief would be appropriate. This is because of the danger that anything said or done by this Court in the exercise of its reviewing function might either trespass upon matters that are for the tribunal to decide (such as the underlying merits) or, at the very least, have an unwarranted impact on the tribunal's decision, such as causing the decision to be postponed. For example, if relief were to be granted in the form of a mandatory order directing the Defendant in the present case to make immediate provision for H in school B, the tribunal is likely to want to see how she gets on at school B before reaching its decision on the appeal. Moreover, the tribunal (or indeed the Defendant) may feel that once H was settled in school B, it would cause unnecessary disruption, or indeed risk serious harm to her health and well-being, to require her to go back to school A. Thus the court's decision might well create a situation in which the Defendant is forced to accede to the parents' wishes regardless of what the tribunal might otherwise have decided on the question of suitability. The facts of R (B) v Barnet appear to me to be exceptional, because it was obvious that the Tribunal in that case was highly unlikely to have reached the conclusion that the SSEN was adequate let alone that the chosen school was suitable. The determination of the LEA to place the child there in the face of the views of the school's headmaster and after having carried out what appears to have been a superficial assessment of the child's needs might well have been described as perverse. That case is very different from the present case. The proper approach to the resolution of the issue of breach of statutory duty The key matter that I must consider is whether the Defendant in this case is in breach of its statutory duty under s.19(1) and/or obligations under A2P1. It is only if I conclude that it is, that I then have to consider, in the exercise of my discretion, what (if any) remedy to grant. In my judgment, the duty under A2PI adds nothing of substance to the duty under s.19 of the Act. In the case of C v London Borough of Brent [2006] ELR 435, 2006 EWCA Civ 728, it was conceded by counsel for the claimant that the duty to comply with C's A2P1 right to education added nothing to the defendant's duty under s.19 of the Act. If there was no breach of s.19, there would be no breach of A2P1. Mr Wise accepted that this was the case, but submitted that the role of A2P1 in these proceedings was to heighten the standard of scrutiny by the Court of the way in which the Defendant has gone about discharging its duty under s.19. In the light of that concession, I need not consider further the interesting arguments about cases such as A v Essex County Council [2008] ELR 321 and SP v The United Kingdom, (a decision of the First Chamber of the European Court of Human Rights on the admissibility of a claim for breach of A2P1 dated 17th January 1997). I would merely observe that the approach of the courts in those cases would have posed a formidable obstacle to any self-standing claim in the present case based upon a breach of A2P1. Both Mr Wise and Mr David Lawson, who represented the Defendants, referred me to the well-known passage in the speech of Lord Steyn in R(Daly) v Home Secretary [2001] 2 AC 532 at para 27 on page 547 and to some of the observations made by Lord Bingham in the same case. That of course was a case under Article 8 ECHR, and the discussion was in the context of the application of the principle of proportionality in respect of a review where the ECHR rights at stake were of a nature that allows for qualified and proportionate interference by the State. Whilst I accept that the doctrine of proportionality may require the reviewing court to assess the balance which the decision maker has struck, rather than simply whether it is within the range of reasonable or rational decisions, or require attention to be directed to the relative weight accorded to different interests and considerations, it does not go so far as to transform the function of this Court from a court of review into a court that decides the underlying merits, or anything close to it. In any event, in a situation such as the present, where an unqualified fundamental right is concerned, there is no question of interference being proportionate: either the right is being infringed or it is not. As Munby J. rightly observed in another case involving Article 8, CF v Secretary of State for the Home Department [2004] 2 FLR 517, [2004] EWHC 111 (Fam): "The court's function in this type of dispute is essentially one of review – review of the Secretary of State's decision – rather than one of primary judicial decision-making. It is not the function of the court itself to come to a decision on the merits... A case which properly analysed is a public law case is not transformed into something different merely because European Convention rights are relied upon." In a later passage of his judgment at paragraph 30, the judge went on to reject a submission, similar to the submission made by Mr Wise in the present case, that the intensity of the review demanded in an Article 8 case involving consideration of a decision as to what was in a child's best interests was but "a whisker away from a merits review". He said that he must subject the decision to "intense and anxious scrutiny on an objective basis" whilst at the same time recognising and allowing the Secretary of State a significant margin of discretion. Of course the complaint in the present case is of a continuing breach of statutory duty. There are two Court of Appeal authorities offering guidance as to the proper approach to be taken in the specific context of a review of the discharge by an LEA of its statutory duty under s.19(1) of the Education Act. The first in time is R(G) v Westminster City Council [2004] 1 WLR 1113 [2004] EWCA Civ 45; the second is the case of C v London Borough of Brent which I have mentioned in paragraph 26 above. I have also been referred to the very helpful decision of Mr Nicholas Blake QC (sitting as a judge of this court) in R(R) v Kent County Council [2006] EWHC 2135, [2007] ELR 648, in which both those authorities were considered. In R(G) v Westminster City Council the child had been excluded from school for seven days following the latest in a series of fights. G's father claimed that G had experienced repeated incidents of bullying at the school. Efforts were made to find him a place at an alternative school but without success. When it became apparent that there was no alternative school available, G's father withdrew him and began proceedings for judicial review. The Court of Appeal decided that his behaviour was unreasonable, but later authorities have made it clear that the reasonableness or otherwise of a parent's behaviour in withdrawing the child from school is not a necessary consideration when the issue is whether the LEA is in breach of its duty under s.19. It may be of some relevance in determining, as in the G case, whether the duty was engaged in the first place. The Court of Appeal then considered the ambit of the duty imposed on the council by s.19. The conclusions are expressed in paragraphs 42 to 48 of the judgment of the Court, which was delivered by Lord Phillips MR. He said that if the LEA has arranged for the provision of education which is suitable for a child and which it is reasonably practicable for the child to enjoy, it would not seem logical that the authority should be under a duty to provide alternative suitable education simply because, for one reason or another, the child is not taking advantage of the existing facility. Thus where the section refers to a child who "by reason of illness, exclusion or otherwise" may not for any period receive suitable education unless such arrangements are made for them, the word "otherwise" is intended to cover any other situation in which it is not reasonably possible for a child to take advantage of any existing suitable schooling. In other words, the duty under s.19 does not even arise if it is reasonably practicable for the child to attend a suitable school in which a place has been found for him or her by the LEA, but the child has developed an antipathy towards the school and refuses to go there. The same is true if the reason why the child is not attending school is that the child's parents (with or without the support of an expert) genuinely believe that the chosen school is not best suited to his or her needs and that there is another in the area that is more suitable. Where, as in the present case, there has been a SSEN the parents can challenge the LEA's assessment of suitability through the statutory appeal system but, as Lord Phillips put it, "if the LEA makes available a school that does not please the parents, it is for the parents to arrange for alternative suitable education." Lord Phillips went on to say in paragraph 48 that it is possible to envisage exceptional situations where, although a school satisfies the criteria in s.19(6), and there is no physical impediment to the child attending that school, it is none the less not reasonable to expect the child to attend the school. He gives the graphic example of a case where three other children in the school were facing criminal charges, which they denied, of sexually assaulting that child. In such a case it might not be reasonably practicable for the child to continue to attend the school, and the LEA would then come under a duty under s.19 to make alternative arrangements. In R(G) v Westminster the Court decided the question of reasonable practicability for itself and concluded that it was reasonably practicable for G to attend the school. The claim for judicial review therefore failed. In C v London Borough of Brent the case was again one in which there was a difference of opinion between the LEA and the parents of the child as to what was suitable education for C after she had been excluded from school for violent behaviour. The parents did not dispute that the Pupil Referral Unit to which the LEA wished to send C was a good unit and suitable for most pupils who had been excluded for violent or disruptive behaviour, but contended that for various reasons it was unsuitable for C. Smith LJ considered the case of R (G) v Westminster in paragraph 39 of her judgment. After quoting from what Lord Phillips had said in paragraphs 46-48, she said that the focus of paragraph 48 was not on whether the parents' view according to their understanding of the facts is reasonable but rather on whether it is objectively unreasonable to expect the child to attend the school in question. When considering the question whether the LEA in that case had provided "suitable" education for C, Smith LJ said this: "I have considerable sympathy with the point of view of C and her parents. They see things differently from the way in which they are seen by the defendant. They may even be right, but that is not the point. The defendant is entitled, indeed bound, to form its own view of what is suitable education for C after her exclusion. In doing so it must of course pay attention to C's views and those of her parents, but in the end it is for the defendant to form a professional judgment. If that judgment and the action taken in pursuance of it is sensible and rational and takes into account C's personal needs, it cannot be impugned by the judicial review simply because C and her parents profoundly disagree with it." In his short concurring judgment Laws LJ, a judge with particular expertise in the public law field, added this observation: "It is, I think, of the first importance to recognise that the decisions falling to be made as to the provision of educational facilities for C after she had been excluded were quintessentially for the LEA to make. That is of course no more than an application of the ordinary public law rule that the court will not usurp the role of the statutory decision maker. Where that role includes the elaboration of expert judgment in a delicate and difficult area, the rule is all the more important." It follows that C v Brent is authority for the proposition that, in the exercise of its statutory duty to provide suitable education for a child under s.19, it is for the LEA to exercise a professional judgment as to what is "suitable," and that judgment is only open to public law challenge on traditional Wednesbury-type grounds. For the purposes of this application I am prepared to accept, without deciding the matter, that the review by the Court should adopt the heightened standard of scrutiny introduced by Daly and contended for by Mr Wise (which I note was the approach adopted by the judge in R(R) v Kent County Council.) It is not for this Court to get drawn into the merits of the rival arguments on suitability any more than is absolutely necessary for the purposes of exercising its review function. Both Court of Appeal authorities were followed in R (R) v Kent County Council. That was a case where a child, S, was withdrawn from school by his parents after some serious bullying. The LEA proposed to send him back to the same school, as the nearest suitable alternative was a considerable distance away from his home and would have required him to travel for over 1 ¼ hours by bus on his own. Measures had been taken in the interim to address the issue of bullying at the school. S relied on evidence from an expert psychologist that a return to the school would be psychologically detrimental to him. The LEA did not accept that returning S to the school would cause him illness in the future and relied on their own expert psychologist. S sought judicial review on the grounds of a breach of s.19. The application was dismissed. The judge first considered the case of R(G) v Westminster and decided that the court's focus of attention was not upon the parental objections or the child's objections but upon the objective consideration of whether the education offered is reasonably possible or reasonably practicable to be accessed by the child in question. Having quoted from paragraph 46 of Lord Phillips' judgment he continued: "[21] In my judgment, those passages indicate that the focus of the s.19 duty is concerned with whether educational provision offered by the local authority is available, is possible and is accessible to the child, although the test is one of reasonable practicability as opposed to absolute impossibility. Nevertheless that is an objective and strict test. [22] The problem then occurs as to who is to decide whether the provisions offered are practicable or reasonable. In my judgment it is clear that questions as to what is suitable are primarily for the LEA although subject to supervision by the court. Equally one would imagine that what is reasonably practicable should in the first instance at least be grappled with by the education authority, again subject to the supervision by the court. In the case of R(G) v Westminster City Council, the court appeared to decide the issue of "reasonable practicability" for itself. It may well be, however, that there is not much difference in this particular branch between the local authority or the court's assessment of what is practicable because something is either available, objectively speaking, or it is not." He then considered the case of C v Brent and said that it may provide further support for the proposition that it is for the LEA to decide what is reasonably practicable in the first instance. His conclusion in paragraph 25 was as follows: "The court will undoubtedly review with close scrutiny the assessment of the local authority, having regard to the fact that there must be educational provision available for a child which is both accessible and reasonably accessible in all the circumstances. But those terms must reflect the strict test, verging upon but not quite the same as impossibility, which is the test that is used and adopted in the other two limbs, medical illness and exclusion." Mr Wise sought to persuade me that both the question of "reasonable practicability" and the question of suitability were matters for the Court to determine on an objective test and that insofar as C decided otherwise it was per incuriam as inconsistent with R(G) v Westminster. He made the point that if it is not reasonably practicable for a child to access the education on offer it cannot be suitable. Mr Wise submitted that the correct approach was dictated by two matters, firstly as a matter of construction of the statute as in the case of R (A) v Croydon LBC [2009] 1 WLR 2557, and secondly because s.19 is a statutory duty not a power. It is the exercise of discretionary powers that are traditionally reviewed on Wednesbury grounds. The question of compliance or otherwise with a mandatory statutory duty, being a determination of lawfulness, is a question for the court. He relied upon R(G) v Southwark LBC [2009] 1 WLR 1299 [2009] UKHL 26. However, as Mr Lawson pointed out, that case concerned a very different statutory regime and the House of Lords was not considering the exercise of value judgments. The issue in that case was, once certain conditions were satisfied, which statutory provisions an authority should act under. That is plainly a pure question of law. I do not consider that the case of R(A) v Croydon LBC supports Mr Wise's contention; indeed it may lend support for the opposite view. That was a decision of the Supreme Court concerned with the duty on a local authority to provide accommodation for any child in need within their area who appeared to them to require accommodation in consequence of certain specified matters. "Child" was defined as "a person under the age of 18". The issue was whether it was for the court to determine whether a person was a child on the balance of probabilities or whether the authority must decide the matter, subject to judicial review on the usual principles of fairness and rationality. The Supreme Court decided that it was a matter for the court to determine. Baroness Hale, in paragraphs 26 and 27, drew a distinction between on the one hand a question which requires a number of value judgments, such as whether a child is or is not "in need", and a question of fact, such as whether a person is or is not a child, which admits of only one correct answer. She made it clear that a question of the former kind is one for the public authority subject to the control of the courts on the ordinary principles of judicial review. In my judgment, the examples given by Lady Hale in paragraph 26 point clearly to matters such as "suitability" and even "reasonable practicability" being questions of the former, rather than the latter type. In any event it is clear from paragraph 28 of the judgment that the decision in Ali depended heavily on the way in which Parliament had made its intentions plain through the drafting of the relevant statute. Moreover, in paragraph 33 Lady Hale made it clear that if her approach to the determination of age was accepted by the other members of the court (as it was) that did not mean that all the other judgments involved in the decision whether to provide services to children or to other client groups must be subject to determination by the courts. They remain governed by conventional principles. As for the point that compliance with a mandatory statutory duty is a question for the court, of course I accept this, but the way in which the LEA has gone about complying with that duty necessarily involves the taking by the LEA of a value judgment about the suitability of the proposed educational provision for the needs of the particular child after making a series of highly complex assessments. I am not only bound by the approach in C v Brent but I consider it to be correct. I also agree with the observations of Mr Blake QC in R(R) v Kent quoted in paragraph 39 above. Has there been a breach of the s.19 duty? In my view, on the facts of this particular case, whichever test is to be applied and adopting Mr Wise's preferred approach of a high level of anxious scrutiny, it is reasonably practicable for H to attend School A, the decision by the LEA that School A is suitable for H's needs is unimpeachable on public law grounds, and there has been no breach of the duty under s.19 even if that duty has been engaged. H's case is largely based on the premise that regardless of whether School A might objectively be regarded as suitable to meet H's needs, and even though there is no physical impediment to her attendance there, this is a case which falls within the exceptional category recognized by Lord Phillips in paragraph 48 of the judgment in R (G) v Westminster. Mr Wise submitted that it was unreasonable to expect H to attend that school because "an attempt to require her to return there is likely, given her medical history of anxiety leading to suicidal behaviour, to present a significant risk to her mental health". That is the opinion stated in paragraph 9 of the addendum expert report of Mr Trevor Holme, a Chartered Educational Psychologist, dated 3rd March 2010. Mr Holme is an Associate Fellow of the British Psychological Society and has some 32 years' experience working as an educational psychologist in local authorities including 10 years as Principal Educational Psychologist for Leicestershire County Council. He is also a qualified teacher. His experience and professional qualifications, set out in detail in his first report, are impressive. Mr Holme's opinion is not shared by Ms Sophie Curra, the Defendant's expert Educational Psychologist. In her report Ms Curra points out that children with Asperger's Syndrome often experience change and transitions as anxiety provoking, and that it is recommended to keep such changes and transitions to a minimum. For that reason, she did not believe a further change in school provision to be beneficial to H. She said that H had formed positive relationships at School A and that when attending she presents as settled and happy in school. Ms Curra's view is that "it is likely that a change in school placement will be anxiety provoking and detrimental to H's learning, emotional and social well-being." Ms Curra also refers to reports that a large number of year 9 students at School B display levels of challenging behaviour, including incidents of violent behaviour, and points out that it is likely that the frequent occurrence of such behaviour among her peer group will create feelings of insecurity stress and high anxiety for H. Mr Holme gained the trust of H sufficiently to enable him to persuade her to talk to him at length, but Ms Curra was less fortunate and the closest she was able to get to ascertaining H's views was a statement prepared by H and handed by H to Ms Curra when she visited the family home. Mr Wise submits that this is one reason why I should prefer the views of Mr Holme. However, this is not a case in which the views of H as expressed in writing to Ms Curra were significantly different from what she said to Mr Holme. Whilst Mr Holme had some advantage over Ms Curra with regard to being able to assess H for himself, I am not persuaded that it relegates Ms Curra to the same status as a doctor who fails to examine the patient before making a diagnosis. How, then, is the court to assess the competing views of these two highly competent professionals? A court or tribunal that has to decide a case on the merits may face the unenviable task of having to prefer the view of one expert to that of another, but such a court or tribunal will normally have had the advantage of seeing and hearing the experts and of assessing their answers under cross-examination, as well as questioning them itself if there are any aspects of their reports that need clarification or amplification. This Court, being a court of review, has none of these advantages and in my judgment should not allow itself to be drawn into determining which expert's view is to be preferred. There may be cases in which it is easy to place little or no weight on the opinion of an expert that is relied upon by one of the parties, for example if the expert is unqualified to express the view that he does, or if the view he expresses is manifestly contrary to the rest of the evidence, or if he is reaching a conclusion without first obtaining the empirical evidence to support it – as in Shala v Birmingham City Council [2007] EWCA Civ 624. In a case which is not that extreme, it is almost impossible to decide which of them is right, and that is not the function of a review court in any event. I concur in the view expressed by Munby J in CF v Secretary of State for the Home Department (supra) at paras 216-219 about the undesirability of the use of expert evidence to challenge a public authority's decision-making. The question that I have to decide is whether it is reasonably practicable for H to attend school A (or whether that view is one within the purview of the margin of appreciation allowed to the Defendant when deciding how to exercise its statutory duty under s.19). If Mr Holme's evidence, read in conjunction with the evidence of Mrs R and H herself satisfied me (despite the considerable body of evidence adduced by the Defendant to the contrary) that the case falls within the exceptional category referred to by Lord Phillips in paragraph 48 of R (G) v Westminster, then it would not be. But this is not a case in which the pupil is likely to be exposed to a risk of sexual assault or would be forced to return to the scene of some other appalling traumatic incident or would pose a significant threat to other children at that school. It is not a case where the expert evidence, taken at its highest, comes anywhere near establishing that sending H back to School A against her wishes would be likely to cause her to make another suicide attempt, or even self-harm. I must also bear in mind that wherever H is placed, it appears to be common ground that the already lengthy interruption to her education is bound to have a detrimental impact upon her ability to cope with re-entry to any school, and therefore her reintegration may be a difficult process regardless of the identity of the educational establishment concerned. In my judgment this case is no different from R(G) v Westminster, C v Brent ,and R (R) v Kent in which the LEA was held to be entitled to reject expert evidence relied on by the child's parents in reaching its conclusion. I have noted that in both his original report and his addendum report Mr Holme is not addressing the question whether School A is unsuitable for H nor is he addressing the question whether it would be unreasonable for H to attend School A. Rather, he sets out his assessment and opinion of H's special educational needs and then addresses the question of placement. He refers to the fact that both School A and School B have positive Ofsted reports and that the curriculum at both schools is rated as outstanding. In terms of the quality of both schools he says that there is, in general terms, no difference between them. He then lists a number of factors to be taken into account in determining "which of the schools would best meet H's special educational needs" (emphasis added). In his addendum report he specifically provides an opinion on how that question should be answered and comes down in favour of School B, for a number of cogent reasons which the tribunal may or may not ultimately accept. (I would add that Ms Curra gives a number of equally cogent reasons for her opposing view). However Mr Holme then expresses the opinion in paragraph 9 to which I have already referred. Although elsewhere in his reports Mr Holme has taken pains to explain the reasons for his opinions and demonstrate his chain of reasoning, the only express reason given in the addendum report for his view that an attempt to require H to return to School A is likely to present a significant risk to her mental health is "her mental history of anxiety leading to suicidal behaviour". Yet Mr Holme's earlier report based on his discussions with H states, in paragraph 28, "in reflecting on her episodes of mental ill health H is quite clear in saying that it now feels as if that were a different person. I asked if she feared that such an episode could recur. She told me that she was determined that it would not happen again and that if she decided that it wouldn't happen then it wouldn't." There are also no reports of H self-harming or attempting to do so during her time at School A. The evidence shows that there are numerous measures being taken to help H to cope with her anxiety, and that the re-integration plan would address this, as one might expect it to. Moreover, Mr Holme's interview with the head teacher, Sue Rogers, revealed only one example of a case in which H displayed extreme anxiety at school – and that was about a proposed school trip. In the event H did not go on the trip, and the manifested anxiety was appropriately managed. Accordingly whilst I have no doubt that Mr Holme's view is honestly held, it seems not only somewhat surprising, appearing in the report as it does with no forewarning and no reasoned explanation, but there is no clear support for that conclusion in his earlier report or anywhere else. Indeed, it could be regarded as running contrary to the tenor of the information set out in his first report. Mr Wise drew the Court's attention to paragraphs 49 and 57 of Mr Holme's first report and paragraphs 5 and 6 of his second report as supporting the view expressed in paragraph 9 of the latter. The first of the two passages in the first report to which Mr Wise refers, however, does no more than express the view that H's anxieties are real and present risks if not managed skilfully; if and insofar as Mr Holme criticises the way in which those risks have been managed by School A (and I am not sure that he does) there is a genuine difference of opinion between him and Ms Curra. As for the recommendation of Cognitive Behavioural Therapy, which is available or accessible at School B, there is nothing in Mr Holme's reports to suggest that such therapy must be made available at school. In any event there is evidence that steps are being taken by to arrange for H to have CBT if she returns to School A, if that is an appropriate therapy. I refer to the proposed reintegration plan for H annexed to the School Report by Ms Rogers dated 4th February 2010. As for the observation in the addendum report that the fact that School B is H's preferred option and this is an important factor in considering a placement which presents less risk to her mental health, the issue here is not which school presents less risk, but whether H's mental health would be actively put at risk by returning her to School A to such an extent as to make it unreasonable for her to go there. I do not believe that Mr Holme is suggesting that unless H is allowed to choose her school her mental health will suffer. I do not intend any disrespect to the remainder of Mr Wise's arguments about the "objective unsuitability" of School A when I say that they appear to me to be nothing more than an attempt to persuade this Court to decide the matter on the merits by preferring Mr Holme's assessment to that of the Defendant. It is for the SENDIST tribunal to decide whether or not School A can meet the full range of provision that H requires. After very careful consideration of all the evidence in this case I cannot find that the Defendant's behaviour was perverse or irrational, or that it fell outside the proper and reasonable bounds of its determination as to how to go about exercising its statutory duty to provide H with full-time education that is suitable for her specific needs. CONCLUSION I have carefully considered whether the Defendant's statutory duties under s.19, read in conjunction with A2P1, have been discharged, and I reach the conclusion that they have. In my judgment, applying the Daly approach in scrutinizing the way in which the Defendant exercised its statutory obligations, and taking into account all the evidence in this case, the Defendant was entitled to take the view that School A was available and reasonably practicable for H to attend. As in the case of R(R) v Kent County Council this Court is unable to reach the conclusion that the Defendant has gone beyond the bounds of reasonableness that would enable this Court to intervene. Although H is not receiving full-time education, and this is most regrettable, her situation is not one that engages a duty under s.19(1) on the Defendant to provide her with suitable alternative education pending the determination of the appeal by SENDIST. It follows that permission to bring a claim for judicial review will be refused because that claim would fail.

FOURTH SECTION CASE OF TOMCZYKOWSKI v. POLAND (Application no. 34164/05) JUDGMENT STRASBOURG 17 April 2012 This judgment is final. It may be subject to editorial revision. In the case of Tomczykowski v. Poland, The European Court of Human Rights (Fourth Section), sitting as a Committee composed of: George Nicolaou, President,Ledi Bianku,Vincent A. De Gaetano, judges,and Fatoş Aracı, Deputy Section Registrar, Having deliberated in private on 27 March 2012, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 34164/05) 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 Bogdan Tomczykowski (“the applicant”), on 16 September 2005. 2. The Polish Government (“the Government”) were represented by their Agent, Mr J. Wołąsiewicz of the Ministry of Foreign Affairs. 3. On 28 June 2010 the application was communicated to the Government. 4. The Government objected to the examination of the application by a Committee. After having considered the Government’s objection, the Court rejects it. THE FACTS I. THE CIRCUMSTANCES OF THE CASE 5. The applicant was born in 1962 and lives in Lublin. 6. By a judgment of 19 November 2003 the Lublin Regional Administrative Court dismissed the applicant’s appeal against a second-instance administrative decision of 25 March 2003 by which the second-instance authority had refused to acknowledge that the applicant’s ailment was of an occupational character. 7. This judgment was served on the applicant on 27 January 2004. 8. On 27 February 2004 the applicant requested to be granted legal aid. 9. On an unspecified date the Lublin Bar Association refused to assign a lawyer to the case. Subsequently, on 26 March 2004 it allowed the applicant’s request after the Supreme Administrative Court had instructed it that it had no right to refuse. 10. On 19 November 2004 the lawyer assigned to the case had effective access to the case-file. On 1 December 2004 the lawyer lodged a cassation appeal together with a request for retrospective leave to appeal out of time with the Lublin Administrative Court. 11. By a decision of 1 April 2005 that court rejected the cassation appeal. It noted that the seven-day time-limit for lodging a request for leave to appeal out of time had started, at the latest and if counted in a manner most advantageous to the applicant, on the day when the legal-aid lawyer had had an opportunity to have effective access to the case file. In the present case that time-limit had started to run on 19 November 2004, while the request had been lodged with the court on 1 December 2004. It had therefore to be rejected for failure to comply with the time-limit. 12. The lawyer appealed. On 1 April 2005 the Supreme Administrative Court upheld the contested decision and shared the legal view expressed by the regional court. II. RELEVANT DOMESTIC LAW AND PRACTICE 13. The relevant domestic law and practice concerning the procedure for lodging cassation appeals with the Supreme Administrative Court against judgments of the Regional Administrative Courts are stated in the Court’s judgment in the case of Subicka v. Poland, no. 29342/06, §§ 12‑21, 14 September 2010. 14. In particular, in its decision no. II FZ 651/07 of 18 January 2008 the Supreme Administrative Court held that a request for leave to appeal out of time was the only method by which a cassation appeal submitted after the expiry of the time-limit by a legally-aided applicant could be admitted for examination. 15. When legal aid has been granted and the time-limit for the submission of a cassation appeal has already expired, it is open to the legally‑aided party to submit the appeal together with a request for leave to appeal out of time made under sections 86 and 87 of the Law on the Procedure before Administrative Courts (e.g. NSA FZ 754/04 of 31 January 2005 and NSA, I OZ 160/08 of 14 March 2008). In certain cases the courts stated that such a request should be submitted within seven days from the date on which the lawyer obtained a power of attorney from the party, which date is considered as the date on which the impediment to lodging an appeal ceased to exist (e.g. the Białystok Regional Administrative Court, II SAB Bk 27/07 of 10 April 2008), or from the date when the lawyer could obtain effective access to the case file (e.g. the Poznań Regional Administrative Court, IV SA/Po 865/06 of 13 November 2007). 16. In a number of its recent decisions the Supreme Administrative Court acknowledged the difficulties which legally-aided parties experienced in connection with lodging their cassation appeals against judgments of the first-instance administrative courts. It expressed the view that they should not be penalised for the fact that their requests for legal aid were not processed speedily enough. It analysed relevant case‑law of the administrative courts and noted that the manner in which the beginning of the time-limit for lodging cassation appeals was determined had led to divergent results. It held that it was necessary to determine the relevant time in a manner compatible with effective access to the highest administrative court and which ensured equal treatment for parties represented by lawyers appointed under the legal‑aid scheme and by privately hired lawyers. The court held that the time-limit for a legally-aided party started to run only on the day when a legal-aid lawyer had a genuine possibility of lodging the cassation appeal and not when he or she was informed of having been assigned to the case. The court was of the view that the latter approach was far too rigorous and rendered the effective enjoyment of legal assistance granted under the legal-aid system illusory. In any event, the cassation appeal had to be lodged within thirty days from the day on which the party was informed of the appointment of the legal‑aid lawyer (I FZ 569/06 of 8 December 2006; I FZ 667/06 of 15 January 2007; I FZ 30/09 of 2 March 2007; II FZ 177/08 of 25 June 2008; II OZ 513/08 of 27 May 2008; I OZ 376/08 of 13 June 2008; I FZ 30/09 of 2 March 2009; II OZ 1093/09 of 9 December 2009; I FZ 30/09 of 2 March 2009). THE LAW ALLEGED VIOLATION OF ARTICLE 6 §1 OF THE CONVENTION A. Admissibility 17. The applicant complained that he had been denied access to the Supreme Administrative Court because it had rejected his cassation appeal. He referred to Article 6 § 1 which, in so far as relevant, provides as follows; “In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...” 18. The Court notes that the application 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 19. The applicant complained that he had been denied access to the Supreme Court. 20. The Court has already had occasion to set out at length the relevant principles derived from its case-law in this area (Siałkowska v. Poland, no. 8932/05, §§ 99-107, 22 March 2007; Smyk v. Poland, no. 8958/04, §§ 54-59, 28 July 2009; Zapadka v. Poland, no. 2619/05, §§ 57‑61, 15 December 2009). It adopts those principles for the purposes of the instant case. 21. The same question arises in the context of the present case as that examined by the Court in the cases referred to above, namely whether the applicant was deprived of access to the Supreme Administrative Court. 22. The Court observes that it has already dealt with this question in the context of criminal as well as civil procedure before the Polish courts. 23. As far as criminal procedure is concerned, it was established that – under the established case-law of the Supreme Court – the time-limit for lodging a cassation appeal should run de novo from the day when the applicant has been informed of the legal-aid lawyer’s refusal to lodge a cassation appeal (the Supreme Court, decision II KZ 16/08 of 20 February 2002). This approach was found to satisfy Convention standards, provided that the applicant has been properly informed about his/her procedural rights at the time when the lawyer’s refusal was communicated to him or her (Kulikowski v. Poland, no. 18353/03, § 69‑71, ECHR 2009‑... (extracts); Antonicelli v. Poland, no. 2815/05, § 44‑45, 19 May 2009). Subsequently, in 2008 the Supreme Court also stated that the strand of the case‑law based on that approach was correct as providing adequate guarantees to the defendant by indicating in an unequivocal way the date on which the time‑limit started to run. 24. In the context of civil procedure the Court has found that the civil courts’ approach to the calculation of the time-limit for submitting a cassation appeal was stricter. Thus, a legal-aid lawyer’s refusal to prepare it did not trigger the running of the time‑limit de novo. That approach was regarded by the Court as being incompatible with Convention standards, save for rather rare situations where the refusal of the legal‑aid lawyer was notified to the applicant well before the deadline was due to expire (see Smyk v. Poland, referred to above, §§ 63‑65). 25. In so far as procedure before the administrative courts is concerned, the Court first observes that where a party to proceedings is represented by a lawyer, the procedural time-limits set by the Act on Procedure before Administrative Courts start to run on the date of the service of judicial decisions on the lawyer. In such situations no difficulties arise in connection with establishing the date on which the thirty-day time-limit for lodging a cassation appeal, applicable at the material time, would expire. 26. The situation is significantly different where a party does not have legal representation before the Regional Administrative Court, as in the present case, and is granted legal aid only after the second‑instance judgment has been given and served on him or her. 27. The case‑law of the Supreme Administrative Court provides that the time-limit for lodging a cassation appeal starts to run from the date on which the judgment of the Regional Administrative Court has been served on the non-represented party. The administrative courts have repeatedly held that his or her request for legal aid does not affect the running of the time‑limit (see Relevant domestic law above). However, they have also acknowledged that a party who was subsequently granted legal aid was put in a difficult position, because at the time of service the time‑limit had already started to run. A lawyer subsequently assigned to the case had therefore less time to examine the case and decide, still within the time-limit, whether a cassation appeal offered prospects of success and to prepare an appeal. This might lead to a situation where lawyers subsequently assigned to the case only learned about their appointments after the time‑limit for lodging the cassation appeal had expired. 28. The Supreme Administrative Court has, on numerous occasions, addressed this problem. As a result, a body of case-law has been developed to the effect that in situations where a legal-aid lawyer has been appointed after the time-limit for lodging a cassation appeal had expired and he or she is willing to prepare it, the administrative courts could grant leave for submitting a cassation appeal out of time. Under the case‑law of the Supreme Administrative Court the day on which the impediment for lodging the cassation appeal ceased to exist is defined as the day on which the lawyer has had a genuine possibility to prepare it. Thus, the seven‑day time‑limit begins to run only after the legal‑aid lawyer has had sufficient time to study the file. The Court notes that this jurisprudential approach resulted from the administrative courts’ concern about the difficulties encountered by legally-aided parties and can be said to be compatible with the Convention standards as regards ensuring fair access to the cassation procedure (see also Subicka v. Poland (no. 2), nos. 34043/05 and 15792/06, § 10, 21 June 2011). The Court is of the view, in line with its case-law referred to above and also in line with the many judgments of the Polish administrative courts summarised above (see paragraphs 15‑16 above) that the determination of the time-limit for legally aided parties should be made in a manner compatible with effective access to the highest administrative court and which ensured equal treatment for parties represented by lawyers appointed under legal aid scheme and by privately hired lawyers. 29. Turning to the circumstances of the present case, the Court observes, firstly, that the judgment of the regional administrative court was served on the applicant on 27 January 2004. Subsequently the applicant submitted his request for legal aid thirty days later, only on 27 February 2004. It has not been shown or even argued that this delay had been justified by any special circumstances for which the applicant could not be held responsible, or that he could not have been aware of the time‑limit within which a cassation appeal had had to be submitted to the court. Having regard to the delay with which the applicant availed herself of his procedural right, the Court is of the view that he failed to display diligence which should normally be expected from a party to proceedings concerning one’s civil rights and obligations (see Pretto and Others v. Italy, judgment of 8 December 1983, Series A no. 71, pp. 14-15, § 33; Bąkowska v. Poland, no. 33539/02, §§ 53‑34, 12 January 2010, mutatis mutandis). 30. Furthermore, the Court observes that the legal-aid lawyer submitted the cassation appeal together with the request for leave to appeal out of time on 1 December 2004, after the expiry of the seven-day time-limit, the beginning of which was determined by the administrative courts in the manner most advantageous for the applicant and with due regard being had to the necessity of alleviating the situation of legally-aided parties arising from the difficulties to examine the case and prepare a cassation appeal within the time-limits set out by the applicable procedural law. 31. The Court therefore concludes, having regard to the circumstances of the case seen as a whole, that in the particular circumstances of the present case there has been no violation of Article 6 § 1 of the Convention. FOR THESE REASONS, THE COURT UNANIMOUSLY 1. Declares the application admissible; 2. Holds that there has been no violation of Article 6 § 1 of the Convention. Done in English, and notified in writing on 17 April 2012, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Fatoş AracıGeorge NicolaouDeputy RegistrarPresident

Case C-429/07 Inspecteur van de Belastingdienst v X BV (Reference for a preliminary ruling from the Gerechtshof te Amsterdam) (Competition policy – Articles 81 EC and 82 EC – Article 15(3) of Regulation (EC) No 1/2003 – Written observations submitted by the Commission – National dispute concerning the deductibility from tax of a fine imposed by a Commission decision) Summary of the Judgment Competition – Community rules – Application – Cooperation between the Commission and the national courts – Intervention by the Commission in proceedings pending before a national court (Arts 81 EC, 82 EC and 83 EC; Council Regulation No 1/2003, Art. 15(3)) Article 15 of Regulation No 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, entitled ‘Cooperation with national courts’, establishes a system for the mutual exchange of information between the Commission and the courts of the Member States, and provides, in specific circumstances, for the possibility of intervention by the Commission and the competition authorities of the Member States in proceedings pending before national courts. A literal interpretation of the first subparagraph of Article 15(3) of Regulation No 1/2003 leads to the conclusion that the option for the Commission, acting on its own initiative, to submit written observations to the courts of the Member States is subject to the sole condition that the coherent application of Articles 81 EC or 82 EC so requires. That condition may be fulfilled even if the proceedings concerned do not pertain to issues relating to the application of Article 81 EC or Article 82 EC. Moreover, Articles 81 to 83 EC must be understood as forming part of a comprehensive set of provisions designed to prohibit and punish anti‑competitive practices, the purpose of Article 83 EC being inter alia to ensure the effective supervision of cartels and abuses of dominant positions. To dissociate the principle of prohibition of anti‑competitive practices from the penalties provided for where that principle has not been observed would deprive of any effectiveness the action taken by the authorities responsible for monitoring compliance with that prohibition and punishing such practices. Thus, the provisions of Articles 81 EC and 82 EC would be ineffective if they were not accompanied by enforcement measures provided for in Article 83(2)(a) EC. There is an intrinsic link between the fines and the application of Articles 81 EC and 82 EC. The effectiveness of the penalties imposed by the national or Community competition authorities on the basis of Article 83(2)(a) EC is therefore a condition for the coherent application of Articles 81 EC and 82 EC. The decision that the court of a Member State must give in proceedings relating to the deductibility from taxable profits of the amount of a fine or a part thereof imposed by the Commission for infringement of Articles 81 EC or 82 EC is capable of impairing the effectiveness of the penalty in respect of anti‑competitive practices provided for in Article 83(2)(a) EC and therefore might compromise the coherent application of Articles 81 EC or 82 EC. The third sentence of the first subparagraph of Article 15(3) of Regulation No 1/2003 must therefore be interpreted as meaning that it permits the Commission to submit on its own initiative written observations to a court of a Member State in proceedings relating to the deductibility from taxable profits of the amount of a fine or a part thereof imposed by the Commission for infringement of Articles 81 EC or 82 EC. (see paras 24, 30, 33-34, 36-38, 40, operative part) JUDGMENT OF THE COURT (Fourth Chamber) 11 June 2009 (*) (Competition policy – Articles 81 EC and 82 EC – Article 15(3) of Regulation (EC) No 1/2003 – Written observations submitted by the Commission – National dispute concerning the deductibility from tax of a fine imposed by a Commission decision) In Case C‑429/07, REFERENCE for a preliminary ruling under Article 234 EC from the Gerechtshof te Amsterdam (Netherlands), made by decision of 12 September 2007, received at the Court on 17 September 2007, in the proceedings Inspecteur van de Belastingdienst v X BV, THE COURT (Fourth Chamber), composed of K. Lenaerts, President of the Chamber, T. von Danwitz, E. Juhász (Rapporteur), G. Arestis and J. Malenovský, Judges, Advocate General: P. Mengozzi, Registrar: N. Nanchev, Administrator, having regard to the written procedure and further to the hearing on 18 December 2008, after considering the observations submitted on behalf of: – X BV, by G.Th.K. Meussen, advocaat, – the Netherlands Government, by Y. de Vries and M. de Grave, acting as Agents, – the Italian Government, by I.M. Braguglia, acting as Agent, and F. Arena, avvocato dello Stato, – the Commission of the European Communities, by A. Bouquet and W. Wils, acting as Agents, after hearing the Opinion of the Advocate General at the sitting on 5 March 2009, gives the following Judgment 1 This reference for a preliminary ruling concerns the interpretation of Article 15(3) of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (OJ 2003 L 1, p. 1). 2 The reference was made in the course of proceedings between the Inspecteur van de Belastingdienst (Inspector of Taxes, ‘the Inspector’) and X BV, a company incorporated under Netherlands law whose principal office is established at P, concerning the tax deductibility of fines imposed by the Commission of the European Communities for infringement of the Community competition rules. Legal context Community legislation 3 According to recital 21 in the preamble to Regulation No 1/2003: ‘Consistency in the application of the competition rules also requires that arrangements be established for cooperation between the courts of the Member States and the Commission. This is relevant for all courts of the Member States that apply Articles 81 and 82 of the [EC] Treaty, whether applying these rules in lawsuits between private parties, acting as public enforcers or as review courts. In particular, national courts should be able to ask the Commission for information or for its opinion on points concerning the application of Community competition law. The Commission and the competition authorities of the Member States should also be able to submit written or oral observations to courts called upon to apply Article 81 or Article 82 of the Treaty. These observations should be submitted within the framework of national procedural rules and practices including those safeguarding the rights of the parties. Steps should therefore be taken to ensure that the Commission and the competition authorities of the Member States are kept sufficiently well informed of proceedings before national courts.’ 4 Article 15 of Regulation No 1/2003 provides: ‘Cooperation with national courts 1. In proceedings for the application of Article 81 or Article 82 of the Treaty, courts of the Member States may ask the Commission to transmit to them information in its possession or its opinion on questions concerning the application of the Community competition rules. 2. Member States shall forward to the Commission a copy of any written judgment of national courts deciding on the application of Article 81 or Article 82 of the Treaty. Such copy shall be forwarded without delay after the full written judgment is notified to the parties. 3. Competition authorities of the Member States, acting on their own initiative, may submit written observations to the national courts of their Member State on issues relating to the application of Article 81 or Article 82 of the Treaty. With the permission of the court in question, they may also submit oral observations to the national courts of their Member State. Where the coherent application of Article 81 or Article 82 of the Treaty so requires, the Commission, acting on its own initiative, may submit written observations to courts of the Member States. With the permission of the court in question, it may also make oral observations. For the purpose of the preparation of their observations only, the competition authorities of the Member States and the Commission may request the relevant court of the Member State to transmit or ensure the transmission to them of any documents necessary for the assessment of the case. 4. This Article is without prejudice to wider powers to make observations before courts conferred on competition authorities of the Member States under the law of their Member State.’ 5 According to points 31 to 35 of the Commission Notice on the cooperation between the Commission and the courts of the EU Member States in the application of Articles 81 and 82 EC (OJ 2004 C 101, p. 54): ‘31. According to Article 15(3) of [Regulation No 1/2003], the national competition authorities and the Commission may submit observations on issues relating to the application of Articles 81 [EC] or 82 EC to a national court which is called upon to apply those provisions. That regulation distinguishes between written observations, which the national competition authorities and the Commission may submit on their own initiative, and oral observations, which can only be submitted with the permission of the national court … 32. The regulation specifies that the Commission will only submit observations when the coherent application of Articles 81 [EC] or 82 EC so requires. That being the objective of its submission, the Commission will limit its observations to an economic and legal analysis of the facts underlying the case pending before the national court. 33. In order to enable the Commission to submit useful observations, national courts may be asked to transmit or ensure the transmission to the Commission of a copy of all documents that are necessary for the assessment of the case. In line with Article 15(3), second subparagraph, of [R]egulation [No 1/2003], the Commission will only use those documents for the preparation of its observations … 34. Since [that] regulation does not provide for a procedural framework within which the observations are to be submitted, Member States’ procedural rules and practices determine the relevant procedural framework. Where a Member State has not yet established the relevant procedural framework, the national court has to determine which procedural rules are appropriate for the submission of observations in the case pending before it. 35. The procedural framework should respect the principles set out in point 10 of this notice. That implies amongst others that the procedural framework for the submission of observations on issues relating to the application of Articles 81 [EC] or 82 EC (a) has to be compatible with the general principles of Community law, in particular the fundamental rights of the parties involved in the case; (b) cannot make the submission of such observations excessively difficult or practically impossible (the principle of effectiveness) …; and (c) cannot make the submission of such observations more difficult than the submission of observations in court proceedings where equivalent national law is applied ( … principle of equivalence).’ National legislation 6 The Netherlands Law introducing new rules on economic competition (Law on competition) (wet houdende nieuwe regels omtrent de economische mededinging (Mededingingswet)) of 22 May 1997 (Stb. 1997, No 242), as amended by the law of 9 December 2004 (Stb. 2005, No 172; ‘the Law on competition’), provides, in Article 89h thereof: ‘1. The [Administrative] Board [of the Nederlandse Mededingingsautoriteit (Netherlands competition authority, “the NMa”)] or the Commission of the European Communities may, when not acting as a party, submit written observations in appeal proceedings before the Administrative Court, pursuant to the first subparagraph of Article 15(3) of Regulation No 1/2003, if the Board [of the NMa] or the Commission of the European Communities has expressed its wish to do so. The court may set a time‑limit for this. With the permission of the court, they may also submit oral observations during the hearing. 2. Following an application, pursuant to the second subparagraph of Article 15(3) of Regulation No 1/2003, the court shall provide the Board [of the NMa] and the Commission of the European Communities with all documents referred to in the aforementioned provision. The parties may give their opinions on the documents to be issued within a time-limit to be determined by the court. 3. The parties may respond to observations submitted by the Board [of the NMa] or the Commission of the European Communities within a time-limit to be determined by the court. The court may provide the parties with an opportunity to respond to each other’s observations.’ 7 Article 89h is the result of the Law amending the Law on competition and certain other laws relating to the implementation of Regulations (EC) Nos 1/2003 and 139/2004 (wet tot wijziging van de Mededingingswet en van enige andere wetten in verband met de implementatie van EG-verordeningen 1/2003 en 139/2004) of 30 June 2004 (Stb. 2004, No 345). It is apparent from the order for reference that the explanatory memorandum to that law (Kamerstukken II, session 2003-2004, 29276, No 3) contains the following explanations: ‘2.5 Cooperation with national courts The cooperation between the Commission and the national courts is set out in Article 15 of, and in recital 21 in the preamble to, [Regulation No 1/2003]. … Article 15(3) thereof also provides that the Commission and the national competition authorities may submit written and oral observations during examination of a case by the court (amicus curiae). Those observations have the status of an opinion and the purpose of promoting the coherent application of the competition rules. To that end, the Commission and the national competition authorities must comply with the Netherlands rules of procedure. In proceedings between two parties, the court is passive and determines the rhythm of the proceedings. Moreover, the court is not bound by the Commission’s opinion (recital 21). The court’s independence is not therefore called into question. The Commission and the national competition authorities must respect the rights of the parties and ensure that confidential business information remains confidential. Finally, in accordance with Article 15(1) of Regulation [No 1/2003], the national court is empowered to ask the Commission to transmit to it information in its possession or its opinion. … 3.4 Cooperation between the director‑general of the NMa, the Commission and the courts Article 15(3) of Regulation [No 1/2003] provides that the national competition authorities of the Member States and the Commission, acting on their own initiative, may submit, with regard to the application of Articles 81 and 82 EC, written observations and, with the permission of the court in question, oral observations to the national courts. In addition, Article 15(1) of Regulation [No 1/2003] provides for the possibility that the court may ask the Commission for information or its opinion with regard to the application of Articles 81 and 82 of the Treaty … … The implementation of Article 15 of Regulation [No 1/2003] takes place before the administrative courts by amendment of the Law on competition (Article 1(g) [of the amending law,] Articles 89h, 89i and 89j) [of the Law on competition] and, before the civil courts, by amendment of the Code of Civil Procedure [(Wetboek van Burgerlijke Rechtsvordering)] (Article III).’ 8 Entitled ‘Non‑deductible general charges’, Article 3.14 of the Law on income tax 2001 (Wet Inkomstenbelasting 2001), in the version applicable to income received in 2002, provided: ‘1. When assessing profits, the charges and costs relating to the following headings shall not be deductible: … c. fines imposed by a Netherlands court and the sums paid to the State to avoid judicial proceedings in the Netherlands or to fulfil a condition linked to a decision on remission of a penalty, fines imposed by an institution of the European Union and fines and increases imposed pursuant to the General Law on national taxation [(Algemene wet inzake rijksbelastingen)], the Law on customs [(Douanewet)], the Law on the coordination of social insurance [(Coördinatiewet Sociale Verzekering)], the Law on the administrative enforcement of traffic regulations [(Wet administratiefrechtelijke handhaving verkeersvoorschriften)] and the Law on competition; …’ The dispute in the main proceedings and the question referred 9 By Commission Decision 2005/471/EC of 27 November 2002 relating to proceedings under Article 81 of the EC Treaty against BPB PLC, Gebrüder Knauf Westdeutsche Gipswerke KG, Société Lafarge SA and Gyproc Benelux NV (Case No COMP/E-1/37.152 – Plasterboard) (OJ 2005 L 166, p. 8), BPB, Knauf, Lafarge and Gyproc received fines of EUR 138.6 million, 85.8 million, 249.6 million and 4.32 million respectively. The fines were paid provisionally or secured by a bank guarantee. 10 The penalties thus imposed by the Commission were confirmed by the judgments of the Court of First Instance in Case T‑50/03 Saint-Gobain Gyproc Belgium v Commission [2008] ECR II‑0000, Case T‑52/03 Knauf Gips v Commission [2008] ECR II‑0000, Case T‑53/03 BPB v Commission [2008] ECR II‑0000, and Case T‑54/03 Lafarge v Commission [2008] ECR II‑0000. Knauf and Lafarge lodged an appeal before the Court of Justice against the judgments of the Court of First Instance dismissing their actions (Cases C‑407/08 P and C‑413/08 P). 11 Before those judgments of the Court of First Instance were delivered, one of the companies concerned, which the file shows was established in Germany, called X KG by the referring court, passed on part of the fine imposed on it within the group of which it is the parent company, and in particular to one of its Netherlands subsidiaries, X BV. 12 On 13 March 2004, an assessment to corporation tax was made on X BV by the Netherlands tax authority in respect of the financial year 2002. By letter of 8 April 2004, the company lodged an objection to that assessment with the Inspector, disputing that the fine imposed by the Commission and passed on to it in part by its parent company constitutes a fine within the meaning of Article 3.14(1)(c) of the Law on income tax 2001, which does not permit the deduction of fines imposed by the Community institutions for the purpose of calculating the taxable profits of a company. The Inspector dismissed that complaint by decision of 11 March 2005. 13 On 19 April 2005, X BV brought an action before the Rechtbank Haarlem (Haarlem District Court) (Netherlands). 14 By judgment of 22 May 2006, that court held that the fine was partially deductible. 15 The Inspector brought an appeal against that judgment before the Gerechtshof te Amsterdam (Court of Appeal, Amsterdam) (Netherlands) by notice of 30 June 2006. 16 The Commission, having been informed by the press and through the national competition authorities, notified the referring court, by letter of 15 March 2007, that it wished to intervene as amicus curiae pursuant to Article 15(3) of Regulation No 1/2003 and in accordance with Article 89h of the Law on competition. In addition, the Commission requested that a time-limit be set for that purpose and that any documents necessary for the assessment of the case be transmitted to it. 17 At the hearing of the Gerechtshof te Amsterdam of 22 August 2007, the parties to the main proceedings and the Commission were asked to express their views on the question whether the Commission was competent under Article 15(3) of Regulation No 1/2003 to submit, on its own initiative, written observations in the proceedings pending before that court. 18 It is against that background that the Gerechtshof te Amsterdam decided to stay proceedings and refer the following question to the Court for a preliminary ruling: ‘Is the Commission competent, under Article 15(3) of Regulation … No 1/2003, to submit, on its own initiative, written observations in proceedings relating to the deductibility from the (taxable) profit realised by the party concerned in 2002 of a fine for infringement of Community competition law, which was imposed by the Commission on X KG and (partially) passed on to the party concerned?’ The question referred for a preliminary ruling 19 By its question, the referring court essentially asks whether the Commission is competent, under Article 15(3) of Regulation No 1/2003, to submit, on its own initiative, written observations to a national court in proceedings relating to the deductibility from taxable profits of the amount of a fine or a part thereof imposed by the Commission for infringement of Articles 81 EC or 82 EC. 20 In order to ensure the coherent application of the competition rules in the Member States, a cooperation mechanism between the Commission, the national competition authorities and the courts of the Member States was set up in Chapter IV of Regulation No 1/2003. 21 That cooperation is part of the general principle of sincere cooperation, referred to in Article 10 EC, which governs the relationships between the Member States and the Community institutions. As the Court has held, the duty of sincere cooperation imposed on the Community institutions is of particular importance where that cooperation involves the judicial authorities of a Member State who are responsible for ensuring that Community law is applied and respected in the national legal system (see order in Case C‑2/88 IMM Zwartveld and Others [1990] ECR I-3365, paragraph 18). 22 In that context, the national courts, on the one hand, and the Commission and the Community Courts, on the other, act on the basis of the role assigned to them by the Treaty (see, to that effect, Case C‑344/98 Masterfoods and HB [2000] ECR I‑11369, paragraph 56). 23 Articles 11 to 14 of Regulation No 1/2003 provide for various forms of cooperation between the Commission and the national competition authorities. 24 Article 15 of that regulation, entitled ‘Cooperation with national courts’, establishes a system for the mutual exchange of information between the Commission and the courts of the Member States, and provides, in specific circumstances, for the possibility of intervention by the Commission and the competition authorities of the Member States in proceedings pending before national courts. 25 As recital 21 in the preamble to Regulation No 1/2003 mentions, the cooperation mechanism between the Commission and the courts of the Member States is relevant for all courts of the Member States that apply Articles 81 EC and 82 EC, whether in lawsuits between private parties, acting as public enforcers or as review courts. 26 Article 15(1) of Regulation No 1/2003 provides, on the one hand, that those courts may ask the Commission to transmit to them information in its possession or its opinion on questions concerning the application of the Community competition rules. Article 15(2) thereof states, on the other hand, that the Member States are to forward to the Commission a copy of any written judgment of national courts deciding on the application of Articles 81 EC or 82 EC. 27 The first and second sentences of the first subparagraph of Article 15(3) permit the competition authorities of the Member States to submit written observations on their own initiative, and, with the permission of the court concerned, oral observations to the national courts of their Member State on issues relating to the application of Articles 81 EC or 82 EC. The third and fourth sentences of that provision also permit the Commission to submit written observations on its own initiative, and, with the permission of the court in question, oral observations to courts of the Member States where the coherent application of Articles 81 EC or 82 EC so requires. 28 Thus, the first subparagraph of Article 15(3) of Regulation No 1/2003 refers to two different types of intervention with separate fields of application: intervention by the national competition authorities before the national courts of their Member State on issues relating to the application of Articles 81 EC or 82 EC, and intervention by the Commission before courts of the Member States where the coherent application of Articles 81 EC or 82 EC so requires. 29 The four sentences of that subparagraph, and above all the fact that the second and fourth sentences are almost entirely identical, emphasises the fact that the Community legislature intended to draw a distinction between those two situations, despite the fact that they appear in the same subparagraph. 30 Consequently, a literal interpretation of the first subparagraph of Article 15(3) of Regulation No 1/2003 leads to the conclusion that the option for the Commission, acting on its own initiative, to submit written observations to courts of the Member States is subject to the sole condition that the coherent application of Articles 81 EC or 82 EC so requires. That condition may be fulfilled even if the proceedings concerned do not pertain to issues relating to the application of Article 81 or Article 82 of the Treaty. 31 That interpretation is not called in question by the fourth sentence of recital 21 in the preamble to Regulation No 1/2003, according to which the Commission and the competition authorities of the Member States should be able to submit written or oral observations to courts called upon to apply Articles 81 EC or 82 EC. That recital refers merely to a typical situation but does not exclude other situations in which the Commission may intervene. Moreover, whilst a recital in the preamble to a regulation may cast light on the interpretation to be given to a legal rule, it cannot in itself constitute such a rule (Case 215/88 Casa Fleischhandels [1989] ECR 2789, paragraph 31, and Case C‑136/04 Deutsches Milch‑Kontor [2005] ECR I‑10095, paragraph 32 and case‑law cited). 32 Moreover, contrary to what X BV and the Netherlands Government submit, the interpretation of the first subparagraph of Article 15(3) of Regulation No 1/2003 given in paragraph 30 of this judgment is not contradicted by points 31 to 35 of the Commission Notice on the cooperation between the Commission and the courts of the EU Member States in the application of Articles 81 and 82 EC, which state that the Commission may submit observations on issues relating to the application of Articles 81 EC or 82 EC. The general concept of ‘issues relating to the application of Articles 81 … EC or 82 [EC]’ adopted by that notice includes the possibility for the Commission to submit written observations to national courts where the coherent application of Articles 81 EC or 82 EC so requires. In any event, the content of a Commission notice cannot prevail over the provisions of a regulation. 33 Community law has established a comprehensive system for monitoring cartels and abuses of dominant positions which sets out a principle of prohibition, contained in Articles 81 EC and 82 EC, and sanctions for its infringement, on the basis of Article 83 EC. Those articles must be understood as forming part of a comprehensive set of provisions designed to prohibit and punish anti‑competitive practices. 34 It is apparent from Article 83(2)(a) EC that the fines and periodic penalty payments which may be imposed on undertakings in connection with the application of Community competition law are designed to ‘ensure compliance with the prohibitions laid down in Article 81(1) [EC] and in Article 82 [EC]’. The purpose of Article 83 EC is therefore inter alia to ensure the effective supervision of cartels and abuses of dominant positions. 35 The Commission’s power to impose fines on undertakings which intentionally or negligently commit an infringement of Articles 81(1) EC or 82 EC is one of the means conferred on the Commission in order to enable it to carry out the task of supervision entrusted to it by Community law (see, to that effect, Joined Cases 100/80 to 103/80 Musique Diffusion française and Others v Commission [1983] ECR 1825, paragraph 105, and Case C‑76/06 P Britannia Alloys & Chemicals v Commission [2007] ECR I‑4405, paragraph 22). 36 To dissociate the principle of prohibition of anti‑competitive practices from the penalties provided for where that principle has not been observed would therefore deprive of any effectiveness the action taken by the authorities responsible for monitoring compliance with that prohibition and punishing such practices. Thus, the provisions of Articles 81 EC and 82 EC would be ineffective if they were not accompanied by enforcement measures provided for in Article 83(2)(a) EC. As the Advocate General stated at point 38 of his Opinion, there is an intrinsic link between the fines and the application of Articles 81 and 82 EC. 37 The effectiveness of the penalties imposed by the national or Community competition authorities on the basis of Article 83(2)(a) EC is therefore a condition for the coherent application of Articles 81 EC and 82 EC. 38 In proceedings relating to the penalties in respect of anti‑competitive practices provided for in Article 83(2)(a) EC, the decision that the court seised must give is capable of impairing the effectiveness of those penalties and therefore might compromise the coherent application of Articles 81 EC or 82 EC. 39 In the circumstances of the action in the main proceedings, it is quite clear that the outcome of the dispute relating to the tax deductibility of part of a fine imposed by the Commission is capable of impairing the effectiveness of the penalty imposed by the Community competition authority. The effectiveness of the Commission’s decision by which it imposed a fine on a company might be significantly reduced if the company concerned, or at least a company linked to that company, were allowed to deduct fully or in part the amount of that fine from the amount of its taxable profits, since such a possibility would have the effect of offsetting the burden of that fine with a reduction of the tax burden. 40 It follows from all of the foregoing that the third sentence of the first subparagraph of Article 15(3) of Regulation No 1/2003 must be interpreted as meaning that it permits the Commission to submit on its own initiative written observations to a national court of a Member State in proceedings relating to the deductibility from taxable profits of the amount of a fine or a part thereof imposed by the Commission for infringement of Articles 81 EC or 82 EC. Costs 41 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring 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 (Fourth Chamber) hereby rules: The third sentence of the first subparagraph of Article 15(3) of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty must be interpreted as meaning that it permits the Commission of the European Communities to submit on its own initiative written observations to a national court of a Member State in proceedings relating to the deductibility from taxable profits of the amount of a fine or a part thereof imposed by the Commission for infringement of Articles 81 EC or 82 EC. [Signatures] * Language of the case: Dutch.

This is the judgment of the Court Lord Justice Carnwath: This is an appeal by Mr Robert Capewell against an order made by Lindsay J on 6 April 2004 on his application for the discharge of a receiver appointed pursuant to section 77(8) of the Criminal Justice Act 1988. The respondents to that application were the Receiver himself, Mr Nigel Sinclair, and HM Customs & Excise ("Customs"), on whose application he was appointed. They are also the respondents to this appeal, both represented by Mr Sutherland-Williams. Background On 24 September 2002 Mr Capewell was charged with conspiracy to cheat the public revenue, and conspiracy to contravene the Value Added Tax Act 1994. In paragraph 5 of his first witness statement, Mr Colin Jones, a Customs solicitor, described the alleged fraud: "The Defendant is believed to be involved in a fraud concerning the supply of mobile telephones in the UK from other Member States of the European Union. No VAT would be payable at that stage. The mobile telephones are then sold to a number of companies within the UK with VAT being charged on each of the transactions. The importing company disappears without accounting for the VAT and becomes a "missing trader". The mobile telephones are supplied to a chain of UK VAT registered companies until they are exported eventually to another EU company. This train of transactions is referred to as a carousel. The fraud is therefore known as a carousel fraud or Missing Trader fraud. The Defendant is believed to be one of the principals in the fraud. The principals have benefited by the total amount of VAT evaded, estimated at £18,000,000." On 9 October 2002, on the application of Customs, a restraint order under the 1988 Act was made by Lightman J. Some three months later, Customs applied for the appointment of a receiver, in aid of the restraint order, pursuant to section 77(8). That application was heard by Jackson J on 30th January 2003. He appointed as Receiver Mr Sinclair, who is a licensed insolvency practitioner and a partner in Kroll Ltd. In his judgment, Jackson J summarised Customs' reasons for seeking the order, as explained in Mr Jones' statement: "In that statement, Mr Jones describes a number of business ventures which the defendant has. These include a firm known as James Ashley Associates of which the defendant is either sole principal or certainly a moving force, and these businesses also include a limited company, Brooklands Number One Limited, and another limited company: Direct Mortgage Solutions Limited. The defendant is a shareholder in both those companies. The Customs and Excise are concerned, says Mr Jones, because there are a number of indications in documents which Customs and Excise has seen that creditors are pressing for payment and that the defendant is in financial difficulties. In particular, attention is drawn to a bankruptcy petition which has been presented against the defendant and which is due for hearing on 6 March this year. Mr Jones says that Customs and Excise do not have the necessary expertise to ensure that the defendant's assets are protected from dissipation. However, if a receiver is appointed to take charge and ownership of these assets, he would be able to protect them from dissipation. He would be able to inspect the records and accounts of the firm, James Ashley Associates, to ensure that there is a sustainable business. The Receiver would also be in a position to take a number of steps in relation to Direct Mortgage Solutions Limited and Brooklands Number One Limited. Mr Jones makes the point that the defendant has a legal claim against a Mr Bolton or a company called P & D Distribution Limited. The Receiver would be able to assess the strength of the claim and to reach a view as to whether it is worth investing funds as costs in the pursuit of that claim. The defendant is seeking to remortgage the property Harewood Hall, at Cheadle in Staffordshire, in order to reduce outstanding business and personal debts as well as to facilitate business expansion plans; and the Receiver would be able to look into these matters to ensure that the defendant's assets are being properly managed and that there is no dissipation of assets before such time as a confiscation order is made, if indeed that proves to be the result or one of the results of the criminal proceedings…." Mr Capewell (through his counsel, Miss Barber) opposed the appointment of a receiver on a number of grounds, one of which was the potentially substantial costs of the receivership, which would fall on Mr Capewell even in the event of his acquittal. She also suggested that Customs' concerns would be met if the restraint order were coupled with an order requiring the supply of information about the business, to be updated on a regular basis. However, Jackson J was not satisfied with that proposal. He said: "Whilst I appreciate the intentions which underlie Miss Barber's draft, and I am grateful for the exercise which she has carried out, it seems to me, now that I stand back and look at this proposed order, that it really will not meet the defendant's concerns. It can be seen from the substantial bundle exhibited by Mr Jones, through which I will not now go, that there are real concerns about the solvency of the defendant's various businesses. There are concerns about ongoing disputes arising out of the defendant's business activities and there are concerns about dissipation of assets. I do not consider that the regular provision of retrospective documents will meet Customs and Excise's legitimate concerns. It seems to me, essentially for the reasons set out in Mr Jones' statement, that there is no alternative to the appointment of a receiver." The judge's order included a requirement for the Receiver to act in accordance with a letter of agreement between him and the Customs, and to supply the defendant copies of accounts and reports supplied to Customs pursuant to that agreement. The letter of agreement (dated 21st November 2002) referred to Mr Capewell's "extensive portfolio of assets", including business interests in the UK and abroad; the purpose of the receivership was said to be to enable these assets to be "properly managed and preserved". There was a requirement for the Receiver to report to Customs "on all findings and steps taken in the administration of the receivership"; the first report to be made within 28 days of the appointment, and others to follow at quarterly intervals. There was also provision for his remuneration and expenses to be paid out of sums realised; and for him to be indemnified by Customs for costs exceeding the sum realised, but only after giving notice before incurring such costs. Miss Barber had also submitted that, in the light of further evidence which Mr Capewell wished to adduce but which was not presently available, it would become apparent that there was no case for the appointment of a receiver. Jackson J's order provided that it would remain in force until varied or discharged by the court. Specifically (but without any fixed time limit) it gave Mr Capewell liberty to apply to discharge the order "when the evidence envisaged in Miss Barber's skeleton argument of 30th January becomes available"; and it provided a timetable for the Receiver to submit a report following receipt of that evidence. (We observe, in passing, that this form of order seems to have been calculated to cause later confusion; first because of the lack of a fixed time-limit, and, secondly, because of the imprecision of the reference to "evidence envisaged" in the skeleton, a reference which was not made much clearer by the skeleton itself.) The Receiver's first report In the event, no such application to discharge was made at that time. Nor did the Receiver report within 28 days, as required by the letter of agreement. His first report was submitted in August 2003. It appears from the introduction that he had been waiting for the evidence in support of an application to discharge, which never came. He commented (p 1): "To date there has been virtually no information provided to assess JAA future business. Financial information of anything but the most basic and historical level has not been provided and so an application for my discharge in the expected manner has not occurred." Dealing with the background of the receivership, he said: "My main function was to report to the Court on the viability of the trading of JAA, a business which Mr Capewell operates as a sole trader in the provision of financial services…" (p 2) He noted that he had received annual accounts showing a substantial drop in profits between 2000 and 2002, but no projections of future operations (p 10). He reported on the various assets and businesses. He also referred to the need for further consideration of Mr Capewell's relationship with an Irish company, Ringset Limited, which had apparently awarded him a salary of £150,000 (p 12). By then, the costs of the receivership were already substantial. Fees of almost £63,000 had already been incurred, equivalent to £9,000 per month. Accordingly, on the assumption that a further year would be needed before the criminal case came to trial, he estimated the future costs at some £108,000 (p 15). The report concluded (p 16): "The receivership is set to continue because Mr Capewell has so far been unable to apply for my discharge in the manner anticipated when the order was granted. In view of the many matters arising in respect to Mr Capewell's financial affairs and assets I consider the receivership should continue for the time being." He added that this would mean a continued accrual of costs some of which might have to be met from real property in the receivership. Receipt of this report prompted Olliers, solicitors for Mr Capewell, to write to Customs on 26th September 2003 expressing concern at the size of the Receiver's bill and offering to provide further information in accordance with a list attached to the letter. There were further inconclusive exchanges during the remainder of the year, in the course of which the Receiver accused Mr Capewell of continued failure to provide relevant information, and Olliers accused the Receiver of "extravagant waste" and threatened to apply to the High Court for his discharge. The application to discharge On 5th February 2004 Mr Capewell applied for the discharge of the Receiver. The stated grounds were: "The Receiver has incurred costs which are disproportionate and excessive in relation to the defendant's assets and do not accord with the judgment of Jackson J or the scheme of the Criminal Justice Act 1988 …" A supporting affidavit of Mr Capewell dated 31st January 2004 gave his version of the problems arising from the receivership. He gave a summary of the state of his assets at the commencement of the receivership. He complained that, if the costs of the receivership continued at the present rate, 80% of his estate would have been taken by costs before the trial, with no prospect of recovery even if he is acquitted. He observed that JAA was "simply me trading as a financial adviser…"; that "for an international company such as Kroll's" the points of concern should have been readily resolvable; that the lack of proper provision in the order for running JAA meant that "financial stranglehold was inevitable…"; and that his own ability to run the business had been seriously affected by the time taken up by the restraint orders and case preparation. A particular problem had been Mr Capewell's inability to pay instalments of his liability to the Inland Revenue, with the result that he had been made bankrupt, a matter which "was not only humiliating but undermined my professional credibility". As to Ringset, he accepted that some information had been lacking, but this was due partly to the fact that it had only been trading for a year, so that full accounts were not available. He also drew attention to his lack of the resources and staff necessary to comply with the numerous requests of the Receiver and other official bodies. In response the Receiver prepared a second report dated 31st March 2004, which was attached to a witness statement dated 1st April. He complained that his task had been made more difficult by Mr Capewell's failure "to recognise my office" or "to disclose information of a significant nature to me and to the court." However he proposed to "consider objectively whether there is a need for me to remain in office." (p 2) Having reviewed in detail the various interests of Mr Capewell which had been under investigation by him, he noted that his fees had now increased to £112,505 up to 29th February 2004, and that future costs, assuming a period of 13 months, would be £112,502 (p 27). A schedule (appendix 1) to the report was headed "Estimated outcome statement as at 29th February 2004." This indicated the estimated net value of all assets as £733,828 and the estimated costs of the receivership as £342,828, leaving "funds available to meet confiscation order" of £391,008. It should be noted that the assets included on the one hand the whole of the value of the matrimonial home Harewood Hall at £725,000 (in which Mrs Capewell was claiming a half-share), but on the other hand included no value for a number of possible assets including for example a shareholding in Ringset Ltd (which was noted simply as "value to be assessed"). In his conclusions (p 29-30), the Receiver referred to his previous report in which he had recommended that the receivership should continue in view of the many matters arising in respect of Mr Capewell's financial affairs. He said: "My previous view is unchanged though I acknowledge Mr Capewell's recent efforts to provide some of the information I have requested, albeit too little and far too late in terms of his application and in the receivership generally." He distinguished between the "statutory" and "commercial" considerations. Under the former, he said: "In view of Mr Capewell's behaviour I am not reassured that regular monitoring information could be provided to the Customs in the event of my discharge. Mr Capewell has consistently failed to provide regular information to me. There have been a number of failures to identify assets and authorised dealings in assets and the court might therefore consider it appropriate if I remain in office to police the assets. I would see these points as being of a 'statutory' nature." He referred generally to "other complicating factors such as: Mr Capewell's solvency or otherwise,; the risk of dissipation; business accounting and whether the business is sustainable; specific problematic situations such as litigation, e.g P&D Distribution." From "a purely commercial standpoint", he commented on the prospect of recovery of his costs, noting that: i) Mr Capewell did not now intend to remortgage Harewood Hall; the "consideration of such a borrowing and its serviceability" had been one of the factors initially requiring his involvement. Recovering costs against Harewood Hall would seem "unattractive", since the property "should itself be reasonably secure within restraint". ii) He was "unconvinced" that he should continue to accrue costs in relation to JAA, because – "… it is unlikely to be able to meet my costs in the Receivership and may be unable to sustain itself. Additionally, the economic recovery from my attempting to realise or close JAA would be improbable". He suggested that, if he were to remain in office, the court should make orders requiring Mr Capewell's co-operation in meeting outstanding requirements, and that the matter of discharge should be reconsidered with a further report from the Receiver to be prepared "when I am satisfied I have sufficient information or within four months whichever is the sooner." His recommendation, "taking all of the factors both statutory and commercial into account", was on balance that he remain in office for the time being "that being until my requirements as covered above are met to my satisfaction and within the above timescale". In a witness statement on behalf of Customs dated 2nd April, Mr Millington, a senior lawyer, referred to the failure of Mr Capewell to comply with the receivership. He expressed concern that, a year after his appointment: "The Receiver is still not in a position to give a conclusive view about the financial viability of JAA, or even present an adequate appraisal of the business, notwithstanding repeated requests by the Receiver for further information in this regard." He concluded by supporting the Receiver's position, adding: "I believe that the more co-operative any given defendant is, the more likely it will be that costs are kept to a minimum. Clearly if a defendant refuses to co-operate with a receiver, or lets it be known that he intends to 'go to war' with the Receiver, costs are likely to increase. By illustration, this application has only added to those costs, and I note that the Receiver is yet to receive any information as to how the defendant is meeting his own costs in relation to his application." These statements were served shortly before the hearing, and there was no further substantive evidence from Mr Capewell in reply at that stage. The hearing before Lindsay J The application for discharge was heard by Lindsay J on 5-6 April 2004. Mr Capewell was represented (as he has been in the appeal) by leading counsel, Mr Andrew Mitchell QC, leading Miss Barber. In their skeleton argument, they summarised the case for discharge as follows: "The Receiver has incurred costs that are disproportionate in relation to the defendant's assets; It was wrong for the Receiver to incur such significant costs without recourse to the court; The Receiver was intended to ease cash flow and assess the viability of JAA – the cash flow has been eased and the Receiver could have assessed JAA by now. The Receivership has no further useful function." The judge was told that the criminal trial would not come on until January 2005, and was expected to take some four months. In his judgment, Lindsay J said that the appointment of a receiver had originally been sought by Customs "on a dual basis": "Firstly, there was a need for the ascertainment of and the management of Mr Capewell's assets, and secondly there was a risk of dissipation if no receiver was appointed." (para 6) He noted that these grounds had in effect been accepted by Jackson J, although he commented on the delay before the application to appoint a receiver: "They applied for that officer to be appointed on 24th January 2003. That, one might notice, was some 100 days or so after the making of the restraint order. Had Mr Capewell been minded evasively to dispose of his assets, one might think he would have done so in that 100 day interval." He referred to a schedule submitted by Mr Mitchell, which showed the receiver's costs (including remuneration) as in excess of £153,000 by April 2003, and projected to rise to over £332,000 by July 2005, as compared with an estate likely to be worth no more than some £450,000 (taking account of Mrs Capewell's claim). As the judge summarised Mr Mitchell's submission: "Looking at those figures… the receivership has already lasted too long; it can only get worse…; it is exhausting the estate…; it has already achieved its objects, such as they were, and it is now appropriate that it should be discharged" The judge noted the submission for Customs that the costs had been inflated by lack of co-operation by Mr Capewell, but commented: "… rather than my spending time on the really quite massive correspondence, which, as Mr Capewell urges, indicates that the receivership is now in practical terms spent as all information reasonably requested has already been given that can be given, or whether, as Mr Sutherland-Williams urges, there is still vital information requested but not yet given, I shall look at the other reason given for the receivership, namely, the risk of dissipation of assets." As to the risk of dissipation he said: "Jackson J, as will have been seen, found it to exist and nothing before me today disposes of that risk. Mr Sutherland-Williams asserts that that risk still exists, and I have not understood that to be rebutted or, at any rate, rebutted successfully. Whatever the position might be on the supply of information, I see no reason to suppose that the risk of dissipation referred to by Jackson J has somehow evaporated. So I shall not discharge the receivership on the grounds that its objects have been achieved." On the ground of disproportionate cost, he said (paragraphs 27 and 28): "But what about its being discharged as being disproportionately costly? The figures that I have read from Mr Mitchell's table are undoubtedly very worrying. They are, though, to some extent, open to question. For example, the figure of £449,935 could be as high as £733,828 if the whole value of Mr Capewell's house, rather than 50 per cent of it, was included as in his estate. The Customs and Excise argue that it will be appropriate that the whole of the house is within the estate, but Mr Capewell firmly asserts that his wife has a prior interest that is unlikely to be shaken in any way and that therefore only £287,500 should be brought into the estate as representing the value of Mr Capewell's interest in the house. There is to some extent also the question of how far the figures for 5th August 2004 and 5th July 2005 transpire to be overestimates of costs which, of course, have not yet been incurred. But more importantly, as it seems to me, no costs have yet been paid out of the estate and none have yet been approved by the court. It has all along been open to Mr Capewell, and, indeed, open to the Customs and Excise and the Receiver himself, to seek an assessment of costs, the assessment to be undertaken by the court. There is provision in CPR 69.7 which no one has yet brought into use. It has not been done yet by anyone. How can costs be said to be disproportionate when one does not know what they are? Indeed, a blunt answer to the application notice which seeks discharge on the grounds of excessive costs is that excessive costs are not themselves a ground for discharge, but are a ground, if an argument can be made out, for an assessment downwards of the receiver's bill. So I will not at this stage discharge the receivership on the grounds of disproportionate or excessive costs either, because one does not know yet what the figure that the court would be likely to authorise would be." Accordingly, he did not accept the case for discharge "at this stage". However, he was not content to "let the matter simply drift". His order included directions, with a timetable: first, for the exchange of questions and answers on the outstanding points in the receivership, following which, within 8 weeks of the order, the Receiver was to prepare a further report with his recommendations; and secondly, for exchange of information and objections on the Receiver's charges, following which the parties were given liberty to apply to the Court under CPR69. The costs of the Receiver (summarily assessed at £14,886.31) were ordered to be costs in the receivership; Mr Capewell was ordered to pay the Customs' costs (assessed at £2283.13). Subsequent events On 21st April Mr Capewell lodged an appeal to the Court of Appeal, for which leave was granted on 8th June. In the meantime, there had been further correspondence pursuant to Lindsay J's order. The sequence of events was summarised by the Receiver in a third report, dated 2nd June 2004. This again recorded complaints about Mr Capewell's conduct and failure to provide information as envisaged by Lindsay J. As to JAA, he repeated that lack of information from Mr Capewell meant that he could draw "no firm conclusion about its future prospects"; but he added- "… I do not believe JAA has an identifiable net worth that warrants my continued involvement in it. It is in my view too inextricably linked with Mr Capewell personally and his other business affairs for me to control in isolation." He still lacked "key information" about Ringset, but he believed that Mr Capewell had "dissipated funds from the Ringset bank account and therefore seriously diminished the value of his sole shareholding in Ringset". He concluded by considering whether the receivership should continue but he made no recommendation. He said: "I do not think I have sufficient information, particularly in relation to JAA and Ringset, to enable me to do so. However there are a number of unresolved issues and concerns in relation to JAA and Ringset. I believe my views are plainly set out above, but since my involvement is clearly contentious any ongoing involvement will need to be considered by the court…" Accordingly, on 23rd June he made a new application to the court for directions, which was listed to be heard on 23rd July 2004. Although the application is not in the papers, we understand that it included a request for a direction permitting sale of various assets to meet his costs, including Harewood Hall, the matrimonial home. That date was vacated by the court, for reasons which are not entirely clear from the papers. There was an initial request by Olliers to vacate the date on the grounds that Mr Mitchell was not available, which was opposed. However, on 16th July there was an intervention by solicitors for Mrs Capewell, asserting her beneficial interest in Harewood Hall, and asking for an adjournment to allow time for her to obtain public funding. The adjournment was allowed by the court, apparently (according to Tarlo Lyons' letter of 23rd July) without the agreement of the Receiver or the Customs. The last word on these issues fell to Mr Capewell. In a statement of 27th September 2004, he commented on the practical difficulties of reviewing the Receiver's costs in detail. He referred to the Receiver's bill, running to 100 pages and 8,000 items, and relating to 12 people who at various times had worked on the file for Kroll. He had had to spend 1000 hours of his own time on this task, working with a part-time assistant, at a period when he was also having to spend one full day a week giving instructions to his solicitors in the criminal proceedings. On JAA he comments: "On even the most cursory analysis this was a modest but potentially viable business. In order to assess the viability of this little personal business the Receiver has invested costs of £304,373 in 18 months. Hence a business with an income of £65k per annum has been charged with approximately a quarter of a million pounds per annum by the receiver… The business cannot pay these costs but the Receiver and the court knew the size of my businesses when they appointed the receiver…" JAA's business had diminished as a direct result of the restraint order and receivership, and his own inability to spend time on it. He denied any intention to erode the assets of Ringset: "Essentially, the business is a victim of very bad luck combined with my inability to put any real energy or time into running it." The directions hearing came before Davis J on 13th October. It seems to have been treated by all parties as including a renewed application for the discharge of the Receiver. This was dealt with by Davis J as a preliminary matter. By this time, the Customs had decided not actively to oppose discharge, a decision which, as Mr Sutherland-Williams told us, had been made through "gritted teeth". The reasoning was explained in a witness statement by Mr Kalia (dated 11th October 2004) for the Customs. He referred to the costs of the receivership which by August 2004 had reached approximately £305,000 while the Receiver held only £13,000 in the receivership account. He added "The Receiver estimates that the defendant has equity in his two properties (Brooklands and Harewood Hall) of about £632,000 (allowing for selling costs). However, if Mrs Capewell can successfully establish her 50% interest in Harewood Hall (which we understand to be the matrimonial home), this may reduce the defendant's interest in terms of equity to £344,500." He observed that having read the defendant's witness statement he was forced to conclude that: "The defendant is unlikely, even in the face of a further court order to comply with the Receiver's requests to the level and detail the Receiver requires by November, or at all." He continued "I am firmly of the view that in principle discharge of receivership should not be made on the grounds of costs alone, particularly where there is evidence to suggest that the defendant has failed to co-operate and/or his behaviour has added to those costs. Such a discharge would lead other defendants to stop co-operating with receivers in the hope that costs would increase, leading to the expectation of the Receiver's discharge… However notwithstanding the above I believe that in this case it is appropriate to have regard to the purpose of the Criminal Justice Act 1988, namely the preservation of assets in order to satisfy any confiscation order that may be made. I am forced to concede that that purpose is being eroded, and as a result I believe it is appropriate that this office now adopts the same view as the Receiver in this matter, namely that the matter in terms of discharge should be left to the court to decide…" He added that he had considered with counsel "the potential contempt matters set out in the Receiver's report" but considered that because proof of such matters would be to the criminal standard, "it would not be possible for this office to pursue those matters without further and considerable expense involving the Receiver". According to an unapproved note of the judgment of Mr Justice Davis, he understood that "all the parties agree that the expenditure and sums involved mean it simply does not make sense for the Receiver to continue in office", and that "on pragmatic grounds" the Receiver should be discharged. The judge ordered that Mr Sinclair be discharged as Receiver as from 13th October 2004. He also gave directions for the detailed assessment of his costs and expenses, which were to be paid out of the defendant's assets in priority to the discharge of any confiscation order subject to any order to the contrary. He made an order for the payment of £100,000 on account of such accrued costs and expenses, and authorised the sale of one property, Brooklands, for that purpose. The law The appointment of the Receiver in this case was made under Part VI of the Criminal Justice Act 1988 (as amended). The relevant provisions were authoritatively reviewed by this court in Hughes v Customs and Excise Commissioners [2003] 1 WLR 177; [2002] EWCA Civ 734. For present purposes it is sufficient to refer to Simon Brown LJ's summary of the legislative background (at para 6-7): "6. 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. 7. 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) provides for the appointment of a receiver: "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." As Simon Brown LJ made clear: "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." (para 50) Section 82 imposes both on the High Court, and on a receiver appointed under Part VI, the duty to exercise the powers so conferred – "… with a view to making available for satisfying… any confiscation order that may be made in the defendant's case the value for the time being of realisable property held by any person by the realisation of such property." (s 82(2)) In Hughes, this court confirmed that the Receiver appointed under Part VI, before the making of a confiscation order, was entitled to recover his costs from the assets under his control; and that the fact that there was no right to compensation, even for a defendant who was ultimately acquitted, involved no conflict with the human rights of those affected (para 59). However, Simon Brown LJ added a cautionary note: "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." (para 60) Since Hughes, but before the present case, new provision has been made in the Civil Procedure Rules relating to receivers generally. CPR69 came into effect in December 2002. Rule 69.1 provides for the appointment, and termination of appointment, of receivers by the court. Rule 69.6 permits the receiver to apply to the court "at any time" for directions to "assist him in carrying out his function as a receiver". Rule 69.10 allows "a receiver or any party" to apply for the receiver to be discharged "on completion of his duties". Rule 69.7 deals with the receiver's remuneration. A receiver may only charge for his services if the court so directs, and specifies the basis on which he is to be remunerated (r 69.7(1)); and the court may specify who is to be responsible for paying the receiver, and the fund or property from which he is to recover his remuneration. Unless otherwise ordered, the court shall award such sum as is "reasonable and proportionate in all the circumstances" and which - "takes into account – (a) the time properly given by him and his staff to the receivership; (b)  the complexity of the receivership; (c) any responsibility of an exceptional kind or degree which falls on the receiver in consequence of the receivership; (d) the effectiveness with which the receiver appears to be carrying out, or to have carried out, his duties; and (e) the value and nature of the subject matter of the receivership." (r 69.7(4)) Determination of the remuneration may be referred to a costs judge (r 69.7(5)). The Practice Direction provides that a receiver's application for determination of this remuneration must be supported by written evidence showing on what basis it is claimed, and that is justified and in accordance with Part VI; and by a "certificate" by the receiver that he considers the claim "reasonable and proportionate" (CPR 69PD.9). The issues in the appeal The receivership having now been discharged, the appeal has proceeded on the basis that the live issues relate to the receivership costs incurred since the hearing before Lindsay J and the costs of the hearing before Lindsay J. The assumption seemed to be that, if we were to find that Lindsay J ought to have discharged the receivership with immediate effect, then it would follow that the Receiver would have no right to his receivership costs after that time. The costs of the hearing before Lindsay J would also fall to be re-considered, along with the costs of this appeal, in the light of the substantive judgment. On the merits, the case for Mr Capewell has been put in a number of different ways. However, as we understand the grounds of appeal and submissions, there are three main points. First, the judge was wrong to hold that the application to discharge on the grounds of disproportionate cost could not properly be considered, until there had been an assessment of the costs under Part 69. He could and should have made a judgment on the basis of the material before him. Secondly, he failed to consider whether, in the light of the level of costs, the Customs' remaining concerns could not be adequately met by a restraint order, rather than a receivership. Thirdly, it is unfair for the Receiver to seek to justify the level of costs by reference to allegations of non-cooperation by Mr Capewell, when he has taken no steps to bring the matter back before the court by an application to commit, or otherwise. In this context, Mr Mitchell relies on Simon Brown LJ's emphasis in Hughes on the need for "close control" of the Receiver by the courts. If the Receiver considered that the objectives of the receivership were being unreasonably impeded by Mr Capewell's conduct, it was his responsibility to bring the matter back to court for appropriate directions. Discussion - Powers of the court It was common ground before Lindsay J that he had power to discharge the Receiver, and it appears to have been assumed that, apart from the legislative steer set by section 82(2), his discretion was at large. Although we have not heard argument, this seems to us correct. Jackson J's order provided expressly for the possibility of discharge by further order, without limitation. Subject to taking account of the special nature and purposes of this form of statutory receivership, there seems no reason why the court's discretion should be any more confined than under its ordinary equitable jurisdiction (see e.g. Halsbury's Laws Vol 39(2) para 463ff). The position in this court, following Davis J's order, is less clear. When the notice of appeal was lodged, the main substantive issue was whether the judge erred in not ordering discharge. If the appeal had continued in the normal way, and that submission had been accepted by this court, it could have remitted the matter to the judge to redetermine, or itself exercised the power to discharge (CPR 52.10). For that purpose, it would have exercised the discretion on the basis of the up-to-date information, and a subsequent order discharging the Receiver would have been prospective only. It would not have altered the validity or status of the receivership in the period since the judge's order. However, the receiver's claim for remuneration during that period would be open to separate challenge under CPR69.7, including consideration of issues of reasonableness and proportionality. Now that the substantive purpose of the appeal has been achieved by Davis J's order, it is open to question what more this court can or should do. We are not aware of any power to backdate Davis J's order, and we have not been asked to do so. It follows that anything we say on the legal merits will leave unaffected the validity of the receivership in the intervening period. Any arguments about his right to recover the costs in that period would normally be a matter for consideration under CPR69.7, and would not necessarily be determined by our decision on the appeal. That view does not detract from the general importance of the case, or the desirability of a ruling on the correctness of Lindsay J's decision. It may, however, be relevant to the consequences of such a ruling, and the form of our order. We will return to this point at the end of the judgment. Discussion – merits We say at once that we see no force in Mr Mitchell's third point, as we have summarised it, relating to the Receiver's failure to apply to court. The Receiver is of course entitled to seek directions in order to assist the receivership. But whether to do so is a matter of judgment for him, taking into account the costs of doing so and the prospect of securing his objectives by agreement. It may be a difficult balance to draw in many cases, particularly where the defendant is apparently promising co-operation, but failing to deliver. Short of neglect amounting to actual misconduct, we find it difficult to see how his failure to do so can be relied on in support of an application to discharge. It must also be remembered that the defendant can always seek the aid of the court if he thinks that he is being unfairly treated. In the present case, it was the defendant himself who was originally expected to take the initiative in bringing the matter back to court, and had obtained provision in the order to enable him to do so. His failure to use that opportunity has never been properly explained. For the same reason, the Receiver's failure to make at least a formal report within 28 days, as required by the order, is not a point from which Mr Capewell can draw any comfort. Mr Mitchell's other points concern the proportionality of the receiver's costs, as related to the objectives of the receivership. One of the difficulties facing the judge was that the grounds of the application to discharge were not very precisely or consistently articulated. The application itself gave as the principal ground that the Receiver had incurred "costs which are disproportionate and excessive." We agree with the judge that, if disproportionate cost were the only issue, Part 69 appears to provide a complete answer. Part 69.7 (at least in theory) gives the defendant full protection against having to bear any costs which are found to be unreasonable or disproportionate, taking account of the wide range of matters set out in Part 69.7(4), including the "effectiveness" of the receiver's performance. Unfortunately, the emphasis given by the submissions to questions of cost seems to have distorted the issues. On the question of discharge, cost is of course a factor, but it is not the primary issue. The overriding consideration is whether the receivership is still serving a valid purpose, within the overall objective set by section 82. The relevant questions for the court are likely to be: i) For what purposes, within the overall objective, was the receivership authorised? ii) To what extent have those purposes been achieved or overtaken? iii) To the extent that they have not yet been achieved or overtaken, is the continuation of the receivership (as opposed to a restraint order or some other order) necessary to achieve them? iv) In any event, having regard both to the overall objective and to fairness to the defendant, is the additional cost of continuing the receivership proportionate to the likely financial gain? We would add that fairness to the defendant cannot be measured purely in financial terms. Even without accepting all of Mr Capewell's evidence, it requires little imagination to understand how a receivership of this kind can seriously interfere with the ordinary business and personal life of those affected and their families. That must be particularly so in relation to a business such as JAA, whose success was almost wholly dependent on the personal efforts of Mr Capewell. The premise of the 1988 Act is that such a burden may have to be accepted in the public interest. But it is for the court to decide in an individual case where the balance lies, weighing all the benefits and the burdens, both public and private. If these were the right questions, then in our view the judgment failed to provide the answers. Paragraphs 25 and 26 of the judgment treated the purposes of the receivership as being simply information-gathering and preventing risk of dissipation. The decision rested on the judge's view that the evidence before him had not shown that the risk, as found by Jackson J, had evaporated. With respect, we think that was too general an approach. Customs' case for a receivership before Jackson J had been based on more specific concerns, as set out in Mr Jones' statement and accepted by the judge. Indeed, had their case rested solely on the need for information and the risk of dissipation, the judge might well have accepted that they could be met by the continuation of the restraint order, supplemented by stringent disclosure orders, as proposed by Miss Barber. At the end of his skeleton argument Mr Mitchell referred back to the purposes identified before Jackson J, and submitted: "All of the concerns which were expressed by (Customs) have been tackled either by the Receiver or by the defendant. The bankruptcy has been annulled; the defendant does not at this stage seek to pursue the remortgage; the litigation against Peter Boulton is on hold as is the litigation against business debtors; the defendants' expenses have been renegotiated and the cash flow has been eased; JAA is functioning again albeit in a more limited fashion…" (1st April 2004, para 17) That may have been too limited a list of "concerns", since other matters had emerged during the receivership (for example, the position of Ringset). However, in principle it was the right approach. Because of the unduly general view he took of the purposes of the receivership, the judge failed in our view to address the first three questions on the correct basis: that is, by reference to the specific considerations put forward as justifying a receivership, rather than a lesser order. The fourth question does bring in questions of cost. The judge was right to treat the figures before him as provisional, to the extent that they might be reduced on assessment. However, in our view, he was wrong to regard this as a reason for not considering discharge until an assessment of the costs under Part 69. Quite apart from the delay and the cost inherent in such an exercise, the requirement was unnecessary in our view, and paid insufficient regard to the special position of the receiver, as an officer of the court. As has been seen, in this statutory context the duty under section 82 is shared by the court and the receiver. The "close control" referred to in Hughes can only in practice be achieved if the court is able to rely on the Receiver to provide a balanced and reliable assessment of all the relevant factors, including cost. It follows, in our view, that in providing its own answer to the fourth question, the court is entitled to start from the assumption that the costs put forward in the Receiver's reports are those which he considers reasonable to achieve the identified purposes, and to judge him accordingly. It is apparent from the Receiver's own reports in this case that he understood his duty in this respect. In particular, in his second report which immediately preceded the hearing before Lindsay J, he endeavoured to provide an "objective" consideration of the detailed points relevant to whether the receivership should continue, including his estimate of the costs involved. Understandably, it was not part of his case, or that of Customs, that proportionality should be judged on any other basis. We confess that, in reading those reports (particularly the thirty pages of closely-packed text in the second report), we have not found it altogether too easy to differentiate the wood from the trees. After more than a year of investigation, one would have hoped that the Receiver would have been in a position, in relation to each of the interests or groups of interests set out in his schedule, to give a succinct and realistic assessment of the prospects of significant recovery, and the likely costs of achieving it, and to explain why a receivership (rather than a restraint order) was needed to do so. Such an approach would have helped to provide the necessary focus for the response by the defendant, and for the debate before the judge. As it was, on the state of the evidence before him, we doubt whether it would have been possible for the judge to provide complete answers to the four questions, without further investigation, possibly including oral examination of Mr Capewell and of the Receiver. It must be accepted that "close control" may require the court to adopt a more interventionist role than is normal in other contexts, and to give the directions necessary to ensure that it has the evidence it requires. However, even limited study of the reports, taken together with the Receiver's schedule, gave considerable ammunition for Mr Mitchell's submissions. For example: i) The Receiver himself, in his first report, had identified the main purpose of the receivership as being to report on the viability of JAA. In his April 2004 report, after more than a year of the receivership, his conclusions were at best equivocal as to the prospects of any recovery from JAA. By the time of his third report in June 2004, he had formed the view that JAA did not have "an identifiable net worth that warrants my continued involvement in it". Even accepting that Mr Capewell was not fully co-operative, it seems surprising that it took almost a year and a half for an experienced receiver to reach this conclusion, in relation to what Mr Capewell fairly describes as "a little personal business". ii) By far the most substantial single asset on this list was the matrimonial home at Harewood Hall, valued at £725,000. As the Receiver recognised, now that there was no proposal to remortgage it, it was likely to be adequately protected by a restraint order on its own. iii) The pending bankruptcy petition, which had been identified as a concern by Mr Jones in 2003, had long since ceased to be an issue. iv) Although other potential assets (including foreign bank accounts, retirement annuities etc) were listed in the schedule, there appeared to be no indication that, after more than a year of investigation, the Receiver regarded the prospect of significant recovery from them as other than speculative. v) Taken at face value, the schedule showed the prospect of almost half the estimated assets being taken up by the Receiver's costs. Even this result was heavily dependent on the value of Harewood Hall, half of which was subject to an apparently credible claim by the wife. If that were established, the receiver's costs were likely to absorb most of Mr Capewell's available assets. It is difficult, and of doubtful relevance, for this court to attempt to assess how matters would have proceeded if the judge had asked the correct questions, and given directions to ensure that he had the information necessary to answer them. We would have expected him at least to have required the Receiver to identify the specific purposes on which he was now seeking to rely to justify continuing in office; to have identified the outstanding issues in relation to each such purpose; and to have given directions to enable them to be resolved within a short timetable. We now know that by September, the Receiver and Customs had formed the view that the application for discharge could not be resisted. We must be careful not to abuse the advantage of hindsight. However, it seems likely that, with the stimulus of appropriate directions and a tight time-table set by the judge, the teeth of Customs would have been "gritted" with rather more urgency, and certainly before the hearing date fixed for 23rd July. Conclusions For the reasons we have given, we consider that the judge asked himself the wrong questions, and that he was wrong to postpone consideration of the question of discharge until assessment of the Receiver's costs. Since the Receiver has now been discharged, it is unnecessary for us to make any order in that respect. It remains to consider whether we can or should make any order in relation to the costs of the receivership since the judgment. For the reasons we have given, this would not be on the footing that the judge should have immediately ordered discharge of the receivership in April. On the other hand, it is reasonable, in our view, to infer that the date would have been likely to have been brought forward by a number of months. If required to fix a precise date, doing the best we can, we would set it at 1st June 2004. We have not heard submissions as to what order we can or should make in the light of that conclusion. It may be said to be a matter for the assessment under Part 69.7, when it takes place. However, that rule is arguably wide enough, at least with the consent of the parties, to enable this court to make a more specific order, and it may save costs if we do so. For those reason, we would invite further submissions by the parties as to what if any order they wish us to make in the light of this judgment. Postscript Finally, we record Mr Mitchell's invitation to the court to set out some guidance for prosecuting authorities, receivers and the courts in future cases under the 1988 Act and similar jurisdictions. At our invitation he and Miss Barber prepared a set of guidelines, which were amended by Mr Sutherland Williams, and agreed by Mr Mitchell. The guidelines (in the form as amended) are appended to this judgment. Since we have not heard detailed discussion on them, and they go beyond the facts of the case before us, we do no more than commend them as a useful checklist for those concerned in future cases. Appendix – Counsels' Suggested Guidelines for appointment of Receivers Application by the Prosecutor Within the witness statement in support of the application to appoint a management receiver, the prosecutor should set out the reasons the prosecutor seeks the appointment of a receiver; and what purpose the prosecutor believes the receivership will serve. The witness statement in support of the application should also give an indication of the type of work that it is envisaged the receiver may need to undertake, based on the facts known to the prosecutor at the time of the appointment. The witness statement should specifically draw to the Court's attention the proposition that the assets over which the receiver is appointed will be used to pay the costs, disbursements and other expenses of the receivership (even if the defendant is acquitted or the receivership is subsequently discharged). The letter of acceptance of appointment from the receiver, which must be exhibited to the applicant's witness statement, should contain the time charging rates of the staff the receiver anticipates he may need to deploy. In appropriate cases, where it is possible, and this will not be in every case, the receiver should give in his letter of acceptance an estimate as to how much the receivership is likely to cost. The prosecutor's witness statement in support of the application should inform the Court of the nature of the assets and their approximate value (if known), and the income the assets might produce (if known). If the prosecutor or receiver is unable to comply with any of the above requirements the prosecutor should explain the reasons for the failure in the prosecutor's application to the court, and the matter will be left at the discretion of the court. Upon appointment Upon the appointment of a receiver, the Judge should consider whether it is appropriate, in all the circumstances, to reserve any future applications to himself, with a view to minimising costs. Upon the appointment of a receiver, the Judge should consider whether it is appropriate, in all the circumstances, to set a return date, balancing the need for such a hearing with the interests of the defendant, who ultimately will bear the costs of such a hearing. The receiver should inform the parties by written report as soon as reasonably practicable, if it appears to him that any initial costs estimate will be exceeded, or receivership costs are increasing, or are likely to increase to a disproportionate level. Such a report should also be filed with the Court. In such circumstances the parties and the receiver shall be at liberty to seek directions from the Court. Reporting requirements Unless the Court directs otherwise, the receiver should report 28 days after his appointment and quarterly thereafter. Unless the Court directs otherwise, the report should be served on the prosecutor and the defendant and filed with the Court. Every report should set out: the costs incurred to date; the work done; the projected costs until the next report; a summary of how those costs attach to the matters that led to the appointment or to the matters that may have arisen; and, where appropriate, an estimated final outcome statement. Every report should contain a statement that the receiver believes that his costs are reasonable and proportionate in all the circumstances. If the receiver is unable to fulfil any of the above reporting requirements, he should give, as soon as reasonably practicable, an explanation, by way of written report to be filed at Court and served on the parties, of why this is the case, and those parties shall be at liberty to seek directions from the Court. Lawyers and other agents The parties should always be told that lawyers or other agents have been instructed unless it is not practicable or in the interests of justice to do so (for example, to make an urgent without notice application to secure assets). If lawyers or other agents are instructed the receiver should ask for monthly bills or fee-notes. The receiver should endeavour to keep a close control on such fees and satisfy himself that the costs being incurred are reasonable and proportionate in all the circumstances. The receiver should notify the parties as soon as reasonably practicable, if it appears to him that any lawyers or other agents' costs are rising to a disproportionate level, and those parties shall be at liberty to apply to the Court for directions. General Nothing in these guidelines should be read as supplanting the appropriate rules of court, particularly CPR 69, and the relevant statutory provisions. Judges appointing receivers should always bear in mind that the costs of the receivership may fall on an innocent man. They should also bear in mind that the interests of justice dictate that receiverships are a necessary and essential tool of the criminal justice process for preserving and managing assets to satisfy confiscation orders if the defendant is convicted. Management receivership orders should be endorsed with the appropriate penal notice. It will be a term of most orders that defendants should cooperate with and comply with, as soon as possible and forthwith, directions and requests of the receiver, so as to enable the receiver to efficiently and cost-effectively carry out the duties, functions and obligations of his office. It is therefore in the defendant's interest to avoid, as far as possible, the need for the receiver to return to Court for further orders or directions, the cost of which ultimately fall on the defendant's estate. ----------------------------- LORD JUSTICE LAWS: Who is going first? The judgments have been handed down. For the reasons given in those judgments, no order is made on the substantive appeal. Yes? MR MITCHELL: My Lord, can we develop the consequences of that. Your Lordship indicates that no order is made because of course the receivership order has already been discharged. The Commissioner's position is really what we respectfully submit is one that the court needs to review in the circumstances of your Lordships' decision, because they of course, over and above everyone, were blessed with the ability to address the court and invite the court to continue or discharge. You will remember that in the hearing before Lindsay J the appellants sought the discharge of the receivership, the Receiver was neutral, and Customs, for all the reasons that they then set out, objected to it. LORD JUSTICE LAWS: Yes. MR MITCHELL: And they persuaded the judge that it should continue, and continue on the basis that the judge then held, because those were the submissions made by Mr Sutherland Williams on behalf of the Commissioners, setting out a route map for its continuance, which was, as you have found, too open-ended and indeed wrong in principle. We submit that, had the judge adopted the route that your Lordships have indicated he should have done, then this receivership would have come to a conclusion much earlier than has happened. LORD JUSTICE CARNWATH: Mr Mitchell, we have said that. MR MITCHELL: You have. LORD JUSTICE CARNWATH: All we have said so far is that, since the receivership has been discharged, we do not need to discharge it. MR MITCHELL: I understand that. LORD JUSTICE CARNWATH: For my part I think it would be helpful simply to look at Mr Sutherland Williams' draft order. MR MITCHELL: Does your Lordship have mine? LORD JUSTICE CARNWATH: I have had yours and I have had his, and I am afraid I preferred his - as a starting point. MR MITCHELL: Well, if that is the starting point. LORD JUSTICE CARNWATH: And we have read the skeletons. The real question, it seems to me, arises under his 3, which is whether we simply leave this to be taken into account in the CPR 69.7 assessment, in which the costs judge would no doubt have to have regard to what we say about 1st June and the gritting of teeth and so on. MR MITCHELL: Yes. LORD JUSTICE CARNWATH: Or whether we can or should make some sort of order either to limit the costs -- limit 3 so it only applies to 1st June; alternatively, limit to 1st June, other than for special reasons; because even on the strongest view from your point of view, there were some costs incurred by the Receiver after 1st June which it would be difficult to deny him, in the sense that they were probably partly due to the abortive hearing in June, and so on, or to this appeal. MR MITCHELL: My Lord, we do not seek to deny the Receiver his costs at all. Our draft order was intended to give the court the ability of sending out a message to the prosecutors who have the power to decide whether or not these things should run; and your Lordships' judgment is, we respectfully submit, plainly aimed at the prosecutors being a little bit more sensible. LORD JUSTICE CARNWATH: That is the message of the judgment. The question is, what we do about the order. Any question of an indemnity as between the Customs and Mr Capewell is not something we can go into at all. MR MITCHELL: I agree. But, my Lord, when we were below before Davis J at the discharge point and there was discussion about the application of Part 69, there was no resistance from either the Receiver or from the Commissioners that Part 69 could be invoked at any time; it was not just there for the purposes of the appointment. Indeed it was the structure of Part 69 that led him to make the orders that he did about how the approach to the assessment of the costs of the receivership were to be undertaken. We therefore respectfully submit that there is simply nothing wrong in saying to a prosecutor who has invoked a power to appoint a management receiver, has been found to have been - to say the least - dilatory in their approach to the discharge, for your Lordships to say, under 69.7(2), the court may specify who is to be responsible for paying the Receiver and the fund or property from which the Receiver is to recover his remuneration, that the costs of the receivership should be borne by the prosecutor from whatever date it is that your Lordships have identified. Why should it be that the defendant, who is yet to be tried and may or may not be acquitted, but certainly presumed innocent for a long time ahead - trials dates, I hear, may even move once again - why should the defendant's estate have to immediately bear these costs? LORD JUSTICE CARNWATH: Mr Mitchell, I understand the point; the question is the mechanics. If we were to limit paragraph 3 of Mr Sutherland Williams' draft order to the "costs up until 1st June", then the Receiver would presumably have to look for any of his costs somewhere else, and the other possible person is the Customs. We cannot make any order as between the Receiver and the Customs, because I mean they are both before us represented by the same person and we have not been asked to. All we can do is to limit the costs which he can get out of the estate. MR MITCHELL: Certainly if your Lordships are prepared to consider resolving the issue, as indeed we, I think, discussed at the time of the full hearing, that the appellant shall not bear the costs - which is the way that we drafted the order - from whatever date it is, and the Receiver shall have no lien over the defendant's estate for those costs, and then the Receiver is left to debate that issue with the Commissioners in relation to the indemnity, then of course I am protected. I had moved on, however, in an effort to try to - rightly or wrongly - protect the Receiver's position, by saying: well, I think you can apply -- LORD JUSTICE CARNWATH: But you are not acting for the Receiver. MR MITCHELL: I am not. LORD JUSTICE CARNWATH: Then you cannot, so the less we worry about that the better. MR MITCHELL: Can I take your Lordships then respectfully to my order, if only to have a look at the phraseology that we had suggested? My Lord, I am going to come back, if I may, albeit I accept that your Lordships may already have come to a conclusion that I cannot persuade you to change the court's order below, but I would like to come back to that. But so far as paragraph 2 is concerned: "The second respondent is not entitled to recover any costs, disbursements and expenses in relation to the receivership from 1st June to 13th October, or in relation to the costs of and occasioned by the hearing before Lindsay J or the appeal from the appellant's realisable property. The second respondent is to have no lien over the appellant's estate, in respect of the costs, disbursements and expenses set out in paragraph 2 above." LORD JUSTICE CARNWATH: Why do you need 3; does that not follow from 2? LORD JUSTICE LAWS: It must do. MR MITCHELL: I am not sure that it would necessarily do so, because there may be an independent argument in relation to the Receiver's limb. LORD JUSTICE CARNWATH: If there is, that is not before us and we cannot deal with it. . MR MITCHELL: I am seeking an order from the court that the defendant's estate need not suffer as a result of this decision. LORD JUSTICE LAWS: But is that not achieved simply by saying - looking at your opponent's draft paragraph 3 to which my Lord referred: the costs of the receivership from 6th April 2004 to 1st June 2004 shall be costs in the receivership, and thereafter it will be a matter for the Receiver to pursue what indemnity he may? MR MITCHELL: My Lord, of course I am here to protect the appellant's position, and I would contend for a position that says that the second respondent is not entitled. It would be much more appropriate that the court says nothing about that that he is entitled to, because your Lordships do not need to tell him what he is entitled to because he is entitled to it without interference by the court. But what he needs to know, and what the prosecutor needs to know, is this court has said, in the light of its decision, that he is not entitled to costs, disbursements and expenses from 1st June until the date of discharge. My Lord, I cannot ... It is going to go round in circles, and my Lords have the point. I respectfully submit that, from the appellant's point of view, it is appropriate that the order sets out what they are not entitled to, rather than what they are entitled to because that they remain entitled to in any event. LORD JUSTICE LAWS: You are really asking us to make a declaration rather than an order. MR MITCHELL: No, my Lord. Your Lordships have acknowledged that there can be no order in relation to the discharge of the receivership because it has already happened; but you can deal with it on the basis of: it was still in existence during the period which was live for the purposes of the appeal, and you are entitled to say, in the light of the appeal, that the second respondent shall not have his receivership costs from the appellant's estate. My Lord, can I very briefly, because I know your Lordships have obviously discussed it, but the appellant is here and it is right that he at least hears the submissions put. In relation to the costs below, I have not, in the light of your Lordships' judgment, asked that that order for costs be quashed and that the first and second respondents pay the appellant's costs, but in recognising that the judge was wrong and in recognising that he was wrong because he accepted submissions on behalf of the Receiver and the Commissioners that now, in the light of your judgment, were flawed, we submit that it is wrong to leave his estate in the position of having to bear the costs of first instance of the first and second respondents, because had they adopted your Lordships' approach then it is likely that the receivership would have come to a much speedier conclusion. We submit that the judge would not have made any order in relation to costs. He would have been persuaded of the strength of the submissions in bringing the matter back. He would have recognised that it was the appellant - the applicant before him - who was seeking remedies that neither the prosecutor nor the Receiver were prepared to invest in. He would not, we respectfully submit, have caused his estate to have been diminished to the extent that the costs claim was. We submit that had this been the decision below he would have made no order for costs. LORD JUSTICE LAWS: That is paragraph 1 in your draft order? MR MITCHELL: That is paragraph 1. LORD JUSTICE CARNWATH: I see your point in relation to the costs as between you and Customs, but surely the Receiver would normally have been entitled to his costs out of the estate acting reasonably? MR MITCHELL: I cannot resist that suggestion, though it might be that his legal costs could have been something, in light of the way that the applicant/appellant approached that hearing that the court could have ordered to have been -- legal costs could have been ordered to be met by Customs, because, of course, costs at large between the parties the court could properly have said: well the Receiver is here but you are here through one counsel, but your legal costs could be met by the Commissioners. That is submission one. Submission two I have covered. In relation to the appeal, I bound to say that I find it extraordinary - and I hope your Lordships will not criticise me for using that word - that Mr Sutherland Williams approaches this on the basis that the Receiver and the Commissioner's costs should be paid by the appellant, who has made his point and has been successful. LORD JUSTICE LAWS: You had a partial win. MR MITCHELL: Yes. We submit that the appellant is publicly funded, so in fact whether his costs are paid by the Commissioners or not may be a question of whether they come out of one public purse or the other, and that may depend on whether the court wants to mark this appeal by saying that the Commissioners should pay the costs. But we go on to say that it would be improper for his estate to have to bear the expense of the legal representation of the Commissioners and the respondent Receiver through Mr Sutherland Williams, and that again the proper order is: this was in very many respects a public interest appeal, as it turned out, because it needed to be resolved. LORD JUSTICE LAWS: So the proper order is what? MR MITCHELL: That the Commissioners pay the Receiver's costs of the appeal. I would like to press on the public purse/legal representation part that the Commissioners pay his costs, but that does not really matter because he is himself protected, though, if I have a duty to the Fund, which I probably do -- LORD JUSTICE LAWS: Yes, you do. MR MITCHELL: -- I seek to protect that fund by suggesting and submitting that the Commissioners, who fought tooth and nail and eventually gritted their teeth to see this discharged, should bear the costs of the appeal, which is what our draft order suggested. So, my Lord, going back to our draft order -- and forgive me for getting back to it; I am not trying, I hope, to flog a dead horse -- we submit that paragraph 1 is appropriate: that there be no order for costs. The respondent recovering his costs - perhaps that is how it could be amended, from: the Receiver respondent recovering his costs from the Commissioners. That paragraph 2, whilst I accept that it may need some detailed amendment, reflects what the court would seek to ensure occurs, namely that the Receiver respondent's costs, disbursements and expenses should not fall on the estate. Paragraph 3 your Lordships say may become otiose, and I do not press that if the court is confident that its order in 2 would reflect a lack of right on the part of the Receiver to attack the estate of the appellant. Then, on the costs of the appeal, my Lord, we submit that the first respondent either pays the costs of the appellants, being publicly funded to be taxed if not agreed, and in any event bears the costs of the first respondent's legal costs for the purposes of this appeal, we having made our point and partially won. My Lords, this case will see a watershed; it will see a change in the approach of the prosecutors to the appointment of receivers - there is no doubt about that, with respect. And it would be quite wrong that those who look back on this see that as the decision: that yet again an innocent, at this time, appellant is made to suffer the legal expenses of the consequences of bringing his appeal, and winning. My Lord, those are my submissions. LORD JUSTICE LAWS: Yes. MR SUTHERLAND WILLIAMS: My Lord, may I begin - and I am going to try to avoid repeating arguments that I have made in the skeleton because I know that my Lords will have read that - by reminding the court of the principles - and I am dealing now, my Lord, with the period from 1st June to 13th October in the first instance - which have always applied in these cases. And I know where I am, but I hope that my Lord will forgive me if I repeat the principles that we have all been working on throughout this receivership. First of all, that the Receivers must look for their remuneration and expenses from within the receivership - that is not only the common law position - and I am talking about Hughes and Bowman v Goodhall and, for that matter, Glatt, but it is also, as my Lords will have seen, now embodied in the statutory instrument that supports the Proceeds of Crime Act. I do appreciate this is not a Proceeds of Crime Act case, but I hope my Lords received the extract -- LORD JUSTICE LAWS: Yes, we did. MR SUTHERLAND WILLIAMS: -- which in effect gives this court a steer, we say, as to what Parliament intends in these matters. LORD JUSTICE LONGMORE: Even when he resists an appeal and loses. MR SUTHERLAND WILLIAMS: Even when we resist an appeal and lose -- LORD JUSTICE LONGMORE: It is just a free run for the Receiver, with no consequences at all? LORD JUSTICE CARNWATH: I think we have to distinguish between the Customs and the Receiver, do we not? MR SUTHERLAND WILLIAMS: If I may develop the principles that we say the court -- LORD JUSTICE LONGMORE: On the face of it, that is rather surprising. MR SUTHERLAND WILLIAMS: -- have acted upon, my Lord. We say that that principle applies in cases where the Crown offers no evidence in a criminal matter, that is to say and a Receiver has been appointed; and that was the case in Hughes. We say that it applies when a defendant has been acquitted; and that was the case in Hughes and that was the case in Re: Andrews. LORD JUSTICE LAWS: But those are cases in which no question arises as to the conduct of the receivership itself. MR SUTHERLAND WILLIAMS: I think that in Hughes certainly the appellants in that case were certainly arguing about the conduct of the receivership, and they certainly were in Glatt, where Mumby J also in effect held -- LORD JUSTICE CARNWATH: I am certainly conscious of the principles, but given that our judgment is that the Receiver should have recognised sooner that really it was not going anywhere, and we have put a figure, 1st June, how do you say that should be taken into account in our order? MR SUTHERLAND WILLIAMS: If I may say so, my Lord, that goes to the facts of this matter. And I know my Lord will bear in mind that on 23rd July the Receiver did attempt to have this matter listed. This Receiver -- LORD JUSTICE CARNWATH: Sorry, I am not asking you to go into the merits; that is what we have said. MR SUTHERLAND WILLIAMS: Yes. LORD JUSTICE CARNWATH: But in saying it we say we need to have submissions as to whether we take that into account by making some specific order or whether it is something that would be taken into account under the 69(7) assessment. MR SUTHERLAND WILLIAMS: We say, in answer to my Lordship's question I think at paragraph 64 of the judgment, that firstly the court can make an order and, secondly, that the court should make an order but in accordance with 69.7. In effect we say: as a matter of principle the Receiver is entitled to all of his costs, and that must follow for the reasons that I am giving at the moment, the principles of the case law - and I am about -- given the opportunity to -- LORD JUSTICE CARNWATH: 69.7 to some extent is new -- MR SUTHERLAND WILLIAMS: Yes. LORD JUSTICE CARNWATH: -- but what it clearly does is to say in certain circumstances if the Receiver acts disproportionately and so on, then he does not get his costs. MR SUTHERLAND WILLIAMS: But that is if there has been serious -- LORD JUSTICE CARNWATH: You say that, but this is a new provision; it does not say 'seriously disproportionate', it says "disproportionate". MR SUTHERLAND WILLIAMS: I could not possibly accept, and I do not think in the judgment there is any suggestion that the Receiver has acted inappropriately throughout this. LORD JUSTICE CARNWATH: But that is not what 69.7 says. It may be, you know, that this case raises difficult points about 69.7 which we are not really able to answer in an half-an-hour hearing today. But certainly I do not think that Mr Mitchell would accept that 69.7 is as limited as you say. 69.7(4): "Reasonable and proportionate in all the circumstances, taking into account the time, complexity, responsibilities, effectiveness, value." MR SUTHERLAND WILLIAMS: Yes. And we say that those issues should be determined by Davis J in his review of this case which is going to take place as a result of the order he made, as a result of an order which has never been appealed. Davis J -- LORD JUSTICE CARNWATH: But you accept that he can take account of what we have said about what should have happened if the matter had been dealt with properly? MR SUTHERLAND WILLIAMS: My Lord, I am actually asking you to go further than that. I am asking you to say: as a matter of principle the Receiver should be entitled to the costs, and it is only the quantum of those costs which Davis J should be dealing with; and that was certainly the position under Order 30, which was the order which preceded these rules. LORD JUSTICE CARNWATH: What is troubling me is that I think there is no authority on this, is there? MR SUTHERLAND WILLIAMS: These are, as my Lord knows, relatively new; but we know from the judgment of Davis J, which is at page 104, that Mr Mitchell in fact raised this same argument with him. Davis J was of the view that Hughes has not been overtaken by CPR 69, and he goes on to say that that argument was not pursued by Mr ... LORD JUSTICE CARNWATH: But the question of how broad the discretion is under 69.7, I suppose, is a matter which will have to be argued at that stage. It is not an issue before us to decide how a judgment of the Court of Appeal of the type we have given would be taken into account at that stage. MR SUTHERLAND WILLIAMS: With respect, the stakes are high. LORD JUSTICE CARNWATH: I know they are high. But what I am trying to get from you, Mr Sutherland, is what are you asking us to do in the next quarter of an hour, which is all we have got. MR SUTHERLAND WILLIAMS: I was hoping my Lord would at least allow me to develop the arguments. My submissions I do not think will take more than ten minutes. As a result of those submissions if my Lord is of the view that this is not a matter to be determined by this court today, I would ask for it to be adjourned - because, in effect, this application was only ever about this costs argument as far as certainly Mr Mitchell was concerned and the principle is still somewhat in abeyance. As Mr Mitchell quite rightly points out, if my Lords decide that in circumstances such as we have here that receivers in effect are set free by the court to go cap in hand to the prosecutor who appointed them without any further direction then we would say that the implications of that are far-reaching. LORD JUSTICE LAWS: Well this is a big question. MR SUTHERLAND WILLIAMS: My Lord, yes. LORD JUSTICE LONGMORE: It is far more important than what we have decided in the appeal! LORD JUSTICE LAWS: Forgive us just for a moment. MR SUTHERLAND WILLIAMS: Of course. (The Bench conferred.) LORD JUSTICE LAWS: Mr Mitchell, Mr Sutherland Williams, we think the bite of 69.7 in a case like this and indeed in the light of what Mr Sutherland Williams has just been saying raises big questions which we cannot conceivably, in fairness to the parties, or for that matter ourselves, deal with in fifteen minutes. At the moment we feel driven to adjourn the hearing of these applications for consequential orders, to be relisted before ourselves. We shall have to reconstitute. We think that the hearing may take up to half a day. As my Lord has just been pointing out to me, there may be a question - which is for you, not for us - as to whether the Receiver and the Customs should be separately represented. MR SUTHERLAND WILLIAMS: Undoubtedly, my Lord. LORD JUSTICE LAWS: The position is not satisfactory because we are generating more costs and expenditure of time, but we do not see any alternative. Perhaps you have any submissions about it? MR MITCHELL: The only immediate reaction I have is that the appellant of course has the benefit of a legal representation order - a representation order giving him legal aid - but he is at risk if the Receiver is going to be here that at any subsequent hearing, with plainly a lot of preparation lying behind a half-day hearing, what is going to fall on to the receivership estate as yet another burden. LORD JUSTICE LAWS: We shall have to consider that, Mr Mitchell. I do not think as we sit here that we can save your client harmless from any consequences, although he may be saved from them after we have heard argument in due course. MR MITCHELL: He may be. I raise that in the spirit of wondering whether, as these are points of principle and knowing that the solicitor for Customs is here, it may be thought appropriate that Customs underwrite not only their own costs but the costs of counsel to represent the Receiver; I just raise that for them to consider. LORD JUSTICE LAWS: Mr Sutherland Williams will not ... MR SUTHERLAND WILLIAMS: The gentleman who sits behind me does not have the authority to make that decision. LORD JUSTICE LAWS: To give those instructions, no. MR SUTHERLAND WILLIAMS: May I apologise; I thought that this issue was clearly -- I have to say I thought, bearing in mind the case law of Mellor v Mellor and so on, that this was clearly going to be an issue today that the court was seeking to resolve. But it is one, we say, of enormous implication, and it may well be that I myself -- LORD JUSTICE LAWS: Sorry to interrupt you, are you proposing any course other than the adjournment we are suggesting? MR SUTHERLAND WILLIAMS: No. LORD JUSTICE LAWS: I think we are driven to that. MR SUTHERLAND WILLIAMS: Yes, my Lord. All I would ask on behalf of the Receiver and the Commissioners is that there be sufficient time for counsel to acquaint themselves with these issues. LORD JUSTICE LAWS: It is very unlikely to come back, as it were, tomorrow because we shall have enormous administrative difficulties reconstituting this constitution of the court. MR MITCHELL: May we respectfully suggest that the court make some orders which would result, unless the delay I am about to suggest becomes intolerable, in the matter coming back early in the New Year? Because I simply cannot see, allowing for my own professional commitments, finding my way through to preparing a -- LORD JUSTICE LAWS: Speaking for myself - my Lords may have observations - I think it is simply unrealistic to suppose we will get the three of us together before the end of this term. MR MITCHELL: In that case if we could perhaps agree some directions with a view to it coming back on a day convenient to your Lordships. Counsel obviously will be able to argue the superiority of this court in their other professional commitments and will come as your Lordships direct. LORD JUSTICE LAWS: I can say: to be adjourned, to be refixed through the usual channels, not before the first day of next term. MR MITCHELL: Thank you, my Lord. MR SUTHERLAND WILLIAMS: May I ask for the following directions? That within four weeks the appellant serve a skeleton argument in relation to these arguments? LORD JUSTICE LAWS: Four weeks - you mean pretty well on Christmas Day? MR SUTHERLAND WILLIAMS: Point taken. Either three weeks or six weeks, whichever avoids the holiday period. Six weeks. That the respondents serve any reply -- and if it pleases my Lordship I will calculate the dates. LORD JUSTICE LAWS: This is going to go past the beginning of next term, is it not, if we are talking about six weeks? Well, not quite, perhaps. MR SUTHERLAND WILLIAMS: As I say I am happy to see it as three weeks, of course subject to Mr Mitchell and Miss Barber's commitments. But I would ask that there be the respondent's reply within three weeks. LORD JUSTICE LAWS: Well there may be separate arguments to be had from the Commissioners and the Receiver here. MR SUTHERLAND WILLIAMS: The potential is that -- the only conflict I can see at the moment is that if my Lords had adopted Mr Mitchell's submission as I had understood it was going to be, that you may make an order directing Customs to use the indemnity to pay the Receiver's fees, then of course there is the potential at least for the Receiver to say: 'Well, I would rather have that than nothing at all', and of course the Customs are not in a position to take a view about that. LORD JUSTICE LAWS: Yes. LORD JUSTICE CARNWATH: It is really for you to decide whether there are any problems about that. LORD JUSTICE LAWS: Yes. What about directions then and skeleton arguments? Mr Mitchell, my instinct is to leave it to the good sense of counsel, but perhaps it is cleaner if we have directions. How long do you want? MR MITCHELL: I am bound to say in less than 21 days I will not be here until 3rd January. LORD JUSTICE LAWS: Very sensible. MR MITCHELL: So I would prefer, if your Lordships were gracious enough to agree, that I be given until the first working Monday in January, which is 10th January, my Lord. LORD JUSTICE LAWS: So skeleton argument from the appellant by 10th January and from the respondents within three weeks thereafter; is that all right? MR SUTHERLAND WILLIAMS: My Lord, yes. LORD JUSTICE LAWS: We had better put back the listing to not before one week after that. MR SUTHERLAND WILLIAMS: 31st January, and therefore not before 7th February. LORD JUSTICE LAWS: It does not look as if we can do it any faster and highly doubtful whether it will get on that soon after 7th February, but we will see. Anything else? MR SUTHERLAND WILLIAMS: No, my Lord. MR MITCHELL: No, my Lord, we are grateful. LORD JUSTICE LAWS: Can you agree a draft order in those terms? MR MITCHELL: Yes. LORD JUSTICE LAWS: I am very grateful, thank you.

THIRD SECTION CASE OF BRÂNDUŞE v. ROMANIA (No. 2) (Application no. 39951/08) JUDGMENT STRASBOURG 27 October 2015 FINAL 27/01/2016 This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of Brânduşe v. Romania (no. 2), The European Court of Human Rights (Third Section), sitting as a Chamber composed of: Luis López Guerra, President,Kristina Pardalos,Johannes Silvis,Iulia Antoanella Motoc,Branko Lubarda,Carlo Ranzoni,Armen Harutyunyan, judges,and Stephen Phillips, Section Registrar, Having deliberated in private on 6 October 2015, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 39951/08) against Romania lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Romanian national, Mr Ioan Brânduşe (“the applicant”), on 18 July 2008. 2. The applicant was represented by Ms R. Crișan Costea, a lawyer practising in Arad. The Romanian Government (“the Government”) were represented by their Agent, Ms C. Brumar, of the Ministry of Foreign Affairs. 3. The applicant alleged, in particular, that he was detained in conditions which do not satisfy the requirements of Article 3 of the Convention and that he was prevented from voting in parliamentary elections because of a blanket ban on prisoners’ voting. 4. On 11 September 2013 these complaints were 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 I. THE CIRCUMSTANCES OF THE CASE 5. The applicant was born in 1951 and lives in Şomoşcheş, Arad County. 6. At the time of the events in the present case, the applicant was serving a prison sentence for fraud, imposed by two decisions of the Timişoara Court of Appeal on 14 August 2002 and 11 November 2004. He was held mainly in Arad and Timişoara Prisons. In 2008 he spent a few days in cell no. 309 of Jilava Prison. According to the applicant’s description, the cell was dirty and lacked access to warm water. 7. On several occasions the applicant was kept in the court’s detention rooms where the detainees and guards were allowed to smoke. According to the applicant, he was exposed to passive smoking in the Arad County Court detention room on 15 December 2008. 8. According to the information provided by the prison administration and forwarded to the Court by the Government, the applicant was held in cell no. 309 in Jilava Prison from 29 May to 1 June 2008 and from 16 to 18 June 2008. The personal space available to the applicant was 1.65 sq. m during the first period of detention and 1.93 sq. m during the second period of detention. Disinfection and pest control were carried out three times per year and the cell was cleaned daily by the inmates. The same rules of hygiene applied to the toilets and shower rooms. The cell benefitted from both natural and artificial light and had beds with mattresses, tables, shelves, and a television set. In an annex to the cell there was a toilet space, consisting of two partitioned toilet bowls and two wash basins. Access to warm water was possible in the common shower room, which contained eighteen showers and to which the inmates had access in privacy once a week. 9. On 30 November 2008 the applicant was not allowed to vote in the parliamentary elections and, despite his requests for clarifications, the prison authorities gave him no explanations as to whether he was entitled to vote or not. The next day, he informed the Court about what had happened. 10. On 21 December 2009 the applicant was released on probation. He was arrested again on 2 July 2010 and served the rest of his sentence until 28 March 2011. II. RELEVANT LAW A. Conditions of detention 11. Excerpts from the relevant domestic legislation and international reports, specifically Law no. 275/2006 on the execution of sentences; reports of the European Committee for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment (“the CPT”); and Recommendation Rec(2006)2 of the Committee of Ministers of the Council of Europe to member States on the European Prison Rules, are set out in the cases of Bragadireanu v. Romania, no. 22088/04, §§ 73-75, 6 December 2007; Artimenco v. Romania, no. 12535/04, §§ 22-23, 30 June 2009; and Iacov Stanciu v. Romania, no. 35972/05, §§ 116-29, 24 July 2012. B. Right to vote 12. The relevant Articles of the Criminal Code providing for the automatic withdrawal of the right to vote and to be elected during the execution of a prison sentence, read as follows: Article 64 – Additional penalties “Disqualification from exercising one or more of the rights mentioned below may be imposed as an additional penalty: (a) the right to vote and to be elected to public authorities or to public office ...” Article 71 – Secondary penalty “The secondary penalty shall consist of disqualification from exercising all the rights listed in Article 64. (2) A life sentence or any other prison sentence shall automatically entail disqualification from exercising the rights referred to in the preceding paragraph from the time at which the conviction becomes final until the end of the term of imprisonment or the granting of a pardon waiving the execution of the sentence ...” 13. In its decision of 5 November 2007 (following an appeal in the interests of the law) which became mandatory on the date of its publication in the Official Gazette on 18 July 2008, the High Court of Cassation and Justice advised the domestic courts to interpret Article 71 § 2 of the Criminal Code in the light of the Convention and thus assess in each case individually the necessity of the withdrawal of the right to vote. 14. The relevant international instruments concerning restrictions on the right to vote are summarised in Anchugov and Gladkov v. Russia (nos. 11157/04 and 15162/05, §§ 38-46, 4 July 2013). THE LAW I. ALLEGED VIOLATION OF ARTICLE 3 OF THE CONVENTION 15. The applicant complained under Article 3 of the Convention about the conditions of his detention in Jilava Prison and about the fact that he had been kept on several occasions with smokers in the court’s detention facilities. Article 3 of the Convention reads as follows: “No one shall be subjected to torture or to inhuman or degrading treatment or punishment.” A. Admissibility 16. Firstly, the Government argued that the applicant had not raised his complaint in the application form. Moreover, the letter of 18 July 2008 in which he mentioned the complaint did not meet the criteria set forth in Rule 47 of the Rules of Court as the applicant had merely made general statements unsupported by evidence. 17. Secondly, they contended that the applicant had abused the right of individual application. In particular, they considered that the applicant’s complaint concerning the conditions of detention in Arad Prison had already been dealt with by the Court in Brânduşe v. Romania, no. 6586/03, 7 April 2009. In their view, the applicant had omitted this information in his current request in order to obtain fresh compensation for the same Convention violation as in his previous application, thus abusing his right of petition. 18. The applicant made no further comments on these points. 19. The Court reiterates that, in accordance with its established practice and Rule 47 § 5 of the Rules of Court, as in force at the relevant time, it normally considered the date of introduction of an application to be the date of the “first communication” indicating an intention to lodge an application and giving some indication of the nature of the application (see Avanesyan v. Russia, no. 41152/06, § 20, 18 September 2014). In the current case, the applicant set out in his letter of 11 July 2008 a summary description of the conditions of his detention in Jilava Prison which raised a prima facie issue concerning the compliance by the State authorities with the criteria set forth in Article 3 of the Convention in this respect. It was therefore sufficient to warrant examination by the Court (see, in contrast, Nicolescu v. Romania (dec.), no. 38566/04, §§ 10-11, 14 January 2014). 20. The Court further reiterates that the communication referred to the conditions of detention in Jilava alone and therefore did not overlap with those already examined by the Court in the applicant’s previous case before the Court in Brânduşe, cited above. 21. The Government’s objections are therefore unfounded and must be dismissed. 22. The Court notes that the 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 23. The applicant submitted a statement by F.N.I., another inmate, who explained the situation of non‑smokers in prison. He also submitted court decisions in which the complaint raised by F.N.I. was dismissed as ill‑founded. 24. The Government made reference to the information provided by the prison administration, according to which cell no. 309 and the attached washroom and toilets were cleaned daily and disinfected three times per year. They reiterated that the applicant had only spent five days in that cell. 25. As for the exposure to passive smoking, the Government could not provide exact information on whether the room in question had been non‑smoking, but pointed out that the applicant himself had received a significant amount of cigarettes during his detention. They further averred that the decision to place the applicant in Jilava Prison had been taken in order to preserve his own interests, namely to ensure that he could easily participate in court hearings in his cases rather than having to be transported from Arad or Timişoara Prisons (which were further away) for each such hearing. 2. The Court’s assessment 26. The Court refers to the principles established in its case-law regarding conditions of detention (see, in particular, Iacov Stanciu, cited above, §§ 165-70, and Pavalache v. Romania, no. 38746/03, §§ 87-88, 18 October 2011). It reiterates, specifically, that ill‑treatment must attain a minimum level of severity if it is to fall within the scope of Article 3; the assessment of this minimum is, in the nature of things, relative; it depends on all the circumstances of the case, such as the nature and context of the treatment, the manner and method of its execution, its duration, its physical or mental effects and, in some instances, the sex, age and state of health of the victim (see Kudła v. Poland [GC], no. 30210/96, § 91, ECHR 2000‑XI). 27. The Court further reiterates that it has previously found violations of Article 3 on account of severely inadequate conditions of detention, even if the period of detention is brief (notably ten and four days detention in an overcrowded and dirty cell in the case of Koktysh v. Ukraine, no. 43707/07, §§ 22 and 91-95, 10 December 2009, and five days in Căşuneanu v. Romania, no. 22018/10, §§ 61-62, 16 April 2013). 28. The Court has also already found violations of Article 3 of the Convention on account of the material conditions of detention in Jilava Prison, especially with respect to overcrowding and lack of hygiene (see, among others, Iacov Stanciu, cited above, §§ 173 and 179). 29. Turning to the facts of the present case, the Court notes that the applicant’s submissions in respect of the poor conditions of detention, all be they succinct, correspond to the general findings by the CPT in respect of Romanian prisons (see Iacov Stanciu, cited above, §§ 125-126). Furthermore, it appears from the Government’s submissions that the applicant was also held in overcrowded conditions. The Court considers that the material conditions that the applicant had to live in for five days (see paragraph 8 above) were sufficiently intolerable to cause him suffering (see, mutatis mutandis, Căşuneanu, cited above, § 61). The Government failed to put forward any argument that would allow the Court to reach a different conclusion. 30. The foregoing considerations are sufficient to enable the Court to conclude that the conditions of incarceration caused the applicant harm that exceeded the unavoidable level of suffering inherent in detention and thus reached the minimum level of severity necessary to constitute degrading treatment within the meaning of Article 3 of the Convention. 31. There has accordingly been a violation of Article 3 of the Convention in respect of the material conditions of the applicant’s detention. 32. On account of this finding, the Court does not consider it necessary to examine the remainder of the complaint concerning the conditions of detention. II. ALLEGED VIOLATION OF ARTICLE 3 OF PROTOCOL No. 1 TO THE CONVENTION 33. Relying in substance on Article 3 of Protocol No. 1 to the Convention, the applicant complained that he had not been allowed to vote in the parliamentary elections of 30 November 2008. That provision reads as follows: “The High Contracting Parties undertake to hold free elections at reasonable intervals by secret ballot, under conditions which will ensure the free expression of the opinion of the people in the choice of the legislature.” A. Admissibility 34. The Government firstly argued that the applicant had failed to observe the requirements of Rule 47 of the Rules of Court, in that he had not raised his complaint in the application form. Moreover, the letter in which he had mentioned the complaint, specifically that of 1 December 2008, had not met the criteria set forth in Rule 47, as the applicant had merely made general statements unsupported by evidence. 35. Secondly, they pointed out that the restrictions on the applicant’s right to vote had been instituted by the decision of 11 November 2004 and argued that the six-month time-limit for lodging this complaint with the Court had started running from that date. Moreover, they noted that two other elections had occurred since that date – the presidential elections of 2004 and the European parliamentary elections of November 2007 – and that the applicant could not vote on those occasions either. In their view, the fact that he had not complained about his disenfranchisement for those elections showed that he had lacked interest and that his complaint was thus purely vexatious. 36. The applicant did not comment. 37. The Court makes reference to the requirements of Rule 47 at the date when the application was lodged (see paragraph 19 above). It notes that the elections complained of took place on 30 November 2008 and the applicant brought his complaint on 1 December 2008, giving sufficient details in his letter addressed to the Court about the factual situation and the nature of his grievance. It is satisfied that Rule 47 was observed by the applicant. 38. The Court further notes that, although disenfranchisement was imposed by the final decision adopted in the case – therefore in 2004 at the latest – the applicant was directly affected by it when he wished to cast his vote in the parliamentary elections of 2008 (see, for instance, Firth and Others v. the United Kingdom, nos. 47784/09, 47806/09, 47812/09, 47818/09, 47829/09, 49001/09, 49007/09, 49018/09, 49033/09 and 49036/09, 12 August 2014 where the applicants complained about their inability to vote in specific elections – for the European Parliament – and lodged their complaint within six months of those elections, irrespective of the date when the statutory ban had been imposed). In a similar case, the Court has concluded that such a disenfranchisement provision produced a continuing state of affairs against which no domestic remedy was in fact available to the applicant, and which could end only when the provision in question was no longer in force or when it was no longer applicable to the applicant (see Anchugov and Gladkov, cited above, § 77). 39. As for the allegations of vexatious complaint, the Court notes that casting a vote in elections is not an obligation in the respondent State (Article 36 of the Constitution (the right to vote), and Article 4(4) of Law no. 35/2008 on parliamentary elections). Therefore, no negative consequences can be inferred from the applicant’s choice not to participate in the previous elections mentioned by the Government. 40. The Government’s objections are therefore unfounded and should be dismissed. 41. 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 42. The applicant averred that he could not vote in the elections. 43. The Government contended that the disenfranchisement was applied according to the law. They further argued that the Court’s findings in Cucu v. Romania (no. 22362/06, 13 November 2012) were not applicable in this case, in so far as in Cucu the Court only established that the interested party had to contest the decision to disenfranchise and not a subsequent application of that decision in particular elections. 2. The Court’s assessment 44. The Court reiterates that Article 3 of Protocol No. 1 guarantees subjective rights, including the right to vote and to stand for election. It further notes that the rights guaranteed by this Article are crucial to establishing and maintaining the foundations of an effective and meaningful democracy governed by the rule of law. In addition, the right to vote is not a privilege. In the twenty-first century, the presumption in a democratic State must be in favour of inclusion and universal suffrage has become the guiding principle. As the Court has already noted, the same rights are enshrined in Article 25 of the International Covenant on Civil and Political Rights (see Scoppola v. Italy (no. 3) [GC], no. 126/05, §§ 81-82, 22 May 2012). 45. The Court has established in Hirst v. the United Kingdom (no. 2) ([GC], no. 74025/01, § 82, ECHR 2005‑IX), that when disenfranchisement affects a group of people generally, automatically and indiscriminately, based solely on the fact that they are serving a prison sentence, irrespective of the length of the sentence and irrespective of the nature or seriousness of their offence and their individual circumstances, it is not compatible with Article 3 of Protocol No. 1. 46. In several cases against Romania, the Court has found a similar restriction to be incompatible with the requirements of Article 3 of the First Protocol in so far as, according to Romanian law as it was applied by the domestic courts at that time, all convicted prisoners serving prison sentences received a secondary penalty in the form of a general, automatic and indiscriminate restriction on the right to vote (see, notably, Calmanovici v. Romania, no. 42250/02, §§ 150-151, 1 July 2008, and Cucu, cited above, § 109). 47. The circumstances of the present case are identical to those examined by the Court in Calmanovici and Cucu, both cited above, as the disenfranchisement was imposed as a direct consequence of incarceration, without an individual assessment of the applicant’s concrete situation by the courts. 48. The Court notes the change in the interpretation of the legislation in question brought about by the decision adopted by the High Court of Cassation and Justice on 5 November 2007 (see paragraph 13 above and Pleş v. Romania (dec.), no. 15275/10, 8 October 2013). However, this new approach did not benefit the applicant who remained unable to vote in elections. 49. For these reasons, the Court concludes that there has been a violation of Article 3 of Protocol No. 1 to the Convention. III. APPLICATION OF ARTICLE 41 OF THE CONVENTION 50. 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 51. The applicant claimed just satisfaction in respect of damage requesting, in particular: – 250,000 euros (EUR) for non-pecuniary damage for the alleged violation of Article 3 of Protocol No. 1 to the Convention (and other Articles); and – EUR 200 for pecuniary damage for each day of detention in breach of the requirements of Article 3 of the Convention; he further asked the Court to determine the amount of compensation for the non‑pecuniary damage incurred. 52. The Government contested these claims. 53. The Court notes that the applicant failed to justify the pecuniary damage alleged; it therefore rejects this claim. However, it awards the applicant EUR 1,500 in respect of non-pecuniary damage for the violation of Article 3 of the Convention. No additional award is made for the violation of Article 3 of Protocol No. 1 to the Convention (see Firth and Others, cited above, § 18). B. Costs and expenses 54. The applicant also claimed EUR 1,000 for costs and expenses incurred before the domestic courts and the Court. 55. The Government contested the claim. 56. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum. In the present case, regard being had to the documents in its possession and the above criteria, the Court rejects the claim for costs and expenses. C. Default interest 57. 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 application admissible; 2. Holds that there has been a violation of Article 3 of the Convention; 3. Holds that there has been a violation of Article 3 of Protocol No. 1 to the Convention; 4. Holds (a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, EUR 1,500 (one thousand and five hundred euros) plus any tax that may be chargeable, in respect of non-pecuniary damage, to be converted into the currency of the respondent State 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; 5. Dismisses the remainder of the applicant’s claim for just satisfaction. Done in English, and notified in writing on 27 October 2015, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Stephen PhillipsLuis López GuerraRegistrarPresident

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1157 of 1974. Appeal by special leave from the judgment and order dated the 20th June, 1973 of the Andhra Pradesh High Court in Writ Appeal No. 411 of 1973. S. Nariman and P. P. Rao, for the appellant. Subba Rao, for respondents Nos. 1-10, 12-31, 33 and 36. The Judgment of the Court was delivered by CHANDRACHUD, J.-The Andhra Pradesh Municipalities Act. VI of 1965, hereinafter called the Act came into force on April 2, 1965. Section 3 1 a of the Act empowers the State Government to companystitute a local area as a municipality. Section 3 1 b empowers the Government, by numberification in the Gazette to declare its intention to include within a municipality any local area in the vicinity thereof and defined in such numberification. Section 3 1 c companyfers power on the Government to exclude from a municipality any local area companyprised therein and defined in such numberification. Under section 3 2 , any resident of a local area or taxpayer of a municipality, in respect of which a numberification under section 3 1 is published, may, if he desires to object to anything therein companytained, submit his objection in writing to the Government within six weeks from the publication of the numberification and the Government is under an obligation to take all such objections into companysideration. Under section 3 3 after the expiry of the aforesaid period o six weeks and on companysidering the objections, the Government may by numberification in the Gazette declare to be a municipality or include in or exclude from a municipality, the local area or any portion thereof. By section 3 4 , the provisions of the Act companye into force in or cease to apply to and municipality or part thereof, as the case may be, on the date of publication of numberification under sub-section 3 if such date is the first day of April, or in any other case, on the first day of April immediately succeeding the date of publication of such numberification. Respondents 1 to 36 are residents of two villages called Ramakrishnapuram and Sriharipuram. Prior to the year 1966, the area companyprised in these villages was number included within the municipal limits of the Visakhapatnam Municipality. Most of these respondents own properties situated within the limits of the two villages but they were number assessed to property tax under the Andhra Pradesh Andhra Area District Municipalities Act 1920 which was in force until the introduction of the Act. They used to pay taxes to the village Panchayat. . In exercise of the powers companyferred by the companyresponding provision of the District Municipalities Act, 1920, namely section 4 1 c , the Government of Andhra Pradesh declared its intention to include within the limits of Visakhapatnam Municipality the local area companyprised in the villages of Ramakrishnapuram and Sriharipuram. The district Municipalities Act, 1920 was repealed by section 391 1 of the Act which, as stated earlier, came into force on April 2, 1965. On March 24, 1966 the Government of Andhra Pradesh acting in the exercise or powers companyferred by section 3 3 of the Act issued a numberification including within the limits of the Visakhapatnam Municipality the area companyprised in the villages of Ramakrishnapuram and Sriharipuram with effect from April 1, 1966. on March 24, 1970 and June 10, 1970 the Municipal Council declared its intention to levy property tax in the areas newly included within the municipal limits. After companysidering the objections, the Council passed a resolution on August 28, 1970 companyfirming the levy of property tax on buildings and lands situated within the municipal limits, with effect from October 1, 1970. However, the municipality issued numberices to respondents 1 to 36 demanding property tax from them number from October 1, 1970 but from April 1, 1966, that is to say, with effect from the date when the villages of Ramakrishnapuram and Sriharipuram were included within the municipal limits. These numberices would appear to have been issued on the supposition that taxes leviable under the District Municipalities Act, 1920 companyld be levied under clause 12, Schedule IX of the Act, unless the Government directed otherwise. On January 24, 1971 respondents 1 to 36 filed writ petition 442 of 1971 in the High Court of Andhra Pradesh against the State of Andhra Pradesh and the Visakhapatnam Municipality asking for a declaration that the levy of property tax on their properties for the period prior to October 1, 1970 was illegal. The writ petition was dismissed by a learned Single Judge on the view that it was companypetent to the municipality, under the District Municipalities Act 1920, to levy property tax on properties situated in the newly included areas from April 1, 1966 to October 1, 1970. Respondents 1 to 36 filed writ appeal 411 of 1972 against the decision on the Single Judge, which was allowed by a Division Bench of the High Court by its judgment dated June 13, 1972. lt held that the provisions companytained in clause 12 of Schedule IX had numberapplication and that it was incompetent to the municipality to impose the property tax on the newly included areas without following the procedure prescribed by sections 81 and 83 of the Act. The companyrectness of that view is challenged by the Visakhapatnam Municipality in this appeal by special leave. The State of Andhra Pradesh is respondent No. 37 to the appeal. The circumstance that whereas the preliminary numberification declaring the intention of the State Government to include new areas within the municipal limits was issued under the District Municipalities Act 1920, the final numberification companyfirming that intention was issued under the Act presents numberdifficulty. In so far as relevant, Schedule IX clause 13 of the Act, read with clause 1, provides that any action taken under the District Municipalities Act, 1920 by any authority before the companymencement of the Act shall, unless inconsistent with the Act be deemed to have been taken by the authority companypetent to take such action under the Act. The preliminary numberification, though issued under section 4 1 c of the 1920 Act must therefore be deemed to have been issued under section 3 1 b of the Act. The inclusion of the villages of Ramakrishnapuram and Sriharipuram within the limits of the Visakhapatnam Municipality is accordingly in order. The true question for our companysideration is whether the property tax which companyld lawfully be levied under the District Municipalities Act, 1920 can be levied, after the repeal of that Act, on properties situated in the areas included within the municipal limits after the companystitution of the municipality. Section 391 1 of the Act expressly appeals the District Municipalities Act, 1920 from which it must follow that ordinarily, numberaction can be taken under the Act of 1920 after April 1,1966 when the repeal became effective on the companying into force of the Act. But companynsel for the appellant municipality companytends that clause 12 of Schedule IX of the Act keeps the repealed enactments alive for tax purposes and therefore the municipality has authority to impose the property tax under the Act of 1920, numberwithstanding its repeal by the Act. Schedule IX appears under the title Transitional Provisions and clause 12 thereof reads thus Continuance of existing taxes, etc. Any tax, cess or fee which was being lawfully levied by or on behalf of any companyncil at the companymencement of this Act and which may be lawfully levied under this Act, shall, numberwithstanding any change in the method or manner of assessment or levy of such tax, cess or fee, companytinue to be levied by or on behalf of the companyncil for the year in which this Act is brought into . force, and unless the Government by general or special order otherwise direct, for subsequent years also. This provision cannot justify the imposition of tax under the repealed Act of 1920 on properties situated in the newly included areas. In the first place, as the very title of Schedule IX shows, the provisions companytained in the Schedule are of a transitional nature. They are intended to apply during the period of transition following upon the repeal of old municipal laws and the introduction of the new law. Some time must necessarily elapse before a municipality can act under the new law but taxes have all the same to the imposed and companylected during the interregnum. The object of clause 12 of Schedule IX is to authorise the levy of taxes which, on the companymencement of the Act, were levied under the repealed laws. The material date for this purpose is the date of the companymencement of the Act, namely April 1, 1966 and the legality of the exercise of the power companyferred by clause 12 is to be judged in reference to that date. In other words, if any tax, cess or fee was being lawfully levied by or on behalf of any companyncil on April 1, 1966 and if it can be lawfully levied under the Act, it can companytinue to be levied numberwithstanding any change in the method or manner of assessment or levy of such tax, cess or fee. On April 1, 1966 numbertax at all was being levied by or on behalf of any companyncil on properties situated in Ramakrishnapuram and Sriharipuram and therefore the appellant municipality had numberoccasion or power to direct that the property tax may companytinue to be levied on those properties. Continuance of existing taxes, after the companymencement of the Act being the theme of clause 12 and since the property tax was number levied by or on behalf of any companyncil at the companymencement of the Act on the properties situated in the two villages, clause 12 has numberapplication. Imposition of certain kinds of taxes is an obligatory function of municipal companyncils, under the Act. Section 81 1 a provides that every companyncil shall, by resolution, levy a property tax, a profession tax, a tax on carriages and carts and a tax on animals. under. section 81 2 a resolution of a companyncil determining to levy tax shall specify the rate at which and the date from which the tax shall be levied. The first proviso to this sub-section requires that before passing a resolution imposing a tax for the first time or increasing the rate of an existing tax, the companyncil shall publish a numberice in the prescribed manner declaring the requisite intention The companyncil has further to invite objections and it is under an obligation to companysider the objections received within the stipulated time. By section 83, when a companyncil determines, subject to the provisions of section 81, to levy any tax for the first time or at a new rate, the Secretary shall forthwith publish numberification in the prescribed manner specifying the rate at which, the date from which and the period of levy, it any, for which, such tax shall be levied. Section 83 is thus expressly subject to section 81 and under the latter provision numbertax can be imposed for the first time unless the procedure prescribed therein is followed. Since the procedure prescribed by the first proviso to section 81 2 was number followed in regard to the period prior to October 1, 1970 the levy of property tax on the properties of respondents 1 to 36 for that period is without the authority of law and companysequently illegal. It was urged on behalf of The appellant that the first proviso to section 81 2 would apply only when a tax was imposed for the first time and since appellant was levying properly tax long before its imposition on the properties of respondents 1 to 36, it was unnecessary to follow the procedure prescribed by the proviso. It is number possible to accept this submission. The Municipality might have been levying property tax since long on properties situated within its limits but until April 1, 1966 the villages of Rarmakrishnapuram and Shriharipuram were outside those limits. Qua the areas newly included within the municipal limits, the tax was being imposed for the first time and therefore it was incumbent on the Municipality to follow the procedure prescribed by the first proviso to section 81 2 . Residents and taxpayers of those areas, like respondents 1 to 36, never had an opportunity to object to the imposition of the tax and that valuable opportunity cannot be denied to them. It is obligatory upon the Municipality number only to invite objections to the proposed tax but also to companysider the objections received by it within the specified period. Such period has to be reasonable, number being less than one month. The policy of the law is to afford to those likely to be affected by the imposition of the tax a reasonable opportunity to object to the proposed levy. According to the appellant, the residents of Ramakrishnapuram and Sriharipuram had an opportunity to object to the imposition of the tax when the State Government issued a numberification under section 3 1 b of the Act declaring its intention to include the two villages within the limits of the municipality. It is number possible to accept this submission either. When the State Government issues a numberification under any of the clauses of section 3 1 , any resident of the local area companycerned or any tax payer of the municipality can object to anything therein companytained meaning thereby, anything companytained in the numberification. A numberification issued under section 3 1 b companytains only the declaration of the Governments intention to include within a municipality any local area in the vicinity thereof and defined in such numberification. The right of objection would therefore be limited to the question whether a particular area should, as proposed, be included within the municipal limits. It would be premature at that stage to offer objections to the imposition of any tax because it is only after the final Notification is issued under section 3 3 that the question would at all arise as regards the imposition of a tax on the newly included areas. A numberification under section 3 3 has to be followed by a resolution under section 81 1 if the municipality wants to impose a tax, and for the resolution to be effective, the procedure prescribed by the first proviso to section 81 2 has to be followed. The appellant municipality shortcircuited this mandatory procedure and thereby deprived respondents 1 to 36 of the valuable right of objecting to the imposition of the tax. Finally, relying on section 3 4 of the Act, learned companynsel for the appellant companytended that the inclusion of the two villages within the municipal area attracts of its own force every provision of the Act with effect from the date on which the final numberification is published by the Government under section 3 3 . This argument is said to find support in a decision of this Court in Atlas Cycle Industries Ltd. v. State of Haryana Anr. 1 . Far from supporting the argument, we companysider that the decision shows how a provision like the one companytained in Section 3 4 cannot have the effect companytended for by the appellant in the Atlas Cycle case, section 5 4 of the Punjab Municipality Act. 1911 provided that when any local area was included in a municipality, this Act and all rules, bye laws, orders, directions and powers made, issued or companyferred under this Act and in force throughout the whole municipality at the time, shall apply to such areas. The industrial area within which the factory of the Atlas Cycle was situated was by a numberification included within the municipality of Sonepat. The municipality thereafter purported to impose octroi duty on the goods manufactured, by the companypany without following the procedure companyresponding to that prescribed by sections 81 and 83 of the Act. It was held by this Court that since section 5 4 of the Punjab Act did number, significantly, refer to numberifications and since section 62 10 of the Punjab Act spoke of numberification for the imposition of taxes, it was number companypetent to the municipality to levy and companylect octroi from the companypany on the strength merely of the provision companytained in section 5 4 of the Punjab Act. Tn the instant case, what section 3 4 provides is that once a numberification including any area within a municipality is published under section 3 3 , The provisions of this Act shall companye into force into any municipality or part thereof on the date of publication of the numberification under sub-section 3 , if such date is the first day of April, or in any other case, on the first day of April immediately succeeding the date of publication of such numberification. Thus. by section 3 4 , once a numberification is issued under section 3 3 , all the provisions of the Act companye into force. That means that sections 81 and 83, which are a part of the act, would also apply to the entire Municipal area. It would then be obligatory for the municipality to follow the procedure prescribed in these sections. Taxes can be imposed under the Act only by passing appropriate resolutions under section Section 3 4 does number provide that on the inclusion of a new area within a municipality, the resolutions passed by the municipal companyncil before such inclusion will automatically apply to the new area. Plainly, such companyld number be the intention of the legislature in 1 1972 1 S.C.R. 127. view of the importance which it has attached to the right of the citizens to object to the imposition of a proposed tax. Though, therefore, by reason of section 3 4 the provisions of the Act would apply to the new areas included within a municipality, it is number companypetent to the municipality to take resourse to the resolution passed for imposing tax on the old areas for the purpose of levying taxes on new areas. The procedure prescribed by section 81 and 83 must be followed if a tax is proposed to be levied on the new areas. For these reasons we companyfirm the judgment rendered by the Division Bench of the High Court and dismiss this appeal with companyts.

Introduction There are before the Court applications by the Defendants for summary judgment and/or to strike out the claims in two consolidated actions in effect brought by Mr Rawnsley the principal director of and a major shareholder in Canal Dyeing Company Limited ("the Company"). The claims arise out of the insolvency of the Company and the sale of its principal asset by the Liquidator Mr O'Hara having received valuation advice from Weatherall Green & Smith North Limited ("Weatheralls"). Mr Rawnsley believes that Weatheralls advice was negligent and that Mr O'Hara failed to market the property properly with the result that the sale was for less than the price that ought to have been achieved. He also believes that Mr O'Hara failed to institute proceedings against Weatheralls for negligence. In addition to the claims by Mr Rawnsley there is in addition a claim by the Company acting by its other Joint Liquidator - Mr Poxon. Mr Rawnsley sues in various capacities; in part he sues as a shareholder; in part as a creditor pursuant to an assignment from a major creditor and in part pursuant to an assignment authorised by an order of the Court one day before the expiry of the limitation period against Weatheralls. Mr O'Hara challenges the proceedings in a number of ways. He submits that the Court order did not authorise proceedings against him; in so far as the proceedings are properly brought he submits that they have no realistic prospect of success. Weatheralls challenge the effectiveness of the Assignment made pursuant to the Court Order. In so far as it is effective they contend that the claims face insurmountable problems on the issue of causation. Mr Rawnsley accepts that some of Mr O'Hara's challenges are unanswerable. However he maintains that it is well arguable that Mr O'Hara was negligent and that the Company thereby lost the opportunity of selling the property for a higher sum. Accordingly he submits the proceedings do have a realistic prospect of success. He disputes Weatheralls' challenge to the assignment and contends that the question of causation is essentially a matter for the trial. Although Mr Poxon authorised the Company to institute proceedings against Mr O'Hara and Weatheralls he has taken no further part in the proceedings. He appears to be content to rely on the effectiveness of the Assignment in favour of Mr Rawnsley. Representation Mr Rawnsley has been represented by Miss Eleanor Temple instructed by Taylors of Rawlings House, Exchange Street, Blackburn, BB1 7JN. Mr O'Hara has been represented by Mr Paul Mitchell instructed by Beachcroft LLP of 7 Park Square Leeds LS1 2 LW. Weatheralls have been represented by Miss Anneliese Day instructed by WHCG LLP of 6th Floor 40 Lime Street, London EC3M 7 AW. I have received full and helpful skeleton arguments from all Counsel involved. I am most grateful to them. The Underlying Facts 3.1     The Insolvency of the Company One of the principal assets of the Company was property known as Old Lane Dyeworks, Old Lane, Halifax ("the property"). Weatheralls were well known surveyors with offices in Wellington Street, Leeds. Mr O'Hara is an insolvency practitioner. Following a meeting with Mr Rawnsley on 7th February 2002 and with the Company's accountants on 20th February 2002, Mr O'Hara was instructed on 13th May 2002 to assist the directors in convening meetings of members and creditors with a view to placing the Company in voluntary liquidation. On 29th May 2002 Mr O'Hara was appointed liquidator of the Company by its members and creditors. 3.2     The sale of the property. In order to assist with the preparation of the statement of affairs and report to creditors Mr O'Hara, as agent for the Company, instructed Weatheralls to provide a valuation of the property. The report was provided to Mr O'Hara on 23rd May 2002 and is central to the allegations against Weatheralls. Weatheralls attributed the open market value of the property at £295,000 and the Estimated Restricted Realisation Price at £175,000. The report suggested that the price of £295,000 might take 12 – 18 months to sell. The report went on to suggest a marketing strategy including direct mailing of local owners, occupiers, investors, and regional developers, advertisements in both local and regional press and (possibly) trade magazines. Particulars should be placed on Weatheralls' web site. In their report Weatheralls noted the limiting effect of "the age arrangement and location" of the property. They also did not see any enhanced value being achieved through residential development. On 21st May 2002 Mr O'Hara met insurance brokers on site. On 22nd May 2002 the brokers produced a report setting out that the main buildings were not insured but that the building was Grade 2 listed. The document does not give a quotation for the cover but Mr O'Hara has alleged that the insurance costs would have been of the order of £10,000 per month. On 31st May 2002 Mr O'Hara wrote to HSBC. In the letter he stated that he was actively marketing the property and that there was interest from prospective purchasers. The letter pointed out that he was not in a position to insure the property because of the level of the anticipated premium and the lack of funds. He advised HSBC to make its own arrangements to insure. On 6th June 2002 HSBC replied to the letter asking for details of the cost of insurance quoted to Mr O'Hara. Mr O'Hara did not respond to the letter. Mr O'Hara did not market the property as suggested by Weatheralls. He set a very tight deadline for bidders to make best and final offers (by 7th June 2002). On 10th June 2002 he accepted an offer of £400,000 from Lazarus Properties Limited ("Lazarus"). Lazarus occupies as subtenant the same premises as those occupied by Mr O'Hara. The sale to Lazarus[1] completed on 24th June 2002. Some months later another property developer, Britannia Developments Limited ("Britannia") became interested in acquiring the property. An offer of £1.4 million subject to residential planning consent was made in January 2003; this offer was increased to £1.7 million in February 2003. The property was in fact sold to Britannia in 2008 for £1.95 million. Mr Rawnsley believes that the sale of the property for £400,000 by Mr O'Hara was a sale at an undervalue. He is suspicious of the fact that the sale was to a person occupying the same premises as Mr O'Hara. He also believes that the valuation by Weatheralls at £295,000 was negligent and significantly underestimated the hope value in the property. 3.3     Appointment of Mr Poxon as joint liquidator Among the unpaid creditors of the Company is a pension fund known as The Canal Dyeing Company Limited Pension Scheme (1982) ("the Pension Fund"). Mr Rawnsley is the principal beneficiary and a trustee of the Pension Fund. The Pension Fund is the second largest creditor of the Company being owed £152,000 out a total of £627,773 owed to unsecured creditors. On 22nd May 2006 Mr Rawnsley (as a trustee of the Pension Fund and thus a creditor) applied for an order restricting Mr O'Hara's right to vote on a resolution he wished to raise at the annual creditors' meeting. The matter came before Mr James Allen QC sitting as Deputy Judge of the High Court. Mr Allen permitted Mr Rawnsley to amend the application to seek an order for the removal of Mr O'Hara from the office of liquidator. The amended application came before me on 2nd August 2006. Both Mr Rawnsley and Mr O'Hara were represented by Solicitors and Counsel. There was a compromise. As a result I made an order by consent which included recitals : 1.. That there should be a creditor's meeting on 5th September 2006 at which Mr Rawnsley would vote against the removal of Mr O'Hara as liquidator that both he and Mr O'Hara would vote in favour of the appointment an insolvency practitioner as joint liquidator. 2.. That the responsibilities of Mr O'Hara and the Appointee would be: 1. the Appointee would investigate the circumstances of the sale of the property by Mr O'Hara and would report to the creditors no later 28th February 2007 whether in his opinion there was a reasonable claim against Mr O'Hara and/or his agents on the basis of a sale at an undervalue and/or misfeasance and/or negligence in relation to that sale. 2. Mr O'Hara would have responsibility for all other matters in the Liquidation. The creditors' meeting was duly convened on 5th September 2006. At the meeting Mr Poxon was appointed as joint liquidator on the terms set out in the consent order. 3.4     Mr Poxon's report Mr Poxon carried out his investigation and prepared a report dated 30th March 2007 for the benefit of creditors and the Court. His report contained a number of criticisms both of Mr O'Hara and of Weatheralls. Criticisms of Mr O'Hara In paragraphs 3.8 to 3.12 of the report he deals in some detail with the marketing of the property. He makes the point that there was only 6 effective working days from the date of the appointment to the acceptance of the offer. In his view this was not a reasonable period to obtain the most favourable realisation for the benefit of the Company's creditors. Mr O'Hara ignored the advice of Weatheralls (in a letter of 30th May 2002) that a thorough marketing campaign be adopted. It also appears that despite written assurances and assertions by Mr O'Hara Weatheralls were not instructed to market the property. In paragraphs 4.1 to 4.4 Mr Poxon deals with the question of insurance. He makes the point that it may have been feasible for the Bank to ensure that the property was adequately insured prior to its eventual sale. Mr Poxon makes the point that Mr O'Hara has said on more than one occasion that there were no funds available to cover the costs of insuring the property. However Mr O'Hara appears to have failed to consider insurance cover other than on a reinstatement basis – such as "diminution in value". This would have resulted in greatly reduced premiums. In paragraph 5.7 of the report there is a general criticism of Mr O'Hara to the effect that his general management was poor. In particular the point is made that the assertion he made to the Bank in the letter of 31st May 2002 appears to have been untrue. Criticisms of Weatheralls Mr Poxon deals with the position of Weatheralls in paragraphs 5.1 to 5.5 of his report. He is critical of the enquiries made of the local planning officers. In his view the enquiries that were made were not sufficient to enable Mr O'Hara to conduct the liquidation effectively. In his view the enquiries fell below the standard reasonably to be required of a professional valuer and Weatheralls underestimated the hope value of the property. Overall view. Mr Poxon's overall view is expressed in paragraph 5.9: In conclusion, although I believe Mr O'Hara's management of the case could have been handled more effectively, he did rely on the advice of his agents to provide a professional valuation and therefore an indication of the likely realisable value. As an offer was received by Mr O'Hara far in excess of the market value provided by Weatheralls it can be argued that Mr O'Hara acted in the best interests of creditors by not only accepting the offer but ensuring that costs were kept to a minimum. In contrast I have been advised by independent agents that Weatheralls conducted insufficient enquiries with the local authority given their expertise and experience and therefore did not provide the liquidator with a clear of the potential value of the land and buildings. In my opinion there are reasonable grounds against the liquidator's agent for negligence in providing substandard advice … 3.5     The order of 22nd May 2008 There is no evidence that Mr O'Hara took any action as a result of Mr Poxon's report. In December 2007 Mr Crayton (an employee in Mr O'Hara's firm) wrote to Mr Colman (an employee in Mr Poxon's firm) describing the action of Mr Rawnsley as vexatious and stating that he intended to convene a section 106 meeting to determine the liquidation. In March 2008 he sent a further e-mail commenting that it was now a year since Mr Poxon's report and he repeated the comment that he intended to convene a section 106 meeting. On 18th March Mr Maloney replied to the effect that Mr Poxon considered that some matters were still ongoing and he did not wish to commence closure procedure. On 7th April Mr Colman replied by making reference to the fees charged by Mr O'Hara. It is apparent from that e-mail that Mr Poxon was in communication with Mr Rawnsley. There is, however, no document before the Court which gives any indication as to what steps, if any, Mr O'Hara took on receipt of Mr Poxon's report indicating that there was a claim for negligence against Weatheralls. There is, at least, an inference that he decided to take no steps. It will be recalled that Weatheralls report was provided to Mr O'Hara on 23rd May 2002. Any claim for negligence against Weatheralls would (at least arguably) become statute barred after 22nd May 2008. On 21st May 2008 Mr Poxon wrote to Mr O'Hara. In the letter he informed Mr O'Hara that Counsel agreed that a claim should be pursued against Weatheralls for negligence. He accordingly sent to Mr O'Hara for execution an Assignment. As there was no response to this letter at 1.24 p.m on 22nd May 2008 the solicitors for Mr Rawnsley sent a fax to Mr O'Hara pointing out the urgency and inviting him to sign the Assignment immediately. Mr O'Hara replied by fax at 5.47 p.m on the same day. In his reply he made a number of comments. He complained he was being pressurised into signing an Assignment without taking legal advice; he made the point that the terms of the Assignment seemed inequitable because the consideration for the Assignment was only 10% of the net recovery by Mr Rawnsley. He accordingly refused to execute the Assignment. Meanwhile, no doubt in anticipation that Mr O'Hara might not be willing to execute the Assignment a without notice application was made to Court. The application came before me on 22nd May 2008. I made an order extending the powers of Mr Poxon as joint liquidator of the Company to permit him to issue proceedings in the name of the Company against Weatheralls and/or to assign this cause of action to Mr Rawnsley. The order made it clear that the powers could be exercised independently of Mr O'Hara. In the course of this application some criticism was made of the order. However Mr O'Hara made no application to set it aside or to appeal it. In those circumstances, as it seems to me, it stands as a valid order. 3.6     The Assignments. The Pension Fund On 21st May 2008 the Trustees of the Pension Fund executed a Deed whereby they assigned to Mr Rawnsley any right title and interest that they might have in the Claims which were defined in wide terms as follows: All and any right or cause of action, claims, right in damages, right of compensation, rights based on negligence, misfeasance or analogous claims which the Assignor may have against (a) [Weatheralls] and/or [Mr O'Hara] … in respect of advice and/or failure to advise properly and/or loss of opportunity by reason of negligence and/or breach of duty by Weatheralls relating to their retainer by the Company and/or Mr O'Hara to advise and/or act on behalf of the Assignor in and about the disposition of its interest in the property … and/or (b) against Mr O'Hara in respect of his breach of duty and/or misfeasance in failing to achieve a proper value in the realisation of the property. The consideration for the assignment was a deferred interest of 10% of the net recovery together with the sum of £1. Under clause 5 the Assignor acknowledged that the Assignee (Mr Rawnsley) would from that date be solely responsible for the management of the Claims and Mr Rawnsley would in his absolute discretion be entitled to avoid, settle, compromise or appeal the Claims and to instruct lawyers and to manage and control all proceedings in relation thereto. Mr Poxon On the same day as and pursuant to the order made on 22nd May 2008 Mr Poxon executed an assignment to Mr Rawnsley of any right title and interest that the Company and the Liquidators might have in the Claims which were defined in wide terms as follows: All and any right or cause of action, claims, right in damages, right of compensation, rights based on negligence, misfeasance or analogous claims which the Company and/or the Liquidators may have against [Weatheralls] in respect of advice and/or failure to advise properly and/or loss of opportunity by reason of negligence and/or breach of duty by Weatheralls relating to their retainer by the Company and/or the Liquidators to advise and/or act on behalf of the Company and/or the Liquidators in and about the disposition of the Company's interest in the property The consideration for the Assignment was a sum equal to 10% of the net recovery by Mr Rawnsley arising out of a successful prosecution of the claims. Under clause 5 the Company and the Liquidators acknowledged that Mr Rawnsley would from that date be solely responsible for the management of the Claims and Mr Rawnsley would in his absolute discretion be entitled to avoid, settle, compromise or appeal the Claims and to instruct lawyers and to manage and control all proceedings in relation thereto. 4. The Claims On 22nd May 2008 Mr Rawnsley issued two sets of proceedings – an Originating Application against Mr O'Hara and a Claim Form. 4.1     The Originating Application The Originating Application has been wrongly described as a Part 8 Claim. In fact it was an application under section 212 of the Insolvency Act 1986 by Mr Rawnsley as a creditor (pursuant to the Pension Fund Assignment) alleging misfeasance by Mr O'Hara as Liquidator of the Company. The application was supported by a 6 page witness statement from Mr Rawnsley with exhibits extending to some 140 pages. Four allegations are made against Mr O'Hara: 1. That he failed properly to market the property prior to its sale thereby causing loss to the Company. 2. That he is responsible for the negligent advice of Weatheralls, his agents. 3. That on the receipt of Mr Poxon's report he failed to pursue Weatheralls for breach of duty and/or negligence. 4. That he failed to consent to the Assignment of any cause of action against Weatheralls. During the course of the hearing before me Miss Temple made it clear that Mr Rawnsley was not pursuing the second allegation. 4.2     The Claim Form The Claimants are named as the Company and Mr Rawnsley; the Defendants are named as Mr O'Hara and Weatheralls. The brief details of the claim allege negligence by Weatheralls in the report of 23rd May 2002 and a failure by Mr O'Hara to market the property and/or pursue Weatheralls for negligence. Mr Rawnsley alleges that he brings the claim in his capacity as a shareholder of the Company and as a creditor by way of Assignment pursuant to the order of 22nd May 2008. Mr Poxon expressly authorised the claim to be brought in the name of the Company. However no further steps have been taken by Mr Poxon to prosecute the claim. On 19th September 2008 Mr Rawnsley served a Particulars of Claim. It is an 11 page document and is supported by a Statement of Truth. As was made clear at the hearing before me it was not a document served with the authority of or on behalf of Mr Poxon. It is not necessary to give more than the briefest of summaries of the allegations. After setting out the history in some detail it alleges negligence by Weatheralls in the report of 23rd May 2002. It alleges negligence against Mr O'Hara in the selection of Weatheralls, in failing to follow Weatheralls' advice, in failing to market the property. It alleges a breach of fiduciary duty based on the fact that the sale to Lazarus was a sale at an undervalue to a purchaser whose office was in the same building as that of Mr O'Hara. It alleges a substantial loss. 4.3     The Order of District Judge Lord The matter came before DJ Lord on 13th January 2009 who ordered that the 2 claims be consolidated and should proceed as a Part 7 Claim. 5. Mr O'Hara's application to strike out 5.1     The Part 7 Claim Mr Mitchell made a number of submissions in relation to the Part 7 Claim which turned out to be uncontroversial. 1. He submitted that Mr Rawnsley's claim as a shareholder against Mr O'Hara was bound to fail. He referred me to the rule against reflective loss as stated by Lord Millett in Johnson v Gore Wood [2001] 2 AC 1 at 62E and as stated by Neuberger LJ in Gardner v Parker [2004] EWCA Civ 78 at paragraph 33. Miss Temple acknowledged that the rule applied and that Mr Rawnsley's claims as shareholder (against either Mr O'Hara or Weatheralls) were bound to fail. 2. He submitted that Mr Rawnsley's claims against Mr O'Hara made as Assignee of the Liquidator's or the Company's claims were bound to fail. First he submitted that the order of 22nd May 2008 authorised the assignment of claims against Weatheralls but not against Mr O'Hara. It followed that Mr Poxon had no power to assign claims against Mr O'Hara. He also submitted that, as a matter of construction the Assignment did not in fact assign claims against Mr O'Hara. Miss Temple accepted that the order of 22nd May 2008 did not purport to assign claims against Mr O'Hara and that Mr Rawnsley's claims against Mr O'Hara in the Originating Application had to be struck out. She did not, however, concede Mr Mitchell's point on the construction of the Assignment. In the light of the concession the point is academic. For what it is worth I agree with Mr Mitchell's submission. 3. He submitted that the Company's claims against Mr O'Hara should be struck out because of the failure by Mr Poxon to prosecute the claims. He relied on the fact that the Particulars of Claim served by Mr Rawnsley was not authorised by Mr Poxon on behalf of the Company, that no steps had been taken by Mr Poxon to prosecute the claim following the issue and service of the Claim Form and that Mr Poxon had not chosen to attend to defend the application to strike out the claim. Miss Temple readily accepted that she was not instructed on behalf the Company and therefore could not make submissions on its behalf. She suggested that Mr Poxon was content to rely on the validity of the Assignment and thus the Company had no interest in the proceedings. In the light of the non-attendance by the Company I agree that the claims by the Company fall to be struck out for want of prosecution. 5.2     The Misfeasance Claims As I understood his submissions Mr Mitchell accepted the validity of the Assignment by the Trustees of the Pension Fund of its claims against Mr O'Hara. He accordingly accepted that Mr Rawnsley was entitled, as a creditor, to bring misfeasance proceedings against Mr O'Hara. He, however, contended that the proceedings were bound to fail and that the Court should give summary judgment in favour of Mr O'Hara pursuant to Part 24 CPR. He reminded me in his Reply that DJ Lord had ordered that the misfeasance claim be treated as if it were a Part 7 Claim so that the provisions of Part 24 applied to it. The failure to market In paragraphs 35 to 37 of her witness statement in support of the application Ms Collins submits that the documents demonstrate that Mr O'Hara's decision to sell the property quickly arose from the concern that he could not realistically afford to retain ownership of it. She accordingly submits that there is no real prospect that a court will find that Mr O'Hara was in breach of duty in selling the property at a price in excess of Weatheralls' valuation. In his submissions Mr Mitchell referred me to the decision of Millett J (as he then was) in Re Charnley Davis [1990] BCLC 760 at 775 f – h. He accepted that Mr O'Hara's duty was to take reasonable care to obtain the best price that the circumstances as he perceived them permitted. He referred me to the insurance position and the fact that the offer was in excess of the valuation and submitted that there was no real prospect that a Court would reach any different conclusion. I respectfully disagree. In my view the question of whether Mr O'Hara's admitted failure to market the property amounted to a breach of duty is well arguable and not suitable for summary determination. On any view Mr O'Hara acted contrary to Weatheralls express recommendation. There is no reason to believe that HSBC would not have paid any necessary insurance premium. At the moment there is no explanation for Mr O'Hara's failure to follow up the correspondence relating to insurance. In any event as Mr Poxon pointed out it might have been possible to insure the property at a premium significantly less than the £10,000 per month now suggested by Mr O'Hara. There is in fact no evidence to support Mr O'Hara's figure. Furthermore there is no explanation of Mr O'Hara's apparent lie to HSBC that he was actively marketing the property when he was not. There are also clear triable issues on the question of causation and the extent of any loss. Mr O'Hara lost the chance of obtaining a higher figure on the sale by the failure to market the property. There are triable issues in the assessment of that loss of chance. Failure to issue proceedings against Weatheralls Mr Mitchell suggested that any failure to prosecute Weatheralls lay with Mr Rawnsley and/or Mr Poxon. He made the point that there was no suggestion that he issue proceedings against Weatheralls in the report or in correspondence. He also suggested that there was no loss as proceedings have been issued against Weatheralls within the limitation period. In my view the question of what steps were taken by Mr O'Hara following Mr Poxon's report merits investigation. Mr O'Hara was, after all the Liquidator with a duty to collect in the assets of the Company. It may be he had no funds with which to commence proceedings. However this is a matter that needs to be investigated. Furthermore he could have sought an indemnity from either Mr Rawnsley or another creditor. It has to be remembered that Weatheralls are seeking to challenge the validity of the Assignment pursuant to the Court Order. If that challenge succeeds either in this Court or in the Court of Appeal the loss flowing from a failure to issue proceedings against Weatheralls could be very significant. In all the circumstances this allegation does have realistic prospects of success and I would not strike it out. Failure to execute the Assignment This is a very small claim as the only loss would appear to be the costs of the application to this Court. Furthermore Mr O'Hara was given very short notice of the request to execute the Assignment. However it is in the nature of a Liquidator's task that he occasionally has to make speedy decisions. It was made apparent to him that the limitation period for the claim against Weatheralls expired within 24 hours. In those circumstances it is to my mind arguable that the failure to respond more promptly was negligent. I would not strike out this allegation. Mr Mitchell also suggested that Mr O'Hara would obtain relief under section 1157 of the Companies Act 2006. I cannot accept this argument either. It is to my mind seriously arguable that a liquidator is not within the ambit of section 1157. Even if he is the question of whether he should obtain relief is plainly fact sensitive and should be determined at a trial. In any event Mr O'Hara was a professional liquidator who was earning substantial fees from the liquidation. He chose to ignore advice from Weatheralls, not to follow up the insurance correspondence and (on one view) to lie to HSBC over the extent of the marketing that he was carrying out. In those circumstances I would have thought he might well have an uphill task in seeking to persuade any court to grant him relief under section 1157. In all the circumstances I would not strike out any of the allegations now pursued by Mr Rawnsley. The application for summary judgment by Mr O'Hara is refused. 6. Weatheralls' application to strike out. 6.1     The order of 22nd May 2008 In her helpful skeleton argument Miss Day criticises the order that I made on 22nd May 2008 on the ground that I was not informed of the correspondence from Mr O'Hara. However, as I have noted there was no application to set aside the order or to appeal it. In my view it stands as a valid order. It is perhaps also worth commenting that the fax from Mr O'Hara appears to be timed at 5.47 p.m that is to say after the hearing of the application before me. 6.2     The Assignment The principal point taken by Miss Day is that the Assignment is invalid in the light of the principles contained in Ruttle Plant Ltd v Sec of State for Environment Food and Rural Affairs [2008] EWHC 238. Miss Temple does not accept this analysis. In paragraph 5 of her skeleton argument Miss Temple draws to my attention a liquidator's power of sale under paragraph 6 of Schedule 4 of the Insolvency Act 1986. She contends that that power includes the right to assign causes of action which are the property of the Company. She accepts that claims that are personal to the Liquidator (such as claims under section 214 of the Act) cannot be sold but that is not this case. In her submission the claim in this case - a claim in negligence and/or breach of contract against Weatheralls – was vested in the Company and was not personal to the liquidator and could accordingly be sold. In her supplementary skeleton Miss Day describes this analysis as "brave but hopeless". Part III of Schedule 4 of the Act deals with the powers of a Liquidator exercisable without sanction in a voluntary winding up. By paragraph 6 there is power to sell any of the Company's property. Before looking at the authorities on this area of the law (including the decision in Ruttle) it is perhaps worth looking at the commentary of Professor Key and Louis Doyle in the 2009 Edition of their Commentary on the Insolvency Legislation At page 779 there is a commentary on paragraph 6: 'Property' here includes causes of action vested in the Company at the time of the liquidation (Seear v Lawson (1880) 15 Ch D 426 at 432 – 433; Grosvenor Holdings plc v James Capel & Co Ltd [1995] BCC 760). So a sale of a bare cause of action is permissible, as is a transfer of a half beneficial interest or other share in recoveries in return for financing the action (Grovewood at 764; Ruttle Plant … at paragraph 25. But an assignment by the liquidator to a third party of the fruits of proceedings with the power to initiate or continue legal proceedings brought to enforce a cause of action, is not permissible as it is champertous (Grovewood Holdings at 765; Ruttle Plant at paragraph 43) A liquidator cannot surrender his fiduciary power to control proceedings commenced in the name of the Company (Ruttle Plant at paragraph 43). Liquidators are not permitted to assign actions that are granted to them as liquidators, such as under s 214 or s 239 because they are actions given by statute to them personally in the position of liquidator: Re Oasis Merchandising Services Ltd [1995] 2 BCLC 493 affirmed on appeal [1997] 1 AER 1009. There is a full and very helpful review of this area of the law in the decision of Robert Walker J (as he then was) in Re Oasis at pp 497 – 499. I do not intend to lengthen this judgment by setting it out in detail. In summary: 1. In Seear v Lawson the Court of Appeal upheld an outright legal assignment of a cause of action by a company in liquidation for monetary consideration. 2. In Guy v Churchill (1888) 40 Ch D 481 there was an assignment on terms that the assignee would continue the action in his name and pay to the trustee in bankruptcy 25% of any net recovery. The Court of Appeal upheld the assignment. The decision was followed by the Court of Appeal in Ramsey v Hartley [1977] 2 AER 673 where the trustee assigned a cause of action to the bankrupt in consideration of receiving 35% of any net recovery. 3. In Grovewood v Capel there was no outright assignment of the cause of action but a sponsorship arrangement under which the action was pursued in the name of the Company but at the expense of the sponsors and with the assistance but not subject to the control of the liquidator. In the result the action was stayed as champertous 4. At page 501 Robert Walker J cited with approval passages from the judgment of Knox J in Re Ayala Holdings [20 May 1993] But Knox J referred to-- 'an important distinction between property of the company, on the one hand, and the rights and powers of a liquidator on the other. The property of a company includes rights of action against third parties vested in a company at the commencement of winding up and to that extent the principles in Ramsey v Hartley undoubtedly apply and such rights can, as I see it, be sold by a liquidator pursuant to para 6 of Sch 4. What is to be distinguished in my view are the statutory privileges and liberties conferred upon liquidators as such . . . who are officers of the court and act under the court's direction.' … Knox J reiterated: 'the fundamental distinction between assets of a company and rights conferred upon a liquidator in relation to the conduct of the litigation. The former are assignable by sale under para 6 of Sch 4, the latter are not because they are an incident of the office of liquidator.' When I consider the Assignment in the light of these authorities it seems to me quite plain that there is here an outright Assignment of the cause of action to Mr Rawnsley for a consideration of 10% of the net proceeds of the action. That is a form of consideration approved in the cases cited above. It is also plain from clause 5 that the whole of the management of the claim is vested in Mr Rawnsley. I turn therefore to the decision of Ruttle relied on by Miss Day. In my view that case is not in any way inconsistent with this analysis. In paragraphs 29 to 40 Ramsey J cited extensively from the Oasis decision including much of the material I have summarised above and the decision of Knox J in Ayala. There is nothing in his judgment to suggest that he had any criticism of the law as set out in those authorities. The distinction between this case and Ruttle emerges from paragraphs 40, 41 and 43 of the judgment. In Ruttle there was an assignment of the fruits of the proceedings (which was not objectionable) and an assignment of the Liquidator's discretionary power to prosecute the proceedings that was objectionable. It is thus distinguishable from this case where the assignment is of the cause of action itself and not of the fruits of the proceedings. Where the fruits of the proceedings are assigned it is not possible in addition for the Liquidator to assign the power to conduct the proceedings. This does not, however, affect the right of liquidator to sell the bare cause of action – unless, as in Re Oasis, it is a claim given to the Liquidator such as a claim to bring proceedings under section 214 of the Act. Thus I consider that the statement of law in the commentary to paragraph 6 is accurate. I also consider that Miss Temple's submission is neither brave nor hopeless but to be preferred. I accordingly reject this ground to strike out Mr Rawnsley's claim. 6. 3. Causation I can deal with this point very briefly. Miss Day submits that Mr Rawnsley cannot show that Weatheralls' valuation advice had any causative effect. She relies on the failure by Mr O'Hara to market the property and the delay between the time the advice was given and the eventual further sale to Britannia. To my mind these matters are matters for the trial. Miss Day realistically accepts that there are triable issues as to whether Weatheralls were negligent. It is simply not possible to say summarily that the (assumed) negligence did not make a significant contribution to the Company's (assumed) loss. It may be that Weatheralls will establish this at the trial but it is not a point suitable for summary determination. It follows that I refuse to strike out the claim by Mr Rawnsley against Weatheralls. 6. 4. The claim by the Company. As already noted Mr Poxon has taken no steps to prosecute this claim other than the issue and service of the Claim Form. On that basis I agree with Miss Day it falls to be struck out. 7. Conclusion I would strike out the claims by the Company against Mr O'Hara and Weatheralls and the claims by Mr Rawnsley in his capacity as a shareholder. I would however not strike out the claims by Mr Rawnsley in his capacity as an Assignee pursuant to the Order of 22nd May 2008 against Weatheralls or in his capacity as an Assignee of the Pension Fund against Mr O'Hara. JOHN BEHRENS Wednesday 30 September 2009 Note 1   In fact the property was transferred to Basilton Properties a company associated with Lazarus.    [Back]

LORD JUSTICE WILSON: With the permission of the Asylum and Immigration Tribunal, the Secretary of State for the Home Department appeals against the determination of the Tribunal's predecessor, namely the Immigration Appeal Tribunal ("the Tribunal"), promulgated on 24 August 2006. The Tribunal had on 3 March 2004 heard an appeal by the Secretary of State and a cross-appeal by RK, the respondent, against determinations by an adjudicator that the respondent's appeal against the Secretary of State's refusal to grant him asylum should be upheld and that his appeal against the rejection of his claims under the European Convention on Human Rights 1950 should be dismissed. The Secretary of State's main ground for appeal to this court is founded upon a lamentable, and I trust unique, state of affairs, namely that, as is already apparent, the Tribunal's determination was promulgated 29 months after the hearing. As I will explain, the determination seems to have been written and signed on about 11 September 2004, in itself amounting to a delay of about six months, but thereafter it was not promulgated for almost a further two years. The Tribunal's determination was that, although the adjudicator had been wrong to hold that the respondent, who is of Algerian nationality and who had served in the Algerian army prior to his decision to seek to remain in this country and to desert from that army, was entitled to asylum, he had been equally wrong to reject his claim to be allowed to remain in the UK by virtue of Article 3 of the European Convention. The respondent is now aged 45. In 1983, when aged 21, he joined the Algerian army, in which he became a junior officer. During the following 13 years he made various lawful visits to this country, in the course of which he developed a relationship with a female British citizen who, in 1991, bore him a son. In December 1996 he came again to the UK with entry clearance which afforded him leave to remain here for six months. His leave of absence from the Algerian army, however, was only until 29 January 1997. On 22 January 1997, in England, the respondent married the mother of his son and decided not to return to Algeria but, rather, to claim leave to remain in the UK as a spouse of a British national. On any view, therefore, the respondent deserted from the Algerian army by failing to return for service on or before 29 January 1997. In June 1997 the respondent claimed asylum. But on 13 March 2000 the Secretary of State refused his claim and later that month made a deportation order against him. Following further representations on his part and a refusal on the part of the Secretary of State to revoke the deportation order, the respondent launched his appeal to the adjudicator. The result of the appeal, promulgated on 2 April 2002, was, as I have indicated, to uphold his claim for asylum, on grounds which are now irrelevant, but to reject his claim on human rights grounds. It will be noted that the hearing before the Tribunal on 3 March 2004 took place almost two years after the promulgation of the adjudicator's decision. That delay was partly attributable to the Tribunal's wish to receive further, updated objective evidence about the likely treatment of the respondent in the event of his return to Algeria. Then, however, there was no promulgation of the Tribunal's decision. The solicitors for the respondent wrote to the Tribunal, marked "For the attention of the President", on 17 September 2004, 21 January 2005, 29 March 2005 and 2 June 2005, pressing for promulgation of the decision. They received one bare acknowledgment and the other three letters were, so we have been told, ignored. It is unclear whether the Secretary of State also pressed for promulgation; Miss Chan, on his behalf, is unable to confirm that he did so. In the end, on 9 May 2006, the respondent issued proceedings for judicial review of the Tribunal's conduct of the appeals with a view to securing a mandatory order for promulgation of its decision. That precipitated its promulgation on 24 August 2006. Senior Immigration Judge Moulden endorsed on the issued copies of the determination that His Honour Judge Risius, the Vice President of the IAT who had presided over the hearing on 3 March 2004, had signed the original of it on or about 11 September 2004; that the original had been misplaced; and that he, Judge Moulden, was signing a duplicate copy of it on 27 July 2006. In giving permission to appeal to this court, Senior Immigration Judge Batiste wrote that: "The long delay between the hearing and the promulgation of the determination without further consideration of the changed objective evidence render the grounds properly arguable." Underneath his signature was an endorsement by the Deputy President of the AIT, Mr Ockelton, dated 11 October 2006. He wrote: "This is a case in which, had I still the power to do so, I should have consulted the parties with a view to setting aside the determination under appeal and ordering a rehearing." The Deputy President seems there to have been referring to the lack of power of the President at that particular time to set aside, of his own motion, a determination of the Tribunal following consultation with all parties. As it happens, the power has now been restored to him: see Rule 15 of the Asylum and Immigration Tribunal (Procedure) (Amendment) Rules 2006, SI2006 No. 2788. Whether it would have been proper for the President or the Deputy President to have exercised that power in this case, had he had it at the relevant time, seems to me to be an issue identical with the issue raised before us today. It is important to note what is no longer, and indeed what never has been, the Secretary of State's argument in support of the appeal. First, notwithstanding that such was a faint subsidiary ground of appeal, Miss Chan does not deny that it was open to the Tribunal, on the evidence before it on 3 March 2004, to have held that there was a real risk of Article 3 ill-treatment of the respondent in the event of his return to Algeria. The respondent's main evidence before the Tribunal in that regard was contained in a report by Professor Seddon. The report was the subject of considerable debate before the Tribunal. In its determination the Tribunal reported the concession on behalf of the Secretary of State that, as a deserter, the respondent would face some formal proceedings on return to Algeria. Professor Seddon's evidence, however, went much further, namely that, in the case of an officer's desertion abroad, there was a high likelihood of a lengthy period of imprisonment and that the likely conditions of it were such as to cross the Article 3 threshold. Also placed before the Tribunal on the respondent's behalf were extracts from the 2003 US State Department country report on Algeria (published in 2004) and from the Home Office CIPU Report dated October 2003. In its determination the Tribunal recorded both the submission on behalf of the Secretary of State that those two reports did not confirm the evidence of Professor Seddon and the rival submission on the part of the respondent that they did indeed confirm it. In the event the Tribunal upheld the respondent's submission in that regard. Furthermore the Secretary of State today makes no continuing attempt to persuade us, even on a prima facie basis, that circumstances for deserting officers returning to Algeria have significantly changed since March 2004 and, if analysed by reference to up-to-date evidence, would no longer cross the Article 3 threshold. As can be seen from the way in which the Senior Immigration Judge articulated his reasons for granting permission for this appeal, namely from his reference to "the changed objective evidence", this contention was at the forefront of the Secretary of State's appeal at its outset; and, although it was given less prominence in Miss Chan's skeleton argument, it has been abandoned only this morning. In my view Miss Chan was wise to abandon it. First, the material which in this regard the Secretary of State had apparently wished us to consider, namely another decision of the IAT in January 2005 entitled SG (Article 3 - Military Service - Detention) Algeria (2005) UKIAT 00031 and the Home Office Country of Origin Information Report on Algeria dated April 2006, did not in my view sufficiently demonstrate the contention which was being made. But also, more importantly, had she been continuing to rely on an alleged change of circumstances in Algeria between March 2004 and August 2006, Miss Chan would been confronted by the fact that it would have been open to the Secretary of State, at any time prior to promulgation of the decision, to seek the Tribunal's permission to lay the further material before it: see the decision of this court in E v Secretary of State for the Home Department [2004] EWCA Civ 49, at [27] and [92]. Another factor which usually figures prominently in a court's consideration of the effect of delay upon the safety of a lower court's or tribunal's decision is that there were issues of credibility for the court or tribunal to consider; and that, in the long passage of time until preparation of the decision, the court's or the tribunal's memory of the often subtle features relevant to an assessment of credibility may well have dimmed. But, as the Secretary of State has, in effect, always conceded, such is a factor entirely absent from this case. The adjudicator had described the respondent as "in general, a credible witness"; and, before the Tribunal, his credibility was not in issue. Indeed he did not even give oral evidence. No oral evidence was given at all, whether by Professor Seddon or otherwise; and the appeals fell to be determined by reference entirely to the written material, as well, of course, as to the submissions made orally to the Tribunal by the Home Office Presenting Officer and by counsel for the respondent. If such then are not the arguments marshalled on the Secretary of State's behalf today, how is it argued that the Tribunal made an error of law which would entitle us to set aside its determination? Miss Chan relies in particular upon a decision of this court, namely Sambasivam v Secretary of State for the Home Department (2000) Imm AR 85. In that case an asylum-seeker unsuccessfully appealed to this court on the primary basis that, instead of hearing his appeal substantively, the IAT should have remitted the matter for a fresh hearing by another adjudicator because the adjudicator had failed to promulgate his determination for four months after the hearing. It was my Lord, the President, then Potter LJ, who gave the only substantive judgment. The appellant pressed on this court the statement of the IAT in Mario (1998) Imm AR 281 at 287 to the effect that: "In an area such as asylum, where evidence requires anxious scrutiny, the Tribunal will usually remit a case to another adjudicator where the period between the hearing and the dictation of the determination is more than 3 months." In his judgment my Lord said, at [16]: "In my view, the decision in Mario was no more and no less than a useful statement of guidance to practitioners upon the usual attitude and likely decision of the IAT in a case where an issue essential to the disposition of the claim for asylum depends upon a careful weighing of the credibility of the applicant and yet it appears that the delay between the hearing date and the preparation of the determination exceeds three months. In the absence of special or particular circumstances, that is plainly a useful and proper rule of thumb which, in the experience of the Tribunal, it is broadly just to apply, for the twin reasons that substantial delay between hearing and preparation of the determination renders the assessment of credibility issues unsafe and that such a delay tends to undermine the loser's confidence in the correctness of the decision once delivered." Later my Lord continued: "In cases of delay of this kind, the matter is best approached from the starting point that, where important issues of credibility arise, a delay of over three months between hearing and determination will merit remittance for re-hearing unless, by reason of particular circumstances, it is clear that the eventual outcome of the application, whether by the same or a different route, must be the same." In his judgment my Lord went on to explain that there were particular circumstances in the case before the court which militated against application of the rule of thumb, namely that the Tribunal had allowed for the substance of the appellant's complaint about the delay by stating that it would proceed to determine the appeal on the basis that, save in one respect which my Lord considered to have been rationally excepted, the appellant's account of past events was true. Miss Chan's stance today is to rely upon the second of the "twin reasons" to which my Lord referred in judgment, namely that such a delay tends to undermine the loser's confidence in the correctness of the decision ultimately delivered. Miss Chan makes no bones about it. Her case is that the Secretary of State has lost confidence in the correctness of the Tribunal's determination because both of the excessive delay in its preparation and of the gross further delay in its promulgation. But, with respect, Miss Chan's task is to persuade this court that it should have no confidence in the correctness of the determination or, put more precisely, in its safety and therefore in its lawfulness. The currency in which this court deals is that of reason; and, if her case is to prevail, Miss Chan must tender reasoned arguments why the determination is unsafe. She is not appealing against the delay. She is appealing against the decision; and, if she can, she must, in some rational way, present the delay as a source of infection of the decision. I am quite unable to see how in any case a delay between preparation and promulgation, however lamentable, can thus be presented. And, in relation to the delay until preparation, we have both Miss Chan's confirmation that credibility was not in issue and her specific acknowledgment today that she cannot even argue that in its determination the Tribunal did not adequately address the submissions made orally to it. Miss Chan's brief is in effect to submit that, of itself, a delay of about six months until preparation of the decision, with or without the gross further delay thereafter, represents such a lamentable failure on the part of the system that the only fair reaction of an appellate court is to require the exercise to be undertaken again. When in the course of argument I suggested to her that, were her submission upheld, all judges and tribunal chairmen should, in cases in which their decisions were not fully prepared by the expiry of six months, cease work on them, she, in a way reasonably, qualified her submission. For the length of delay which would trigger the need for a rehearing under her suggested principle would of course depend upon the complexity of the decision. I also accept that the anxious scrutiny to be applied to immigration cases might make them more appropriate candidates for the sort of principle which she purports to enunciate. But, even as thus qualified, I cannot accept her principle. For she has failed to show, indeed she does not purport to show, any nexus between the delay and the safety of the decision. Miss Chan also says -- and here now she speaks purely hypothetically -- that, if there is in the course of delay in the Tribunal's preparing or promulgating a decision a substantial change for the better in the relevant circumstances which obtain in the foreign country, it is highly undesirable that no cognisance can be taken of it. She relies on the decision of this court in Ravichandran v Secretary of State for the Home Department (1996) Imm AR 97 in which it was held that judicial determinations made within the immigration appellate structure were to be regarded as an extension of the decision-making process and so in principle should be based upon circumstances as they are at the time of those determinations rather than at any earlier stage. Of course she does not submit that this court is part of that structure; but she reaches for the principle behind that decision. There has to come a time, however, at which the opportunity for judicial survey of up-to-date evidence stops. Under our system, and save in exceptional circumstances, it stops upon promulgation of the Tribunal's determination; and so it has stopped by the time when the case reaches this court. There is, however, a second response to Miss Chan's point. The result of our dismissal of this appeal would be that the Secretary of State would be required to reflect the Tribunal's determination in the grant to the respondent either of leave to remain as a matter of humanitarian protection or of discretionary leave to remain. In either case, however, the leave would be likely to be for a finite number of years, at the end of which the Secretary of State would be required to review the respondent's case in the light of all the relevant circumstances which then obtain, including in Algeria. I would dismiss the appeal. LORD JUSTICE SEDLEY: I agree. SIR MARK POTTER, P: I also agree.

Lord Justice Thomas: This appeal raises an evidential issue in an application under s.7 of the Company Directors Disqualification Act 1986 (CDDA) to seek the disqualification of three directors. The Secretary of State wishes to rely upon finding of fact and opinions set out in a Report of the Financial Services Authority (FSA) (made under s.170 of the Financial Services and Markets Act 2000 (FSMA) by investigators appointed under s.167 and 168 of FSMA) and other materials on which the Secretary of State relied when deciding to make the application. The defendant directors contend that the findings of fact and the opinions expressed in the report and other documents are inadmissible, principally because of the rule in Hollington v Hewthorn. Mr Thomas Ivory QC, sitting as a Deputy Judge, decided the issue on all the materials in favour of the Secretary of State. Background It is not necessary to describe the background at length. A summary will suffice: i) The first defendant, David Aaron, was the Chairman and Chief Executive of David M Aaron (Personal Financial Planners) Limited (DMA). The second defendant, Andrew Jones, was the investment director of DMA; he became the compliance officer in 2002. The third defendant was the technical director of DMA, being responsible for the provision of technical support in all areas of financial planning. DMA was a company regulated by the Personal Investment Authority (PIA) until November 2001 and thereafter by the FSA. ii) The business of the firm was run as a partnership until 30 September 2000 when DMA was incorporated. It acted as an independent financial adviser and was authorised under the FSMA to advise and enter into deals in investments. It had about 27,000 active clients. iii) In the period 1998 to 2003 about 28% of its business was structured products. A part of that business in structured products, though it was not possible to tell precisely how much, related to advice and the sale of structured capital at risk products ("SCARPs"). iv) SCARPs are financial arrangements which give investors a guaranteed fixed income or growth on the initial capital invested over a fixed term; the return of the initial capital invested is linked to a specific measure such as a designated index or basket of stocks. Although the income is guaranteed, the return of the initial capital invested is dependent upon the performance of the designated index or basket of stocks to which it was linked. v) DMA sold SCARPs either as direct sales to investors on the basis of material it provided to potential investors or on the basis of advice. About 85% was sold on the basis of written materials. vi) In March 2002 the FSA conducted an industry-wide review of the sale of SCARPs. The review of DMA included an examination of training materials, sales documentation and complaints. The complaints related to the loss of capital on the maturity of the SCARP in which members of the public had invested. It was alleged there had been mis-selling. Concerns were identified regarding the suitability of sales. As a result a visit to DMA was undertaken in March 2003. vii) After further action by the FSA, on 23 June 2003 the FSA commenced an investigation under s.167/168 of FSMA into the sale of SCARPs by DMA. The investigation included interviews of the officers of DMA. viii) On 8 December 2003 the Financial Ombudsman Service (FOS) upheld 4 complaints against DMA and awarded compensation. As a result the directors of DMA consulted the FSA and KPMG. In consequence, and with the approval of the FSA, on 18 December 2003 the directors resolved to place DMA into administration. On 22 December 2003 DMA went into administration. ix) On 30 April 2004 the FSA published its investigation report on DMA. x) Subsequently, after considering representations from the defendants, on 25 August 2004 the FSA by a Final Notice cancelled DMA's authority to carry on business. The FSA Report and the Final Notice included the following conclusions: i) DMA's process for categorizing risks was flawed. ii) In promoting the sales of SCARPs DMA did not give a proper explanation or advise correctly on their suitability for investors. DMA did not provide customers with an objective view; it played down the risks associated with the return of capital and so mis-sold SCARPs. iii) In the risk ratings allocated to SCARPs by DMA, the risk rating was too low. iv) The literature did not sufficiently emphasise the risks as to the return of the capital invested. v) DMA's advertising material did not give sufficient information to enable the customer to make an informed decision. vi) DMA's record-keeping was defective. The compliance officer failed to pay adequate attention to his role and spent too much time selling products. The FSA Report and Final Notice set out the relevant principles of the FSA and the FSA/PIA rules which it was said that DMA had breached and the facts relied on for those breaches. When DMA went into administration, there was a deficiency of assets over liabilities. The Financial Services Compensation Scheme received 2,600 claims against DMA; on these it has paid out £11.92m relating to 1,862 claims. The Financial Services Compensation Scheme has projected total compensation of £14.6m. In the result this would give an overall deficiency as regards creditors and shareholders of £17.3m; it was not anticipated that any dividend would be payable to creditors. The application by the Secretary of State The FSA Report, the Final Notice and five of the Complaints determined by FOS were considered by the Secretary of State through the Insolvency Service, an Executive Agency of his Department, in order to determine whether he should make an application for disqualification. Under the CDDA there are two powers to disqualify directors which are relevant to this application: i) Under s.6 of the CDDA the court is obliged to make a disqualification order where the court is satisfied that the person has been a director of a company which has become insolvent and that his conduct as a director of the company makes him unfit to be concerned in the management of a company. Under s.7, the Secretary of State is entitled to make such an application within 2 years of the date on which the company became insolvent; it was under this section the application against the defendants was made. ii) Under s.8 of CDDA the Secretary of State can apply for an order for disqualification if it appears to him "from investigative material that it is expedient in the public interest" that a disqualification order should be made against a person who has been a director of the company. "Investigative material" includes a report by Inspectors under s.437 of the Companies Act 1985, a report made by Inspectors under ss. 167 and 168 of the FSMA and information obtained under the investigations provisions in ss. 165, 171, 172, 173 and 175 of FSMA. The court will make a disqualification order where it is satisfied that his conduct in relation to the company makes him unfit to be concerned in the management of it. The Secretary of State decided to consider making an application for disqualification under s.6. I accept that an application could have been made under s.8 in view of the fact that there was "investigative material" set out in a report under s.170 of FSMA made by investigators appointed under s.167/168 of FSMA. On 18 November 2005 notices were sent to the defendants giving them notice pursuant to s.16 of CDDA of the Secretary of State's intention to apply for a disqualification order under s.6 of that Act. After considering the responses of the defendants, the Secretary of State commenced the present proceedings on 20 December 2005 seeking the disqualification of the defendants. It was made a matter of days before the expiry of the two year time limit. An affidavit in support of the application was sworn by Mr Elliott Burns, a Chief Examiner of the Insolvency Service, on behalf of the Secretary of State in support of that application. The affidavit was required to comply with Rule 3(3) of the Insolvent Companies (Disqualification of Unfit Directors) Proceedings Rules 1987 (as amended) which provided "The case against the defendant (1) There shall, at the time when the application is issued, be filed in court evidence in support of the application for a disqualification order; and copies of the evidence shall be served with the application on the defendant. (2) The evidence shall be by one or more affidavits, except where the claimant is the official receiver, in which case it may be in the form of a written report (with or without affidavits by other persons) which shall be treated as if it had been verified by affidavit by him and shall be prima facie evidence of any matter contained in it. (3) There shall in the affidavit or affidavits or (as the case may be) the official receiver's report be included a statement of the matters by reference to which the defendant is alleged to be unfit to be concerned in the management of a company. It was the contention of the Secretary of State that the defendants were unfit to be concerned in the management of a company by reason of their failure to ensure that DMA carried on business in a manner appropriate to an Independent Financial Adviser and in a manner in compliance with the regulatory regime applicable to its business. In particular it was contended that each of the defendants failed: i) To ensure that he was sufficiently concerned with the regulatory responsibilities that applied to DMA. ii) Adequately to understand or take account of the risks associated with SCARPS. iii) To ensure that the advertisements and promotional material issued on behalf of DMA were clear, fair and not misleading. iv) To use within DMA's promotional literature material provided by journalists in an appropriate manner. v) To make suitable recommendation to customers. vi) To keep adequate records of the manner in which DMA assessed and discussed the risks of SCARPs and complete records of individual sales. vii) To ensure that DMA's compliance procedures were adequate and properly followed. The exhibits to the affidavit included transcripts of interviews conducted by the FSA and a new report by Mr Jeremy Kaye. He was an expert appointed by the Secretary of State to test the findings made by the FSA and the FOS and to make additional findings. His report commented upon and expressed his opinion on the performance of the defendants as authorised persons; Mr Kaye drew heavily upon the FSA Report and the findings of FOS, but also added further opinions of his own. The objection made by the defendants to the evidence served; the course of the proceedings The defendant directors objected that the report was expert evidence for which no permission had been obtained by the Secretary of State. On 10 April 2006, the Registrar directed that the Secretary of State apply for permission to adduce expert evidence and that the application be heard by a Judge. On 5 May 2006 the Secretary of State applied for permission to rely upon the report of Mr Kaye. That application came on before Etherton J on 6 July 2006. He adjourned the application, directing that the Secretary of State serve schedules specifying which were the facts and opinions in the various documents annexed to Mr Burns' affidavit upon which he wished to rely for the purpose of the proceedings. The order provided that the defendant directors were then to file and serve a schedule stating whether or not the facts set out in the Secretary of State's schedule were accepted, whether or not the statements of opinion set out in the Secretary of State's schedule were agreed to be admissible and whether or not they were challenged by the defendants. A schedule of 115 pages was prepared by the parties. i) The Secretary of State set out 935 statements of fact or statements of mixed fact and opinion and identified by documents and page number where the statement was to be found. ii) The response of the defendant directors was to accept some as statements of law or fact and in respect of others to require sight of documents before acceptance or to accept some subject to qualification or to reject them. The defendant directors did not accept as accurate the overwhelming majority of statements of mixed fact and opinion. They made clear that opinion evidence was in any event inadmissible. This was completed by 24 August 2006; as Mr Bannister QC, on behalf of the defendant directors, succinctly summarised it in his skeleton argument: "as an attempt to refine the issues, it proved futile" The application for permission to rely on Mr Kaye's report was restored by the Secretary of State and came on for hearing before Robin Knowles QC, sitting as a Deputy Judge of the Chancery Division, on 1 March 2007; the bundle for the hearing before him ran to 8 volumes; included within these was the affidavit from Mr Burns (which ran to 63 pages) and the report of Mr Kaye that ran to 100 closely typed pages. In a judgment given on 19 June 2007, the Deputy Judge made it clear at paragraph 20 that he was not asked to consider and therefore did not consider whether the findings of the FSA report were admissible on the basis now argued before this court. The Deputy Judge questioned the need for expert evidence, particularly on the issue of whether the FSA and FOS had been correct in their conclusions as to rule breaches (see paragraphs 21, 23, 35 and 40). He pointed out that the issue for the court was not whether the FSA and FOS had been correct, but whether on the findings of fact made, the defendants were unfit to be directors; a court could readily understand the issues and did not need an expert to help it on most of the issues, taking as an example the question of whether risk ratings had been properly explained. Accordingly he gave the Secretary of State very limited permission to adduce the expert evidence from Mr Kaye and confined it to the issue of "the nature of [the SCARPs] in question and the investment risks they pose". It was ordered that the Secretary of State file a revised affidavit of Mr Burns by 27 July 2007, together with a report from Mr Kaye, on that basis. The defendants were given permission to adduce expert evidence in answer to Mr Kaye's report, such evidence to be filed by Friday, 19 October 2007. The usual order was made for the meeting between experts. Mr Burns swore a revised affidavit on 27 July 2007; this still ran to 61 pages. It exhibited and relied on as evidence a number of documents, including transcripts of evidence given by the defendants, the report to creditors, the FSA's investigation report, the Final Notice and FOS decisions, but not the report of Mr Kaye. On 28 September 2007, the defendant directors issued an application seeking an order that the Secretary of State re-swear the evidence to omit all references to various matters including opinions of the FSA or factual findings and conclusions of the FSA set out in its report dated 30 April 2004 or the final notice dated 25 August 2004. The defendant directors also sought an order that their evidence in answer to the affidavit of Mr Burns be extended until 8 weeks after the determination of the application. That application came on for hearing before Thomas Ivory QC, sitting as a Deputy Judge of the Chancery Division, on 27 and 28 February 2008. By a judgment and order on 22 April 2008, the application was dismissed. He held that all the material exhibited was admissible as evidence. The defendants were ordered to serve their evidence by 18 June 2008. On 5 June 2008, the Judge of this Court gave the defendants permission to appeal. Expedition was ordered. The issue and the contentions The argument centred on the FSA report and as the report was produced as a result of a statutory mechanism referred to in the CDDA in the same way as reports of inspectors appointed under the Companies Act, it is convenient to deal with this separately from the FSA Final Notice and the FOS decision. The FSA report contained the following types of material: i) Statements of what the FSA Investigators had been told by witnesses: this is hearsay in the ordinary sense of the term. ii) Findings of fact reached by the FSA Investigators from the interviews conducted and the enquiries made iii) Conclusions of the investigators reached in relation to the conduct of the business of DMA by the defendants, particularly in relation to risk assessment, mis-selling and rule breaches. In my view all of this is undoubtedly relevant. It is common ground the statements of witnesses set out in the report and in the transcripts are hearsay, but admissible under s.1 of the Civil Evidence Act 1995. However, it is also common ground that the findings of fact and the conclusions on the conduct of the defendants are ordinarily inadmissible on the basis that they constitute findings in other proceedings and are excluded under what is commonly referred to as the rule in Hollington v Hewthorn [1943] 1 KB 587. Despite criticism of the rule in Hollington v Hewthorn (as for example in the opinion of Lord Hoffman in Arthur JS Hall v Simons [2002] 1 AC 615 at page 702D and the observations of Toulson J in Lincoln National v Sun Life [2004] EWHC 343 Comm at paragraph 92), the rule remains a clear rule of evidence – see the cases referred to in Cross & Tapper on Evidence 11th edition (2007) at page 119. The very distinguished members of the Law Reform Committee in their Fifteenth Report on the rule in Hollington v Hewthorn (Cmnd 3391, 1967) recommended the abolition of the rule for convictions in criminal proceedings and certain matrimonial proceedings observing, at paragraphs 3 and 4: "3. Rationalise it as one will, the decision in this case offends one's sense of justice. The defendant driver had been found guilty of careless driving by a court of competent jurisdiction. The onus of proof of culpability in criminal cases is higher than in civil; the degree of carelessness required to sustain a conviction for careless driving is, if anything, greater than that required to sustain a civil cause of action in negligence. Yet the fact that the defendant driver had been convicted of careless driving at the time and place of the accident was held not to amount even to prima facie evidence of his negligent driving at that time and place. It is not easy to escape the implication in the rule in Hollington v. Hewthorn that, in the estimation of lawyers, a conviction by a criminal court is as likely to be wrong as right. It is not, of course, spelt out in those terms in the judgment of the Court of Appeal, although, insofar as their decision was based mainly upon the ground that the opinion of the criminal court as to the defendant driver's guilt was as irrelevant as that of a bystander who witnessed the accident, the gap between the implicit and the explicit was a narrow one. 4. It is in a sense true that a finding by any court that a person was culpable or not culpable of a particular criminal offence or civil wrong is an expression of opinion by the court. But it is of a different character from an expression of opinion by a private individual. In the first place, it is made by persons, whether judges, magistrates or juries, acting under a legal duty to form and express an opinion on that issue. In the second place, in forming their opinion they are aided by a procedure, of which the law of evidence forms part, which has been evolved with a view to ensuring that the material needed to enable them to form a correct opinion is available to them. In the third place, their opinion, expressed in the form of a finding or verdict of guilty or not guilty in criminal proceedings or a judgment in civil proceedings, has consequences which are enforced by the executive power of the state." The recommendations were enacted in the Civil Evidence Act 1968. However, the Committee recommended against any change in relation to findings in all other proceedings (see paragraphs 38-39). They did so for reasons that can be viewed as sensibly applying to ordinary civil proceedings. Parliament accepted this recommendation and made no change to the law in the Civil Evidence Act 1968. The Secretary of State contended that the findings of fact and the opinion set out in the report were admissible under an implied exception to the strict rules of evidence developed in disqualification proceedings - referred to by Mr Newey QC as the Armvent principle after the decision of Templeman J in Re Armvent [1975] 1 WLR 1679. The defendants contended that the exception no longer had any relevance. It was concerned with hearsay only and had in that respect been replaced by the 1995 Act. It had never enabled a court to rely on findings of fact or opinions of other courts or persons. It is therefore necessary to examine in a little detail the scope of implied exception developed in the cases. The scope of the implied exception to the strict rules of evidence in disqualification proceedings The implied exception to the strict rules of evidence developed in disqualification proceedings has its origins and rationale in the decision of Pennycuick J in Re Travel & Holiday Club [1967] 1 WLR 711. The Board of Trade (the predecessor to the Secretary of State) presented a petition for winding up on the basis of a Report of external inspectors (appointed under the equivalent provision to s.432 of the Companies Act 1985) made under the equivalent provision to s.437 of the 1985 Act. The Report set out the findings of fact made by the inspectors (a Queen's Counsel and an accountant) and their conclusions that the director had been guilty of misconduct. The judge held that it was permissible to rely on the report of Inspectors as they were acting in a statutory fact finding capacity and the findings were not contradicted by any evidence adduced on behalf of the company. At page 715, he said: "It seems to me that it would not be in accordance with the apparent intention of the section that, where inspectors appointed under the Act have made a report, the court should not be entitled to look at that report and accept it, not as hearsay evidence, but as material of a different character altogether, and should have to be satisfied anew by evidence of the ordinary nature as to the facts found in the report." This was followed in Re Armvent [1975] 1 WLR 1679. The Secretary of State presented a petition to wind up the company based on a similar report. An official in the Department swore an affidavit exhibiting the Report in which he stated that the Secretary of State believed that the facts set out in the Report were true and the opinions contained therein were the opinions of the inspectors. Templeman J followed the decision of Pennycuick J and held that even if the report of the Inspectors was challenged, "it ought to be treated as prima facie evidence and it ought to be left to a Judge in any case, having read the report and having seen the witnesses, to make up his own mind whether it is just and equitable to wind up the company. The whole machinery of the inspectors' report was evolved in order to enable the Secretary of State to present a winding up petition where the Secretary of State considers the public interest so demands. It would be unfortunate if once the Secretary of State has reached that conclusion on proper grounds based on the inspectors' detailed report, that the court should be right back to square one and start again as if the inspectors had never come on the scene at all. A great deal may depend on the on the contents of the report and the evidence set out in the report; but I would hope that a report of this nature would be accepted by the court as being prima facie evidence of the main conclusions drawn by the inspectors. Once evidence is sworn to the contrary, then if the Secretary of State fails to support the report by direct evidence which removes nay doubt cast on the validity of the inspectors' conclusions the court would not be slow to dismiss the petition" Both decisions were followed by Dillon J in Re St.Piran Limited [1981] 1 WLR 1300, another winding up case. He observed in relation to Pennycuick's decision, "the reason why he held that the Secretary of State was entitled to rely on the inspectors' report to support his petition was a combination of two factors, first, that the report was not ordinary hearsay evidence because the inspectors acted in a statutory fact-finding capacity, and secondly, that it would be nonsensical if the court could not take the report into consideration in deciding whether it was just and equitable that the company should be wound up when on the very terms of section 169 (3) of the Act of 1948 as of section 35 of the Act of 1967, it is on the basis of his consideration of the report that the Secretary of State has concluded that it is expedient that the winding up petition should be presented or that the company should be wound up. It would be strange in that context if Parliament had intended that the Secretary of State should have to rely on entirely fresh evidence and should not be able to present the report to the court and rely on the findings of the inspectors." It is clear from these decisions that the exception as to admissibility of the reports of inspectors appointed under the Companies Acts was not confined to hearsay evidence, but included the evidence of the findings and opinions of the inspectors. The principle decided in these winding up cases was then applied by Sir Donald Nicholls V.-C. in Re Rex Williams Leisure plc [1994] Ch 1 to proceedings for the disqualification of directors under s.8 of the CDDA. The Secretary of State relied upon an affidavit made by an examiner in the Investigations Division of the then Department of Trade and Industry who had interviewed directors and employees of the company under powers contained in s.447 of the Companies Act 1985. The Examiner, in his affidavit made comments and submissions based on what he was told in the interviews; he exhibited the interview notes. The directors submitted that the interview notes were being put forward as evidence of the facts related to the Examiner by those interviewed and as such the evidence was hearsay. As the Vice-Chancellor accepted, the evidence contained in the notes was hearsay in the case of all witnesses save the directors against whom disqualification was sought. The Vice-Chancellor, however, held that the Secretary of State could rely upon the principle the court had developed in winding up petitions as to the admissibility of reports made by inspectors appointed under s.431. He stated at page 12: "In my view the approach adopted by the Court to the use of the contents of an inspector's report in a winding up petition is equally applicable on an application for a disqualification order founded on such a report. That is so because the rationale underlying the use of the contents of an inspectors' report on a winding up petition is equally applicable to a disqualification application based on the contents of such a report. In the latter case as much as the former, Parliament must have intended the Secretary of State should be able to present a case to the Court founded upon the information gathered by the inspectors and set out in their report. He added at page 15: "There is a measure of practical good sense in a procedure whereby the plaintiff has first to set out his case, with sufficient clarity and identification of the evidence being relied on for the defendant to know where he stands. Then the defendant puts in his evidence. The plaintiff can see what factual issues there are, and then he can take steps and incur expense in adducing where necessary first hand evidence on these issues, before the hearing. In this way the genuine issues can be resolved properly and fairly in the interests of the defendant and in the public interest. This procedure does no prejudice a fair and just trial of the issues." Although what was in issue was hearsay evidence set out in materials obtained under powers contained in the Companies Act, the Vice-Chancellor did not distinguish between what was hearsay and what constituted opinion evidence or findings of fact. His conclusion was upheld by the Court of Appeal at [1994] Ch 350 at p.364-368. Hoffmann LJ made clear that the principle developed in relation to winding up also applied to disqualification proceedings under s.8 of the CCDA: he said at 367A: "In my judgment, these distinctions go to weight rather than admissibility. In a disqualification application hearsay evidence untested by cross-examination of the informant may be insufficient to satisfy the burden of proof against opposing evidence. It will depend upon the facts and probabilities of each case. Once the Secretary of State knows from the opposing affidavits which material facts are seriously in dispute, he may be well advised to reinforce his case by affidavits from the appropriate informants. But that is no reason why their hearsay evidence obtained under section 447 should be inadmissible. Much of what they say may be uncontested, in which case it would have been a waste of time and money to insist that they swear affidavits." In his concurring judgment, Staughton LJ pointed out that this was a well developed exception: at page 369A he added: "How then can the Secretary of State be entitled to use affidavits of information and belief in disqualification proceedings? As Hoffmann L.J. has shown, this stems from an implied statutory provision as to the use of hearsay as evidence, or at any rate as provisional evidence until it is challenged. That doctrine is now of respectable antiquity, having been established between 1967 and 1975. I would for my part have hesitated to accept it when first propounded. But as it has existed for a substantial period of time, during which relevant statutory provisions have been replaced and re-enacted or amended, I would not now alter it." In Secretary of State for Trade and Industry v Ashcroft [1998] Ch 71, the argument was made to this Court that the position was different in an application under s.7 for disqualification under s.6 of the CDDA. The Secretary of State sought to rely upon the affidavit of one of the joint liquidators where he had set out an account of an interview with one of the non executive directors against whom proceedings had not been brought; that evidence was hearsay. Although the Civil Evidence Act 1995 had been enacted in November 1995 and brought into force on 31 January 1997, the transitional provisions applied the Act only to proceedings commenced after 31 January 1997 (see note 33-0-2 to Civil Procedure Vol. 1 2008); this Court therefore had to apply the law as it existed before the 1995 Act. It was held that there was no distinction which could properly be drawn between an application for a disqualification under s.8 and s.6 and between information supplied to him under statutory powers by his own officials and information supplied to him by others such as inspectors. The Court held that, although a distinction could have been drawn between relying on such evidence in a winding up petition and in disqualification proceedings or between the evidence of outside inspectors and information obtained by officials under s.447, none had been drawn. There was no logical distinction between applications under the different sections of the CDDA. Millett LJ said at 81: "A logical distinction might have been made between cases where the Secretary of State was seeking a winding up order and cases where he was applying for a disqualification order; but this court refused to make it. A similar distinction might alternatively have been made between cases where the Secretary of State was acting upon a formal report by outside inspectors, where section 441 of the Companies Act 1985 covers the situation, and information obtained by officials appointed under section 447, where there is no comparable provision; but the court refused to draw it. Once the last step was taken, I can see no discernible distinction between an application for a disqualification order by the Secretary of State based on information gathered for him by his own officials and one based on information supplied to him by an office holder. In both cases the information is obtained by a professional man or an official acting in pursuance of statutory powers to compel the provision of information. In both cases the information will necessarily include hearsay but it will be the material on which the Secretary of State decides that a particular regulatory response is necessary. In both cases it would be nonsensical if the court could not take it into account at least unless and until it is challenged by direct evidence to the contrary. The safeguards, in my opinion, are threefold: first, the information is obtained by a professional insolvency practitioner or an official in the Department of Trade and Industry, who must have judged it prima facie worthy of credence; secondly, it is considered by the Secretary of State, who must have judged it sufficiently credible to form the basis of his own opinion and to base an application to the court upon it; and, thirdly, the respondent whose conduct is impugned has every opportunity to rebut it and, if the evidence is not later supported by direct evidence, to invite the court to reject it." Although both Rex Williams Leisure and Ashcroft were concerned with the admissibility of hearsay, the court in each case approved the statements of principle set out in the earlier cases as to the general admissibility of what was contained in reports and other materials obtained under the statutory powers. In Re Barings plc & Others (No.2) [1998] 1 BCLC 590 (Evans-Lombe J) and Re Barings plc (No 5) [1999] 1 BCLC 433 (Jonathan Parker J), disqualification proceedings were brought on the basis of an affidavit of an accountant instructed by the Secretary of State to collate for him the facts contained in various investigations including the report by the Board of Banking Supervision Enquiry into the circumstances surrounding the collapse of Barings and the report of Inspectors appointed by the Government of the Republic of Singapore. The reports were relied on for pure hearsay statements (for example recitals of what witnesses had told the enquiry) and for analyses of the facts carried out by the enquiry and findings of primary or secondary fact made by the enquiry, but not for the evaluative judgments or expressions of criticisms of any of the directors on the basis that the Court was in a position to reach its own conclusions on the evidence before it. Evans-Lombe J applying the principles in the cases to which I have referred decided in the first of the hearings that the Secretary of State was entitled to put before the court the affidavit of the accountant as he had relied on that for bringing the proceedings, including recitals of what witnesses had said or what was contained in documents, even though these were hearsay statements. Jonathan Parker J held at pages 495-6 that it was implicit in Evans-Lombe J's decision that findings of primary and secondary fact in the report of the Board of Banking Supervision and the Singapore Inspectors report were also admissible: "It seems to me to be implicit in the decision of Evans-Lombe J that findings of primary and secondary fact (as noted above, evaluative judgments are to be excluded for present purposes) are also admissible as evidence in these proceedings. But in any event, whether or not that be strictly correct, I take the view that the implied statutory exception identified in Re Rex Williams Leisure plc, the wide-ranging nature of which was explained by Millett LJ in Ashcroft (at 81-82) – a passage quoted by Evans-Lombe J in his judgment in Re Barings plc (in admin) (No 2), Secretary of State for Trade and Industry v Baker (No 2) [1998] 1 BCLC 590 (see at 594-595) – covers findings of fact, as well as pure hearsay statements. The weight to be attached to such evidence is of course a matter for the court." On appeal this part of his decision was not challenged, but although the issue was therefore not argued before the court, Morritt LJ, in giving the judgment of the court, observed at p.537f of [2001] BCLC 523 that the court had no reason to doubt the validity of the Judge's conclusions. Although the decisions which I have set out seem to have made clear that the width of the implied exception applied not only to hearsay, but also to findings of fact and opinion at least when contained in reports or materials obtained under statutory powers, the defendants contended that the decision in Secretary of State for Trade and Industry v Bairstow [2003] EWCA Civ 321, [2004] Ch 1 made clear that the exception was confined to hearsay. In proceedings commenced in February 2000 (and to which the Civil Evidence Act 1995 applied), the Secretary of State applied to disqualify a director under s.8 of the CDDA relying upon an affidavit of one of the Inspectors appointed by the Secretary of State under s.432 of the 1985 Act to investigate the affairs of the company which drew heavily upon matters discovered during the inspection of the company. The Secretary of State also relied on the affidavit of an official in the Department which referred to the findings of Nelson J in proceedings which the director had brought against the company for wrongful dismissal; the affidavit pointed to the substantial identity of the issues in the disqualification proceedings and the hearing before Nelson J. Pumfrey J, relying on the principle in Hunter v Chief Constable for the West Midlands [1982] as to collateral attacks on findings made in earlier proceedings, made an order that the director could not challenge the findings made by Nelson J and was to be bound by them. On appeal, the director contended that the decision was wrong; not only was he not bound by Nelson J's findings, but they were inadmissible as evidence. It was held that the director was not so bound; as to the question as to whether the findings were admissible, Sir Andrew Morritt V-C, giving the leading judgment in this court, held that the rule in Hollington v Hewthorn applied and evidence could not be adduced. "26. I am unable to accept the distinction on which counsel for the Secretary of State relies. Even if Hollington v F.Hewthorn & Co.Ltd could originally have been confined to cases in which the earlier decision was that of a court exercising a criminal jurisdiction, it has stood for over 60 years as establishing a much broader proposition. There was no criminal prosecution in any of the other cases to which I have referred except Hui Chi-Ming v R. The submission of counsel is inconsistent with the judicial statements made in each of the other cases to which I have referred, in particular of Lords Steyn, Hope of Craighead and Hutton in Three Rivers District Council v Bank of England. It is true that in most of them the decision in question was not that of a court, but of inspectors appointed under the Companies Act, an arbitrator or extra-statutory investigators. But that feature was not the basis of the decision in any of those cases and cannot account for the dictum of Balcombe LJ in Symphony Group plc v Hodgson or the decision of Keene J in Hawaz v The Thomas Cook Group Ltd. 27. Accordingly I would accept the submission of counsel for Mr Bairstow that the factual findings and conclusions of Nelson J in the earlier proceedings are not admissible as evidence of the facts so found in these proceedings. Counsel for the Secretary of State accepted that he could not rely on any statutory or common law exception to render those conclusions admissible for the purpose of proving those facts. Thus it is unnecessary to consider further the decisions of Evans-Lombe or Jonathan Parker JJ in Re Barings plc. Counsel for the Secretary of State also accepted that if the factual conclusions of Nelson J are inadmissible there is nothing in the Civil Procedure Rules, in particular CPR Rule 32.1, to alter the position." In my view this court in Bairstow was not dealing with an issue that fell within the scope of the implied exception set out in the earlier cases. The findings made by Nelson J were findings made in ordinary civil proceedings to which the rule in Hollington v Hewthorn plainly applied. As counsel for the Secretary of State accepted in that case, the findings and conclusions in the judgment of Nelson J was not covered by any of the exceptions. The implied exception related to reports and materials produced under the statutory scheme under the Companies Acts as referred to in the CDDA. Sir Andrew Morritt referred at paragraph 13 to Re Rex Williams, but only in connection with the hearsay rule and to observe that in that respect it had been overtaken by the Civil Evidence Act 1995. The decision was not concerned with the report of the Inspectors, and as is clear from the paragraphs of the judgment which I have set out did not consider the decisions in Barings. Nor is that part of the decision of the House of Lords in the litigation relating to the collapse of BCCI, Three Rivers District Council v Bank of England [2001] UKHL 16 (at paragraphs 5 and 31-33), affirming the application of the rule in Hollington v Hewthorn in relation to the Bingham Report into the collapse of BCCI; the Bingham report was a non statutory report being used in ordinary civil proceedings. The implied exception was not in any way relevant. In my view therefore, it is clearly established that in disqualification proceedings whether brought under s.8 or under s.7 for an order under s.6 that there is an implied exception to the strict rules of evidence on hearsay evidence, opinion evidence and the rule in Hollington v Hewthorn. This was developed from the scheme of the Companies Acts on the basis that Parliament must have intended that a court should have regard to the materials produced under clear statutory procedures on which the Secretary of State had relied in bringing the proceedings. There was no real disadvantage to a director. It was no more than prima facie evidence and the director was entitled to adduce evidence to contradict the findings and conclusions in the report. The court would reach its own conclusions. Although it is no longer necessary to rely on the implied exception in relation to hearsay evidence, it is still necessary to do so in relation to findings of fact and conclusions in the report so long as the rule in Hollington v Hewthorn remains good law. The principle of the statutory scheme under the Companies Acts, although broadened to include provisions of FSMA, remains the same and the reasons for the implied exception remain valid. On an examination of the rationale for the decision in Hollington v Hewthorn and the Law Reform Committee's reasons for recommending its retention in civil proceedings, it is clear that the exception does not offend the underlying purpose of the rule. It is clear from the decisions to which I have referred that the implied exception has been developed in the context of the specific rules relating to disqualification and not in the context of rules pertaining to the use in subsequent litigation of a decision in prior litigation where the issues on which evidence is required in each of the sets of proceedings are delineated by pleadings. The primary objective of the implied exception is to put before the court material obtained under the statutory scheme on which the Secretary of State relied in making his decision and which forms the basis of the case against the defendant. It enables the defendant to know the case made against him and to put in the materials on which he relies in response. In my view there is good reason to reaffirm not only the principle of the implied exception and its scope as extending to whatever is contained in the reports and other materials obtained under the statutory scheme, but also its eminent good sense in relation to disqualification proceedings such as this. To abrogate the exception would be to render of no value a careful investigation, to put the public through the Secretary of State to considerable and unnecessary expense and to cause significant delay. Save by making the task of the Secretary of State more difficult, slower and expensive (with the consequent advantage that would provide to such defendant directors), it cannot sensibly be argued that the admission of such evidence causes any disadvantage to the defendant directors. It is plainly relevant evidence which a judge can and should take into account with all the other evidence in the case, giving it such weight as it deserves in the context of all the other evidence adduced. It was suggested on behalf of the defendant directors that the directors would be condemned on the basis of the opinion of third parties and not of the court determining the matter. I cannot accept that submission as having any semblance of reality. A judge of the Chancery Division will receive all the evidence, including the FSA report and the evidence for the defendants. It is, with respect, absurd to suggest that a judge of the Chancery Division who tries this case will not make up his or her own mind but will meekly follow or be influenced by the views of the FSA investigators. In my view, to exclude the FSA report would be to cause injustice by bringing about further delay and expense in these proceedings. There is fortunately no need to do so as the scope of the implied exception is clear. I would therefore uphold the decision of Mr Ivory QC on the main issue. The FOS decisions, the final notice and the other materials The primary argument before us took place in relation to the FSA report. However Mr Burns also relied on decisions of the FOS in relation to complaints about DMA, the Final Notice and two compliance reports as materials taken into account by the Secretary of State and so admissible as evidence under the implied exception. It was contended on behalf of the Secretary of State that the issue had been decided by Barings No 2 and No 5 where, as I have set out above, the documents relied on were investigative reports which had not been produced under statutory powers in the Companies Acts, but were relied upon by the Secretary of State. Evans Lombe J decided that the decisions did "not reveal that in either [Rex Williams and Ashcroft] that the Court is prescribing as a rule that only evidence gathered pursuant to the relevant statutory powers is capable of being given in the affidavit sworn by the provider of information to the Secretary of State. " Mr Bannister contended that this decision could not stand in the light of Bairstow where, as I have set out, it was held that the findings made by Nelson J were not admissible. This submission was rejected by the Deputy Judge, Mr Ivory QC, on the basis that Bairstow was a decision under s.8 where the Secretary of State could only make an application where it appeared to him "from investigatory material". In contradistinction, s.7 enabled an application under s.6 to be made where it appeared to the Secretary of State "that it is expedient on the public interest that a disqualification order under s.6 should be made against any person". Thus in Bairstow, the Secretary of State had been right not to rely upon the implied exception because the judgment of Nelson J was not investigative material, but as the application was made under s.7 for an order under s.6, other material could be relied on. I am not persuaded that this is correct. I see no reason to make a distinction between s.6 and s.8. The basis of the decision in Ashcroft was that it was not sensible to make a distinction as to the admissibility of evidence between the two different powers under the CDDA; that that is a proper and correct conclusion is underlined by the fact that in this case an application could have been made under s.8. It would make little sense if the evidence was admissible if the application was made under s.6, but not under s.8. Furthermore the whole basis for the rationalisation in the cases is the statutory scheme. I cannot see any reason to hold that anything relied on by the Secretary of State is admissible in disqualification proceedings; the rationale for relying on the reports and other material fits into the statutory scheme, but there is nothing to suggest that the Secretary of State can go outside this scheme. If he could, it would difficult to see what limit there could be to the materials relied on. There is also good sense in restricting the material relied upon to material produced through the statutory scheme for investigation; this is understood by everyone and the procedure clear. Moreover a report or other material produced in this way can readily be distinguished from a decision in an adjudicative process (such as the decision of the FOS or the Final Notice) where the decision maker is deciding a matter between two parties. It may be that in a diverse regulatory system within the UK and in a globalised financial and banking services industry, it is necessary to rely on investigative reports carried out by other regulators or under statutory authority in other states and that by analogy, such material can be relied on in disqualification proceedings. That was the effect of the decision in Barings and, although the point does not arise on the present appeal, I accept that an argument can be made along those lines and the merits of the argument can be decided when it arises, unless Parliament takes the preferable course of amending the CDDA. The other material sought to be relied on in the present case is not analogous investigative material of this kind and I cannot accept that it falls within the implied exception. I therefore cannot uphold the decision of the Deputy Judge on this issue. However, as is illustrated by the tortuous history of this case, an examination of the schedules produced in relation to the FSA report and the reliance placed on the decisions of the FOS, there is no sense in trying to excise parts of the documents before they are put before the court making the determination. The FOS decisions contain much that is simply a recital of the evidence given by the complainants; that is admissible as hearsay under the Civil Evidence Act 1995. But the decisions also contain findings which, in my view, are inadmissible under the rule in Hollington v Hewthorn and fall outside the scope of the implied exception. It is my experience that many experts report views on matters on which it is for the court to make its decision and not for an expert to express a view. No modern or sensible management of a case requires putting the parties to the expense of excision; a judge simply ignores that which is inadmissible. In this case therefore the judge at the trial will simply ignore findings of fact in the documents not produced under the statutory scheme in the way judges are these days well used to doing. To do otherwise would be to ignore the warning highlighted by Lord Woolf MR in Re Westmid Packing Services Ltd [1998] 2 All ER 124 at 134-5 as to the dangers of an over-elaborate over-technical approach. Thus, in respect of those small passages contained in the material not produced under the statutory scheme which are not admissible, I accept the alternative submission made in the respondent's notice served on behalf of the Secretary of State, that the whole of these documents should be before the court, the judge taking into account what was admissible at trial and ignoring the remainder; excision would be a wholly unnecessary exercise and serve to defeat the just disposal of these proceedings by causing unnecessary delay and expense. The further conduct of the proceedings It follows therefore that the affidavit of Mr Burns can stand and that the defendants must serve their evidence within 2 months of the date of this judgment. As accepted by Counsel for the Secretary of State before us, the Secretary of State will on receipt of the evidence of the defendants review the evidence needed. In the light of that evidence the Secretary of State may take the view that the court might attach little weight to some parts of the FSA report and therefore wish to serve evidence from other witnesses on some of the matters in issue. The Rules make provision for this and for the giving of directions. It is clear, in my view, that what will then be needed is very robust case management by a judge of the Division to focus the issues and ensure that the materials placed before the court are proportionate to what is in issue. Mr Knowles QC in his clear and incisive judgment has already pointed to the disproportionate way in which the case has so far proceeded. It will be for judge on the directions hearing to decide whether it is necessary to make any further use of the schedule that has been produced. In the present case it is clear that much of the factual material set out in the report is not in issue. Some of the findings of fact in relation to mis-selling are in issue as are the conclusions that the FSA has drawn, but robust case management should identify precisely what is in issue when the defendants have put in their evidence. It will be for the judge hearing the proceedings to decide on the weight to be attached to the materials place before him in reaching the decision he has to make on whether there has been mis-selling and, to the extent material, whether there have been breaches of the rules and principles, and, if so whether such conduct should result in disqualification. It may be that on contested issues little, if any, weight will be placed on the report of the FSA. Furthermore, it will always be open to the defendants to contend that it would be unfair in particular circumstances to rely at all on any part of the report without adducing specific evidence and if it is, the judge will put that part out of his mind when making his decision. There will be no prejudice to the defendants. Lord Justice Keene I agree. Lord Justice Buxton I also agree.

JUDGMENT OF THE COURT (Third Chamber) 4 September 2014 ( *1 ) ‛Reference for a preliminary ruling — Compulsory insurance against civil liability in respect of the use of motor vehicles — Directive 72/166/EEC — Article 3(1) — Concept of ‘use of vehicles’ — Accident caused in the courtyard of a farm by a tractor to which a trailer was attached’ In Case C‑162/13, REQUEST for a preliminary ruling under Article 267 TFEU from the Vrhovno sodišče (Slovenia), made by decision of 11 March 2013, received at the Court on 29 March 2013, in the proceedings Damijan Vnuk v Zavarovalnica Triglav d.d., THE COURT (Third Chamber), composed of M. Ilešič, President of the Chamber, C.G. Fernlund, A. Ó Caoimh, C. Toader and E. Jarašiūnas (Rapporteur), Judges, Advocate General: P. Mengozzi, Registrar: A. Calot Escobar, having regard to the written procedure, after considering the observations submitted on behalf of: — the German Government, by T. Henze, J. Kemper and J. Möller, acting as Agents, — Ireland, by A. Joyce, E. Creedon and L. Williams, acting as Agents, and by C. Toland, Barrister at Law, — the European Commission, by B. Rous Demiri and K.-Ph. Wojcik, acting as Agents, after hearing the Opinion of the Advocate General at the sitting on 26 February 2014 gives the following Judgment This request for a preliminary ruling concerns the interpretation of Article 3(1) of Council Directive 72/166/EEC of 24 April 1972 on the approximation of the laws of Member States relating to insurance against civil liability in respect of the use of motor vehicles, and to the enforcement of the obligation to insure against such liability (OJ, English Special Edition 1972 (II), p. 360; ‘the First Directive’). The request has been made in proceedings between Mr Vnuk and Zavarovalnica Triglav d.d. (‘Zavarovalnica Triglav’) concerning the payment of compensation on the basis of compulsory insurance against civil liability in respect of the use of motor vehicles (‘the compulsory insurance’). Legal context European Union law The fifth to seventh recitals in the preamble to the First Directive state: ‘Whereas it is desirable that … measures should be taken further to liberalise the rules regarding the movement of persons and motor vehicles travelling between Member States; … Whereas such relaxation of the rules relating to the movement of travellers constitutes another step towards the mutual opening of their markets by Member States and the creation of conditions similar to those of a domestic market; Whereas the abolition of checks on green cards for vehicles normally based in a Member State entering the territory of another Member State can be effected … ;’ Article 1 of the First Directive states: ‘For the purposes of this Directive: 1. “vehicle” means any motor vehicle intended for travel on land and propelled by mechanical power, but not running on rails, and any trailer, whether or not coupled; …’ Article 3(1) of that directive states: ‘Each Member State shall, subject to Article 4, take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance. The extent of the liability covered and the terms and conditions of the cover shall be determined on the basis of these measures.’ Article 4 of that directive provides: ‘A Member State may act in derogation of Article 3 in respect of: … (b) certain types of vehicle or certain vehicles having a special plate; the list of such types or of such vehicles shall be drawn up by the State concerned and communicated to the other Member States and to the [European] Commission. …’ Article 1(1) of Second Council Directive 84/5/EEC of 30 December 1983 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles (OJ 1984 L 8, p. 17; ‘the Second Directive’) provides: ‘The insurance referred to in Article 3(1) of [the First Directive] shall cover compulsorily both damage to property and personal injuries.’ Article 1(2) of the Second Directive established the minimum amounts which have to be guaranteed by that compulsory insurance. Those amounts were reassessed by Directive 2005/14/EC of the European Parliament and of the Council of 11 May 2005 amending Council Directives 72/166/EEC, 84/5/EEC, 88/357/EEC and 90/232/EEC and Directive 2000/26/EC of the European Parliament and of the Council relating to insurance against civil liability in respect of the use of motor vehicles (OJ 2005 L 149, p. 14), which also inserted in the Second Directive a provision to ensure that those amounts are reviewed regularly in line with the European Index of Consumer Prices. The first subparagraph of Article 1(4) of the Second Directive provides that ‘[e]ach Member State shall set up or authorise a body with the task of providing compensation, at least up to the limits of the insurance obligation for damage to property or personal injuries caused by an unidentified vehicle or a vehicle for which the insurance obligation … has not been satisfied’. Furthermore, the fourth subparagraph of Article 1(4) of the Second Directive provided that ‘Member States may limit or exclude the payment of compensation by that body in the event of damage to property by an unidentified vehicle’. That possibility was, however, subsequently excluded by Directive 2005/14 ‘where the body has paid compensation for significant personal injuries to any victim of the same accident in which damage to property was caused by an unidentified vehicle’. Article 2(1) of the Second Directive provides: ‘Each Member State shall take the necessary measures to ensure that any statutory provision or any contractual clause contained in an insurance policy issued in accordance with Article 3(1) of [the First Directive], which excludes from insurance the use or driving of vehicles by: — persons who do not have express or implied authorisation thereto, or — persons who do not hold a licence permitting them to drive the vehicle concerned, or — persons who are in breach of the statutory technical requirements concerning the condition and safety of the vehicle concerned, shall, for the purposes of Article 3(1) of [the First Directive], be deemed to be void in respect of claims by third parties who have been victims of an accident. …’ Article 3 of the Second Directive provides: ‘The members of the family of the insured person, driver or any other person who is liable under civil law in the event of an accident, and whose liability is covered by the insurance referred to in Article 1(1) shall not be excluded from insurance in respect of their personal injuries by virtue of that relationship.’ Article 1 of Third Council Directive 90/232/EEC of 14 May 1990 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles (OJ 1990 L 129, p. 33), as amended by Directive 2005/14 (‘the Third Directive’), states: ‘… the insurance referred to in Article 3(1) of [the First Directive] shall cover liability for personal injuries to all passengers, other than the driver, arising out of the use of a vehicle. Member States shall take the necessary measures to ensure that any statutory provision or any contractual clause contained in an insurance policy which excludes a passenger from such cover on the basis that he knew or should have known that the driver of the vehicle was under the influence of alcohol or of any other intoxicating agent at the time of an accident, shall be deemed to be void in respect of the claims of such passenger. …’ Article 1a of the Third Directive provides: ‘The insurance referred to in Article 3(1) of [the First Directive] shall cover personal injuries and damage to property suffered by pedestrians, cyclists and other non-motorised users of the roads who, as a consequence of an accident in which a motor vehicle is involved, are entitled to compensation in accordance with national civil law. …’ Article 4c of that directive provides: ‘Insurance undertakings shall not rely on excesses against the injured party to an accident as far as the insurance referred to in Article 3(1) of [the First Directive] is concerned.’ Article 3 of Directive 2000/26/EC of the European Parliament and of the Council of 16 May 2000 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles and amending Council Directives 73/239/EEC and 88/357/EEC (Fourth motor insurance Directive) (OJ 2000 L 181, p. 65), headed ‘Direct right of action’, states: ‘Each Member State shall ensure that injured parties … enjoy a direct right of action against the insurance undertaking covering the responsible person against civil liability.’ Furthermore, Article 1 of First Council Directive 73/239/EEC of 24 July 1973 on the coordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of direct insurance other than life assurance (OJ 1973 L 228, p. 3), as amended by Council Directive 84/641/EEC of 10 December 1984 (OJ 1984 L 339, p. 21), provides: ‘1. This Directive concerns the taking-up and pursuit of the self-employed activity of direct insurance … carried on by undertakings which are established in the territory of a Member State or which wish to become established there. … 3. The classification by classes of the activity referred to in this Article appears in the Annex.’ The Annex to that directive states: ‘A. Classification of risks according to classes of insurance … 10. Motor vehicle liability All liability arising out of the use of motor vehicles operating on the land (including carrier’s liability). …’ Slovenian law Article 15 of the Law on compulsory motor vehicle liability insurance (Zakon o obveznih zavarovanjih v prometu; ‘the ZOZP’) provides: ‘The owner of a vehicle must take out insurance covering liability for damage caused by the use of the vehicle to third parties resulting in death, physical injury, invalidity, loss of or damage to property …, with the exception of liability for damage to property which the proprietor has agreed to transport. …’ The dispute in the main proceedings and the question referred for a preliminary ruling It is apparent from the order for reference that, on 13 August 2007, when bales of hay were being stored in the loft of a barn, a tractor to which a trailer was attached, which was reversing in the courtyard of the farm in order to position the trailer in that barn, struck the ladder on which Mr Vnuk had climbed, causing him to fall. Mr Vnuk brought an action seeking payment of the sum of EUR 15 944.10 as compensation for his non-pecuniary damage, together with default interest, against Zavarovalnica Triglav, the insurance company with which the owner of the tractor had taken out compulsory insurance. The first-instance court dismissed that application. The second-instance court dismissed the appeal that Mr Vnuk lodged against that judgment, stating that a compulsory insurance policy in respect of the use of a motor vehicle covered damage caused by the use of a tractor as a means of transport, but not damage caused when a tractor is used as a machine or propulsion device. The referring court granted Mr Vnuk leave to appeal on a point of law against the decision of the second-instance court in so far as that appeal related to the question of the use of a tractor as a ‘vehicle’ within the meaning of Article 15 of the ZOZP. Before the referring court, Mr Vnuk submits that the concept of ‘use of a vehicle in traffic’ cannot be restricted to journeys on public roads and that, in addition, at the time the harmful event at issue in the main proceedings occurred, the unit formed by the tractor and its trailer did indeed constitute a vehicle that was moving and that what was involved was the end of the journey. By contrast, Zavarovalnica Triglav submits that the case in the main proceedings concerns the use of a tractor not in its function as a vehicle for road use, but for work in front of a barn on a farm. The referring court observes that the ZOZP does not define the concept of ‘use of vehicles’, but that that lacuna is filled by the case-law. It states, in that regard, that the primary purpose of compulsory insurance under the ZOZP is to shift the cost of risk to society and the necessity of taking care of the needs of persons injured and passengers on public roads. The referring court takes the view that, according to Slovenian case-law, for the purpose of assessing whether specific damage is covered by compulsory insurance, the question whether it occurred on a public road is not, however, decisive. There is, however, no compulsory insurance cover when a vehicle is used as a machine, for example in a farming area, because, in such cases, there is no road use. The referring court points out that the various Directives relating to insurance against civil liability in respect of the use of motor vehicles — namely the First to Third Directives, the Fourth motor insurance Directive and Directive 2005/14 (taken together, ‘the Directives relating to compulsory insurance’) — refer to ‘use’, to ‘road traffic’ or even to ‘users of the road’, but do not specify what may be regarded as the use of a motor vehicle and which is the decisive criterion in that regard. It is thus possible to take the view that compulsory insurance covers damage caused by a vehicle in the context of road use alone or that it covers any damage, however connected to the use or the operation of a vehicle, irrespective of whether the situation may be defined as a situation involving road use. In those circumstances the Vrhovno sodišče (Supreme Court) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling: ‘Must the concept of “the use of vehicles” within the meaning of Article 3(1) of [the First Directive] be interpreted as not extending to the circumstances of the present case, in which the person insured by the defendant struck the applicant’s ladder with a tractor towing a trailer while hay was being stored in a hayloft, on the basis that the incident did not occur in the context of a road traffic accident?’ The requests seeking the reopening of the oral procedure By document lodged at the Court Registry on 28 March 2014, Ireland requested the Court to order the reopening of the oral part of the procedure, pursuant to Article 83 of the Rules of Procedure of the Court. In support of its request, that Member State puts forward the need, if the Court follows the Advocate General’s Opinion, to impose temporal limits on the effects of the judgment to be delivered and, consequently, the need to reopen the oral part of the procedure to give it an opportunity to submit arguments in support of its request to impose temporal limits on the effects of the judgment. By documents lodged at the Court Registry on 15 and 21 May respectively, the United Kingdom Government and the German Government also requested the Court to order the reopening of the oral part of the procedure, pursuant to Article 83. In support of its request, the United Kingdom Government submits that the Advocate General’s Opinion is marred by a number of errors, with regard to which it wishes to submit observations. The German Government submits that that opinion raises an argument that has not been debated by the parties, namely the presence of a possible lacuna in the First Directive, which it is necessary to fill, and that the Court does not have sufficient information to give a ruling. Pursuant to Article 83 of its Rules of Procedure, the Court may at any time, after hearing the Advocate General, order the reopening of the oral part of the procedure, in particular if it considers that it lacks sufficient information or where a party has, after the close of that part of the procedure, submitted a new fact which is of such a nature as to be a decisive factor for the decision of the Court, or where the case must be decided on the basis of an argument which has not been debated between the parties or the interested persons referred to in Article 23 of the Statute of the Court of Justice of the European Union. In the present case, the Court, after hearing the Advocate General, considers that it has all the information necessary to answer the question raised by the referring court and that the case does not have to be examined in the light of a new fact which is of such a nature as to be a decisive factor for its decision or of an argument which has not been debated before it. Furthermore, as regards the criticisms made of the Advocate General’s Opinion, it must be borne in mind, firstly, that the Statute of the Court and the Rules of Procedure of the Court make no provision for interested parties to submit observations in response to the Advocate General’s Opinion (order Emesa Sugar, C‑17/98, EU:C:2000:69, paragraph 2, and Döhler Neuenkirchen, C‑262/10, EU:C:2012:559, paragraph 29). Secondly, under the second paragraph of Article 252 TFEU, it is the duty of the Advocate General, acting with complete impartiality and independence, to make, in open court, reasoned submissions on cases which, in accordance with the Statute of the Court, require the Advocate General’s involvement. In this regard, the Court is not bound either by the conclusion reached by the Advocate General or by the reasoning which led to that conclusion. Consequently, a party’s disagreement with the Opinion of the Advocate General, irrespective of the questions that he examines in his Opinion, cannot in itself constitute grounds justifying the reopening of the oral procedure (Hogan Lovells International, C‑229/09, EU:C:2010:673, paragraph 26; E.ON Energie v Commission, C‑89/11 P, EU:C:2012:738, paragraph 62; and Weber, C‑438/12, EU:C:2014:212, paragraph 30). The requests of the German Government, Ireland and the United Kingdom Government seeking the reopening of the oral part of the procedure must therefore be rejected. Consideration of the question referred By its question the referring court asks, in essence, whether Article 3(1) of the First Directive is to be interpreted as meaning that the concept of ‘use of vehicles’ covers circumstances such as those at issue in the main proceedings, namely the manoeuvre of a tractor in the courtyard of a farm in order to bring the trailer attached to that tractor into a barn. The German Government and Ireland submit that the insurance obligation provided for in Article 3(1) of the First Directive relates only to situations involving road use and that it does not therefore apply to circumstances such as those at issue in the main proceedings. By contrast, the Commission is of the opinion that that provision applies to the use of vehicles, whether as a means of transport or as machines, in any area, both public and private, in which risks inherent in the use of vehicles may arise, whether those vehicles are moving or not. Under Article 3(1) of the First Directive, each Member State is, subject to Article 4, to take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance. The concept of vehicle is defined in Article 1(1) of that directive, under which ‘vehicle’ within the meaning of that directive means ‘any motor vehicle intended for travel on land and propelled by mechanical power, but not running on rails, and any trailer, whether or not coupled’. Clearly, a tractor to which a trailer is attached satisfies that definition. In that regard, it is important to point out that that definition is unconnected with the use which is made or may be made of the vehicle in question. Consequently, the fact that a tractor, possibly with a trailer attached, may, in certain circumstances, by used as an agricultural machine has no effect on the finding that such a vehicle corresponds to the concept of ‘vehicle’ in Article 1(1) of the First Directive. However, it does not necessarily follow that a tractor to which a trailer is attached is subject to the obligation to insure against civil liability provided for in Article 3(1) of that directive. First, under that provision, it is necessary for the vehicle to be normally based in the territory of a Member State, a condition the satisfaction of which is not at issue in the dispute in the main proceedings. Secondly, pursuant to Article 4(b) of that directive, a Member State may act in derogation of Article 3 of the directive in respect of certain types of vehicle or certain vehicles having a special plate; the list of such types or of such vehicles is to be drawn up by the State concerned and communicated to the other Member States and to the Commission. It follows that a tractor to which a trailer is attached is subject to the obligation provided for in Article 3(1) of the First Directive if it is normally based in the territory of a Member State which has not excluded that type of vehicle from the scope of that provision. As regards whether the manoeuvre of a tractor in the courtyard of a farm in order to bring the trailer attached to that tractor into a barn is to be regarded as being covered by the concept of ‘use of vehicles’ referred to in that provision, it must be pointed out at the outset that that concept cannot be left to the assessment of each Member State. Indeed neither Article 1 of the First Directive, Article 3(1) of that directive nor any other provision of that directive or of the other directives relating to compulsory insurance refer to the law of the Member States as regards that concept. According to the Court’s settled case-law, the need for a uniform application of European Union law and the principle of equality require the terms of a provision of European Union law which makes no express reference to the law of the Member States for the purpose of determining its meaning and scope normally to be given an independent and uniform interpretation throughout the European Union; that interpretation must take into account not only its wording but also its context and the objectives pursued by the rules of which it is part (see, to that effect, Omejc, C‑536/09, EU:C:2011:398, paragraphs 19 and 21 and the case-law cited). As regards, in the first place, the terms used in Article 3(1) of the First Directive, it is apparent from a comparative examination of the different language versions of that provision that it exhibits differences as regards the type of situation covered by the insurance obligation for which it provides, differences which are, moreover, to be found in the actual title of that directive, in particular in its English and French language versions. Accordingly, in the French language version, as in the Spanish, Greek, Italian, Dutch, Polish and Portuguese language versions, Article 3(1) refers to the obligation to insure against civil liability in respect of the ‘circulation’ of vehicles, thus suggesting that that insurance obligation relates only to accidents caused in the context of road use, as submitted by the German Government and Ireland. However, the English language version and also the Bulgarian, Czech, Estonian, Latvian, Maltese, Slovakian, Slovenian and Finnish language versions of the same provision refer to the concept of ‘use’ of vehicles, without providing any further details, whereas the Danish, German, Lithuanian, Hungarian, Romanian, and Swedish language versions of that provision refer, even more generally, to the obligation to take out insurance against civil liability in respect of vehicles and thus appear to impose the obligation to insure against civil liability in respect of the use or operation of a vehicle, irrespective of whether that use or operation takes place in the context of a situation involving road use or not. According to settled case-law, a purely literal interpretation of one or more language versions of a multilingual text of European Union law, to the exclusion of the others, cannot, however, prevail since the uniform application of European Union rules requires that they be interpreted, inter alia, in the light of the versions drawn up in all the languages (see, to that effect, Jany and Others, C‑268/99, EU:C:2001:616, paragraph 47 and the case-law cited, and Commission v Spain, C‑189/11, EU:C:2013:587, paragraph 56 and the case-law cited). Where there is divergence between the language versions of a European Union text, the provision in question must be interpreted by reference to the general scheme and purpose of the rules of which it forms part (see, to that effect, ZVK, C‑300/05, EU:C:2006:735, paragraph 16 and the case-law cited; Haasová, C‑22/12, EU:C:2013:692, paragraph 48; and Drozdovs, C‑277/12, EU:C:2013:685, paragraph 39). It is therefore necessary, in the second place, to refer to the general scheme and purpose of the European Union legislation concerning compulsory insurance, of which Article 3(1) of the First Directive forms part. In that regard, it is important to point out that none of the directives relating to compulsory insurance contains a definition of what is meant by the concepts of ‘accident’, ‘use’ or even ‘use of vehicles’ for the purposes of those directives. However, those concepts must be understood in the light of the dual objective of protecting the victims of accidents caused by motor vehicles and of liberalising the movement of persons and goods with a view to achieving the internal market pursued by those directives. The First Directive is therefore part of a series of directives which came progressively to define the obligations of Member States concerning civil liability in respect of the use of vehicles. Although the Court has repeatedly held that it is apparent from the recitals in the preambles to the First and Second Directives that the aim of those directives is to ensure the free movement of vehicles normally based on European Union territory and of persons travelling in those vehicles, it has also repeatedly held that they also have the objective of guaranteeing that the victims of accidents caused by those vehicles receive comparable treatment irrespective of where in the European Union the accident occurred (see, inter alia, to that effect Ruiz Bernáldez, C‑129/94, EU:C:1996:143, paragraph 13, and Csonka and Others, C‑409/11, EU:C:2013:512, paragraph 26 and the case-law cited). Although it is apparent, inter alia, from the fifth to seventh recitals in the preamble to the First Directive that that directive sought to liberalise the rules regarding the movement of persons and motor vehicles between Member States with a view to the creation of an internal market, by abolishing the checks on green cards which were carried out at the borders of Member States, it pursued equally the objective of protecting victims (see, to that effect, Ruiz Bernáldez, EU:C:1996:143, paragraph 18). Furthermore, the development of the European Union legislation concerning compulsory insurance shows that that objective of protecting the victims of accidents caused by vehicles has continuously been pursued and reinforced by the European Union legislature. That is apparent, in particular, firstly from Articles 1 to 3 of the Second Directive. Accordingly, Article 1 of the Second Directive required the insurance referred to in Article 3(1) of the First Directive to cover both damage to property and personal injuries. It also required the Member States to set up bodies with the task of providing compensation for damage caused by unidentified vehicles or vehicles for which the insurance obligation had not been satisfied and established the minimum amounts of compensation to be guaranteed. Article 2 of that directive restricted the scope of certain exclusion clauses provided for by legislation or in contracts in respect of claims by third parties who were victims of an accident caused as a result of the use or driving of the insured vehicle by certain persons. Article 3 of that directive extended the benefit of insurance in respect of personal injuries to the members of the family of the insured person, driver or any other person who is liable for the accident. Secondly, the Third Directive, through Article 1, inter alia extended insurance cover to personal injuries to all passengers, other than the driver and the Fourth motor insurance Directive, among other things, introduced in its Article 3 a direct right of action by injured parties against the insurance undertaking covering the responsible person against civil liability. Lastly, Directive 2005/14, through Articles 2 and 4, which amended respectively the Second and Third Directives, inter alia, adjusted the minimum amounts of compensation to be guaranteed and provided for their regular review, extended the scope of the payment of compensation by the body established by the Second Directive and extended the insurance cover referred to in Article 3(1) of the First Directive to personal injuries and damage to property suffered by pedestrians, cyclists and other non-motorised users of the roads. It also inserted a new restriction on the possibility of applying certain exclusion clauses to the insurance cover and prohibited excesses from being relied on against the injured party to an accident as far as the insurance referred to in Article 3(1) of the First Directive is concerned. In the light of all of those factors, and in particular of the objective of protection pursued by the First to Third Directives, the view cannot be taken that the European Union legislature wished to exclude from the protection granted by those directives injured parties to an accident caused by a vehicle in the course of its use, if that use is consistent with the normal function of that vehicle. In that regard, it is also important to point out that, according to part A of the Annex to Directive 73/239, as amended by Directive 84/641, the class of direct insurance activity relating to ‘Motor vehicle liability’ concerns ‘[a]ll liability arising out of the use of motor vehicles operating on the land (including carrier’s liability)’. In the present case, it must be pointed out that, firstly, as is apparent from information published by the Commission, the Republic of Slovenia did not, pursuant to Article 4(b) of the First Directive, exclude any type of vehicle from the scope of Article 3(1) of the First Directive. Secondly, according to the information provided by the referring court, the accident which gave rise to the dispute in the main proceedings was caused by a vehicle reversing, for the purpose of taking up a position in a specific location, and, therefore seems to have been caused by the use of a vehicle that was consistent with its normal function, this, however, being a matter for the referring court to determine. Accordingly, in the light of all of the foregoing considerations, the answer to the question referred is that Article 3(1) of the First Directive must be interpreted as meaning that the concept of ‘use of vehicles’ in that article covers any use of a vehicle that is consistent with the normal function of that vehicle. That concept may therefore cover the manoeuvre of a tractor in the courtyard of a farm in order to bring the trailer attached to that tractor into a barn, as in the case in the main proceedings, which is a matter for the referring court to determine. Costs Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. On those grounds, the Court (Third Chamber) hereby rules: Article 3(1) of Council Directive 72/166/EEC of 24 April 1972 on the approximation of the laws of Member States relating to insurance against civil liability in respect of the use of motor vehicles, and to the enforcement of the obligation to insure against such liability must be interpreted as meaning that the concept of ‘use of vehicles’ in that article covers any use of a vehicle that is consistent with the normal function of that vehicle. That concept may therefore cover the manoeuvre of a tractor in the courtyard of a farm in order to bring the trailer attached to that tractor into a barn, as in the case in the main proceedings, which is a matter for the referring court to determine. [Signatures] ( *1 ) Language of the case: Slovenian

MR JUSTICE STANLEY BURNTON: This is an appeal by way of Case Stated by Mr Michael Saliu who was convicted by lay magistrates after a hearing occupying three days from 29th to 30th September and 1st December 2004 of assaulting Police Constable Blacker in the execution of his duty. He was found not guilty of a similar charge of assaulting Sergeant Ferguson. The case arises out of an incident clearly connected with a history of some domestic violence between the appellant and his partner who together had a baby son. I say that because the incident in question took place on 3rd May 2004 and there was an injunction at the time in force which prohibited the appellant from using or threatening violence against his partner and from visiting a specified address. That injunction was subject to a power of arrest in respect of any use or threat of violence against the applicant for that injunction. I am told, and I think it is common ground, that there was no such power of arrest in relation to the prohibition against visiting the specified address. On 3rd May 2004 the police were called to 49 Perkins Way in Ipswich. The evidence before the magistrates and the facts found by them are, of course, contained in the Case Stated. I said at the beginning of this appeal that the Case Stated was far from being the clearest Case Stated I have seen, and that impression has been confirmed by the submissions made by counsel. It seems to me, however, that the Case Stated is sufficient for me to come to a conclusion on this appeal. The appeal raises the question whether the appellant was rightly convicted, having regard to the fact that he was, during the course of the day in question, and in the course of the incident in question, arrested and, it is contended, following that arrest, he was not as soon as practicable informed of the ground for his arrest. It is submitted that his arrest was therefore unlawful by reason of section 28 of the Police and Criminal Evidence Act 1984 and therefore any assault, or the assault which followed his arrest of which he was found guilty, was not an assault on the officer in the execution of his duty, because there had been no lawful arrest. He was unlawfully detained and indeed if he was unlawfully detained he would be entitled to use reasonable force to free himself. There are other issues which the appellant sought to take before this Court. One is that his solicitor contended that having made a submission after the close of the prosecution case that there was no case to answer, on the basis that at the time of the assault the appellant was under unlawful arrest, and that submission having been rejected at that point, the solicitor was prevented by the magistrates from making submissions on that point again after the close of all the evidence, that is to say including the defence evidence, during his final submissions. That matter is not referred to in the Case Stated. If it were sought to raise it before this Court it would have been necessary for the Case Stated to have dealt with it. In the event of there being any refusal by the magistrates to state the necessary facts and question of law arising in such circumstances, the remedy of an appellant is to seek a direction from this Court that the case be amended appropriately. That was not done, and it needs to be emphasised that an appeal by way of Case Stated is restricted to the matters set out in the Case and the consequences for any conviction of the questions raised by the Case Stated. An appeal by way of Case Stated does not give rise to a general roving complaint by appellants as to the conduct of or the issues in the trial at first instance. The second matter, which is also not referred to in the Case Stated, and which it was sought to raise but only subsequent to the trial, was whether the injunction contained a relevant power of arrest. The scope of the injunction and the power of the arrest in the injunction were never raised before the magistrates. They therefore made no relevant finding in relation to it, it having been asserted before them without any issue having been raised, that at the relevant time the appellant was subject to an injunction prohibiting him from visiting the property in question which, although the magistrates do not mention it, contained a power of arrest. Had the issue been raised at the trial it would have been seen that there was indeed a power of arrest in relation to the use or threat of violence by the appellant. The magistrates might then have considered whether or not there was a good power of arrest in the circumstances based on the injunction itself. That was never done. It is far too late to raise such an issue on a Case Stated where (a) the relevant facts are not found in the case and (b) the relevant question or questions is or are not raised in the case and (c) had the issue been raised at trial the trial might have taken a different course. I turn, therefore, to the real question that arises in this appeal. In the end, it seems to me the appeal raises a question of fact which is: when did the arrest take place and when the assault, if there was an assault, take place: was that after the arrest and at a time when it had not been practicable to inform the appellant of the reason for his arrest? The relevant findings of the magistrates are contained in paragraph 2 and in subsequent paragraphs. They recite the evidence as follows: three police officers attended the address in question where the appellant was inside with his partner and their baby son: "b. The officers knew that the Appellant was subject to an injunction prohibiting him from visiting this property. Other police units were called because screaming and shouting could be heard coming from the property and officers believed there to be a possible hostage situation in progress. The control room had classified the situation as a 'Grade 1' incident and therefore another three or four units were told immediately to attend at the property. (c) CS gas was sprayed into the property by PC Ormes. The Appellant complained that his baby had been affected by this and demanded that an ambulance be called to take his son to hospital. The officers were conscious in this potential hostage situation of the need to get the baby to safety before arresting the Appellant for breach of an injunction. They used their knowledge of conflict resolution in order to deal with the incident. An ambulance arrived and the Appellant was permitted to take his son to it to be treated by paramedics. Charlene Bryan [who I take to be the partner or former partner of the appellant] accompanied her baby into the ambulance. (d) Inspector Lewis had arrived at the scene together with other officers. He ensured that the baby was not in danger and then turned his attention to the Appellant. He did not detain the Appellant at this time as he wished to keep the situation calm and for it not to get out of control. He asked the Appellant to go into the police vehicle." Pausing there, it is accepted by Mr Mitchell who has said everything possible on behalf of the appellant and who I hasten to add did not appear on behalf of the appellant at the trial before the magistrates, that the last sentence of paragraph (d) refers to a request rather than an imposition of force. That follows from the second sentence in which the magistrates say that Inspector Lewis did not detain the appellant. "e. The Appellant became agitated when they were by the police car. He kept moving from foot to foot and was asked to sit in the rear of the police vehicle. He responded by saying 'It will take more of you to get me in the car'. The Appellant squared up to Inspector Lewis and crouched down raising his fist. Inspector Lewis thought he was going to be assaulted and took hold of the Appellant's left arm. Sergeant Ferguson took hold of his right arm but he lost his footing and fell over. The Appellant twisted and struggled and moved his feet around. Other officers assisted Inspector Lewis to restrain the Appellant. f. The Appellant was flailing and twisting and turning his arms with tense arms and clenched fists. At around at this time and during the ensuing struggle PC Blacker was struck by the Appellant on his right cheek causing reddening and swelling, and his lip was split. The Appellant was eventually taken to ground and said 'Okay you win'. We did not accept the Appellant's contention that he only struggled because he did not want his arm to be broken. It is also at this point in the incident that Sergeant Ferguson was struck in the head by the Appellant's knee. g. The Appellant, having been physically restrained, was placed in a police vehicle and it is at this point that we found that his arrest took place. The Appellant was not informed of the reason for his arrest at this time. h. We found that it had not been practicable at the time of arrest to inform the Appellant of the reasons for his arrest. Police Constable Carpenter was instructed to take the Appellant to the police van and to 'caution' him. i. The Appellant was placed in the cage in the police van, but continued to be violent and agitated. PC Carpenter informed the Appellant, while in the van that he was under arrest for breach of an injunction and for assaulting a constable, the Appellant was agitated at this point kicking and spitting. j. The Appellant was again informed of the reasons for his arrest while at the police station. k. Our finding with respect to evidence given by the Appellant that he was restrained after his son had been placed in the ambulance, and at a time when he indicated that he was approaching the ambulance to see if all was well with his son, is that this is consistent with the prosecution accounted. l. This finding is also based upon and consistent with the evidence of Mr Lopez, (a defence witness) who confirmed that things went wrong when the Appellant walked five feet towards the ambulance. Mr Lopez described Inspector Lewis calmly holding out his arm without making contact with the defendant in order to restrain him, but that the Appellant tried to go around the officer's arm. It was at this point that he was restrained, a number of officers became involved, and the Appellant was handcuffed and placed in a police van. m. We accepted the Appellant's description that he was angry prior to his detention and that he had shouted at the officers that he would make a complaint about them. We did not accept the Appellant's evidence that he was not being aggressive in any way, that he was grabbed and jumped upon by the officers, and that he did not fight or punch the officers. n. the Appellant stated that he could not remember being told that he was under arrest, or at what point he was arrested. He stated that he did not remember an officer speaking to him but that this was not whilst on the journey. These assertions are not inconsistent with the evidence of the police officers or our other findings in the matter." They referred to the submission being made at half-time, that is to say after the conclusion of the prosecution case, based on section 28, and they say: "We considered the evidence at that time placed before us and found that there was a case to answer. We reached the conclusion that a reasonable tribunal might convict upon the evidence placed before the court on the basis that there was a lawful arrest, in that the Appellant was informed that he was under arrest as soon as practicable given the constraints created by his own behaviour." Then finally in paragraph 6, they say: "We were of the opinion that an arrest took place at the time handcuffs were applied to the Appellant. We found that this arrest was lawful because the Appellant was informed of the reasons for his arrest in the police van as soon as was practicable after his arrest. We were of the opinion that at the time of the arrest Inspector Lewis had control of one arm, the other was free and was flailing about. At this time the Appellant was twisting and turning his arms with tense arms and clenched fists. During this fracas contact was made initially with PC Blacker and later with Sgt Ferguson. We were of the opinion that the Appellant clearly resisted the officers, and realised that there was a risk that injury would be caused. We were of the opinion that the actions towards PC Blacker were reckless and constituted an assault. Sgt Ferguson in his evidence has stated that the contact which the Appellant had with him may have been an accident, even though the Appellant's knee was lifted. We took note of that evidence and dismissed the charge of assault by the Appellant upon him. We convicted the Appellant for an assault on Police Constable Blacker in execution of his duty. The questions for the High Court are. (a) Were we correct in rejecting a submission of no case to answer on the basis of an argument based upon s28 of the Police and Criminal Evidence Act 1984. (b) Were we correct to convict the Appellant of recklessly assaulting PC Blacker?" The first question which has to be determined on the basis of the facts found is: when did the assault take place and when did the arrest take place? So far as the evidence recited in paragraphs (d), (e) and (f) of paragraph 2 of the case are concerned, the position would seem to be straightforward. As I have already mentioned initially Inspector Lewis makes a request for the appellant to go into a police vehicle. At that stage there has been no arrest. According to subparagraph (e) of paragraph 2 there is then an altercation. At that stage no arrest has taken place. There is an altercation because the appellant squares up to Inspector Lewis and raises his fist. Inspector Lewis takes hold of the appellant's left arm and it is implicit in the case that it is not simply or at all by way of arrest but because he thought he was going to be assaulted. There is at that moment not a detention. There is then an altercation during the course of which, according to paragraph (f) PC Blacker is struck. It is thereafter that the arrest takes place, after there had been an assault on the police officer. On that basis, quite straightforwardly the officer was struck in the execution of his duty. There was an apprehended assault on Inspector Lewis quite apart from the fact that it had been thought that there might have been and certainly might have been thought that there were reasonable grounds for believing there had been a breach of the injunction. The assault on the officers had no good justification in law and on that basis the conviction was amply justified. The fact that there was an arrest thereafter would not mean that the assault was not an assault on the officer or officers in the execution of their duty. Matters are made rather less straightforward by subparagraph (l) of paragraph 2, however, because that refers to the evidence of Mr Lopez that things went wrong went the appellant walked quietly towards the ambulance. Mr Lopez described Inspector Lewis calmly holding out his arm without making contact with the defendant in order to restrain him, and that the appellant tried to go round the officer's arm. It was at that point that he was restrained and a number officers became involved and the appellant was handcuffed and placed in a police van. It may be that what the magistrates intended to say when they referred to the consistency with the evidence of Mr Lopez was that Mr Lopez would not have seen why Inspector Lewis held out his arm. He would not have necessarily seen that Inspector Lewis held out his arm because he apprehended an assault by the appellant. Be that as it may, even on that account the appellant was not restrained until after, or in the course of the altercation. It may be that Inspector Lewis sought to arrest the appellant, but even on Mr Lopez's evidence, he did not succeed in doing so and there was immediately an altercation during the course of which the appellant ultimately was handcuffed and placed in the police van. Certainly there could be no question of it being unreasonable or perverse for magistrates to find that during the course of that altercation when the officers were seeking to restrain the appellant it was not practicable to inform him why he was being detained. In my judgment, therefore, the altercation took place immediately before the arrest and, in those circumstances, there can be no good argument that there was not an assault on a police officer in the execution of his duty, having regard to what had happened at the address and having regard to what Inspector Lewis apprehended and the violent conduct of the appellant at the time. In those circumstances, it seems to me, on any basis the magistrates were entitled not only to reject the submission of no case, but to convict the appellant of recklessly assaulting PC Blacker. The magistrates explained why they did not convict him of assaulting Sergeant Ferguson in their reference to his acceptance that the contact with him may have been accidental, and therefore there is no inconsistency between the acquittal on the one charge and the conviction on the other. I would only add this: when magistrates have addressed themselves to the correct question of law and that is in this case whether it was reasonably practicable to inform the appellant of the reasons for his arrest before he was in fact so informed, the court will be slow to conclude that no reasonable Bench could have reached the conclusion they did given that, on this hypothesis, the Bench were apprised of and sought to apply the correct test in law. In those circumstances it seems to me that the answers to the questions for the opinion of the High Court are both affirmative and it follows that this appeal must be dismissed.

The Honourable Mr Justice Singh : Introduction In this claim for judicial review the claimant challenges provisions of the National Health Service (Charges to Overseas Visitors) Regulations 2011 (SI 2011 No. 1556) ("the Regulations"), in particular regulation 11(c). In brief, the Regulations provide, so far as material, that former asylum claimants are entitled to NHS treatment free of charge only if they are receiving accommodation and support from the Home Office pursuant to certain statutory provisions. The claimant submits that he would qualify for such support but for the fact that he is disabled and requires help with personal care. Under the relevant legislation this means that the support he receives must come not from the Home Office but from a local authority. As a result, the claimant contends, he has been refused important medical treatment free of charge which he cannot otherwise afford. His main grounds of challenge are that the Regulations discriminate against people like him on grounds of disability, contrary to Article 14, read with Article 8, of the Convention rights, as set out in Sch. 1 to the Human Rights Act 1998; and that, in making the Regulations, the Secretary of State breached the public sector equality duty in section 149 of the Equality Act 2010. Originally the claim arose out of an alleged refusal of treatment in August 2013, when the Regulations were applied to the claimant by the relevant local health service authorities in the area where he was then living. The claim was therefore originally issued against the Bristol Clinical Commissioning Group and the University Hospitals Bristol NHS Foundation Trust. However, since he has been placed outside the Bristol area, the claim against the Commissioning Group and the Trust has been withdrawn. Permission to bring this claim for judicial review against the Secretary of State was given by Lang J at a renewed oral hearing on 21 May 2014. The claimant's factual circumstances The claimant is from Jamaica and has been in the United Kingdom since 2002 but has no leave to remain in this country. He initially entered the UK in 1998 as a visitor. His application for further leave to remain was refused in 1999. On 4 April 2000 he was arrested on drugs charges. On 6 August 2000 he was removed from the UK to Jamaica. However, he returned to the UK on 23 March 2002 using a false identity and was granted leave to enter for six months but overstayed. In December 2002 and April 2003 he was convicted of drugs offences and sentenced to a total of 5 years imprisonment. He absconded from prison in December 2004. He was re-arrested and sentenced to a further 24 weeks imprisonment for absconding. The claimant is a former asylum seeker, since he made a claim for asylum in around 2006 which was unsuccessful. He has been released from immigration detention, most recently in October 2012. However, he is subject to a deportation order. It is common ground that he could not be removed because he was considered unfit to fly. There is medical evidence before the court to the effect that he remains unfit to travel. In around November 2012 the claimant first began receiving support from a local authority, Bath and North East Somerset Council, under section 21 of the National Assistance Act 1948 (the 1948 Act). Between January and August 2013 the claimant was in custody for drugs offences. Since his release he has continued to be provided with accommodation under section 21 of the 1948 Act. His support package includes a £45 per week subsistence payment to cover his essential living needs. The claimant was first diagnosed as suffering from ankylosing spondylitis, which is a chronic form of arthritis, in 2005 but had suffered symptoms from around 2002. According to medical evidence before the court, the claimant has a very severe form of that disease. The disease leads to progressive fusion of the spine, resulting in decreased mobility, increased deformity and disability. Without intensive physiotherapy the claimant's disability is likely to worsen. The claimant also suffers from mental health problems and has a history of self-harm. In July 2013 the claimant was assessed by a consultant rheumatologist as requiring treatment at a specialist rheumatology clinic. Funding was requested from the Bristol Clinical Commissioning Group but on 6 August 2013 this was refused by reference to the 2011 Regulations. This decision was adopted by the local NHS Foundation Trust and the claimant was refused further treatment from the clinic. Since then the claimant has been moved by Social Services into new accommodation in Bath. He has renewed his request for secondary health care. As things stand it is unclear whether he will be provided with funding for that or otherwise provided with the treatment despite his inability to fund it. The circumstances in which it is permissible for a person in the claimant's position to be given NHS treatment even when he cannot pay for it upfront is a topic to which I will return later in this judgment. Legislative framework Section 1 of the National Health Service Act 2006, so far as material, provides: "(1) The Secretary of State must continue the promotion in England of a comprehensive health service designed to ensure improvement – (a) in the physical and mental health of the people of England, (b) in the prevention, diagnosis and treatment of physical and mental illness. … (4) The services provided as part of the health service in England must be free of charge except in so far as the making and recovery of charges is expressly provided for by or under any enactment, whenever passed." Section 175 of the same Act gives power to the Secretary of State to make regulations as follows: "(1) Regulations may provide for the making and recovery, in such manner as may be prescribed, of such charges as the Secretary of State may determine in respect of the services mentioned in subsection (2). (2) The services are such services as may be prescribed which are – (a) provided under this Act, and (b) provided in respect of such persons not ordinarily resident in Great Britain as may be prescribed. (3) Regulations under this section may provide that the charges may be made only in such cases as may be determined in accordance with the Regulations. …" The relevant Regulations at the present time are the 2011 Regulations. In those Regulations the phrase "overseas visitor" is defined by the Interpretation Regulation (Regulation 2(1)) to mean a person not ordinarily resident in the United Kingdom. Regulation 3, so far as material, provides: "(1) A relevant NHS body must make and recover charges from the person liable under Regulation 4 where it provides an overseas visitor with relevant services and the condition specified in paragraph (2) applies. (2) The condition specified in this paragraph is that the relevant NHS body having made such enquiries as it is satisfied are reasonable in all the circumstances, including in relation to the state of health of that overseas visitor, determines that the case is not one in which these Regulations provide for no charge to be made. …" Regulation 4 provides that the person liable to pay charges under these Regulations is, unless an exception specified in that Regulation applies, the overseas visitor in respect of whom the relevant services are provided. There are certain exemptions to the charging duty set out in part 3 of the Regulations. First there are certain types of services which are exempted. Regulation 6 provides that no charge may be made or recovered in respect of any relevant services provided to an overseas visitor which fall within the paragraphs then set out. Paragraph (a) covers accident and emergency services. Other Regulations provide exemptions in respect of certain types of person. Regulation 11 is at the heart of the present proceedings for judicial review. It provides: "No charge may be made or recovered in respect of any relevant services provided to an overseas visitor who – (a) has been granted temporary protection, asylum or humanitarian protection under the immigration rules made under section 3(2) … of the Immigration Act 1971; (b) has made an application, which has not yet been determined, to be granted temporary protection, asylum or humanitarian protection under those rules; (c) is currently supported under section 4 or 95 of the Immigration and Asylum Act 1999; or (d) is a child, taken into local authority care under the Children Act 1989." At the heart of the present claim is the complaint that Regulation 11(c), although a welcome exemption, does not go far enough because it is argued that the claimant is in an analogous position to anyone supported under section 4 or 95 of the Immigration and Asylum Act (the 1999 Act) and yet is not protected by the exemption from charges in Regulation 11. I turn therefore to the relevant provisions of the 1999 Act. The interpretation provisions of section 94 provide that "claim for asylum" means a claim that it would be contrary to the United Kingdom's obligations under the Refugee Convention, or under Article 3 of the Human Rights Convention, for the claimant to be removed from, or required to leave, the UK. "Asylum-seeker" means a person who is not under 18 and has made a claim for asylum which has been recorded by the Secretary of State but which has not been determined. Under section 95 the Secretary of State may provide, or arrange for the provision of, support for asylum-seekers or dependants of asylum-seekers who appear to the Secretary of State to be destitute or to be likely to become destitute within such period as may be prescribed. Section 95(3) provides that for this purpose a person is "destitute" if "(a) he does not have adequate accommodation or any means of obtaining it (whether or not his other essential living needs are met); or (b) he has adequate accommodation or the means of obtaining it but cannot meet his other essential living needs." As will be apparent from its wording, section 95, read with section 94, does not apply in the case of an asylum-seeker whose claim for asylum has been rejected. Such failed asylum-seekers are dealt with by section 4 of the 1999 Act, which provides: "(1) The Secretary of State may provide, or arrange for the provision of, facilities for the accommodation of persons - (a) temporarily admitted to the United Kingdom under paragraph 21 of Schedule 2 to the 1971 Act; … (2) The Secretary of State may provide, or arrange for the provision of, facilities for the accommodation of a person if – (a) he was (but is no longer) an asylum-seeker, and (b) his claim for asylum was rejected." Subsection (4) makes it clear that expressions such as "asylum-seeker" and "claim for asylum" have the same meaning in this section as in Part 6 (as defined in section 94). Subsection (5) empowers the Secretary of State to make regulations specifying criteria to be used in determining whether or not to provide accommodation to a person under section 4 and whether or not to continue to provide such accommodation. In particular the regulations may (pursuant to subsection (6)) provide for the continuation of the provision of accommodation for a person to be conditional upon his performance of or participation in community activities in accordance with arrangements made by the Secretary of State. The relevant regulations made under the 1999 Act are the Immigration and Asylum (Provision of Accommodation to Failed Asylum-seekers) Regulations 2005 (SI 2005 No. 930). The interpretation provision in Regulation 2 provides that "destitute" is to be construed in accordance with section 95(3) of the 1999 Act. Regulation 3 provides that: "(1) Subject to Regulations 4 and 6, the criteria to be used in determining the matters referred to in paragraphs (a) and (b) of section 4(5) of the 1999 Act in respect of a person falling within section 4(2) or (3) of that Act are – (a) that he appears to the Secretary of State to be destitute, and (c) that one or more of the conditions set out in paragraph (2) are satisfied in relation to him. (2) Those conditions are that – (a) he is taking all reasonable steps to leave the United Kingdom or place himself in a position in which he is able to leave the United Kingdom, which may include complying with attempts to obtain a travel document to facilitate his departure; (b) he is unable to leave the United Kingdom by reason of a physical impairment to travel or for some other medical reason; … or (e) the provision of accommodation is necessary for the purpose of avoiding a breach of a person's Convention rights, within the meaning of the Human Rights Act 1998." No regulations have been made setting out the criteria to be applied under section 4(1) of the 1999 Act. However, Home Office guidance states that the power under that subsection should not be exercised in favour of asylum seekers or failed asylum seekers (who may qualify under either section 95 or section 4(2)). It is common ground that the scheme in sections 4 and 95 of the 1999 Act is one of last resort. In particular a failed asylum seeker will not be regarded as destitute so as to qualify for support under that Act if he is entitled to support under another statutory provision, including section 21 of the 1948 Act. I therefore turn to that provision. Section 21 of the 1948 Act provides: "(1) Subject to and in accordance with the provisions of this part of this Act, a local authority may with the approval of the Secretary of State, and to such extent as he may direct, shall, make arrangements for providing – (a) residential accommodation for persons aged 18 or over who by reason of age, illness, disability or any other circumstances are in need of care and attention which is not otherwise available to them; … (1A) a person to whom section 115 of the Immigration and Asylum Act 1999 (Exclusion from benefits) applies may not be provided with residential accommodation under subsection (1)(a) if his need for care and attention has arisen solely – (a) because he is destitute; or (b) because of the physical effects or anticipated physical effects, of his being destitute." By section 21(5) references to accommodation are to be construed as including reference to "board and other services", such as help with subsistence. The Secretary of State has issued directions under section 21(1) in the form of Local Authority Circular (93) (10). The effect of that circular is that, where the criteria in section 21(1)(a) are met, social services authorities are under a duty to provide accommodation to persons who are "ordinarily resident in that area" and to persons who are in urgent need thereof. The circumstances in which assistance can be provided by a local authority under section 21 of the 1948 Act are subject to restrictions set out in Schedule 3 to the Nationality, Immigration and Asylum Act 2002. A number of paragraphs in that Schedule specify categories of person who are ineligible for such support: paragraphs 4-7 of the Schedule. In particular paragraph 6 applies to a person who was (but is no longer) an asylum seeker and who fails to co-operate with removal directions issued in respect of him. Paragraph 7 applies to a person if he is not an asylum seeker and is in the UK in breach of the immigration laws within the meaning of section 50A of the British Nationality Act 1981. There is then an exception set out in Schedule 3 to the 2002 Act, which has the effect of bringing certain persons back into the scope of eligibility for support under (for example) section 21 of the 1948 Act. Those exceptions are to be found in paragraph 3 of Schedule 3. So far as material it is provided that: "Paragraph 1 does not prevent the exercise of a power or the performance of a duty if, and to the extent that, its exercise or performance is necessary for the purpose of avoiding a breach of – (a) a person's Convention rights…" Background leading up to the 2011 Regulations In February 2010 the Department of Health issued a consultation paper on "Review of Access to the NHS by Foreign Nationals". In the introductory chapter it was stated that: "The regulations and guidance on NHS access and charging have to support the provision of health care that meets residents' entitlements, public health and humanitarian obligations, while also protecting finite NHS resources, and supporting wider government strategy on migration. Administrative processes to manage access and implement charging also have to be practical, proportionate and cost effective, and professional clinical staff, whilst having responsibility to help ensure that the charging regime is upheld, should not be held accountable for administering immigration rules. Charges should be applied to non-UK residents in a rational, non-discriminatory, consistent and defensible way." Chapter 3 set out proposals for change to the charging regulations. It was noted that people currently seeking refuge or asylum were exempt from NHS charges while their claim was still outstanding and any appeal was ongoing. However, those whose claims had been refused (failed asylum seekers) were chargeable for most treatment after their full appeals process had been exhausted. The consultation paper continued: "We are not proposing any change to these arrangements for the vast majority of failed asylum seekers. We recognise that many failed asylum seekers have limited resources, meaning that debts to the NHS are often written off and the cost of administering charges is likely to outweigh the income recovered, and that some untreated non-urgent conditions may lead to subsequent more costly, urgent provision for which costs would be unlikely to be recoverable. However, automatic entitlement to full, free secondary care, including both urgent and non-urgent treatment, would not be consistent with the denial of leave to remain and may act as both a deterrent to leaving the UK on a voluntary basis and an incentive to others to travel here illegally. Similarly, we are proposing no change to the current position for other people, such as illegal entrants and over-stayers, who have no lawful basis of stay in the UK and so are subject to charges. We are proposing a specific exception for those Failed Asylum Seekers who are co-operating with UKBA and are supported under sections 4 or 95 of the Immigration and Asylum Act 1999: Section 4 support is available to those adults who are taking reasonable efforts to leave the UK and where there is a genuine recognised barrier to leaving (such as being unable to obtain a passport). Support is provided in the form of accommodation and food vouchers/payment cards … Section 4 and section 95 support does not currently include free health care. The extension of free health care to these groups therefore is wholly consistent with this element of the government's migration and asylum policy." Relevant guidance The Secretary of State has issued guidance as to how relevant NHS bodies should deal with overseas visitors and charging: the current version, which was updated in October 2013, is Guidance on implementing the Overseas Visitors Hospital Charging Regulations. Chapter 4 of the guidance sets out when to provide NHS hospital treatment to those not entitled to it free of charge. Para 4.2 states that para 2.3 sets out the legal obligations under the charging regulations of all relevant NHS bodies. However, para 4.3 goes on to state that such bodies must also ensure that treatment which is "immediately necessary" is provided to any patient, even if they have not paid in advance. It goes on to state that, whilst treatment provided in an accident and emergency department is free to any person, further emergency treatment after admission as an in-patient is not. The following sentence is underlined in the same passage: "Failure to provide immediately necessary treatment may be unlawful under the Human Rights Act 1998." The passage then goes on to state that urgent treatment should also be provided to any patient, even if deposits have not been secured. Non-urgent treatment should not be provided unless the estimated full charge is received in advance of treatment. The following paragraphs in chapter 4 then give more detailed guidance as to the meaning of those concepts. Para 4.5 deals with "immediately necessary treatment", that is treatment which a patient needs to save his life, or to prevent a condition from becoming immediately life-threatening or promptly to prevent permanent serious damage from occurring. "Urgent treatment" is defined in para 4.8 to be that which clinicians do not consider immediately necessary but which nevertheless cannot wait until the person can be reasonably expected to return home. That passage continues: "Clinicians may base their decision on a range of factors, including the pain or disability a particular condition is causing, the risk that delay might mean a more involved or expensive medical intervention being required, or the likelihood of a substantial and potentially life-threatening deterioration occurring in the patient's condition if treatment is delayed until they return to their own country." "Non-urgent treatment" is defined by para 4.11 to mean routine elective treatment that could wait until the patient can return home. Para 4.12 makes it clear that the decision on whether a patient's need for treatment is immediately necessary, urgent or non-urgent "is only for clinicians to make". However, the same passage continues to state: "In determining whether or not a required course of treatment should proceed even if payment is not obtained in advance, or if it can safely wait until the patient can return home (i.e. whether it is urgent or non-urgent), clinicians will need to know their estimated return date." Para 4.10 of the guidance makes it clear that treatment is not made free of charge by virtue of being provided on an immediately necessary or urgent basis. It continues: "Charges found to apply cannot be waived." There then appears a section on how to determine when an overseas visitor patient can reasonably be expected to return home. In particular para 4.14 states: "The general principle is that overseas visitors should either return home for treatment that is not immediately necessary or pay in advance of receiving it. However, in some cases it may not be possible or reasonable to expect a person to return home quickly enough for treatment. Clinicians will need to know when a patient can reasonably be expected to return home to decide if their need for NHS hospital treatment is urgent or if it can safely await their return." The relationship between the 1948 Act and the 1999 Act In R (Westminster City Council) v National Asylum Support Service [2002] 1 WLR 2956 the House of Lords had to consider the respective duties imposed on local authorities by section 21 of the 1948 Act and on the Secretary of State, through the agency of the National Asylum Support Service (NASS), under section 95 of the 1999 Act. The principal opinion was delivered by Lord Hoffmann. At para 29 Lord Hoffmann drew a distinction between two classes of asylum seekers: "The first class were the able bodied asylum seekers who qualified solely because, being destitute, they were already or were likely to become in need of care and attention. … I shall call them 'the able bodied destitute', who came within section 21 solely because they were destitute. The second class were asylum seekers who had some infirmity which required the local social services to provide them with care and attention, but who would not ordinarily have needed to be provided with accommodation under section 21 because it was available in other ways, for example, under the homelessness legislation. They would not have come within the section 21 duty because they would not have satisfied the third condition which I have quoted from the judgment of Hale LJ in Wahid's case [2002] EWCA Civ 287 at [30]: 'Care and attention which is needed must not be available otherwise than the provision of accommodation under section 21. I shall call this class "the infirm destitute".' " At para 31, having referred to the White Paper which preceded the 1999 Act, Lord Hoffman noted the introduction of the new subsection (1A) in section 21 of the 1948 Act, which was inserted by section 116 of the Immigration and Asylum Act 1999. At para 32, Lord Hoffmann said: "The use of the word 'solely' makes it clear that only the able bodied destitute are excluded from the powers and duties of section 21(1)(a). The infirm destitute remain within. Their need for care and attention arises because they are infirm as well as because they are destitute. They would need care and attention even if they were wealthy. They would not of course need accommodation, but that is not where section 21 (1A) draws the line." At para 33 Lord Hoffmann referred to section 95(1) in parallel with the amendment of section 21. At para 35, he said: "It will be seen that while section 21(1A) removes only the able bodied destitute from the duty of the local social service departments, section 95(1) appears prima facie to give NASS power to accommodate all destitute asylum seekers, whether able bodied or infirm. It is this apparent overlap between the powers of NASS and the duties of the local authority which has given rise to this appeal." In answering the questions which arose for decision in that case, at para 49 Lord Hoffmann concluded: "…The issues before your Lordships are narrow. The present case has been argued throughout on the footing that Mrs Y-Ahmed has a need for care and attention which has not arisen solely because she is destitute but also (and largely) because she is ill. It is also common ground that she has no access to any accommodation in which she can receive care and attention other than by virtue of section 21 or under part VI of the 1999 Act. The first question for your Lordships is whether in those circumstances she comes prima facie within section 21(1)(a) and, if so, the second is whether she is excluded by section 21(1A). In my opinion, the answers to these questions are Yes and No respectively. The third question is whether the existence of a duty under section 21 excludes Mrs Y-Ahmed from consideration for asylum support. Again, in agreement with the Court of Appeal, I think that the answer is Yes." On the basis of that authority the claimant submits that the only reason why he had to be supported by a local authority under section 21 of the 1948 Act is that he has a disability. To use Lord Hoffmann's terminology, the claimant is "infirm" rather than "able-bodied." Otherwise, he submits, he would receive support under the 1999 Act. The Claimant's grounds In the claimant's skeleton argument there were four grounds advanced: (1) The Regulations were said to violate Article 8 of the Convention rights in the their application to the claimant (ground 1); (2) They were said to give rise to unlawful disability discrimination in breach of Article 14 of the Convention, read with Article 8 (ground 2); (3) It was said that the defendant failed to comply with the public sector equality duty in section 149 of the Equality Act (ground 3); (4) It was said that the Regulations give rise to a risk of unlawful decision-making by relevant National Health Service bodies (ground 4). At the hearing before me counsel for the claimant fairly accepted, without formally abandoning either ground 1 or ground 4, that they add little if anything to the other grounds. Accordingly, I propose to deal with the complaints which are at the heart of this claim for judicial review: ground 2, which alleges a breach of Article 14, and ground 3, which alleges a breach of the public sector equality duty. Ground 2: Article 14, read with Article 8 It is common ground for the purposes of the present claim that the facts of the case fall within the ambit of Article 8. Accordingly it is further common ground that the claimant is in principle entitled to rely upon Article 14. It is also common ground that disability is a ground of discrimination which is within the scope of Article 14, particularly because it falls within the concept of "other status". On behalf of the claimant it is submitted that the Regulations discriminate on grounds of disability directly. The Secretary of State denies that there is such direct discrimination. However, it is accepted on behalf of the Secretary of State that there is indirect discrimination on grounds of disability. I accept the Secretary of State's submission in this regard. In my judgment there is indirect discrimination but not direct discrimination in the present case. This is because Regulation 11(c) does not in terms distinguish between persons on the ground of disability. Nor is that its necessary effect in all cases. Ultimately this question may not be of crucial significance, since it is common ground that, in the context of Article 14, both direct and indirect discrimination are in principle capable of being justified. Accordingly the central issue which divides the parties in this context is that of justification. It is common ground that discrimination under Article 14 will be justified if it pursues a legitimate aim and there is a reasonable relationship of proportionality between the means employed and the aim sought to be achieved. The appropriate standard of review There can be no doubting the importance of the principle of equality. The reasons for this were emphasised by Baroness Hale of Richmond in Ghaidan v Godin-Mendoza [2004] 2 AC 557, at para 132. She emphasised in particular that democracy is founded on the principle that each individual has equal value. Treating some people as automatically having less value than others not only causes pain and distress to that person but also violates his or her dignity as a human being. As Baroness Hale concluded in that paragraph: "Democracy values everyone equally even if the majority does not." At one time it was thought that the appropriate standard of review in discrimination cases under Article 14 depends on the nature of the ground of alleged discrimination: certain classes were regarded as "suspect", terminology which was adopted from jurisprudence on the Fourteenth Amendment to the US Constitution. In R (Carson) v Secretary of State for Work and Pensions [2006] 1 AC 173 the House of Lords had to consider the application of Article 14 of the Convention rights in the context of various types of social security benefit. It was contended that various pieces of legislation breached the principle of equality in Article 14, read with the right to peaceful enjoyment of possessions in Article 1 of the First Protocol, either on the ground of residence or on the ground of age. At para 14 Lord Hoffmann said that discrimination means a failure to treat like cases alike. There is discrimination only if the cases are not sufficiently different to justify the difference in treatment. At para 15 he continued that whether cases are sufficiently different is partly a matter of values and partly a question of rationality. He said: "Article 14 expresses the Enlightenment value that every human being is entitled to equal respect and to be treated as an ends and not a means. Characteristics such as race, caste, noble birth, membership of a political party and (here a change in values since the Enlightenment) gender, are seldom, if ever, acceptable grounds for differences in treatment. In some constitutions, the prohibition on discrimination is confined to grounds of this kind and I rather suspect that Article 14 was also intended to be so limited. But the Strasbourg Court has given it a wide interpretation, approaching that of the Fourteenth Amendment [to the US Constitution], and it is therefore necessary, as in the United States, to distinguish between those grounds of discrimination which prima facie appear to offend our notions of the respect due to the individual and those which merely require some rational justification…" At para 16 Lord Hoffmann said: "There are two important consequences of making this distinction. First, discrimination in the first category cannot be justified merely on utilitarian grounds, eg. that it is rational to prefer to employ men rather than women because more women than men give up employment to look after children. That offends the notion that everyone is entitled to be treated as an individual and not a statistical unit. On the other hand, differences in treatment in the second category (eg. on grounds of ability, education, wealth, occupation) usually depend upon considerations of the general public interest. Secondly, while the Courts, as guardians of the right of the individual to equal respect, will carefully examine the reasons offered for any discrimination in the first category, decisions about the general public interest which underpin differences in treatment in the second category are very much a matter for the democratically elected branches of government." On behalf of the Secretary of State in the present case emphasis is placed on two passages in Carson. First at para 41, where Lord Hoffmann said: "Mr Gill emphasised that the 25th birthday was a very arbitrary line. There could be no relevant difference to a person the day before and the day after his or her birthday. That is true, but a line must be drawn somewhere. All that is necessary is that it should reflect a difference between the substantial majority of the people on either side of the line. If one wants to analyse the question pedantically, the person one day under 25 is in an analogous, indeed virtually identical, situation to a person aged 25 but there is an objective justification for such discrimination, namely the need for legal certainty and a workable rule. But your Lordships are likely to reach what I consider to be the obvious answer without having to resort to such formal reasoning. …" In similar vein at para 45, Lord Rodger of Earlsferry said: "… The scheme also had certain administrative advantages. In my view, having regard to these and other factors, it was open to ministers and Parliament, in the exercise of a broad political judgment, to differentiate between the two groups and set different levels of benefit for them. Drawing the bright demarcation line at 25 was simply one part of that exercise. It follows that the difference in treatment … easily withstands scrutiny and there is no unlawful discrimination in terms of Article 14." In his opinion, at paras 55-60, Lord Walker of Gestingthorpe addressed specifically the question of whether certain grounds of discrimination are "suspect" grounds and referred extensively to the jurisprudence of the US Supreme Court in that regard. At para 58 he observed that the European Court of Human Rights, although not using the terminology of "suspect" classes often refers to "very weighty reasons" being required to justify discrimination on particularly sensitive grounds. One of the Strasbourg decisions in which there is reference to the need for "very weighty reasons" to be established was Gaygusuz v Austria (1997) 23 EHRR 364. That case concerned the context of social security in particular a form of emergency assistance which depended upon a national insurance scheme in Austria. The applicant was a Turkish national who was refused an advance on his pension in the form of such emergency assistance because he did not have Austrian nationality. He brought a complaint under Article 14 of the Convention read with Article 1 of the First Protocol. At para 42 of its judgment the European Court of Human Rights said that "very weighty reasons would have to be put forward before the Court could regard a difference of treatment based exclusively on the ground of nationality as compatible with the Convention". This point was picked up by the House of Lords in A v Secretary of State for the Home Department [2005] 2 AC 68, at para 49 in the opinion of Lord Bingham of Cornhill. That was the well known decision in which a declaration of incompatibility was issued by the House of Lords in respect of Part 4 of the Anti Terrorism, Crime and Security Act 2001, which had permitted the Secretary of State to authorise the detention without charge of suspected international terrorists but only if they were foreign nationals. That distinction was regarded as unacceptable discrimination on the grounds of nationality. In an important passage, at para 68 Lord Bingham emphasised that: "… Any discriminatory measure inevitably affects a smaller rather than larger group, but cannot be justified on the ground that more people would be adversely affected if the measure were applied generally. What has to be justified is not the measure in issue but the difference in treatment between one person or group and another. What cannot be justified here is the decision to detain one group of suspected international terrorists, defined by nationality or immigration status, and not another. To do so was a violation of Article 14. …" (Emphasis added) Counsel for the Secretary of State before me accepted that important principle. However, she emphasised that a number of authorities since that time, both in Strasbourg and in the domestic courts, appear to have developed, and perhaps modified, the appropriate standard of review, at least in cases concerned with social and economic policy. In Stec v United Kingdom (2006) 43 EHRR 1017 the Grand Chamber of the European Court of Human Rights considered a complaint that there had been sex discrimination in the context of certain social security benefits. As the Court observed at para 51 of its judgment, contracting states enjoy a margin of appreciation in assessing whether and to what extent differences in otherwise similar situations justify a different treatment. At para 52 the Court continued: "The scope of this margin will vary according to the circumstances, the subject matter and the background. As a general rule, very weighty reasons would have to be put forward before the Court could regard a difference in treatment based exclusively on the ground of sex as compatible with the Convention. On the other hand, a wide margin is usually allowed to the State under the Convention when it comes to general measures of economic or social strategy. Because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to appreciate what is in the public interest on social or economic grounds, and the Court will generally respect the legislature's policy choice unless it is 'manifestly without reasonable foundation'." As will be seen later, the test of "manifestly without reasonable foundation" was originally formulated in cases where it was alleged that there had been a violation of the right to peaceful enjoyment of possessions in Article 1 of the First Protocol. Such cases had nothing to do with alleged discrimination, let alone discrimination on a ground which was to be treated as "suspect" such as nationality or gender. Nevertheless, it is clear that the test has now become applicable in Article 14 cases too, even where what would have been regarded as a suspect class is concerned. The above observation in Stec was picked up by the House of Lords in R (RJM) v Secretary of State for Work and Pensions [2009] 1 AC 3111, in particular at para 54 in the opinion of Lord Neuberger of Abbotsbury: "… Policy concerned with social welfare payments must inevitably be something of a blunt instrument, and social policy is an area where a wide measure of appreciation is accorded by the ECtHR to the State; see the judgment in Stec 43 EHRR 1017, para 52. As Lord Bingham said about a rather different statute, '[a] general rule means that a line must be drawn and it is for Parliament to decide where', and this 'inevitably means that hard cases will arise falling on the wrong side of it, but that should not be held to invalidate the rule if, judged in the round, it is beneficial'…" In Humphreys v Commissioners of Revenue and Customs [2012] 1 WLR 1545 the Supreme Court had to consider the application of these principles in the context of alleged sex discrimination in relation to child tax credit. The main judgment for the Court was given by Baroness Hale of Richmond JSC. After referring to the decision of the Grand Chamber in Stec, at para 17, Baroness Hale observed that the phrase "manifestly without reasonable foundation" dates back to James v United Kingdom (1986) 8 EHRR 123, para 46, which concerned the compatibility of leasehold enfranchisement with Article 1 of the First Protocol. However in the Stec case, as she continued, the Court clearly applied this test to the State's decision as to when and how to correct inequality between the sexes in State pension ages, which had originally been introduced to correct the disadvantaged position of women. At para 19 Baroness Hale observed that, in Carson, both Lord Hoffmann and Lord Walker had drawn a distinction between discrimination on "suspect" grounds such as race and sex and discrimination on grounds such as place of residence and age. She continued: "But that was before the Grand Chamber's decision in the Stec case… It seems clear from Stec, however, that the normally strict test for justification of sex discrimination in the enjoyment of the Convention rights gives way to the 'manifestly without reasonable foundation' test in the context of state benefits. The same principles were applied to the sex discrimination involved in denying widow's pension to men in Runkee v United Kingdom [2007] 2 FCR 178, para 36. If they apply to the direct sex discrimination involved in the Stec and Runkee cases, they must, … apply a fortiori to the indirect sex discrimination with which we are concerned." At para 20 Baroness Hale noted that in fact the appellant in that case did not argue for anything other than the test established in the Stec and RJM cases. Nevertheless, as Baroness Hale observed at para 22 of her judgment, "the fact that the test is less stringent than the 'weighty reasons' normally required to justify sex discrimination does not mean that the justifications put forward for the rule should escape careful scrutiny. On analysis, it may indeed lack a reasonable basis. …". More recently, in R (MA) v Secretary of State for Work and Pensions [2013] PTSR 1521 the Court of Appeal had to consider the application of these principles in the context of a challenge to the amendment to the Housing Benefit Regulations which created the so-called "bedroom tax". Giving the main judgment for the Court, Lord Dyson MR, at paras 49-60, considered the appropriate standard of review. In particular, at paras 53-54, Lord Dyson rejected the submission that the "manifestly without reasonable foundation" test was not applicable because the discrimination in issue lacked the elements of "high policy" which were said to be in play in the Humphreys case. Lord Dyson was of the view that there was no hint of that distinction in the Stec case or the Humphreys case. Furthermore, at para 54, he said that: "Although the precise detail and scope of the Regulations may not be matters of high policy in themselves, they form an integral part of what was unquestionably a high policy decision. The particular decisions taken to give effect to the high policy decision cannot be dismissed as technical detail. These decisions involved policy choices even if at a lower level than the overarching decision to reduce HP by focussing on the problem of 'under-occupancy' of accommodation." At para 55 he continued that: "This area of the law would suffer from undesirable uncertainty if the test were to be 'manifestly without reasonable foundation' where there is a challenge to high policy decisions and a less stringent test where the challenge is to lower level policy decisions. I see no warrant for taking this course." Nevertheless, at para 56, Lord Dyson repeated what Baroness Hale had made clear in the Humphreys case, at para 22: this does not mean that the justifications put forward for a rule should escape "careful scrutiny". At para 60 of his judgment Lord Dyson observed that this is particularly important where the Court is dealing with a vulnerable group (disabled persons) and the discrimination is closely connected with their disabilities. The Court in that context was "obliged to scrutinise carefully the reasons advanced by the Secretary of State in justification of his scheme". At para 80 Lord Dyson said: "I would emphasise the following … . [T]he 'manifestly without reasonable foundation' test is a stringent test. I would not go so far as to say that all the Secretary of State has to show is that his policy is not irrational, although Lord Neuberger in the RJM case … perhaps came quite close to that. The question is simply whether the discrimination has an objective and reasonable justification. I accept that the Court must scrutinise carefully the justification advanced. But it is not sufficient to expose some clause in the scheme or to conclude that the justification is not particularly convincing. The stringent nature of the test requires the Court to be satisfied that there is a serious flaw in the scheme which produces an unreasonable discriminatory effect." It was common ground before me that the appropriate standard of review is not whether there are "very weighty reasons" put forward by the defendant but rather whether the discriminatory measure under challenge is "manifestly without reasonable foundation". Nevertheless, the claimant emphasises, as was emphasised in the authorities which I have already cited, that the fact that the test is less stringent than the one normally required does not mean that the justifications put forward should escape careful scrutiny: on analysis they may indeed lack a reasonable basis. Application of the principles to the present case As I have mentioned, it is accepted on behalf of the Secretary of State that Regulation 11(c) is capable of giving rise to prima facie indirect discrimination, in that its effect is to disadvantage persons who are destitute in consequence of their immigration status and who are so disabled as to require looking after within the terms of section 21 under the 1948 Act as compared to non-disabled persons who are destitute in consequence of their immigration status. However, the Secretary of State maintains that the provisions are justified and therefore compatible with Article 14. The Secretary of State submits that the test of "manifestly without reasonable foundation" is not satisfied by the claimant in the present case. The justification relied on is that the exemption in Regulation 11(c) is relatively simple for relevant NHS bodies (more specifically the Overseas Visitor Managers or OVMs) to administer. It is necessary only to seek confirmation from one body, namely the Home Office, to resolve completely the question of a patient's eligibility. If the exemption were expanded to any patient who would be supported under section 4 of the 1999 Act but for the fact he is in fact supported under section 21 of the 1948 Act by reason of disability, then there would be the potential for considerably greater administrative complexity. Put shortly, the Secretary of State submits that he is entitled to adopt a bright line rule in this area of social and economic policy. As the authorities I have cited make clear, there are circumstances in which a bright line legitimately can be drawn even if it results in hard cases falling on the wrong side of the line. There are limits to how far this point can be taken. To take an extreme example, if the Secretary of State adopted a policy that a Christmas bonus was to be payable only to white people, that would be a bright line and easy to administer but it is difficult to see how it could survive scrutiny under the test of "manifestly without reasonable foundation." However, the Secretary of State submits that the present context is far from such an extreme example. In this regard the Secretary of State relies in particular on the witness statement of Craig Keenan, who is the Visitor and Migrant NHS Access Manager at the Department of Health. At paras 49-56 of his witness statement Mr Keenan sets out what he describes as being the difficulties with extending the exemption in Regulation 11(c). He states that, if a patient who an OVM finds not to be ordinarily resident in the UK states that he or she is supported under section 4 of the 1999 Act, that information can be readily confirmed through the Home Office and that confirmation in effect resolves completely the question of eligibility for exemption. In contrast, for persons claiming to qualify under the "but for" test, which the claimant advances, he states that the position would be rather more complex for the following reasons. (1) It would be necessary to verify with the relevant local authority that the person in question was being supported under section 21 of the 1948 Act. (2) Because the range of overseas visitors supported under section 21 is far wider than failed asylum seekers, persons admitted temporarily and persons released from immigration detention, it would be necessary to confirm the immigration status of the person with the Home Office. (3) Most importantly, it would be necessary for the OVM to satisfy himself or herself that the person would qualify for section 4 support. In some cases Mr Keenan accepts this would be straightforward because the person would already have given all of the necessary information to the Home Office. However, he says that in most cases the OVM would have to make the necessary assessment himself or herself and this exercise would not be straightforward. Mr Keenan goes on to state that there is inconsistency in practice across local authorities and there would be no way for an OVM to verify that the Home Office agreed with the local authority's assessment that provision of support was necessary to avoid a breach of Convention rights. Furthermore, it would also be necessary for OVMs to satisfy themselves that the condition of being "destitute" was satisfied. Mr Keenan accepts that in practice this would usually be satisfied in the case of person where provision of support was required to avoid a breach of the Convention rights. Nevertheless he makes the observation that both criteria would need to be satisfied and the OVM would have to make an assessment about them. Furthermore Mr Keenan states that it is difficult to know how OVMs would go about this task: presumably either they would seek information and advice from the local authority, the Home Office or some other agency; or they would reach their own view about whether the patient was destitute before receiving section 21 support and whether they would still be destitute in the absence of such support. Mr Keenan states that he has asked a number of OVMs how they might go about this last exercise. They have expressed concerns to him that this could be a difficult and protracted process, in that it might involve long and sensitive discussions with the patient about, for example, their living arrangements and their means of support (including relatives, friends and charitable organisations). Some have also raised with him the problem of the difficulty in verifying what patients say, especially if there is no supporting documentation. Finally, Mr Keenan says, even for those patients whose circumstances (including destitution) could be verified by other government agencies, there would be a question of timing. Mr Keenan is informed by his colleagues at the Home Office that, because section 4 of the 1999 Act is intended to be only a temporary, last resort form of support, cases are reviewed regularly and people are often taken off of section 4 support. Therefore, even if someone had given the Home Office all of the necessary information to make a section 4 assessment a few months earlier, before being referred to the local authority in the light of his or her care needs, that does not necessarily guarantee that the person in question would still qualify for section 4 support at the time at which the OVM has to make the necessary evaluation. In the light of these matters, Mr Keenan expresses the view to the court that the claimant's argument has the potential to give rise to considerable and time consuming complexities for OVMs. It is not possible for him to be more precise about the scale of the administrative problems to which the extension could give rise because the numbers are not known with certainty. He accepts that it may well be that the total number of persons at stake is modest. Nevertheless, he states that, across OVMs as a whole, there will be at least some increase in the overall administrative burden. I accept the submissions made on behalf of the Secretary of State, which are based on the evidence of Mr Keenan. I am unable to accept the claimant's submission that Regulation 11(c) fails the test of being "manifestly without reasonable foundation." Counsel for the claimant submitted that the line drawn by Regulation 11(c) is arbitrary and unreasonable. She suggested alternative ways in which the legislation might have been drafted so as to include a person in the claimant's position. She also submitted that, even on the present arrangements, there will be circumstances in which a clinician may have to address difficult questions in accordance with the guidance I have cited earlier: for example, to estimate when a person is likely to be returned to his or her own country. However, it is important to recall that the task of the court is not to identify what other legislation might have been drafted or whether there might be better arrangements that could be put in place. The question for the court is whether the legislation that the Secretary of State has in fact adopted is manifestly without reasonable foundation. In my judgment it is not. Accordingly this part of the claim fails. Ground 3: The Public Sector Equality Duty The claimant contends that the Secretary of State breached his duty in section 149 of the Equality Act 2010, which is referred to in the side note as the public sector equality duty. Section 149, so far as material, provides: "(1) A public authority must, in the exercise of its functions, have due regard to the need to – (a) eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under this Act; (b) advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it; (c) foster good relations between persons who share a relevant protected characteristic and persons who do not share it. … (3) Having due regard to the need to advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it involves having due regard, in particular, to the need to – (a) remove or minimise disadvantages suffered by persons who share a relevant protected characteristic that are connected to that characteristic; (b) take steps to meet the needs of persons who share a relevant protected characteristic that are different from the needs of persons who do not share it; … (4) The steps involved in meeting the needs of disabled persons that are different from the needs of persons who are not disabled include, in particular, steps to take account of disabled persons' disabilities. …" It is uncontroversial that disability is one of the protected characteristics in the Equality Act. It was common ground before me that the relevant principles as to the application of the public sector equality duty were summarised by McCombe LJ in Bracking v Secretary of State for Work and Pensions [2013] EWCA Civ 1345, at para 26 as follows: "(1) As stated by Arden LJ in R (Elias) v Secretary of State for Defence [2006] 1 WLR 3213; [2006] EWCA Civ 1293 at [274], equality duties are an integral and important part of the mechanisms for ensuring the fulfilment of the aims of anti-discrimination legislation. (2) An important evidential element in the demonstration of the discharge of the duty is the recording of the steps taken by the decision maker in seeking to meet the statutory requirements: R (BAPIO Action Ltd) v Secretary of State for the Home Department [2007] EWHC 199 (QB) (Stanley Burnton J as he then was)). (3) The relevant duty is upon the Minister or other decision maker personally. What matters is what he or she took into account and what he or she knew. Thus, the Minister or decision maker cannot be taken to know what his or her officials know or what may have been in the minds of officials in proffering their advice: R (National Association of Health Stores) v Department of Health [2005] EWCA Civ 154 at [26-27] per Sedley LJ. (4) A Minister must assess the risk and extent of any adverse impact and the ways in which such risk may be eliminated before the adoption of a proposed policy and not merely as a 'rearguard action', following a concluded decision: per Moses LJ, sitting as a Judge of the Administrative Court, in Kaur & Shah v LB Ealing [2008] EWHC 2062 (Admin) at [23-24]. (5) These and other points were reviewed by Aikens LJ, giving the judgment of the Divisional Court, in R (Brown) v Secretary of State for Work and Pensions [2008] EWHC 3158 (Admin), as follows: i) The public authority decision maker must be aware of the duty to have 'due regard' to the relevant matters; ii) The duty must be fulfilled before and at the time when a particular policy is being considered; iii) The duty must be 'exercised in substance, with rigour, and with an open mind'. It is not a question of 'ticking boxes'; while there is no duty to make express reference to the regard paid to the relevant duty, reference to it and to the relevant criteria reduces the scope for argument; iv) The duty is non-delegable; and v) Is a continuing one. vi) It is good practice for a decision maker to keep records demonstrating consideration of the duty. (6) '[G]eneral regard to issues of equality is not the same as having specific regard, by way of conscious approach to the statutory criteria.' (per Davis J (as he then was) in R (Meany) v Harlow DC [2009] EWHC 559 (Admin) at [84], approved in this court in R (Bailey) v Brent LBC [2011] EWCA Civ 1586 at [74-75].) (7) Officials reporting to or advising Ministers/other public authority decision makers, on matters material to the discharge of the duty, must not merely tell the Minister/decision maker what he/she wants to hear but they have to be 'rigorous in both enquiring and reporting to them': R (Domb) v Hammersmith & Fulham LBC [2009] EWCA Civ 941 at [79] per Sedley LJ. (8) Finally, and with respect, it is I think, helpful to recall passages from the judgment of my Lord, Elias LJ in R (Hurley & Moore) v Secretary of State for Business, Innovation and Skills [2012] EWHC 201 (Admin) (Divisional Court) as follows: (i) At paragraphs [77-78] '[77] Contrary to a submission advanced by Ms Mountfield, I do not accept that this means that it is for the court to determine whether appropriate weight has been given to the duty. Provided the court is satisfied that there is a proper appreciation of the potential impact of the decision on equality objectives and the desirability of promoting them, then as Dyson LJ in Baker (para [34]) made clear it is for the decision maker to decide how much weight should be given to the various factors informing the decision. [78] The concept of "due regard" requires the court to ensure that there has been a proper and conscientious focus on the statutory criteria, but if that is done, the court cannot interfere with the decision simply because it would have given greater weight to the equality implications of the decision than did the decision maker. In short, the decision maker must be clear precisely what the equality implications are when he puts them in the balance, and he must recognise the desirability of achieving them, but ultimately it is for him to decide what weight they should be given in the light of all relevant factors. If Ms Mountfield's submissions on this point were correct, it would allow unelected judges to review on substantive merits grounds almost all aspects of public decision making.' (ii) At paragraphs [89-90] '[89] It is also alleged that the PSED in this case involves a duty of inquiry. The submission is that the combination of the principles in Secretary of State for Education and Science v Tameside Metropolitan Borough Council [1977] AC 1014 and the duty of due regard under the statute requires public authorities to be properly informed before taking a decision. If the relevant material is not available, there will be a duty to acquire it and this will frequently mean that some further consultation with appropriate groups is required. Ms Mountfield referred to the following passage from the judgment of Aikens LJ in Brown (para [85]): "… the public authority concerned will, in our view, have to have due regard to the need to take steps to gather relevant information in order that it can properly take steps to take into account disabled persons' disabilities in the context of the particular function under consideration." [90] I respectfully agree ……'" Application of the principles to the present case In his witness statement Mr Keenan explains that, in the consultation which preceded the making of the 2011 Regulations, draft impact assessments were carried out and consultees were also asked whether they were able to provide any additional data that might inform the calculations of costs and benefits. The Government's response to the consultation was accompanied by final impact assessments in respect of the changes made by the Regulations. Both the draft and final version of the impact assessments in respect of the new exemption concerning section 4/section 95 of the 1999 Act included an "equality screening" in respect of the exemption. The material part of that screening stated as follows: "There is no foreseeable differential impact on disability, gender, sexual orientation, or religion or belief. This policy increases equality by bringing more of the [failed asylum seeker] population into line with the general population into line with the general population in terms of eligibility for free NHS hospital treatment, which in turn is likely to lead to them accessing secondary care more. The initial screening suggests that there should be some positive impact on ethnicity and religious belief. However the numbers affected are small so the overall impact on equality at a national level will be minimal. The relevant Section 4 and Section 95 individuals cannot be compared against the general [failed asylum seeker] population for equality implications as their circumstances are markedly different. The UK Border Agency receives applications from adherents to a wide range of world religions and from different racial groups, sometimes on the basis of religious or racial persecution in their home countries. No particular racial or religious group is liable to be affected by this proposal." The final impact assessment which is dated 18 March 2011 had a section headed "Equality Screening". At para 50 that document stated: "There is no foreseeable differential impact on disability, gender, sexual orientation, or religion or belief. This policy increases equality by bringing more of the FAS population into line with the general population in terms of eligibility for free NHS hospital treatment, which in turn is likely to lead to them accessing secondary care more." (Emphasis added) In the Equality Analysis document in 2011, which was produced after the 2011 Regulations had been made, it was stated under the heading "Disability": "People with disabilities are able to benefit from the exemption from charge categories." (Emphasis added) Mr Keenan notes that one respondent to the 2010 consultation, namely the policy and communications officer of the NRPF ("No Recourse to Public Funds") network said in his response that the proposed exemptions should extend to those being supported by local authority social services departments under section 21 of the 1948 Act and under section 17 of the Children Act 1989 on the basis that those people are similar to those being supported under section 4 and section 95 of the 1999 Act insofar as they cannot reasonably be expected to leave the country due to outstanding claims with the Home Office, or are temporarily unable to return to their country of origin through no fault of their own. However, Mr Keenan observes that the respondent in question did not refer to the question whether excluding section 21 support recipients would give rise to any disability discrimination. Further it appeared to Mr Keenan that the wider exemption that he proposed would have gone beyond that for which the claimant is now arguing. In its response to the 2010 consultation the Department of Health addressed the consultation response referred to by Mr Keenan by commenting that: "Introducing a wider range of other support related exemption would be a further scope change [and] may also be difficult to administer. It would not be appropriate to do this without further evaluation." Subsequently in 2011 a similar view was expressed after further correspondence with the consultee concerned. The 2011 Regulations were made on 21 June 2011, laid before Parliament on 27 June and came into force on 1 August. A full Equality Analysis of the 2011 Regulations and the Guidance was undertaken by the Department of Health in August 2011. The Department concluded that the 2011 Regulations gave rise to some differences in impact in respect of some of the protected groups under the Equality Act 2010. In the application of the 2011 Regulations it was felt that the greatest risk of an inadvertent adverse impact was on protected groups relating to race and religion/belief. To address this risk, the Guidance issued to NHS trusts stressed the equality duties that they had to abide by in carrying out their functions. In the meantime, in view of the fact that both the 2010 consultation and the responses to it had indicated to the Department that there was a need for a more comprehensive and fundamental review to consider the full scope of who should be charged and for which services, and how the rules on charging were applied, the Department had announced in March 2011, at the time of publishing its response to the consultation exercise, that there would be a major review of the Overseas Visitors Charging Policy. The outcome of that review was completed in April 2012 and published in July 2013. Subsequently a public consultation exercise was conducted in July 2013 on a range of proposals for a new, fairer and simpler charging system. As Mr Keenan explains, the July 2013 consultation was supported by an Equality Analysis. However, the specific issue about whether to widen the exemption in Regulation 11(c) was not a matter for consideration at that time. This is because the focus of the consultation exercise was one of addressing the difficulties of recovering treatment costs from those who are currently chargeable, not on reviewing the case for widening the exemptions further. The Government issued a response to this consultation exercise in December 2013 and in January 2014 issued an implementation plan of what it intends to do next. Part of the next steps does involve reviewing further the current exemptions within the 2011 Regulations. At para 77 of his witness statement Mr Keenan states: "While it would obviously be premature for me to comment on the precise scope of this further review, in principle I cannot at this stage see why, in the course of the review, the issue raised by Mr Price about whether to widen the scope of the s.4/s.95 exemption in Reg.11(c) could not be considered, along with the potential equalities impacts." In his witness statement Mr Keenan concludes on the public sector equality duty as follows at paras 78-80. He reiterates that, in relation to the question what regard was had to the discrimination issue which the claimant now raises when the Regulation 11(c) exemption was consulted on, the new exemption was a positive move from an equalities perspective, in that it made more persons eligible for free NHS treatments and did not worsen the position of those overseas visitors who were not exempted from charges. That the new exemption was not something which should have given rise to concern about potential discriminatory impacts is, in his view, further reinforced by the fact that the issue of discriminatory impact on the ground of disability was not something to which any of the consultees drew the Department's attention. Even the NRPF consultation response did not allude expressly to disability discrimination. In any event that response was received after the consultation exercise was over. By that time the Government had already taken a decision as to the content of the new 2011 Regulations. Mr Keenan states: "To have considered widening the proposed exemption at that stage, beyond the scope of what had been consulted on and without further consultation, would … have been inappropriate in the view of the DH (Department of Health). But that is not to say that careful and conscientious consideration of such a widening, and the equalities issues that this Claimant has raised, will not take place at the next suitable opportunity when the exemptions from NHS charging are reviewed." I accept the submissions made on behalf of the claimant in relation to this ground of challenge. I am unable to accept the submission made on behalf of the Secretary of State that he did have due regard to the need to promote equality of opportunity for disabled people. Applying the principles which I have sought to summarise earlier, I have come to the conclusion that the Secretary of State failed to have due regard to that matter. Although Mr Keenan points to the fact that equality impacts were carried out, they addressed other protected characteristics in terms, such as race and religion. This was perhaps understandable in a context which concerned foreign nationals. However, the equality impacts simply did not address the protected characteristic of disability. In so far as there has been consideration of the issue of disability later that was too late. As the authorities make clear the public sector equality duty must be complied with before and at the time that a relevant decision is being made, not afterwards. In any event, as the evidence from Mr Keenan shows, the possibility of extending the scope of Regulation 11(c) to include persons in the claimant's position has not yet been considered in the exercise which has taken place since the Regulations came into force. It was submitted on behalf of the Secretary of State that he was not to blame for the omission to refer expressly to the protected characteristic of disability, since no one drew this to his attention despite the opportunity to do so in the consultation exercise which preceded the making of the Regulations. However, in my judgment, this is to miss the point. There is no question of casting blame on anyone. The question is whether the duty imposed by Parliament in section 149 of the Equality Act was complied with or not. It is also important to recall that Parliament has imposed that duty on the relevant public authority: a failure to comply with it cannot be excused by saying that others did not draw the decision-maker's attention to the relevant protected characteristic and should have done so. Although the public sector equality duty is one created by statute it seems to me that an analogy can be drawn with the well known principle of administrative law that a public authority must have regard to all relevant considerations. If it fails to do so, it will breach that duty and in principle that failure in its decision-making process will vitiate the resulting decision. The law does not seek to cast blame for that failure. The failure may be an "innocent" one. Nevertheless, the fact that the decision-maker has not had regard to a relevant consideration is a breach of one of the basic requirements of administrative law. Furthermore, in my view, this approach is consistent with the purpose which lies behind the public sector equality duty. It was first created in the Race Relations (Amendment) Act 2000, as Parliament's response to one of the most important recommendations made by the Stephen Lawrence Inquiry report. The purpose of the duty is to make sure that public authorities do not inadvertently overlook the impact of their decisions on relevant groups, because too often in the past they were overlooked. As the authorities make clear, the question of what weight should be attached to a relevant consideration is a matter for the public authority concerned and not for the court. However, what is crucial is that the public authority has had due regard to the relevant matters. If it has not done so, there will be a breach of its duty in section 149 of the Equality Act. That is what I find occurred in the present case. Conclusion For the reasons I have given this claim for judicial review succeeds in part: there was a breach by the Secretary of State of the public sector equality duty in the process leading up to the making of the Regulations. I will consider counsel's submissions as to the form of any remedy which the Court should grant to reflect this judgment.

OPINION OF MR ADVOCATE-GENERAL TRABUCCHI DELIVERED ON 10 MARCH 1976 ( ) Mr President, Members of the Court, 1. After the solemn declarations made by the Heads of State and of Government in Paris in 1972 on the importance of the social aspects of European integration, here we have a private individual, a female worker, who succeeds in obtaining from her national court a reference for a preliminary ruling on the interpretation of the provision in the EEC Treaty which establishes the principle of equal treatment for men and women in the field of employment. A reference which in itself is of very modest financial importance provides an opportunity for this Court to clarify certain aspects of the protection which fundamental rights are entitled to receive within the framework of the Community structure. This is the second reference for a preliminary ruling which bears the name of Miss G. Defrenne, a former air hostess of the Société Anonyme Beige de Navigation Aérienne (Sabena). Engaged on 10 December 1951 as a ‘trainee air hostess’ she proceeded, on 1 October 1963, under a new contract, to discharge the responsibilities appropriate to the category of ‘cabin steward, air hostess/principal cabin attendant’. Earlier, on 15 March 1963, Sabena and the worker's trade unions concluded a collective agreement which could not be made binding by a royal decree and which, in fact, has never been binding. In conformity with the collective contract, a clause was inserted in the individual contract of the person concerned providing that the contract of women members of the cabin crew was in all cases to cease automatically on completion of 40 years of age. This clause was applied to Miss Defrenne on 15 February 1968. Under the terms of her contract, she received a grant equivalent to one year's salary. Miss Defrenne then took two actions: On 9 February 1970 she applied to the Belgian Conseil d'Etat for annulment of the Royal Decree of 3 November which, for civil aviation crew, laid down special rules governing the acquisition of the right to a pension and special procedures for implementation of Royal Decree No 50 of 24 October 1967 concerning retirement pensions and survivors pensions for employed persons, on the basis of which her pension had been calculated. Giving a preliminary ruling on a reference made to it by the Belgian court (in Case 80/70), this Court, in its judgment of 25 May 1971, ruled that a retirement pension established within the framework of a social security scheme laid down by legislation does not constitute consideration which the worker receives indirectly in respect of his employment from his employer within the meaning of Article 119 of the EEC Treaty ([1971] ECR 445). At the same time, on 13 March 1968, Miss Defrenne brought proceedings against Sabena before the Tribunal du travail, Brussels, claiming compensation for the injury she alleged she had suffered owing to the fact that: 1. The salary paid to her during the period between 15 February 1963 and 1 February 1966 was FB 12716 less than that to which a male ‘steward’ with the same seniority would have been entitled; 2. She was entitled to a severance grant of FB 166138; 3. She ought to have been recognized as entitled to a higher pension, up to a maximum of FB 334000. In its judgment on 17 December 1970, the Tribunal du travail, Brussels, dismissed all three heads of claim without recourse to Article 177 of the EEC Treaty. On 11 April 1971, Miss Defrenne thereupon brought an appeal before the Cour du travail, Brussels. Finally, on 23 April 1975, that court found that only the first head of claim required interpretation of Article 119 of the Treaty and thereupon referred to this Court the questions which we must now consider. In spite of the opinion to the contrary expressed by the Auditeur General, the Cour du travail dismissed the applications relating to the injury which Miss Defrenne claims to have suffered, in connexion with pension and grant as a result of the difference in previous salary and the difference in pensionable age respectively compared with her male colleagues. Arrears were claimed only with effect from 15 February 1963 because of the five-year limitation rule provided for under Article 2277 of the Belgian Civil Code. The reason why the claim does not extend beyond 1 February 1966 is that, with effect from that date, Sabena, of its own accord, placed ‘hostesses’ and ‘stewards’ on the same basic rates of pay. 2. The questions referred to the Court are in the following terms: (1) Does Article 119 of the Treaty of Rome introduce directly into the national law of each Member State of the European Community the principle that men and women should receive equal pay for equal work and does it therefore, independently of any national provision, entitle workers to institute proceedings before national courts in order to ensure its observance, and if so as from what date? (2) Has Article 119 become applicable in the internal law of the Member States by virtue of measures adopted by the authorities of the European Economic Community (if so, which, and as from what date?) or must the national legislature be regarded as alone competent in this matter? 3. Article 119 is not a complete innovation: it must be viewed both in the light of internationally recognized principles and in the light of the EEC Treaty. At international level Article 119 is the extension, the ‘European translation’, of Convention No 100 adopted by the International Labour Organization on 29 June 1951‘concerning equal remuneration for men and women workers for work of equal value’. The Convention has now been ratified by all the Member States of the EEC although some of them ratified it after the entry into force of the Treaty of Rome (the Netherlands in 1971 and Ireland in 1974). Belgium, however, had already ratified it on 23 May 1952. The Convention, which came into force a year later, on 23 May 1953, is accordingly applicable in all the Member States although not with effect from the same date. The question whether it is or is not ‘self-executing’ has no bearing on the interpretation to be placed in Community law on the provision of Article 119 of the EEC Treaty which is, essentially, its counterpart. In the Treaty of Rome Article 119 appears in Chapter 1 (Social Provisions) of Title III Social Policy) of Part Three (Policy of the Community). It embodies an objective consonant with that laid down in the preamble to the Treaty and subsequently expressed more precisely in Article 117, which recognizes‘the need to promote improved working conditions and an improved standard of living for workers, so as to make possible their harmonization while the improvement is being maintained’. Obviously, this harmonization can be achieved only if the standard of living and working conditions, in particular those relating to pay, are harmonized not only as between the Member States but also within each State and, again, as between men and women. As Mr Advocate-General Dutheillet de Lamothe said, Article 119 has a double objective: ‘a social objective … since it leads all the countries of the Community to accept the principle of a basically social nature raised by the ILO Convention; but an economic objective, too, for in creating an obstacle to any attempt at “social dumping” by means of the use of female labour less well paid than male labour, it helped to achieve one of the fundamental objectives of the Common Market, the establishment of a system ensuring that “competition is not distorted”’. Confirmation of this view is provided both by the “preparatory documents” and by the subsequent attitudes adopted by the Member States. The authors of the ECSC Treaty provided that the Community should “progressively bring about conditions which will of themselves ensure the most rational distribution of production at the highest possible level of productivity” (Art. 2). In much clearer terms, the authors of the Treaty of Rome declared (about 20 years ago) that “spontaneous” harmonization of rates of pay as a result of action by the trade unions and of the progressive establishment of the Common Market must be completed by special action on the part of the governments. 4. This brings us to the wording of Article 119. The first paragraph reads as follows: “Each Member State shall during the first stage ensure and subsequently maintain the application of the principle that men and women should receive equal pay for equal work”. The principle quoted was, therefore, due to be put into operation before the end of the first stage, namely, before 1 January 1962. The Treaty forms a single entity; it is impossible to lay emphasis on some of its provisions and ignore others without upsetting the balance of the whole. Thus, in order to prevent any delay whatsoever affecting social policy pending transition to the second stage, the Commission addressed to Member States and, through them, to all the authorities competent to determine rates of pay, a recommendation, dated 20 July 1960, in which it reminded them of the need to fulfil the obligation imposed by Article 119 and indicated the means whereby this aim could be achieved. But, because, subsequently, the Member States considered that they were not in a position to comply with the prescribed time-limit, the “conference of Member States” adopted, on 30 December 1961, a resolution on Article 119 in which a fresh time-table was laid down for the phasing out of differences of treatment and laid down 31 December 1964 as the date by which all discrimination must be abolished. It should be noted that both the recommendation and the resolution emphasize the need for the Member States to establish, in their own national legal systems, a means of redress of which women can avail themselves in the event of an infringement of Article 119. This would appear to indicate that, in the view of the Commission and of the Member States, Article 119 was not “self-executing”. This leads us to the heart of the matter and to the question, which we must now consider, whether Article 119 constitutes a provision having direct effect. Under the criteria established by the case-law of this Court, a Community provision produces direct effects so as to confer on individuals the right to enforce it in the courts, provided that it is clear and sufficiently precise in its content, does not contain any reservation and is complete in itself in the sense that its application by national courts does not require the adoption of any subsequent measure of implementation either by the States or the Community. Let us consider whether, viewed in the light of the context and spirit of the Treaty, the character and content of Article 119 satisfy these conditions. The provision in question places every Member State under the unconditional obligation to ensure during the first stage, and subsequently to maintain, the application of the principle that men and women should receive equal pay for equal work. Although the form of words used: “principle that men and women should receive equal pay”, may seem too vague and the meaning of the word “principle” itself not to be very specific, the purpose of the rule is nevertheless clear: to prohibit any discrimination to the detriment of women with regard to pay. It can be argued that, even though Article 119 defines the concept of pay for the purposes of equality, the definition given of it is not so complete as to exclude all doubt about the precise meaning of the rule. Under the case-law of the Court, however, the fact that the concepts relied upon in a provision require interpretation by the national court, which may, inter alia, avail itself of the procedure in Article 177 of the Treaty, constitutes no obstacle to recognition of its direct effect (see the judgment in Case 27/67 Fink-Frucht [1968] ECR 223 and in Case 41/74 Van Duyn [1974] ECR 1337). Again, with regard to the definition of the concept of “equal work”, which is in any case partly described in the third paragraph of Article 119 (which, in addition to. using the term “same work” for work at piece rates, also refers to pay for work at time rates as “the same for the same job”), there is no need to exaggerate its importance in applying the article. It has been rightly observed that Article 119 “does not try to determine when men and women are doing the same work but only to ensure that the sex of the worker is in no way taken into account in decisions on pay. Whether the work is the same or different is a question of fact to be determined in every individual case in accordance with the responsibilities assigned to each person concerned and must not be the subject of an a priori decision any more than there is an a priori decision that two men placed on the same rate of pay perform the same work” (Levi Sandri, in Commentario CEE, vol. II, p. 956). The conclusion may therefore be drawn that, as regards the abolition, in connexion with pay, of all discrimination based on sex, Article 119 imposes an obligation which is clear, precise and unconditional. It must, however, be emphasized that Article 119 does not provide for, or rather does not always necessarily provide for, all possible implications of the principle of equal pay for men and women in its fullest sense. The application of the principle to situations other than those referred to in the aforesaid artcle (cases where the “same work”, namely identical work, is performed) lies, without doubt, outside the context in which the question of the direct applicability of the rule can arise and more properly falls within the field of social policy the definition and application of which primarily depend on the initiative and coordinating action of the Community executive and of the Member States. 5. The obligation imposed on the Member States, to which the rule is formally addressed, consists of an obligation to act subject to a specific time-limit (end of the first stage). As we know, by the resolution of 31 December 1961 the Member States determined to extend the time-limit for full application of the principle of equal pay until 31 December 1964. As the validity and effect of that act must be established I must point out that in form it constitutes an agreement reached between the representatives of the Member States meeting in Council; as for its effect, it specifies the substance of Article 119 by laying down the methods and the time-table to be followed in implementing it. As in the case of the ruling given in the judgment of 3 February 1976, in Case 59/75, Manghera, concerning a resolution on another subject, there can be no doubt that the said resolution is powerless to amend the Treaty by replacing the clear provision in Article 119 in respect of the time-limit therein provided. The resolution must, therefore, be regarded as an essentially political act expressing the States' concern to solve the problems arising from implementation of Article 119. It does not constitute an independent source of obligations for the States; such obligations stem exclusively from the article of the Treaty. The wording of the provision under consideration certainly implies action by the States to put the obligation which they have assumed into full effect. In view of this the questions arises whether Article 119 possesses the completeness which a provision is required to have in order to be recognized as having direct effect. From the precedents established by this Court it is clear that an article of the Treaty does not cease to have direct effect merely because it imposes on the States an obligation to act, provided that the obligation is expressed clearly and unconditionally, its tenor is precise and no real discretion is left to the Member States with respect to the application of the provision (see, for example, the judgment in Case 57/65 Lütticke, [1966] ECR 205). Apart from cases where work which is not identical has to be established as being of equal value, which could undoubtedly give rise to fairly complicated assessments on the part, in the first place, of the legislature, the application of Article 119 does not necessarily require the adoption of implementing legislation in circumstances (which, in this case, are exclusively the concern of the court making the reference) where work which is undoubtedly identical is differently rewarded on grounds of sex. Difficulties might, of course, be involved in the concept of ‘pay’. Those who drafted Article 119 tried to define this concept. Repeating, on this point word for word the text of Article 1 (a) of Convention No 100 ( ) Article 119 provides that ‘“pay” means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives, directly or indirectly, in respect of his employment from his employer’. Despite this clarification, it will, in my opinion, frequently be necessary to interpret the concept of pay and especially that of ‘any other consideration’. The Court did this in the first Defrenne case and, in respect of the treatment of dependants, in Case 20/71, (Sabbatini (nee Bertoni), [1972] ECR 345). Nevertheless, it seems clear to me that the ordinary basic wage or salary as set out in the salary table or scales must be treated as pay and that if, in the event, there is found to be discrimination solely on grounds of sex, this constitutes one of the conditions for application of Article 119. All that I need add is that, as is observed by the court making the reference, the difference of FB 12716 is due to the difference in the ‘basic salary scales’ applicable to men and women and not to supplementary perquisites, whether direct or indirect, in cash or in kind, such as ‘flight bonuses’ or ‘cabin bar takings’. On this point, too, therefore, I consider that there is nothing standing in the way of the direct applicability of Article 119 in a case such as that on which the national court is called upon to rule. 6. But another question arises. In contrast to the other articles of the Treaty which the Court has hitherto declared to have immediate effect and which are concerned with matters on which there is a direct legal relationship between the State and its subjects (customs or taxation law and the right of establishment), Article 119, despite the fact that it is restricted to imposing an obligation on the States, is primarily concerned with the relationship between individuals. The discrimination which the provision sets out to prohibit will, in the majority of cases, consist of discriminatory action by a private undertaking against women workers. The State directly intervenes in the fixing of rates of pay only in the public sector; in the private sector, on the other hand, pay rates are largely left to be fixed by agreement between the independent parties to the contract. The national authorities might not, therefore, be in a position, on the basis of this provision alone, forthwith to impose the principle of equal pay. To this end it would be necessary to adopt appropriate national legislation. For these reasons, the intervener governments have argued that the provision under consideration does no more than impose a direct obligation on the Member States alone and that it cannot create rights and duties in the case of individuals. A subsidiary argument contended for by the representative of the Commission is to the effect that, from a purely technical standpoint, Article 119 could enable individuals to bring an action which, although admissible, would be upheld only if it were based on discrimination for which, as the employer, the State was responsible or, at least, on systems of payment directly fixed by the national legislative or executive authorities in the country concerned. The above-mentioned arguments seem to me to misconceive the principles of the Community legal order which have been developed by case-law covering more than twenty years. To begin with, if we were to accept that the provision is directly applicable only against public employers this would, as was emphasized by the agent of the Irish Government, constitute fresh and unacceptable discrimination between the public and private sectors. The legal status of Sabena and its relationship with the Belgian State have, therefore, no relevance to the present dispute. It should also be borne in mind that, under settled and well-known precedents established by this Court, even provisions addressed to the States alone are, in certain conditions, capable of creating individual rights which the national courts can and must protect. The decisive factor in determining what the effects of a Community provision are in national law is not the identity of those to whom it is addressed but its nature, which the Court defines on the basis of ‘the spirit, the general scheme and the wording’ of the provision itself. The object of Article 119 is, within a specified time, to abolish discrimination of any kind in fixing rates of pay and, moreover, not only discrimination created by the laws or regulations of the Member States but also discrimination produced by collective agreements or individual contracts of employment. It follows that the obligation to observe the principle of equality is imposed not only on the States, inasmuch as the determination of the pay of government servants is concerned but, provided that the requirement stated in the provision is sufficiently clear and precise in meaning to enable it to apply in relation to third parties, it also has effects in the field left to trade union organizations and individuals in which to conclude their collective or individual contracts. This is due entirely to the provison of the Treaty, regardless of other implementing provisions adopted to this end by the State. When requested to give a ruling on a private ‘regulation’ adopted by an international sporting organization, the Court stated (in Case 36/74, Walrave [1974] ECR 1405) that both Article 59 and Article 48 prohibit not only discrimination which has its origin in acts of a public authority but also those arising from ‘rules of any other nature aimed at regulating in a collective manner gainful employment and the provision of services’. The attainment of the fundamental objectives of the Treaty would in fact be compromised in the absence of ‘the abolition of… obstacles resulting from the exercise of their legal autonomy by associations or organizations which do not come under public law’. It is true that, in contrast to the free movement of persons, the principle of equal pay is not included amongst the fundamental objectives of the Treaty but its attainment is of exceptional importance as a step towards ‘economic and social progress’ and in achieving the ‘constant improvement of the living and working conditions …’ (see preamble to the Treaty). 7. I therefore feel able to conclude that the principle of equal pay, which by its very nature is of direct concern to individuals, is, within the limits which I have indicated above, capable of producing direct effects in respect of such individuals and enables them to rely upon it in the national courts without need for it to be subject to adoption of relevant legislative measures by the States. Of course, the adoption of administrative or even penal sanctions could only reinforce the direct effectiveness of Community laws and would for this reason be particularly favourable, but the main sanction is the inapplicability of national law or of any other kind of act, public or private, which conflicts with directly applicable Community law. Consequently, where previous national legislation or regulations, have been repealed or amended only by implication through the automatic incorporation of Community laws within the national legal system, or where the contracting parties maintain in force collective or individual contracts which conflict with Community legislation, it is not necessary, for an acknowledgment of the direct effectiveness of the latter, for the said provisions to be formally harmonized with the Community laws concerned in order that all concerned may be made aware of the change and any uncertainty as to the law in force may be removed. Here too, formal harmonization would, without doubt, be of great value but any doubts, assuming there are any, may be removed by the use of Article 177 of the Treaty; the danger that this Court would be overwhelmed with requests for ‘clarification’ is an argument worthy of consideration only on grounds of expediency. Accordingly for the purposes of Article 119, there is a very simple and effective method of moving against a discrimination; it is enough for the national courts to declare null and void any clause in an individual or collective contract which conflicts with the aforesaid provision. Here again, however, we must define the precise meaning of the words ‘null and void’. Notwithstanding the axiom ‘no nullity save as provided for by the law’, the nullity to which I refer is based on public policy and thus takes priority over any individual provision of the law. On the question of pay, nullity means that the rate of pay provided for by the clause which is void is automatically replaced by the higher rate of pay granted to male workers. There is nothing new in this. The courts in various Member States have, even in the face of opposition from management and workers, and even in the absence of implementing legislation, so acted in order to give effect to the principles of equal treatment enshrined in the constitutions of the countries concerned. The Court has, moreover, recognized other provisions of the Treaty as having direct effect, although they raised much greater problems (see, for example, Article 95 (1) of the EEC Treaty which is the subject of the judgment in Case 57/65, Lütticke [1966] ECR 205). It is no more difficult for the national court to disallow a discriminatory contractual agreement than to disallow a national law which is incompatible with the Treaty or to award compensation to an individual who has suffered damage as the result of such a law. Furthermore, in interpreting Article 119, the Court cannot overlook the fact that the principle of equal treatment is enshrined in the legal system of Member States, the majority of which have erected it into a principle formally underwritten by the constitution itself. In its judgment of 17 December 1970 in Case 11/70, Internationale Handelsgesellschaft ([1970] ECR at p. 1134), the Court stated that respect for fundamental rights forms an integral part of the general principles of law and that the protection of such rights within the Community can and must be inspired by the constitutional traditions common to the Member States. In view of this it seems to me that the prohibition of all discrimination based on sex (particularly on the subject of pay) protects a right which must be regarded as fundamental in the Community legal order as it is elsewhere. In cases where discrimination was based on the criterion of mere residence or nationality — in Case 33/74 (Van Binsbergen [1974] ECR 1299) and Case 2/74 (Reyners [1974] ECR 631) — the Court declared any discrimination based on residence or nationality to be contrary to the Treaty. I propose that the Court should extend the principle of these decisions to discrimination based solely on considerations of sex, as the Court has already done in the case of Community dependants (see Case 20/71, Sabbatini (nee Bertoni), [1972] ECR 351, and Case 21/74, Airola [1975] ECR 228). 8. To summarize my comments, at this point, let me say that the words in Article 119: ‘Each Member State (shall… ensure)’, taken from Convention No 100 and which are explained by the fact that the putting into effect of Article 119 requires, on the part of the authorities of the Member States (and of the so-called ‘social partners’, namely the employers, the workers and their respective organizations), constant action in order to ensure that the realization of the principle is not placed in jeopardy even in the event of a technological development or a change in economic policy, have nevertheless a much deeper significance in the Treaty of Rome; the words refer not only to the Member State as a sovereign body bound by an international treaty, as was also the case under Convention No 100 but, in addition, all the competent authorities of the State, including the courts, which have a duty to apply the provisions of the Treaty. It is true that application of the concepts of ‘pay’ and of ‘work’ may give rise to difficulty but it is equally true that ‘the fulfilment [of the obligation] had to be made easier by … the implementation of a programme of progressive measures’ (judgment of 21 June 1974 in Case 2/74, Reyners, [1974] ECR 631. Undoubtedly, action by the Member States and by the Community institutions in the form of legislation, regulations or administrative measures is essential for the reason that, if the principle of equal treatment were to apply only to pay in the strict sense of the word or to absolutely identical work, the practical effect of Article 119 would be rather small. This gives the Member States and the Community institutions enormous scope in taking action to put into effect the principle of non-discrimination laid down in Article 119 without having to rely on its direct applicability. Discrimination against women is, in fact, often disguised by the pay structure, the classification or description of work, the special character of labour in certain spheres, not to mention inequalities due to job training or promotion systems and general working conditions. The list of studies and investigations carried out at Community level in order to make the principle of equal treatment fully effective is an impressive one. Furthermore, on 10 February 1975, the Council adopted under Article 100 a directive, submitted to it by the Commission on 14 November 1973, on the approximation of the laws of the Member States relating to the application of the principle of equal pay for men and women ‘for the same work or for work to which equal value is attributed’. The purpose of the directive was to ensure smooth and effective application of the principle of equal pay and indicated in general terms certain measures which would provide minimum protection, in particular through judicial process. The Member States were given a year, ending in February 1976, to comply with the directive and three years, ending in February 1978, to report to the Commission on its application. The directive quoted did not, however, avail to amend the original scope of Article 119. All that can be said is that, as no one disputes, provisions adopted under Article 100 (approximation of laws) can help to make more effective application of Article 119. 9. I can now bring the considerations I have mentioned to bear on the national law which raised doubts in the minds of the Cour du travail, Brussels. Article 14 of Royal Decree No 40 of 24 October 1967, promulgated in implementation of the Law of 31 March 1967 on economic recovery, reads as follows: ‘In accordance with Article 119 of the Treaty establishing the European Economic Community, ratified by the Law of 2 December 1957, any woman worker may institute proceedings before the relevant court for the application of the principle that men and women should receive equal pay for equal work.’ The court which has referred the matter to the Court of Justice for a preliminary ruling seems, therefore, to take the view, in conformity with the explanatory memorandum to the decree, that women workers have the right to bring proceedings to compel the employer to comply with ‘individual rights arising from the principle of equal treatment only with effect from 1 January 1968, the date when Royal Decree No 40 (Article 30) came into force’. But the fact that, in order to make Article 119 more effective, the Belgian authorities deemed it necessary to make express provision for women workers to take legal action in no way implies that, without that provision, the principle in Article 119 would not have created and did not create individual rights and that analogous rights exist solely because and from the date when national law recognized the said principle. The measure adopted by the Belgian authorities has no effect whatsoever on the meaning of Article 119; if we accept that, at least within certain limits, Article 119 is directly effective as from the end of the first stage, we must recognize that the nationals of the original Member States were and are able to avail themselves of it from that date, subject to the laws governing application to the courts for redress and to the law of limitation affecting that right. It is true that, in Belgium, the King “regularly” refuses to give the force of law to collective contracts which conflict with the principle contained in Article 119. But, since the collective contract between Sabena and its employees could not be subject to review by the King, the obstacle consisting of the “independent wishes of employers and employed” and of the “freedom to negotiate and enter into collective contracts” could not be surmounted in this way. If there were anything discriminatory in the contract and if there were a desire to remove it, this could only be done by the use, in the words of the explanatory memorandum, of a “legal fiction”. But this fiction does not require the consent of national law; it is merely the legal translation into national law of “the direct effect” of the Community provision to be applied. In my opinion, therefore, a royal decree is not necessary in a case such as the present one. The principle embodied in Article 119 of the Treaty was not introduced into the Belgian legal system by the royal decree in question but by the law, ratifying the EEC Treaty, which was approved on 2 December 1957. Under the case-law of this Court, the methods adopted for implementation of a Community provision cannot jeopardize its uniform application: “All methods of implementation are contrary to the Treaty which would have the result of creating an obstacle to the direct effect of Community regulations and of jeopardizing their simultaneous and uniform application in the whole of the Community” (judgment of 7 February 1973 in Case 39/72, Commission v Italy [1973] ECR at p. 114). The national provision in question may have value for the future but it could not affect the substance of the principle embodied in Article 119. Finally, I feel justified in reaching the following conclusion: with effect from 1 January 1962, a woman worker in the six original Member States could, purely on the basis of Article 119, bring proceedings against any infringement whatever of the principle embodied in the said article. The validity of the action would depend on the meaning attributed to the concepts of “pay” and of “equal work”. 10. A final argument against the “direct effect” of Article 119 is put forward by the Governments of the United Kingdom and of the Irish Republic, both of whom appear to be peculiarly sensitive to what might be called the “cost of the operation”. Arguments of this kind, however pressing on grounds of expediency, have no relevance in law. This Court did not deem it necessary to alter its interpretation of Article 95 which, in Germany, resulted in a large number of applications and created difficulties for the fiscal courts. The Court declared: ‘This argument is not by itself of such a nature as to call in question the correctness of that interpretation’ (judgment of 3 April 1968 in Case 28/67 Molkerei-Zentrale Westfalen v Hauptzollamt Paderborn [1968] ECR at p. 153). On the other hand, in view of the fact that Article 119 is recognized as having direct effect solely in respect of pay, properly so called, representing consideration for ‘equal work’, the financial consequences should not reach too high a level, having regard to the effects of limitation in the various Member States. For the foregoing reasons I am of the opinion that the Court should rule as follows: Inasmuch as Article 119 of the EEC Treaty is concerned with pay in the strict sense of the word and with work which is not merely similar but is the same, the article has, with effect from 1 January 1962, introduced into the national law of the original Member States of the Community the principle of equal pay for men and women, and has by itself directly conferred rights on the workers concerned, which national courts must protect; such protection is not subject to prior adoption of rules for its implementation either by the States or by the Community. ( ) Translated from the Italian ( ) Translator's note: but not of the English text of the Convention

HH Judge Pelling QC: Introduction These Proceedings This is an Inquiry concerning a claim by the 1st, 3rd and 4th Defendants (hereafter collectively "the Defendants" and individually respectively "Mr Hone", "Mr P Owen" and "Mr W Owen") to recover sums said to be due pursuant to a cross-undertaking in standard form given on behalf of the 1st Claimant ("Abbey") to the Court ("the cross-undertaking") in respect of a freezing order made against the Defendants by Blackburne J on 4th February 2009, and amended by a consent Order made by Warren J on 18th February 2009 ("the Freezing Order"). The Freezing Order was discharged with effect from 10th September 2010 by Lewison J (as he then was) by an Order made on 30th July 2010, following the dismissal of the claim in support of which the Freezing Order had been made. Lewison J directed this inquiry at the same time. The circumstances that led to these events are explained further below in the section entitled "Background". The Defendants' cross-undertaking claim has been quantified by them in a total of between £1m and £1.9m. The Role of HM Revenue & Customs in these Proceedings Although the cross-undertaking was given to the Court by Abbey, HM Revenue & Customs ("HMRC") gave an indemnity in respect of any liability Abbey might incur on the cross-undertaking. Following the commencement of the Inquiry, HMRC applied to be joined as a claimant to these proceedings and an Order to that effect was made by consent by Master Price on 2nd October 2012. By Paragraphs 2 and 3 of that Order HMRC is recorded as having adopted Abbey's Defence and all the evidence filed on behalf of Abbey. Abbey did not appear and was not represented at the hearing before me. In the result the claim by the Defendants has been resisted by HMRC. HMRC deny that Abbey is liable in respect of any of the claims that have been made by the Defendants other than one and contend that the maximum value of the claim (subject to liability being established) is no more than £21,000. The Strike-Out Application At the outset of the trial I determined an application made by an Application Notice issued on behalf of HMRC on 15th September 2012 by which an order was sought striking out various sub-paragraphs of the Points of Claim filed by the Defendant. The basis of that application was that (a) certain of the sub-paragraphs related to losses suffered by third parties, not the, or any of the, Defendants and thus were not even arguably recoverable under the cross- undertaking relied on by the Defendants, and (b) the claim by the Defendants for exemplary damages was not arguable as a matter of law. The Application Notice also contained an application to strike out some paragraphs from the report of the expert accountancy witness who was to be called on behalf of the Defendants. I return to that part of the application in Paragraph 9 below. I struck out the relevant sub-paragraphs of the Points of Claim for detailed reasons that I gave at the time but which in summary were because, in relation to first point, as a matter of construction, the undertaking did not entitle someone other than the Defendants to make a claim or entitle the Defendants to bring a claim in respect of losses suffered by someone other than the Defendants and because the principles identified in Linden Gardens Trust Limited v. Lenesta Sludge Disposals Limited [1994] 1 AC 85 and Alfred McAlpine Construction Limited v. Panatown Limited [2001] 1 AC 518 were of no application to a claim based on a cross-undertaking applying SmithKline Beecham Plc v. Apolex Europe Limited [2006] EWCA Civ 658 [2007] Ch 71. I struck out the claim for exemplary damages following the reasoning of Jack J in Al-Rawas v. Pegasus Energy Limited and others [2008] EWHC 617 (QB) [2009] 1 All ER 346. Case and Trial Management There were two other events in the course of the trial that I should note at this stage. First, there was an application made by the Defendants to adduce in evidence some undisclosed material for the purpose of attempting to demonstrate that some answers given by Ms Brittain in the course of her cross examination were untruthful. I refused that application for detailed reasons that I gave at the time but in summary were because the issue to which the questions went was a collateral issue and evidence to contradict answers given in cross examination as to a collateral issue was not admissible. Secondly, during the early evening of the 23rd November 2012, I was informed by Mr Nathan on behalf of all the parties that they had agreed that the quantum aspects of this case would no longer form part of the hearing before me. I was not forewarned that this was a possibility and would not have acceded to such an application had it been made. By the start of the trial three extensive expert accountant reports had been prepared and cross-served, and a fourth was produced in the course of the hearing. The cost of producing this material will undoubtedly have been substantial. Inevitably the material has been prepared on a number of hypotheses concerning which claims would succeed and on various factual assumptions concerning the basis on which it had been assumed that the claims would succeed. Thus it was likely that resolving expert accounting issues would have taken rather longer at trial than was desirable. This might have led the parties to consider applying at an early stage for the initial hearing to be on all liability issues with the quantum issues being left for determination once the extent of Abbey's liability had been established. If that course had been adopted at an early stage I can see that some costs savings might have been made. However that course was not adopted. On 26th November, I made clear my views as to what had been proposed but it became apparent that I had been left with no practical choice but to accede to what had been agreed by the parties. I was told that the experts had been released and were no longer available to give evidence within the period reserved for the trial. I was also told that Mr Coppel would be professionally embarrassed if I directed the trial to proceed in the following week. In fact I have been able to arrange for any quantum issues to be tried before me in Manchester starting on the 22nd January 2013. As noted above, HMRC's strike out application applied not merely to the Points of Claim but also to a number of paragraphs within the expert report prepared by Mr Kevin Harding, the expert forensic accountant relied on by the Defendants. Mr Nathan declined to move that part of his application at the start of the trial because, he submitted, it would be preferable to leave that until the experts gave evidence. I acceded to that submission but in light of what has happened concerning the quantum aspects of this claim, that application was not in the end moved. The Trial The trial took place between 20th -23rd, 26th – 28th and 30th November 2012. I heard evidence from each of the Defendants, and from Mr Wates, Mr Osborn, Mr Welch, Mr Short and Mr Cruise, each of whom gave evidence on behalf of the Defendants, and from Ms Brittain, who was the liquidator of Abbey at all times material to these proceedings although she has since been replaced by court order. Mr Davies' and Mr Tooth's evidence on behalf of HMRC was agreed. Background Abbey operated a freight forwarding and goods warehousing business from premises in South East London ("the Warehouse") that it leased informally from Wingpitch Limited, a company owned by Messrs Owen and various members of their families ("Wingpitch"). In May 2002 Abbey was granted an excise licence. Thereafter, it carried on a bonded warehouse business from the Warehouse. In 2005, Abbey entered into a movement guarantee arrangement with HMRC that enabled it to arrange transport of goods under bond from one bonded warehouse to another located either in England and Wales or elsewhere within the EU. Haulage was carried out either by road haulage operators appointed by Abbey's customers or by operators appointed by Abbey. HMRC alleged that there had been large scale evasions of excise duty on alcohol that had been stored in bond at the Warehouse as a result of such goods being diverted while in the course of transit from the Warehouse to another bonded facility. Abbey had been named in the documentation associated with the relevant movements as the consignor of the goods and/or the relevant movements of goods had been carried out under Abbey's movement guarantee. In consequence, assessments in the sum of approximately £5.965m were raised by HMRC against Abbey ("the Assessments"). This represented excise duty and VAT allegedly lost to the Crown as a result of the alleged diversion of 301 separate consignments of bonded goods in transit from the Warehouse. It was Abbey's role as consignor and/or the movement guarantee that gave rise to the alleged liability on which the Assessments were based. HMRC presented a Petition seeking a winding up order against Abbey based on non-payment of the sums supposedly due under the Assessments. At a hearing on 4 February 2009 HMRC applied for the appointment of a provisional liquidator over Abbey. Blackburne J appointed Ms Brittain to that office. Ms Brittain then immediately applied for and was granted the Freezing Order by Blackburne J. The Freezing Order was sought in aid of the claim made in these proceedings by Abbey, acting by Ms Brittain, in which it was alleged that Abbey's directors had been negligent in allowing Abbey to be exposed to the liability to HMRC and that the Defendants had been dishonestly complicit in the fraudulent activity that had led to the Assessments. The Freezing Order restrained each of the Defendants from disposing, dealing with or diminishing the value of that Defendant's assets up to a value of £5.95m or removing his assets up to that value from England and Wales. The Freezing Order as varied permitted Mr Hone to expend £10,000, Mr P Owen £3,750 and Mr W Owen £7,250 per month on living expenses. In addition, each was permitted to expend "… a reasonable sum on legal advice and representation …" and the Order expressly stated that it did not "… prohibit the Respondent from dealing with or disposing of any of his assets in the ordinary and proper course of business". There was an express power contained in Paragraph 10(3) of the Freezing Order that permitted the parties to agree variations to the Order and liberty was given to the Defendants to apply to vary or discharge the Order on giving 72 hours notice in writing. Abbey gave the cross-undertaking which is in what is now the standard form. The cross-undertaking was in these terms: "If the court later finds that this order has caused loss to the respondent and decides that the said respondent should be compensated for that loss, the applicant will comply with any order the court may make." On 18th March 2009, Abbey was ordered to be wound up on HMRC's Petition based on the sums due on the Assessments. Ms Brittain was appointed Liquidator. She continued in that role until 29th August 2012 when she was removed as liquidator on the application of the Defendants by an Order to which she consented. There was ostensibly an issue between the parties as to why she consented to this Order. She told me that it was for commercial reasons – Abbey was and is hopelessly insolvent, there were Liquidators' costs and expenses outstanding of approximately £1.6m and HMRC had indicated that it was not prepared to support her activities financially beyond what it had so far paid. Mr Coppel was disposed to challenge that as being the true reason why she did not oppose the making of the Order. His client does not accept that Abbey is insolvent. It is not disputed however that there are fees outstanding to Ms Brittain as she alleges nor was it disputed that there was no prospect of them being paid at the time when she decided not to oppose her removal by Order. I accept Ms Brittain's evidence as to why ultimately she did not oppose the making of an Order removing her as Liquidator because her evidence concerning the primary facts which she mentioned (that she was owed over £1.6m in fees that there was no prospect of her collecting and HMRC was not prepared to further support the liquidation financially) was not challenged and in those circumstances a decision not to oppose the application was obviously consistent with commercial logic. Abbey's claim against the Defendants was heard by Lewison J. between 6th and 20th July 2010 and was dismissed by a judgment delivered on 30th July 2012 ([2010] EWHC 2029 (Ch)). By the Order made on 30th July 2010 Lewison J dismissed the claim, discharged the freezing order with effect from 10th September 2010 and ordered an inquiry under the cross-undertaking. In essence the Assessments were based on an allegation that a total of 301 consignments of duty-suspended alcohol that left the Warehouse bound for other bonded warehouses had not reached their destination but had been diverted and sold illicitly. Lewison J explains in Paragraph 108 of his judgment how that allegation was based on 3 physical interceptions where the load in the vehicle did not correspond with the relevant documentation. The remaining consignments were identified by extrapolation because the goods concerned were owned by the same persons as owned the goods the subject of the interceptions relied on, the receiving warehouses and hauliers were the same and the movements concerned all took place in the period January 2007-8. Lewison J then said this at Paragraphs 109-110 of his Judgment: "109. The Re-Amended Particulars of Claim allege that that each of 301 consignments of duty suspended alcohol purportedly transported by the Company for purported supply to customers of SAS and W2W did not arrive at their destinations but were instead diverted within the United Kingdom. A Request for Further information of that allegation asked: "in relation to each and every of the 301 consignments referred to, please set out the basis for the … allegation that the given consignment was not received at its stated destination." The answer (verified by a statement of truth signed by Ms Brittain) said: "First, each of the consignments transported on behalf of …SAS and … W2W was intercepted by HMRC empty." 110. Although in oral evidence Ms Brittain refused to accept this, the only reasonable reading of that plea is that it was alleged that each of the 301 consignments had been intercepted by HMRC and found to be empty. This was an exaggeration by a factor of a hundred. How the allegation came to be made was unexplained; and it did no credit to Ms Brittain that she refused to accept that this was the plain allegation. This issue gave rise to some sustained cross examination of Ms Brittain in the course of the trial before me. Whilst I accept that this material might be relevant to credit, in the end the credibility of Ms Brittain as a witness has been of little significance because most of the primary facts that are relevant were not contentious between the parties and most of the material relevant to the claim is contained in or can be decided by reference to the contemporaneous written material. Overall Lewison J concluded that either the relevant goods had arrived at the premises of their respective consignees or it had not been proved that they had not. That was in one sense sufficient to resolve the claim. However at Paragraph 182 of his Judgment, Lewison J recorded that it was no longer alleged that Messrs Owen knew the underlying transactions were fraudulent. At Paragraph 185 of his Judgment Lewison J recorded that it had not been put to Mr Hone that he knew or suspected that the underlying transactions were fraudulent so that a finding to that effect was not open to him. The negligence claims were rejected at Paragraphs 196-206 and in the result the claim was dismissed. Mr Coppel was severely critical of Ms Brittain for not conceding that there could be no appeal from the Order made by Lewison J earlier than the 10th September 2010 and in consequence in not conceding that the Freezing Order should be discharged earlier than that date. I reject that criticism. First, the time frame was that established by Lewison J's Order. That was never challenged either by application to him or by way of appeal. This is not surprising. His order had extended the time for applying for permission to appeal his Order to 10th September 2010 and he had suspended the discharge of the Freezing Order until that date. The permission application would have had to be made to the Court of Appeal. I suspect that Lewison J made the Order he did specifically because he realised that it might be difficult to take all the necessary advice and obtain all necessary instructions and prepare Grounds of Appeal during August and because the Court of Appeal would only be able to consider an application to further suspend the discharge of the Freezing Order in September. His Order did not provide for a further suspension of the discharge in the event an application for permission to appeal was made. I am satisfied that Ms Brittain was awaiting advice from a new team of counsel and that she received the relevant advice no earlier than 10th September 2010 – see Transcript, Day 7, page 1026, Lines 11-12. In my judgment she is not to be criticised for waiting for such advice. The Heads of Claim In these proceedings, and aside from a claim for general, exemplary and aggravated damages, the Defendants seek to recover compensation for losses allegedly suffered by them under 13 separate heads being: i) Loss of profits that each of the Defendants would have made from purchasing in or around March 2010 further shares in "Don't Lean Back Limited" ("DLB"), a company that each of the Defendants had already invested in at the time that the Freezing Order was made; ii) Loss of profits that each of the Defendants assert they would have made from selling chairs at a profit to DLB; iii) Loss of profits that each of the Defendants say they would have made from purchasing marble from China to be sold to wholesale customers in the UK; iv) Loss of profit that Mr Hone asserts he would have made through buying and selling shares. Mr Hone alleges that but for the Freezing Order he would have been able to buy and sell shares and would have made a profit from so doing, as he had done previously; v) Surcharges that Mr P Owen incurred to HMRC as a result of his being unable to pay his tax liability within the prescribed time. Mr P Owen asserts that but for the Freezing Order he would have been able to pay his tax liability on time and so avoid the surcharges. It is this claim that is not disputed by HMRC; vi) Loss of the profits that each of the Defendants would have made from buying and selling various residential properties including in particular properties at: a) 73 Frensham Road, Lower Bourne, Frensham, Farnham, GU10 3HU ("the Farnham Property"); b) 45 Carlton Hill, Herne Bay ("the Herne Bay Property"); and c) 2 Woodside Cottages, 1 London Road, Harbledown, Kent, CT2 9AX ("the Harbledown Property"); The Defendants allege that but for the Freezing Order they would have carried out this business from August 2009; vii) Damage to the Warehouse (which it is common ground was owned at all relevant times by Wingpitch) as a result of the Defendants being unable to pay security costs for that property. The Second and Third Defendants allege that but for the Freezing Order they would have been able to provide the funds needed to pay for these security costs. This claim was in respect of a loss that it is common ground was suffered by Wingpitch not the Defendants and was one of the claims that I struck out at the outset of the trial; viii) Loss of rental income as a consequence of the Warehouse being unfit to let following vandalism to the property. Had the security been in place it is alleged that the vandalism would not have occurred, and had it not occurred, the Defendants allege that the Warehouse could have been let to a third party tenant. Since this claim is in relation to a loss suffered by Wingpitch not the Defendants, I struck it out at the start of the trial; ix) Loss of dividend income resulting from the forced sale of Mr P Owen's shares in Barclays Bank plc. But for the Freezing Order, Mr P Owen asserts that he would not have had to sell his shares in Barclays Bank plc. x) Encashment losses in respect of Mr P and Mr W Owen's pension funds. But for the Freezing Order, it is asserted that they would not have had to encash their pension funds. xi) Valuation losses in respect of Mr Hone's classic car. But for the Freezing Order, Mr Hone alleges he would not have suffered these valuation losses. xii) Loss of the profits that each of the Defendants allege they would have made from purchasing in or around February 2009 further shares in Knowledgecenter Limited. The Defendants had already invested in this company at the time of the making of the Freezing Order. There is an issue concerning the beneficial ownership of the Knowledgecenter shares that I will have to resolve and consider further below; xiii) Loss of profits that Mr Hone sustained in respect of a public house called "Treleigh Arms." But for the Freezing Order, Mr Hone alleges that he would have funded the construction of a conservatory extension to the restaurant area of the public house which would have resulted in increased profits being made of which he would be entitled to a share. Of these, I have struck out the claim for exemplary damages and the claims in relation to losses suffered by Wingpitch Limited. In consequence, Items (vii) and (viii) cannot be maintained. The claim in respect of pension losses suffered by Mrs Rikki Owen had been pleaded but did not appear in the list of heads of claim reproduced by Mr Coppel in his written opening submissions. The only pension losses that have been pleaded (other than those of Mrs Rikki Owen) are those alleged to have been suffered by Mr W Owen. If and to the extent that Mr P Owen as has suffered such losses as is suggested in Mr Coppel's skeleton, they have not been pleaded as losses claimed in the re-amended Points of Claim and cannot be maintained. In any event there is no evidence that supports such a claim. Given what has happened in relation to the quantum aspects of this claim, the issues that arise in relation to each head concern whether the factual basis of each head has been proved, whether the loss claimed satisfies the relevant causation and remoteness tests that are to be applied in this area and whether the Defendants have taken reasonable steps top mitigate those losses. The general and aggravated damages claims are pleaded in Paragraphs 11-14 of the Points of Claim. I refer to this in more detail when I consider those claims below. The Relevant Legal Principles. Introduction It is common ground that a cross-undertaking is given to the Court not the Respondent against whom the Injunction is granted and in consequence it does not create a cause of action in favour of that Respondent but rather entitles the respondent to apply for compensation – see Cheltenham & Gloucester BS v. Ricketts [1993] 4 All E.R. 276 at 281, propositions (2) and (3). In relation to the issues of causation, forseeability and mitigation, the starting point is Hoffman-La Roche & Co AG v. SoS T and I [1975] 1 AC 295, where Lord Diplock defined what was recoverable under a cross-undertaking by reference to contractual principles. He said at 361: "The assessment is made upon the same basis as that upon which damages for breach of contract would be assessed if the undertaking had been a contract between the Plaintiff and the Defendant that the Plaintiff would not prevent the Defendant from doing that which he was restrained from doing by the terms of the injunction: see Smith v. Day (1882) 21 Ch.D 421 per Brett LJ at p.427" The relevant part of the judgment of Brett LJ to which Lord Diplock was referring was his statement that in an assessment of damages due under a cross-undertaking "… the Court would never go beyond what would be given if there was an analogous contract with or duty to the opposite party. The rules as to damages are shewn in Hadley v. Baxendale (1854) 9 Ex 341". It was suggested that the reference to "duty" raised the possibility that there was thereby incorporated into the formulation the possibility of assessment by references to breach of fiduciary duties. I do not read what Brett LJ said in this way. Not only does it plainly not accord with what Lord Diplock considered that Brett LJ was saying but the reference to Hadley v. Baxendale is consistent only with the view that Brett LJ did not intend to go further than Lord Diplock considered that he had gone, and was referring to a contractual duty. The Court of Appeal approved this approach in Cheltenham & Gloucester BS v. Ricketts [1993] 4 All ER at 282 – see proposition (8). The approach identified by Lord Diplock has been followed in a significant number of first instance decisions – see by way of example Lightman J in Triodos Bank NV v. Dobbs and others [2005] EWHC 108 – see Paragraphs 34 – 38 of his judgment, Jack J in Al-Rawas v. Pegasus Energy Limited and others [2008] EWHC 617 (QB) [2009] 1 All ER 346 – see paragraph 15 of his judgment following the judgment of Nelson J in Eliades v. Lewis [2005] EWHC 2966 (QB) to similar effect. The effect of this in my judgment is to incorporate into this area of the law by analogy the principles relating to causation, remoteness and mitigation that are applied to claims for damages for breach of contract. However, it is to be borne in mind that the analogy is just that and it may have to be departed from to the extent necessary to take account of the fact that there is no contract between the parties, the claim is not a claim for damages for breach of the cross-undertaking but is a claim for compensation due pursuant to it and for the purpose of ensuring that an over-mechanical approach does not defeat the vital protection afforded to an injunctee by the cross-undertaking. The application by analogy of the approach adopted in relation to claims for damages for breach of contract to issues concerning causation, remoteness and mitigation does not lead necessarily to the conclusion that all the rules relating to such claims must be adopted when considering a claim for compensation in respect of losses made pursuant to a cross-undertaking. I return to this issue when considering the general damages and aggravated damages claims. Causation It is common ground that the onus rests on the Defendants to prove that the loss for which compensation is claimed (a) was suffered in fact and (b) would not have occurred but for the existence of the Freezing Order. It is common ground that it follows that where there is more than one cause of the loss in question the Defendants must show that the Freezing Order was at least an effective cause of the loss in respect of which compensation is claimed. It further follows that a key point in an Inquiry of this sort is to identify loss caused by the Injunction as opposed to loss caused by the litigation in which the interim injunction has been obtained – see R v. Medicines Control Agency Ex P. Smith & Nephew Pharmaceuticals Limited [1999] RPC 707 at 714, lines 37-8 ("Medicines"). Foreseeability and Remoteness The main area of dispute between the parties concerned the applicable principles of remoteness. The reason for this was that the contractual analogy may not work entirely satisfactorily in all cases where compensation is claimed pursuant to a cross-undertaking. The principles of foreseeability and remoteness applicable to a claim for damages for breach of contract are well established. They are founded on the formulation in Hadley v. Baxendale and the cases that follow it. In principle, the victim of a breach of contract is only entitled to recover such part of the actual loss caused by the breach as was reasonably foreseeable at the time the contract was made as liable to result from the breach. Any loss that falls outside this definition, even if shown to have been caused by the breach alleged, is too remote and thus is irrecoverable as damages. What is treated as foreseeable depends on the knowledge of the contract-breaker. The first rule in Hadley v. Baxendale is concerned with losses that may reasonably be supposed to be in the mind of both parties, at the time the contract is made, as the probable result of a breach. The second rule is concerned with losses arising from special circumstances outside the reasonable contemplation of the parties at the time that the contract is made, which can be recovered only if the contract-breaker had actual knowledge of the special circumstances at the time when the contract was made. It is also trite that the knowledge required is of the type of loss suffered rather than precise knowledge or imputed knowledge of the mechanisms by which loss is caused or its extent. The conventional application of these principles to claims for compensation for loss made pursuant to a cross-undertaking is that set out by Aickin J in Ansett Transport Industries (Operations) Pty Ltd v. Halton and others [1979] 25 ALR 639, a decision of the High Court of Australia ("Ansett"). This statement of principle was cited with approval in Cheltenham & Gloucester BS v. Ricketts (ante) at 282 – see proposition (8) and was described in Medicines as being "… the leading modern case …" on this issue. Aickin J said "In a proceeding of an equitable nature it is generally proper to adopt a view that is just and equitable or fair and reasonable, in all the circumstances … the view that the damages that should be those which flow directly from the injunction and could have been foreseen when the injunction was granted, is one that will be just and equitable in most cases … circumstances may sometimes require a different approach. However it will in my opinion be seldom that it will be just and equitable that the unsuccessful plaintiff should bear the burden of damages which were not foreseeable from circumstances known to him at the time" The phrase "… at the time …" relates back to the earlier part of this statement and refers to when the injunction was granted. In my judgment the statement of principle above renders recoverable either loss suffered by the Injunctee that falls within either the first or second rule in Hadley v. Baxendale and arises from circumstances that were either actually known to the injunctor or deemed to have been known to the injunctor at the date when the injunction is granted. As stated by Jacobs J as he then was in Medicines at 713 lines 5-7 and by Jacobs LJ in SmithKline Beecham Plc. v. Apolex Europe Limited [2006] EWCA Civ 658 [2007] Ch 71, this has the effect that the injunctor will only be liable for such damage as he could reasonably foresee would be caused to the injunctee by the injunction either from his own general knowledge of the circumstances or from his knowledge of the particular circumstances. This last point is significant because although the form of cross-undertaking considered by Lord Diplock was one that referred to damage rather than loss, Jacobs LJ in SmithKline Beecham was considering a cross-undertaking in the form that was adopted in this case. This approach was also adopted by Jack J in Al-Rawas v. Pegasus Energy Limited and others (ante) at paragraph 15 of his judgment, following the judgment of Nelson J in Eliades v. Lewis (ante). This leaves out of account losses that result from events developing after the injunction has been granted. Ordinary contractual principles would suggest losses flowing from such circumstances would not be recoverable. In this area however such an approach would be unduly narrow and would deprive the cross-undertaking of much of its practical utility and the Injunctee of much of the practical protection the cross-undertaking is meant to accord to him. It takes no account of the fact that interim injunctions can be varied by Order to take account of a change in circumstances and that freezing orders in particular conventionally contain provisions which permit variation by agreement – in this case contained in Clause 10(2) of the Freezing Order. It was for this reason that Mr Nathan accepted that in relation to events of this sort, loss caused by the injunction would be recoverable, even though it was unforeseeable at the date when the injunction was granted, provided that express notice of the post-injunction special circumstances had been given prior to the loss being suffered in sufficient time for the parties to be able to agree the terms of an appropriate variation. In support of this proposition, he relied on the comment of Jacob J in Medicines at 714, lines 45-50 where having acknowledged obiter that there was something to be said for the view that the paying party should pay for all loss directly caused to the Injunctee by the wrongfully granted injunction, he then qualified that by saying: "… if… once he knows of the Injunction, the Injunctee does not spell out to the Injunctor any special circumstances causing direct but, to the Injunctor, unforeseeable damage, he may not be allowed to recover for that damage. Equity would be apt to blame an Injunctee who stood by, letting the Injunctor build up a liability on the cross-undertaking of which he had no knowledge." This approach is consistent with that identified by Aickin J in that he was prepared to accept that there might be circumstances in which a different approach to that which is conventional might be required to achieve what was just and equitable. However in my judgment the cardinal point remains this: absent express notice of special circumstances arising after the date when the Injunction is granted, the conventional approach is that compensation will not be recoverable for events occurring after the grant of the injunction that could not be foreseen at the date when the injunction was granted. The Defendants rely on a number of first instance decisions for the proposition that loss should be recoverable applying the principles relevant to awards of compensation for breach of fiduciary duty. These decisions have not persuaded me that it is appropriate to depart from what appears to me to be the conventional approach. These authorities are either ones that have been reached per incuriam earlier decisions of appellate courts (Lilly ICOS LLC v. 8pm Chemists Limited [2010] FSR 4) or contain views that are strictly speaking obiter (R v. Medicines Control Agency Ex P. Smith & Nephew Pharmaceuticals Limited [1999] RPC 707 at 714 and Les Laboratoires Servier v. Apotex Inc [2008] EWHC 2347 (Ch)). Apex frozen Foods (In Liquidation) v. Ali [2007] EWHC 469 (Ch) is distinguishable because it was concerned with a cross-undertaking in terms that are different from that in this case and had been given by a third party and the issue in that case concerned the liability of the third party for costs under the cross-undertaking. That point would not arise in relation to an undertaking given by a party to the litigation in which the injunction had been sought and granted. The key point to emerge from that case is that in general the formulation adopted by Lord Diplock remains the correct approach – see Paragraph 10 of the Judgment. In my judgment there is nothing in any of these authorities that entitles me to depart from the conventional approach indentified by the Lord Diplock in Hoffman-La Roche and Jacobs LJ in SmithKline Beecham (ante). The "Knockback" Theory On a number of occasions and in relation to a significant number of the heads of claim for which compensation is claimed, it was put to the Defendants in cross examination that no notice was given by them to the liquidator of Abbey or her advisors of the existence of the opportunities which it was said were lost to the Defendants as a result of the Freezing Order. When these points were made each of the Defendants maintained that they considered that it would be pointless to advise the liquidator of the opportunities concerned because it was clear that she would (unreasonably and unfairly) refuse to consider the opportunities properly on their merits by reason of the way that she had reacted when approached for other variations and permissions – which each of the Defendants and in particular Mr Hone described as "knockbacks". It is convenient that I address this point at this stage because it is one that was relied on by the Defendants in relation to a number of different heads of claim and is a point that is wrong in my judgement both in law and fact. Factually I do not accept that the correspondence relied on by the Defendant demonstrates either that the liquidator had adopted the stance alleged or that the Defendants or at any rate the very experienced solicitors who acted for them at all stages material to the issue I am now considering considered that the liquidator had adopted such a stance. I do accept that some of the correspondence written by Moon Beever contained points that were wrong in principle and over-aggressively expressed. Whilst worthy of criticism, such conduct does not justify the approach to foreseeability and remoteness issues adopted by the Defendants. I turn now to the relevant correspondence. On 2nd June 2009, Moon Beever (the solicitors acting for the liquidator) wrote to Master Price concerning various procedural issues relating to the claim. In relation to the operation of the Freezing Order they wrote: "Provision has been made for living and legal expenses for the directors whose assets are frozen and we have thus far had no indication of any difficulties that this may be causing …" Cripps Harries Hall ("CHH" – the solicitors then acting for the Defendants) wrote to Master Price on 5th June 2009 responding to Moon Beever's letter of 2nd June. In relation to the Freezing Order they wrote: " … to date there have been no problems in obtaining payment of living expenses etc as duly authorised by the freezing order. However, the order has a significant impact on the ability of our clients to engage in new business and we anticipate that we shall need to make requests in this respect in due course …" The effect of this correspondence is entirely clear. It suggests that on any view by that date (5th June 2009) CCH had not formed the view that to make requests of the liquidator for permission to embark on new business ventures would be a waste of time or would be unreasonably rejected if made. This correspondence makes clear that no such requests had been made down to the date when the letter of 5th June was sent and it contains a clear recognition that in relation to new business activity an approach for permission from the liquidator would be required. There is no suggestion that requests had been made, but had been rejected unreasonably, nor is there any suggestion that business activity was being prevented because the Defendants could not reasonably be expected to fund the cost of making such requests or applications to the Court if such a request was refused. This last point was also one that was relied on by the Defendants in general and Mr Hone in particular. It is a point that CHH was almost bound to have mentioned in this correspondence if the issue had arisen by that stage because the correspondence that I have so far referred to was written in the context of a challenge by Moon Beever to a trial window that had been fixed by Master Price. Had business opportunities been lost because of unreasonable refusals of permission in circumstances where the Defendant could not afford or could not reasonably be expected to fund applications to the court for variations of the Freezing Order then this point (if it was a good one) was one that CHH was bound to deploy at this point. For these reasons I conclude that there is no factual merit in the knockback theory prior to the 5th June 2009. The correspondence that followed does not support an inference that the Defendants or their solicitors considered that any request for a variation of the terms of the Freezing Order to accommodate new business ventures was not worth making because it was bound to be refused. I asked Mr Coppel to identify the correspondence that was relied on to support this theory. He identified a series of letters that passed between solicitors between the end of June and the end of December 2009. Many of these letters concern disputes about increases in what are properly to be regarded as living expenses and the reasonableness of legal fees rather than requests for agreement to funds being drawn down in order to finance new business ventures. I question whether challenges in relation to the former by a claimant in the position of the liquidator in this case could even arguably justify an inference that requests relating to the latter would be unreasonably refused. Probably however, whether that is so or not does not matter because in my judgment when the correspondence is viewed as a whole it is clear that no such inference had been drawn by CHH and there is nothing in the correspondence that suggests that the Defendants had in fact arrived at such a conclusion either. By a letter dated 23rd June 2009, CHH informed Moon Beever that (a) Mr Hone had dealt in stocks and shares prior to the making of the Freezing Order; (b) he had entered into a trade for the purchase of shares and copies of the relevant contract notes were attached; (c) £60,039.40 had to be paid by 25th June (that is 2 days after the date of the letter) and (d) that a further sum of £36,586 had to be paid by 29th June. It was said that the payment was to be drawn down from a particular bank account using funds credited to that account from a particular source and asserted that the transaction was one falling within Clause 10(2) of the Freezing Order, being a transaction in the ordinary course of business. The response from Moon Beever came on 25th June 2009 and was in these terms: "Thank you for your fax. Ordinary business does not necessarily include risk taking with assets subject to order. On this occasion our client will agree the release, as the shares appear to be good investments. The Freezing Order bites on the shares. In future we require more notice and there is no reason why substantially more notice shouldn't have been given, the contract note being 10 days ago. …" In my judgment no reasonable reading of this document could lead to it being read as a "knockback" in the terms suggested by the Defendants. It was a consent given within 2 days to a payment in aid of a transaction that was said to have been made in ordinary course of business but which was in relation to a type of business that had not in fact been disclosed. Mr Hone's affidavit of means had disclosed that he owned a number of shares. That does not lead to the inference that he operated a personal business investing in stocks and shares and there was nothing in the affidavit of means that suggested that he did. It was this point that was made by Moon Beever in the letter to CHH dated 6th July 2009 and was returned to in the letter of 13th July 2009. There was thus a dispute as to whether share dealing was Mr Hone's ordinary course of business. That did not mean that the liquidator would irrationally or unreasonably refuse to agree a variation so as to permit an appropriate share transaction. Objection was taken to the comment in the 25th June letter that "Ordinary business does not necessarily include risk taking with assets subject to order". That was not a knockback – it was a warning as to the position that might be adopted by the liquidator in the future. The liquidator might be wrong but the warning given on her behalf was not a "knockback". It was clearly not construed as such by CHH because by a letter dated 8th July 2009, they informed Moon Beever that: "With reference to the share dealing by Mr Hone we have requested out clients to give us advance notice of any such proposed transaction in order that this can be pre-emptively agreed …" It is to be borne in mind when considering this theory that at no stage down to the date I am now considering had it been suggested that the Defendant did not have the means or the inclination to apply to court for a variation if a request for a variation was refused. It was thus highly unlikely that the liquidator would adopt an indefensible stance in relation to such a request since if she did she would be at risk of having to pay the costs of the application. It is true to say that by a letter dated 7th July 2009, Moon Beever objected to the expenditure by the Defendants of money on an appeal against the underlying assessments. This expenditure had been undertaken without prior consent. Plainly it did not come within the scope of the legal expenses exception within the Freezing Order which as a matter of necessary inference was in respect of legal costs incurred by the Defendants in defending the proceedings in which the Freezing Order had been sought and granted. It is significant that Mr Coppel did not seek to rely on this letter as being one that justified the knockback theory. Thus I do not consider that anything had occurred down to the 8th July 2009 that could reasonably be said to support the view that if a request had been made to vary the Freezing Order so as to permit a new business opportunity to be exploited it would have been rejected unreasonably. In arriving at that conclusion I make clear that in arriving at that conclusion I have taken account of the terms of each of the letters to which I have referred. It would be artificial to look at each letter relied on in isolation. I accept that it is the substance of the correspondence taken as a whole that matters. Reliance was placed on a sentence in the letter from Moon Beever to CHH dated 20th July 2009 in which the writer said that "… Mr Hone's assumption that he can gamble on the stock market is also we have to say wholly misconceived …". However this was not a knockback – that is a refusal of consent to a particular transaction or course of dealing. It was a reassertion in emphatic and perhaps over-emphatic terms of the point that the liquidator had been making via her solicitors consistently namely that she did not consider that share trading was part of Mr Hone's ordinary course of business. It is now clear that in fact Mr Hone had been operating in a small way in the stock market prior to the making of the Freezing Order. But that fact had not been disclosed to the liquidator in the affidavit of means and the documentation now relied on had not been disclosed to Moon Beever in any of the correspondence that I have so far considered. On 23rd July 2009, CHH wrote to Moon Beever asserting on behalf of Mr Hone a request that he be allowed to draw down from his assets in order to meet various debts then outstanding. This letter included a statement to the effect that "… Mr Hone does not have sufficient income in order to discharge his significant outgoings. He is unable to obtain work in the freight forwarding/broking industry as he is unable to obtain credit in light of the freezing order." It identified his annual income as being the sum of £15,000 from holiday let properties owned by him and £5,000 being rent from the Treleigh Arms. It was said that Mr Hone had "… previously earned an income from share trading (around £7,000 last year)". The letter concluded by requesting the liquidator's consent to various payments including "…£30,000 to be deposited with Pershing Securities in order to allow Mr Hone to make a modest living from share dealing. In this respect it should be noted that Mr Hone has been profitably trading in shares for over 12 years". On 27th July Moon Beever responded to this letter seeking further information though not specifically in relation to share trading activity. This issue then become lost in the correspondence which then became diverted to other matters including the practice of Mr Hone borrowing from friends and relatives without the prior consent of the liquidator being sought. The letter which it was submitted on behalf of the Defendants constituted the slamming of the door by the liquidator to any speculative ventures is that of the 27th August 2009. By the time this letter came to be written there were two main issues that had arisen concerning the Freezing Order. One was an ongoing dispute concerning the level of the Defendants' living expenses and how they were being funded. I need not consider that issue further at this point. It is not material to the issue I am now concerned with which is whether the correspondence displayed on the part of the liquidator an unreasonable refusal to consider business opportunities that became available to the Defendant as and when requests for variations were received. In relation to that, the letter of 27th August referred to "… a very odd call from Patrick Owen today seeking £14,000 to buy a container of marble. She directed him to address any requests via you to us." This was undoubtedly a request for consent to spend money on a business venture. The letter was technically incorrect to the extent that it implied that the Freezing Order required the Defendant to apply for consent variations via their solicitors. It did not. However, Paragraph 10(3) of the Freezing Order did require such variations to be agreed with the Claimant's solicitors. The letter then continued: "We have repeatedly tried to ascertain what your clients are doing in terms of work or income. Their "ordinary course of business" on the basis of the information thus far supplied via you is "unemployed". Thus clearly no releases can be made for any trading. " In my judgement, this last statement was one that was seriously misplaced. Paragraph 10(2) of the Freezing Order made it abundantly clear that the Defendants were entitled to deal with or dispose of their assets in the ordinary course of business. A refusal to release assets to permit trading would be a very serious and entirely unwarranted departure from the terms of the Order. The letter then concluded by demanding further information concerning the Defendants income and assets and with the threat that if full replies were not received "… we shall advise our client to reduce the living expenses agreed previously and the matter will have to be dealt with by the Court…". This was a course that was not open to the liquidator since living expense limits had been fixed by the Order made on 18th February 2009. A threat to unilaterally interfere with what was permitted by that Order was entirely unwarranted. However imprudently and intemperately worded the letter of 28th August is regarded as having been expressed, its actual effect can only be understood in context. The Defendants were represented by experienced solicitors and they responded on 28th August in these terms: "The request made to your client's manager by Mr Patrick Owen in relation to the marble should not be considered in any way odd. This was a business opportunity that our clients wished to take up. As with most business opportunities they are time critical and cannot wait for our clients to inform us, for us to inform you, for you to inform your client and then potentially for your client to inform you, you inform us and us our clients of any decision. This will effectively prevent our clients from taking up business opportunities as they arise … Our clients are businessmen who have over the years diversified into various projects of which you are well aware. Unfortunately, these projects are not generating money at this point. Our clients, as businessmen, are on the lookout for business opportunities in order to bring in income. If they are not allowed to explore such opportunities then their assets will be denuded by payment of living expenses and legal expenses." A potentially significant point to emerge from this correspondence is that it was not suggested that any business opportunities had been lost down to the date of this letter as a result of refusals of consent under Paragraph 10(3). The letter suggested that no income-earning opportunities had been lost down to the date of that letter other than the marble transaction. The wholly unreasonable attitude of the liquidator's legal advisors to the question of living expenses was continued in a letter from Moon Beever to CHH dated 1st September 2009. That letter included the following remarkable statement: "At present Messrs Hone, P.Owen and W.Owen are (by agreement with our client) being permitted £10,000, £3,750 and £7,250 p.m. respectively living expenses. This is not sustained by income and so we require lists of their reasonable living expenses … so we can review our client's view of "reasonable living expenses". At present the order of £500 pw initially granted seems more appropriate and if we do not receive current details we will advise our client the banks should be notified that the revised sums are withdrawn and £500 pw stands until further order. We do not consider that your clients should be recklessly spending from capital where we consider the capital possessed is likely to be at least in part the proceeds of the alleged fraud and in any event the freezing order is intended to preserve assets for satisfaction of judgment." This was an extraordinary statement at a number of different levels. First, the sums permitted for living expenses was not the result of an agreement by the liquidator. The sums permitted to be used for living expenses were fixed by the Order made by consent on 18th February 2009. Secondly, what is required for living expenses is to be judged by the standard of living enjoyed before the Freezing Order was imposed not what income is available to the Defendants after the action taken by HMRC and the liquidator. Thirdly, and irrespective of that point, the threat to advise the liquidator to unilaterally reduce living expenses was a threat to advise her to breach the terms of the Order which at least arguably would be a contempt of court. Finally whatever might have been the position if the claim made by Abbey had been proprietary in nature, the fact is that it was not. That being so the reference to the Defendants' capital being "…the proceeds of the alleged fraud …" was misplaced. However, as I have said already the impact of this conduct in the context of the issue I am now considering must be judged against what happened subsequently in relation to requests for consent to variations in order to permit advantage to be taken of new business activity. On 11th September 2009, CHH wrote a lengthy letter to Moon Beever specifically to address "… the various insinuations and allegations that have been made by yourselves and your client in relation to our clients financial circumstances." The letter enclosed a summary of the financial position of each Defendant. There was also a schedule that showed the income received by the Defendant and Wingpitch from Abbey between 2005 and 2007. The letter concluded with the following statement: "The comments in the final paragraph of your letter of 1st September 2009 are entirely rejected. Our clients are not "recklessly spending from capital". Their outgoings have been notified and a court order made accordingly. The fact that their outgoings need to be paid from capital is because the liquidation of Abbey … (and the consequential loss suffered by Wingpitch …) has removed our clients' main (and in some cases sole) source of income. With regard to replacing that income, our clients, by virtue of the liquidation of their company and the freezing injunction are unable to obtain employment in the industry which they worked in for most of their lives. Nor are they able to earn money from ancillary activities in view of your client's unwillingness to allow our clients to use their own money in any speculative venture. In these circumstances, it is your client that is the author of our clients having to spend their capital …" The significant part of this letter for present purposes is the assertion that the Defendants were unable to "… earn money from ancillary activities in view of your clients unwillingness to allow our clients to use their own money in any speculative venture". This would appear to relate back to the letter from Moon Beever of 27th August. In fact the only transaction in respect of which permission appears to have been refused was the marble transaction. By a letter of 14th September 2009, a request by Mr P.Owen for permission to pay an insurance premium was refused on the basis that the liquidator was not prepared to permit any further expenditure pending "… full answers to the expenses questions". This was relied on by Mr Coppel as part of the material supporting the knockback theory but in fact the letter relates to an expenses issue not a business expenses issue. Although I accept that in some respects the issues had become elided in the correspondence they are in fact entirely separate issues. There is further correspondence thereafter relating to legal and living expenses which canvasses the territory already summarised above. It does not take matters further. While there is much that could legitimately be regarded as objectionable and misconceived in the correspondence that was written on behalf of the liquidator by her solicitors in relation in particular to expenses, the critical issue I am now addressing is whether it was reasonably to be inferred that notifying the liquidator of business opportunities and seeking her consent to participate would be a waste of time and costs. In my judgment it does not. The correspondence relating to living and legal expenses is not material to the issue I am now considering which is whether otherwise unforeseeable losses that could be recovered normally only following notice being given of that opportunity should nonetheless be recoverable given the approach of the liquidator as set out in the correspondence. In my judgment the correspondence that relates to business opportunities does not justify such an approach at a factual level. The reality is that the Defendants were represented throughout and could and did make requests as and when they considered it appropriate to do so. So for example, by a letter dated 12th November 2009, CHH specifically requested the agreement of the liquidator to the participation of the Defendants in a residential property re-development venture. The response was a letter dated 23rd November. It did not reject the request but sought further information in relation to what was proposed. Indeed, on one occasion when a request was refused an application was made to the Court for a variation Further, I question whether as a matter of law the position adopted by the Defendants is correct. Even if the approach to Inquiries of this sort proceeded on the basis that the starting point is that all loss directly caused by the injunction concerned should be recoverable under the cross-undertaking (the position favoured by Jacobs J in Medicines), that would almost be bound to be subject to a qualification to the effect that an Injunctee who stood by, letting the Injunctor build up a liability on the cross-undertaking of which he had no knowledge, would not be permitted to recover such losses. If that is so then I do not see how refusals by someone in the position of the liquidator to permit variations so as to facilitate new business ventures (however often they occur and however unreasonable they might appear or appear in retrospect) could lead to that protective exception ceasing to apply. The injunctor is entitled to consider each business proposition on its merits and either agree a variation or refuse and run the risk either of an application being made to the Court or a claim for losses being made pursuant to the cross-undertaking. The possibility or even the probability that the liquidator would refuse consent does not in my judgment justify a departure from this approach. Mitigation The principles applicable to the mitigation of loss that apply to claims for damages for breach of contract apply in this area as well – see Triodos Bank NV v. Dobbs and others (ante) at Paragraph 38. I do not understand this to be in dispute between the parties. The issue between the parties is whether the Defendants were obliged to mitigate their loss by applying to the court for an Order varying the terms of the Freezing Order where consent was refused. This issue is not capable of being answered sensibly as a matter of generality or in a factual vacuum and I address it further as I consider each head of loss claimed. General Damages I consider the legal principles applicable to this issue and to the claim for aggravated damages at the end of this judgment. The Heads of Loss It is convenient that I consider each of the Heads of Loss separately. I do not consider further those that I have struck out nor do I consider further the claim by Mr P.Owen to recover a tax surcharge, which has been conceded. There are thus 9 separate heads of ;oss in respect of which compensation is claimed. The DLB Shares Purchase DLB was a company controlled by Mr Tom Wates. The company's core business is the manufacture of chairs for use in schools. Mr Wates is a long standing friend or associate of the Defendants and in particular Mr Hone. On 9th January 2009, shares in DLB were purchased (by whom and on behalf of who is in issue) and were allotted to, and registered in the name of, Ms Kelly Owen, Mr P.Owen's daughter, on 4th March 2009. It is common ground that Ms Owen does not have any beneficial interest in the shares. Who in fact owns them beneficially is in dispute. Although Mr Coppel submitted in Paragraph 54 of his closing submissions that DLB was mentioned by Mr Hone in an interview with the liquidator that took place in March 2009, I regard that as immaterial for present purposes. The only material mention of DLB was on page 6 of the transcript of the interview. It refers to a role in manufacturing chairs. Mr Hone is not recorded as referring expressly or by implication to a shareholding much less one owned by the Defendants. The shares in DLB were first mentioned in the letter of 11th September 2009 from CHH to Moon Beever referred to above. In the schedules attached to that letter, Mr P.Owen was described as having "… an interest in …" DLB, as was Mr Hone and Mr W.Owen. There had been no mention of the company or the Defendants interest in it until that point. It is not suggested that the liquidator knew or ought to have known of any interest that the Defendants might have in DLB at any stage prior to the 11th September 2009. Moon Beever requested further information concerning this interest and on 16th October CHH wrote to the liquidator in these terms: "The position in relation to [DLB] is as follows: £50,000 in value of shares was purchased in this company in December 2008 by Wingpitch; The money for the purchase came from Abbey Forwarding Limited. Wingpitch Limited issued a credit note to Abbey … in this sum (to be credited against the money owing from Abbey … to Wingpitch … in relation to rent); This shareholding was considered to be an investment on behalf of the families of Messrs Owen and Hone but it was undecided as to how the shares should ultimately be held. Accordingly, the shares were registered in the name of the daughter of Mr [P.Owen]; In due course the appropriate accounting adjustments would have been made to reflect initial purchase of the shareholding by Wingpitch Limited … " There are a number of difficulties about all this. First, there is no formal lease between Wingpitch and Abbey. Secondly the "credit note" referred to in the letter has never been produced. The credit note was apparently issued by Wingpitch in favour of Abbey. Wingpitch is not in liquidation and remains in the control of its directors. It is unclear therefore why the credit note has not been produced. Thirdly, the sum of £50,000 does not divide into the rent ostensibly due from Abbey to Wingpitch each month of £33,000. Fourthly, the accounts for Wingpitch for the period ending 31st December 2009 record a turnover of £49,500, a depreciation in the value of fixed assets in 2009 when compared to 2008 (which is not consistent with the acquisition of new assets at a price of £50,000, a view that is supported by Note 4 to the accounts which makes clear the only property held by Wingpitch is the Warehouse), and nowhere within the accounts either for this or the subsequent financial period is there a reference to a credit note being issued to Abbey. Fourthly, if the purchase was by or on behalf of Wingpitch (a company controlled by the Owen family in which Mr Hone had no interest), it is not at all clear why the shares were not allotted to and registered in the name of that company. On any footing however, the shares could only have been owned beneficially on allotment either by Abbey or Wingpitch applying conventional resulting trust principles, if they were not owned beneficially by Ms Owen. There is no obvious basis on which shares purchased by Wingpitch could be owned jointly by the Defendants. If, as is common ground, the purchase money was provided by Abbey, the Defendants could jointly have become beneficial owners of the shares by debiting the sum used to purchase the shares to their respective director's loan accounts. It is not alleged that such ever occurred however. Mr Hone gave evidence on this issue. He said in his statement that the shares had been registered in the name of Ms Owen on the advice of accountants. So they might have been but that does not assist in resolving the issue I am now considering. In his oral evidence Mr Hone said first that the shares were owned by Wingpitch and then by the Defendants. Given this level of uncertainty, I gain no real assistance from this oral evidence. In these circumstances the only safe conclusion that can be reached and the finding I make is that the shares originally allotted to Ms Owen were owned beneficially either by Abbey or Wingpitch. Any transfer of beneficial ownership from either Abbey or Wingpitch would require a further step. The terms of the letter of 16th October 2009, if accurate, mean that any such step would have to have been taken after that date if it occurred at all. No evidence has been produced that proves the occurrence of such a step. The fact that the shares remain registered in the name of Ms Owen suggests that in truth no such step has been taken. Who owns the shares is important because of the nature of the loss in respect of which compensation is claimed. The claim is based upon a loss of ability to purchase shares that would otherwise have been available by way of a rights issue - that is an offer of further shares to existing shareholders in return for additional investment. This much is apparent from the letter dated 22nd January 2010 sent to existing shareholders by DLB that refers to a resolution by which "…all existing shareholders …" were being invited to apply for further shares. Thus any loss resulting from not taking full advantage of the rights issue would be suffered by the beneficial owner of the shares originally allotted to and registered in the name of Ms Owen. If the beneficial owners of the shares were not the Defendants then any such loss would not be recoverable in these proceedings because the loss would not be their loss and because the cross-undertaking serves only to compensate the parties identified in the undertaking (the Defendants) in respect of losses caused to them or any of them – see Smith Kline Beecham Plc v Apotex Europe Ltd [2006] EWCA Civ 658; [2007] Ch 71 at paragraphs 86-87. The remainder of this part of the judgment proceeds on the basis that this analysis is wrong. If it is right then this part of the claim must necessarily fail. Mr Hone argues that this is wrong because the evidence establishes that he borrowed money from his mother for the purposes of exercising the rights to acquire further shares. Mr Hone's case is that there were further shares available because the existing shareholders did not wish to take up the whole of their respective entitlements. He maintains at paragraph 36 of his witness statement that further shares would have been acquired but that the Defendants could not do so "[a]s a consequence of the freezing order …". In my judgment this claim fails even assuming that the Defendants are to be treated as the beneficial owners of the DLB shares or that the acquisition of the additional shares would have been funded by the Defendants who would thus have acquired a beneficial interest in them. I reach that conclusion for the following reasons. I find (and it was not in the end disputed) that there was no request made by the Defendants or any of them to the liquidator either for a consent variation so as to permit them to acquire the additional shares (assuming that the purchase of shares would not fall within the "ordinary course of business exception") or for the liquidator to authorise any bank to permit a drawdown of the sum necessary to purchase the shares assuming that the purchase was to be treated as being in the ordinary course. I conclude that without such notice any loss flowing from the inability of the Defendants to purchase additional shares in DLB was unforeseeable applying the principles outlined above. Although foreseeability focuses on the kinds of loss that are not unlikely to occur – see Paragraph 33 of the Defendants closing submissions and above – I do not consider that losses flowing from a failure to take up a rights issue are losses of a kind that is not unlikely to occur to the holders of shares given the terms in which losses that are not unlikely to occur have been defined in the cases identified in Paragraph 34 of the Defendants' closing submissions. The Defendants interest in DLB was not known to the liquidator prior to the application for the Freezing Order and the only detailed information that was ever supplied was that contained in the letter of 16th October. In my judgment losses suffered as a result of not taking up shares available as part of a rights issue that was made after the grant of an injunction will not be recoverable unless the injunctor knew of the offer and the desire of the injunctee to take up what was offered. Any losses suffered in the absence of such knowledge will be too remote in law to be recoverable. It follows from these conclusions that the question of failing to mitigate by applying to the court for a variation does not arise. It was submitted by HMRC that if and to the extent that the purchase of the shares was in the ordinary course of business then no compensation was recoverable because it was open to the Defendants simply to proceed. If and to the extent that assets could be deployed without involving third parties anxious to avoid being complicit in a breach the Freezing Order this is technically correct since expenditure in the ordinary course of business does not require any form of prior consent under the terms of Paragraph 10(2) of the Freezing Order. The Freezing Order provides that before drawdowns for living and legal expenses are made notice must be given of where the money is to come from. That requirement has not been applied to expenditure in the ordinary course of business. However the reality is that all the Defendants' free assets required the interaction of either a lender or a banker in order to move funds from source to destination and the evidence in particular in relation to the payment in respect of Mr Hone's share dealings that were authorised shows that banks are remarkably reluctant to permit funds to dissipated without the prior consent of the injunctor. Thus I am not persuaded that consent was not required. However what does emerge from this is that if the Defendants wished to use their assets in the ordinary course, and wished to do so using a bank, they knew that before the banks would permit a transaction to proceed the consent of the liquidator's solicitor would be required. The key point is that there was never any such request. Supplying Furniture to DLB For Onward Sale By DLB The business opportunity here referred to was described by Mr Hone in his witness statement at Paragraphs 27-36. As already explained, DLB's core business was the supply of chairs for use in schools. Mr Hone's evidence was that the Defendants (there is a dispute as to what entity or entities controlled by them would carry out this business) would source chair frames from China, and plastic seats from a moulder in Wales and would assemble the chairs in the Warehouse. He maintains that he had agreed a price of £9.60 per chair with Mr Wates and that the cost of importing, manufacture and assembly would be £7.50 (see paragraphs 28 and 30 of his witness statement). He says that 3,200 chairs had been manufactured by a Chinese supplier known to the Defendants though another business operated by them called Abbey Fireplaces and that they had been shipped and were stored at the Warehouse at the date when Ms Brittain was appointed provisional liquidator. The seats were being manufactured in Wales at that time. There are two claims advanced. The first relates to the 3,200 frames. The Defendants maintain that they were excluded from the Warehouse for two months notwithstanding that they had informed the liquidator that the chairs needed to be assembled and sold on. In the result the transaction was lost. There is also a claim for future loss of profits based on an assertion that a long term trading project by which the Defendants would manufacture and supply chairs to DLB was lost because of the Freezing Order and that now the opportunity does not exist because Mr Wates has improved his relationship with his current suppliers. The substance of each of these claims is summarised by Mr Coppel as being that the Defendants "… could … not continue with the supply of the chairs because they did not have free access to their assets.". There are significant issues between the parties as to which entity was in fact undertaking this work. The metal frames had been ordered by Abbey Fireplaces, a partnership between the Defendants and a fourth individual called Mr Steve Duguid. The freight was paid for by Abbey and eventually the business was to be conducted through another corporate vehicle controlled by the Defendants called Purland House Limited. The key point is that all these entities were or would be VAT registered. Unless this was so all relevant VAT could not be reclaimed. However the real point is that this claim fails on causation and remoteness ground irrespective of whether this business was intended to be carried on by the Defendants or not. I reach that conclusion for the following reasons. If the Defendants were undertaking on their own account the manufacture of chairs for DLB, then this was activity that on any view came within the "ordinary course of business" exception. The Defendants were entitled to deal with or dispose of their assets in pursuit of this activity. They were entitled to what was stored at the Warehouse because (on their case) Abbey had no title to the components stored there. At no stage prior to the date when Wingpitch recovered possession of the Warehouse was a request made specifically for the recovery of the chair components. There were requests for recovery of stock belonging to Abbey Fireplaces and the liquidator accepted that she considered this included the chair components. There was no specific mention of the chair components. The reason why this was not done is I consider obvious. On the Defendants' case the manufacturing process was to be undertaken at the Warehouse. That ceased to be available as a result of Abbey being placed in provisional liquidation. The Freezing Order did not prevent chairs from being manufactured. The loss of use of the Warehouse did. It is not suggested that at any stage the Defendants sought to draw down funds to enable alternative premises to be acquired for this process or that any attempt to find alternative premises was ever made. By no later than 26th March Wingpitch resumed possession of the Warehouse following the disclaimer of the lease by the liquidator. No manufacturing took place thereafter. The reality is that there was nothing within the Freezing order that could have prevented this business being conducted. Either the business was that of Abbey Fireplaces and so was not affected at all by the Order or it was the defendants trading together independently of Abbey fireplaces in which case it was activity that fell fairly and squarely within the exception concerning ordinary course of business. They were entitled to delivery up of the components and the contrary was not suggested. They were never specifically requested however. The reality is that manufacturing required use of the Warehouse. Loss of use of the Warehouse was not the result of the Freezing Order. It was the result of Abbey being placed into provisional liquidation. Once occupation of the Warehouse could be regained no attempt was made to resume manufacturing the chairs. Why this was is obscure – but the one thing that is clear is that there was nothing within the Freezing Order that prevented it. Although there was a suggestion that funds were required but not sought because of knockbacks this is plainly not sustainable on the facts. The events with which this claim is concerned all took place in February and March 2009. As is apparent from the correspondence referred to earlier in this judgment that issue did not even arguably arise until much later. In any event it has not been established that there would be any future orders beyond the 3,200 chairs for which components had been sourced. Future orders depended on the quality of what was produced initially, on delivery obligations being met and on price. All this depended on a number of imponderables, none of which had been resolved. The Defendants have failed to establish that the chair manufacturing opportunity was one that was lost to them as a result of the Freezing Order. Marble The Defendants claim that but for the Freezing Order they would have purchased containers of marble from China and have made gross profits of £9,500 per container. They maintain that they would have imported one container of marble every 6 months and thus could have made gross profits of £19,000 per annum. They assert that this was a trade lost to them as a result of a refusal by the liquidator to sanction a single transaction involving the importation of a container of marble in August 2009. There are thus two claims brought under this head – a claim in relation to a specific transaction that was the subject of the letter of 27th August 2009 from Moon Beever referred to above and a larger claim for loss of future profits made by reference to future transactions of a similar type. This claim is resisted by HMRC on the basis that the loss was that of Abbey Fireplaces not the Defendants; that there was nothing to stop the Defendants embarking on the transaction because it was in the ordinary course of business, the loss was not foreseeable and the Defendants failed to mitigate their loss. The future loss claim is without foundation. There was nothing known or that ought reasonably to have been known to the Liquidator prior to the 26th August 2009 that ought to have alerted the liquidator to the possibility that the Defendants traded or might in the future trade in marble. The first mention of this issue came in a conversation between Mr P. Owen and Ms Claire Self, a junior employee of Deloittes who was assisting Ms Brittain in the liquidation of Abbey. According to the memo that she prepared following the conversation its effect was: "Pat Owen called to request £14K be released from frozen assets to purchase a container of marble which he claims he already has a buyer for £21K I informed him that I would speak to the liquidator and someone would contact him back." According to Mr Owen the effect of the conversation (Transcript, Day 4, page 602) was that: "I have got a container sitting in China which I can buy for £14,000 and sell it for £21,000. The money will come from my personal bank account, come back into my personal bank account, there will be a profit of approximately £8,000 which you have got complete control of …" The difference between Ms Self's summary and that given by Mr Owen is immaterial for present purposes. The key point to emerge from these exchanges is that whichever version is correct, there was no mention of this being the commencement of what was intended to be a regular trading operation. Permission was being sought in relation to a single transaction. There is nothing in Moon Beever's letter of 27th August that suggests they had understood what was being proposed as anything other than a single trading opportunity and equally there was nothing in the response from CHH dated 28th August which suggested that the issue that had arisen concerned anything other than a single business opportunity. Aside from the points already made, there is no evidence that suggests the existence of similar opportunities nor were any requests made after the exchange of correspondence to which I have referred that suggests such opportunities were available to the Defendants. The real issue is whether the Defendants have established a claim in relation to the single transaction which was the subject of the exchanges to which I have referred above. The first issue concerns whether this was a transaction that to be carried out by Mr P Owen or the Defendants collectively on the one hand, or by Abbey Fireplaces on the other. The latter entity was as I have said a partnership. That being so, if the transaction was to be carried out for the benefit of the partnership then the losses would have to be measured by reference to the degree to which the profits of the partnership in the relevant year were affected by the transaction not taking place. Although HMRC contended that this was a transaction that was for the benefit of Abbey Fireplaces, I am not persuaded that is so. First, although in the course of cross-examination attention was drawn to an apparent cash surplus in the bank account of Abbey Fireplaces at the relevant time, I regard that as entirely immaterial. Whether a trading entity has cash at bank at any given time is immaterial to the question whether it has the capacity to undertake a particular transaction. Trading companies will very often have cash surpluses as payments come in before expenses are incurred. What matters when considering whether a particular transaction can be undertaken is whether overall a profit is being made. The evidence given by the Defendants was that Abbey Fireplaces was fully extended and could not afford to complete the purchase. I accept that evidence. It is entirely consistent with the Abbey Fireplaces accounts for the years ending 30th April 2009 and 2010. Those show that Abbey Fireplaces made a profit to the end of April 2009 of £4,312 and a loss in the following year (which included the period with which I am now concerned, August 2009) of £3,733. Secondly it would make no obvious sense for Mr Owen to inject £14,000 into Abbey Fireplaces in order to enable it to make a gross profit on the transaction of in excess of £9,000 only to have to share it with all the other partners. Thirdly, if the intention had been to fund Abbey Fireplaces, then there is no reason why Mr Owen would not have said so and why CHH would not have said so either in the conversations and correspondence to which I have referred already. It may well be that initially this was an order that was placed by Abbey Fireplaces but the reality is that it could not afford to process it. I accept that this transaction was one that would require the consent of the liquidator. That is obvious from the fact that it is not asserted that the Defendants or any of them had imported marble for their own account prior to approaching the liquidator in relation to this transaction. Mr Owen did in fact approach the liquidator for consent. This was refused by the letter dated 27th August 2009. Contrary to what was submitted by HMRC the letter of 27th August was a refusal. Whilst the letter did say that such requests were to be directed to the liquidator's solicitor, that was not the end of what was said in that letter. In the final paragraph on page 1 of the letter, Moon Beever said "We have repeatedly tried to ascertain what your clients are doing in terms of work or income. Their "ordinary course of business" on the basis of the information thus far supplied via you is "unemployed". Thus clearly no releases can be made for any trading."(Emphasis supplied) That was a refusal. The loss was foreseeable because the liquidator was informed of the transaction, its cost and the likely profit that would be made. Notwithstanding that information she refused her consent. Although it is submitted by HMRC that if further information had been provided concerning the proposed transaction then use of funds would have been permitted, this assertion is flatly contrary to what the liquidator's own solicitors said in the letter of 27th August. If further information was required before the proposal could be considered the letter would have said so and identified the information that was required. The suggestion that CHH ought to have anticipated what information was required without being told is with respect wholly unsustainable as an approach to the policing of an injunction of this sort. If the injunctor requires information before a request for a variation can be considered then it is for the injunctor to identify the information that is required. The liquidator and her solicitors did not do so. Had the position been that judgment was being suspended pending the provision of further information, the letter could and would have said so. It did not. Consent to the transaction was not refused because the liquidator had doubts as to whether it was genuine (the point made in Paragraph 76 of HMRC's closing submissions) but because she was seeking further information concerning the Defendants means and the sources of it which were relevant only to the substantive litigation. In those circumstances the only remaining potential answer to the claim is one based on mitigation. As to that it is noteworthy that it is not suggested in HMRC's closing submissions that it would have been reasonable to require the Defendants to applied to court for a variation. Plainly it would not have been. The cost relative to the profit and the time it would have taken to obtain a hearing all made such an approach impractical in the particular circumstances. There will be issues of quantum that will have to be considered but in my judgment liability has been established in relation to this head of claim. The transaction is one that I find was to be undertaken by Mr P.Owen, who is the Defendant who is entitled to recover compensation under this head of loss. Mr Hone's Share Trading The basis of this claim has not been clearly spelt out by Mr Coppel. HMRC's understanding is that this claim results from losses suffered as a result of the trades referred to initially in the letter from CHH dated 23rd June 2009 referred to above. In my judgment if that is the basis of the claim then it is misconceived. The request for consent to allow the margin call payments to be made was contained in the letter of 23rd June as I have said. It was consented to by the letter from Moon Beever dated 25th June. On 29th June 2009, CHH wrote to Barclays Bank requesting confirmation that the cheque drawn by Mr Hone in favour of the brokers (Pershing Securities) would be processed. The difficulty was that there were no funds in the relevant account. The relevant sum had to be borrowed under an existing mortgage facility with Birmingham Midshires Building Society. That was not known to Moon Beever or the liquidator (or, apparently CHH) at the time of the correspondence between 23rd and 25th June 2009. The loss was not caused by the Freezing Order but by the failure of Mr Hone either to request consent early enough or to supply accurate information as to what was required to the liquidator or her solicitors. There is an issue between the parties as to whether share dealing by Mr Hone came within the ordinary course of business exception (as alleged by Mr Hone) or required a consent under Paragraph 10(3) of the Freezing Order (as contended by HMRC). The issue is however immaterial to the particular claim that is being considered. It is not clear to me whether any other claim is being advanced under this head by Mr Hone. By their letter dated 8th July 2009, CHH told Moon Beever that in relation to future share dealing by Mr Hone "… we have requested our clients to give us advance notice of any such proposed transaction in order that this can be pre-emptively agreed". As far as I can see no such requests were ever made thereafter. As noted above by the letter dated 23rd July 2009, CHH sought the agreement of the liquidator to Mr Hone drawing down £30,000 from the Birmingham Midshires facility for the purpose of depositing it with Pershing Securities in order to permit Mr Hone to trade in shares. By a letter dated 27th July 2009, Moon Beever said they would seek instructions on the letter of 23rd July (described as being the "third letter" of that date). That letter was acknowledged by CHH by a letter dated 28th July 2009. The issue concerning the Pershing Securities deposit would appear to drop out of the correspondence thereafter. As I have said already it is unclear to me whether Mr Hone is advancing any claim in relation to share dealing other than in relation to the particular losses suffered in July 2009. No notice appears to have been given of any share transaction that Mr Hone wished to enter into other than the transactions entered into in July. The correspondence from his own solicitor contemplated that notice would be given before such transactions were entered into. The request for consent to pay a deposit to Pershing does not appear to have been pursued. Mr Hone addresses share trading in paragraphs 59 -61 of his witness statement. He does not suggest that there were any other share transactions that he wanted to enter into but was prevented from entering into as a result of the Freezing Order or the liquidator's policing of it. It follows therefore that there is no other claim that Mr Hone could advance under this head.. Residential Property Dealing – The Farnham Property The transaction is one that Mr W.Owen maintains he would have participated in with Mr Ian Cruise but for the Freezing Order which, he maintains, prevented him from participating in the venture. He describes this opportunity in Paragraphs 30-32 of his witness statement. In summary he makes the following points: (a) he had capital to invest in the form of about AED 3m that was on deposit with the Commercial Bank of Dubai (Paragraphs 28 and 31); (b) In August 2009 he and Mr Cruise wished to acquire the Farnham property that was available for sale on a distressed basis at £650,000 with a view to reselling it quickly at a price of £950,000 (Paragraph 31); (c) "Unfortunately as a consequence of the freezing order I was unable to proceed with this investment. Had it not been for the freezing order I am confident that I would have done this …" (Paragraph 32). Mr Cruise gave evidence. In his witness statement he says: i) The Farnham Property was first introduced to him as a business opportunity in August 2009 (Paragraph 9); ii) He agreed with Mr W.Owen to "… do the deal together …", that "… Bill would put up the capital required to acquire the property, and I would take responsibility for managing the back to back transaction and securing the purchaser …" (Paragraph 11) iii) "… Bill indicated to me that he had funds available …" (Paragraph 12) but " towards the end of August 2009 Bill informed me that he would be unable to proceed owing to a freezing injunction which had been imposed on him by HMRC …" (Paragraph 13). If Mr Cruise is right, his conversations with Mr W.Owen all took place in August 2009. It would appear that initially Mr Owen said that he had funds available but towards the end of August said he could not proceed because of the Freezing Order. However the Freezing Order had been in place since February 2009. Nothing occurred during August 2009 that would lead to a change of perception by Mr W.Owen concerning the effect of the Freezing Order. There was no mention of the loss of this transaction by CHH in their letter of 28th August 2009 which amongst other things was concerned specifically with the loss of business opportunities. There was no mention of the loss of this alleged opportunity in either the letter of 11th September or the schedule attached relating to Mr W.Owen. At no stage was any request made to the liquidator for authority to enter into the transaction either by reference to Clause 10(3) of the Freezing Order or (assuming it to be contended that this proposed transaction was in the ordinary course of business) for consent to all relevant banks to permit the acquisition to proceed. The transaction was one that could not be delivered in any event. The registered proprietor of the property was an un-discharged bankrupt. It follows that a sale could be negotiated only by either the registered proprietor's trustee in bankruptcy or by the mortgagee, assuming that it was in a position to exercise a power of sale. In neither case would either sell at a price that was less than the market price for obvious reasons. The trustee was under a duty to recover the most that could be recovered for the benefit of creditors and a mortgagee who was selling is under a duty not to sell at an undervalue. It follows that the chances of being able to buy the property at a discount and then sell it at a significant profit without any intervening value added activity was negligible. Had Mr Owen wished to embark on this venture, and assuming that he contended that to do so was in the ordinary course of business, there was nothing to prevent him doing so using the Dubai funds to which he makes reference in his witness statement, subject to obtaining from the liquidator the consents necessary to ensure that any funds transferred to the UK from Dubai could be paid out by the UK Bank to which the sums were credited. There was no such request, nor any such transfer. My view is that this is a transaction that would not be in the ordinary course of business because at no stage had Mr Owen carried on business as a dealer in property. He had invested in two property transactions prior to the liquidation of Abbey – one in Dubai which had resulted in a profit and one in the West Indies that had not. Each was a personal investment. For loss not to be too remote it would be necessary for notice to be given to the liquidator of the proposed transaction. The defendants collectively had not at any stage prior to the making of the Freezing Order carried on property dealing or development. In my judgment the probability is that this supposed project got no further than the most initial of outline discussions. This is the only basis on which the evidence of Mr Cruise and Mr Owen can be reconciled with the contemporaneous documentation to which I have referred. Had it progressed any further it would have become apparent that the registered proprietor was an un-discharged bankrupt and thus someone who could not sell the property. Aside from that, this was not a transaction that was in the ordinary course of business and any loss arising from it was not foreseeable in the absence of notice. Thus in my judgment Mr Owen has failed to establish that the opportunity was one that was available to him or that any loss caused to him as a result of not being able to participate was reasonably foreseeable to the liquidator. Residential Property Dealing – The Herne Bay Property and the Harbledown Property I turn first to the Herne Bay Property issue. There was nothing disclosed by or on behalf of Mr Hone prior to the 12th November 2012 that suggested that Mr Hone carried on property trading or development as a business or at all. The contrary is not suggested. On 12th November 2012, CHH wrote to Moon Beever in these terms: " … our clients … are looking out for business opportunities and have identified a potential project for the development of a residential property. We enclose: details of the property in question; A short business plan which our clients have drawn up You will see that the proposal is to purchase the property in auction, renovate it and sell it on. The project is intended to be funded via a drawdown which is available under the mortgage of Yew Cottage which is owned by Mr Hone. Please could you take your client's urgent instructions in this respect and note that the auction date is 17 December 2009 and the draw down will need to be actioned in advance of that date." There was no response from Moon Beever until 23rd November 2009, when, oddly, there were two responses. The first was contained in Paragraph 6 of the longer of the two letters of that date. The response was to ask a series of questions, the answers to at least some of which were to be found in the request letter and the documents attached. Thus what sum was intended to be borrowed was identified in the schedule (£204,000). Who was to draw down the sum had also been identified (Mr Hone) and the source had also been identified (the facility secured by mortgage of Yew Cottage being as the liquidator and her solicitors well knew the Birmingham Midshires facility). The question "Is Mr Hone financing the project?" was also answered by the request letter. The other letter from Moon Beever of the 23rd November was less strident in tone and was in these terms: "… We are taking our client's instructions, but please clarify in whose name the property was registered, what the cost of the purchase will be and the cost of the sum being drawn down. Who has prepared the business plan and on what basis and with what experience… We are somewhat surprised that you say "your clients" and yet it is Mr Hone who is funding this … What is the arrangement between the Defendants and which defendants are involved. Please also provide details of the builder and suppliers. If you provide clarification of the information above by return, then we will take urgent instructions." There was no response to that letter by or on behalf of the Defendants. Mr Hone's witness statement addresses this issue at paragraphs 46-52. He makes the point at Paragraph 46 that he intended to fund this project using the Midshires facility (Paragraph 49) but that he was not able to proceed for the reasons that he gives in Paragraph 52 of his statement, that is: "As a consequence of the freezing order imposed by HMRC my facility with Birmingham Midshires BS was withdrawn and, despite requests to release funds to enable us to proceed with this venture, the liquidator refused. We have suffered financial loss as a result." Mr Short gave evidence as I have said. His evidence in relation to the funding issue was limited and inevitably hearsay. However in paragraph 8 of his statement, Mr Short said: "Rick explained to me that he was subject to a freezing injunction imposed on him and his business Abbey Forwarding by HMRC. He explained that he had approached the liquidator in order to request the release of funds to proceed with our proposed venture but this request was rejected. As a consequence we were unable to proceed with the purchase of either … Herne Bay or … Harbledown …" Whilst it was true to say that a request for consent had been made to the liquidator by CHH, it is not correct to say that there had been a refusal. On the contrary, there had been a request for further information. In my judgment the liquidator was entitled to test the robustness of what was proposed before giving her consent to a variation of the terms of the Freezing Order (which is what had been sought). The business plan that had been produced was skeletal in the extreme and there was no indication given as to who the builder was to be or what experience the builder had in projects of the sort being contemplated or when the work could be commenced or the degree to which (if at all) the costs of financing the project to a conclusion had been taken into account. No further information was ever provided. Mr Hone accepted that the request for further information was reasonable (T2/285/8). In those circumstances Mr Hone had to explain why there was no response to the request. His answer was: "There was no reply to that because in the meantime I was talking to Jim Short about taking time off after this to do the property up, but (1) Jim could not commit unless I could commit absolutely that the funds would be in place to take the property on and (2) when I went to Birmingham Midshires that is when I found out that the actual drawdown facility had been terminated because of the freezing order that was placed on that" The difficulty about this evidence is that there is there is no evidence at all to suggest that Mr Hone approached Birmingham Midshires seeking a drawdown in November 2009 either in relation to this project or otherwise. The decision by Birmingham Midshires to withdraw the facility did not occur until April 2010. There was never any request from any of the Defendants for consent to use any assets in connection with the proposed projects with Mr Short other than that made by Mr Hone. I am not able to reach any conclusions as to why in fact the further information was not provided. Mr Hone's explanation does not withstand scrutiny for the reasons I have given. It would be inappropriate of me to speculate about what reasons there might have been. What is clear however is that Mr Hone has failed to prove that this transaction did not proceed because of the Freezing Order. Similar considerations apply to the Harbledown property. The added difficulty about this project from Mr Hone's point of view is that it was never the subject of a specific request for consent. The consent that was sought in relation to the Herne Bay property was not premised on that project being anything other than a single opportunity. If additional losses are to be claimed in relation to other property transactions in my judgment the Defendants have to show that such losses were foreseeable. Absent any indication that they wished to undertake property development on a regular basis this requirement cannot be satisfied. The Defendants have not proved that the Freezing Order caused the loss of the Harbledown project nor have they proved that any loss suffered was foreseeable. Loss of Dividend Income (Mr P.Owen) and Pension Encashment Losses (Mr W.Owen) There is no dispute of any significance concerning the primary facts surrounding these transactions. Mr P.Owen sold 14,256 Barclays shares for a price of £41,039 on 21st July 2010, the day following the end of the trial but before judgment had been given. The reason why this sale took place was identified in a letter dated 19th July 2010 from the solicitors then acting for the Defendants (Bark & Co) that is, in order to pay counsel. The realisation of the pension plans is again not in dispute. In each case it is for the Defendants to demonstrate that an effective cause of the realisations was the making of the Freezing Order or the manner in which it was being policed. The Defendants' case as advanced in Paragraph 74 of their closing submissions was that: "Had the freezing order not prevented them from making money by way of other ventures and investments then these legal fees would have been funded from earned monies. However as the freezing order prevented Messrs Owen from entering into other profitable business opportunities they were forced to sell assets to fund legal expenses …" In my judgment the Defendants have failed to prove that the losses claimed under these heads would not have occurred but for the making of the Freezing Order. The need to realise these assets was caused by the loss of the Defendants' income from Abbey as a result of its liquidation and the need to finance their living and legal expenses. The need to finance their living and legal expenses would have arisen whether or not the Freezing order had been made and it has not been demonstrated that the need to realise these assets would have been avoided if the Defendants had been allowed to pursue other business options. No attempt has been made to identify which of the opportunities relied on would have eliminated this need. The assertion is little more than that. The reality is that the Defendants had finite resources available to them to fund their legal costs and living expenses. That would have been so whether or not the Freezing Order had been made. This was the overwhelming cause of the need to realise assets. The Ferrari Claim Mr Hone owned a Ferrari motor car. It had a premium value because of its age and type. He maintains that the Freezing Order prevented him from paying for the car to be serviced. He maintains that the car should have had three annual services between April 2009 and April 2011. He says that the last service to the vehicles was carried out in April 2008. He claims that the result has been a loss in the capital value of the car because there is a difference in value between those cars with a full service history and those without such a history. The following points relevant to this claim are common ground – First, normally the cost of servicing cars will be regarded as a reasonable living expense and is peculiarly likely to be so where the failure to maintain the car concerned will result in a capital loss that would not otherwise be suffered; secondly, under the Freezing Order as varied, Mr Hone was entitled to £120,000 per annum in respect of his living expenses and thirdly, at no stage did Mr Hone seek permission from the liquidator to expend money on service of his car. It is asserted by Mr Coppel in his written closing submissions (Paragraph 75) that Mr Hone was unable to afford the costs of servicing his car from the living allowance that he was receiving. He submits that to the extent that it is suggested that Mr Hone could have asked for an increase in his living expenses the proper inference is that this would have been refused because a request by Mr P.Owen for a one-off payment to meet his car insurance costs had been refused. In my judgment this claim fails at the first hurdle. Mr Hone has failed to prove that £120,000 was insufficient to fund his true living expenses. This is particularly startling given the income figures disclosed by his solicitors as part of the material attached to the letter of 11th September 2009. According to the first schedule he draw £102,619 from Abbey in the year ending 31st December 2006 and £127,159 in the year ending 31st December 2007. In addition he received £5,000 from the Treleigh Arms, £12,000 from the holiday letting business that he operated, £5,000 from 42 Wyatt Point and up to £7,000 from share trading. This gives an asserted annual income of £156,000. This does not equate to a net income of £120,000. Put shortly, he was apparently able to afford to purchase and service the Ferrari on an gross income of £156,000 but could not afford to service it notwithstanding that he was entitled to draw up to £120,000 to expend on living expenses. Absent any evidence that explains these figures, the inference I draw is that Mr Hone's asset position was such that he could not afford to draw up to the maximum that he was permitted under the Order and continue to defend the claim made against him, and thus that requesting an increase of that figure would serve no practical benefit. Even if this inference is wrong, it is nevertheless the case that Mr Hone's evidence does not explain why the £120,000 per annum he was permitted to draw was not sufficient to enable him to meet the servicing costs for the car or why (if such was the case) such costs were omitted when calculating what his reasonable living expenses would be. I am not persuaded that Mr Hone in truth regarded a request for an increase as a waste of time simply because Mr Owen's request in relation to car insurance had been rejected. The reasons why that request was rejected were fact specific to Mr Owen and in any event the expense would not have prevented his car from depreciating in value. The whole point about servicing the Ferrari is that (on Mr Hone's case) not servicing the car would cause a loss of capital value that would not otherwise be suffered. That is likely to be an important consideration for someone in the position of the liquidator. Even if all that I have said so far concerning this head of claim is wrong, in my judgment the loss claimed was unforeseeable. Normally as I have said car servicing forms part of an injunctee's normal living expenses. The provision that had been made by the liquidator for Mr Hone's living expenses was on any view substantial. Absent notice that the car was not being serviced, there is no basis on which the liquidator can be treated as knowing that this loss will be suffered. In summary this claim fails because Mr Hone has failed to prove that the effective cause of the loss claimed was the Freezing Order; because he has failed to show that the loss claimed was foreseeable by the liquidator and/or because he did not mitigate his loss by requesting permission to expend funds available to him on servicing his car. The Knowledgecenter Limited ("KcL") Shares Claim KcL is a company operated by Mr Osborn, who is the majority shareholder. It is not necessary that I burden this judgment with a detailed description of the activities of that company other than to say that it owns rights to a software product that it markets to the insurance industry and which it is believed by Mr Osborn could have other applications but to exploit those will require substantial funding. Mr Osborn is a friend and associate of Mr W. Owen. Between 2006 and September 2008, Mr Owen invested in KcL initially by way of loan and thereafter he acquired an equity interest. In 2006 Mr W.Owen became a director of the company until 2009, when he resigned. By no later than 28th February 2007, an entity described in the KcL annual return as "Purland House" had acquired 3,750 shares in KcL. The Defendants' case is that this is a trading name meaning the three of them together. HMRC do not suggest any alternative possibility. Purland House Limited is a company controlled by the Defendants. It was incorporated as an investment holding vehicle in April 2008. The Defendants case is that in late 2008 they had "pledged" a further investment of £250,000 in KcL in return for a further 10% of its issued share capital, that they were prevented from entering into this investment by the Freezing Order and that in consequence they have suffered a loss because the shares in KcL that would have been acquired are worth more now than the sum that would have been paid for them. The first point taken by HMRC is that the original shares are now owned beneficially by Purland House Limited not the Defendants, that the opportunity to invest is one that would have been taken by Purland House Limited not the Defendants and thus any loss was suffered by Purland House Limited not the Defendants and for that reason is not recoverable. I reject that submission. It is perfectly true to say that there have been a number of references in documentation prepared by or on behalf of the Defendants that suggest that the shares in KcL are owned by Purland House Limited. These are all rehearsed in Paragraph 165 of HMRC's closing submissions and I do not need to repeat them all in this already overlong judgment. The fact remains however that the shares were allotted to and registered in the name of "Purland House" in excess of a year before Purland House Limited came into existence. Since there is no alternative suggestion for what "Purland House" is other than the Defendants together, in my judgment the shares in KcL were owned beneficially by the Defendants in equal shares as at the date when they were first allotted. If that is so, then that position could only alter if either the Defendants transferred their shares to Purland House Limited or declared themselves to hold the shares on trust for Purland House Limited. I do not accept that the erroneous assertions that the shares were owned by Purland House Limited constitute a declaration of trust. They are as likely to be simply errors. In this regard it is significant that the accounts of Purland House Limited do not suggest that the shares belong to the company beneficially. I have no doubt that an intention was formed by the Defendants to transfer the shares to Purland House Limited. However that has not been done. Absent an unequivocal declaration of trust I conclude that the original shares are currently held by the Defendants jointly for themselves. The other technical point that is taken is that the evidence is not sufficiently strong to support the suggestion that any further investment would have been by way of the acquisition of shares in KcL. As to this, that is not what Mr Osborn says in Paragraph 32 of his witness statement. Shares were sold to Watertrace Limited when that company invested in KcL as part of a strategic alliance between those two companies. Mr Osborn told me that the shares acquired by that company were sold to it by him (T3/434-5). That leads to the conclusion for which Ms Harman contended in her cross examination of Mr Osborn – it was not an investment by Watertrace Limited in KcL. That may be so. It does not lead to the conclusion that Mr Osborn was reluctant to share the equity with others. In any event, the relationship between him and Mr W.Owen was a close one and I have little doubt that Mr Osborn would have fewer doubts about shares being held or controlled by him than he would about shares being held by others. The real issue concerns whether the Freezing Order was the effective cause of the claimed loss and whether any such loss was reasonably foreseeable to the liquidator. Evidentially the position is clear. Whatever the position had been before Ms Brittain was appointed liquidator, thereafter the Defendants made no attempt to carry through the investment. No notice was given to the liquidator that an agreement such as is alleged had been reached, no request was made to the liquidator either for consent to invest pursuant to Clause 10(3) of the Freezing Order or for her authorisation to any bank to facilitate the investment. The reality is that the Defendants chose not to invest further. That was likely to be because they wished to garner their resources in order to meet the two most pressing matters for them – their respective living expenses and the cost of defending the substantive proceedings brought against them in circumstances in which what was any view the main source of their income – Abbey – had been placed in liquidation. In my judgment had the Defendants wished to proceed, the further investment would have been one that fell within the ordinary course of business exception. I say this because the Defendants had invested heavily, and planned to invest further, in KcL prior to the commencement of these proceedings. There can be no doubt that such investment was in the course of business. These were not investments held by them privately but were held by them collectively for business purposes. Thus, as is submitted by HMRC it was open to them if they chose to do so to proceed with the transaction. Thus I am not satisfied that the Defendants have proved that the effective cause of the failure to invest was the Freezing Order. Even if this is wrong and the investment is one that would have required express consent under Clause 10(3) I conclude that the Defendants have not proved their claim. Aside from the points already made concerning the causative potency of the Freezing Order on the proposed investment, there is no proper basis on which is can sensibly be contended that losses caused by the failure to make this investment were foreseeable to the liquidator in the absence of express notice. She did not have either actual or inferred knowledge of the Defendants interest in KcL as at the date when either the Freezing Order was made or varied. The first mention of KcL to the liquidator was in an interview of Mr P.Owen that took place on 3rd July 2009. There was no mention of the further investment at that stage. It is simply not the case that knowledge of the existence of a shareholding in a closely-held company leads to the knowledge that an injunctee might wish to invest further but will be precluded from so doing by a freezing injunction which incorporate provisions such as those in Clause 10(2) and (3) of the Freezing Order. The Treleigh Arms Claim I can take this issue very shortly. Mr Hone maintains that an extension to the Treleigh Arms had been planned that would have expanded the size of the restaurant and thus the amount of profits made by the partners in the operation. He maintains that but for the Freezing Order the expansion would have taken place during the first half of 2009 and increased profits would have been earned thereafter. Mr Hone's partner in the Treleigh Arms is Mr Welch. He gave evidence. The key part of his evidence was that the whole idea had been scrapped before the commencement of these proceedings and the making of the Freezing Order- see T3/482 where the following exchanges took place between Mr Nathan and Mr Welch: "Q. Somebody has to sign the application form, have they not, on behalf of the owner? A. We did not go forward with it. Q. I know you did not go forward with it. Am I right in thinking that by the time Christmas 2008 came, no decision had been made to go forward with it? A. That is right. Q. And by the time that the beginning of February 2009 arrived, no one had made the decision about going forward with it? A. No. The whole idea was scrapped" This is evidence I accept because (i) Mr Welch had no reason to mislead me, (ii) it is entirely consistent with the fact that the only quote obtained was one dated in September 2008, (iii) it is entirely consistent with the fact that no request of any sort was made to the liquidator for consent to proceed even though on Mr Hone's case the work should have been completed by June 2009 before any question of knockback arose, (iv) the sum involved was modest and Mr Hone had access to the Midshires facility from which the necessary funding could have been raised and (v) to this day the work has never been carried out. This claim is one that fails because Mr Hone has failed to prove that the Freezing Order was an effective cause of the decision not to carry out the work. The General and Aggravated Damages Claims General Damages – The Principles General damages for breach of contract are generally not recoverable to compensate for injury to reputation, feelings or mental distress. The general principle was recently restated in Johnson v. Gore-Wood & Co [2002] 2 AC 1 following Addis v. Gramophone Co Ltd [1909] AC 488. This general principle is to be read subject to the exception summarised in Watts v. Morrow [1991] 1 WLR 1421 at 1445 namely that where "… the very object of a contract is to provide pleasure, relaxation, peace of mind or freedom from molestation, damages will be awarded if the fruit of the contract is not provided or if the contrary result is procured instead.". It was that exception that was applied by HH Judge Diamond QC who was upheld by the House of Lords in Ruxley Electronics and Construction Limited v. Forsyth [1996] AC 344. In assessing the compensation due pursuant to a cross-undertaking in damages the court proceeds as I said much earlier in this judgment as if the undertaking had been a contract between the claimant and the defendant that the claimant would not prevent the defendant from doing that which he was restrained from doing by the terms of the injunction – that is on the facts of this case as if there had been a contract between Abbey and the Defendants that Abbey would not prevent the Defendants from disposing, dealing with or diminishing the value of their assets up to a value of £5.95m or removing their assets up to that value from England and Wales. I do not see why the notional contract by reference to which compensation is to be assessed is not a contract the very object of which "… is to provide freedom from molestation …" or, when an Inquiry as to the compensation due under a cross-undertaking has been ordered, why a court should be precluded from awarding compensation on the basis that "… the contrary result is procured instead…" It is very difficult to see how preventing an individual from dealing with his or her assets is anything other than molestation or why the contrary result is not the consequence of a (wrongly made) order that prevents such activity. I leave to one side cases where the injunctee is a company or other corporate entity, an LLP or a true partnership. Claims by such entities raise different issues that do not arise in cases such as this where all the Defendants are individuals. The only authority that has been cited to me which is said to support the proposition that general damages are not recoverable is Al-Rawas v. Pegasus Energy Limited and others (ante). Jack J noted in passing at Paragraph 39 the New Zealand case of Bonz Group (Pty) Limited v. Cooke [2000] NZCA 44 where there had been an appeal from a decision of a first instance judge on an Inquiry under a cross-undertaking given on an application for a search and seizure order where ultimately the claim in aid of which that order had been granted failed and was dismissed. There had been no appeal against the judge's decision to award $5,000 for emotional distress on a cross-undertaking. Jack J completed his analysis with a conclusion at Paragraph 40 of his judgment in these terms: "I think the award of damages for emotional distress in the Bonz case is to be considered in the context of their particular facts. In my judgment, unless the particular facts make it appropriate as an exception, damages for emotional distress are not recoverable under a cross-undertaking. I refer to Chitty on Contracts 29th Edition, Paragraph 26-073 and following, where the principles and authorities are considered. I do not think that the circumstances here are such as to take the case out of the general rule." Jack J accepted in Paragraph 39 that general damages may be awarded where a freezing order has been wrongly obtained. Such damages were to compensate: "… the defendant for the consequences of the order which cannot be claimed as special damage. They are not however awarded for nothing. It may be obvious that the particular circumstances of the case justify an award, or it may well not be but rather the contrary. In most cases it will be necessary to have some evidence to support the award. " I have come to the conclusion that in principle there is no general bar to the award of general damages for emotional distress but that whether such an award is made in any given case is fact-sensitive. I consider that this approach is in keeping with that adopted by Jack J, is consistent with the current approach of the English law of damages for breach of contract and consistent too with logic. In many and perhaps most cases where injunctions are wrongly granted no question of general damages much less general damages for emotional distress will arise. However it is most likely to do so where the court is concerned with search and seizure and freezing orders where the respondents concerned are individuals. This approach was strongly challenged by Mr Nathan in Paragraph 24 of his supplemental submissions on this point. He characterised emotional distress as "unpleasantness". I regard that as unnecessarily belittling the potential effect on individuals against whom freezing orders have been obtained without notice. If the sole effect in a particular case has been no more than unpleasant then it is unlikely that any damages will be awarded. It does not justify the conclusion that damages for emotional distress should never be awarded notwithstanding the strength of the evidence in support of such an award. Mr Nathan next suggested that such claims should be rejected as wrong in law because a court would otherwise have to weigh in the balance when considering whether to grant an injunction the potential emotional distress to the respondent. I reject that submission. If compensation is recoverable for such distress pursuant to a cross-undertaking then there is no need for a court to weigh such concerns in the balance to any greater extent than any other potential adverse effects. In fact if anything the court is more likely to be concerned with such issues at the application stage if compensation for such losses is not recoverable. It is then said that if compensation for such loss was recoverable "… it would be recoverable in almost every single case where a natural person is enjoined …" I do not agree. First, such damages will only be recoverable where a natural person has been wrongly enjoined. Secondly it is not every case where an Inquiry will be ordered. Whether to order an Inquiry is discretionary. Thirdly, as I have said, such cases are likely to be acutely fact-sensitive depending on all the circumstances of each case including the nature and terms of the injunction, the length of time it was in place, the effect on the individual concerned of the injunction and how it was policed, the degree to which its grant was publicised or copies disseminated and the effects of such publicity and dissemination. Finally it was submitted that the award of compensation is all the more inappropriate when the injunction concerned was granted in the context of a commercial dispute. I reject that submission because it focuses on the wrong issue. The question the court is concerned with is not the nature of this dispute but the effect of a wrongly obtained order on individual respondents. It is as likely that an individual will suffer emotional distress when being served with a freezing order in the context of a commercial dispute as in any other. It is the effect on the individual respondent that is important, not the nature of the dispute that led to the injunction being (wrongly) granted. Aggravated Damages – The Principles I see no reason why in appropriate cases aggravated damages may not be awarded. Contrary to what Mr Nathan submits, Lord Bingham's judgment in Johnson v. Gore-Wood & Co [2002] 2 AC 1 does not support the proposition that aggravated damages are never available for breach of contract. Claims for aggravated damages are always parasitic on another head of loss as Mr Nathan rightly observed in the additional submissions he set out in his email to me of 4th December 2012. In Gore-Wood the aggravated damages claim was parasitic on the claim for general damages for distress that was struck out. It was for that reason that the aggravated damages claim was struck out, not because it was held that such damages are never recoverable for breach of contract – see [2002] 2 AC at 38D. The availability of such a remedy was assumed in Uzor v. Chinye [2004] EWHC 827 (Ch) and (contrary to Mr Nathan's submissions) were awarded in Al-Rawas v. Pegasus Energy Limited and others (ante) at Paragraph 48. Whether such damages ought to be awarded is likely to be acutely fact sensitive. The Pleading Issue It was submitted by Mr Nathan that on proper analysis the aggravated damages claim had been pleaded as a free standing claim. Since aggravated damages can be awarded only to augment damages awards made under other heads. Mr Nathan submits therefore that the aggravated damages claim is technically demurrable and ought to be dismissed on that account – see Paragraphs 1 – 7 of his Additional Written Closing Submissions dated 3rd December 2012 and the email of 4th December 2012 referred to above. I do not accept that submission. Paragraph 13 of the Points of Claim expressly pleads what are alleged to be "aggravating matters". It contains 5 sub-paragraphs. Sub-paragraphs (a) to (d) all contain assertions that various allegations made in support of the initial without notice application were without evidential justification and were not pursued at trial. Paragraph (e) contains an allegation that: "At various points during the period in which the Freezing Order was in place the Defendants requested the release of funds. The manner in which those requests were dealt with and responded to was such as to properly give rise to an increased level of compensation." Paragraph 14 pleads a claim for general damages in these terms: "The obtaining of the Freezing Order and the conduct of [Abbey] was such as to cause severe distress to the Defendants resulting in medical intervention. The Defendants therefore claim damages and/or compensation for emotional distress." The claim for aggravated damages is pleaded specifically in the Prayer to the Points of Claim in terms that include the phrase "…and/or increased compensation". Damages for emotional distress are pleaded as a separate head of loss claimed in the Prayer. In my judgment a reasonable reading of the pleading as a whole shows that aggravated damages are being claimed by way of augmentation of the general damages claim. The Losses for Which General Damages Are Awarded. Mr Nathan submitted at Paragraph 226 of his principal written closing submissions that for loss to be compensatable by general damages, the loss would have to be the result of complying with the Order rather than the fact of it having been made. I do not agree with this analysis. Such loss caused in the manner Mr Nathan describes will of course be recoverable. However I do not accept his submission that misuse of the order does not come within the scope of a claim for general damages. If that was the result then in my judgment is would adversely affect the practical utility of the cross-undertaking mechanism. The suggestion that the sole remedy for such conduct is to apply for the discharge of the injunction is misplaced. Such an application may be a remedy but it is not the sole remedy for such conduct. Indeed, such an approach is precisely not the approach adopted by Jack J Al-Rawas v. Pegasus Energy Limited and others (ante). At Paragraph 42 he held that the fact that an Order had been obtained by intentionally concealing a material fact from the court was something that justified not merely an award of general but of aggravated damages. It is apparent that in an appropriate case and with appropriate evidence, Jack J would have considered a claim for damages by reference to an allegedly overaggressive enforcement of a freezing order as part of a general damages claim – see paragraphs 44-45 of his judgment. He also awarded general damages for time wasted by the freezing order –see paragraph 25 – and for the effect of the order on the eighth defendant – see paragraph 48. The Medical Evidence Issue No medical evidence was adduced at the trial before me concerning any of the Defendants. Mr Coppel relied in particular on an allegation that Mr Hone attempted to commit suicide as a result of the Freezing Order and sought to bolster that claim by reference to a very short entry in some medical records relating to Mr Hone that purport to record such an event. There was no expert medical evidence in relation to this issue which either confirms any particular diagnosis or establishes that the suicide attempt was the result of a condition the effective cause of which was the making or policing of the Freezing Order. In the absence of any evidence of this sort there is no basis on which it could properly be argued or that I could find proved that the suicide attempt was caused by the Freezing Order, as opposed to the loss of Abbey, the income derived by Mr Hone from Abbey prior to the appointment of Ms Brittain as provisional liquidator or the substantive claims being made in these proceedings. I make it clear therefore that I leave this issue entirely out of account. Mr Nathan's more general submission was that a medical report was required in all cases where damages for emotional distress were claimed. I do not agree. Where it is alleged that a medically diagnosable condition has been caused by a wrongly granted injunction or the way it has been policed, such a report will almost certainly be required because an unqualified claimant would not be in a position to provide cogent evidence concerning diagnosis or causation. However where a claim for damages for emotional distress does not involve such an allegation, I do not see how or why such evidence should be required. The General and Aggravated damages Claims. As explained at the start of this judgment all quantum issues have been postponed to be determined at a further heading in January. In those circumstances it would be wrong of me to attempt to arrive at a figure for general or aggravated damages in this judgment. That assessment will have to be carried out in January unless agreement can be reached in the meanwhile. I confine this part of the judgment therefore to identifying the facts and matters that in my judgment are or may be material to such an assessment. The Defendants in principle are entitled to recover a sum by way of general damages to compensate them for the consequences of the order that cannot be claimed as special losses. Such claims might have included the time that each spent with their solicitors and in responding to questions from their solicitors and from the liquidator and her solicitors that were referable to the Freezing Order or the administration of it by the liquidator and her solicitors. However no such claim has been pleaded or intimated. In consequence it is not open to me to award damages by reference to these issues. Mr Hone Mr Hone's evidence on this issue went unchallenged. I have already dealt with the suicide issue. I accept his evidence that he had suffered a mental breakdown earlier in his life, that he attempted suicide in March 2009, and that he was detained under the Mental Health Act as a result. What is not established by his evidence is that an effective cause of any of this was the making or operation of the Freezing Order. Likewise, whilst I accept that in principle the effect of observing the effect on loved ones of a wrongly granted freezing order might on appropriate facts entitle a defendant to recover general damages, Mr Hone's evidence does not support such a claim here. The effect described on Mr Hone's mother was not the result of the Freezing Order because her Abbey pension was not lost to her as a result of that order. The cause of that loss was the liquidation of Abbey. Likewise the inability of Mr Hone to support his son's ambition to go to university was not the result of the Freezing Order (the costs of supporting a dependent child at university would I think clearly form part of a defendants reasonable living expenses or ought to be permitted by express concession) but by a lack of resource. That was the result of the liquidation of Abbey. Had it been demonstrated that an effective cause of Mr Hone's inability to support his son was the Freezing Order or the manner in which it had been administered, I would have accepted that the effect on Mr Hone of not being able to provide for his son would have been a factor to be taken into account in assessing general damages. I accept that the liquidator or her staff attempted to contact people whose phone numbers appeared in the mobile phone records of the Defendants kept by Abbey. I accept Mr Hone's evidence that some of these conversations were with personal friends and family members. I also accept that in at least some of these conversations the recipients were told of the Freezing Order. I accept that some embarrassment would have resulted from such discussions. However I do not accept that in truth the embarrassment caused was "enormous". On the evidence adduced by the Defendants they willingly informed a number of business associates about the existence of the Freezing Order and it is clear that Mr Hone's immediate family would have learned of what had occurred in any event. There was one point in Mr Hone's evidence when he touched upon his experience of this litigation in general which he described in these terms: " [Mr Hone] … Again, I draw your attention to what happened in February 2009 and, again, when our lives were devastated and we are sitting here talking as if we are a corporate conglomerate with people working for us, everything, everything was swept away. Our ambition, our lives, everything was swept away. It took some many, many months for us to actually get back off of our knees and start thinking of ways to try and earn some money, when it was clear that the Liquidator was not going to do her job properly, approach us, realise things were wrong. She could have sold the air freight department in the sea freight department. She could have come at us and said, "Would you like to take these? Would you like to buy these as a going concern?" I have a degree in logistics. I could have done that, but she never. [Mr Nathan] Q. You never approached her and asked her? A. Never approached her? Q. To ask to buy it? A. I never asked her to buy the sea freight and the air freight division? The very first day that we walked in the door, Richard Mills, who is the operations director, the very first day said, "The phone is ringing. People are trying to book cargo. Tell them that they cannot, we are closed for business." There was nothing -- she had already alienated and got rid of the business within two days. There was nothing to buy. If she had sat us down, as I think she should have and "Right, you are on gardening leave, but I want to talk to you. What can we do here? What do you think about what HMRC have said? What do you think about these assessments? Shall I appeal them?" If we had done that right at the beginning, we would not be here. Q. Okay. That was activity, these were all consequences of the appointment of the Liquidator. Yes? A. And the freezing orders that were put on us, I remember you said yesterday, "Why did you not buy a company off the shelf and start again?" How on earth could you go to a bank and say, "I have got freezing orders. We have got freezing orders on us"? It has been difficult enough, 18 months later, after we were found not guilty and the freezer was taken away, for the banks to talk to us now. It has been almost impossible, but we done it, but we could not have done anything then. Q. Just let us break that down a little bit. I appreciate that the emotions which you feel." I found Mr Hone's last answer to be an entirely cogent description of one effect of the wrongly granted Freezing Order on him and the other Defendants. I accept of course that there is an element of commonality between the effect of the Freezing Order and that of the liquidation of Abbey. However there is no doubt in my mind that in this section of his evidence Mr Hone accurately described the effect in practical terms of the Freezing Order on him as a self-employed businessman. It is an effect that I can legitimately take into account when assessing general damages as being a facet of the emotional distress indignity and loss of reputation that has been pleaded as the basis of the general damages claim. Mr Hone returned to this issue again in the course of the evidence he gave in re-examination when he touched on one particular effect of the Freezing Order: "Q. To what extent, just generally, were you making her aware of your personal business predicament, how this was affecting you, Rick Hone, not to be able to have access to your private funds in order to carry out business? A. I think in the first months we were just actually fighting what was coming at us. We thought that because Baker Tilley -- it was Baker Tilley at the time -- was in the warehouse, and they were in the warehouse for two months, we would have £60,000 coming back to us. We actually thought that then we would take the warehouse over and perhaps salvage something. But very early on, we were told by the staff that were still working at Abbey Forwarding that she was systematically shutting everything down, telling every customer that the company was insolvent, she was telling everybody, which was blatantly untrue. So, every time ---- JUDGE PELLING: Can you just go a bit more slowly? I want to take a full note of this. A. Sorry, sir. There was a view -- and I was talking to people, to see if there was something we could rescue, because we were mindful, also, that the rates on the warehouse were over £7,000 a month and we knew that that would then impact later on. Then it became apparent that the banks just wouldn't talk to us. The normal people we were talking to at the banks were not talking to us any more. When we went up to get our money from the local branch, we had to take our passports. On every level, it just became impossible; and me, personally, there was a point where I just could not go on." I have set out the quotation in full so as to establish context. The point that is relevant to the matters I am now considering is contained in the final part of Mr Hone's answer after my intervention. It records an aspect of the effect of the Freezing Order that was plainly material to the issue I am now considering Mr W.Owen His evidence concerning the issue I am now considering is contained in Paragraphs 48-51 of his witness statement and was not challenged. I accept that evidence to the extent that I set it out below. It was as follows: "It became highly embarrassing for myself and my wife to do simple day to day tasks whilst the freezing order was imposed on us, such as going to the bank where the staff knew that we were subject to a freezing order. It was also very embarrassing for us to see people whom we have known for many years who would look at us as though we were criminals. This also caused damage to my reputation as a businessman and investor. My wife refused to go out and meet up with friends. She found it extremely difficult, as did I, … . My youngest son was also affected by the freezing order as he was living at home studying for his GCSEs when the order was imposed. He missed the grades required to stay at the school he had studied at since the age of 11. … " I make it clear that I accept the remaining evidence contained in the paragraphs to which I have referred. However, it is not material either because there is no medical evidence that demonstrates that an effective cause of the ill health referred to was the imposition or policing of the Freezing Order, and the loss of the ability to finance private health insurance and family holidays was the result of the loss of Abbey as a source of income and the need to spend money on defending the claims. Mr P.Owen Mr P.Owen addresses the issues I am now considering in Paragraphs 28 and 29 of his witness statement. I make clear that I accept the evidence set out in Paragraph 30 but do not take it into account on the issue I am now considering because the loss of BUPA cover was the result of the loss of income caused by the liquidation of Abbey not the imposition of the Freezing Order. I accept that in fact Mrs Owen was prescribed anti-depressants but do not take that into account because there is no evidence that demonstrates that the effective cause of this was the Freezing Order. I also accept that the family were unable to take holidays together and that they were forced to watch every penny. This was not the result of the Freezing Order however but of the liquidation of Abbey. In so far as is material Mr Owen's evidence in Paragraphs 28 and 29 of his statement was as follows: "… It was unrealistic of the liquidator to assume that I would simply be able to secure alternative employment whilst subject to a freezing order … It became highly embarrassing for myself and my wife to do simple day to day tasks whilst then freezing order was imposed on us, for example the bank would require us to answer numerous questions and present identification documents such as utility bills and passports on each visit. My wife still refuses to go into our local bank branch as a result of personal embarrassment caused to her in having our accounts frozen. Our credit cards were all terminated. It felt to us as though we were regarded as criminals within the local community which caused untold stress, embarrassment and indignity, not to mention damage to my reputation as a businessman and investor. The stress was unbearable and both my wife and I were forced to take sleeping tablets to help us rest." Matters relevant to each of the Defendants' Claims For Aggravated Damages. There is I think no dispute as to the facts and matters pleaded in Paragraph 13(a) to (d) of the Points of Claim. I accept as correct the point made in relation to (a) by the Claimants that what is pleaded is not an aggravating factor for the reasons they plead in paragraph 13.3 of the Points of Defence. It is not clear to me how (b) could be an aggravating factor. In relation to (b) to (d), the notion that the liquidator can distance herself from HMRC in the manner attempted by the Defence may not be a tenable position for her to adopt given that the application for the Freezing Order was made by her immediately following her appointment if she adopted the evidence that had been used to support her appointment or did not seek to dissociate herself from it. Finally as matters presently rest I do not see how the matters referred to in (b) to (d) can have an aggravating effect when none of the Defendants mention them in their witness statements as having any effect on them. These issues require further clarification. That can be done either at the hand down of this judgment or at the assessment hearing. I make clear however that I consider the facts and matters pleaded in (c) and (d) (about which there is no factual dispute) are capable of having an aggravating effect given the findings made at trial and thus are matters that will be relevant to an assessment of aggravated damages subject to the points made in paragraph 138. Finally I turn to (e). I regard the manner in which the liquidator and her solicitors approached the question of releasing funds for living and legal expenses to be a potentially aggravating factor in the following respects. It is entirely clear from what I have said already that two issues were at the forefront of the Defendants' minds during the period covered by the Freezing Order – defending the claim and providing for their families and themselves. Thus a failure by the liquidator or those who acted for her to provide the necessary releases so as thereby to interfere with those objectives has the potential to increase not decrease stress distress and anxiety. Correspondence that demands prior consent before legal costs are incurred is simply not acceptable when there is no justification for such a stance in the Order itself and when it was obvious that such conduct was capable of affecting the ability of the Defendants to defend the claims made against them. Likewise delays in authorising the release of funds, particularly before a trial when it must have been apparent that a potential effect of such delay would be to interfere with the ability of the Defendants to defend the claims is unacceptable. Finally, threats to reduce unilaterally the sums that the Defendants were entitled to draw down in respect of their living expenses when the limits had been fixed by court order were equally unacceptable. The difficulty about each of these matters however is that which I have noted in relation to paragraphs (b) to (d) - whilst the correspondence supports findings in each of these categories there is no evidence as to the effect on the Defendants of these matters. Indeed they are not mentioned at all in their respective witness statements. These points were not explored in the submissions made to me. It would be wrong to determine finally the general and aggravated damages claims without giving the parties an opportunity to address these points. Conclusions Other than in relation to the tax penalty and marble claims, and subject to the point reserved in Paragraph 81 above, the special damages claims all fail. Each of the Defendants is entitle to recover general damages by reference to the facts and matters referred to in paragraphs 130 – 136 above that are there identified as supporting those claims. Final determination of whether aggravated damages can be recovered depends upon further argument on the issues identified in Paragraphs 138 and 140 above.

MR JUSTICE MOSES: This is an appeal against the decision of the District Judge for the Luton and South Bedfordshire Local Justice Area on 18 July 2011. The judge asks whether he was correct in finding the appellant guilty of an offence contrary so section 4 of the Public Order Act 1986 for using threatening and abusive behaviour with intent to cause his victim to believe that immediate unlawful violence would be used against him. The judge concluded that the appellant did intend to cause a Mr Peck to believe that unlawful violence would be used against him arising out of the events in the early hours of 4 December 2010. The facts are no credit to this appellant. He was clearly guilty of unprovoked and unlawful serious violence against the victim, Mr Peck. He, as the District Judge found, approached Mr Peck from his right-hand side and, it is important to note, slightly to his rear. He struck him a violent blow with his fist to the side of the head. It appears that Mr Peck was immediately knocked unconscious because, as found by the District Judge, he fell to the ground and did not move. The District Judge specifically found that the appellant had approached Mr Peck and "threw the punch in such a way that it would land before Mr Peck perceived the blow, or so soon after he perceived the threat as to prevent him from reacting to defend himself". The judge further found that there was no evidence that Mr Peck was aware of the blow before it struck. He further found that the appellant intended to punch Mr Peck to the head, and intended to strike the blow before Mr Peck could defend himself. He then continued: "If Mr Peck saw the blow before it landed, the appellant intended that Mr Peck believe that unlawful violence would be used against him, as indeed it was." He concluded that he was sure that the appellant had both the intention to punch Mr Peck to the head and the intention to cause him to believe that unlawful violence would be used against him. He repeated that he was satisfied that the appellant had those two continuing concurrent intentions, as he put it, which were not mutually exclusive. The question for this court is as to whether there was evidence on the basis of which the judge was entitled to infer that the appellant intended to cause Mr Peck to believe that unlawful violence would be used against him. We should make clear that that was the basis upon which the appellant was charged under section 4(1) of the Public Order Act 1986, and there was no case made against him on the basis not of his intention, but rather that it was likely that such unlawful violence would have been provoked, that it is a separate and distinct basis which was not pursued in this case. It is important, as Mr Leonard stresses in his helpful written and oral submissions, to acknowledge that there is no requirement on the prosecution to prove that the victim did in fact believe that he would be visited with unlawful violence (see Swanston v DPP [1997] 161 JP 203 WL, following early authority). But, in this case, the question for this court is whether there was any evidence at all that the appellant intended his victim to believe anything, let alone that he would suffer unlawful violence. This was, as the judge specifically found, a sneaky and unprovoked attack: the appellant approached the victim from behind. As soon as the appellant got close enough, he delivered the blow in such a way as to avoid any advance warning. In my view, there was no evidence whatever from which it could be inferred that the appellant intended to cause Mr Peck to believe that unlawful violence would be used against him. Mr Leonard suggests that there was a possibility that the victim might have noticed what was about to happen to him before the blow was delivered, in which case the actions of the appellant were such that it could be inferred that he might have intended to cause him to believe that he was about to be hit. That is, in my view, a wholly unacceptable and highly strained basis upon which to view the facts. The reality is that the intention of this appellant was to hit the victim before he knew what was happening to him. Why it was that the appellant was not charged with an assault, or even a more serious offence given the effect of striking this man unconscious with one blow, has never become apparent and could not be explained to us by counsel for the prosecution, Mr Leonard. Where the prosecution have failed to charge the obvious offence, it is quite wrong to seek to strain a view of the facts so as by some unjustifiable Procrustean method to drag it within the embrace of an offence miles away from that simple charge of assault, which is what this appellant ought to have faced. Mr Leonard does make the more realistic submission that there will often be cases of an assault where it can be inferred that the intention of the perpetrator of that assault will be to cause the victim to apprehend a second occasion of violence - a second blow. But there was absolutely no evidence of that in this case; certainly no evidence of that intention to be inferred from the sudden striking of one blow. The reality of this case was that the prosecution charged the wrong offence, and that the District Judge understandably, but in my view mistakenly, sought to see that at least the perpetrator of this wholly uncalled for violence did suffer at least a conviction for some sort of offence. It requires no words of mine to underline that that is not an acceptable approach. If the prosecution charge the wrong offence, they had no business in seeking to pursue so unrealistic a course. In my view, the appellant ought not to have been convicted of an offence under section 4(1) on the basis of intending the victim to believe that unlawful violence would be used against him, even if other aspects of that offence under section 4 might have been more appropriate. There was no evidence on the basis of which the judge could conclude in the way he did, and I would allow the appeal. MR JUSTICE IRWIN: I agree. I add only this: the implication of the argument advanced on behalf of the respondent was that an offence under section 4(1) of the Public Order Act 1986 could be charged in almost every assault case which arises. I echo the words of my Lord, Moses LJ: it is highly desirable that offences should be properly charged, not charged on a strained or artificial basis. This was, on any sensible view, an assault and it should have been prosecuted as such. Prosecutors should not seek to confuse what should be readily understandable criminal proceedings by attaching the wrong label and then attempting to see that the label sticks. MR JUSTICE MOSES: What relief are you seeking; that we quash the conviction? MR STOREY: Indeed. MR JUSTICE MOSES: Anything else? MR STOREY: No, my Lord. MR JUSTICE MOSES: Thank you very much.

Conclusions OPINION OF ADVOCATE GENERAL MISCHO delivered on 28 May 2002 (1) Joined Cases C-57/00 P and C-61/00 P Freistaat Sachsen, Volkswagen AG and Volkswagen Sachsen GmbH v Commission of the European Communities ((State aid – Compensation for economic disadvantages caused by the division of Germany – Serious disturbance in the economy of a Member State – Community framework on State aid to the motor vehicle industry)) 1. In Joined Cases C-57/00 P and C-61/00 P, Freistaat Sachsen, first, and Volkswagen AG ( Volkswagen) and Volkswagen Sachsen GmbH ( VW Sachsen), second, have appealed against the judgment delivered on 15 December 1999 by the Court of First Instance of the European Communities, Second Chamber (Extended Composition), in Freistaat Sachsen and Others v Commission (2) ( the contested judgment). I ─ Introduction 2. For a description of the legal background and the facts from which the dispute arises, I refer to paragraphs 1 to 44 of the contested judgment which, for the sake of brevity, I shall not reproduce here. 3. However, I note briefly that the origin of the present cases lies in Commission Decision 96/666/EC of 26 June 1996 concerning aid granted by Germany to the Volkswagen Group in Mosel and Chemnitz (3) ( the contested decision). 4. In the contested decision, the Commission declared that certain aid granted to the Volkswagen Group for investment projects in Saxony was compatible, in particular, with Article 92(3)(c) of the EC Treaty (now Article 87(3)(c) EC). 5. On the other hand, it stated that the investment aid granted to the Volkswagen Group for its investment projects comprising the creation of a new motor vehicle construction plant at Mosel ( Mosel II) and a new engine production plant at Chemnitz ( Chemnitz II) in the form of special depreciation on investment under the German Assisted Areas Law, with a nominal value of DEM 51.67 million, and also investment aid granted to the Volkswagen group for its investment projects at Mosel II, with a value of DEM 189.1 million, were not compatible with that provision. 6. The Commission also limited the combined effective aid intensity, expressed in gross grant equivalent, to 22.3% for Mosel II and 20.8% for Chemnitz II. 7. The actions brought by Freistaat Sachsen and by Volkswagen and VW Sachsen in the Court of First Instance, seeking partial annulment of the contested decision, were dismissed in the contested judgment. 8. In their appeals, the appellants claim that the Court should annul the contested judgment, allow the claims put forward at first instance, and order costs against the Commission. The Federal Republic of Germany intervenes in support of their claims. 9. The Commission contends that the appeal should be rejected, that its submissions at first instance, for the actions to be rejected as unfounded, should stand, and that costs should be ordered against the appellants. II ─ Analysis A ─ First plea in law, alleging infringement of Article 92(2)(c) of the Treaty 10. The appellants, supported by the German Government, criticise the interpretation of Article 92(2)(c) of the Treaty given by the Court of First Instance. (4) 11. That Court found as follows: Under Article 92(2)(c) of the Treaty, aid compatible with the common market includes aid granted to the economy of certain areas of the Federal Republic of Germany affected by the division of Germany, in so far as such aid is required in order to compensate for the economic disadvantages caused by that division. Far from being implicitly repealed following German reunification, that provision was retained by both the Maastricht Treaty concluded on 7 February 1992 and the Amsterdam Treaty concluded on 2 October 1997. Moreover, an identical provision was inserted into Article 61(2)(c) of the Agreement on the European Economic Area concluded on 2 May 1992 (OJ 1994 L 1, p. 3). Having regard to the objective scope of the rules of Community law, the authority and effectiveness of which must be preserved, it cannot therefore be assumed that that provision has become devoid of purpose since the reunification of Germany, as the Commission maintained at the hearing, contradicting its own administrative practice (see, in particular, the Daimler-Benz [ (5) ] and Tettau [ (6) ] decisions). It should, nevertheless, be emphasised that, since it is a derogation from the general principle laid down in Article 92(1) of the Treaty that State aid is incompatible with the common market, Article 92(2)(c) of the Treaty must be interpreted narrowly. Moreover, as the Court of Justice has emphasised, in interpreting a provision of Community law it is necessary to consider not only its wording but also the context in which it occurs and the aims of the rules of which it forms part (Case 292/[82] Merck v Hauptzollamt Hamburg-Jonas [1983] ECR 3781, 3792; Case 337/82 St. Nikolaus Brennerei v Hauptzollamt Krefeld [1984] ECR 1051, 1062). In this case, the phrase division of Germany refers historically to the establishment of the dividing line between the two zones in 1948. Therefore, the economic disadvantages caused by that division can only mean the economic disadvantages caused by the isolation which the establishment or maintenance of that frontier entailed, such as, for example, the encirclement of certain areas (see the Daimler-Benz decision), the breaking of communication links (see the Tettau decision), or the loss of the natural markets of certain undertakings, which therefore need support, either to be able to adapt to new conditions or to be able to survive that disadvantage (on that point, but in relation to the fourth paragraph of Article 70 of the ECSC Treaty, see Barbara Erzbergbau, p. 409). By contrast, the conception of the applicants and the German Government, according to which Article 92(2)(c) of the Treaty permits full compensation for the undeniable economic backwardness suffered by the new Länder, until such time as they reach a level of development comparable with that of the original Länder, disregards both the nature of that provision as a derogation and its context and aims. The economic disadvantages suffered by the new Länder as a whole have not been caused by the division of Germany within the meaning of Article 92(2)(c) of the Treaty. As such, the division of Germany has had only marginal consequences on the economic development of either zone, which, moreover, it affected equally at the outset, and it has not prevented the economies of the original Länder from developing favourably thereafter. It follows that the differences in development between the original and the new Länder are explained by causes other than the division of Germany as such, and in particular by the different politico-economic systems established in each State on either side of the frontier. It also follows from the above that the Commission did not make any error of law by stating generally, in the third paragraph of Point X of the [contested decision], that the derogation laid down in Article 92(2)(c) of the Treaty should not be applied to regional aid for new investment projects and that the derogations provided for in Article 92(3)(a) and (c) of the Treaty and the Community framework were sufficient to deal with the problems faced by the new Länder. 12. In Case C-156/98 (7) the Court of Justice interpreted Article 92(2)(c) of the Treaty similarly and in almost identical words. And, rather more even than did the Court of First Instance, it also stressed the geographical aspect of the division, for paragraph 54 in that judgment, which should be compared with paragraph 136 of the contested judgment, reads:The economic disadvantages suffered by the new Länder as a whole have not been directlycaused by the geographical division of Germany within the meaning of Article 92(2)(c) of the Treaty. (8) 13. The appellants and the German Government, however, hold to their view that this interpretation is mistaken and too restrictive. 14. Let us consider the various arguments which they put forward on this. 1. Interpretation of the wording 15. According to the appellants and the German Government, the Court of First Instance misconstrued the wording of Article 92(2)(c) of the Treaty in basing the contested judgment on an interpretation of the expression division of Germany which derives from criteria that are purely physical and/or relate to transport. 16. They submit that, within the context of a provision which deals with compensation for economic disadvantages, the concept of division of Germany is commonly understood to refer to the division of Germany into two separate economic and political systems. 17. In support of this interpretation, the appellants and the German Government also refer to the Protocol on German Internal Trade, which also includes the words division of Germany. 18. The Commission maintains that, under Article 42(2) and Article 118 of the Rules of Procedure of the Court of Justice, which prohibit new pleas in law in the course of the proceedings, the appellants are precluded from relying on the Protocol on German Internal Trade. I do not share that view because, in my opinion, the reference to that Protocol is not a new plea in law raised by the appellants but an argument in support of a plea already raised at first instance. 19. In any event, as regards the Protocol, the appellants themselves explain that [s]ince in 1957, at the conclusion of the EEC Treaty, there was still hope that the iron curtain might soon be lifted, the signatory States took action so that, as regards the movement of goods between the two German states, the establishment of the external customs frontier of the territory of the Community should not disproportionately hinder the trade in goods which still passed at that time between the two economic zones. (9) 20. Thus, the stress was laid not on the existence of two different political and economic systems but on the existence, between the two Germanies, of a frontier which, without the relief given by that Protocol, would have constituted an external Community frontier like any other. 21. The appellants also refer to a number of other documents to show that the expression division of Germany must be taken as a synonym for differentiation between opposing economic and political systems. More particularly, these are the judgment in Anastasiou and Others (10) , which refers to the de facto partition of the territory of Cyprus, (11) the answer to Written Question 2654/85, by Mr Pordea, Member of the European Parliament, (12) which refers to the division of Europe, the Resolution of the European Parliament on the conclusions of the Luxembourg European Councils on 21 November and 12 and 13 December 1997, (13) which refers to the division of Europe, and the preamble to the Maastricht Treaty, which mentions the division of the European continent. 22. But, as the Commission rightly notes, these documents do not constitute an interpretation of the words division of Germany in Article 92(2)(c) of the Treaty. They are therefore not relevant to the resolution of the present action. 23. That said, I agree with the appellants and the German Government that there is a close link between the existence of an inter-German frontier and the existence of two differing politico-economic systems. The radical difference between those two systems was assuredly the origin of the fact that, apart from the openings created by the Protocol on German Internal Trade, the inter-German frontier was more tightly closed than, for example, the German-Swiss frontier. In addition, it cut the bonds that had been created between these territories over a lengthy period when they had been part of one and the same country. The economic disadvantages resulting from that frontier were therefore particularly serious. 24. However, I consider that paragraph 134 of the contested judgment is fully compatible with that viewpoint. It cannot be said that the Court of First Instance meant the physical frontier alone, since it mentions the encirclement of certain areas, the breaking of communication links and the loss of the natural markets of certain undertakings, which are circumstances that can be explained only by the existence of two differing politico-economic systems, for they do not occur along a normal frontier such as the German-Swiss frontier. 25. What the Court of First Instance was seeking to contrast in paragraphs 134 and 135 of the contested judgment were, on the one hand, the consequences of the establishment of that politico-economic frontier and, on the other, the economic backwardness which resulted from the policy pursued by the governing bodies of the German Democratic Republic. 26. But it is that economic backwardness which the appellants and the German Government rely on in support of the applicability of Article 92(2)(c) of the Treaty. 27. That leads us to consider what is to be understood by the expression economic disadvantages caused by that division (14) which is found in that provision. 28. The terms used clearly establish a causal link between the economic disadvantages and the division of Germany. 29. However, it has to be admitted that, after that division was ended, those words ─ retained by the treaties of Maastricht and Amsterdam ─ must now be understood as referring to the consequences of that division. 30. But can those terms therefore be construed as aid necessary to compensate for the backwardness of economic development which can be attributed to the politico-economic system that existed in the territory of the new Länder before that division was ended? This is how I believe I may sum up the German Government's contention. 31. For my part, I believe that to construe Article 92(2)(c) of the Treaty thus would substantially modify its scope. The causal link between the economic disadvantage and the division of Germany would become much too indirect. 32. Where a provision has, as the appellants and the German Government admit, become applicable to reunited Germany simply through the effect of the principle of the mobility of the territorial scope of treaties, that near-automatic extension alone cannot modify its scope or content. 33. Thus, this provision cannot now be construed to cover situations which are not the direct consequence of the previous existence of an inter-German frontier but, to a large extent, result from particular decisions of economic policy taken by the former authorities of the German Democratic Republic. 34. If the position were otherwise, that could make the division of Germany the justification for aid granted to create a new industry in the open countryside, in an area which has always been purely agricultural, for the reason that, if that area had been part of the Federal Republic of Germany earlier, an industry would certainly have been established there long before. 35. The German Government does indeed deny intending to take its argument so far. I may quote here a passage from the German Government's reply in Germany v Commission (Case C-301/96), pending in the Court of Justice, where it states that it has always indicated that it is itself of the opinion that only certain reconstruction projects in the East are covered by the division clause, namely those which meet the factual conditions in Article 92(2)(c) of the EC Treaty (now, after amendment, Article 87 EC), and that must be verified in each specific case. (15) 36. But, when it comes down to defining these factual conditions, the German Government dismisses every criterion connected with the former frontier and refers only to the economic and technological backwardness of the former German Democratic Republic as a whole. 37. But it has to be one or the other. Either the economic situation of East Germany in 1996 [is] comparable in several respects to that of Greece or Portugal, for example. (16) In this case, I cannot see why the slightly more restrictive criteria of Article 92(3)(c) of the Treaty should be applied to Greece and Portugal and not to East Germany. The mere presence of the division clause in the Treaty would not be sufficient explanation: I can hardly imagine that the Treaty negotiators intended that clause to justify different treatment in two similar situations. 38. Or else there was an essential difference between the projects for re construction of an old industrial landscape that was in existence even before 1945 ─ we have a classic case of that in the old motor-vehicle area in Saxony around Mosel and Chemnitz! ─ and the general support granted to previously less developed areas of the Community under Article 92(3) EC. (17) 39. In which case, it is even harder to see why more favourable treatment, in terms of public aid, should be given to areas located quite close to the centre of Europe, where even before the ending of the division of Germany there was a skilled workforce, production plant and rail and road links, than to areas, handicapped by their location at the periphery of the Community, which had never experienced any industrial development. 40. Furthermore, in interpreting the actual words of Article 92(2)(c) of the Treaty, we cannot ignore the terms certain areas ... affected (18) which are found there. 41. In paragraph 135 of the contested judgment, the Court of First Instance found that the applicants and the German Government had expounded the conception ... according to which Article 92(2)(c) of the Treaty permits full compensation for the undeniable economic backwardness suffered by the new Länder, until such time as they reach a level of development comparable with that of the original Länder. (19) 42. That argument was also confirmed in the written pleadings lodged as part of the present appeal. 43. Very clearly, that conception amounts to saying that the area affected, within the meaning of Article 92(2)(c) of the Treaty, is the entire territory of the former German Democratic Republic, since the economic development of the whole of that territory was backward. That would mean that any kind of aid granted to any kind of undertaking or entity located in that territory would now fall within the scope of the division clause. 44. However, upon being questioned, the German Government stated at the hearing before the Court of Justice that it did not support such a wide interpretation and that the areas referred to were the areas of Mosel and Chemnitz. In my opinion, this latter interpretation is the only one compatible with the wording of the clause. 45. Indeed, before reunification, it was never considered that all of the areas or undertakings of West Germany could rely on the division clause. 46. Thus, the Mosel and Chemnitz areas could be regarded as having suffered economic disadvantages caused by the division of Germany only if the existence of the politico-economic frontier between the two parts of Germany had constituted an obstacle to their economic development in a way that had marked them out from the other areas of the former German Democratic Republic (or at least from all those areas not affected by the frontier in the same way as them). 47. But the Mosel and Chemnitz areas are more than 100 km from the former inter-German frontier and, far from having been worse constrained in their economic development than other areas, they have after the period from 1945 to 1949, ... experienced a recovery which is remarkable if we compare it to the circumstances of the Communist economic system, (20) as the German Government itself tells us. 48. On the basis of the considerations above, I consider that the Court of First Instance did not misconstrue the wording of Article 92(2)(c) of the Treaty. 2. Interpretation in the light of the effectiveness of the provision 49. The points made above are closely linked with the matter of maintaining the effectiveness of Article 92(2)(c) of the Treaty, and I would therefore like to consider that before the appellants' other arguments. 50. The appellants and the German Government support the observation by the Court of First Instance, in paragraph 131 of the contested judgment, that the authority and effectiveness of the rules of Community law prevent Article 92(2)(c) being regarded as a provision that has become devoid of purpose since German reunification. 51. However, they claim that the interpretation set out in paragraph 134 of the contested judgment is incompatible with the fact that Article 92(2)(c) of the Treaty was maintained after reunification; this provision therefore cannot be intended, as the Court of First Instance states, to apply only to the disadvantages caused by the encirclement of certain areas, the breaking of communication links or the loss of markets in the East. 52. Since the contracting parties were aware that those direct consequences of the physical alignment of the frontier between West Germany and East Germany would very speedily be eliminated after reunification, the interpretation adopted by the Court of First Instance would be correct only if the latter were attributing to the States signatory to the Treaty of Amsterdam the intention, in Article 92(2)(c) of the Treaty, of maintaining a provision devoid of meaning or scope. Since the Treaty of Amsterdam led to a detailed revision of many of the provisions of the EC Treaty, it would be very unrealistic to attribute such an intention to the contracting States. 53. On this point, it should be noted, first, that this provision has not become devoid of all scope: as the Court of First Instance pointed out in paragraph 131 of the contested judgment, Article 92(2)(c) of the Treaty has been applied on two further occasions since the German reunification, namely the Daimler-Benz decision, adopted on 14 April 1992, and the Tettau decision, adopted on 13 April 1994. The provision, as the Court of First Instance has interpreted it, has therefore continued to have practical effect even after German reunification. 54. Certainly the provision was not applied between 1994 and 1997, the year in which the Treaty of Amsterdam was signed, but that does not prove as yet that the negotiators of the Treaty of Amsterdam kept a now meaningless provision in the Treaty. 55. In 1997, three years after the latest case arose, it was in fact conceivable that problems of that type might still present themselves, although the likelihood was very small. 56. It should be added, second, that the principle of the effectiveness to be attached to a Community provision does not prevent that provision from being applied less and less frequently and, in the end, not being applied at all. The German Government acknowledges, moreover, that the instances where Article 92(2)(c) of the Treaty is applied will become increasingly rare. 57. In fact, the principle of effectiveness cannot be regarded as an instrument intended to keep a provision in force where the conditions for it to apply are such that, over time, no further cases fall within its scope. Effectiveness would otherwise become a pretext for attaching to a provision a meaning which it has never had. 58. In my opinion, the meaning of the division clause has never been that of a sort of regional-development clause, forming, as it were, a synthesis of Article 92(3)(a) and (c) of the Treaty, but now freed from the restriction laid down in subparagraph (c), so that the Commission can object to its use only in cases of manifest abuse. 59. Nor, then, could any such meaning have been attributed to that provision simply because it was maintained in the treaties of Maastricht and Amsterdam, both signed after the division of Germany ended. Indeed, I believe that no such fundamental modification of the scope of a provision can be assumed. If that had been the intention of the inter-governmental conference, it should at least have adopted an interpreting protocol to be annexed to the Treaty of Amsterdam and submitted with it for parliamentary ratification. 3. Historical interpretation 60. In the course of the foregoing discussion, I have in fact already shown that I agree with the historical interpretation which the Court of First Instance gave to the provision at issue. However, for the sake of completeness, I must examine the objections to that interpretation voiced by the appellants and the German Government. (a) The Declarations of 1957 61. The appellants refer first to the declarations by the Federal Government in 1957 regarding the Treaties establishing the European Economic Community and the European Atomic Energy Community; among other things, we read here that [t]he Treaties take account of that requirement [to strengthen the internal and external links of the Federal Republic with the Germans of the Soviet Zone and to support the position of Berlin] by means of a number of specific provisions benefiting Berlin and the areas affected by the division of Germany and also a protocol on German internal trade. 62. As the Commission rightly points out, these are unilateral and internal explanations given by one Member State and they are not appropriate for the purpose of giving an interpretation valid erga omnes of a provision of Community law. Furthermore, these declarations do little more than repeat the text of Article 92(2)(c) of the Treaty and thus do not contribute to an interpretation of that provision. (b) The case of the Saarland 63. The appellants and the German Government refer next to the case of the Saarland: on this, the Court of First Instance found as follows, in paragraph 147 of the contested judgment:As for the decision concerning the Saarland, none of the parties have produced or requested it in these proceedings. The applicants have failed to show that the latter decision reflected a different approach by the Commission in the past and that such an approach, if it were established, would call into question the validity of the legal assessments made in 1996. 64. On this, Volkswagen and VW Sachsen complain, first, that the Court of First Instance infringed Article 64(2)(b) of its Rules of Procedure, on the ground that it failed to order the Commission to produce a copy of that decision. 65. According to the appellants, the Court should have made use of such a measure of inquiry because the Commission contradicted itself in the case at first instance regarding that decision. On the one hand, the Commission acknowledged in its defence that the decision on the Saarland was based on Article 92(2)(c) while, on the other, it stated in its rejoinder that, from a reading of the decision as published, (21) there is nothing to suggest that the decision was not taken on the basis of Article 92(2)(b) of the Treaty. 66. I feel that it is enough to note that the Court of First Instance is the sole judge of any need for the information available to it concerning the cases before it to be supplemented. (22) In addition, at no stage of the proceedings at first instance did Volkswagen and VW Sachsen ask the Court for measures of organisation of procedure, in this case consisting in the production of the decision on the Saarland, although that possibility was open to them at any stage of the proceedings. (23) Therefore, their argument that the Court was obliged to take such a measure cannot be accepted. 67. Next, regarding the substance of the case, the appellants and the German Government maintain that the instance of the Saarland shows that Article 92(2)(c) of the Treaty has not been interpreted by the Commission only as a rule on compensating for disadvantages resulting directly from the physical alignment of the frontier between East Germany and West Germany but also, in a general manner, as a provision intended to overcome the economic consequences of the division of Germany into different economic zones as implemented in the context of reorganisation after the war. 68. Unlike what was the case during the proceedings in the Court of First Instance, we now have the decision in question, which has been submitted to this Court by the German Government as part of this appeal. It is in the form of a letter from the President of the Commission to the German Minister for Foreign Affairs; it is dated 14 December 1964 and its subject is stated as: Aid to eliminate certain consequences of the division of Germany ( Beihilfen zur Beseitigung bestimmter Folgen der Teilung Deutschlands). The first part of the latter reads as follows: Aid for the elimination of certain consequences of the division of Germany was the subject of a detailed multilateral examination by a working group on 10 July 1963.The Commission considered that it should give special treatment to the measures specified, if only because of their special nature, and as a matter of priority resolve all issues arising in this connection, so that it could then focus its activity on general or regional measures.In the light of the additional information supplied by your Government, the Commission considers it proper to inform you of its conclusions: 1. As regards an initial category of measures, as follows: ─ aid for deportees, refugees and victims of the war or dismantling operations; ─ measures in favour of certain areas along the zone border [ Zonenrandgebiete] (reduced-rate interest, accelerated depreciation, compensation for additional transport costs); ─ aid to take account of the special circumstances of the Land of Berlin (credit guarantees, accelerated depreciation, measures to encourage the establishment of stocks, reduced income tax, allowance for workers in Berlin, partial reimbursement of certain tolls charged by the authorities of the Soviet Zone, partial exemption from turnover tax for small- and medium-sized undertakings and the self-employed professions); ─ aid to facilitate the economic reintegration of the Saarland into the Federal Republic of Germany; the Commission has, in the light of the information available, come to the conclusion that this aid meets the conditions for applying the following derogations: Article 92(2)(b), aid to make good the damage caused by natural disasters or exceptional occurrencesor Article 92(2)(c), aid granted to the economy of certain areas of the Federal Republic of Germany affected by the division of Germany, insofar as such aid is required in order to compensate for the economic disadvantages caused by that division. ... . (24) 69. The following observations should be made regarding this decision. We should note, first, that it is not a decision on the Saarland properly so called because there are references to all the types of measures or aids that might relate to the consequences of the Second World War or the division of Germany. Nor, second, is it a decision within the meaning of Article 93 of the EC Treaty (now Article 88 EC), rather it puts into written form conclusions which the Commission has reached from discussions which it has had with the German authorities. 70. Third, these conclusions are of a preliminary nature, for they refer to the details available. We are not told which particular aids have been planned to assist the reintegration of the Saarland. Neither in the written submissions nor at the hearing has there been mention of aid which was actually granted to the Saarland as a whole or to certain areas or undertakings in that Land and which the Commission did not dispute. 71. Fourth, the letter of 14 December 1964 does not state whether any aid granted to the Saarland was going to be examined by the Commission under Article 92(2)(c) of the Treaty or under Article 92(2)(b) of the Treaty. These two legal bases are mentioned as alternatives and, since the letter refers also to aid for certain areas along the zone border ( bestimmte Zonenrandgebiete) and the special circumstances of the Land of Berlin, it is possible that reference was made to Article 92(2)(c) of the Treaty only in respect of those areas. 72. I even think that this is likely: any aid of this type granted to the Saarland was clearly not related to the division between the Federal Republic of Germany and the German Democratic Republic. Thus, for that aid to qualify under Article 92(2)(c) of the Treaty, one would have to consider that the words division of Germany in that provision refer not only to the division between East and West but also to the other division of Germany, that between the Federal Republic of Germany and the Saarland. 73. On this point, we should note that, during the post-war years, the Saarland enjoyed political autonomy and that there was an economic and monetary union between France and this territory. (25) Under agreements made in October 1956, France accepted that the political union of the Saarland and Germany should take place on 1 January 1957 and that the economic union should be terminated after a three-year transition period. 74. Therefore when the Treaty of Rome was signed, on 25 March 1957, the Saarland was already a part of the Federal Republic of Germany in political terms. Thus it is very questionable whether the words division of Germany referred also to the Saarland question. 75. Furthermore, the Treaty refers only to the division of Germany. (26) Since the two situations are so very different in their nature, both in geographic and in political and economic terms, I think that the division between the Federal Republic of Germany and the Saarland could be regarded as falling within the scope of Article 92(2)(c) of the Treaty only if, in one way or other, the Treaty had explicitly referred to both divisions. 76. Finally, I feel that the comparison between the present case and that of the Saarland lacks relevance also in so far as the Saarland and the Federal Republic of Germany did not have substantially different politico-economic systems. Hence there could not have been aid intended to compensate for delayed development due to such a difference of systems. 77. Consequently, even if ─ hypothetically ─ it were accepted that the legal basis for that aid was Article 92(2)(c) of the Treaty, it could only be inferred that the end of the division does not mean that this provision ceases to be applicable. But this has not been in any way disputed. 78. Accordingly, we may conclude that the Court of First Instance did not make an error in finding that [t]he applicants have failed to show that the latter decision reflected a different approach by the Commission in the past and that such an approach, if it were established, would call into question the validity of the legal assessments made in 1996. (c) Aid to the Zonenrand 79. Finally, the appellants assert that, contrary to what the Court of First Instance states in the contested judgment, application of the division clause was by no means restricted, even in the past, to compensation for mere technical difficulties relating to access to areas situated immediately adjacent to the East/West frontier. 80. According to the appellants, the aid to areas bordering on the Soviet-occupied zone ( Zonenrandförderung) which the Commission authorised for decades under Article 92(2)(c) of the Treaty extended to a territory which was equivalent to one third of the old Federal territory. 81. The Commission denies that aid to the Zonenrand related to one third of the territory of the old Länder without the need to establish the existence of a specific disadvantage caused by the frontier. Furthermore, according to the Commission, encouragement to areas located within the Zonenrand certainly never related to the Länder remote from the frontier, such as North Rhine-Westphalic or Rhineland-Palatinate. The Commission points out that the Volkswagen works at Mosel and Chemnitz are also at least 100 km from the former inter-German frontier. 82. I feel that there is a misunderstanding here as to what the Court of First Instance meant. 83. In finding that the economic disadvantages caused by [the] division can only mean the economic disadvantages caused by the isolation which the establishment or maintenance of that frontier entailed, (27) I do not believe that the Court intended to rule that only areas located within a very short distance from the inter-German frontier can benefit under Article 92(2)(c) of the Treaty. 84. The interpretation of that provision adopted by the Court of First Instance is based not on the distance from the partition line to a potential beneficiary of aid but on the effects of that frontier in terms of economic disadvantages caused by the division it created. Even though there is a greater likelihood of such effects occurring in the areas very close to the partition line, economic disadvantages ─ for example in the form of a loss of natural markets ─ may well occur also farther from the frontier. 85. On this point, furthermore, the appellants themselves state that, by means of the aid to the Zonenrand, the Federal Republic of Germany was seeking to avoid greater difficulty when Germany was reunified in due course, by gradual desertification of the (by then) former Zonenrand in the midst of a united Germany. 86. And it is indeed conditions such as the encirclement of certain areas, the breaking of communication links or the loss of the natural markets of certain undertakings ─ which, according to the Court of First Instance, may warrant aid under Article 92(2)(c) of the Treaty ─ which can bring about this risk of desertification. 87. Finally, I think there is no need to dwell on a remark by the German Government that the date 1948, which the Court of First Instance mentions as the year that the line of partition was drawn between the two zones, is historically inaccurate: there is no doubt that, at the time that the EEC Treaty was signed, there was an East/West division of Germany and that it was the origin of the clause at issue. 4. Systematic interpretation 88. The appellants and the German Government also consider that the interpretation adopted by the Court of First Instance does not take account of the fact that, in accordance with the scheme of the Treaty, provision is already made in respect of transport, in Article 82 of the EC Treaty (now Article 78 EC), to compensate for the disadvantages linked to the division of Germany. 89. That article reads as follows:The provisions of this Title shall not form an obstacle to the application of measures taken in the Federal Republic of Germany to the extent that such measures are required in order to compensate for the economic disadvantages caused by the division of Germany to the economy of certain areas of the Federal Republic affected by that division. 90. We should note, first, as does Erdmenger, (28) that that article allows the Federal Republic of Germany to maintain or to lay down national measures relating to transport policy ( nationale verkehrspolitische Maßnahmen). It therefore applies to measures derogating from the Community's common transport policy. But it does not apply to measures derogating from the rules governing public aid to transport infrastructures. Like the Commission, I consider that such aid remains covered by Articles 92 and 93 of the Treaty. 91. As Erdmenger points out also, that Member State has not felt the need to rely on that provision either during the period of the division or subsequently. The transitional measures required by German reunification were also adopted not on the basis of Article 82 of the Treaty but on the basis of Article 75 of the EC Treaty (now, after amendment, Article 71 EC). (29) 92. Second, the Commission rightly points out that the Court of First Instance did not limit the disadvantages caused by the division of Germany, within the meaning of Article 92(2)(c) of the Treaty, only to the consequences affecting communication links. In paragraph 134 of the judgment, those consequences were cited only as one example among other possible consequences, such as the encirclement of certain areas or the loss of natural markets. 93. Therefore, the appellants' argument regarding Article 82 of the Treaty is not convincing. 5. The burden of proof on the Federal Republic of Germany 94. Volkswagen and VW Sachsen, with the support of the German Government, consider that the Court of First Instance erred regarding the extent of the burden of proof on the Federal Republic of Germany. 95. Regarding this, the contested judgment reads: Moreover, as regards the question whether, apart from its character as aid for the economic development of the Free State of Saxony, the aid in question is specifically designed to compensate for the disadvantages caused by the division of Germany, it should be borne in mind that a Member State which seeks to be allowed to grant aid by way of derogation from the Treaty rules has a duty to collaborate with the Commission, requiring it in particular to provide all the information to enable the Commission to verify that the conditions for the derogation sought are fulfilled ([Case C-364/90] Italy v Commission [[1993] ECR I-2097], paragraph 20). On that point, there is nothing in the documents before the Court to show that the German Government or the applicants put forward specific arguments during the administrative procedure in order to prove a causal link between the situation of the motor-vehicle industry in Saxony after German reunification and the division of Germany. The Commission is therefore right in maintaining that the parties have not put forward specific evidence capable of justifying the application of Article 92(2)(c) of the Treaty to this case. 96. Volkswagen and VW Sachsen believe that, in paragraph 141 of the contested judgment, the Court of First Instance was wrong in complaining that the Federal Republic of Germany had not put forward specific arguments on the applicability of the division clause: they say that clearly there was no point in a statement of the conditions for application because the Commission had decided in advance, at policy level, not to apply the provision. 97. But that argument cannot be upheld. 98. It confounds two successive stages of the reasoning: first, the definition of the scope of Article 92(2)(c) of the Treaty and, second, once that definition has been established, whether in actual fact the aid at issue fulfils the conditions in that provision. At this latter stage, as is apparent from the judgment in Italy v Commission, the Member State has a duty to provide all the information to enable the Commission to verify that the conditions for the derogation sought are fulfilled. 99. The Federal Republic of Germany does not accept the definition of the scope of Article 92(2)(c) of the Treaty adopted by the Commission in the contested decision and subsequently endorsed by the Court of First Instance in the contested judgment, but that will not relieve it of the burden of proof if it seeks nevertheless to benefit from that provision. 100. The Court of First Instance therefore properly interpreted the burden of proof which lay on the Federal Republic of Germany here. 101. The German Government also adds that the Court of First Instance was wrong in not regarding a number of documents annexed to its application in Case C-301/96 that it had also submitted to that Court in connection with its intervention in the case at first instance. These are a letter of 9 December 1992 from the Federal Chancellor to the President of the Commission and also two communications, of 15 October 1993 and 19 September 1994, and a memorandum, of 13 May 1996, all sent to the Commission. 102. The German Government says that, had the Court of First Instance appraised those documents, it would not have been able to state that there was nothing in the documents before the Court to show that the Federal Republic of Germany had put forward arguments on the applicability of the division clause. 103. But, in effect, this argument questions an appraisal of the facts by the Court of First Instance, although it is settled case-law that the Court of First Instance has sole jurisdiction to find and appraise the facts, except in a case where the factual inaccuracy of its findings arises from evidence adduced before it. The appraisal of the facts by the Court of First Instance does not constitute, save where the clear sense of the evidence produced before it is distorted, a question of law which is subject, as such, to review by the Court of Justice. (30) 104. There is no question here of the Court of First Instance distorting the sense of the facts: on reading the documents to which the German Government refers, it is clear that there is no information in them intended to show that the aid in dispute satisfies the conditions laid down by Article 92(2)(c) of the Treaty as interpreted by that Court, and that they only put forward arguments for a different interpretation of that provision. 105. Having rejected that interpretation, the Court of First Instance was thus able, without distorting the sense of those documents, to find that no specific argument had been put forward during the administrative procedure in order to prove a causal link between the situation of the motor-vehicle industry in Saxony after German reunification and the division of Germany taken in the sense which the Court of First Instance attaches to that concept. 6. Institutional balance 106. Lastly, Volkswagen and VW Sachsen allege that the Court of First Instance compromised the institutional balance by finding, in paragraph 136 of the contested judgment, that the disadvantages suffered by the new Länder as a whole have not been caused by the division of Germany within the meaning of Article 92(2)(c) of the Treaty. As such, the division of Germany has had only marginal consequences on the economic development of either zone, which, moreover, it affected equally at the outset, and it has not prevented the economies of the original Länder from developing favourably thereafter. 107. They claim that there is nothing to be found about this subject in the contested decision. The Court of First Instance therefore assumed the role of the Commission in making factual findings as to the applicability of that provision. 108. This argument cannot be upheld. 109. It is enough to note, as the Commission rightly does, that paragraph 136 of the contested judgment only repeats an argument submitted by the Commission at first instance. 110. As we see in paragraph 126 of the contested judgment, the Commission had maintained that the poor general economic situation of the new Länder was a direct consequence not of the division of Germany but of the political system of the former German Democratic Republic and of reunification itself. 111. Furthermore, it is not relevant that the disputed decision says nothing on this matter: the Commission was fully entitled, during the proceedings in the Court of First Instance, to answer the appellants' argument that establishing the backwardness of economic development in the new Länder was sufficient to render Article 92(2)(c) of the Treaty applicable, by stating that, in its opinion, there was no causal link between that situation and the division of Germany. 112. I consider that it follows from the points made above that the appellants have not shown that the Court of First Instance erred in its interpretation of Article 92(2)(c) of the Treaty. 113. I therefore propose that their first plea be rejected. B ─ Second plea in law, alleging infringement of Article 190 of the EC Treaty (now Article 253 EC) Second plea in law, alleging infringement of Article 190 of the EC Treaty (now Article 253 EC) 114. The appellants and the German Government consider that the Court of First Instance erred in law in finding as follows regarding the Commission's duty to state reasons: As for the complaint of insufficient reasoning, it should be recalled that the statement of reasons required by Article 190 of the EC Treaty (now Article 253 EC) must clearly and unequivocally show the reasoning of the institution which adopted the measure, so as to enable the Community judicature to exercise its power of review and the persons concerned to know the grounds on which the measure was adopted (see, for example, Case T-84/96 Cipeke v Commission [1997] ECR II-2081, paragraph 46). In this case, the [contested decision] contains only a brief summary of the grounds for the Commission's refusal to apply the derogation in Article 92(2)(c) of the Treaty to the facts of the case. Nevertheless, [that decision] was adopted in a context that was well known to the German Government and the applicants and forms part of a consistent line of decision-making practice, particularly in relation to those parties. Such a decision may be supported by a summary statement of reasons (Case 73/74 Papiers Peints v Commission [1975] ECR 1491, paragraph 31; Case T-34/92 Fiatagri and New Holland Ford v Commission [1994] ECR II-905, paragraph 35). Since 1990, in its relations with the Commission, the German Government has referred many times to Article 92(2)(c) of the Treaty, insisting on the importance of that provision for the recovery of the former East Germany (see, in particular, the letter from Chancellor Kohl to President Delors of 9 December 1992, cited above). The arguments put forward by the German Government in that regard were rejected in various letters or decisions of the Commission [see, in particular, the Commission notice pursuant to Article 93(2) of the EEC Treaty to other Member States and other parties concerned regarding the proposal by the German Government to award State aid to the Opel group in support of its investment plans in the new Länder (OJ 1993 C 43, p. 14); the Commission notice pursuant to Article 93(2) of the EEC Treaty to other Member States and interested parties concerning aid which Germany proposes to grant Rhône-Poulenc Rhotex GmbH (OJ 1993 C 210, p. 11); Commission Decision 94/266/EC of 21 December 1993 on the proposal to award aid to SST-Garngesellschaft mbH, Thüringen (OJ 1994 L 114, p. 21); the Mosel I decision; [ (31) ] and Commission Decision 94/1074/EC of 5 December 1994 on the German authorities' proposal to award aid to Textilwerke Deggendorf GmbH, Thüringen (OJ 1994 L 386, p. 13)]. In that respect, particular importance should be accorded to the Mosel I decision, in which the Commission declared some of the aid in question, amounting to DEM 125.2 million, incompatible with the common market after excluding, on grounds identical to those used in the [contested decision], the possibility that that aid might be covered by Article 92(2)(c) of the Treaty. It should be noted, moreover, that neither the applicants nor the German authorities have brought any action against that earlier decision. Even though, between the adoption of the Mosel I decision and the adoption of the [contested decision], the Commission, the German authorities and the applicants have had numerous contacts revealing their continuing differences of opinion concerning the applicability of Article 92(2)(c) of the Treaty to the aid in question (see Points V and VI of the [contested decision]), it should also be noted that no specific or new argument has been put forward in that context, particularly as to the existence of a causal link between the position of the motor-vehicle industry in Saxony after German reunification and the division of Germany (see paragraph 141 above). In those circumstances, the Court finds that the applicants and the Federal Republic of Germany were sufficiently informed of the grounds for the [contested decision] and that, in the absence of more specific arguments, the Commission was not obliged to state the grounds for it more extensively. 115. The appellants, supported by the German Government, maintain that the contested judgment infringes Article 190 of the Treaty in that it unlawfully reduces the requirements of the obligation to state reasons. They allege that the contested decision does not in fact enable either them or the Court of First Instance to know the reasons for which the Commission refused to apply Article 92(2)(c) of the Treaty. 116. The Commission submits that, by this plea, the appellants are in fact criticising an appraisal of the facts by the Court of First Instance, even though they assert that their argument refers to a problem of law, that is, a misinterpretation of Article 190 of the Treaty. 117. However, I do not share this view of the Commission. 118. In Commission v Daffix, (32) the Court of Justice held, in paragraphs 34 and 35, that: ... [C]ontrary to the findings of the Court of First Instance ..., the contested decision gave a sufficiently precise indication of the conduct with which the official was charged. ... In so far as it considered that the contested decision did not indicate sufficiently precisely the conduct with which Mr Daffix was charged and that hence Article 190 of the Treaty and Article 25 of the Staff Regulations had been infringed, the Court of First Instance committed an error of law. (33) 119. This judgment confirms that whether the reasons for a decision are stated sufficiently is a matter of law and not of fact. In finding whether the reasons for a decision are stated sufficiently, the Court of First Instance is not ascertaining a fact but already classifying it in law. But the legal classification of a fact relates to a point of law and, as such, is subject to review by the Court of Justice. (34) 120. Let us now consider the individual arguments advanced by the appellants in their second plea in law. First of all, they believe that the Court of First Instance erred in holding that the decisions cited at paragraphs 153 and 154 of the contested judgment could contribute to the statement of reasons for the contested decision even though, first, this latter makes no reference to those other decisions and, second, the reasons for those other decisions are no more fully stated than those of the contested decision itself. 121. The Commission rightly points out that the Court of First Instance referred to those decisions ─ which had all been published and which the appellants cannot therefore claim to have been unaware of ─ as part of its description of the context of the contested decision, which, as the Court has consistently held, contributes to the statement of reasons for a decision. (35) 122. There was therefore no need for the contested decision to refer to those decisions or for the reasons for those decisions to be stated more explicitly than in the contested decision. A reference to earlier reasons would not be a context but the consideration of an explicit statement of grounds that would make reference to a context redundant. 123. The appellants also claim that it is not sufficient for the persons with an interest in a decision to be able to deduce the reasons for it by comparing the decision in question with similar earlier decisions. 124. In this connection, they refer to the judgment in Control Data Belgium v Commission (36) where, in paragraph 15, the Court held that ... it is not sufficient that the Member States as addressees of the decision, are aware of the reasons as a result of their participation in the preliminary procedure and that the applicant the person directly and individually concerned, is able to deduce these reasons by comparing the decision in question with similar earlier decisions. It is further necessary that the applicant should be enabled in practice to defend its rights and the Court should be able effectively to exercise its power of review on the basis of the statement of reasons. ... 125. However, the context to that judgment is very specific because the issue was whether two particular types of computers could be regarded as scientific apparatus and so be exempted from duty under the Common Customs Tariff, as opposed to other computers for which such exemption had been refused in a serious of earlier decisions. (37) 126. In the present case, by contrast, the Court of First Instance established that, during the administrative procedure, the applicants had not put forward any specific or new argument, (38) particularly as to the existence of a causal link between the position of the motor-vehicle industry in Saxony after German reunification and the division of Germany, that would have made it possible to distinguish this case from the earlier decisions. 127. In those circumstances the Court was fully entitled to consider that the contested decision formed part of a consistent line of decision-making practice and so could be supported by a summary statement of reasons. (39) 128. The appellants consider also that, since the German authorities and the Commission have taken different positions as to the interpretation of the derogation in Article 92(2)(c) of the Treaty and since the importance of that interpretation for the German authorities has been stressed several times, this argues, contrary to the view of the Court of First Instance, that the Commission had a duty to state its reasons specifically. 129. That argument is not convincing, however. 130. Failure to agree with a position taken does not in fact mean that the reasons for it cannot be understood. Therefore the mere existence of a difference of position ─ which is always to be found in an appeal ─ does not mean that the reasons for a decision had to be stated in a specific manner. 131. The appellants also submit that the wording used in the contested decision is too terse for its reasons to be understood. 132. It is enough to note that the Court of First Instance essentially took its lead from the context and, more particularly, from the existence of a constant line of decision-making practice which, as has been said, can contribute to the statement of reasons for a decision. 133. However, the appellants also dispute that the decisions to which the Court of First Instance referred in paragraphs 153 and 154 of the contested judgment are able to constitute a constant line of decision-making practice from which the reasons of the contested decision may be understood. They consider that that Court erred when, in paragraph 154 of the contested judgment, it accorded particular importance to the Mosel I decision and noted that neither the applicants nor the German authorities had brought any action against that earlier decision. 134. However, I do not share the appellants' view here. 135. It is difficult to understand their explanation that that decision did not adversely affect them ─ which would have explained their refraining from bringing an action ─ because, in the Mosel I decision, the Commission declared aid amounting to DEM 125.2 million to be incompatible with the common market. 136. Moreover, as a Member State the Federal Republic of Germany did not have to demonstrate a legal interest in bringing an action for annulment (40) and could thus seek annulment of the Mosel I decision solely on the ground that its legal basis was wrong. 137. Similarly, the appellants' argument regarding the fact that the Mosel I decision related to the refusal of certain aids for the renewal of plant and to cover losses, whereas the contested decision related to the refusal to authorise aid granted for new investment, does not seem relevant. 138. As the Commission has noted, rightly, in both cases the entity granting the aid, the recipient of the aid and the purpose and the place of use of the aid were practically identical. The Court of First Instance was therefore entitled to regard the Mosel I decision as contributing to the statement of reasons for the contested decision. 139. Furthermore, the argument that it was not possible to deduce the reasons for the contested decision from the constant line of decision-making practice cited by the Court of First Instance is contradicted by the Daimler-Benz and Tettau decisions. 140. As the Commission says, [b]y comparing these two decisions, where the Commission had applied [Article 92(2)(c) of the Treaty], with all the other decisions cited, where the Commission had expressly refused to apply that provision and which are all known to the appellants, anyone might see how strict were the terms on which the Commission held the conditions for applying the provision to be fulfilled and how it interpreted the concept of division of Germany. 141. I may add that German legal writers were in any event not unaware of the way in which the Commission applied Article 92(2)(c) of the Treaty. (41) 142. Lastly, I note that, in Germany v Commission, cited above, (42) the Court ruled that, in circumstances practically identical to those in this case, the reasons for the Commission's decision in question were stated sufficiently. 143. I consider that the appellants have not shown that the Court of First Instance infringed Article 190 of the Treaty, and I therefore propose that their second plea be rejected. C ─ Third plea in law, alleging infringement of Article 92(3)(b) of the Treaty 144. The appellants, supported by the German Government, complain that the Court of First Instance misinterpreted Article 92(3)(b) of the Treaty. 145. In paragraph 167 of the contested judgment, the Court said with respect to that provision:It follows from the context and general scheme of that provision that the disturbance in question must affect the whole of the economy of the Member State concerned, and not merely that of one of its regions or parts of its territory. This, moreover, is in conformity with the need to interpret strictly a derogating provision such as Article 92(3)(b) of the Treaty. ... 146. The applicants consider wrong in law the Court's interpretation that [Article 92(3)(b) of the Treaty] may apply only if the whole of the territory of a Member State is affected. (43) 147. It should first be noted that the Court did not refer to the whole of the territory of a Member State but to the whole of the economy of the Member State concerned. 148. Second, as the Commission judiciously observes, unlike subparagraphs (a) and (c) in Article 92(3) of the Treaty, subparagraph (b) refers not to areas but to serious disturbance in the economy of a Member State. 149. Thus, having regard also to the need for strict interpretation of a derogating provision, the Court of First Instance was entitled to find that the disturbance in question must affect the whole of the economy of the Member State concerned, and not merely that of one of its regions or parts of its territory. 150. The appellants maintain also that neither the wording nor the practical effect of Article 92(3)(b) of the Treaty justifies the Court's conclusion that the collapse of the old socialist economy of the German Democratic Republic during the reunification is not to be described as serious disturbance in the economy of the Federal Republic of Germany. 151. On this, the Court ruled that ... the question whether German reunification has caused a serious disturbance in the economy of the Federal Republic of Germany involves complex assessments of an economic and social nature ... which fall within the exercise of the wide discretion which the Commission enjoys ... (44) and that the applicants have not put forward any concrete evidence capable of establishing that the Commission made a manifest error of assessment in taking the view that the unfavourable repercussions of the reunification of Germany on the German economy, however real, did not in themselves constitute a ground for applying Article 92(3)(b) of the Treaty to an aid scheme. (45) 152. Undeniably, the assessment of the total impact of reunification on the economy of the Federal Republic of Germany does involve complex assessments of an economic and social nature. The German Government is therefore wrong in asserting that merely referring to the provision, in the context of a known factual situation, was sufficient to show that the conditions were fulfilled for applying Article 92(3)(b) of the Treaty. 153. Moreover, the appellants' argument is an invitation to reconsider the Court of First Instance's assessment of the facts, namely that there was no manifest error of assessment by the Commission. However, since the appellants do not offer any evidence of clear distortion of the facts by the Court, their argument must be rejected. 154. For all these reasons, I therefore propose that the appellants' third plea be rejected. D ─ Fourth plea in law, alleging infringement of Article 92(3) and Article 93 of the Treaty 155. In their fourth plea, the appellants, supported by the German Government, complain that the Court of First Instance infringed Article 92(3) and Article 93 of the Treaty in ruling as follows: Contrary to what the applicants maintain, the aid measures in dispute cannot be regarded as falling within a regional aid programme already approved by the Commission and thus exempt from the duty of prior notification. By referring, in the Nineteenth Outline Plan adopted pursuant to the Joint Task Law, [ (46) ] to a number of specific sectors in which each of the projects to be supported remained subject to the need for prior authorisation from the Commission (see paragraph 7 above), Germany acknowledged that approval of the regional aid envisaged by that outline plan did not extend to the sectors in question and, in particular, the motor-vehicle industry, to the extent that the cost of a support operation exceeded 12 million ecus. That is confirmed, in particular, by the Commission's letter of 2 October 1990 approving the regional aid scheme laid down for 1991 by the Nineteenth Outline Plan (see paragraph 7 above) and by its letter of 5 December 1990 approving the application of the Joint Task Law to the new Länder (see paragraph 11 above), in which the Commission expressly drew the attention of the German Government to the need to take account, when implementing the measures contemplated, of the Community framework existing in certain sectors of industry; by its letters of 14 December 1990 and 14 March 1991, insisting that the aid for Volkswagen's new investments could not be implemented without having first been notified to the Commission and having received its approval (see paragraph 18 above); and by the fact that each of the 1991 [decisions] states that it is subject to the authorisation of the Commission. The applicants are wrong in arguing that such a reference is devoid of purpose having regard to the authorisation already obtained by virtue of the approval of the Nineteenth Outline Plan; that approval does not extend to the motor-vehicle industry, as has just been pointed out in paragraph 204 above. The applicants are also incorrect in arguing that the production of the letters referred to above, in an annex to the rejoinder, was out of time and inadmissible. In the first place, those letters are cited both in Point II of the [contested decision] and in the decision to initiate the investigation procedure. Moreover, they were produced in response to an assertion made for the first time in the reply. In the light of the factors described above, the fact that application of the Community framework [ (47) ] was suspended between January and April 1991, even if established, cannot have the legal consequence that the aid to the motor-vehicle industry is to be regarded as covered by the approval of the Nineteenth Outline Plan. On the contrary, if that fact were established, it would have to be held that Article 93(3) of the Treaty remained fully applicable to the aid in question. It follows from the above that, in any event, the aid in dispute was subject to the duty of prior notification to the Commission, and that it could not be implemented before the procedure had led to a final decision. By contrast, the question whether or not the Community framework had binding force vis-à-vis Germany in March 1991 is of no relevance for the purposes of these proceedings. In that respect, it should be emphasised that, although the rules of the Community framework, as appropriate measures proposed by the Commission to the Member States on the basis of Article 93(1) of the Treaty, are entirely devoid of binding force and bind Member States only if the latter have consented to them (Case C-292/95 Spain v Commission, paragraphs 30 to 33), there is nothing to prevent the Commission from examining the aid which must be notified to it in the light of those rules when exercising the wide discretion which it enjoys for the purposes of applying Articles 92 and 93 of the Treaty. 156. According to the appellants, in holding that the aid granted to the undertakings of the Volkswagen group was subject to a duty of individual notification and that it could have been subjected to detailed control by the Commission under Article 92 of the Treaty, the Court of First Instance infringed Articles 92 and 93 of the Treaty. They say that this statement is wrong in law because, contrary to the Court's incorrect view, the aid is part of an approved aid programme. 157. In support of their view, the appellants argue as follows. 158. The aid in dispute is part of the system of regional aid planned for 1991 in the Nineteenth Outline Plan adopted in accordance with the Joint Task Law, and that system was approved by the Commission by a letter of 2 October 1990 to the German Government. In letters of 5 December 1990 and 11 April 1991, to the German Government, the Commission approved the application of the Joint Task Law to the new Länder. Similarly, by a letter of 9 January 1991, it approved the extension of the existing systems of regional aid to the new Länder. 159. The appellants acknowledge that these letters from the Commission state that in implementing the programmes, in so far as they concern aid, the German authorities are to take account of the provisions of Community law and of the framework conditions ... in force in certain sectors of industry and thus also of the provisions of the Community Framework. Among other things, this provides in the first paragraph of point 2.2, that [a]ll aid measures to be granted by public authorities within the scope of an approved aid scheme to (an) undertaking(s) operating in the motor vehicle sector as defined above, where the cost of the project to be aided exceeds ECU 12 million are subject to prior notification on the basis of Article 93(3) of the EEC Treaty. ... 160. However, they maintain that, during the period from January to April 1991, the Community Framework was not a provision of Community law in force. 161. Indeed, the Community Framework was applicable for a period of two years up to 31 December 1990. But its extension was not accepted by the German Government until April 1991. Therefore, since it is an appropriate measure within the meaning of Article 93(1) of the Treaty, the Community Framework as extended can, according to the appellants, be regarded as applicable only from April 1991. 162. According to the appellants, the aid in dispute was granted on 22 March 1991 and thus precisely during the period that the Community Framework did not apply. It follows that the aid in dispute must be regarded as part of an aid scheme subject to general authorisation from the Commission. That aid must, therefore, be described as existing aid. 163. This has two consequences, according to the appellants. First (in formal terms) there was no need to notify the aid in dispute. Second (in material terms) the appellants consider that, since this was existing aid, examination by the Commission was limited to whether the individual aid was covered by the general scheme and whether the conditions laid down in the decision approving the general scheme had been met. 164. However, the appellants' argument fails to convince. 165. That argument is based entirely on the idea that Commission approval of regional aid schemes under the Nineteenth Outline Plan is limited only to the extent that the Community Framework applies. If the latter does not apply, then the approval is general and thus covers all aid under that scheme, including the aid at issue. 166. But that is not the view of the Court of First Instance. In paragraph 206 of the contested judgment, it said that, in the light of the factors described in paragraphs 204 and 205, ... the fact that application of the Community framework was suspended between January and April 1991, even if established, cannot have the legal consequence that the aid to the motor-vehicle industry is to be regarded as covered by the approval of the Nineteenth Outline Plan .... 167. In other words, the Court reached the conclusion that, whether the Framework applies or not, aid to the motor vehicle sector is, in any event, not covered by the approval for the regional aid scheme provided in the Nineteenth Outline Plan. 168. That conclusion is based on the Court's assessment of the documents to which it refers in paragraphs 204 and 205 of the contested judgment. 169. This is an assessment of fact by the Court of First Instance, and it cannot be called into question in this appeal unless those facts have been distorted. 170. But I believe that we cannot speak of any such distortion here. 171. The correspondence, cited in paragraph 205 of the contested judgment, by which the Commission drew the German Government's attention, first, to the need to take account, when implementing the measures contemplated, of the Community framework existing in certain sectors of industry (including the motor vehicle sector) and, second, to the fact that the aid for Volkswagen's new investments could not be implemented without having first been notified to the Commission and having received its approval, confirms that the Commission's clear and plain intention as regards the regional aid scheme provided for in the Nineteenth Outline Plan was to give an approval which did not cover certain sectors of industry, one of those being the motor vehicle sector. 172. The Commission's approval of the regional aid scheme provided for in the Nineteenth Outline Plan is therefore not an approval with a variable scope ─ meaning that it is limited if the Community Framework applies and general if not ─ but an approval with a scope that in any event excludes aid granted, in particular, in the motor vehicle sector. 173. Nor did the German Government construe it otherwise, as is shown by the text of the Nineteenth Outline Plan, which (at Part I, point 9.3, p. 43) indicates that the Commission has taken decisions which prohibit the implementation of State aid granted in certain sectors even if it were granted in the context of approved programmes (regional aid for example), or which make its implementation subject to the need for prior authorisation of each of the projects which it is intended to benefit ... Such rules exist in the following areas: (a) ... ─ the motor-vehicle industry, in so far as the cost of an operation which it is intended to benefit exceeds 12 million ecus. the motor-vehicle industry, in so far as the cost of an operation which it is intended to benefit exceeds 12 million ecus. (48) 174. Since the approval did not cover aid in the motor vehicle sector, the aid at issue should have been notified, either under the provisions of the Community Framework or, should that not apply, as the appellants maintain, under Article 93(3) of the Treaty, as the Court of First Instance rightly held in paragraph 206 of the contested judgment. 175. That Court was therefore entitled to rule, in paragraph 207 of the contested judgment, that the aid at issue was subject to the duty of prior notification to the Commission, and that it could not be implemented before the procedure had led to a final decision. 176. My examination could stop here. 177. The arguments used by the appellants as part of the fourth plea in law are essentially intended to show that the Community Framework did not apply between January and April 1991. 178. Yet, as we have just seen, that issue is not relevant to the solution of the present dispute. 179. That being said, the argument used by the appellants to show that the Community Framework did not apply during that period is not convincing. 180. Their argument is that the German Government only accepted the extension of the Community Framework in April 1991. Since the Community Framework was an appropriate measure within the meaning of Article 93(1) of the Treaty, it could not, in the absence of acceptance by the Member State, apply before that date. 181. But, in paragraph 209 of the contested judgment, the Court of First Instance rightly ruled that ... there is nothing to prevent the Commission from examining the aid which must be notified to it in the light of [the rules of the Community Framework] when exercising the wide discretion which it enjoys for the purposes of applying Articles 92 and 93 of the Treaty. 182. As the Court of Justice ruled in Case C-288/96, (49) it should be borne in mind that the Commission may adopt a policy as to how it will exercise its discretion in the form of measures such as the Guidelines, in so far as those measures contain rules indicating the approach which the institution is to take and they do not depart from the rules of the Treaty. 183. The Community Framework may thus be applied not only as an appropriate measure but also through the Commission's exercise of its discretion under Articles 92 and 93 of the Treaty. (50) 184. In this connection, we should refer to Commission Decision 90/381/EEC of 21 February 1990 amending German aid schemes for the motor vehicle industry, (51) which was adopted following the German Government's decision not to apply the Community Framework (in the original version). (52) Article 1 of the Decision provides: 1. From 1 May 1990, the Federal Republic of Germany shall notify to the Commission pursuant to Article 93(3) of the EEC Treaty all aid measures to be granted for projects costing more than ECU 12 million under the aid schemes set out in the Annex hereto to undertakings operating in the motor vehicle sector as defined in sub-section 2.1 of the Community framework for State aid to the motor vehicle industry. Such notification shall be effected in conformity with the requirements laid down in sub-sections 2.2 and 2.3. The Federal Republic of Germany shall, moreover, provide annual reports as required by the framework. 2. Further to the list of aid schemes set out in the Annex to this Decision (which list is not exhaustive), the Federal Republic of Germany shall also comply with the obligations of Article 1(1) with regard to all other aid schemes capable of benefiting the motor vehicle industry. 3. Aid to undertakings in the motor vehicle industry operating in Berlin which are granted under the Berlin Förderungsgesetz are excluded from the prior notification obligation provided for in the framework but shall be included in the annual reports required by that framework. 185. As the Commission correctly observes, the validity of that decision was unlimited and, unlike the validity of the Community Framework, was thus not limited to 31 December 1990. 186. However, the appellants reply that the fact that the Community Framework was made binding on the Federal Republic of Germany from 1 May 1990, following a procedure initiated under Article 93(2) of the Treaty, cannot make it binding with no time-limit beyond the expiry date originally provided for it. 187. According to the appellants, it would be contrary to the principle of equal treatment of Member States if the Community Framework could continue to apply only in Germany when it had expired in the other Member States on 31 December 1990. 188. However, this argument, alleging infringement of the principle of equal treatment, cannot be accepted. 189. As regards the duty to notify aid in the motor vehicle sector, the Federal Republic of Germany, to which the rules of the Community Framework applied because of Decision 90/381, was from January to April 1991 in the same position as Member State X where ─ by definition ─ the Community Framework no longer applied in the absence of that State's consent to extension. 190. Thus, in both of these cases, aid in excess of ECU 12 million had to be notified, whether on the basis of Decision 90/381 (the Federal Republic of Germany) or directly, on the basis of Article 93(3) of the Treaty (Member State X). All things considered, it was Member State X that was in an even less favourable position, because it had to notify even aid that did not exceed ECU 12 million. 191. It follows therefore that the Court of First Instance observed very acutely, in paragraph 208 of the contested judgment, that the question whether or not the Community framework had binding force vis-à-vis Germany in March 1991 was of no relevance for the present proceedings. 192. The Commission also refers to the considerations of the Court of First Instance, in paragraphs 210 to 219 of the contested judgment, where that Court rejects the appellants' argument that the investigation, in 1996, of the compatibility of the disputed aid with the common market could be based only on assessment criteria which existed in 1991 ( investigation ex ante). 193. According to the Commission, the appellants' arguments on the application of the Community Framework between January and April 1991 lose their point in the light of these considerations by the Court of First Instance. It considers that the applicability of the Community Framework in March 1991 was irrelevant here, because the Commission could and had to take account of those circumstances of fact and law of which it had knowledge at the time that the contested decision was adopted, on 26 June 1996. 194. However, that argument by the Commission cannot be accepted. 195. As the appellants rightly point out, the question whether there was or not a duty to notify aid must be considered at the date of the decision granting that aid. 196. By contrast, the question of which circumstances of fact and law the Commission must take into account when adopting its decision is another matter entirely. Furthermore, that question arises only if the question whether aid must be notified was answered yes. The answer to that first question, therefore, cannot determine the answer to be given to the latter. 197. Furthermore, we see both from the heading which precedes paragraph 192 and from paragraph 219 of the contested judgment that the Court of First Instance regarded the appellants' arguments concerning the need for an investigation ex ante and the inapplicability of the Community framework as two separate arguments. 198. It follows from the above considerations that, in their fourth plea, the appellants have not in my opinion shown that the Court of First Instance erred in law. 199. I therefore propose that that plea be rejected. E ─ Fifth plea in law, adduced by Volkswagen and VW Sachsen, on the partial discontinuance accepted by the Court of First Instance 200. Volkswagen and VW Sachsen object to paragraph 1 of the operative part of the contested judgment taken together with paragraphs 309 and 65 of the judgment. 201. In paragraph 309 of the contested judgment, the Court stated that [u]nder Article 87(2) of the Rules of Procedure, an unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Under Article 87(5) of the Rules of Procedure, a party who discontinues or withdraws from proceedings is to be ordered to pay the costs if they have been applied for in the other party's pleadings. 202. In point 1 of the operative part of the contested judgment, the Court of First Instance:1. Takes formal notice that the applicants discontinue their action in Case T-143/96 in so far as it seeks the annulment of the first indent of Article 2 of Commission Decision 96/666/EC of 26 June 1996 concerning aid granted by Germany to the Volkswagen Group for works in Mosel and Chemnitz. 203. In paragraph 65 of the contested judgment, the Court had declared:At the hearing on 30 June 1999, the applicants in Case T-143/96 asked the Court to hold that the action had become devoid of subject-matter in so far as it sought the annulment of the first indent of Article 2 of the [contested decision], declaring investment aid in the form of special depreciation on investment incompatible with the common market, and to apply Article 87(6) of the Rules of Procedure in that respect. The Court also took formal notice of the fact that, in the Commission's submission, that request must be interpreted as a partial discontinuance and entail the application of Article 87(5) of the Rules of Procedure. 204. Volkswagen and VW Sachsen complain that, without stating any other grounds, the Court accepted the Commission's submission. 205. They point out that they had made clear at the hearing that, following a recent modification in German tax legislation, they would no longer be allowed to effect special depreciation retrospectively, even if their case succeeded (and the Commission issued authorisation). Since they could no longer benefit from a judgment giving them entitlement to special depreciation, they proposed, as they state it, that the proceedings should be terminated, while asking that an order for costs should be made in accordance with Article 87(6) of the Rules of Procedure of the Court of First Instance. 206. The appellants emphasise that they consider it important to establish that they did not discontinue their action in respect of special depreciation. Therefore, they say, costs cannot be ordered under Article 87(5) of the Rules of Procedure. 207. According to the Commission, the appellants' submission is incorrect. An action becomes devoid of subject-matter for the purposes of Article 87(6) of the Rules of Procedure only if the applicant's complaint has been remedied out of court, so that there is no longer any need for a decision and the bringing of an action. In the present case, the action would have been devoid of subject-matter only if the dispute at issue between the Commission and the applicants had ceased to exist after the case had been brought, for example because of a partial revocation of the contested decision. But that did not happen. 208. For my part, I consider that the request from Volkswagen and VW Sachsen to declare the action partially devoid of subject-matter was unfounded. The subject-matter of the proceedings was the contested decision and, at the time that the contested judgment was given, the decision was fully applicable. At that time, therefore, the subject-matter of the action remained intact, and it is not correct to state that it was partially devoid of subject-matter. 209. On the other hand, the mere fact that one no longer has an interest in the decision being partially annulled, which was the position for Volkswagen and VW Sachsen, would rather be a reason for partial discontinuance. However, I question whether the Court of First Instance is able to take formal note of a partial discontinuance where the party concerned has not made that intention known unequivocally, which appears to me to be the case here. 210. None the less, I consider that the plea raised by Volkswagen and VW Sachsen must still be rejected. The two observations following need to be made. 211. Firstly, had the Court of First Instance accepted the argument that there was no need to adjudicate, the costs would none the less have been at the Court's discretion, under Article 87(6) of the Rules of Procedure. The interest of the appellants in raising that point is therefore not clear. 212. Secondly, and chiefly, we are entitled to consider that a plea alleging infringement of Article 87(5) or (6) of the Rules of Procedure is tantamount to a plea calling into question the burden of costs as resolved by the Court of First Instance. 213. Any such plea is inadmissible here. 214. By virtue of the second paragraph of Article 51 of the EC Statute of the Court of Justice, [n]o appeal shall lie regarding only the amount of the costs or the party ordered to pay them. 215. In addition, the Court has consistently held that ... where all the other pleas put forward in an appeal have been rejected, any plea challenging the decision of the Court of First Instance on costs must be rejected as inadmissible by virtue of the second paragraph of Article 51 of the EC Statute of the Court of Justice .... (53) III ─ Conclusion 216. Having regard to the foregoing considerations, I propose the Court should: ─ dismiss the appeals; dismiss the appeals; ─ order Freistaat Sachsen, Volkswagen AG and Volkswagen Sachsen GmbH jointly and severally to pay the costs; order Freistaat Sachsen, Volkswagen AG and Volkswagen Sachsen GmbH jointly and severally to pay the costs; ─ order the Federal Republic of Germany to bear its own costs. order the Federal Republic of Germany to bear its own costs. 1 – Original language: French. 2 – T-132/96 and T-143/96, [1999] ECR II-3663. 3 – OJ 1996 L 308, p. 46. 4 – The parties use the new numbering of the Treaty in their pleadings but I feel that, since we are considering an appeal, we should use the same numbering as was used by the Court of First Instance. 5 – Commission Decision 92/465/EEC of 14 April 1992 concerning aid granted by the Land of Berlin to Daimler-Benz AG Germany (C 3/91 ex NN 5/91) (OJ 1992 L 263, p. 15). 6 – Commission Decision of 13 April 1994 on aid to producers of glass containers and porcelain, Tettau (OJ 1994 C 178, p. 24). 7 – Case C-156/98 Germany v Commission [2000] ECR I-6857, paragraphs 46 to 56. 8 – Emphasis added. 9 – Emphasis added. 10 – Case C-432/92 [1994] ECR I-3087. 11 – .Anastasiou and Others, paragraph 37. 12 – OJ 1988 C 236, p. 4. 13 – OJ 1998 C 14, p. 180. 14 – Emphasis added. 15 – Point 15 of the reply in that case. 16 – Ibid. 17 – Ibid. Emphasis is that of the German Government. 18 – Emphasis added. 19 – Emphasis added. 20 – Point 25 of the application in Case C-301/96. 21 – .Bulletin of the European Economic Community No 2-1965, p. 33. 22 – Case C-315/99 P Ismeri Europa v Court of Auditors [2001] ECR I-5281, paragraph 19. 23 – Article 64(4) of the Rules of Procedure of the Court of First Instance. 24 – Emphasis added. 25 – See, for example, Duroselle, J-B., Histoire diplomatique de 1919 à nos jours, Éditions Dalloz, 1957, in particular, pp. 556-557. 26 – Emphasis added. 27 – Contested judgment, paragraph 134. 28 – Erdmenger, J., in Groeben, Thiesing and Ehlermann, Kommentar zum EU-/EG-Vertrag, Nomos Verlagsgesellschaft, 5th edition, 1999, on Article 82. 29 – See Council Regulation (EEC) No 3572/90 of 4 December 1990 amending, as a result of German unification, certain Directives, Decisions and Regulations relating to transport by road, rail and inland waterway (OJ 1990 L 353, p. 12). 30 – See Joined Cases C-280/99 P to C-282/99 P Moccia Irma and Others v Commission [2001] ECR I-4717, paragraph 78. See also Case C-390/95 P Antillean Rice Mills and Others v Commission [1999] ECR I-769, paragraph 29, Case C-119/97 P Ufex and Others v Commission [1999] ECR I-1341, paragraph 66, and Case C-267/97 P VBA v Florimex and Others [2000] ECR I-2061, paragraph 139. 31 – Commission Decision 94/1068/EC of 27 July 1994 concerning aid granted to the Volkswagen Group for investments in the new German Länder (OJ 1994 L 385, p. 1). 32 – Case C-166/95 P [1997] ECR I-983. 33 – Emphasis added. 34 – See the Opinion of Advocate General Van Gerven in Case C-145/90 P Costacurta v Commission [1991] ECR I-5449, point 3. See also Wathelet, M. and Van Raepenbusch, S., Le contrôle sur pourvoi de la Cour de justice des Communautés européennes, dix ans après la création du Tribunal de première instance, in Rodriguez Iglesias, G.C., Due, O., Schintgen, R., Elsen, C., (ed.), Mélanges en hommage à Fernand Schockweiler, Nomos Verlagsgesellschaft, 1999, p. 605, 612. 35 – See, in particular, Case C-278/95 P Siemens v Commission [1997] ECR I-2507, paragraph 17; Case C-367/95 P Commission v Sytraval and Brink's France [1998] ECR I-1719, paragraph 63; Case C-289/97 Eridania [2000] ECR I-5409, paragraph 41; and Germany v Commission, paragraph 97. 36 – Case 294/81 [1983] ECR 911. 37 – .Control DataBelgium v Commission, paragraph 12. 38 – Contested judgment, paragraph 155. 39 – .Papiers peints v Commission, paragraph 31, Case C-350/88 Delacre and Others v Commission [1990] ECR I-395, paragraph 15, and Germany v Commission, paragraph 105. 40 – Case 41/83 Italy v Commission [1985] ECR 873, paragraph 30. 41 – See, for example, Schütterle, P., Die Rechtsgrundlage für Beihilfen zur Überwindung der wirtschaftlichen Folgen der Teilung Deutschlands, EuZW, 1994, p. 715; von Wallenberg, G., in: Grabitz and Hilf, Das Recht der Europäischen Union. Kommentar, Verlag C.H. Beck, Artikel 92 EGV, paragraph 40; Kruse, E., Ist die Teilungsklausel als Rechtsgrundlage für Beihilfen zum Ausgleich teilungsbedingter Nachteile obsolet?, EuZW, 1998, p. 228; Mederer, W., in: Groeben, Thiesing and Ehlermann, Kommentar zum EU-/EG-Vertrag, Nomos Verlagsgesellschaft, 5th Edition, 1999, Artikel 92, paragraphs 60 to 64. 42 – Paragraphs 104 to 108. 43 – Emphasis by Volkswagen and VW Sachsen. 44 – Contested judgment, paragraph 169. 45 – Contested judgment, paragraph 170. 46 – German Law of 6 October 1969 on the Joint Task of Improving the regional economic structure. 47 – Community framework on State aid to the motor vehicle industry, which was the subject of notice 89/C 123/03 (OJ 1989 C 123, p. 3). 48 – See the contested judgment, paragraph 7. 49 – Case C-288/96 Germany v Commission [2000] ECR I-8237, paragraph 62. 50 – See also my Opinion of 12 March 2002 in Case C-242/00 Germany v Commission, pending before the Court, points 73 to 75. 51 – OJ 1990 L 188, p. 55. 52 – See the contested judgment, paragraph 6. 53 – Joined Cases C-302/99 P and C-308/99 P Commission and France v TF1 [2001] ECR I-5603, paragraph 31. See also Case C-396/93 P Henrichs v Commission [1995] ECR I-2611, paragraph 66, the order of 6 March 1997 in Case C-303/96 P Bernardi v Parliament [1997] ECR I-1239, paragraph 49, and the order of 13 December 2000 in Case C-44/00 P Sodima v Commission [2000] ECR I-11231, paragraph 93.

LORD JUSTICE HOOPER : The full facts of this case are set out in our judgment [2009] EWCA Crim 930 dismissing all the conviction appeals and all the applications for leave to appeal except one. That one concerns TD and is an application for leave to appeal based on fresh evidence. We adjourned this application and listed it for a separate hearing. At the conclusion of oral argument, we announced that the application for leave to appeal was dismissed and we now give our reasons. Having done so we turn to the appeals against sentence, leave having been given either by the single judge or by the full court. Leave to appeal conviction- TD The applicant seeks to rely on what is said to be a record of mobile phone calls made in July and September 2008 in which BR confessed to the stabbing. We told Mr Spens QC for TD that we would assume for the purposes of the application that BR had confessed to being the stabber and that the stabbing had taken place outside 174 Hammersmith Grove. It was TD's case supported by his evidence that he went some way up Hammersmith Road beyond Chez Kristof and then turned back and away (see paras. 73 and 74 of the main judgment). Mr Spens tells us that he reached about as far as 150 Hammersmith Grove. Mr Spens submits that the fresh evidence would: "require the court to consider whether or not the jury could have been sure that [TD] had not withdrawn from any joint enterprise and was thus a party to the killing by [BR]". In our view, although the judge did direct the jury about withdrawal (see pages 14-15 of volume 1 of the summing-up), we have no doubt that, on the facts of this case, the jury would have been sure that TD had not withdrawn simply by turning away when he reached 150 Hammersmith Grove. As we said in the main judgment, in order to have convicted TD of murder the jury must, in our view, have reached the conclusion that a knife other than a Stanley knife caused the deceased's death and that TD knew that the knifeman had a knife and he shared the knifeman's intention to kill or do really serious bodily harm, or realised that the knifeman might use the weapon with that intention and nevertheless took part. Merely turning back just before the fatal end of a long chase cannot in law constitute withdrawal on the facts of this case. Sentence appeals As we said in our main judgment, the appellants BR and TD were each unanimously convicted of the murder on 14 March 2007 of 16 year old Kodjo Yenga (count 4). The appellants Kurtis Yemoh, JB and MW were each acquitted of his murder but were unanimously convicted of the lesser charge of his manslaughter. Yemoh, JB and MW were convicted of violent disorder relating to the same incident, a count to which BR and TD had earlier pleaded guilty. Additionally Yemoh (on his own admission), TD and JB were convicted of violent disorder on 17 February 2007 and Yemoh was convicted of inflicting grievous bodily harm on the same occasion. The incident of 17 February is described by the learned judge in passing sentence (see below). The victim was caused serious injury. No separate penalty was imposed for the count of violent disorder. Yemoh, aged 16 at the time of committing the manslaughter, received an extended sentence of 15 years under section 228 of the Criminal Justice Act 2003 comprising a custodial term of 10 years (less 418 days spent on remand) and an extended period of licence of 5 years. He had one police warning for burglary and three previous court appearances for aggravated vehicle taking, attempted robbery and robbery, for the latter of which he had received a 6 months detention and training order. BR, aged 13 at the time of committing the murder, was sentenced to be detained during Her Majesty's Pleasure and to serve a minimum term of 15 years (less 418 days spent on remand). He had a previous court appearance for robbery and possession of a bladed article. He had also committed an attempted robbery, although not dealt with until after the murder conviction. JB, aged 14 at the time of committing the manslaughter, received an extended sentence of 15 years under section 228 comprising a custodial term of 10 years (less 359 days spent on remand) and an extended period of licence of 5 years. He had nine previous court appearances for offences including assault on police (two occasions), attempted robbery and affray for which he had been sentenced to a 6 months detention and training order. Later the warrant was amended to show the remand time as 325 days. MW, aged 13 at the time of committing the manslaughter, received an extended sentence of 15 years under section 228 comprising a custodial term of 10 years (less 418 days spent on remand) and an extended period of licence of 5 years. MW had no previous reprimands or court appearances. TD, aged just under 16 at the time of committing the murder, was sentenced to be detained during Her Majesty's Pleasure and to serve a minimum term of 15 years (less 418 days spent on remand). He had no previous reprimands or court appearances. No separate penalty was imposed on the other counts and on the February 17 indictment. In passing sentence the judge said, amongst other things: Kodjo Yenga was lured to a quiet residential street in Hammersmith on the pretext that he was to be challenged to a one-to-one fight. You, TD, and you, BR, were the prime instigators in that challenge. You, MW, you, Kurtis Yemoh, and you, JB, were part of the gang of youths who confronted Kodjo once he was there. What then happened was anything but one-on-one. Following an initial exchange of blows, you all pursued Kodjo as a pack. I am quite satisfied that you, JB, deliberately set loose your Staffordshire bull terrier dog with the intention that it would join in the attack, although in the event it caused Kodjo inconvenience rather than injury. Kodjo was chased into Hammersmith Grove by all of you. You, TD, on the evidence were armed with a Stanley knife. You had threatened Kodjo with it. Whether that was the knife that eventually killed him is doubtful. It is far more likely that a more substantial weapon was used to stab him through his clothing and into his heart. It cannot be said with any degree of certainty on the evidence which of you was armed with the murder weapon, and nor in my judgment does it matter. You, BR, and you, TD, may have been the assailant; I cannot say. But you are both convicted of murder on the basis that you knew perfectly well that one of your number was armed with a knife or other sharp implement which might be used to attack Kodjo with murderous intent. You, MW, you, Kurtis Yemoh, and you, JB, also knew perfectly well that such a weapon was present which might be used to attack Kodjo and cause him at least some harm. It was in those circumstances and with that knowledge that you all took part in the pursuit which ended in the needless loss of yet another young life as a result of the use of knives on the streets of our cities by youngsters such as you. Whether all or some of you were members of a formal gang -- it is said that you were all members or followers of the MDP gang -- again is unimportant. What is undoubtedly the case is that you are all part of the gang culture which casts its dreadful influence over so much of the youth of our inner cities and which leads almost inevitably to the sort of tragedy that has been seen so vividly here. These events took place in broad daylight in a residential street, to the horror of people going about their business. The fact that you, almost without exception, come from decent and caring backgrounds makes the situation all the more worrying. A month previously on a Saturday in February 2007 you, TD, you, Kurtis Yemoh, and you, JB, had been part of a gang of youths who attacked Seun Adeboyejo and terrified ordinary members of the public in Shepherds Bush market. In passing sentence on BR and TD the judge said: I have to set the minimum term which you must each serve before you may be considered for release on licence. The starting point in each of your cases is agreed to be 12 years. The only mitigation in your cases is your youth and the fact that I cannot be sure that you intended to kill. Otherwise, your crime is greatly aggravated by the factors which I have already identified, not least the use of knives. You, TD, are of previous good character; you, BR, are not, and you are mature beyond your years. Despite the disparity in your ages I intend to treat you equally. The minimum term in each of your cases is 15 years (Underlining added). In passing sentence on the others, the judge said: MW, Kurtis Yemoh and JB, will you stand, please. I am satisfied in all of your cases, taking into account your antecedents, all that I have read about you and the serious nature and circumstances of your conviction for manslaughter, that there is a significant risk to members of the public of serious harm occasioned by the commission by you of further specified offences. I am, however, satisfied in each of your cases that an extended sentence under section 228 of the Criminal Justice Act 2003 will be sufficient protection for the public and indeed accord you the extended licence which I think you all need upon release. Accordingly, on Count 4 of this indictment I pass upon each of you an extended sentence, the total term of which is 15 years, of which 10 years is the custodial term and 5 years the extension period for which you are to be subject to licence once you have completed the normal licence period following release. On behalf of all the appellants it is submitted that the judge made a finding of premeditation when he said: "Kodjo Yenga was lured to a quiet residential street in Hammersmith on the pretext that he was to be challenged to a one-to-one fight" and that counsel was not forewarned of an intention to make this finding and that this finding was not justified. Thereafter it is said that, although he did not use the word premeditation, he made it clear that he was sentencing on the basis that the offences were premeditated. We were referred to the sentencing remarks in the case of BR and TD and the words which we have underlined. We looked carefully at the evidence and, in particular, at the period of time between the arrival of the victim and the start of the attack and the location of the start of the attack compared with the location of the victim when he first arrived and what happened during this period. Sir Allan Green QC did point to the fact that some of the appellants were armed. That does not, in our view, necessarily show the kind of premeditation to which Schedule 21 refers. We conclude, with all deference to the trial judge, that it would not be right to sentence on the basis of being certain that an attack had been planned beforehand. We also noted that the earlier encounter with Kodjo Yenga when he was with his girlfriend Shar-de Cummings in Hammersmith, West London was not pre-planned. It was at that stage that TD said "I hear you want to fight me" and Kodjo Yenga agreed to a one-on-one fight with him. The fight was to take place at the corner of Agar Road and Adie Road. BR's later receipt of the rucksack in Adie Road tends to suggest that at that stage it was going to be a one on one fight. There was evidence from a witness FF that the start of the attack came a little later in Adie Road when deceased picked up a scaffold pole. In the words of one counsel, what started as a one on one fight spiralled out of control and in the words of another counsel "the confrontation escalated rapidly". The aggravating features are therefore: the prolonged chase and attack on a schoolboy, the possession of two knives one of which caused the death of 16 year old Kodjo Yenga, the possession of other weapons and the fact that "these events took place in broad daylight in a residential street, to the horror of people going about their business". In the cases of Yemoh, TD and JB there was the aggravating feature of the earlier attack. BR and TD We turn to the sentences passed on BR and TD. Both were sentenced on the basis of participation in a joint enterprise. Both had the mitigating features, as found by the judge, of an intention to cause serious bodily harm rather than to kill. Both had the mitigating feature of age (BR 13, TD just under 16) and TD additionally had no previous convictions. On the other hand there was the additional aggravating feature in TD's case that he had been involved in the nasty incident of February 17. In our view the judge was right to set the same minimum term for the two of them. BR was younger and had a previous court appearance for robbery, and had, at the start of the incident, taken TD's rucsack for safe keeping. TD was older and although he had no previous convictions he had been involved in the February 17th incident. The agreed starting point is 12 years and in the light of our finding about the absence of a significant degree of planning or premeditation and giving due weight to their ages, we think that the right minimum sentence is one of 13 years. To that extent their appeals against sentence are allowed. Yemoh Yemoh was aged 16 and had serious previous convictions. It is submitted that the judge was wrong to make the finding of dangerousness. In the light of his antecedents and his involvement in the February 17th offences, coupled with his age and the facts of the manslaughter, the judge was in our view entitled to make a finding of dangerousness and that finding is not challenged. Given our finding about premeditation, we reduce the sentence by substituting for the sentence passed an extended sentence of 13 years under section 228 of the Criminal Justice Act 2003 comprising a custodial term of 9 years (less 418 days spent on remand) and an extended period of licence of 4 years. JB JB was 14 and time of the offence and had previous court appearances for assault and affray. There is no challenge to the finding of dangerousness, nor could there be in the light of the previous offending, the index offence and the contents of the PSR. In the absence of premeditation but bearing in mind JB's bad record and his involvement in the offence of 17th February, we reduce the sentence by substituting for the sentence passed an extended sentence of 13 years under section 228 comprising a custodial term of 9 years (less 325 days spent on remand) and an extended period of licence of 4 years. MW MW was only 13 and had no previous remands or court appearances. He has expressed genuine remorse and is progressing well in detention. The finding of dangerousness is not challenged. In his case the absence of premeditation should result in the sentence being reduced by substituting for the sentence passed an extended sentence of 11 years under section 228 comprising a custodial term of 8 years (less 418 days spent on remand) and an extended period of licence of 3 years.

The Master of the Rolls This is the judgment of the Court. On 19 December 2011 we dismissed an application by the claimant, Mortgage Express, for an extension of time for appealing and for permission to appeal, among other things, that part of the order of District Judge Mildred in the Bournemouth County on 22 July 2010 which declared that the second defendant, Anthony Martin, has an equitable right to occupy 159 Northfield Road, Ringwood, Hampshire ("the property"), for his lifetime or, if sooner, until he permanently ceases to reside there, and that that right has priority over Mortgage Express's charge over the property. We said that we would give reasons later. These are our reasons. The case concerns a transaction under which the first respondent, Clinton James Butcher, agreed to purchase the property from Mr Martin for £210,000 (which was substantially less than its market value), and promised Mr Martin that he would be entitled to remain in occupation of the property after completion for the rest of his life. The sale was completed in February 2008. Mr Butcher raised £300,000 from Mortgage Express, secured by way of charge on the property, but he did not disclose the promise made to Mr Martin. Mr Butcher defaulted in payment of the sums due under the charge. He has been adjudicated bankrupt and cannot be found. Mortgage Express brought proceedings against both Mr Butcher and Mr Martin for possession of the property. Mr Martin counterclaimed a declaration that he has the right to remain in occupation of the property for his life. The trial of the action took place on 20 June 2010 and 1 July 2010, and on 22 July 2010 District Judge Mildred handed down his judgment. He found that Mr Butcher had dealt fraudulently with both Mr Martin and Mortgage Express. He held that Mr Martin had an equity to remain in the property for the rest of his life as a result of Mr Butcher's promise to Mr Martin to that effect, and that that equity was binding on Mortgage Express, which had failed to make enquiries which it should have made. Mortgage Express was refused permission to appeal by the District Judge. Following the District Judge's refusal of permission to appeal, Mortgage Express's solicitors confirmed to Mr Martin's solicitors by letter dated 30 July 2010 that it did not intend to make an application to the Court of Appeal for permission to appeal. The time for appealing expired on 13 August 2010. In a subsequent letter dated 14 October 2010 Mortgage Express's solicitors informed Mr Martin's solicitors that it was "conducting litigation where the same issue as in this case is to be determined" and "subject to [Mortgage Express] being successful in that litigation", Mortgage Express would appeal out of time unless terms could be agreed. In a judgment given by His Honour Judge Behrens, sitting as a High Court Judge, in favour of various mortgage lenders in nine test cases on 19 November 2010, notices of appeal were filed by various individuals who claimed priority over those lenders on a similar ground to that raised by Mr Martin in this case. At around that time, Mortgage Express filed a notice of appeal from the District Judge's order. The notice of appeal contained an application for permission to appeal and an application for an extension of time for appealing. Our reasons for refusing Mortgage Express an extension of time for appealing may be shortly stated. Mr Martin is an individual of relatively modest means, who had suffered a considerable time of uncertainty and mental anguish as to whether he might lose his home and suffer severe financial loss, not as a result of any default on his part but as a result of the scheming of a fraudster. On successfully establishing his case before the trial judge, he was entitled to expect Mortgage Express, a relatively substantial commercial organisation, to inform him promptly, in accordance with the timetable laid down by the Civil Procedure Rules, if it intended to appeal. Indeed, Mortgage Express did inform him promptly of its intention, and that intention was not to appeal. Mr Martin not unreasonably then proceeded to live his life in the belief and expectation that his right to remain in occupation of his home would take priority over any right enjoyed by Mortgage Express. By changing its decision, more than two months after the time for appealing had expired, and then expressing its new intention whether or not to appeal as conditional on the outcome of other cases to which Mr Martin was not a party, Mortgage Express was not only seeking to impose on Mr Martin its own uncertain timetable for attempting to appeal. It was seeking to do so irrespective of both the requirements of the Civil Procedure Rules and Mr Martin's reasonable expectations. Furthermore, whilst a successful appeal would have a devastating effect on Mr Martin, the refusal of an extension of time for appealing would not deprive Mortgage Express of the benefit of its security over the property: it would merely defer its right to realise that security until after Mr Martin's death or his earlier vacation of the property. There is an additional point which provides some, if limited, specific support for our conclusion. Prior to making the order in Mr Martin's favour, the District Judge invited him to give an undertaking to make a will, under which his executors were required to notify Mortgage Express of his death, and to provide a copy of the will to Mortgage Express. Mr Martin agreed to do so, and that undertaking is recorded in the District Judge's order. Mr Martin duly had a will dated 1 November 2010 prepared at his own expense, and provided a copy of it to Mortgage Express. It is true that the will was provided after Mortgage Express put Mr Martin on notice that it had changed its mind about not appealing; but even then Mortgage Express expressed its intention to appeal as conditional on the outcome of other proceedings, as explained above. Not only was Mr Martin not a party to those other proceedings, but he was never informed about them; in particular, he was never told when it was expected those cases would be resolved. For these reasons, having regard to the matters in CPR 3.9 and the Overriding Objective, we refused Mortgage Express's application for an extension of time for appealing.

THIRD SECTION CASE OF KOCHEROV AND SERGEYEVA v. RUSSIA (Application no. 16899/13) JUDGMENT STRASBOURG 29 March 2016 FINAL 12/09/2016 This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of Kocherov and Sergeyeva v. Russia, The European Court of Human Rights (Third Section), sitting as a Chamber composed of: Luis López Guerra, President,George Nicolaou,Helen Keller,Dmitry Dedov,Branko Lubarda,Pere Pastor Vilanova,Alena Poláčková, judges,and Stephen Phillips, Section Registrar, Having deliberated in private on 1 March 2016, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 16899/13) 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 two Russian nationals, Mr Vitaliy Mikhaylovich Kocherov and Ms Anna Vitalyevna Sergeyeva (“the applicants”), on 17 January 2013. 2. The applicants were represented by Mr D. Bartenev, a lawyer practising in St Petersburg. The Russian Government (“the Government”) were represented by Mr G. Matyshkin, Representative of the Russian Government to the European Court of Human Rights. 3. The applicants alleged, in particular, that their right to respect for their family life had been violated on account of the first applicant’s parental authority over the second applicant being restricted, and that the restriction was discriminatory as it had been imposed because of the first applicant’s mental disability. They relied on Articles 8 and 14 of the Convention. 4. On 9 April 2013 the application was granted priority treatment under Rule 41 of the Rules of Court. On 19 December 2013 the application was communicated to the Government. 5. On 26 March 2014 leave was granted to four non-governmental organisations – the International Disability Alliance, the European Disability Forum, Inclusion International and Inclusion Europe – to intervene in the proceedings as third parties (Article 36 § 2 of the Convention and Rule 44 § 3 of the Rules of Court). THE FACTS I. THE CIRCUMSTANCES OF THE CASE 6. The applicants were born in 1966 and 2007 respectively and live in St Petersburg. The first applicant is the second applicant’s father. A. Background to the case 7. The first applicant has a mild mental disability. Between 1983 and January 2012 he lived in St Petersburg Neuropsychological Care Home no. 1 (“the care home”). 8. In 2007 the first applicant married Ms N.S., a resident of the same care home, who had been deprived of her legal capacity on account of her mental disability. 9. On 30 May 2007 Ms N.S. gave birth to the second applicant. At the time, the first applicant was not recognised as the child’s father. One week later the second applicant was admitted to hospital because of an infection she had contracted during the delivery. 10. On 12 July 2007 the second applicant was placed in St Petersburg Children’s Home no. 3 (“the children’s home”) as a child without parental care. 11. On 7 August 2007 the first applicant obtained a new birth certificate for the second applicant and was registered as her father. He subsequently gave his consent for her to stay at the children’s home until it became possible for him to take care of her. Throughout the second applicant’s stay there, the first applicant maintained regular contact with her. He would visit her regularly, spend time with her, take her for walks and buy her books, toys and clothes. 12. By a judgment of 31 March 2008 the Dzerzhinskiy District Court of St Petersburg refused to restore Ms N.S.’s legal capacity, relying in particular on a psychiatric examination report. It stated that, inter alia, there were conflicting, aggressive and emotionally inadequate tendencies in her behaviour. 13. On 24 September 2008 the marriage between the first applicant and Ms N.S. was declared void at the request of a public prosecutor because of Ms N.S.’s legal incapacity. 14. Following a claim by the first applicant acting on his own behalf and on behalf of the second applicant, on 6 June 2011 the Smolninskiy District Court of St Petersburg ordered the St Petersburg City Council to provide the applicants with housing under a social tenancy agreement. In November 2011 they were provided with a flat in St Petersburg. 15. In February 2012, on the basis of a medical assessment, the first applicant was discharged from the care home and moved into his flat. He has been living there ever since. B. Proceedings to restrict the first applicant’s parental authority 1. Proceedings before the first-instance court 16. In November 2011 the first applicant informed the children’s home of his intention to take the second applicant into his care once he was discharged from the care home and had moved into his flat. 17. On an unspecified date the children’s home applied to the Frunzenskiy District Court of St Petersburg (“the District Court”) to have the first applicant’s parental authority over the second applicant restricted. The children’s home indicated that “the first applicant [had] never yet taken the girl from the children’s home to raise her in his family but was planning to raise the girl by himself”. In the children’s home’s view, it was not advisable to let the girl be placed in her parents’ care as her mother was legally incapacitated and thus posed a danger to the girl’s life and health, while her father could not fully exercise his parental responsibilities owing to his mental disability. In addition, the children’s home submitted, referring to information provided by its staff (see paragraph 18 below), that at the time it would be very stressful for the second applicant to be transferred to her parents’ family. (a) Written evidence 18. In the proceedings before the District Court, the children’s home produced undated reports by its staff. They stated that the second applicant had difficulties in communicating with her parents and that she felt fear, anxiety and emotional stress in their presence. 19. The first applicant relied on the following pieces of written evidence. 20. In a certificate dated 24 December 2009 the children’s home stated that the second applicant was in their care and that the first applicant and Ms N.S. regularly visited her. 21. In a certificate dated 26 May 2011 a municipal custody and guardianship agency confirmed that the second applicant was living temporarily at the children’s home at the first applicant’s request pending the allocation of social housing to him, and that he visited her there. 22. A report dated 10 October 2011 by a panel of experts contained the results of a medical psychiatric examination of the first applicant that had been carried out with a view to determining whether he could be discharged from the care home and bring up his child. The report described him as a fully focused, sociable person with reduced intelligence. According to the report, the first applicant was well presented, readily engaged himself in conversation and could read, write and do arithmetic. He was able to cook and kept his room in the care home clean and orderly. The report also mentioned that he talked about his daughter with tenderness and love, proudly demonstrated her “achievements”, showed clothes and toys bought for her, and regularly visited her. He was planning to take her home as soon as he was provided with social housing. The report also stated that throughout his stay at the care home the first applicant had worked there and saved money over several years; he would therefore be able to support his daughter financially. The report concluded that he could be discharged from the care home and that his state of health enabled him to fully exercise his parental authority. 23. A report dated 8 February 2012 by the custody and guardianship authority described the living conditions in the first applicant’s flat as appropriate for his daughter. It stated, in particular, that the flat had recently been renovated, was clean and light, had all the necessary furniture and home appliances, and that there was a sleeping place for the child with clean bed linen. There were toys and books suitable for her age, and clothes appropriate for the season. There was also a separate desk equipped for the child. 24. A letter dated 14 February 2012 issued by the care home to the District Court again confirmed that the first applicant regularly visited the second applicant at the children’s home, that he bought clothes for her and that he discussed with the management of the care home the steps he could take on his own to ensure the girl received a good upbringing, financial support, health care and an education. When concluding the social tenancy agreement for the flat allocated to him, the first applicant had himself found out which documents he would need to register the girl at kindergarten, had collected those documents and had put her on a waiting list for a place. The letter also stated that the first applicant’s medical examination had not revealed any contradictions to his upbringing of the second applicant; he was a well-organised and reliable person who had realistic life plans and a responsible attitude towards his work and obligations. His psychiatric state was stable; he did not show any signs of aggression towards others or emotional instability and did not need any medical treatment. (b) Oral submissions and witness statements 25. At the hearing before the District Court, the first applicant’s representative contested the children’s home’s application as groundless and discriminatory as being based on the fact that the first applicant had an intellectual disability. He argued, with reference to the adduced evidence (see paragraphs 20-24 above), that the first applicant was fully able to exercise his parental authority and take care of his daughter. He pointed out that the first applicant had recently been discharged from the care home and lived in a separate flat, where the conditions were adequate and suitable for the second applicant to live in. The first applicant’s lawyer thus insisted that the second applicant should be transferred into his care. He argued that the transfer could be performed gradually, to enable the girl to get used to the changes in her life, while the competent social care agencies could assist the first applicant in exercising his parental authority and monitor the family and, in particular, the second applicant’s life and upbringing. 26. Representatives of the children’s home (its director and the doctor in charge of the second applicant’s treatment) maintained the claim, arguing that it was premature to transfer the girl into the first applicant’s care. They stated, in particular, that the first applicant had a mental disability and had lived for all his life in a closed specialist institution; he would therefore be unable to ensure proper hygienic care of the girl or her adequate development, while it was impossible to entrust any such care to the second applicant’s mother as she was legally incapacitated. The representatives of the children’s home also stated that the first applicant’s attempts to communicate with the second applicant clearly showed that there was no contact between them. They added that when the second applicant had been told for the first time that she might be transferred into her father’s care, she had been stressed, scared and afraid of approaching him; later, when she had realised that she would be staying at the children’s home, her fears had disappeared. They also stated that at the time the second applicant’s fear of her parents had passed, and that she ceased fearing living with her family. 27. A representative of the municipal custody and guardianship authority and a public prosecutor both maintained the children’s home’s application, arguing that in view of the first applicant’s diagnosis, and the fact that his partner Ms N.S. had no legal capacity, it was not safe to transfer the second applicant into their care, and that two parents with mental disabilities would be unable to ensure the girl’s harmonious development. 28. The District Court also heard evidence from Ms O., a care home employee, who stated that whilst at the home the first applicant had lived independently in a separate room, which he had kept in order. He had bought food and cooked for himself and had been able to take prescribed medicines unsupervised if given clear instructions. He had worked part-time at the home, helping to take care of its patients, and had always been able to establish good contact with the patients and their relatives. He had been allowed to leave the care home freely and had also worked part-time outside, and at some point he and Ms N.S. had lived together at her relatives’ place for a while, and had then returned to the care home. Ms O. expressed her certainty that the first applicant would be fully able to fulfil his parental obligations and take good care of the second applicant. (c) Judgment of 20 March 2012 29. On 20 March 2012 the District Court examined the children’s home’s claim. It observed, in particular, that the first applicant and Ms N.S. regularly visited the second applicant at the children’s home and attempted to communicate with her in the presence of the social workers, and that the first applicant had obtained a compulsory medical insurance certificate for her. The court also referred to the report of 8 February 2012 regarding the first applicant’s living conditions and noted, more specifically, that the first applicant had carried out repairs at the flat allocated to him, had equipped a room for a child, and had registered the second applicant at the address. 30. The District Court went on to note that if the children’s home’s application to restrict the first applicant’s parental authority were to be dismissed, the first applicant would be entitled to take his daughter into his care. However, the court considered that at the time it would be “undesirable” as it would not be in the child’s best interests. It noted, with reference to the reports by staff members of the children’s home (see paragraph 18 above) and similar statements by the representatives of the children’s home made at the hearing (see paragraph 26 above) that at present the girl felt anxious in the presence of her parents and had difficulties in communicating with them. The court therefore considered that “it would be stressful for the child to be placed with the family of her parents, who she had never lived with and had so far had no chance to get used to”. 31. The District Court further observed that since childhood, the first applicant had lived in specialist State institutions for people with mental disabilities and had no skills and experience in rearing children and taking care of them. In view of the fact that he had only left an institution and started living on his own in 2012, it considered that his intention to raise his daughter by himself was premature. 32. The court also observed that the girl’s biological mother had free access to the first applicant’s flat and noted that at present she had no legal capacity. It then noted that it “[had] no sufficient and reliable evidence that it would be safe for the child to remain with her parents, including her legally incapacitated mother”. 33. The District Court also referred to the first applicant’s mental disability and noted that “at present there was no reliable evidence showing that it would be safe for the girl to live with him”. In this connection, it noted that his medical diagnosis and category of disability would make him ineligible for applying to adopt a child. 34. Lastly, the District Court observed that the first applicant’s monthly income was 15,000 Russian roubles (RUB), while the monthly living wage was RUB 6,910.90 for an adult and RUB 5,461.39 for a child. As the first applicant would have to pay utility bills and, from time to time, medicine, some of which could be costly, the court considered that at the time he would be unable to provide adequate financial support for his daughter. 35. The District Court then referred to Article 73 of the Family Code and allowed the children’s home’s claim. It restricted, for the time being, the first applicant’s parental authority over the second applicant. The court added that by virtue of Article 76 of the same Code the first applicant would be able to apply to court to have the restriction of his parental authority lifted, if the reasons for the restriction being imposed ceased to exist. 2. Proceedings before the appellate court 36. The first applicant appealed against the judgment of 20 March 2012 to the St Petersburg City Court (“the City Court”). 37. With regard to the District Court’s first argument (see paragraph 30 above), the first applicant submitted that it would in any case be stressful for the child, who had spent four years at the children’s home, to start living anywhere else, for instance with an adoptive family. As for the children’s home’s reference to the girl’s anxiety in her parents’ presence, the first applicant argued that the reports to that end by its staff (see paragraph 18 above) were out of date and could not serve as a basis for the court’s finding, as at the hearing before the first-instance court the children’s home representatives had confirmed that the second applicant was no longer afraid of her parents or of being placed in the first applicant’s care (see paragraph 26 above). 38. The first applicant also argued that, in so far as the District Court had relied on the fact that he had lived at the care home for a prolonged period, a parent’s past or present residence in a specialist institution, there was no such ground for restricting parental authority in the Russian Family Code. Moreover, the law did not require biological parents to prove their ability to raise children or their housekeeping skills as a prerequisite for exercising their parental authority. 39. The first applicant further insisted, with reference to the District Court’s argument to that end, that the fact the girl’s mother was legally incapacitated was of no relevance to his case. Legal incapacity was a formal status and did not mean that the person was dangerous to others. In any case, the mental health of the child’s mother could not serve as a basis for restricting his own parental authority over his daughter. The first applicant also claimed that during the second applicant’s stay at the children’s home, her mother had been allowed to visit her. 40. The first applicant went on to argue that there had been no evidence at the District Court’s disposal proving that he posed any danger to his daughter. On the contrary, the relevant medical report by the experts of the care home, who had observed the first applicant for many years, revealed that his mental condition had not impaired his ability to fulfil his parental responsibilities (see paragraph 22 above). 41. Lastly, the first applicant alleged that the District Court had erred in establishing his income, which in fact exceeded the living wage in St Petersburg. Referring to the Court’s judgment in the case of Saviny v. Ukraine (no. 39948/06, 18 December 2008) and the relevant provisions of the United Nations Convention on the Rights of Persons with Disabilities, he also submitted that his income could not be a decisive element in the decision to restrict his parental authority. 42. In his oral submissions before the City Court, the first applicant argued that if the children’s home’s claim was rejected, the transfer of the second applicant into his care could be gradual to enable her to adapt psychologically to her new life in the family. 43. On 17 July 2012 the City Court upheld the judgment of 20 March 2012 on appeal. It repeated the reasoning and conclusions of the District Court, stating that they were correct and accurately reflected the factual circumstances of the case. The appellate court considered that the first applicant “had not adduced convincing evidence proving the absence of a real risk to the second applicant’s life, health and adequate upbringing” if she was transferred into her father’s care. It also noted that the first applicant was not precluded from seeking an annulment of the restriction of his parental authority in the future, should the relevant circumstances change. 44. On 31 January 2013 a St Petersburg City Court judge returned without examination a cassation appeal by the first applicant against the court decisions of 20 March and 17 July 2012, as he had failed to enclose a duly certified copy of the judgment of 20 March 2012. He did not attempt to pursue the cassation proceedings any further. C. Further developments 45. After the present application was communicated to the respondent Government, they submitted information on factual developments in the case. 46. In particular, by a judgment of 20 September 2012, the Zelenogorskiy District Court of St Petersburg restored, with reference to a psychiatric report, Ms N.S.’s legal capacity. The judgment entered into force on 25 October 2012. 47. On 15 November 2012 the first applicant remarried Ms N.S. 48. By an order of 9 January 2013 the children’s home established rules concerning the admission of visitors. According to the Government, on the basis of that order the first applicant regularly and without any limitations visited the second applicant there. 49. On an unspecified date the first applicant brought civil proceedings against the children’s home in the District Court of St Petersburg, seeking to have the restriction of his parental authority over the second applicant lifted. He argued, in particular, that one of the grounds for imposing that restriction had been the second applicant’s anxiety and fear she had felt in his presence and her unwillingness to live with him. He pointed out that at present the second applicant had no fear of her parents, that she had developed an affective attitude towards him, considered him as her father and was ready to live with him. He also pointed out that since February 2012 he had been living on his own and maintaining a household and that he was employed and had a stable income. He also submitted that the legal capacity of the second applicant’s mother, Ms N.S., had recently been restored. In the first applicant’s view, therefore, there was no reason to continue to restrict his parental authority over the second applicant which prevented him from taking her from the children’s home. 50. A representative of the children’s home confirmed in court that the first applicant regularly visited the second applicant, that close emotional ties had formed between them and that the girl missed her father when he left. He was therefore of the opinion that it would be in the second applicant’s interests to lift the restriction on the first applicant’s parental authority and transfer her into his care. Representatives of two district custody and guardianship agencies and a public prosecutor supported the first applicant’s application. 51. On 8 April 2013 the District Court gave its judgment. It took into account the parties’ arguments and observed, as had been submitted by a representative of the children’s home, that the first and second applicants had developed close emotional ties, that at present the girl felt comfortable and calm in her father’s presence and that she missed him whenever he left the children’s home. It also observed that from February 2012 onwards the first applicant had been living independently in a separate flat, where the second applicant was also registered. The court noted that the conditions were good and suitable for the second applicant to live in. It also had regard to the fact that the first applicant was employed and had received positive references from his place of work and place of residence. 52. The District Court further noted that the first applicant had a stable monthly income of approximately RUB 19,000. The living wage being RUB 7,352 for a working adult and RUB 5,802.50 for a child, the court considered that he was fully able to ensure the second applicant had adequate financial support. The court went on to note that the legal capacity of Ms N.S., who freely visited the first applicant’s flat, had by that time been restored and that the first applicant had himself submitted a medical report dated 5 March 2013 which confirmed that he was fully able to take care of his child. 53. The District Court therefore concluded that the restriction of the first applicant’s parental authority was no longer justified, as the reasons it had relied on in its previous judgment of 12 March 2012 were no longer valid. With reference to Article 76 of the Russian Family Code, the court thus allowed the first applicant’s application and ordered that the restriction of his parental authority over the second applicant be lifted and that she be transferred into his care. The judgment was not appealed against and entered into force on 17 May 2013. 54. On 20 May 2013 the first applicant took the second applicant from the children’s home to his home address, where she has been living ever since. II. RELEVANT DOMESTIC LAW 55. On 9 December 2010 the relevant parts of the Russian Code of Civil Procedure concerning the review of judgments delivered by the courts of first instance were amended by Federal Law no. 353-FZ, with effect from 1 January 2012. Article 376 of the Code of Civil Procedure provides that judgments delivered by the courts of general jurisdiction may be challenged in cassation appeal proceedings within six months of the date on which they become legally binding. 56. The relevant parts of the Russian Family Code of 1995 provide as follows: Article 73: Restriction of Parental Authority “1. A court may, in the interests of the child, decide to remove [him or her] from his [or her] parents (or one of them) without depriving them of their parental authority (a restriction of parental authority). 2. A restriction of parental authority is allowed when leaving the child with his [or her] parents (or one of them) is dangerous for the child due to circumstances beyond the parents’ control (or one of them) such as mental illness or other chronic disease, a combination of difficult circumstances, and others. A restriction of parental authority is also possible in cases where leaving a child with his or her parents (or one of them) is dangerous for the child on account of their behaviour, but sufficient grounds for depriving the parents (or one of them) of their parental authority have not been established. If the parents (or one of them) do not change their behaviour, the custody and guardianship authority is under an obligation to apply for the parents to be deprived of their parental authority within six months of the court decision restricting the parental authority. Acting in the interests of the child, the authority may lodge the application before that deadline ...” Article 74: Consequences of a Restriction of Parental Authority “1. Parents whose parental authority has been restricted by a court shall lose the right to bring up the child themselves, and the right to the privileges and State allowances granted to citizens with children. 2. A restriction of parental authority shall not relieve parents of their duty to maintain the child. 3. A child whose parents’ parental authority (or that of one of them) are restricted shall retain ownership of any accommodation or the right to use [it], and also property rights based on his [or her] kinship with his [or her] parents and other relatives, including inheritance rights. 4. If the parental authority of both parents has been restricted, the child shall be placed in the care of the custody and guardianship authority.” Article 75: The Child’s Contact with Parents whose Parental Authority Has Been Restricted by a Court “Parents whose parental authority has been restricted by a court may maintain contact with the child if it has no harmful impact on [him or her]. Contact is permitted with the consent of the custody and guardianship authority, the child’s guardian (trustee), his [or her] foster parents or the authorities of the institution in whose care the child is placed.” Article 76: Lifting a Restriction of Parental Authority “1. If the grounds on which one or both parents’ parental authority has been restricted cease to exist, the court may, on the application of the parents (or one of them) decide to return the child to one or both parents and lift the restrictions stipulated in Article 74 of this Code. 2. The court may, taking into account the child’s opinion on the matter, refuse to allow the application if the child’s return to one or both parents is not in his [or her] interests ...” III. INTERNATIONAL LAW INSTRUMENTS A. Convention on the Rights of Persons with Disabilities, adopted by the United Nations General Assembly on 13 December 2006 (Resolution A/RES/61/106) 57. The convention came into force on 3 May 2008. It was ratified by Russia on 25 September 2012. In its relevant part, the convention provides as follows: Article 5 - Equality and non-discrimination “1. States Parties recognize that all persons are equal before and under the law and are entitled without any discrimination to the equal protection and equal benefit of the law. 2. States Parties shall prohibit all discrimination on the basis of disability and guarantee to persons with disabilities equal and effective legal protection against discrimination on all grounds. 3. In order to promote equality and eliminate discrimination, States Parties shall take all appropriate steps to ensure that reasonable accommodation is provided. 4. Specific measures which are necessary to accelerate or achieve de facto equality of persons with disabilities shall not be considered discrimination under the terms of the present Convention.” Article 23 - Respect for home and the family “1. States Parties shall take effective and appropriate measures to eliminate discrimination against persons with disabilities in all matters relating to marriage, family, parenthood and relationships, on an equal basis with others, so as to ensure that: 2. States Parties shall ensure the rights and responsibilities of persons with disabilities, with regard to guardianship, wardship, trusteeship, adoption of children or similar institutions, where these concepts exist in national legislation; in all cases the best interests of the child shall be paramount. States Parties shall render appropriate assistance to persons with disabilities in the performance of their child‑rearing responsibilities. ... 4. States Parties shall ensure that a child shall not be separated from his or her parents against their will, except when competent authorities subject to judicial review determine, in accordance with applicable law and procedures, that such separation is necessary for the best interests of the child. In no case shall a child be separated from parents on the basis of a disability of either the child or one or both of the parents. ...” B. Convention on the Rights of the Child, adopted by the United Nations General Assembly on 20 November 1989 (Resolution 44/25) 58. The relevant parts of the convention read as follows: Article 3 “1. In all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration. ...” Article 9 “1. States Parties shall ensure that a child shall not be separated from his or her parents against their will, except when competent authorities subject to judicial review determine, in accordance with applicable law and procedures, that such separation is necessary for the best interests of the child... 2. In any proceedings pursuant to paragraph 1 of the present article, all interested parties shall be given an opportunity to participate in the proceedings and make their views known. ...” THE LAW 59. The Court will deal with the preliminary matters in the case before considering the applicants’ complaints concerning the allegedly unjustified and discriminatory restriction of the first applicant’s parental authority over the second applicant. I. THE GOVERNMENT’S OBJECTIONS ON THE ADMISSIBILITY OF THE APPLICATION A. Compliance with the six-month rule 60. The Government argued that the present application had been lodged outside the six-month period set forth in Article 35 § 1 of the Convention. They submitted that the final decision in the applicants’ case had been taken by the St Petersburg City Court on 17 July 2012, and it was from that date that time had started running. By lodging their application on 17 January 2013, the applicants had missed the time-limit by one day. 61. The applicants disagreed with the Government. They argued that under the Court’s well-established case-law, the six-month period ran from the day following the date on which the final decision was pronounced in public or on which the applicant or his representative were informed thereof. In view of the fact that the final decision had been pronounced by the St Petersburg City Court on 17 July 2012, the period for lodging the application had started to run on 18 July 2012 and had expired on 17 January 2013, the date on which the present application had been sent. The applicants therefore insisted that they had complied with the six-month rule. 62. The Court observes that for the purposes of calculating the six‑month period, both parties relied on the decision of the St Petersburg City Court of 17 July 2012 as being “final”, within the meaning of Article 35 § 1 of the Convention. They disagreed, however, as to the exact date on which that period started running. The Court reiterates in this connection that the date on which the final domestic decision is pronounced is not counted in the six-month period referred to in Article 35 § 1 of the Convention. Time starts to run the day following the date on which the final decision has been pronounced orally in public, or on which the applicant or his representative were informed thereof, and expires six calendar months later, regardless of the actual duration of those calendar months (see, among other authorities, Nelson v. the United Kingdom, no. 74961/01, §§ 12-13, 1 April 2008; Otto v. Germany (dec.), no. 21425/06, 10 November 2009; and Bajsultanov v. Austria, no. 54131/10, §§ 53-54, 12 June 2012). The Court thus accepts the applicants’ argument that the six-month period in the present case started running on 18 July 2012 and expired on 17 January 2013, the date on which the present application was sent. 63. The Court is satisfied that the application was lodged with the Court within the six-month period. The Government’s relevant objection should therefore be dismissed. B. Exhaustion of domestic remedies 64. In an additional memorandum, the Government pointed out that a federal law of 9 December 2010 had amended the Russian Code of Civil Procedure to establish three levels of jurisdiction for examining a civil case. In particular, a new appeal procedure had been introduced in respect of judgments by first-instance courts that had not become binding. Moreover, a procedure for reviewing judgments that had become final had been split into a cassation appeal procedure and a supervisory-review procedure. The Government insisted that the two procedures were effective within the meaning of Article 35 § 1 of the Convention, so the applicants should have availed themselves of them before applying to the Court. They further pointed out that the first applicant’s cassation appeal against the judgment of 20 March 2012, upheld on appeal on 17 July 2012, had been returned without examination on 31 January 2013 as it had not met certain formal requirements. They argued that by failing to pursue the cassation proceedings any further, the first applicant had failed to exhaust the effective domestic remedies available to him. 65. The Court reiterates that the rule of exhaustion of domestic remedies referred to in Article 35 § 1 of the Convention obliges those seeking to bring a case against a State to use first the remedies provided by the national legal system, thus allowing States the opportunity to put matters right through their own legal systems before being required to answer for their acts before an international body. In order to comply with the rule, applicants should normally use remedies which are available and sufficient to afford redress in respect of the breaches alleged (see, among other authorities, Selmouni v. France [GC], no. 25803/94, § 74, ECHR 1999‑V). 66. In the context of Russia, the Court has consistently held that the ultimate judicial remedy to be exhausted prior to lodging an application with the Court was an appeal to a regional court, and that the applicants were not required to submit their cases for re-examination by higher courts by way of a supervisory review procedure, which constituted an extraordinary remedy (see Tumilovich v. Russia (dec.), no. 47033/99, 22 June 1999; Denisov v. Russia (dec.), no. 33408/03, 6 May 2004; and Martynets v. Russia (dec.), no. 29612/09, 5 November 2009). It was not until very recently that, following the legislative amendments reforming the Russian civil procedure with effect from 1 January 2012, the Court held that the new cassation procedure was no longer fraught with the previously existing uncertainty, and that any individual who intended to lodge an application in respect of a violation of his or her Convention rights should first use the remedies offered by the new cassation procedure, including a second cassation appeal to the Supreme Court of Russia (see Abramyan and Others v. Russia (dec.), nos. 38951/13 and 59611/13, §§ 76-96, 12 May 2015). By contrast, the Court affirmed its consistent approach to the supervisory-review procedure, which it does not consider an effective remedy to be exhausted (ibid., § 102). 67. It is however observed that the issue of whether domestic remedies have been exhausted is normally determined by reference to the date on which the application was lodged with the Court (see Shalya v. Russia, no. 27335/13, § 16, 13 November 2014, and Baumann v. France, no. 33592/96, § 47, ECHR 2001-V (extracts)). In cases where the effectiveness of a given remedy was recognised in the Court’s case-law after the introduction of an application, the Court deemed it disproportionate to require the applicants to turn to that remedy for redress a long time after they had lodged their applications with the Court, especially after the time‑limit for using that remedy had expired (see Riđić and Others v. Serbia, nos. 53736/08, 53737/08, 14271/11, 17124/11, 24452/11 and 36515/11, § 72, 1 July 2014, and Pikić v. Croatia, no. 16552/02, §§ 29-33, 18 January 2005; contrast with Nogolica v. Croatia (dec.), no. 77784/01, ECHR 2002‑VIII, in which the applicant could still avail himself of a new remedy). 68. In the present case, the applicants lodged their application with the Court on 17 January 2013, that is, before the Court recognised the reformed two-tier cassation appeal procedure as an effective remedy. Moreover, the Government never alleged that at the time of the events under consideration any relevant domestic case-law had existed to enable the applicants to realise that the new remedy met the requirements of Article 35 § 1 of the Convention, and to anticipate the new exhaustion requirement rather than following the approach that had been applied by the Court until very recently (see paragraph 66 above). In such circumstances, the Court considers that the applicants were not required to pursue that procedure prior to lodging their application to the Court. Moreover, it notes that the applicants can no longer avail themselves of the remedy in question, as the time-limit for using it expired (see paragraph 55 above). 69. Accordingly, the Court rejects the Government’s objection as to the alleged non-exhaustion of domestic remedies. C. Conclusion 70. The Court notes that the application is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention and is not inadmissible on any other grounds. It must therefore be declared admissible. II. ALLEGED VIOLATION OF ARTICLE 8 OF THE CONVENTION 71. The applicants complained that the restriction of the first applicant’s parental authority over the second applicant had made it impossible for them to live together as a family and had thus breached their right to respect for their family life. They relied on Article 8, which reads as follows: Article 8 “1. Everyone has the right to respect for his private and family life... 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.” A. The parties’ arguments 1. The applicants 72. The applicants maintained their complaint. They argued that the restriction imposed on the first applicant’s parental authority over the second applicant had resulted in their continued separation and inability to live as a family at their home and the second applicant’s continued time in public care, and constituted an unjustified interference with their right to respect for their family life. 73. The applicants argued, in particular, that the interference in question had not been lawful, as the domestic courts had failed to establish that the first applicant had posed any danger to the second applicant, that being a prerequisite for restricting parental authority under Article 73 § 2 of the Russian Family Code. The applicants submitted that the domestic courts had held instead that it would be “undesirable” to give custody of the girl to her father, which was not a legitimate ground for restriction under that Article. 74. The applicants also argued that the interference in question had not been proportionate as the domestic courts had failed to adduce “relevant and sufficient reasons” for their decisions. They contended, more specifically, that the domestic courts had not been justified in relying on the first applicant’s mental disability and Ms N.S.’s legal incapacity as the reason for restricting the first applicant’s parental authority. In particular, the mental disability and legal incapacity as such did not imply any danger and could not be a ground for restricting parental authority. Moreover, the legal incapacity of a child’s mother could not be regarded as a legitimate ground for restricting the father’s parental authority. 75. The applicants went on to argue that the domestic courts had failed to establish convincingly the first applicant’s inability to provide the necessary care to the second applicant. In so far as the domestic courts and the Government had relied on the second applicant’s anxiety and fear of her parents, the applicants argued that at the time the application to restrict the first applicant’s parental authority was being examined in 2012, that consideration had no longer been relevant. They relied in that connection on a statement by a representative of the children’s home made at the trial to the effect that at the time “the girl’s fear of her parents had passed” (see paragraph 26 above). The applicants argued that, in any event, it would have inevitably been stressful for the second applicant, who at the time had only been five years old, to start living somewhere new, be it in an adoptive family or with her father. As the first applicant had suggested during the proceedings before the first-instance court, that stress could have been mitigated by arranging for a “gradual transfer” of the child, with certain measures of psychological support for the parents and the child. Yet the authorities had never considered any such alternative measures and had preferred to leave the second applicant in public care. 76. Lastly, the applicants acknowledged that the restriction imposed on the first applicant’s parental authority would not have entailed the second applicant’s removal from her family, as at the time she had been in public care in any event. They nevertheless argued that because of that restriction, the second applicant had had to spend one more year in care, which, given her young age at the time had been a significant period for her. The applicants relied on the State’s obligation under Article 8 of the Convention to aim at reuniting children in care with their parents in situations where the reasons for placing a child in public care no longer existed. The applicants argued that the authorities had failed to take any such measures in their case. 2. The Government 77. The Government acknowledged that there had been an interference with the applicants’ right to respect for their family life within the meaning of Article 8 § 1 of the Convention, as a result of the first applicant’s parental authority over the second applicant being restricted. At the same time, they insisted that the interference in question had been lawful, pursued the legitimate aim of protecting the health and rights of a minor, the second applicant, and that it had been necessary in a democratic society, within the meaning of Article 8 § 2 of the Convention. 78. The Government argued, in particular, that in the proceedings to restrict the first applicant’s parental authority, the parties, including the first applicant and his representative, had been fully able to present all evidence and arguments they had considered necessary. The domestic courts had had due regard to all relevant factors and had carefully balanced the interests of the first applicant and those of the second applicant. The decision to restrict the first applicant’s parental authority had been well-reasoned and taken in the second applicant’s best interests. 79. The Government stressed that the domestic courts had established with reference to oral evidence of the staff of the children’s home that at the time, the girl had felt anxious in her parents’ presence, had had difficulties in communicating with them, and had been afraid of the idea of having to live with her father. They disputed the applicants’ argument that the representatives of the children’s home had confirmed at a hearing before the first-instance court that the second applicant was no longer afraid of her parents (see paragraph 75 above), saying that it was untrue, incorrect and did not correspond to reality. 80. The Government also argued that the domestic courts had had reasonable doubts that the first applicant, who had never lived independently and had just been discharged from a specialist institution where he had spent almost twenty-nine years and had always relied on its staff’s assistance, would be able to provide all the necessary security and care to the second applicant. Indeed, during the proceedings in question, the first applicant’s representative had put forward somewhat conflicting arguments, from the Government’s point of view, insisting on the one hand that the first applicant was fully able to live independently and take care of the second applicant, and stating on the other that he would need assistance from the competent social care agencies (see paragraph 25 above). The courts had also taken into account the first applicant’s financial situation at the time, which would hardly have enabled him to ensure adequate support for himself and his daughter. 81. The Government also argued that the domestic courts had been justified in relying on the fact that the second applicant’s mother, Ms N.S., who had had free access to the first applicant’s flat, had been deprived of her legal capacity. The absence of legal capacity meant that she could not understand the meaning of or control her actions or bear responsibility for them, which could have put the second applicant at risk. The Government relied on a psychiatric examination report which had been carried out in the context of civil proceedings in 2008, when Ms N.S.’s application to restore her legal capacity had been rejected, and which had stated that there were aggressive, conflicting, emotionally inadequate tendencies in her behaviour (see paragraph 12 above). 82. The Government went on to argue that any less restrictive alternatives, such as for instance transferring the second applicant into the first applicant’s care under the close supervision and monitoring of the State social care agencies, would not have objectively guaranteed the girl’s safety and adequate living conditions. Furthermore, they stressed that the restriction of the first applicant’s parental authority had been of a temporary nature, which the domestic courts had clearly stated in the decisions of 20 March and 17 July 2012, and could have been lifted as soon as it became clear that the first applicant had fully adapted himself to an independent life and had maintained a relationship with his daughter. In fact, the first applicant had successfully availed himself of the right to seek to have his parental authority fully restored, and his application to that end had been allowed by the domestic courts in 2013, when they had established that the relevant circumstances had changed and the restriction in question had no longer been needed, and had returned the second applicant to her father. Moreover, during the period when the restriction complained of had remained in place, the first applicant had had unlimited access to the second applicant (see paragraph 48 above), which had allowed him to develop close emotional ties with her. 83. Overall, the Government argued that the impugned measure had been proportionate to the aim pursued, and therefore complied with Article 8 § 2 of the Convention. 3. The third-party interveners 84. The third-party interveners – the International Disability Alliance, the European Disability Forum, Inclusion International and Inclusion Europe – made a number of general observations concerning the latest international standards on the human rights of persons with disabilities and the right of children to grow up in a family environment. 85. They stressed, in particular, that the United Nations Convention on the Rights of Persons with Disabilities and Council of Europe instruments, such as a recommendation of the Committee of Ministers and an action plan, encouraged States to address carefully the needs of parents and children with disabilities and provide measures of support for them to enable the former to acquire the necessary competence to fulfil their responsibilities towards their children, and the latter to grow up with their families, to be included in the community and local children’s life and activities. The third-party interveners also pointed out that in the cases of Kutzner v. Germany (no. 46544/99, ECHR 2002‑I) and Saviny v. Ukraine (no. 39948/06, 18 December 2008) the Court had confirmed the States’ positive obligation to uphold family ties between parents and children as a component of the right to respect for family life secured by Article 8 of the Convention, and to provide increased protection to vulnerable persons. 86. The third-party interveners also submitted that national laws, policies and practices concerning the right to family life of people with disabilities were developing across the world with growing recognition of the enjoyment and exercise of parental authority by those people on an equal basis with others, as well as of the obligation on States to ensure the provision of measures of support for parents where needed. According to the third parties, an increasing number of States were addressing that important issue and reaching out to people with disabilities in order to consult and involve them in legal reform processes and identify and improve shortfalls in both law and practice. 87. They concluded by arguing that decisions to remove children from parents with disabilities, or to deny their reunion, represented a serious interference with the right to respect for family life of such children and their parents. The States’ margin of appreciation in that area was narrow and, unless valid and compelling reasons were provided for such an interference, it would constitute a violation of the rights of the parents and children to respect for their family life under Article 8 of the Convention, and discrimination on the grounds of disability, contrary to Article 14 of the Convention. Moreover, separating children from their parents with disabilities and placing them in care also constituted discrimination through their association with their disabled parents. B. The Court’s assessment 88. The Court observes at the outset that the existence of ties between the applicants forming “family life” within the meaning of Article 8 § 1 of the Convention has never been denied either by the domestic courts or by the Government before the Court. It also reiterates that the mutual enjoyment by a parent and child of each other’s company constitutes a fundamental element of family life, and domestic measures hindering such enjoyment amount to an interference with the right protected by Article 8 of the Convention (see, among other authorities, Johansen v. Norway, 7 August 1996, § 52, Reports of Judgments and Decisions 1996-III). Any such interference constitutes a violation of this Article unless it is “in accordance with the law”, pursues an aim or aims that are legitimate under Article 8 § 2 and can be regarded as “necessary in a democratic society”. 89. In the present case, the parties agreed that the restriction of the first applicant’s parental authority over the second applicant constituted an interference with their right to respect for their family life. The Court takes the same view. 1. “In accordance with law” 90. The court observes that the measure in question was based on Article 73 of the Russian Family Code and thus “in accordance with law”. In so far as the applicants disputed the lawfulness of the interference, arguing that the domestic courts had failed to show convincingly that the first applicant had posed any danger to the second applicant while under the same Code this was a prerequisite for restricting parental authority, the Court considers that these arguments instead relate to the proportionality of the restriction under examination. It will therefore address these arguments in the relevant part of its analysis. 2. “Legitimate aim” 91. The Court also finds that the interference was aimed at protecting the “health or morals” and the “rights and freedoms” of a minor – the second applicant – and thus pursued aims that are legitimate under Article 8 § 2. It remains to be examined whether the restriction in question can be considered “necessary in a democratic society”. 3. “Necessary in a democratic society” (a) General principles 92. The Court has to consider whether, in the light of the case as a whole, the reasons given to justify the impugned measure were relevant and sufficient for the purposes of Article 8 § 2 of the Convention. It will also have regard to the obligation which the State has in principle to enable the ties between parents and their children to be preserved (see Kutzner, cited above, § 65). 93. Undoubtedly, consideration of what is in the best interests of the child is of crucial importance in every case of this kind. Moreover, it must be borne in mind that the national authorities have the benefit of direct contact with all the persons concerned. It follows from these considerations that the Court’s task is not to substitute itself for the domestic authorities in the exercise of their responsibilities regarding custody and contact issues, but rather to review, in the light of the Convention, the decisions taken by those authorities in the exercise of their discretionary powers (see Hokkanen v. Finland, 23 September 1994, § 55, Series A no. 299‑A, and Kutzner, cited above, § 66). 94. The margin of appreciation to be accorded to the competent national authorities will vary in accordance with the nature of the issues and the importance of the interests at stake. The Court has thus recognised that the authorities enjoy a margin of appreciation when deciding on custody matters. However, stricter scrutiny is called for as regards any further limitations, such as restrictions placed by those authorities on parental rights of contact, and as regards any legal safeguards designed to secure the effective protection of the right of parents and children to respect for their family life. Such further limitations entail the danger that the family relations between a young child and one or both parents would be effectively curtailed (see Sahin v. Germany [GC], no. 30943/96, § 65, ECHR 2003‑VIII; Elsholz v. Germany [GC], no. 25735/94, § 49, ECHR 2000‑VIII; and Kutzner, cited above, § 67). 95. Article 8 requires that the domestic authorities should strike a fair balance between the interests of the child and those of the parents and that, in the balancing process, particular importance should be attached to the best interests of the child, which, depending on their nature and seriousness, may override those of the parents. In particular, a parent cannot be entitled under Article 8 to have such measures taken as would harm the child’s health and development (see Elsholz, cited above, § 50; T.P. and K.M. v. the United Kingdom [GC], no. 28945/95, § 71, ECHR 2001-V; Ignaccolo‑Zenide v. Romania, no. 31679/96, § 94, ECHR 2000-I; and Nuutinen v. Finland, no. 32842/96, § 128, ECHR 2000-VIII). (b) Application of these principles 96. In the present case, the Court observes that, in view of his diagnosis, the first applicant lived at the care home from 1983 until 2012, that is, for twenty-nine years. During that period, in 2007 he and Ms N.S., another resident of the care home, had a daughter, the second applicant, who was placed in public care a week after her birth, where she remained for several years, with the first applicant’s consent (see paragraphs 7-11 above). It is therefore clear that the restriction of the first applicant’s parental authority over the second applicant imposed by the domestic courts in the proceedings that took place in 2012 did not result in the applicants’ separation one from another, as by that time they had never lived together as a family. 97. Moreover, the restriction of the first applicant’s parental authority over the second applicant had no impact on his visiting rights; it is clear from the case file that, either before or after the court decisions restricting his parental authority, the first applicant had unlimited access to the second applicant at the children’s home (see paragraphs 11 and 48 above). Also, as was stressed by the domestic courts, the impugned restriction was of a temporary nature and could be lifted as soon as practicable. In fact, it remained in place for slightly more than a year, from 20 March 2012 when the Frunzenskiy District Court imposed it, until 8 April 2013 when the same court withdrew it (see paragraph 53 above). 98. At the same time, the first applicant made it clear that he intended to take the second applicant home as soon as he was discharged from the care home, that is, in February 2012 (see paragraphs 11 and 16 above), and by restricting his parental authority over the second applicant, the authorities prevented their immediate reunion. The Court reiterates in this respect that where the existence of a family tie with a child has been established, the State must act in a manner calculated to enable that tie to be developed (see Keegan v. Ireland, 26 May 1994, § 50, Series A no. 290, and Kroon and Others v. the Netherlands, 27 October 1994, § 32, Series A no. 297‑C). Article 8 of the Convention thus imposes on every State the obligation to aim at reuniting a natural parent with his or her child (see K. and T. v. Finland [GC], no. 25702/94, § 178, ECHR 2001–VII; Johansen, cited above, § 78; and Olsson v. Sweden (no. 1), 24 March 1988, § 81, Series A no. 130), and any measures of implementing temporary public care should be consistent with that ultimate aim (see E.P. v. Italy, no. 31127/96, § 64, 16 November 1999, and Jovanovic v. Sweden, no. 10592/12, § 77, 22 October 2015). Moreover, as was pointed out by the third-party interveners in paragraph 85 above, the same principles are established in the relevant international instruments (see paragraphs 57 and 58 above). 99. The Court observes that in their decisions of 20 March and 17 July 2012 the domestic courts found that at the time the first applicant was not in a position to care for the second applicant, and that she should therefore remain in public care for the time being. Those decisions were based on a number of considerations. In particular, the domestic authorities noted that the second applicant showed signs of anxiety in her parents’ presence and had difficulties communicating with them. They concluded that “it would be stressful for the child to be placed with the family of her parents, who she had never lived with and had so far had no chance to get used to” (see paragraph 30 above). They also referred to the fact that by that time it had only been a month since the first applicant had left a specialist institution, where he had lived for all his life with the result that, in the District Court’s opinion, he had “no skills or experience in bringing children up and taking care of them” (see paragraph 31 above). The remaining reasons given by the domestic courts included the first applicant’s psychiatric diagnosis; the fact that the second applicant’s mother, Ms N.S., was legally incapacitated and could freely visit the first applicant’s flat; and the first applicant’s financial means being insufficient to support the second applicant (see paragraphs 32-34 above). 100. The Court is prepared to accept that the aforementioned considerations were relevant for striking a balance between the conflicting interests in the present case. On the other hand, it doubts that they were based on sufficient evidence (see Saviny, cited above, § 56). It will examine below each of the reasons given by the domestic courts. (i) Communication difficulties between the applicants 101. Thus, in so far as the domestic courts established the existence of communication difficulties between the applicants, they relied on reports by the staff of the children’s home and statements of its representatives and made at a hearing before the District Court (see paragraphs 18 and 26 above). The Court observes, however, that, in its judgment the first-instance court did not indicate the dates the reports had been issued, or mention the period of time they had described. Yet in his appeal submissions, the first applicant’s representative disputed the reports as being out of date and thus irrelevant for the assessment of the current relationship between the applicants (see paragraph 37 above), but the appellate court left that argument unanswered. 102. Furthermore, as pointed out by the applicants in the proceedings before the District Court, the representatives of the children’s home stated, in fact, that at the time, the second applicant’s fear of her parents had passed, and that she had ceased fearing having to live with her family (see paragraph 26 above). It appears that this statement remained unnoticed and unassessed by either the first-instance or appellate court, although the first applicant had expressly raised an argument to that end in his appeal submissions (see paragraph 37 above). In so far as the Government argued that the interpretation given to that statement by the applicants was inaccurate (see paragraph 79 above), the Court cannot accept that argument, as it was for the national courts to resolve all possible ambiguity by addressing this issue during the proceedings, which they failed to do. 103. It also observes that the first applicant produced a number of certificates confirming that he had regularly visited the second applicant in the children’s home in 2009 to 2012 and had communicated with her (see paragraphs 20- 22 and 24 above). It does not however transpire from the court decisions of 20 March or 17 July 2012 that those pieces of evidence were ever assessed by the domestic courts, which made their conclusion that the second applicant “[had] so far had no chance to get used” to the first applicant questionable. In this connection, the Court notes that, faced with an obviously conflicting body of evidence, the domestic courts could have ordered an independent comprehensive psychological expert examination of the second applicant with a view to establishing her psychological and emotional state and attitude towards the first applicant, but they failed to do so. 104. In the light of the foregoing, the Court is not persuaded that the domestic courts convincingly demonstrated that the second applicant’s transfer into the first applicant’s care would be stressful for her to the extent that it made it necessary for her to remain in public care for another year. In the Court’s view, they chose a formalistic approach, simply endorsing the position of the representative of the children’s home, supported by the municipal custody and guardianship agency and public prosecutor (see paragraphs 26-27 above), and silently ignoring all evidence and arguments to the contrary advanced by the first applicant. (ii) The first applicant’s lack of skills in child rearing 105. Furthermore, the District Court found that “in view of his diagnosis” the first applicant had spent all his life in a specialist institution with the result that he “had no experience in bringing up and taking care of children”. The court also added that it was only in February 2012 that the first applicant had been discharged from the specialist institution and that “in such circumstances, his intention to raise his daughter [was] premature”. 106. Firstly, the Court agrees with the applicants that the absence of skills and experience in rearing children, whatever reasons they might be, in itself can hardly be regarded as a legitimate ground for restricting parental authority, or keeping a child in public care. Furthermore, in so far as the Government suggested that the domestic courts actually referred to the fact that, having just been discharged from a specialist institution where he had spent nearly twenty-nine years the first applicant had not adapted to an independent life and therefore the immediate transfer of the second applicant into his care could have been dangerous for her, the Court notes that this line of reasoning did not transpire from the decisions of the domestic authorities, whose relevant findings were limited to those summarised in the previous paragraph. 107. Even if the Court were prepared to accept the Government’s interpretation of the domestic courts’ decisions, it observes that the first applicant submitted a number of documents to them, including a psychiatric examination report dated 10 October 2011 and certificates from the care home. Those documents, as well as a representative of the care home and Ms O. in the proceedings before the District Court, confirmed that during his years at the home, the first applicant had lived in a separate room which he had kept in order. He had cooked for himself, maintained a household, and overall had been quite independent and fully able to care for himself (see paragraphs 22, 24 and 28 above). Moreover, he had not been confined to the care home, and had been authorised to leave the premises. He had actually worked part-time at the home, and had very positive references. He had also worked part-time outside in the city. The evidence adduced by the first applicant to the domestic courts also showed that as soon as he had been allocated a flat, he had carried out the necessary repair works, registered the second applicant there, obtained compulsory medical insurance for her and collected all the necessary documents to put her on a waiting list for a place at a kindergarten (see paragraph 24 above). 108. The accuracy of any of the aforementioned pieces of evidence or Ms O.’s statements was never challenged before the domestic courts or called into question by them. Yet it does not appear that they made any meaningful attempt to analyse the first applicant’s emotional and mental maturity and ability to care for his daughter in the light of the adduced evidence and with due regard to all of the elements it revealed. As noted above, the domestic courts limited their finding in that regard to a mere reference to the first applicant’s very prolonged residence in a specialist institution. In the Court’s view, that fact alone cannot be regarded as a sufficient ground to justify the domestic courts’ decision to restrict his parental authority over the second applicant and to prolong her time in care. (iii) The first applicant’s mental disability 109. The Court further turns to the domestic courts’ finding that “there [was] no reliable evidence that the girl living with [the first applicant] would be safe for her in view of his diagnosis”. 110. The Court observes in this connection that the first applicant produced to the domestic courts a report of 10 October 2011 on the results of a psychiatric examination by a panel of experts, which described in detail his psychiatric condition, his ability to take care of himself and rear a child, and so forth (see paragraph 22 above). The report unequivocally concluded that the first applicant’s state of health allowed him fully to exercise his parental authority. The authenticity or accuracy of the report or the expert conclusions therein were never called into doubt by the opposing party or the courts. The latter, in fact, remained silent regarding this piece of evidence and did not indicate in their relevant decisions whether they considered it to be reliable or not. The opposing party did not provide any evidence disputing the conclusions of the report, or proving that the first applicant’s diagnosis would put the second applicant at risk, if she were transferred into his care. 111. In such circumstances, the Court fails to see the basis for the domestic courts’ aforementioned finding, and more importantly what evidence, in the domestic courts’ view, the first applicant was required to adduce to prove that his mental condition posed no danger to the second applicant’s safety. 112. The Court therefore finds that the domestic courts’ reference to the first applicant’s diagnosis was not a “sufficient” reason to justify a restriction of his parental authority. (iv) Ms N.S.’s legal incapacity 113. The domestic courts also referred to the fact that the second applicant’s mother had been deprived of her legal capacity in view of her mental illness, and to the fact that she would have free access to the second applicant if she were transferred into the first applicant’s care, which, in their opinion, could put the second applicant at risk. 114. The Court observes, as was established by the domestic courts, that Ms N.S. had had free access to the first applicant’s flat, and as a result could have unrestricted access to the second applicant if the latter were to live there. The Court accepts that in such circumstances the question of whether Ms N.S. posed a danger to the second applicant was directly relevant for striking a balance between her interests and those of her father. 115. The Court notes, however, that the domestic courts based their fears for the second applicant’s safety on a mere reference to the fact that Ms N.S. had no legal capacity. The Court is not convinced that a person’s lack of legal capacity in itself makes him or her dangerous to others. In its view, the domestic courts should have convincingly demonstrated that Ms N.S.’s behaviour had or may have put the second applicant at risk to the extent that made a transfer into her father’s care impossible. Yet the domestic courts did not rely on medical reports or any other written or oral evidence to prove that any such danger emanated from Ms N.S. 116. The Court notes the Government’s argument that the fact that Ms N.S. could pose a danger to the second applicant was confirmed by a medical report drawn up in 2008 in the proceedings regarding Ms N.S.’s legal capacity, which stated that there were aggressive, conflicting and emotionally inadequate tendencies in her behaviour (see paragraphs 12 and 81 above). Even if the Court were prepared to accept that a report on a medical psychiatric examination carried out four years before the proceedings under examination may be regarded as a sufficient ground for the domestic courts’ finding that Ms N.S. posed a danger to the second applicant, it notes that, in any event, the domestic courts never relied on that report to substantiate their finding. The Court thus rejects the Government’s argument as irrelevant. 117. In such circumstances, the Court is not convinced that the domestic courts’ reference to Ms N.S.’s legal status was a sufficient ground for restricting the first applicant’s parental authority. (v) The first applicant’s financial situation 118. Lastly, the domestic courts assessed the first applicant’s financial means as insufficient to maintain an adequate standard of living for the second applicant (see paragraph 34 above). 119. The Court will not speculate whether the first applicant’s monthly income was higher than the minimum subsistence level and therefore sufficient to ensure an adequate standard of living for the second applicant. It finds that, in any event, the first applicant’s financial difficulties cannot in themselves be regarded as sufficient grounds for refusing him custody over the second applicant, in the absence of any other valid reasons. (vi) Conclusion 120. In the light of the foregoing, the Court considers that the reasons relied on by the domestic courts to restrict the first applicant’s parental authority over the second applicant in order to prevent her transfer into his care were insufficient to justify that interference. Notwithstanding the domestic authorities’ margin of appreciation, the interference was therefore not proportionate to the legitimate aim pursued. 121. Accordingly, there has been a violation of Article 8 of the Convention on that account. III. ALLEGED VIOLATION OF ARTICLE 14 IN CONJUNCTION WITH ARTICLE 8 OF THE CONVENTION 122. The first applicant complained that the restriction on his parental authority had been discriminatory as it had been imposed because of his mental disability and had only been motivated by the authorities’ prejudice against people with mental disabilities. The first applicant argued that in a comparable situation, where a biological father without a mental disability sought to exercise his parental authority over his child, the arguments advanced by the domestic authorities would be irrelevant. The first applicant relied on Article 14 in conjunction with Article 8 of the Convention. Article 14 reads as follows: Article 14 “The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.” 123. The Government insisted that the first applicant had not been discriminated against, as the decision to temporarily restrict his parental authority had not only been based on the state of his health; the domestic courts had taken into account and carefully assessed a number of relevant factors, and had taken their decision in the second applicant’s best interests. 124. The Court reiterates that where a substantive Article of the Convention has been invoked both on its own and together with Article 14 and a separate breach has been found of the substantive Article, it is not generally necessary for the Court also to examine the case under Article 14 unless a clear inequality of treatment in the enjoyment of the right in question is a fundamental aspect of the case (see Dudgeon v. the United Kingdom, 22 October 1981, § 67, Series A no. 45). In the present case, it observes that the first applicant complained, in essence, that the restriction on his parental authority over the second applicant had been imposed because of his mental disability. It observes in this respect that in paragraphs 101-119 above it has analysed in detail the reasons, including the first applicant’s mental health, advanced by the domestic courts to restrict his parental authority. It found those reasons to be insufficient to justify that restriction, with the result that the interference with the applicants’ right to respect for their family life was disproportionate in breach of Article 8 of the Convention. In view of the Court’s analysis under that Article and the violation found, the Court does not consider it necessary to determine whether the domestic courts’ decisions thereby discriminated against the first applicant in breach of Article 14, read in conjunction with Article 8 of the Convention (see, for a similar conclusion, Schneider v. Germany, no. 17080/07, § 108, 15 September 2011, or A.K. and L. v. Croatia, no. 37956/11, § 94, 8 January 2013). IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION 125. 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 126. The applicants claimed 12,000 euros (EUR), with EUR 8,000 to be awarded to the first applicant and EUR 4,000 to be awarded to the second applicant, in respect of the non-pecuniary damage they incurred in connection with the alleged violations of their rights under the Convention. 127. The Government contested that claim as excessive and unsubstantiated. 128. The Court observes that it has found a violation of Article 8 of the Convention. It considers that the applicants must have suffered stress and frustration as a result, which cannot be compensated by a mere finding of a violation. Making its assessment on an equitable basis, the Court awards the first applicant EUR 5,000 and the second applicant EUR 2,500 in respect of non-pecuniary damage, plus any tax that may be chargeable. B. Costs and expenses 129. The applicants also claimed EUR 8,043 for the costs and expenses incurred in the domestic proceedings and before the Court. 130. The Government argued that the number of lawyers and their fees had been excessive, and that in any event it had not been demonstrated that the applicants had any prior agreement with the counsel in question, or that all of the fees had actually been paid. 131. 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. Regard being had to the documents in its possession and the above criteria, the Court considers it reasonable to award the applicants jointly the sum of EUR 8,000 covering costs and expenses under all heads, plus any tax that may be chargeable to the applicants on that amount. C. Default interest 132. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points. FOR THESE REASONS, THE COURT 1. Declares, unanimously, the application admissible; 2. Holds, unanimously, that there has been a violation of Article 8 of the Convention; 3. Holds, by six votes to one, that there is no need to examine separately the complaint under Article 14, taken together with Article 8 of the Convention; 4. Holds, unanimously, (a) that the respondent State is to pay the applicants, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts, to be converted into the currency of the respondent State at the rate applicable at the date of settlement: (i) EUR 5,000 (five thousand euros) to the first applicant, and EUR 2,500 (two thousand five hundred euros) to the second applicant, plus any tax that may be chargeable on both amounts, in respect of non-pecuniary damage; (ii) EUR 8,000 (eight thousand euros) jointly to the two applicants, plus any tax that may be chargeable to the applicants, in respect of costs and expenses; (b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points; 5. Dismisses, unanimously, the remainder of the applicants’ claim for just satisfaction. Done in English, and notified in writing on 29 March 2016, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Stephen PhillipsLuis López GuerraRegistrarPresident In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the separate opinion of Judge Keller is annexed to this judgment. L.L.G.J.S.P. DISSENTING OPINION OF JUDGE KELLER 1. In addition to his claims under Article 8 of the Convention, the first applicant alleged a breach of Article 14 of the Convention, read in conjunction with Article 8, on account of the fact that the restriction on his parental authority had been discriminatory. This restriction was imposed because of his mental disability and, he argued, was mainly motivated by the authorities’ prejudice against people with mental disabilities (see paragraph 122 of the judgment). While I agree with the majority’s finding of a violation of Article 8 in respect of both applicants, I regret that am unable to share the majority’s view that it is not necessary to examine separately whether there has been a violation of Article 14 in conjunction with Article 8 in respect of the first applicant. Unlike the majority, I consider that the threshold required for a separate evaluation of whether the first applicant suffered discrimination in his enjoyment of the rights and freedoms set forth in the Convention has been reached, for the reasons set out below. 2. In paragraph 124 of the judgment, the majority reiterates the Court’s pre-existing case-law that where a substantive Article of the Convention has been invoked both on its own and together with Article 14, and a separate breach has been found of the substantive Article, it is not generally necessary for the Court to also examine the case under Article 14 unless a fundamental aspect of the case is a clear inequality of treatment in the enjoyment of the right in question (see Dudgeon v. the United Kingdom, 22 October 1981, § 67, Series A no. 45; Chassagnou and Others v. France [GC], nos. 25088/94, 28331/95 and 28443/95, § 89, ECHR 1999-III; Timishev v. Russia, nos. 55762/00 and 55974/00, § 53, ECHR 2005-XII; and A.K. and L. v. Croatia, no. 37956/11, § 92, 8 January 2013). In the present case, in view of its detailed analysis of Article 8 and the violation of that provision found, the majority applied this case-law to find that it was not necessary to determine whether the domestic courts’ decisions were also discriminatory. 3. In my opinion, and contrary to the majority’s view, the first applicant has an arguable claim that the restriction on his parental authority over the second applicant was imposed and maintained because of his mental disability, which therefore seems indeed to be a fundamental aspect of the case. The reasons for this are various, but they largely concern the stereotyped view of the first applicant as a mentally disabled parent expressed by the domestic instances. The domestic reliance on the first applicant’s mental disability to justify the restriction on his parental rights is a crucial factor in the present case, and represents a recurring theme in the reasoning provided by the State authorities. I. Stereotyped Line of Reasoning as a Fundamental Aspect 4. The reliance on Mr Kocherov’s disability as a justification for restricting his parental authority stems from the submissions made by the children’s home, which argued that he was incapable of exercising his parental responsibilities due to his mental disability, while providing the District Court only with undated reports by its own staff to support this statement (see paragraphs 17 and 18 of the judgment). The representatives of the children’s home maintained these claims and further stated, in particular, that the first applicant would be unable to provide the second applicant with proper hygienic care, owing to his mental disability and his lifelong stay in a closed specialist institution (see paragraph 26). Moreover, a representative of the municipal custody and guardianship authority and a public prosecutor both corroborated the children’s home’s claims and explicitly identified the first applicant’s diagnosis, along with his wife’s condition, as the main ground for refusing to transfer the second applicant into her father’s care, as two parents with mental disabilities would be unable to ensure the second applicant’s harmonious development (see paragraph 27). 5. The District Court based its judgment on the aforementioned statements. It ruled that placing the second applicant into the care of a mentally challenged person would not be in the child’s best interest (see paragraph 30) and attributed to the first applicant a lack of skills and experience in raising a child that was, in its estimation, due to the fact that he had lived in a specialist State institution for people with mental disabilities since childhood (see paragraph 31). In addition, the District Court again explicitly referred to the first applicant’s mental disability in stating – while seemingly disregarding all the written evidence to the contrary (see paragraphs 20-24) – that he had failed to provide reliable evidence that it would be safe for the second applicant to live with him (see paragraph 33). The District Court also noted that, given his diagnosis and category of disability, the first applicant was not eligible to apply to adopt a child (ibid.). In doing so, the District Court based its judgment on outdated reports provided by the staff members of the children’s home, while disregarding the later evidence provided by the same representatives, which confirmed that the second applicant was no longer afraid of her father (see paragraph 37). 6. Similar argumentation was employed by the second domestic instance. The appellate court upheld the judgment of the District Court and repeated the same reasoning and conclusions, stating that the first applicant had failed to adduce convincing evidence to prove the absence of a real risk to the second applicant’s life, health and adequate upbringing (see paragraph 43). 7. Taken as a whole, the domestic argumentation demonstrates that the authorities based their conclusions on generalised ideas about disabled parents, rather than on the first applicant’s actual ability to care for his child or the concrete facts of the case. The domestic authorities’ reasoning thus clearly indicates the presence of a stereotyped assumption about the parenting inabilities of mentally disabled persons, as well as a tendency to ignore the evidence in the first applicant’s favour. 8. The argument that the first applicant was subjected to obvious discrimination due to his mental disability is further substantiated by two points. First, the Russian Family Code does not provide that a prolonged stay in a specialist institution for people with mental disabilities constitutes a ground for restricting parental authority. Secondly, Russian law does not normally require biological parents to provide proof of their ability to raise children or their housekeeping skills (see paragraph 38). 9. Based on the aforementioned circumstances, I cannot but regard the rulings of the domestic courts as biased. To my mind, it is evident that the stereotyped line of reasoning employed by the domestic authorities was based on the underlying assumption that a handicapped person is, by definition, less or not at all capable of properly caring for a child. Such an essentialist view of the parenting inabilities of persons with disabilities flattens and homogenises the experiences and capabilities of this group’s members. The inadequacy of such a stereotyped approach is particularly acute given the vulnerability of persons with mental disabilities as a group that has suffered considerable discrimination in the past (see Alajos Kiss v. Hungary, no. 38832/06, 20 May 2010, § 42). II. Disproportionate Reactions of the National Authorities 10. Furthermore, my disagreement relates to the disproportionality of the restrictive measures applied by the domestic authorities in the present case. As regards the United Nations Convention on the Rights of Persons with Disabilities, the Court has recognised this instrument of international law, which enjoys almost universal ratification, as setting the standard concerning the need to protect people with disabilities from discriminatory treatment (see Glor v. Switzerland, no. 13444/04, § 53, 30 April 2009). Concerning parental rights, the CRPD states in its Article 23 (see paragraph 57) that State Parties are to render appropriate assistance to persons with disabilities in the performance of their child-rearing responsibilities. Furthermore, Article 23 (4) explicitly confirms that no child is to be separated from his or her parents on the basis of a disability either of the child or of one or both of the parents. The written and oral evidence adduced by the first applicant (see paragraphs 20-24 and 25) convincingly showed that there was no objective indication of neglect, abuse or immediate danger for the child. On the contrary, the first applicant showed his concern for the child’s welfare and his willingness to cooperate with the domestic authorities by even proposing a gradual transfer of the second applicant into his care in order to avoid causing her any unnecessary stress (see paragraph 25). Yet the domestic authorities did not attempt to impose any less invasive measures regarding the restriction on the first applicant’s parental authority anywhere in their reasoning, and did not seem to make any efforts to provide the first applicant with the “appropriate assistance” required by the CRPD. III. General Meaning of Article 14 of the Convention 11. It is well-established in the Court’s case-law that Article 14 has no autonomous meaning, but can be invoked only in conjunction with another Convention guarantee. However, the fact that the substantive provision invoked in the present case, Article 8 of the Convention, has been analysed in detail and a violation has been found does not mean that the discriminatory nature of the State action has been sufficiently examined by the Court. In other words, the scope and substance of Article 14 is by no means automatically absorbed by the scope of the substantive right with which it must be invoked. Such automatic absorption would deprive Article 14 of all scope of application and render it the ‘Cinderella provision’ of the Convention.[1] 12. The Court’s traditional line of reasoning concerning the accessory nature of Article 14, as interpreted in the present case, has a significant impact on the meaning of Article 14 of the Convention[2] and could considerably limit its scope in practical terms. Thus, an applicant seeking a definitive finding by the Court on a discrimination issue would have to make a difficult decision prior to submitting his or her application. In order to achieve a separate examination of Article 14, an applicant would necessarily have to invoke only Article 14 in conjunction with Article 8 of the Convention, instead of also invoking Article 8 on its own. In my opinion, such a restrictive practice does not correspond to the ratione Conventionis. Apart from the doubts expressed above, one has to bear in mind that it is also of practical significance whether the Court finds one or two Convention rights to have been violated: the amount granted under Article 41 is normally higher in the latter case. IV. Conclusion 13. I conclude that the Court should have examined the violation of Article 14 alleged by the first applicant. There is much evidence suggesting a violation of Article 14 read in conjunction with Article 8 in respect of the first applicant’s claim that the restriction on his parental authority over the second applicant was imposed and maintained because of his mental disability. It follows that the inequality of treatment in question constitutes a fundamental aspect of the case (compare supra, § 3) and warrants examination by the Court under Article 14 in conjunction with Article 8. [1] O’Connell Rory, ‘Cinderella Comes to the Ball: Article 14 and the Right to Non‑Discrimination in the ECHR’, (2009) 29 (2) Legal Studies: The Journal of the Society of Legal Scholars, 211-229, 212. [2] This approach is one reason for the Court’s rather limited case-law on discrimination issues; see Gerards Janneke, ‘The Discrimination Grounds of Article 14 of the European Convention on Human Rights’, (2013) 13 (1) Human Rights Law Review, 99-124, 100; Harris David John, O’Boyle Michael, Bates Edward and Buckley Carla, Harris, O'Boyle, and Warbrick: Law of the European Convention on Human Rights (Oxford: Oxford University Press 2014), p. 784.

JISCBAILII_CASE_CONSTITUTIONAL Parliamentary Archives, HL/PO/JU/18/252 Regina v. Lord President of the Privy Council (Original Respondent and Second Cross-appellant) (acting for the Visitor of the University of Hull (Original Respondent and First Cross-appellant) ex parte Page (Original Appellant and Cross-respondent) JUDGMENT Die Jovis 3° Decembris 1992 Upon Report from the Appellate Committee to whom was referred the Cause Regina against Lord President of the Privy Council (acting for the Visitor of the University of Hull) ex parte Page, That the Committee had heard Counsel as well on Monday the 6th as on Tuesday the 7th, Wednesday the 8th, Thursday the 9th and Monday the 13th days of July last upon the Petition and Appeal of Edgar Page of 90 Sunnybank, Hull, praying that the matter of the Order set forth in the Schedule thereto, namely an Order of Her Majesty's Court of Appeal of the 31st day of July 1991, might be reviewed before Her Majesty the Queen in Her Court of Parliament and that the said Order might be reversed, varied or altered or that the Petitioner might have such other relief in the premises as to Her Majesty the Queen in Her Court of Parliament might seem meet; as upon the cases of the University of Hull and of the Lord President of the Privy Council acting for the Visitor of the University of Hull lodged in answer to the said Appeal; as upon the Petitions and Cross-Appeals of the University of Hull of Hull, HU6 7RX and of the Lord President of the Privy Council of the Privy Council Office, London SW1A 2AJ; as also upon the case of Edgar Page lodged in answer to the said Cross-Appeals; and due consideration had this day of what was offered on either side in this Cause: It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal of the 31st day of July 1991 complained of in the said Appeal be, and the same is hereby, Affirmed save as to costs and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Original Appellant do pay or cause to be paid to the said Original Respondents the Costs incurred by them in the Courts below, and the Costs incurred by them in respect of the said Appeal and Cross-Appeals, the amount of such last-mentioned costs to be certified by the Clerk of the Parliaments if not agreed between the parties. Cler: Parliamentor: Judgment: 3.12.92 HOUSE OF LORDS REGINA v. LORD PRESIDENT OF THE PRIVY COUNCIL, EX PARTE PAGE Lord Keith of Kinkel Lord Griffiths Lord Browne-Wilkinson Lord Mustill Lord Slynn of Hadley LORD KEITH OF KINKEL My Lords, For the reasons set out in the speech to be delivered by my noble and learned friend Lord Browne-Wilkinson, which I have had the opportunity of considering in draft and with which I agree, I would dismiss this appeal and allow the cross-appeals. LORD GRIFFITHS My Lords, I have had the advantage of reading the judgment of Lord Browne-Wilkinson with which I agree and I would dismiss this appeal on the ground that certiorari is not available to challenge the decision of a visitor on the ground of an error of law within his jurisdiction. I add a few words of my own only because of the difference of opinion between your Lordships on this question and because what I said about the availability of certiorari in my speech in Thomas v. University of Bradford [1987] A.C. 795 has been interpreted to include an error of law by the Divisional Court and the Court of Appeal which was not what I had intended. It is in my opinion important to keep the purpose of judicial review clearly in mind. The purpose is to ensure that those bodies that are susceptible to judicial review have carried out their public duties in the way it was intended they should. In the case of bodies other than courts, in so far as they are required to apply the law they are required to apply the law correctly. If they apply the law incorrectly they have not performed their duty correctly and judicial review is available to correct their error of law so that they may make their decision upon a proper understanding of the law. - 1 -In the case of inferior courts, that is courts, of a lower status than the High Court, such as the Justices of the Peace, it was recognised that their learning and understanding of the law might sometimes be imperfect and require correction by the High Court and so the rule evolved that certiorari was available to correct an error of law of an inferior court. At first it was confined to an error on the face of the record but it is now available to correct any error of law made by an inferior court. But despite this general rule Parliament can if it wishes confine a decision on a question of law to a particular inferior court and provide that the decision shall be final so that it is not to be challenged either by appeal or by judicial review. Such a case was Pearlman v. Keepers and Governors of Harrow School [1979] Q.B. 56 in which the dissenting judgment of Geoffrey Lane L.J. was approved by the majority of the House of Lords in Re Racal Communications Limited [1981] AC 374. The common law has ever since the decision in Philips v. Bury (1694) Holt K.B. 715 recognised that the visitor acting as a judge has exclusive jurisdiction and that his decision is final in all matters within his jurisdiction. The common law courts have through three centuries consistently resisted all attempts to appeal decisions of the visitor. The courts have however been prepared to confine the visitor to his proper role as a judge of the internal affairs of the foundation by the use of the writs of prohibition and mandamus. When I said in Thomas; "I have myself no doubt that in the light of the modern development of administrative law, the High Court would have power, upon an application for judicial review, to quash a decision of the visitor which amounted to an abuse of his powers" I used the words "an abuse of his powers" advisedly. I do not regard a judge who makes what an Appellate Court later regards as a mistake of law as abusing his powers. In such a case the judge is not abusing his powers; he is exercising them to the best of his ability albeit some other court thinks he was mistaken. I used the phrase "abuse of his powers" to connote some form of misbehaviour that was wholly incompatible with the judicial role that the judge was expected to perform. I did not intend it to include a mere error of law. The decision in Racal shows that Parliament can by the use of appropriate language provide that a decision on a question of law whether taken by a judge or by some other form of tribunal shall be considered as final and not be subject to challenge either by way of appeal or judicial review. For three centuries the common law courts have recognised the value of the visitor acting as the judge of the internal laws of the foundation and have refused to trespass upon his territory. I do not believe that it would be right to reverse this long line of authority and declare that certiorari should now lie to reverse the decision of a visitor on a question of law. The value of the visitorial jurisdiction is that it is swift, cheap and final. These benefits will be largely dissipated if the visitor's decision can be challenged by way of judicial review. Many decisions may turn upon the interpretation - 2 - of the statutes and other decisions of a more factual nature can all too easily be dressed up as issues of law under the guise of "Wednesbury" principles. The learning and ingenuity of those members of the foundation who are likely to be in dispute with the foundation should not be lightly underestimated and I believe to admit certiorari to challenge the visitor's decision on the grounds of error of law will in practice prove to be the introduction of an appeal by another name. The visitor is either a person holding a high judicial office, or is advised on questions of law by such a person, in whose decision on matters of law it is reasonable to repose a high degree of confidence. I say this not because any holder of judicial office should ever regard it as an affront to be overruled by an Appellate Court but merely to emphasize that as a practical matter the chances are that the visitor probably will get it right. If it is thought that the exclusive jurisdiction of the visitor has outlived its usefulness, which I beg to doubt, then I think that it should be swept away by Parliament and not undermined by judicial review. I would add that in the present case I am satisfied that the decision of the visitor was correct. LORD BROWNE-WILKINSON My Lords, The appellant, Mr. Page was appointed a lecturer in the Department of Philosophy at the University of Hull by a letter dated 13 June 1966. The letter stated 'The appointment may be terminated by either party on giving three months' notice in writing expiring at the end of a term or of the long vacation." As a lecturer, Mr. Page became a member of the University which is a corporate body regulated by Royal Charter. Section 34 of the Statutes made under the Charter provides: "1. The Vice-Chancellor and all Officers of the University including Professors and members of the Staff holding their appointments until the age of retirement may be removed by the Council for good cause. . . . 2. . . . 3. Subject to the terms of his appointment no member of the teaching research or administrative staff of the University (including the Vice-Chancellor) shall be removed from office save upon the grounds specified in paragraph 2 of this Section and in pursuance of the procedure specified in Clause 1 of this Section." Section 34(2) defines the meaning of "good cause". On 30 June 1988 Mr. Page was given three months' notice terminating his appointment on the grounds of redundancy. It is - 3 - common ground that there was no "good cause" within the meaning of section 34; the University was reiying on the three months' notice term contained in the letter of appointment coupled with the provision in section 34(3) that Mr. Page's tenure was to be subject to the terms of the appointment. Mr. Page took the view that on the true construction of section 34 of the statutes the University had no power to remove him from office and terminate his employment save for good cause. Your Lordships were told that Mr. Page started an action in the Queen's Bench Division for wrongful dismissal which action was struck out on the grounds that the matter fell within the exclusive jurisdiction of the Visitor of the University, Her Majesty the Queen. Mr. Page then petitioned the Visitor for a declaration that his purported dismissal was ultra vires and of no effect. The petition was considered by the Lord President of the Council, on behalf of Her Majesty. He sought advice from Lord Jauncey of Tullichettle who advised that on the true construction of the Statutes the dismissal was valid and intra vires. On that advice, the petition was dismissed by the Visitor. Mr. Page then applied by way of judicial review for an order quashing the Visitor's decision. Before the Divisional Court (Taylor L.J. and Rougier J.) two issues arose: first, did the Divisional Court have jurisdiction to review the Visitor's decision and, if so, second, was the Visitor's construction of the Statutes correct? The Divisional Court held that it had jurisdiction to review the Visitor's decision and that the Visitor's decision was wrong in law. They made an order quashing the decision and made a declaration that "upon a true construction of the Statutes of the University of Hull the University has and had no power to dismiss Edgar Page by reason of redundancy and his purported dismissal is without effect". The University and the Visitor appealed to the Court of Appeal (Lord Donaldson of Lymington M.R., Staughton and Farquharson L.JJ.) who upheld the Divisional Court's decision on jurisdiction but reversed its decision on construction taking the view that the Visitor's construction of the Statutes was correct. Mr. Page appeals to your Lordships' House against the decision of the Court of Appeal on the construction of the Statutes: the University and the Visitor cross appeal against the decision on jurisdiction. I will deal first with the question of jurisdiction. As the argument was refined in the course of the hearing, it emerged that the rival contentions came down to a narrow but difficult issue. It is established that, a university being an eleemosynary charitable foundation, the Visitor of the University has exclusive jurisdiction to decide disputes arising under the domestic law of the University. This is because the founder of such a body is entitled to reserve to himself or to a visitor whom he appoints the exclusive right to adjudicate upon the domestic laws which the founder has established for the regulation of his bounty. Even where the contractual rights of an individual (such as his contract of employment with the university) are in issue, if those contractual rights are themselves dependent upon rights arising under the regulating documents of the charity, the visitor - 4 - has an exclusive jurisdiction over disputes relating to such employment. Those propositions are all established by the decision of this House in Thomas v. University of Bradford [1987] A.C. 795 which held that the courts had no jurisdiction to entertain such disputes which must be decided by the visitor. However the Thomas case was concerned with the question whether the courts and the visitor had concurrent jurisdictions over such disputes. In that context alone it was decided that the visitor's jurisdiction is "exclusive". Thomas does not decide that the visitor's jurisdiction excludes the supervisory jurisdiction of the courts by way of judicial review. On the contrary, my noble and learned friend Lord Griffiths (at page 825) said this: "Finally, there is the protection afforded by the supervisory, as opposed to appellate, jurisdiction of the High Court over the visitor. It has long been held that the writs of mandamus and prohibition will go either to compel the visitor to act if he refused to deal with the matter within his jurisdiction or to prohibit him from dealing with a matter that lies without his jurisdiction. . . . Although doubts have been expressed in the past as to the availability of certiorari, I have myself no doubt that in the light of the modern development of administrative law, the High Court would have power, upon an application for judicial review, to quash a decision of the visitor which amounted to an abuse of his powers." Lord Ackner (at page 828B) said that the case fell within the exclusive jurisdiction of the visitor "subject always to judicial review". Under the modern law, certiorari normally lies to quash a decision for error of law. Therefore, the narrow issue in this case is whether, as Mr. Page contends and the courts below have held, certiorari lies against the visitor to quash his decision as being erroneous in point of law notwithstanding that the question of law arises under the domestic law of the University which the visitor has "exclusive" jurisdiction to decide. It is necessary first to consider in some detail the nature of the visitor's jurisdiction. After some earlier doubts on the matter, the exclusivity of the visitor's jurisdiction was finally confirmed in Philips v. Bury [1694] Holt K.B. 715 where the reported dissenting judgment of Holt C.J. was eventually adopted by this House. In that case, the visitor of Exeter College, Oxford, had deprived Bury of his office as Rector. The new Rector appointed in his place had leased a house to the plaintiff Philips, who had been evicted by Bury. Philips brought an action in ejectment against Bury. Accordingly the issue in the case was whether the removal of Bury by the visitor was valid or not. Holt C.J. held that two questions arose: first, did the visitor have jurisdiction to remove Bury; if so, second, was the visitor's decision correct. He held that the visitor did have jurisdiction and that "having that power, the justice thereof is not examinable in a Court of Law, upon any action concerning the [visitor's] power". He contrasted private charitable bodies with public corporations and said this at page 723: - 5 - "And I think the sufficiency of the sentence is never to be called in question, nor any inquiry to be made here into the reasons of the deprivation. If the sentence be given by the proper visitor, created so by the founder, or by the law, you shall never inquire into the validity, or ground of the sentence. And this will appear, if we consider the reason of a visitor, how he comes to be supported by authority in that office.... But private and particular corporations for charity, founded and endowed by private persons, are subject to the private government of those who erect them; and therefore if there be no visitor appointed by the founder, I am of opinion that the law doth appoint the founder and his heirs to be visitors. The founder and his heirs are patrons, and not to be guided by the common known laws of the kingdom. But such corporations are, as to their own affairs, to be governed by the particular laws and constitutions assigned by the founder. . . . But you'll say, this man hath no court. It is not material whether he hath a court or no; all the matter is, whether he hath a jurisdiction; if he hath conusance of the matter and person, and he gives a sentence, it must have some effect to make a vacancy, be it never so wrong. But there is no appeal, if the founder hath not thought fit to direct an appeal; that an appeal lieth in the Common Law Courts is certainly not so. This is according to the government settled by the founder; if he hath directed all to be under the absolute power of the visitor, it must be so. ... As to the matter of there being no appeal from an arbitrary sentence; it is true, the case is the harder, because the party is concluded by one judgment, but it doth not lessen the validity of the sentence, nor doth it in any way prove that you shall find out some way to examine this matter at law in a judicial proceeding." Later, at page 727 Holt C.J. said this: "I know no difference between this case and that of a mandamus. In that case of Appleford there was a mandamus brought, to restore him to his fellowship: it was returned, that by the Statutes of the college, for misdemeanour they had a power to turn him out; and that the Bishop of Winchester was visitor, and that he was turned out pro crimine enormi, and had appealed to the bishop, who confirmed the expulsion; and the particular cause was not returned: I was of counsel for the college, and we omitted the cause in the return for that reason, because indeed it was not so true as it should have been. It was insisted, that we ought to show the cause in the return, to bring it within the Statutes. It was answered, here was a local visitor, who has given a sentence; and be it right, or be it wrong, the party is concluded by it; and you must submit to such laws as the founder is pleased to put upon you. And Mr. Appleford was not restored. This is an express authority to guide our judgment in this case. Here is a local visitor hath given a sentence, he hath declared the rector to be actually deprived of his place. When shall we know when a deprivation is good? If not upon a mandamus, why in an ejectment?" - 6 - The decision of Holt C.J. in Philips v. Bury is the locus classicus of the law of visitors. It has been repeatedly applied for the last 300 years, most recently in Thomas. For present purposes it is important for three reasons: 1. It shows that the court can and will inquire whether the visitor has jurisdiction to determine the question, i.e. to enter into the matter. 2. If the visitor has such jurisdiction, the court has no power to ignore it or review it by way of mandamus or in any other way. 3. The reason for such lack of jurisdiction to review in the court is that an eleemosynary corporation is governed by a system of private law which is not of "the common known laws of the kingdom" but the particular laws and constitutions assigned by the founder. As to the first of those points, the ability of the courts to control the visitor by the prerogative writs has been established by many cases. Thus, the court has by mandamus required a visitor to exercise his jurisdiction: see R. v. Bishop of Ely [1794] 5 Durn. & E. 475 and R. v. Dunsheath ex parte Meredith [1951] 1 K.B. 127 at 134. The court will also grant prohibition to restrain a visitor from acting outside his jurisdiction: Bishop of Chichester v. Harward and Webber [1787] 1 Durn. & E. 650. In one case, the court indicated that it would intervene to prevent a breach by the visitor of the rules of natural justice: see Bently v. Bishop of Ely [1729] 1 Barn. K.B. 192. As to the second point, there are numerous cases in which attempts have been made to induce the courts to review or ignore decisions of the visitor acting within his jurisdiction, all of which have been unsuccessful. For some technical reason certiorari used not to be available in such cases; but the aggrieved party applied for mandamus to require the other parties to act on the footing that the visitor's decision was invalid. Thus in the case referred to by Holt C.J., Appleford's case (1672) 1 Mod. Rep. 82, the plaintiff sought an order directed to the master and fellows of a college to reinstate him as a fellow, the visitor having already adjudicated that he had been rightly removed. Mandamus was refused. In R. v. the Bishop of Chester 1 W.B1. 22 the bishop as visitor had removed the applicant as a canon. The applicant sought mandamus directed to the visitor to restore him. The order was refused. Lee C.J. said, "There is no precedent, where a mandamus has gone to a visitor to reverse his own sentence". Wright J. agreed saying, "Visitors have an absolute power; the only absolute one I know of in England". Denison J. said, "This court cannot control visitors". Similarly in R v. Bishop of Ely (supra) the applicant had been removed as a fellow of Jesus College, Cambridge and had appealed unsuccessfully to the bishop as visitor. He then applied for a mandamus directed to the visitor to hear an appeal on the grounds that the earlier appeal to the visitor had been no true appeal at all. His counsel admitted that, by reason of Philips v. - 7 - Bury, the court had no power to order the visitor to correct his decision however erroneous. Lord Kenyon C.J. said this at page 477: "It was settled in Philips v. Bury, in which determination the profession has ever since acquiesced, that this court has no other power than that of putting the visitatorial power in motion, (if I may use the expression,) but that if the judgment of the visitor be ever so erroneous, we cannot interfere in order to correct it. Now here the visitor received the appeal; each party disclosed his case to him; the whole merits of the case were before him; and he has exercised his judgment upon the whole. If therefore we were to interfere, it would be for the purpose of controlling his judgment. But any interference by us to control the judgment of the visitor, would be attended with the most mischievous consequences, since we must then decide on the statutes of the college, of which we are ignorant, and the construction of which has been confided to another forum." Grose J. said: "If the bishop had not exercised his judgment at all, we would have compelled him: but it is objected that he has not exercised it rightly; to this I answer that we have no authority to say how he should have decided." This case seems to me clear authority that the court has no jurisdiction to review the decision of a visitor made within his jurisdiction. In Ex parte Buller [1855] 1 Jurist N.S. 709 the applicant had been expelled from his fellowship by the provost and fellows of Kings College, Cambridge. His appeal to the visitor had been dismissed. He sought mandamus directed not to the visitor but to the provost and fellows to reinstate him on the grounds that the provost and fellows had breached the rules of natural justice. Coleridge J. held, quoting the judgment of Lord Kenyon in R v. Bishop of Ely, that the court had no power to compel the visitor "to correct or alter his decision although that decision may be erroneous". He said that mandamus would not go to the provost and fellows because "a member of a college puts himself voluntarily under a peculiar system of law, and assents to being bound by it, and cannot thereafter complain that such a system is not in accordance with that adopted by the common law." Mandamus was therefore refused because the visitor's determination provided a complete answer to the complaint of breach of natural justice by the provost and fellows. As to the third point (the reason why the court lacks jurisdiction to review), the views of Holt C.J. are supported by the passages I have already quoted from R v. Bishop of Ely (inability to decide on the statutes of the college "of which we are ignorant and the construction of which has been confided to another forum") and Ex parte Buller ("a peculiar system" which is not required to be in accordance with common law). In Thomas this House had to decide whether the jurisdiction of the visitor was founded on membership of the university or (as the House held) on the fact that a separate system of law was applicable. My noble - 8 - and learned friend Lord Griffiths referred (at page 814H) to the visitor's jurisdiction stemming from the power of the founder "to provide the laws under which the object of charity was to be governed and to be sole judge of the interpretation and application of those laws either by himself or by such person as he should appoint as a visitor" (emphasis added). He also referred to the laws as being "domestic" and "the internal laws of the foundation": pages 815D and 816B. Lord Ackner referred to the function of the visitor as being the supervision "of the internal rules of the foundation so that it is governed in accordance with those private laws which the founder has laid down . . . ". In my judgment this review of the authorities demonstrates that for over 300 years the law has been clearly established that the visitor of an eleemosynary charity has an exclusive jurisdiction to determine what are the internal laws of the charity and the proper application of those laws to those within his jurisdiction. The court's inability to determine those matters is not limited to the period pending the visitor's determination but extends so as to prohibit any subsequent review by the court of the correctness of a decision made by the visitor acting within his jurisdiction and in accordance with the rules of natural justice. This inability of the court to intervene is founded on the fact that the applicable law is not the common law of England but a peculiar or domestic law of which the visitor is the sole judge. This special status of a visitor springs from the common law recognising the right of the founder to lay down such a special law subject to adjudication only by a special judge, the visitor. How then is it contended that the courts have power to review the visitor's decision as to the effect of the domestic law of the University in this case? The Divisional Court and the Court of Appeal did not consider in any detail the old authorities to which I have referred. They started from the position, in my judgment incorrectly, that the references in Thomas to the visitor's jurisdiction being exclusive meant simply that the court did not have concurrent jurisdiction with him. Then, since this House in Thomas had accepted that judicial review by way of certiorari did lie to the visitor at least to restrain an abusive process, they held that there was jurisdiction to correct errors of law since "illegality" is one of the accepted heads of judicial review. Before your Lordships, Mr. Burke refined this argument. He relied upon the great development that has recently taken place in the law of judicial review whereby the courts have asserted a general jurisdiction to review the decisions of tribunals and inferior courts. He points to the way in which the law has developed from a maze of individual sets of circumstances in which one or other of the prerogative writs would lie to a general principle under which courts will review decisions on the three grounds of illegality, irrationality and procedural impropriety: see per Lord Diplock in Council of Civil Service Unions v. Minister for the Civil Service [1985] AC 374 at page 410. Mr. Burke submits that if judicial review lies at all, then it is not possible to pick and choose between Lord Diplock's three categories: it must lie on all three grounds or not at all. As to illegality, recent developments in the law have shown that any relevant error of law made by the decision maker, whether as to his powers or as to the law he is to - 9 - apply, may lead to his decision being quashed. In the present case, since the decision in Thomas shows that judicial review does lie against the visitor, so his decision is capable of being reviewed on any one of Lord Diplock's three grounds, including illegality. If, therefore, the visitor has made an error in construing the statutes of the university, his decision can be quashed on judicial review. I accept much of Mr. Burke's submissions. Over the last 40 years, the courts have developed general principles of judicial review. The fundamental principle is that the courts will intervene to ensure that the powers of public decision making bodies are exercised lawfully. In all cases, save possibly one, this intervention by way of prohibition or certiorari is based on the proposition that such powers have been conferred on the decision maker on the underlying assumption that the powers are to be exercised only within the jurisdiction conferred, in accordance with fair procedures and, in a Wednesbury sense, reasonably. If the decision maker exercises his powers outside the jurisdiction conferred, in a manner which is procedurally irregular or is Wednesbury unreasonable, he is acting ultra vires his powers and therefore unlawfully: see Wade on Administrative Law, 6th ed., page 39 et seq. The one possible exception to this general rule used to be the jurisdiction of the court to quash a decision taken within the jurisdiction of the decision taker where an error law appeared on the face of the record: R. v. Northumberland Compensation Appeal Tribunal [1952] 1 KB 338. In my judgment the decision in Anisminic Limited v. Foreign Compensation Commission [1969] 2 AC 147 rendered obsolete the distinction between errors of law on the face of the record and other errors of law by extending the doctrine of ultra vires. Thenceforward it was to be taken that Parliament had only conferred the decision making power on the basis that it was to be exercised on the correct legal basis: a misdirection in law in making the decision therefore rendered the decision ultra vires. Professor Wade considers that the true effect of the Anisminic case is still in doubt: Wade (supra) page 299 et seq. But in my judgment the decision of this House in O'Reilly v. Mackman [1983] 2 A.C. 237 establishes the law in the sense that I have stated. Lord Diplock, with whose speech all the other members of the committee agreed, said (at page 278D) that the decision in Anisminic; "... has liberated English public law from the fetters that the courts had theretofore imposed upon themselves so far as determinations of inferior courts and statutory tribunals were concerned, by drawing esoteric distinctions between errors of law committed by such tribunals that went to their jurisdiction, and errors of law committed by them within their jurisdiction. The breakthrough that the Anisminic case made was the recognition by the majority of this House that if a tribunal whose jurisdiction was limited by statute or subordinate legislation mistook the law applicable to the facts as it had found them, it must have asked itself the wrong question, i.e., one into which it was not empowered to inquire and so had no jurisdiction to determine. Its purported "determination", not being "a determination" within the meaning of the empowering legislation, was accordingly a nullity." - 10 - Therefore, I agree with Mr. Burke that in general any error of law made by an administrative tribunal or inferior court in reaching its decision can be quashed for error of law. At this point I must notice an argument raised by Mr. Beloff for the University. He suggests that the recent decision of this House in R. v. Independent Television Commission ex parte T.S.W. Broadcasting (unreported) has thrown doubt on the proposition that all errors of law vitiate the decision. In my judgment this is a misreading of that authority. This House was asserting that the mere existence of a mistake of law made at some earlier stage does not vitiate the actual decision made: what must be shown is a relevant error of law, i.e. an error in the actual making of the decision which affected the decision itself. This is demonstrated by Lord Templeman's quotation from the well known judgment of Lord Greene M.R., in Wednesbury (including the passage "a person entrusted with a discretion must, so to speak, direct himself properly in law") and the manner in which thereafter he applied those principles to the facts of the case before the House. Although the general rule is that decisions affected by errors of law made by tribunals or inferior courts can be quashed, in my judgment there are two reasons why that rule does not apply in the case of visitors. First, as I have sought to explain, the constitutional basis of the courts' power to quash is that the decision of the inferior tribunal is unlawful on the grounds that it is ultra vires. In the ordinary case, the law applicable to a decision made by such a body is the general law of the land. Therefore, a tribunal or inferior court acts ultra vires if it reaches its conclusion on a basis erroneous under the general law. But the position of decisions made by a visitor is different. As the authorities which I have cited demonstrate, the visitor is applying not the general law of the land but a peculiar, domestic law of which he is the sole arbiter and of which the courts have no cognizance. If the visitor has power under the regulating documents to enter into the adjudication of the dispute (i.e. is acting within his jurisdiction in the narrow sense) he cannot err in law in reaching this decision since the general law is not the applicable law. Therefore he cannot be acting ultra vires and unlawfully by applying his view of the domestic law in reaching his decision. The court has no jurisdiction either to say that he erred in his application of the general law (since the general law is not applicable to the decision) or to reach a contrary view as to the effect of the domestic law (since the visitor is the sole judge of such domestic law). The second reason is closely allied to the first. In Pearlman v. Harrow School [1979] QB 56 a statute provided that the decision of the county court as to whether works constituted an "improvement" within the meaning of the Act should be "final and conclusive". A tenant claimed that the installation of a central heating system constituted an "improvement". The county court judge ruled that it did not. The tenant then applied to the Divisional Court by way of judicial review to quash the judge's decision. The majority of the Court of Appeal held that it had jurisdiction to quash the judge's order. However, Lane L.J. (as he then was) dissented. He held that the judge had done nothing - 11 - which went outside the proper area of his inquiry. The question was not whether the judge had made a wrong decision but whether he had inquired into and decided a matter which he had no right to consider. Therefore he held that the court had no jurisdiction to review the decision of the county court judge for error of law. This dissenting judgment of Lane L.J. has been approved by the Privy Council in South East Asia Fire Bricks v. Non-Metallic Mineral Products Manufacturing Employees Union [1981] AC 363 at p, 370F and by a majority in this House in In re Racal Communications Ltd. [1981] AC 374 pp. 384B, 390F-391D. In the latter case, Lord Diplock pointed out that the decision in Anisminic applied to decisions of administrative tribunals or other administrative bodies made under statutory powers: in those cases there was a presumption that the statute conferring the power did not intend the administrative body to be the final arbiter of questions of law. He then contrasted that position with the case where a decision making power had been conferred on a court of law. In that case no such presumption could exist: on the contrary where Parliament had provided that the decision of an inferior court was final and conclusive the High Court should not be astute to find that the inferior court's decision on a question of law had not been made final and conclusive, thereby excluding the jurisdiction to review it. In my judgment, therefore, if there were a statutory provision that the decision of a visitor on the law applicable to internal disputes of a charity was to be "final and conclusive", courts would have no jurisdiction to review the visitor's decision on the grounds of error of law made by the visitor within his jurisdiction (in the narrow sense). For myself, I can see no relevant distinction between a case where a statute has conferred such final and conclusive jurisdiction and the case where the common law has for 300 years recognised that the visitor's decision on questions of fact and law are final and conclusive and are not to be reviewed by the courts. Accordingly, unless this House is prepared to sweep away long established law, there is no jurisdiction in the court to review a visitor's decision for error of law committed within his jurisdiction. Mr. Burke urged that the position of a visitor would be anomalous if he were immune from review on the grounds of error of law. He submitted that the concept of a peculiar domestic law differing from the general law of the land was artificial since in practice the charter and statutes of a university are expressed in ordinary legal language and applied in accordance with the same principles as those applicable under the general law. He pointed to the important public role occupied by universities and submitted that it was wrong that they should be immune from the general law of the land: "there must be no Alsatia in England where the King's writ does not run": per Scrutton L.J. in Czarnikow v. Roth, Schmidt and Co, [1922] 2 K.B. 478 at page 488. He further suggested that to permit review of a visitor's decision for error of law would not impair the effectiveness of the visitor's domestic jurisdiction. I accept that the position of the visitor is anomalous, indeed unique. I further accept that where the visitor is, or is advised by, a lawyer the distinction between the peculiar domestic law he - 12 - applies and the general law is artificial. But I do not regard these factors as justifying sweeping away the law which for so long has regulated the conduct of charitable corporations. There are internal disputes which are resolved by a visitor who is not a lawyer himself and has not taken legal advice. It is not only modern universities which have visitors: there are a substantial number of other long established educational, ecclesiastical and eleemosynary bodies which have visitors. The advantages of having an informal system which produces a speedy, cheap and final answer to internal disputes has been repeatedly emphasized in the authorities, most recently by this House in the Thomas case: see per Lord Griffiths at page 825D; see also Patel v. University of Bradford Senate [1978] 1 W.L.R. 1488 at pages 1499-1500. If it were to be held that judicial review for error of law lay against the visitor I fear that, as in the present case, finality would be lost not only in cases raising pure questions of law but also in cases where it would be urged in accordance with the Wednesbury principle that the visitor had failed to take into account relevant matters or taken into account irrelevant matters or had reached an irrational conclusion. Although the visitor's position is anomalous, it provides a valuable machinery for resolving internal disputes which should not be lost. I have therefore reached the conclusion that judicial review does not lie to impeach the decisions of a visitor taken within his jurisdiction (in the narrow sense) on questions of either fact or law. Judicial review does lie to the visitor in cases where he has acted outside his jurisdiction (in the narrow sense) or abused his powers or acted in breach of the rules of natural justice. Accordingly, in my judgment the Divisional Court had no jurisdiction to entertain the application for judicial review of the Visitor's decision in this case. In those circumstances, it is unnecessary to express any view on the proper construction of the Charter and Statutes beyond saying that I have heard nothing which persuades me that the views of Lord Jauncey of Tullichettle and the Court of Appeal were wrong. I would dismiss the appeal and allow the cross- appeals, with costs. LORD MUSTILL My Lords, Because I consider that the decision of the visitor was right I concur in the order proposed by your Lordships that this appeal should be dismissed. I have however found it difficult to subscribe to the opinion preferred by the majority of your Lordships that the appeal should be dismissed because the decision of a visitor is not susceptible to judicial review for an error of law, and had prepared a judgment setting out in summary my reasons for this difficulty. Subsequently, I have had the advantage of reading in draft the speech to be delivered by my noble and learned friend Lord Slynn of Hadley, in which he concludes that the decision is indeed reviewable and does so on grounds which I venture to find convincing. Accordingly, I need say no more that that, with due - 13 - respect to the majority of your Lordships, I agree with my noble and learned friend in both his conclusions and his reasoning. LORD SLYNN OF HADLEY My Lords, Mr. Page was appointed as a lecturer in Philosophy in the University of Hull with effect from 1 October 1966. By letter dated 30 June 1988 his appointment was terminated on 2 October 1988. The reason for terminating his appointment was that the University felt it necessary to reduce the number of staff in the Philosophy Department by one and he was the oldest member. Mr. Page began proceedings in the Queen's Bench Division to establish that the University was not entitled to dismiss him. Those proceedings were struck out on the basis that his claim fell within the exclusive jurisdiction of the Visitor of the University and so he petitioned the Visitor, Her Majesty the Queen. Having received from Lord Jauncey of Tullichettle advice that the dismissal was valid, the Lord President of the Council on behalf of Her Majesty dismissed the petition. Mr. Page applied for judicial review of that decision. The Divisional Court held that they had power to review the Visitor's decision and that upon a proper construction of the University Statutes the University had no power to dismiss Mr. Page. The Court of Appeal likewise held that the Visitor's decision could be reviewed but held that the Visitor's decision was correct in law. On this appeal questions as to the court's jurisdiction and as to the proper construction of the University's Statutes have been raised. The jurisdiction issue seems to me to divide into two parts. First, does judicial review by way of certiorari ever lie to review error of law where there is no issue as to excess of jurisdiction or breach of natural justice? If it does not, it cannot in any event lie against a Visitor on that basis. If it does, the second question is whether certiorari can lie in respect of the decision of a Visitor. As to the first question it is clear that views as to the availability and scope of certiorari together with its actual use have varied from time to time. In particular distinctions were drawn between errors of law going to jurisdiction and errors of law within jurisdiction and between errors of law on the face of the record and other errors on law which in neither case went to jurisdiction. For my part and despite the advice of the Privy Council in South East Asia Fire Bricks Sdn Bhd v. Non Metallic Mineral Products Manufacturing Employees' Union [1981] AC 363, I would now follow the opinion of Lord Diplock in In re Racal Communications Ltd. [1981] AC 374, 382-383 (with which Lord Keith of Kinkel agreed) and in O'Reilly v. Mackman [1983] 2 A.C. 237, p. 278, (with which the other members of the Appellate Committee agreed. In the former Lord Diplock said: - 14 - "The breakthrough made by Anisminic was that, as respects administrative tribunals and authoraties, the old distinction between errors of law that went to jurisdiction and errors of law that did not, was for practical purposes abolished." In the latter case Lord Diplock said that the decision in Anisminic Limited v. Foreign Compensation Commission [1969] 2 AC 147: "has liberated English public law from the fetters that the courts had theretofore imposed upon themselves so far as determinations of inferior courts and statutory tribunals were concerned, by drawing esoteric distinctions between errors of law committed by such tribunals that went to their jurisdiction, and errors of law committed by them within their jurisdiction. The breakthrough that the Anisminic case made was the recognition by the majority of this House that if a tribunal whose jurisdiction was limited by statute or subordinate legislation mistook the law applicable to the facts as it found them, it must have asked itself the wrong question, i.e., one into which it was not empowered to inquire and so had no jurisidiction to determine. Its purported 'determination', not being a 'determination' within the meaning of the empowering legislation, was accordingly a nullity." I accordingly accept that certiorari is now available to quash errors of law in a decision albeit those errors do not go to the jurisdiction of the tribunal. The second part of this issue is therefore whether the decision of a Visitor can be reviewed for error of law. It is common ground between the parties, and, on the basis of earlier cases, rightly so, that the Visitor to a University may be given an exclusive jurisdiction, e.g. to decide disputes arising under the statutes of the University, as may Visitors to such eleemosynary foundations as schools, colleges and dioceses. It has long been accepted that this exclusive jurisdiction prevents the courts of the land from dealing initially with issues falling to be decided by the Visitor, and prevent an appeal from the Visitor to those Courts. As early as 1694 in Philips v. Bury (1694) Holt K.B. 715 this House accepted as correct the dissenting judgment of Holt C.J. where it was sought to challenge the removal of a Rector by the Visitor of Exeter College by an action in ejectment. Holt C.J. held that the Visitor did have jurisdiction to deprive the Rector of his office and that "having that power, the justice thereof is not examinable in a Court of Law, upon any action concerning the [Visitor's] power". He asked, at p. 719: "First, whether the sufficiency of the sentence, as to the cause, be examinable in the Common Law Courts? And, secondly, whether the truth of that cause, suppose it to be sufficient to ground the sentence, if true, can be inquired into here?" In vigorous terms he stated the position, at pp. 723-725: - 15 - "If the sentence be given by the proper Visitor, created so by the Founder, or by the law, you shall never enquire into the validity, or ground of the sentence . . . private and particular corporations for charity, founded and endowed by private persons, are subject to the private government of those who erect them ... if [the Visitor] hath conusance of the matter and person, and he gives a sentence, it must have some effect to make a vacancy, be it never so wrong. But there is no appeal, if the founder hath not thought fit to direct an appeal; that an appeal lieth in the Common Law Courts, is certainly not so. This is according to the government settled by the founder; if he hath directed all to be under the absolute power of the Visitor, it must be so . . . " The reason for the rule was explained further in the same year in The King and Queen v. St John's College Cambridge (1694) 4 Mod. Rep. 233 at p. 241: "The Visitor is made by the Founder, and is the proper judge of the private laws of the College; he is to determine offences against those laws. But where the law of the land is disobeyed, this court will take notice thereof notwithstanding the Visitor." To the same effect was R. v. Dr. Bland, Provost of Eton (1740) 7 Mod. Rep. 355, and in 1794 in R. v. The Bishop of Ely (1794) 5 Durn. & E. 475 Lord Kenyon C.J. regarded what had been said by Holt C.J. as settled law. In 1855 Coleridge J. accepted the same principle in Ex parte Buller (1855) 1 Jurist N.S. p. 709: "It has been decided, and is now admitted, that where a Visitor has acted in his visitatorial capacity, this Court has no power to compel him to correct or alter his decision, although that decision may be erroneous. All that we can do is to set the visitor in motion; but having done so, we cannot review his decision. In R. v. The Bishop of Ely, Lord Kenyon refused the rule upon this ground, and says, 'It was settled in Philips v. Bury, (2 T.R. 346), in which determination the Profession has ever since acquiesced, that this Court has no other power than that of putting the visitatorial power in motion, (if I may use the expression); but that if the judgment of the visitor be erroneous, we cannot interfere in order to correct it. Now, here the visitor received the appeal, each party disclosed his case to him, the whole merits of the case were before him, and he has exercised his judgment upon the whole. If, therefore, we were to interfere, it would be for the purpose of controlling his judgment; but any interference by us to control the judgment of the visitor would be attended with the most mischievous consequences, since we must then decide upon the statutes of the college, of which we are ignorant, and the construction of which has been confided to another forum.'" On the other hand, the Court will order by mandamus a Visitor to exercise his jurisdiction if he refuses or fails to do so since if he does not, no one else can. - 16 - In R. v. The Bishop of Ely (1788) 2 T.R. 290, and again in R. v. The Bishop of Ely (1794) 5 T.R. 475, the Court recognised this principle. In the latter case Grose J. said at p. 477: "If the Bishop had not exercised his judgment at all, we would have compelled him: but it is objected that he has not exercised it rightly; to this I answer that we have no authority to say how he should have decided." Conversely, it has been accepted that the Court may inquire as to whether a Visitor intends to act outside his jurisdiction and in a proper case to grant a writ or order of prohibition to restrain him: Bishop of Chichester v. Harward and Webber (1787) 1 T.R. 650; see also Dr. Bently and The Bishop of Ely (1729) 94 E.R. 132. Thus despite the rule in Philips v. Bury, some control over the exercise of jurisdiction was well recognised. The position is summarised in R. v. The Bishop of Chester (1747) 1 Wm. Black. 22, by Lee C.J.: "Certainly, if a Visitor is in his jurisdiction his acts are not to be inquired into; if out of it, his acts are void." There is thus no doubt that on the older authorities the Courts have refused to review by way of certiorari the decision of a Visitor even though they were prepared to grant mandamus to require him to act or to prohibit him from acting in excess of jurisdiction. More recently in Thomas v. University of Bradford [1987] A.C. 795, Lord Griffiths (with whom Lord Bridge of Harwich, Lord Brandon of Oakbrook and Lord Mackay of Clashfern agreed) confirmed that the Courts have no concurrent or appellate jurisdiction in respect of matters referred to a Visitor by the special regulations of a university and emphasised the advantages of the visitorial procedure. Lord Griffiths concluded: "Finally, there is the protection afforded by the supervisory, as opposed to appellate, jurisdiction of the High Court over the Visitor. It has long been held that the writs of mandanus and prohibition will go ... Although doubts have been expressed in the past as to the availability of certiorari, I myself have no doubt that in the light of the modern development of administrative law, the High Court would have power, upon an application for judicial review, to quash a decision of the Visitor which amounted to an abuse of his powers." Lord Ackner at p. 828 said: "The source of the obligation upon which Miss Thomas relies for her claim is the domestic laws of the university, its statutes and its ordinances. It is her case that the university has failed either in the proper interpretation of its statutes or in their proper application. Miss Thomas is not relying upon a contractual obligation other than an obligation by the university to comply with its own domestic laws. Accordingly, in my judgment, her claim falls within - 17 - the exclusive jurisdiction of the Visitor, subject always to judicial review." It is thus clear on the basis of all these authorities that at the present time universities can create a jurisdiction for the Visitor which excludes the concurrent and appellate jurisdiction of the Courts. I do, however, respectfully agree with Lord Griffiths that certiorari would go to quash a decision of the Visitor which amounted to an abuse of his power. The question in the present case is a different question - does certiorari go beyond quashing for abuse of power and allow judicial review for errors of law within jurisdiction? I do not think that this question was resolved in Thomas by what was said by Lord Griffiths though Lord Ackner's reference to judicial review is in general terms. It is obviously not necessary to cite cases for the proposition that there has been a considerable development in the scope of judicial review in the second half of this century. It is more than enough to refer to the analysis of Sir William Wade in "Administrative Law" 6th ed. The old cases which I have cited have to be read subject to that development and not least to what was said in Thomas (supra). With deference to the contrary view of the majority of your Lordships, in my opinion if certiorari can go to a particular tribunal it is available on all the grounds which have been judicially recognised. I can see no reasons in principle for limiting the availability of certiorari to a patent excess of power (as where a Visitor has decided something which was not within his remit) and excluding review on other grounds recognised by the law. If it is accepted, as I believe it should be accepted, that certiorari goes not only for such an excess or abuse of power but also for a breach of the rules of natural justice there is even less reason in principle for excluding other established grounds. If therefore certiorari is generally available for error of law not involving abuse of power (as on the basis of Lord Diplock's speeches I consider that it is so available) then it should be available also in respect of a decision of a Visitor. I am not persuaded that the jurisdition of the Visitor involves such exceptional considerations that this principle should be departed from and that some grounds be accepted and others held not to be available for the purposes of judicial review. The submissions made to your Lordships on the basis of the history of eleemosynary corporations do not seem to me to justify the drawing of such a distinction at the present time once it is accepted that certiorari can be available (as in Thomas) on some grounds. Nor do I accept that all the questions referred to a Visitor involve such arcane learning that only those intimately aware of university affairs can begin to understand it, the judges of the land not being able to appreciate the issues. The fact that Lords of Appeal in Ordinary and other senior judges are invited to advise the Visitor show that this cannot be assumed. Moreover, issues of law may be referred to the Visitor which are wholly analogous to questions decided by the courts. The present is such a case in which, if there had been no referral to a Visitor, the matter would have come before the tribunals and courts on a clearly recognisable employment law question. - 18 - Nor am I impressed by the floodgates argument - it is said that the Divisional Court would be overwhelmed by applications to review Visitors' decisions. In the first place many references to the Visitor in student or staff disputes with university authorities do not involve questions of law at all. It will quickly be recognised that on matters of fact and challenges to the exercise of discretion leave to apply for judicial review will be refused. Moreover where the issue really does raise a question of esoteric university "lore" the courts are unlikely to override the decision of the Visitor, informed as he will be by the university authorities. If there is a real question of law, particularly if it involves matters analogous to or the same as issues of the general law, I can see no reasonable justification for refusing judicial review. If the individual's rights are affected he should be entitled to the same protection by the courts as he would be in respect of the decision of a wide range of other tribunals and bodies to whom decisions involving a question of law are assigned. I do not accept the intervener's argument that it is in some way undignified for the decision of a Visitor on the basis of advice from an eminent judge to be subject to judicial review and that if certiorari is held to be available senior judges will not wish to give such advice. In most cases their advice will either be right in law or be in an area where the courts will wish to leave alone the exercise of the Visitor's discretion. If there is an important and difficult question of law, however, I do not anticipate that senior judges will either feel "demeaned" or take umbrage at the possibility of the courts looking at the question again on fuller argument. The suggested analogies relied on with ecclesiastical courts and military courts which apply wholly distinct areas of law do not seem to me to be helpful or valid. I therefore consider that certiorari does lie to review the construction placed upon the statutes by the Visitor and that the cross appeal should be dismissed. The question then arises as to whether an error of law has been shown in the present case. The notice inviting applications for an appointment as Senior Lecturer/Lecturer in Philosophy contained the following paragraph: "TENURE The appointments will date from the 1st October 1966 and will be subject to the Statutes of the University for the time being in force and to any conditions prescribed by the Council at the time of the appointments. The Senior Lecturer or Lecturer shall vacate his office on the 30th day of September following the date on which he attains the age of 67 years, unless it is specially extended by resolution of Council. . . . "The appointments may be terminated on either side by three months' notice in writing expiring at the end of a term or of the long vacation." - 19 - On 13 June 1966 the Registrar wrote to offer Mr. Page, subject to the formal approval of Senate and Council, an appointment as a Lecturer with effect from 1 October 1966 "on the terms and conditions set out below: The appointment may be terminated by either party on giving three months' notice in writing expiring at the end of a term or of the long vacation." On 14 June 1966 Mr. Page replied: "I am pleased to accept the appointment and have taken note of the terms laid down in your letter." There were interviews of which oral evidence was given in the inquiry ordered by the Visitor but these were found by Lord Jauncey of Tullichettle to be neutral so far as the question at issue falls to be considered. If the letters of offer and acceptance are looked at alone then it is clear that the University was entitled to terminate the appointment on three months' notice. It is said, however, that if regard is had to the Statutes of the University, referred to in the notice inviting applications, on the basis of which the contract was clearly made even if the Statutes were not referred to in the letter, the University had no such right. By section 11 of the Statutes the Council shall appoint such other Officers as may be deemed necessary "with such duties at such remuneration and upon such terms and conditions as the Council shall deem fit provided that no Academic Officer shall be appointed except after consideration of a Report from the Senate". The Statutes also include the following provisions: "Section 34 REMOVAL OF MEMBERS OF THE TEACHING RESEARCH AND ADMINISTRATIVE STAFF AND VACATION OF OFFICE "1. The Vice Chancellor and all Officers of the University including Professors and members of the Staff holding their appointments until the age of retirement may be removed by the Council for good cause, . . . "2. 'Good Cause' in this Statute means: . . ." [Four categories are then specified including certain convictions, incapacity rendering unfit to perform the duties of the office, conduct of an immoral, scandalous or disgraceful nature rendering unfit to perform the duties of the office.] "3. Subject to the terms of his appointment no member of the teaching research or administrative Staff of the University (including the Vice-Chancellor) shall be removed from office save upon the grounds specified in paragraph 2 - 20 - of this section and in pursuance of the procedures specified in Clause 1 of this Section. "Section 35 "RETIREMENT OF MEMBERS OF THE ACADEMIC AND ACADEMIC-RELATED STAFF OF THE UNIVERSITY The Vice-Chancellor and all Professors, Readers, Lecturers and other salaried Officers of the University shall vacate their office on the 30th day of September following the date on which they attain the age of 65 years unless the Council . . . shall request any such Officer to continue in office for such period as it shall from time to time determine provided that in the case of such persons holding office on 30th September, 1977 the date shall be that on which they attain the age of 67 years." Essentially the argument of Mr. Page is that any member of the academic Staff who is appointed until a determined retiring age (in his case 67) can only be removed before that date for good cause as defined in section 34.2 of the Statutes. The provision as to three months' notice has to be read with the limitation that there can only be dismissal for good cause. It follows that, except in a case where either the common law or statute allows instant dismissal (e.g. for gross misconduct) a lecturer can only be dismissed for good cause after being given three months' notice (though the lecturer can terminate the agreement on three months' notice without any reason being assigned). A distinction is sought to be drawn between the staff included in paragraph 1 of section 34 (being those also falling within section 35 and who are appointed until a fixed age) and staff not so appointed to whom section 34(3) applies and who may be dismissed on the notice period specified in their letter of appointment. I do not accept this. Although the drafting of the Statutes leaves much room for argument (as this case has shown) it seems to me that reading the Statutes as a whole 65 is fixed as the retiring age for a member of the academic Staff. It is the age beyond which a member of Staff may not continue; they "shall vacate their Office" (section 35). That provision in itself does not guarantee continuance in post until age 65. Whether members of Staff can so continue depends on the other terms and conditions of the appointment. Those terms in this case include provision for termination for good cause under section 34(1) and on three months' notice as one of the terms of the appointment under section 34(3). This result could have been spelled out more clearly in the Statutes but it seems to me to follow from the provisions of the Statutes as they stand and, contrary to the argument of Mr. Page, to be no more curious than the alternative for which he contends. It follows in my view that no error of law has been shown in the decision of the Visitor and for that reason I consider that this appeal like the cross appeal should be dismissed. - 21 -

Arrêt de la Cour Case C-101/01 Criminal proceedings against Bodil Lindqvist (Reference for a preliminary ruling from the Göta hovrätt (Sweden)) «(Directive 95/46/EC – Scope – Publication of personal data on the internet – Place of publication – Definition of transfer of personal data to third countries – Freedom of expression – Compatibility with Directive 95/46 of greater protection for personal data under the national legislation of a Member State)» Opinion of Advocate General Tizzano delivered on 19 September 2002 Judgment of the Court, 6 November 2003 Summary of the Judgment 1.. Approximation of laws – Directive 95/46 – Scope – Definition of processing of personal data wholly or partly by automatic means – Act of referring, on an internet page, to various persons and identifying them by name or by other means – Included – Exceptions – Activities of the State or of State authorities unrelated to the fields of activity of individuals – Activities carried out in the course of private or family life of individuals – Processing of personal data consisting in publication on the internet in the exercise of charitable or religious activities – Not included (Directive 95/46 of the European Parliament and of the Council, Art. 3(1) and Art. 2, first and second indents) 2.. Approximation of laws – Directive 95/46 – Scope – Definition of personal data concerning health – Reference to foot injury resulting in part-time sick leave – Included (Directive 95/46 of the European Parliament and of the Council, Art. 8(1)) 3.. Approximation of laws – Directive 95/46 – Transfer of personal data to a third country – Definition – Loading of data on an internet page accessible to those with the technical means to access it, including those in third countries – Not included (Directive of the European Parliament and of the Council 95/46, Art. 25) 4.. Approximation of laws – Directive 95/46 – Respect for fundamental rights – Freedom of expression – Obligation of national authorities responsible for applying national legislation implementing the directive to ensure a fair balance between the rights and interests in question (European Convention for Human Rights, Art. 10; Directive of the European Parliament and of the Council 95/46) 5.. Approximation of laws – Directive 95/46 – National legislation for the protection of personal data – Need for consistency with provisions of directive and its objective – Possibility of a Member State's extending its scope to areas not included in the scope of the directive – Limits (Directive 95/46 of the Parliament and of the Council) 1. The act of referring, on an internet page, to various persons and identifying them by name or by other means, for instance by giving their telephone number or information regarding their working conditions and hobbies, constitutes the processing of personal data wholly or partly by automatic means within the meaning of Article 3(1) of Directive 95/46 on the protection of individuals with regard to the processing of personal data and on the free movement of such data. Such processing of personal data in the exercise of charitable or religious activity is not covered by any of the exceptions in paragraph 2 of that article. The first exception, provided for by the first indent of paragraph 2, concerns the processing of personal data in the course of an activity which falls outside the scope of Community law, such as those provided for by Titles V and VI of the Treaty on European Union, and in any case processing operations concerning public security, defence, State security (including the economic well-being of the State when the processing operation relates to State security matters) and the activities of the State in areas of criminal law. The activities mentioned by way of example in that provision are, in any event, activities of the State or of State authorities unrelated to the fields of activity of individuals and intended to define the scope of the exception provided for there, with the result that that exception applies only to the activities which are expressly listed there or which can be classified in the same category. Charitable or religious activities cannot be considered equivalent to the activities listed in that provision and are thus not covered by that exception. The second exception, provided for by the second indent of paragraph 2, relates only to activities which are carried out in the course of private or family life of individuals, which is clearly not the case with the processing of personal data consisting in publication on the internet so that those data are made accessible to an indefinite number of people. see paras 27, 38, 43-48, operative part 1-2 2. Reference to the fact that an individual has injured her foot and is on half-time on medical grounds constitutes personal data concerning health within the meaning of Article 8(1) of Directive 95/46 on the protection of individuals with regard to the processing of personal data and on the free movement of such data. In the light of the purpose of the directive, the expression data concerning health used in that provision must be given a wide interpretation so as to include information concerning all aspects, both physical and mental, of the health of an individual. see paras 50-51, operative part 3 3. There is no transfer [of data] to a third country within the meaning of Article 25 of Directive 95/46 on the protection of individuals with regard to the processing of personal data and on the free movement of such data where an individual in a Member State loads personal data onto an internet page which is stored on an internet site on which the page can be consulted and which is hosted by a natural or legal person who is established in that State or in another Member State, thereby making those data accessible to anyone who connects to the internet, including people in a third country. Given, first, the state of development of the internet at the time Directive 95/46 was drawn up and, second, the absence of criteria applicable to use of the internet in Chapter IV in which Article 25 appears, and which is intended to allow the Member States to monitor transfers of personal data to third countries and to prohibit such transfer where they do not offer an adequate level of protection, one cannot presume that the Community legislature intended the expression transfer [of data] to a third country to cover the loading, by an individual in Mrs Lindqvist's position, of data onto an internet page, even if those data are thereby made accessible to persons in third countries with the technical means to access them. see paras 63-64, 68, 71, operative part 4 4. The provisions of Directive 95/46 on the protection of individuals with regard to the processing of personal data and on the free movement of such data do not, in themselves, bring about a restriction which conflicts with the general principle of freedom of expression or other freedoms and rights, which are applicable within the European Union and are enshrined inter alia in Article 10 of the European Convention for the Protection of Human Rights. It is for the national authorities and courts responsible for applying the national legislation implementing Directive 95/46 to ensure a fair balance between the rights and interests in question, including the fundamental rights protected by the Community legal order. see para. 90, operative part 5 5. Measures taken by the Member States to ensure the protection of personal data must be consistent both with the provisions of Directive 95/46 on the protection of individuals with regard to the processing of personal data and on the free movement of such data and with its objective of maintaining a balance between freedom of movement of personal data and the protection of private life. However, nothing prevents a Member State from extending the scope of the national legislation implementing the provisions of Directive 95/46 to areas not included in the scope thereof provided that no other provision of Community law precludes it. see para. 99, operative part 6 JUDGMENT OF THE COURT 6 November 2003 (1) ((Directive 95/46/EC – Scope – Publication of personal data on the internet – Place of publication – Definition of transfer of personal data to third countries – Freedom of expression – Compatibility with Directive 95/46 of greater protection for personal data under the national legislation of a Member State)) In Case C-101/01, REFERENCE to the Court under Article 234 EC by the Göta hovrätt (Sweden) for a preliminary ruling in the criminal proceedings before that court against Bodil Lindqvist, on, inter alia, the interpretation of Directive 95/46/EC of the European Parliament and of the Council 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 (OJ 1995 L 281, p. 31), THE COURT,, composed of: P. Jann, President of the First Chamber, acting for the President, C.W.A. Timmermans, C. Gulmann, J.N. Cunha Rodrigues and A. Rosas (Presidents of Chambers), D.A.O. Edward (Rapporteur), J.-P. Puissochet, F. Macken and S. von Bahr, Judges, Advocate General: A. Tizzano, Registrar: H. von Holstein, Deputy Registrar, after considering the written observations submitted on behalf of: ─ Mrs Lindqvist, by S. Larsson, advokat, ─ the Swedish Government, by A. Kruse, acting as Agent, ─ the Netherlands Government, by H.G. Sevenster, acting as Agent, ─ the United Kingdom Government, by G. Amodeo, acting as Agent, assisted by J. Stratford, barrister, ─ the Commission of the European Communities, by L. Ström and X. Lewis, acting as Agents, having regard to the Report for the Hearing, after hearing the oral observations of Mrs Lindqvist, represented by S. Larsson, of the Swedish Government, represented by A. Kruse and B. Hernqvist, acting as Agents, of the Netherlands Government, represented by J. van Bakel, acting as Agent, of the United Kingdom Government, represented by J. Stratford, of the Commission, represented by L. Ström and C. Docksey, acting as Agent, and of the EFTA Surveillance Authority, represented by D. Sif Tynes, acting as Agent, at the hearing on 30 April 2002, after hearing the Opinion of the Advocate General at the sitting on 19 September 2002, gives the following Judgment By order of 23 February 2001, received at the Court on 1 March 2001, the Göta hovrätt (Göta Court of Appeal) referred to the Court for a preliminary ruling under Article 234 EC seven questions concerning inter alia the interpretation of Directive 95/46/EC of the European Parliament and of the Council 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 (OJ 1995 L 281, p. 31). Those questions were raised in criminal proceedings before that court against Mrs Lindqvist, who was charged with breach of the Swedish legislation on the protection of personal data for publishing on her internet site personal data on a number of people working with her on a voluntary basis in a parish of the Swedish Protestant Church. Legal background Community legislation Directive 95/46 is intended, according to the terms of Article 1(1), to 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 3 of Directive 95/46 provides, regarding the scope of the directive: 1. This Directive shall apply to the processing of personal data wholly or partly by automatic means, and to the processing otherwise than by automatic means of personal data which form part of a filing system or are intended to form part of a filing system.2. This Directive shall not apply to the processing of personal data: ─ in the course of an activity which falls outside the scope of Community law, such as those provided for by Titles V and VI of the Treaty on European Union and in any case to processing operations concerning public security, defence, State security (including the economic well-being of the State when the processing operation relates to State security matters) and the activities of the State in areas of criminal law, ─ by a natural person in the course of a purely personal or household activity. Article 8 of Directive 95/46, entitled The processing of special categories of data, provides: 1. Member States shall prohibit the processing of personal data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, trade-union membership, and the processing of data concerning health or sex life.2. Paragraph 1 shall not apply where: (a) the data subject has given his explicit consent to the processing of those data, except where the laws of the Member State provide that the prohibition referred to in paragraph 1 may not be lifted by the data subject's giving his consent; or (b) processing is necessary for the purposes of carrying out the obligations and specific rights of the controller in the field of employment law in so far as it is authorised by national law providing for adequate safeguards; or (c) processing is necessary to protect the vital interests of the data subject or of another person where the data subject is physically or legally incapable of giving his consent; or (d) processing is carried out in the course of its legitimate activities with appropriate guarantees by a foundation, association or any other non-profit-seeking body with a political, philosophical, religious or trade-union aim and on condition that the processing relates solely to the members of the body or to persons who have regular contact with it in connection with its purposes and that the data are not disclosed to a third party without the consent of the data subjects; or (e) the processing relates to data which are manifestly made public by the data subject or is necessary for the establishment, exercise or defence of legal claims. 3. Paragraph 1 shall not apply where processing of the data is required for the purposes of preventive medicine, medical diagnosis, the provision of care or treatment or the management of health-care services, and where those data are processed by a health professional subject under national law or rules established by national competent bodies to the obligation of professional secrecy or by another person also subject to an equivalent obligation of secrecy.4. Subject to the provision of suitable safeguards, Member States may, for reasons of substantial public interest, lay down exemptions in addition to those laid down in paragraph 2 either by national law or by decision of the supervisory authority.5. Processing of data relating to offences, criminal convictions or security measures may be carried out only under the control of official authority, or if suitable specific safeguards are provided under national law, subject to derogations which may be granted by the Member State under national provisions providing suitable specific safeguards. However, a complete register of criminal convictions may be kept only under the control of official authority.Member States may provide that data relating to administrative sanctions or judgements in civil cases shall also be processed under the control of official authority.6. Derogations from paragraph 1 provided for in paragraphs 4 and 5 shall be notified to the Commission.7. Member States shall determine the conditions under which a national identification number or any other identifier of general application may be processed. Article 9 of Directive 95/46, entitled Processing of personal data and freedom of expression, provides: Member States shall provide for exemptions or derogations from the provisions of this Chapter, Chapter IV and Chapter VI for the processing of personal data carried out solely for journalistic purposes or the purpose of artistic or literary expression only if they are necessary to reconcile the right to privacy with the rules governing freedom of expression. Article 13 of Directive 95/46, entitled Exemptions and restrictions, provides that Member States may adopt measures restricting the scope of some of the obligations imposed by the directive on the controller of the data, inter alia as regards information given to the persons concerned, where such a restriction is necessary to safeguard, for example, national security, defence, public security, an important economic or financial interest of a Member State or of the European Union, or the investigation and prosecution of criminal offences or of breaches of ethics for regulated professions. Article 25 of Directive 95/46, which is part of Chapter IV entitled Transfer of personal data to third countries, reads as follows: 1. The Member States shall provide that the transfer to a third country of personal data which are undergoing processing or are intended for processing after transfer may take place only if, without prejudice to compliance with the national provisions adopted pursuant to the other provisions of this Directive, the third country in question ensures an adequate level of protection.2. The adequacy of the level of protection afforded by a third country shall be assessed in the light of all the circumstances surrounding a data transfer operation or set of data transfer operations; particular consideration shall be given to the nature of the data, the purpose and duration of the proposed processing operation or operations, the country of origin and country of final destination, the rules of law, both general and sectoral, in force in the third country in question and the professional rules and security measures which are complied with in that country.3. The Member States and the Commission shall inform each other of cases where they consider that a third country does not ensure an adequate level of protection within the meaning of paragraph 2.4. Where the Commission finds, under the procedure provided for in Article 31(2), that a third country does not ensure an adequate level of protection within the meaning of paragraph 2 of this Article, Member States shall take the measures necessary to prevent any transfer of data of the same type to the third country in question.5. At the appropriate time, the Commission shall enter into negotiations with a view to remedying the situation resulting from the finding made pursuant to paragraph 4.6. The Commission may find, in accordance with the procedure referred to in Article 31(2), that a third country ensures an adequate level of protection within the meaning of paragraph 2 of this Article, by reason of its domestic law or of the international commitments it has entered into, particularly upon conclusion of the negotiations referred to in paragraph 5, for the protection of the private lives and basic freedoms and rights of individuals.Member States shall take the measures necessary to comply with the Commission's decision. At the time of the adoption of Directive 95/46, the Kingdom of Sweden made the following statement on the subject of Article 9, which was entered in the Council minutes (document No 4649/95 of the Council, of 2 February 1995): The Kingdom of Sweden considers that artistic and literary expression refers to the means of expression rather than to the contents of the communication or its quality. The European Convention for the Protection of Human Rights and Fundamental Freedoms signed at Rome on 4 November 1950 ( the ECHR), provides, in Article 8, for a right to respect for private and family life and, in Article 10, contains provisions concerning freedom of expression. The national legislation Directive 95/46 was implemented in Swedish law by the Personuppgiftslag (SFS 1998:204) (Swedish law on personal data, the PUL). The main proceedings and the questions referred In addition to her job as a maintenance worker, Mrs Lindqvist worked as a catechist in the parish of Alseda (Sweden). She followed a data processing course on which she had inter alia to set up a home page on the internet. At the end of 1998, Mrs Lindqvist set up internet pages at home on her personal computer in order to allow parishioners preparing for their confirmation to obtain information they might need. At her request, the administrator of the Swedish Church's website set up a link between those pages and that site. The pages in question contained information about Mrs Lindqvist and 18 colleagues in the parish, sometimes including their full names and in other cases only their first names. Mrs Lindqvist also described, in a mildly humorous manner, the jobs held by her colleagues and their hobbies. In many cases family circumstances and telephone numbers and other matters were mentioned. She also stated that one colleague had injured her foot and was on half-time on medical grounds. Mrs Lindqvist had not informed her colleagues of the existence of those pages or obtained their consent, nor did she notify the Datainspektionen (supervisory authority for the protection of electronically transmitted data) of her activity. She removed the pages in question as soon as she became aware that they were not appreciated by some of her colleagues. The public prosecutor brought a prosecution against Mrs Lindqvist charging her with breach of the PUL on the grounds that she had: ─ processed personal data by automatic means without giving prior written notification to the Datainspektionen (Paragraph 36 of the PUL); ─ processed sensitive personal data (injured foot and half-time on medical grounds) without authorisation (Paragraph 13 of the PUL); ─ transferred processed personal data to a third country without authorisation (Paragraph 33 of the PUL). Mrs Lindqvist accepted the facts but disputed that she was guilty of an offence. Mrs Lindqvist was fined by the Eksjö tingsrätt (District Court) (Sweden) and appealed against that sentence to the referring court. The amount of the fine was SEK 4 000, which was arrived at by multiplying the sum of SEK 100, representing Mrs Lindqvist's financial position, by a factor of 40, reflecting the severity of the offence. Mrs Lindqvist was also sentenced to pay SEK 300 to a Swedish fund to assist victims of crimes. As it had doubts as to the interpretation of the Community law applicable in this area, inter alia Directive 95/46, the Göta hovrätt decided to stay proceedings and refer the following questions to the Court for a preliminary ruling: (1) Is the mention of a person ─ by name or with name and telephone number ─ on an internet home page an action which falls within the scope of [Directive 95/46]? Does it constitute the processing of personal data wholly or partly by automatic means to list on a self-made internet home page a number of persons with comments and statements about their jobs and hobbies etc.? (2) If the answer to the first question is no, can the act of setting up on an internet home page separate pages for about 15 people with links between the pages which make it possible to search by first name be considered to constitute the processing otherwise than by automatic means of personal data which form part of a filing system or are intended to form part of a filing system within the meaning of Article 3(1)? If the answer to either of those questions is yes, the hovrätt also asks the following questions: (3) Can the act of loading information of the type described about work colleagues onto a private home page which is none the less accessible to anyone who knows its address be regarded as outside the scope of [Directive 95/46] on the ground that it is covered by one of the exceptions in Article 3(2)? (4) Is information on a home page stating that a named colleague has injured her foot and is on half-time on medical grounds personal data concerning health which, according to Article 8(1), may not be processed? (5) [Directive 95/46] prohibits the transfer of personal data to third countries in certain cases. If a person in Sweden uses a computer to load personal data onto a home page stored on a server in Sweden ─ with the result that personal data become accessible to people in third countries ─ does that constitute a transfer of data to a third country within the meaning of the directive? Would the answer be the same even if, as far as known, no one from the third country had in fact accessed the data or if the server in question was actually physically in a third country? (6) Can the provisions of [Directive 95/46], in a case such as the above, be regarded as bringing about a restriction which conflicts with the general principles of freedom of expression or other freedoms and rights, which are applicable within the EU and are enshrined in inter alia Article 10 of the European Convention on the Protection of Human Rights and Fundamental Freedoms? Finally, the hovrätt asks the following question: (7) Can a Member State, as regards the issues raised in the above questions, provide more extensive protection for personal data or give it a wider scope than the directive, even if none of the circumstances described in Article 13 exists? The first question By its first question, the referring court asks whether the act of referring, on an internet page, to various persons and identifying them by name or by other means, for instance by giving their telephone number or information regarding their working conditions and hobbies, constitutes the processing of personal data wholly or partly by automatic means within the meaning of Article 3(1) of Directive 95/46. Observations submitted to the Court Mrs Lindqvist submits that it is unreasonable to take the view that the mere mention by name of a person or of personal data in a document contained on an internet page constitutes automatic processing of data. On the other hand, reference to such data in a keyword in the meta tags of an internet page, which makes it possible to create an index and find that page using a search engine, might constitute such processing. The Swedish Government submits that the term the processing of personal data wholly or partly by automatic means in Article 3(1) of Directive 95/46, covers all processing in computer format, in other words, in binary format. Consequently, as soon as personal data are processed by computer, whether using a word processing programme or in order to put them on an internet page, they have been the subject of processing within the meaning of Directive 95/46. The Netherlands Government submits that personal data are loaded onto an internet page using a computer and a server, which are essential elements of automation, so that it must be considered that such data are subject to automatic processing. The Commission submits that Directive 95/46 applies to all processing of personal data referred to in Article 3 thereof, regardless of the technical means used. Accordingly, making personal data available on the internet constitutes processing wholly or partly by automatic means, provided that there are no technical limitations which restrict the processing to a purely manual operation. Thus, by its very nature, an internet page falls within the scope of Directive 95/46. Reply of the Court The term personal data used in Article 3(1) of Directive 95/46 covers, according to the definition in Article 2(a) thereof, any information relating to an identified or identifiable natural person. The term undoubtedly covers the name of a person in conjunction with his telephone coordinates or information about his working conditions or hobbies. According to the definition in Article 2(b) of Directive 95/46, the term processing of such data used in Article 3(1) covers any operation or set of operations which is performed upon personal data, whether or not by automatic means. That provision gives several examples of such operations, including disclosure by transmission, dissemination or otherwise making data available. It follows that the operation of loading personal data on an internet page must be considered to be such processing. It remains to be determined whether such processing is wholly or partly by automatic means. In that connection, placing information on an internet page entails, under current technical and computer procedures, the operation of loading that page onto a server and the operations necessary to make that page accessible to people who are connected to the internet. Such operations are performed, at least in part, automatically. The answer to the first question must therefore be that the act of referring, on an internet page, to various persons and identifying them by name or by other means, for instance by giving their telephone number or information regarding their working conditions and hobbies, constitutes the processing of personal data wholly or partly by automatic means within the meaning of Article 3(1) of Directive 95/46. The second question As the first question has been answered in the affirmative, there is no need to reply to the second question, which arises only in the event that the first question is answered in the negative. The third question By its third question, the national court essentially seeks to know whether processing of personal data such as that described in the first question is covered by one of the exceptions in Article 3(2) of Directive 95/46. Observations submitted to the Court Mrs Lindqvist submits that private individuals who make use of their freedom of expression to create internet pages in the course of a non-profit-making or leisure activity are not carrying out an economic activity and are thus not subject to Community law. If the Court were to hold otherwise, the question of the validity of Directive 95/46 would arise, as, in adopting it, the Community legislature would have exceeded the powers conferred on it by Article 100a of the EC Treaty (now, after amendment, Article 95 EC). The approximation of laws, which concerns the establishment and functioning of the common market, cannot serve as a legal basis for Community measures regulating the right of private individuals to freedom of expression on the internet. The Swedish Government submits that, when Directive 95/46 was implemented in national law, the Swedish legislature took the view that processing of personal data by a natural person which consisted in publishing those data to an indeterminate number of people, for example through the internet, could not be described as a purely personal or household activity within the meaning of the second indent of Article 3(2) of Directive 95/46. However, that Government does not rule out that the exception provided for in the first indent of that paragraph might cover cases in which a natural person publishes personal data on an internet page solely in the exercise of his freedom of expression and without any connection with a professional or commercial activity. According to the Netherlands Government, automatic processing of data such as that at issue in the main proceedings does not fall within any of the exceptions in Article 3(2) of Directive 95/46. As regards the exception in the second indent of that paragraph in particular, it observes that the creator of an internet page brings the data placed on it to the knowledge of a generally indeterminate group of people. The Commission submits that an internet page such as that at issue in the main proceedings cannot be considered to fall outside the scope of Directive 95/46 by virtue of Article 3(2) thereof, but constitutes, given the purpose of the internet page at issue in the main proceedings, an artistic and literary creation within the meaning of Article 9 of that Directive. It takes the view that the first indent of Article 3(2) of Directive 95/46 lends itself to two different interpretations. The first consists in limiting the scope of that provision to the areas cited as examples, in other words, to activities which essentially fall within what are generally called the second and third pillars. The other interpretation consists in excluding from the scope of Directive 95/46 the exercise of any activity which is not covered by Community law. The Commission argues that Community law is not limited to economic activities connected with the four fundamental freedoms. Referring to the legal basis of Directive 95/46, to its objective, to Article 6 EU, to the Charter of fundamental rights of the European Union proclaimed in Nice on 18 December 2000 (OJ 2000 C 364, p. 1), and to the Council of Europe Convention of 28 January 1981 for the protection of individuals with regard to automatic processing of personal data, it concludes that that directive is intended to regulate the free movement of personal data in the exercise not only of an economic activity, but also of social activity in the course of the integration and functioning of the common market. It adds that to exclude generally from the scope of Directive 95/46 internet pages which contain no element of commerce or of provision of services might entail serious problems of demarcation. A large number of internet pages containing personal data intended to disparage certain persons with a particular end in view might then be excluded from the scope of that directive. Reply of the Court Article 3(2) of Directive 95/46 provides for two exceptions to its scope. The first exception concerns the processing of personal data in the course of an activity which falls outside the scope of Community law, such as those provided for by Titles V and VI of the Treaty on European Union, and in any case processing operations concerning public security, defence, State security (including the economic well-being of the State when the processing operation relates to State security matters) and the activities of the State in areas of criminal law. As the activities of Mrs Lindqvist which are at issue in the main proceedings are essentially not economic but charitable and religious, it is necessary to consider whether they constitute the processing of personal data in the course of an activity which falls outside the scope of Community law within the meaning of the first indent of Article 3(2) of Directive 95/46. The Court has held, on the subject of Directive 95/46, which is based on Article 100a of the Treaty, that recourse to that legal basis does not presuppose the existence of an actual link with free movement between Member States in every situation referred to by the measure founded on that basis (see Joined Cases C-465/00, C-138/01 and C-139/01 Österreichischer Rundfunk and Others [2003] ECR I-4989, paragraph 41, and the case-law cited therein). A contrary interpretation could make the limits of the field of application of the directive particularly unsure and uncertain, which would be contrary to its essential objective of approximating the laws, regulations and administrative provisions of the Member States in order to eliminate obstacles to the functioning of the internal market deriving precisely from disparities between national legislations ( Österreichischer Rundfunk and Others , cited above, paragraph 42). Against that background, it would not be appropriate to interpret the expression activity which falls outside the scope of Community law as having a scope which would require it to be determined in each individual case whether the specific activity at issue directly affected freedom of movement between Member States. The activities mentioned by way of example in the first indent of Article 3(2) of Directive 95/46 (in other words, the activities provided for by Titles V and VI of the Treaty on European Union and processing operations concerning public security, defence, State security and activities in areas of criminal law) are, in any event, activities of the State or of State authorities and unrelated to the fields of activity of individuals. It must therefore be considered that the activities mentioned by way of example in the first indent of Article 3(2) of Directive 95/46 are intended to define the scope of the exception provided for there, with the result that that exception applies only to the activities which are expressly listed there or which can be classified in the same category ( ejusdem generis ). Charitable or religious activities such as those carried out by Mrs Lindqvist cannot be considered equivalent to the activities listed in the first indent of Article 3(2) of Directive 95/46 and are thus not covered by that exception. As regards the exception provided for in the second indent of Article 3(2) of Directive 95/46, the 12th recital in the preamble to that directive, which concerns that exception, cites, as examples of the processing of data carried out by a natural person in the exercise of activities which are exclusively personal or domestic, correspondence and the holding of records of addresses. That exception must therefore be interpreted as relating only to activities which are carried out in the course of private or family life of individuals, which is clearly not the case with the processing of personal data consisting in publication on the internet so that those data are made accessible to an indefinite number of people. The answer to the third question must therefore be that processing of personal data such as that described in the reply to the first question is not covered by any of the exceptions in Article 3(2) of Directive 95/46. The fourth question By its fourth question, the referring court seeks to know whether reference to the fact that an individual has injured her foot and is on half-time on medical grounds constitutes personal data concerning health within the meaning of Article 8(1) of Directive 95/46. In the light of the purpose of the directive, the expression data concerning health used in Article 8(1) thereof must be given a wide interpretation so as to include information concerning all aspects, both physical and mental, of the health of an individual. The answer to the fourth question must therefore be that reference to the fact that an individual has injured her foot and is on half-time on medical grounds constitutes personal data concerning health within the meaning of Article 8(1) of Directive 95/46. The fifth question By its fifth question the referring court seeks essentially to know whether there is any transfer [of data] to a third country within the meaning of Article 25 of Directive 95/46 where an individual in a Member State loads personal data onto an internet page which is stored on an internet site on which the page can be consulted and which is hosted by a natural or legal person ( the hosting provider) who is established in that State or in another Member State, thereby making those data accessible to anyone who connects to the internet, including people in a third country. The referring court also asks whether the reply to that question would be the same if no one from the third country had in fact accessed the data or if the server where the page was stored was physically in a third country. Observations submitted to the Court The Commission and the Swedish Government consider that the loading, using a computer, of personal data onto an internet page, so that they become accessible to nationals of third countries, constitutes a transfer of data to third countries within the meaning of Directive 95/46. The answer would be the same if no one from the third country had in fact accessed the data or if the server where it was stored was physically in a third country. The Netherlands Government points out that the term transfer is not defined by Directive 95/46. It takes the view, first, that that term must be understood to refer to the act of intentionally transferring personal data from the territory of a Member State to a third country and, second, that no distinction can be made between the different ways in which data are made accessible to third parties. It concludes that loading personal data onto an internet page using a computer cannot be considered to be a transfer of personal data to a third country within the meaning of Article 25 of Directive 95/46. The United Kingdom Government submits that Article 25 of Directive 95/46 concerns the transfer of data to third countries and not their accessibility from third countries. The term transfer connotes the transmission of personal data from one place and person to another place and person. It is only in the event of such a transfer that Article 25 of Directive 95/46 requires Member States to ensure an adequate level of protection of personal data in a third country. Reply of the Court Directive 95/46 does not define the expression transfer to a third country in Article 25 or any other provision, including Article 2. In order to determine whether loading personal data onto an internet page constitutes a transfer of those data to a third country within the meaning of Article 25 of Directive 95/46 merely because it makes them accessible to people in a third country, it is necessary to take account both of the technical nature of the operations thus carried out and of the purpose and structure of Chapter IV of that directive where Article 25 appears. Information on the internet can be consulted by an indefinite number of people living in many places at almost any time. The ubiquitous nature of that information is a result inter alia of the fact that the technical means used in connection with the internet are relatively simple and becoming less and less expensive. Under the procedures for use of the internet available to individuals like Mrs Lindqvist during the 1990s, the author of a page intended for publication on the internet transmits the data making up that page to his hosting provider. That provider manages the computer infrastructure needed to store those data and connect the server hosting the site to the internet. That allows the subsequent transmission of those data to anyone who connects to the internet and seeks access to it. The computers which constitute that infrastructure may be located, and indeed often are located, in one or more countries other than that where the hosting provider is established, without its clients being aware or being in a position to be aware of it. It appears from the court file that, in order to obtain the information appearing on the internet pages on which Mrs Lindqvist had included information about her colleagues, an internet user would not only have to connect to the internet but also personally carry out the necessary actions to consult those pages. In other words, Mrs Lindqvist's internet pages did not contain the technical means to send that information automatically to people who did not intentionally seek access to those pages. It follows that, in circumstances such as those in the case in the main proceedings, personal data which appear on the computer of a person in a third country, coming from a person who has loaded them onto an internet site, were not directly transferred between those two people but through the computer infrastructure of the hosting provider where the page is stored. It is in that light that it must be examined whether the Community legislature intended, for the purposes of the application of Chapter IV of Directive 95/46, to include within the expression transfer [of data] to a third country within the meaning of Article 25 of that directive activities such as those carried out by Mrs Lindqvist. It must be stressed that the fifth question asked by the referring court concerns only those activities and not those carried out by the hosting providers. Chapter IV of Directive 95/46, in which Article 25 appears, sets up a special regime, with specific rules, intended to allow the Member States to monitor transfers of personal data to third countries. That Chapter sets up a complementary regime to the general regime set up by Chapter II of that directive concerning the lawfulness of processing of personal data. The objective of Chapter IV is defined in the 56th to 60th recitals in the preamble to Directive 95/46, which state inter alia that, although the protection of individuals guaranteed in the Community by that Directive does not stand in the way of transfers of personal data to third countries which ensure an adequate level of protection, the adequacy of such protection must be assessed in the light of all the circumstances surrounding the transfer operation or set of transfer operations. Where a third country does not ensure an adequate level of protection the transfer of personal data to that country must be prohibited. For its part, Article 25 of Directive 95/46 imposes a series of obligations on Member States and on the Commission for the purposes of monitoring transfers of personal data to third countries in the light of the level of protection afforded to such data in each of those countries. In particular, Article 25(4) of Directive 95/46 provides that, where the Commission finds that a third country does not ensure an adequate level of protection, Member States are to take the measures necessary to prevent any transfer of personal data to the third country in question. Chapter IV of Directive 95/46 contains no provision concerning use of the internet. In particular, it does not lay down criteria for deciding whether operations carried out by hosting providers should be deemed to occur in the place of establishment of the service or at its business address or in the place where the computer or computers constituting the service's infrastructure are located. Given, first, the state of development of the internet at the time Directive 95/46 was drawn up and, second, the absence, in Chapter IV, of criteria applicable to use of the internet, one cannot presume that the Community legislature intended the expression transfer [of data] to a third country to cover the loading, by an individual in Mrs Lindqvist's position, of data onto an internet page, even if those data are thereby made accessible to persons in third countries with the technical means to access them. If Article 25 of Directive 95/46 were interpreted to mean that there is transfer [of data] to a third country every time that personal data are loaded onto an internet page, that transfer would necessarily be a transfer to all the third countries where there are the technical means needed to access the internet. The special regime provided for by Chapter IV of the directive would thus necessarily become a regime of general application, as regards operations on the internet. Thus, if the Commission found, pursuant to Article 25(4) of Directive 95/46, that even one third country did not ensure adequate protection, the Member States would be obliged to prevent any personal data being placed on the internet. Accordingly, it must be concluded that Article 25 of Directive 95/46 is to be interpreted as meaning that operations such as those carried out by Mrs Lindqvist do not as such constitute a transfer [of data] to a third country. It is thus unnecessary to investigate whether an individual from a third country has accessed the internet page concerned or whether the server of that hosting service is physically in a third country. The reply to the fifth question must therefore be that there is no transfer [of data] to a third country within the meaning of Article 25 of Directive 95/46 where an individual in a Member State loads personal data onto an internet page which is stored with his hosting provider which is established in that State or in another Member State, thereby making those data accessible to anyone who connects to the internet, including people in a third country. The sixth question By its sixth question the referring court seeks to know whether the provisions of Directive 95/46, in a case such as that in the main proceedings, bring about a restriction which conflicts with the general principles of freedom of expression or other freedoms and rights, which are applicable within the European Union and are enshrined in inter alia Article 10 of the ECHR. Observations submitted to the Court Citing inter alia Case C-274/99 P Connolly v Commission [2001] ECR I-1611, Mrs Lindqvist submits that Directive 95/46 and the PUL, in so far as they lay down requirements of prior consent and prior notification of a supervisory authority and a principle of prohibiting processing of personal data of a sensitive nature, are contrary to the general principle of freedom of expression enshrined in Community law. More particularly, she argues that the definition of processing of personal data wholly or partly by automatic means does not fulfil the criteria of predictability and accuracy. She argues further that merely mentioning a natural person by name, revealing their telephone details and working conditions and giving information about their state of health and hobbies, information which is in the public domain, well-known or trivial, does not constitute a significant breach of the right to respect for private life. Mrs Lindqvist considers that, in any event, the constraints imposed by Directive 95/46 are disproportionate to the objective of protecting the reputation and private life of others. The Swedish Government considers that Directive 95/46 allows the interests at stake to be weighed against each other and freedom of expression and protection of private life to be thereby safeguarded. It adds that only the national court can assess, in the light of the facts of each individual case, whether the restriction on the exercise of the right to freedom of expression entailed by the application of the rules on the protection of the rights of others is proportionate. The Netherlands Government points out that both freedom of expression and the right to respect for private life are among the general principles of law for which the Court ensures respect and that the ECHR does not establish any hierarchy between the various fundamental rights. It therefore considers that the national court must endeavour to balance the various fundamental rights at issue by taking account of the circumstances of the individual case. The United Kingdom Government points out that its proposed reply to the fifth question, set out in paragraph 55 of this judgment, is wholly in accordance with fundamental rights and avoids any disproportionate restriction on freedom of expression. It adds that it is difficult to justify an interpretation which would mean that the publication of personal data in a particular form, that is to say, on an internet page, is subject to far greater restrictions than those applicable to publication in other forms, such as on paper. The Commission also submits that Directive 95/46 does not entail any restriction contrary to the general principle of freedom of expression or other rights and freedoms applicable in the European Union corresponding inter alia to the right provided for in Article 10 of the ECHR. Reply of the Court According to the seventh recital in the preamble to Directive 95/46, the establishment and functioning of the common market are liable to be seriously affected by differences in national rules applicable to the processing of personal data. According to the third recital of that directive the harmonisation of those national rules must seek to ensure not only the free flow of such data between Member States but also the safeguarding of the fundamental rights of individuals. Those objectives may of course be inconsistent with one another. On the one hand, the economic and social integration resulting from the establishment and functioning of the internal market will necessarily lead to a substantial increase in cross-border flows of personal data between all those involved in a private or public capacity in economic and social activity in the Member States, whether businesses or public authorities of the Member States. Those so involved will, to a certain extent, need to have access to personal data to perform their transactions or carry out their tasks within the area without internal frontiers which the internal market constitutes. On the other hand, those affected by the processing of personal data understandably require those data to be effectively protected. The mechanisms allowing those different rights and interests to be balanced are contained, first, in Directive 95/46 itself, in that it provides for rules which determine in what circumstances and to what extent the processing of personal data is lawful and what safeguards must be provided for. Second, they result from the adoption, by the Member States, of national provisions implementing that directive and their application by the national authorities. As regards Directive 95/46 itself, its provisions are necessarily relatively general since it has to be applied to a large number of very different situations. Contrary to Mrs Lindqvist's contentions, the directive quite properly includes rules with a degree of flexibility and, in many instances, leaves to the Member States the task of deciding the details or choosing between options. It is true that, in many respects, the Member States have a margin for manoeuvre in implementing Directive 95/46. However, there is nothing to suggest that the regime it provides for lacks predictability or that its provisions are, as such, contrary to the general principles of Community law and, in particular, to the fundamental rights protected by the Community legal order. Thus, it is, rather, at the stage of the application at national level of the legislation implementing Directive 95/46 in individual cases that a balance must be found between the rights and interests involved. In that context, fundamental rights have a particular importance, as demonstrated by the case in the main proceedings, in which, in essence, Mrs Lindqvist's freedom of expression in her work preparing people for Communion and her freedom to carry out activities contributing to religious life have to be weighed against the protection of the private life of the individuals about whom Mrs Lindqvist has placed data on her internet site. Consequently, it is for the authorities and courts of the Member States not only to interpret their national law in a manner consistent with Directive 95/46 but also to make sure they do not rely on an interpretation of it which would be in conflict with the fundamental rights protected by the Community legal order or with the other general principles of Community law, such as inter alia the principle of proportionality. Whilst it is true that the protection of private life requires the application of effective sanctions against people processing personal data in ways inconsistent with Directive 95/46, such sanctions must always respect the principle of proportionality. That is so a fortiori since the scope of Directive 95/46 is very wide and the obligations of those who process personal data are many and significant. It is for the referring court to take account, in accordance with the principle of proportionality, of all the circumstances of the case before it, in particular the duration of the breach of the rules implementing Directive 95/46 and the importance, for the persons concerned, of the protection of the data disclosed. The answer to the sixth question must therefore be that the provisions of Directive 95/46 do not, in themselves, bring about a restriction which conflicts with the general principles of freedom of expression or other freedoms and rights, which are applicable within the European Union and are enshrined inter alia in Article 10 of the ECHR. It is for the national authorities and courts responsible for applying the national legislation implementing Directive 95/46 to ensure a fair balance between the rights and interests in question, including the fundamental rights protected by the Community legal order. The seventh question By its seventh question, the referring court essentially seeks to know whether it is permissible for the Member States to provide for greater protection for personal data or a wider scope than are required under Directive 95/46. Observations submitted to the Court The Swedish Government states that Directive 95/46 is not confined to fixing minimum conditions for the protection of personal data. Member States are obliged, in the course of implementing that directive, to attain the level of protection dictated by it and are not empowered to provide for greater or less protection. However, account must be taken of the discretion which the Member States have in implementing the directive to lay down in their domestic law the general conditions for the lawfulness of the processing of personal data. The Netherlands Government submits that Directive 95/46 does not preclude Member States from providing for greater protection in certain areas. It is clear, for example, from Article 10, Article 11(1), subparagraph (a) of the first paragraph of Article 14, Article 17(3), Article 18(5) and Article 19(1) of that directive that the Member States may make provision for wider protection. Moreover, the Member States are free to apply the principles of Directive 95/46 also to activities which do not fall within its scope. The Commission submits that Directive 95/46 is based on Article 100a of the Treaty and that, if a Member State wishes to maintain or introduce legislation which derogates from such a harmonising directive, it is obliged to notify the Commission pursuant to Article 95(4) or 95(5) EC. The Commission therefore submits that a Member State cannot make provision for more extensive protection for personal data or a wider scope than are required under the directive. Reply of the Court Directive 95/46 is intended, as appears from the eighth recital in the preamble thereto, to ensure that the level of protection of the rights and freedoms of individuals with regard to the processing of personal data is equivalent in all Member States. The tenth recital adds that the approximation of the national laws applicable in this area must not result in any lessening of the protection they afford but must, on the contrary, seek to ensure a high level of protection in the Community. The harmonisation of those national laws is therefore not limited to minimal harmonisation but amounts to harmonisation which is generally complete. It is upon that view that Directive 95/46 is intended to ensure free movement of personal data while guaranteeing a high level of protection for the rights and interests of the individuals to whom such data relate. It is true that Directive 95/46 allows the Member States a margin for manoeuvre in certain areas and authorises them to maintain or introduce particular rules for specific situations as a large number of its provisions demonstrate. However, such possibilities must be made use of in the manner provided for by Directive 95/46 and in accordance with its objective of maintaining a balance between the free movement of personal data and the protection of private life. On the other hand, nothing prevents a Member State from extending the scope of the national legislation implementing the provisions of Directive 95/46 to areas not included within the scope thereof, provided that no other provision of Community law precludes it. In the light of those considerations, the answer to the seventh question must be that measures taken by the Member States to ensure the protection of personal data must be consistent both with the provisions of Directive 95/46 and with its objective of maintaining a balance between freedom of movement of personal data and the protection of private life. However, nothing prevents a Member State from extending the scope of the national legislation implementing the provisions of Directive 95/46 to areas not included in the scope thereof provided that no other provision of Community law precludes it. Costs The costs incurred by the Swedish, Netherlands and United Kingdom Governments and by the Commission and the EFTA Surveillance Authority, 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. On those grounds, THE COURT, in answer to the questions referred to it by the Göta hovrätt by order of 23 February 2001, hereby rules: 1. The act of referring, on an internet page, to various persons and identifying them by name or by other means, for instance by giving their telephone number or information regarding their working conditions and hobbies, constitutes the processing of personal data wholly or partly by automatic means within the meaning of Article 3(1) of Directive 95/46/EC of the European Parliament and of the Council 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. 2. Such processing of personal data is not covered by any of the exceptions in Article 3(2) of Directive 95/46. 3. Reference to the fact that an individual has injured her foot and is on half-time on medical grounds constitutes personal data concerning health within the meaning of Article 8(1) of Directive 95/46. 4. There is no transfer [of data] to a third country within the meaning of Article 25 of Directive 95/46 where an individual in a Member State loads personal data onto an internet page which is stored on an internet site on which the page can be consulted and which is hosted by a natural or legal person who is established in that State or in another Member State, thereby making those data accessible to anyone who connects to the internet, including people in a third country. 5. The provisions of Directive 95/46 do not, in themselves, bring about a restriction which conflicts with the general principles of freedom of expression or other freedoms and rights, which are applicable within the European Union and are enshrined inter alia in Article 10 of the European Convention for the Protection of Human Rights and Fundamental Freedoms signed at Rome on 4 November 1950. It is for the national authorities and courts responsible for applying the national legislation implementing Directive 95/46 to ensure a fair balance between the rights and interests in question, including the fundamental rights protected by the Community legal order. 6. Measures taken by the Member States to ensure the protection of personal data must be consistent both with the provisions of Directive 95/46 and with its objective of maintaining a balance between freedom of movement of personal data and the protection of private life. However, nothing prevents a Member State from extending the scope of the national legislation implementing the provisions of Directive 95/46 to areas not included in the scope thereof provided that no other provision of Community law precludes it. Jann Timmermans Gulmann Cunha Rodrigues Rosas Edward Puissochet Macken von Bahr Delivered in open court in Luxembourg on 6 November 2003. R. Grass V. Skouris Registrar President 1 – Language of the case: Swedish.

Lady Justice Rafferty: The Respondent faces trial in the Crown Court sitting in Woolwich for conspiracy to escape contrary to s.1(1) of the Criminal Law Act 1977. On 7th October 2013 at the conclusion of the case for the Crown the Judge ruled that he had no case to answer. The Crown confirmed that it would appeal the decision pursuant to s.58 Criminal Justice Act 2003 and gave the appropriate undertaking. Also indicted are Robert Riddell, Stuart Reid, Daniel Morgan, Craig Wright and Samantha Glover. Reid, Wright and Glover also made submissions of no case to answer which were rejected. John Anslow, Paul Cadby, Luke Hazel, Moysha Shepherd and Ryan Powell pleaded guilty at an earlier stage. On 13 August 2011 John Anslow was remanded in custody for alleged drugs offences. On 8 September he was arrested and interviewed for murder but not charged. The case for the Crown was that he arranged with his uncle, David Harrison, that Richard Deakin should be killed. Darryl Dickens was said to be the getaway driver. At Christmas 2011 Stuart Reid sent Anslow a card in which was a coded message and a telephone number. The topic was a future escape. This prelude to the indicted conspiracy was not in issue. On 5 January 2012 Harrison and Dickens were charged with murder. The Crown suggested it is inevitable Anslow, in prison, would quickly have learned of this. He was not then a Category A prisoner but there was evidence he was concerned about possible recategorisation. On 18 January Anslow was charged with murder. The Crown's case is that the index conspiracy was up and running before then. On 15th January a vehicle linked to Shepherd reconnoitred the prison housing Anslow. On 16th January another vehicle similarly linked reconnoitred the Crown Court at Stafford, and on 17th January a route from Birmingham to the home of Stuart Reid. That day, two conspirators changed the mobile telephones each used. For convenience we shall use shorthand, and refer to an individual as using an identified mobile. In each case however the true evidential position is that the handset was in use or was contacted, without proof of its user. On 23rd January 2012 Anslow was taken by force from a prison van en route from HMP Hewell to the Crown Court sitting at Stafford. Three men in a VW Sirocco blocked the path of the van and attacked it with sledge hammers until a handcuffed Anslow escaped. There was strong evidence that Anslow used a concealed mobile phone ("731"), the escape phone, to contact those in the Sirocco so as to identify in which of the vans leaving HMP Hewell he would be. Anslow and the escape team made their getaway in the Sirocco, transferred to a high-performance Mercedes and sped off towards Birmingham. Cellsite evidence suggested that Anslow may have lain low in that area and then in the Liverpool area until further arrangements were made for him to leave for Northern Cyprus. He was returned to the UK by police officers from Northern Cyprus in March 2013. The Crown suggested the Respondent had been one who helped Anslow across Birmingham and that mobile telephone evidence linked him on the day of the escape to Anslow and to Daniel Morgan. The morning after the escape the Respondent ceased using the mobile ("210") attributed to him. The undisputed evidence demonstrates that 210 was active before 1st January 2012 and its last made and answered calls were on 24th January. This is relied upon as significant since conspirators changed their mobiles on 23rd and on 24th January, after the escape. During the period of the indicted conspiracy relevant contact from or to 210 was mainly with mobiles attributed to Morgan and to Hazel. On the day of the escape it was twice in contact with Anslow's 731 escape phone. The first attempted contact with Hazel was on 18th January. He was in prison with Anslow and organised the Sirocco trio who attacked the prison van. Hazel has pleaded guilty to this indictment. Morgan remains before the jury. In reliance on the telephone schedule the Crown suggests he was the third of three in the Sirocco. We turn to a detailed review of the evidence of telephone use. 8th January 2012. At 1949 Morgan rang the Respondent for 4m 25s. At 1955 the Respondent rang Morgan for 4m 9sec. At 2000 the Respondent rang Morgan for 4m 32sec. These three calls together suggest a total of some 13 minutes of conversation. Immediately they were followed at 2004 by a Morgan to Hazel attempted call of 6 seconds which went to voicemail. The inference the Crown invites is that whatever business Morgan had with the Respondent was the same business he had with Hazel. 17th January 2012 On this occasion contact between Morgan and Hazel preceded that between Morgan and the Respondent. At 1841 and at 1846 Hazel tried to ring Morgan. AT 1848 Morgan rang Hazel back, the call lasting 10m 33s. Within a minute, at 1859 Hazel rang Morgan back for 2s. At 1904 Morgan texted Hazel. At 1905 Morgan rang the Respondent for 12s. At 1907 the Respondent rang Morgan for 29 secs. The inference the Crown invites is that whatever business Morgan had with Hazel was the same business he had with the Respondent. 17th January is said also to be significant as the date of the third reconnoitre, the meeting with Stuart Reid and the date upon which two conspirators changed their mobile phones. Additionally, at 2 o'clock in the afternoon, Morgan was in contact with Shepherd. Available to the court and in the jury bundle are the full telephone records of the Respondent's 210 mobile from 1st January 2012. The final activity on 18th was an attempted call from Hazel in prison to the Respondent at 2147, the first attempt by Hazel to contact the Respondent that month. 20th January 2012 At 1906 the Respondent rang Hazel for 4m 25s. At 1911 the Respondent rang Hazel for 4m 48s. Just before these two, Hazel sent a text to and attempted to ring Craig Wright, also in prison. At 1935 Hazel tried to ring Powell for 3s going to voicemail. At 1953 Hazel rang Powell for 18s. At 1957 Powell texted Hazel. At 2005 Hazel texted Shepherd. The inference for which the Crown argues is that in the space of an hour contact occurred or was attempted between Hazel and two conspirators, Shepherd and Powell, and Hazel and two alleged conspirators, Wright and the Respondent. In reliance upon all this the Crown submits that a reasonable jury can infer that the telephone traffic was in furtherance of the conspiracy. 23rd January 2012 The escape was at 0820. Before it, there were some half dozen attempted calls or texts between a mobile in the Sirocco and Anslow's 731 escape phone. During what the Crown describes as this critical period the mobile of Morgan, said to be in the Sirocco, was silent. At 1240 the Respondent rang Morgan for 2m 12s. At 1245 Morgan rang the Respondent for 18s. At 1246 Morgan left an 8s voicemail for Hazel. The inference the Crown invites is that the business between Morgan and the Respondent must be the same as that between Morgan and Hazel, the latter having pleaded guilty to the conspiracy. At 1246 the Respondent left a 1s voicemail on the escape phone and did the same at 1247. The escape phone was active only for twenty-seven hours. It was activated at 1517 the day before the escape and was in play until early evening on the day of the escape. The Crown argues it is inconceivable the escape phone details would have been handed out other than to those trusted as part of the conspiracy. It was certain to have had a highly restricted circle of contacts. One was the Respondent. How, the Crown asks rhetorically, did he come to have the number? It suggests the irresistible inference is that it was passed to him by Morgan in the prior contact between the two. Additionally, after its activation at 1517 on 22nd January, the eve of escape day, for the balance of 22nd there were no calls involving any conspirator. On escape day there were no calls involving any conspirator during the morning. The first call between any alleged conspirator and the Respondent is at 1240 when the Respondent rang Morgan. At 1245 and at 1247 the Respondent left one second voicemails for the escape phone. The inference the Crown invites is that Morgan at 1240 gave to the Respondent the 731 escape phone number. It asks what possible reason would there be for that unless the Respondent were a conspirator? At 1251 Anslow rang Morgan. At 1254, within minutes of the Respondent/Morgan calls and of the attempted calls from the Respondent to the escape phone, Morgan rang the Respondent. At 1256 Anslow rang Morgan. The inference the Crown invites is that Morgan was twice in contact with Anslow and, sandwiched between, Morgan was in contact with the Respondent. The business between Morgan and the Respondent must, it argues, have been the escape. At about lunchtime on 23rd January Anslow was in contact with other conspirators. At 1401 Morgan rang the Respondent for 11m 4s. At 1514 Morgan left Anslow a 2s voicemail. The inference the Crown invites is that Morgan was still involved in the escape and that consequently at 1401 so too was the Respondent. At 1601 Morgan contacted the Sirocco/Mercedes phone. What could this be, asks the Crown, but another act in furtherance of the conspiracy? The cellsite evidence. We can take this briefly. At times relevant to the conspiracy the Crown can show that 210 was in the area of the Respondent's home and then within a few kilometres of Smethwick, where the escape phone was. By 1240 it was near Sigma cars, as was the 921 Mercedes getaway car phone. 1240, it should be remembered, was the time of the first call that day involving Morgan near Shepherd's home and the Respondent. The inference the Crown invites is that Morgan, Anslow and the Respondent were in contact when the Respondent was near Sigma as was the Mercedes in which Anslow must earlier have been. Sigma was an office to which the Respondent would on a social basis from time to time call in and one where he told police he may have been on January 23rd. His Defence Case Statement, not yet in evidence, suggests that he definitely was at Sigma, on 23rd, at teatime and saw Shepherd. The Judge's ruling. Where relevant the ruling read as follows: "The issue and the approach 8) The submissions I have heard can all be categorised as second limb Galbraith submissions. I have had assistance on the correct approach in law including a helpful analysis of the authorities prepared by Mr Forte on behalf of SG. I have in mind the recent reminder from the CACD that "It is essential to focus on the traditional question whether or not there is evidence (taking the prosecution case at its highest) upon which a reasonable jury, properly directed, could infer guilt." Per Hallett LJ in R v Khan [2013] EWCA Crim 1345. No-one has argued against this interpretation of the appropriate test in a case based on circumstantial evidence. (10) It follows that the question for me to decide in relation to each defendant is whether I am satisfied that a reasonable jury would be entitled to infer on one possible view of the evidence that it was sure that the defendant had agreed to play some part in the conspiracy to effect JA's escape from custody…………….. 14) The Respondent: Mr Walking submits in his skeleton argument and in oral submissions that: i) Contact with Daniel Morgan and Luke Hazel is incapable of supporting an inference of criminal contact. ii) Attempts to call JA's number on 23rd January are disputed by the Respondent in interview. They are evidentially insignificant and JA never called back. iii) The Respondent's presence at Sigma Cars on 23 January does not prove anything given the absence of evidence that Sigma Cars played any role in the escape. iv) The 210 phone ceased making calls on 24 January but the prosecution cannot rule out the possibility that the call package had expired that day. v) There is no evidence of what the Respondent's role was or why he was needed to play a part in the conspiracy. The prosecution argue that there is support for the Respondent's involvement in the conspiracy: from his phone contact Daniel Morgan (1 call) and Luke Hazel (2 calls) on 20th January. From contact with Daniel Morgan on 23 January which is followed by 2 attempts to call the JA escape phone 731. The fact that the Respondent ceases use of his210 phone on 24 January. 16) The evidence of involvement before 23 January is, in my view thin in the case of the Respondent. The high point of the prosecution case is the allegation that the Respondent must have been trusted with the number of the escape phone to make the calls at 12.46 and 12.47 on 23rd January, four hours or so after the escape. This is a significant point but I am not satisfied that it can bear the weight required for a reasonable jury to draw the necessary inferences as to the Respondent's involvement in a conspiracy to effect JA's escape. There is an understandable lack of certainty about where the second escape vehicle went on 23 January after the last of the witness sightings. In his case, applying the approach set out above, I am not satisfied that there is a case for him to answer." The Judge had regard to R v Anderson [1985] AC 27 R v Khan [2013] EWCA Crim 1345 G & F v R [2012] EWCA Crim 1756. Nothing turns on them for the purposes of this appeal. The real concern for the Crown is the Judge's conclusion set out in paragraph 15. The Crown is anxious that he appeared to have concentrated on 20th January whereas events on 8th and on 17th are more significant for its case as showing a particular pattern of contact and behaviour albeit to be seen in the context of all other evidence. The Law Section 67 of the Criminal Justice Act 2003 sets out the grounds upon which a terminating ruling can be appealed: "S 67 Reversal of rulings The Court of Appeal may not reverse a ruling on an appeal under this Part unless it is satisfied: (a) that the ruling was wrong in law, (b) that the ruling involved an error of law or principle, or (c) that the ruling was a ruling that it was not reasonable for the judge to have made." The Crown suggests that the ruling involved an error of law and was one it was not reasonable for the judge to have made. For the Respondent Mr Walkling argues that when the Judge wrote: "The evidence of involvement before 23 January is, in my view thin in the case of the Respondent" he was not referring solely to contact on 20th January, but to all evidence of contact before 23rd January. The Crown, Mr Walkling argues, cannot establish that he failed to take into account the more significant phone contact on 8th and 17th January 2012. It is also clear, he contends, that the Judge carefully read parties' written submissions. Both documents make explicit reference to contact on 8th and 17th January. He listened carefully to oral argument in which further mention was made of that contact. He was best placed to consider the strength of the evidence in the context of the case as a whole. His written ruling reveals that he had in mind all the Crown's submissions, repeated to this court, when he came to the reasonable conclusion that the evidence of involvement before 23rd January was "thin". The Crown may not agree, but it is not an unreasonable conclusion. Mr Walkling points out that it is clear the Judge considered the significance of the coincidence of cessation of use of phones and the evidence that the phone was activated on 22nd December 2011. It is mentioned in paras. 14(iv) and 15(iii) of his ruling and is set out within the written submissions to which he referred. At the close of the case for the Crown there was evidence 210 was a "GiffGaff" telephone, sold as a one-month package. The activation date may not be the date the package was purchased, or topped up. The first evidenced call from 210, 24th December 2011, was exactly one month before the telephone ceased activity on 24th January 2012. On the basis of this, Mr Walkling contends, the Judge was reasonably entitled to conclude that "the prosecution cannot rule out the possibility that the call package had expired that day." We can take the Giffgaff point shortly since there is an insurmountable difficulty in the submission. Such mobiles can be topped up, or the period for their use extended. The date upon which 210 was last used tells us little about the expiration of any operational period, and the points is of little force at this stage in proceedings. Discussion and conclusion Mr Burrows candidly accepted that when the Crown replied to four submissions of no case to answer, at short notice and as to all of which he had only hours to prepare, he advanced some arguments in reliance on existing documents. For example, Thirlwall J in the Crown Court sitting at Birmingham had heard an application to dismiss in similar terms and ruled against the Respondent. The Judge was given the Crown's response to that application. Her ruling, later supplied to him, rehearses in more detail than the Judge's ruling the foundations upon which the Crown relied but, like the Crown's response, does not go into the detail we have set out here. It was plain that dialogue between Bench and Bar led to each assuming what the other did not. The Crown assumed that the Judge had in mind an exhaustive exegesis of emerging events, the Judge assumed that the Crown had placed selective emphasis where it chose. All members of this court are familiar with such misunderstandings. Had the Judge had the benefit of the exposition by Mr Burrows as we heard it, he would, we are certain, have ruled against the Respondent. He would have seen the telephone contacts between conspirators and alleged conspirators as powerful evidential bases for the adverse inferences the Crown invited. Additionally, because we had the opportunity to hear that evidence (not challenged in any way, it should be remembered) set against the backdrop of context, we are yet more confident that the emphasis as put before us would have left the Judge in no doubt that there was a case to answer. There was evidence at the close of the Crown's case to found the inferences for which the Crown argued before us and which we have set out chronologically in this judgement. There was evidence to found the suggestion that the Respondent had been trusted with the 731 escape phone number as one of a very small circle of contacts, at a time when the escape was in contemplation and imminent, and that he used his 210 phone to play his part in the emerging conspiracy. There is no doubt he has a case to answer. We allow the appeal. The trial we understand has been continuing before the jury until very recently and there will be no difficulty in its resumption with the Respondent back in the dock.

ORIGINAL JURISDICTION Writ Petition Nos. 829/79, 1104, 200 2655 of 1980. Under article 32 of the Constitution of India . N. Dikshit, S. Markendeya, P. Sinha, M. M. Temai, J. K Nayyar and S. K Bisaria with him for the Petitioners. R Gambhir for the Respondent. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. The petitioners are numberad graziers of Gujarat and Rajasthan, who wander from place to place with their sheep, goats and cattle in search of pasture and foliage. Boundaries of States present numberbarriers to them. After all, to them and to their livestock, it is a question of survival. In their wanderings they often pass through the State of Madhya Pradesh en route some times to Uttar Pradesh and some times to Maharashtra. This happens particularly in times of drought in Gujarat and Rajasthan The powers that be in the State of Madhya Pradesh became apprehensive that uninhibited passage of large herds of these animals through Madhya Pradesh may lead to large scale devastation of their forest wealth. So they hit upon a plan to prevent foreign cattle from browsing in Madhya Pradesh forests. For the moment, it was forgotten that India is one companyntry and numberIndian is a foreigner in any of the companystituent States of India. The plan was this The Indian Forest Act 1927 enabled the State Government to make rules to regulate the cutting of grass and pasturing of cattle in protected forests Sec. 32 i and, generally, to carry out the provisions of the Act Sec. 76 . We may numbere here cattle as defined by s. 2 i includes buffaloes, sheep, goats and many other specie of browsing animals. We may also numbere that we are companycerned in this case with protected forests only and number reserved forests. Rules had been made earlier by the Madhya Pradesh Government in 1974 called the Madhya Pradesh Grazing Rates Rules, 1974 by which provision was made A for grazing licences, transit grazing licences, grazing rates and other subjects. Rule 4 prohibited grazing in closed companypes, plantation area and such other areas as were declared as closed for grazing by the Divisional Forest officer. Rule 3 provided for the issuance of licences for grazing in particular grazing units, each forest range being treated as a grazing unit till the companystitution of such grazing units. Rule S provided for the issuance of transit licences for transit of cattle through Government forests in the State of Madhya Pradesh, so that cattle in transit may number graze companytinuously for more than a month in a particular grazing unit. Rule 6 prescribed grazing rates, companymercial and transit. For buffaloes it was Rs. 6 per head per year while for goats and sheep, it was Re. 1 per head per year whether it was for companymercial or transit purposes. Rule 7 prescribed grazing rates for foreign cattle of adjoining States. Whether the cattle grazed in the forest or passed through the forest, Grazing was permitted at the rate of Rs. 10 per head per year in the case of buffaloes and Rs. 2 per head per year in the case of goats and sheep. In 1979, the rules made in 1974 were superseded and fresh rules were made. They are the rules number in force. Rule 2 5 bans grazing in reserved forests. Rule 3 provides for the issue of grazing licences in grazing units so companystituted. Until grazing units are companystituted, each forest range is to be treated as a separate grazing unit. Rule 3 2 provides for the levy of grazing charges at rates to be numberified from time to time. Rule 4 prohibits grazing in closed companypes, plantation areas and other areas which are declared as closed for grazing by the Divisional Forest officer. Rule 5 provides for transit grazing licences, on payment of grazing charges, for the transit of cattle through Government forests where the owners of the cattle are residents of Madhya Pradesh. Cattle in transit, however, are number allowed to graze companytinuously in the same grazing unit for more than 30 days. Rule 6 enables the Government to numberify from time to time the rates of grazing charges and transit grazing charges payable by residents of Madhya Pradesh. Rule 7 provides for the levy of grazing rates for foreign cattle of adjoining States. The rule enables the State Government to prohibit, restrict, or in their discretion to grant owners of cattle residing outside the State of Madhya Pradesh grazing or transit grazing facilities for their cattle on payment of charges to be numberified from time to time. Rule 7 2 further empowers the Government to specify the specific grazing areas, the - points of entry and exit of the route to be followed by the cattle, the period during which grazing or transit grazing should be companypleted, etc. On June 28, 1979, two numberifications one, under rule 6 and the other, under rule 7 were issued numberifying the rates of charges for the issue of grazing and transit grazing licences. In respect of cattle belonging to residents of Madhya Pradesh, the grazing rate is Re. 1 per year for each animal in the case of goats and sheep. Nothing is to be charged in the case of buffaloes. The numberification issued under rule 7 prescribes the routes to be followed by the cattle of Rajasthan and Gujarat while in transit through the State of Madhya Pradesh. It also stipulates that the owners of cattle must take the cattle through the State of Madhya Pradesh within a period of 45 days after the issue of licences. The prescribed grazing rates are Rs. 10 per animal in the case of buffaloes and Rs. 5 per animal in the case of sheep and goats. Apparently the Government of Madhya Pradesh wants to inhibit the influx of cattle of other States described in the rules as foreign cattle by the method of charging higher grazing rates in their case than in the case of cattle belonging to the residents of Madhya Pradesh, This levy of higher rates, the prescription of the route to be followed by foreign cattle while in transit through Madhya Pradesh and the stipulation that the cattle must leave Madhya Pradesh in 45 days are questioned in these writ petitions. It is companytended that the petitioners Fundamental Rights under Art. 14 and Art. 19 e f and g and the right under Art. 301 are companytravened. On the other hand, it is companytended on behalf of State of Madhya Pradesh that the rules prescribing grazing rates for foreign cattle the route to be followed by foreign cattle while in transit through Madhya Pradesh and the period for which foreign cattle may remain within the boundaries of the State of Madhya Pradesh are made to regulate the influx and passage of foreign cattle into and through Madhya Pradesh with a view to prevent devastation and to protect the forest wealth of State. We are unable to see any rational basis for the distinction made between owners of cattle belonging to Madhya Pradesh and owners of cattle belonging to other States described as owners of foreign cattle and the levy of prohibited grazing rates on owners of the so-called foreign cattle. Forests of Madhya Pradesh are number grazing grounds reserved for cattle belonging to residents of Madhya Pradesh only even as the towns and villages of Madhya Pradesh cannot be reserved for the residents of the original residents of Madhya Pradesh only. Accidents of birth and geography cannot A furnish the credentials for such discrimination and authorise prejudicial treatment in matters of this nature. We do number say that geographical classification is never permissible. For example, a preference given by a State to its residents ill the matter of admission to educational institutions maintained by the State from its revenues may be well justified. But we are unable to see any such justification for the levy of virtually penal grazing charges in the case of owners of cattle belonging to other States. The only attempt at justification is that the influx of foreign cattle is resulting in the destruction of the forest wealth of the State. It is difficult to understand this justification. If cattle belonging to residents of Madhya Pradesh are allowed to graze, will it number lead to the same damage as by the cattle belonging to persons of other States ? Surely, it cannot be that the Madhya Pradesh cattle are less destructive than the cattle belonging to persons of other States. Further if the object was to prevent all cattle from grazing in protected forests, such grazing companyld have been banned as in the case of reserved forests. Even in the case of the so-called foreign cattle, cattle belonging to owners who are rich, may yet have their cattle graze in the Madhya Pradesh forests but number cattle belonging to poorer graziers. Further, subject to reasonable restrictions which may be imposed in the interests of the general public, a citizen has the right under our Constitution to move freely throughout the territory of India, to reside and settle in any part of the territory of India and to practise any profession, or to carry on any occupation trade or business. Graziers, be they of Madhya Pradesh, Gujarat or Rajashthan, therefore, have the right to pass and repass through the State of Madhya Pradesh with their cattle in the pursuit of their occupation. The right is, of companyrse, subject to reasonable restrictions in the interests of the general public. We are enable to discover any reasonable basis for classifying graziers into those belonging to Madhya Pradesh and those belonging to other States number are we able to discover any acceptable reason behind the restriction imposed on graziers of other States by the heavier charge made on them. We are companyvinced that their is numberjustification whatsoever for charging higher grazing rates for cattle belonging to persons of other States. In regard to the prescription of the route along which the cattle have to be taken while in transit, however we find numberhing wrong with it, since the object is obviously to prevent cattle straying and causing indiscriminate damage to forests. We are, however, unable to justify the ceiling of 45 days in which cattle must pass through the State of Madhya Pradesh. In the case of cattle belonging to residents of Madhya Pradesh, the grazing rate is levied for a period of one year. There is numberreason why the charge A should be levied for 45 days in the case of persons belonging to other States. The apprehension that cattle, if allowed to graze in the same place for a long time, may destroy the pasture and foliage altogether is taken care of by the other rules which prescribe that the cattle may number graze in the same grazing unit for more than a month. In the circumstances, we quash the levy of higher grazing rates in the case of cattle belonging to persons of States other than Madhya Pradesh and direct the respondents to levy the same rates as they do in the case of cattle belonging to residents of Madhya Pradesh. The limit of stay of 45 days is also declared unconstitutional. The writ petitions are allowed accordingly. The petitioners will get their companyts.

Judgment of the Court of First Instance (First Chamber) of 27 September 2002. - Tideland Signal Ltd v Commission of the European Communities. - Public procurement - Rejection of tender - Failure to exercise power to seek clarification of tender - Action for annulment - Expedited procedure. - Case T-211/02. European Court reports 2002 Page II-03781 Summary Parties Grounds Decision on costs Operative part Keywords 1. Public procurement in the European Communities - Conclusion of a contract following an invitation to tender - Discretion of the institutions - Judicial review - Limits 2. Public procurement in the European Communities - Contract following an invitation to tender - Obligation to reject ambiguous tenders - Scope - Evaluation committee empowered to contact a tenderer after opening the tender procedure - Power to be exercised observing the principles of good administration, equality and proportionality 3. Actions for annulment - Judgment granting annulment - Effects - Annulment of a Commission decision rejecting a tender submitted by a tenderer in a public procurement procedure - Whether the institution concerned is obliged to re-examine decisions similar to the measure annulled but uncontested in judicial proceedings - No such obligation (Art. 233 EC) 4. Actions for annulment - Withdrawal of the contested measure while the proceedings are pending before the Court - Applicant retaining an exceptional interest in annulment - Whether the action is rendered devoid of purpose - No (Art. 230 EC) Summary $$1. The Commission enjoys a broad margin of assessment with regard to the factors to be taken into account for the purpose of deciding to award a contract following an invitation to tender. Review by the Community Courts is therefore limited to checking compliance with the applicable procedural rules and the duty to give reasons, the correctness of the facts found and that there is no manifest error of assessment or misuse of powers. ( see para. 33 ) 2. It is essential, in the interests of legal certainty, that the authority awarding a contract in a tender procedure should be able to ascertain precisely what tenders mean and, in particular, whether they comply with the conditions set out in the call for tenders. Thus, where a tender is ambiguous and it is not possible to establish what it actually means quickly and efficiently, the contracting institution has no choice but to reject that tender. However, where the evaluation committee is empowered, in accordance with the instructions to tenderers, to seek clarification of tenders submitted, the Community law principle of good administration imposes an obligation to exercise that power in circumstances where it is both practically possible and necessary to obtain such clarification. Thus, while the evaluation committees are not obliged to seek clarification in every case where a tender is ambiguously drafted, they have a duty to exercise a certain degree of care when considering the content of each tender, with the result that, where the terms of a tender itself and the surrounding circumstances indicate that the ambiguity probably has a simple explanation and is capable of being easily resolved, it is, in principle, contrary to the requirements of good administration for an evaluation committee to reject the tender without exercising its power to seek clarification. A decision to reject a tender in such circumstances is liable to be vitiated by a manifest error of assessment on the part of the institution in the exercise of that power. It would, moreover, be contrary to the principle of equality for an evaluation committee to enjoy an unfettered discretion to seek or not to seek clarification of an individual tender regardless of objective considerations and free from judicial supervision. In addition, the principle of equality does not preclude an evaluation committee from allowing tenderers to clarify any ambiguities in their tenders, since the instructions to tenderers expressly provide for requests for such clarification and the evaluation committee is obliged to treat all tenderers in a similar manner with regard to the exercise of this power. Furthermore, the principle of proportionality requires that measures adopted by Community institutions do not exceed the limits of what is appropriate and necessary in order to attain the objectives pursued and, where there is a choice between several appropriate measures, recourse must be had to the least onerous. ( see paras 34-39 ) 3. Under Article 233 EC, it is for the institution whose act has been declared void to take the necessary measures to comply with the judgment annulling that act. Those measures involve, inter alia, the removal of the effects of the illegal conduct found in the judgment annulling the act, and the institution is thus required to take adequate steps to restore the applicant to its original position. However, the judgment annulling the act cannot entail the annulment of other acts not challenged before the Community Courts but in respect of which it may be claimed that they are vitiated by the same illegality. Consequently, the argument that annulment of the decision to reject a tender submitted by a tenderer in a public procurement procedure might affect the situation of other tenderers whose offers have likewise been rejected can in no way justify dismissal of the action brought by the first tenderer. ( see para. 44 ) 4. An application for annulment may, exceptionally, not become devoid of purpose despite the withdrawal of the act whose annulment is sought if the applicant nevertheless retains a sufficient interest in obtaining a judgment formally annulling it. ( see para. 48 ) Parties In Case T-211/02, Tideland Signal Limited, whose registered office is in Redhill, Surrey (United Kingdom), represented by C. Thomas and C. Kennedy-Loest, Solicitors, applicant, v Commission of the European Communities, represented by J. Forman, acting as Agent, with an address for service in Luxembourg, defendant, APPLICATION for annulment of the Commission decision of 17 June 2002 rejecting the applicant's tender in procurement procedure EuropeAid/112336/C/S/WW - TACIS - (Re-tender), THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (First Chamber), composed of: B. Vesterdorf, President, N.J. Forwood and H. Legal, Judges, Registrar: J. Plingers, Administrator, having regard to the written procedure and further to the hearing on 17 September 2002, gives the following Judgment Grounds Facts and procedure 1 On 27 February 2002, the Commission issued an Invitation to Tender in TACIS project number EuropeAid/112336/C/S/WW (Re-tender) [s]upply of aids to navigation equipment to the ports of Aktau (Kazakhstan), Baku (Azerbaijan) and Turkmenbashi (Turkmenistan). The same project had previously been put out to tender in 2001, but that original procedure had subsequently been cancelled. The re-tender dossier specified at section 8 of the Instructions to Tenderers that the tenderers shall remain bound by their tenders for a period of 90 days from the deadline for the submission of tenders (29 April 2002). That period expired on 28 July 2002. 2 On 25 April 2002, the applicant submitted a tender for Lot 1 of the project. In accordance with the Instructions to Tenderers, the applicant's accompanying letter of 25 April 2002 (section 3 of the Tender Submission Form) stated that [t]his tender is valid for a period of 90 days from the final date for submission of tenders, i.e. until 28/07/02. It further indicated at section 4 of the Tender Submission Form that [t]his tender is subject to acceptance within the validity period stipulated in [section] 8 of the Instructions to Tenderers. 3 On 7 May 2002 the Commission issued a notice of amendment entitled Addendum No 1 to Tender Dossier (hereinafter the Addendum) by which it modified the description of one of the lots (Item 4.2.2 of Lot 1) and announced its decision to allow extra time for the submission of tenders so that interested parties might, if necessary, amend their offers and resubmit new tenders by 11 June 2002. Tenders received by the original deadline, including that of the applicant, were returned to tenderers unopened. According to the applicant, since it had no need to modify the relevant part of Lot 1, it resubmitted on 10 June 2002 the very same tender documents including the elements required by the Tender Submission Form and, in particular, the letter of 25 April 2002 containing the sentence quoted in the previous paragraph. 4 At its Tender Opening Session on 17 June 2002, the Commission's Evaluation Committee rejected the applicant's bid. According to the part of the Tender Opening Report relating to the applicant's tender, the reason for rejection was that: While checking whether the tender submission form, the declarations and the tender guarantee had been duly completed/submitted, the chairperson noted that the validity of the offer was not reflecting the requested 90 days from the date of the submission of the tender. 5 On 28 June 2002, the applicant inquired as to the outcome of the tender procedure by telephone and was informed that its tender had been rejected. On the same date, the Commission also sent to the applicant by fax a copy of the Tender Opening Report. 6 On 1 July 2002, the applicant contacted the Commission by Email stating that it wished to appeal against the rejection of its tender and asking for information about the relevant appeal procedure. The Commission responded that the applicant's tender had been rejected on the ground that its validity was found to be inadequate with respect to the Commission's requirements because: Section 8, paragraph 1 of the Instructions to Tenderers states that: "[t]enderers shall remain bound by their tenders for 90 days from the deadline for submission of tenders". Given as a fact that the deadline was 11 June 2002 and that in section 5, paragraph 3 of your Tender Submission Form you [wrote] that: "[t]his tender is valid for a period of 90 days from the deadline for the submission of tenders, i.e. until 28.07.02", the Evaluation Committee was, unfortunately, forced to reject your bid. 7 By letter dated 5 July 2002, the applicant formally requested that the Commission reinstate it in the tender process and asked for an assurance that the Commission would not take any further steps in the tender process pending the resolution of its situation. 8 By letter of 10 July 2002, the Commission replied to the applicant: Thank you for your inquiry and remarks concerning this evaluation procedure which we will take into account. As the evaluation is not yet finalised, we are not in a position to respond to your observations, but will revert to you in due course. 9 By an application lodged with the Registry of the Court of First Instance on 15 July 2002, the applicant brought the present proceedings. By two separate applications lodged on the same day the applicant also requested, first, the adoption of both an immediate order and subsequently a final order for interim measures and, second, an expedited procedure in the present case. 10 On 16 July 2002, the President of the Court of First Instance granted the request for the immediate adoption of interim measures. The operative part of that order was worded as follows: 1. The Commission shall alternatively: - adopt all the necessary measures to suspend the award of the procurement procedure for the supply of aids to navigation equipment to the ports of Aktau (Kazakhstan), Baku (Azerbaijan) and Turkmenbashi (Turkmenistan), referred as EuropeAid/112336/C/S/WW - TACIS - (Re-tender), until the date of the final order in these interlocutory proceedings, or - evaluate the tender submitted by Tideland Signal Limited in the above mentioned procurement procedure and allow the said Tideland Signal Limited to participate fully in that procedure in the same way and on the same basis as all the tenderers, until the date of the final order in these interlocutory proceedings. 2. Costs are reserved. 11 Subsequent to the notification of that order, the Commission informed the Court that an award letter had already been sent to another tenderer, Pintsch Bamag A+V, in respect of Lot 1 of the project on 9 July 2002. However, the Commission had subsequently informed that undertaking that the suspension of the award of the contract following that order made it impossible for any further steps to be taken as far as the actual signature of the contract was concerned. 12 Having heard the Commission, the Court of First Instance (First Chamber) decided, on 1 August 2002, to grant an expedited procedure in the present case under Article 76a of its Rules of Procedure. 13 Upon hearing the report of the JudgeRapporteur, the Court of First Instance (First Chamber) decided to open the oral procedure and requested that the Commission produce certain documents referred to in its defence. The Commission complied with that request. 14 The parties presented oral argument and answered questions put to them by the Court at the hearing in open court on 17 September 2002. At the end of the hearing an informal meeting was held and the Commission was asked to indicate by 19 September whether a settlement of the case was possible on the basis of its withdrawal of the decision to reject the applicant's tender. An answer having been provided within the deadline, the Court then requested a further clarification of that decision's status on 23 September 2002 which was provided on the same day. 15 On 24 September 2002, the Court asked both parties to make observations on the question whether the application for annulment had become devoid of purpose. In their observations, lodged the same day, the Commission submitted that the application was now devoid of purpose but the applicant claimed that it was still necessary for the Court to give judgment particularly in order to settle the question whether the decision to reject its tender had been lawful and to ensure its complete disappearance from the Community legal order. Forms of order sought 16 The applicant claims that the Court should: - annul the Commission decision of 17 June 2002 rejecting the tender submitted by Tideland Signal Limited in tender procedure for EuropeAid/112336/C/S/WW - TACIS - (Re-tender); - order the Commission to pay the costs incurred by the applicant. 17 The Commission claims that the Court should: - dismiss the application; - order the applicant to pay the costs. Substance 18 The applicant raises two pleas in law. By its first plea the applicant claims that the Commission decision of 17 June 2002 rejecting its tender is unlawful because it is based on an erroneous determination that the tender was valid only until 28 July 2002, and not for 90 days from 11 June 2002 as required by section 8.1 of the Instructions to Tenderers. By its second plea it alleges that the said decision to reject its tender is illegal because, by failing to seek clarification of the period of validity of the tender, the Commission infringed section 19.5 of the Instructions to Tenderers, the duty of care and the principle of proportionality. 19 The Court will proceed to examine the second plea first. Arguments of the parties 20 The applicant considers that even if the Court does not agree that its tender was clearly intended to be valid for 90 days from the revised 11 June 2002 deadline for the submission of tenders, the wording of the tender documentation in conjunction with the surrounding circumstances should at the very least have led the Evaluation Committee to exercise its power to seek clarification under section 19.5 of the Instructions to Tenderers which states: In the interests of transparency and equal treatment and without being able to modify their tenders, Tenderers may be required, at the sole written request of the evaluation committee, to provide clarifications within 24 hours. Any such request for clarification must not seek the correction of formal errors or major restrictions affecting performance of the contract or distorting competition. 21 Moreover, the applicant maintains that the Commission is bound by a duty of care when organising procurement procedures, just as it does in other contexts such as the examination of State aid notifications. According to the applicant, the Commission's Evaluation Committee failed to exercise due diligence when it rejected the applicant's tender without making use of its power to ask for clarification of the period of validity of that tender. 22 Similarly, the Evaluation Committee acted disproportionately by rejecting the applicant's tender because of the view it took as to the duration of the validity of the tender when it could instead have exercised its power to seek clarification. This course of action would have avoided any risk that the applicant would be incorrectly excluded from the tendering process, without causing any significant delay in that process. 23 The Commission first reiterates that there was no uncertainty regarding the meaning of the expression until 28.07.02. With regard to the applicant's argument that there may have been a certain suspicion as to the correctness of that date, the institution further points out that is an open question when a suspicion has arisen in a particular case such as would oblige the Commission to accept a date other than that unambiguously put forward by a tenderer. 24 More specifically as to the Instructions to Tenderers, which constitute an integral part of the conditions applicable to all tenders, the applicant's interpretation of section 19.5 is rejected by the Commission. Firstly, it points out that, under that provision, tenderers may at the sole written request of the Evaluation Committee be required ... to provide clarifications within 24 hours. Moreover, in exercising the discretion which it thus enjoys, the Evaluation Committee is to consider the interests of transparency and equal treatment as between all the companies which have submitted tenders. It is also expressly stated that, while tenderers may be required to provide clarifications, this is without being able to modify their tenders and that [a]ny such request for clarification must not seek the correction of formal errors .... 25 The Commission argues that the issue which the applicant claims should have been clarified is of precisely the kind which is expressly excluded from the remit of the Evaluation Committee. Indeed, according to the applicant's own pleading, its tender contains a formal error, in respect of one of the basic tender conditions, which cannot be corrected. 26 Furthermore, the Commission dismisses the allegation that it has failed to exercise due diligence in rejecting the applicant's tender without seeking clarification. The Commission points out that it is in fact an error which the applicant itself now claims to have made which caused the applicant's tender to be rejected. 27 The Commission points out that tender procedures, including those applying to the TACIS Regulation, are the subject of detailed and precise conditions, the ongoing and strict respect of which represents a sine qua non for admission to any tender by analogy, in particular, with the position in respect of competitions for the recruitment of Community officials (Case T-54/91 Antunes v Parliament [1992] ECR II-1739, in particular, paragraph 40, and the order in Case C-435/98 P Jouhki v Commission [2000] ECR I-2229, in particular, paragraph 35). Moreover, economic operators will be fully aware of these conditions when they participate in Community tendering. The Commission points out that the tender submitted in respect of the very same project by the applicant had previously been rejected in 2001 and that the applicant should therefore have been especially vigilant when it submitted its tender on this occasion. In particular, it should not have simply resubmitted the same documents after the Addendum was issued and its tender documents were returned to it, without even checking the dates, assuming that is what actually happened as the applicant claims. 28 The Commission argues that the date at issue regarding the extent of validity of the offer is of fundamental importance, not only for the contracting authority, but for each of the individual tenderers. The former must know with certainty when each offer expires and ensure that all participants enjoy the same opportunity to take into account all possible relevant factors for the same period of time. Essential tender conditions, such as the period of validity for tenders, must therefore be unambiguous and must not be subject to interpretation. 29 In particular, it would be unacceptable, according to the Commission, for reasons of transparency, consistency and equality, for individual tenderers to be able to enter into a dialogue with the contracting authority in order to have it reconsider, on a bilateral basis, their individual offers. In particular, it is therefore improper for the Commission, as contracting authority, to contact a particular tenderer so that the latter could set its tender in order, except in respect of certain specific issues where this is expressly permitted. Indeed, such an approach would fly in the face of a system which is based on the fundamental principle of equality of treatment between all tenderers (Case C-243/89 Commission v Denmark [1993] ECR I3353, paragraph 37, and Case C-87/94 Commission v Belgium [1996] ECR I-2043, paragraph 70; also Opinion of Advocate General Stix-Hackl in Case C-57/01 Makedoniko Metro and Michaniki v Dimossio [2003] ECR I-1091, paragraph 66). The Commission also points out, in this regard, that such contacts would impose on it a heavy workload, since in 2001, for the TACIS Regulation alone, Directorate A of Commission DG EuropeAid Cooperation Office, dealt with some 240 contracts. 30 In this context, the Commission observes that the applicant's conduct in contacting both the Chairperson and the Secretary of the Evaluation Committee might merit examination under section 19.6 of the Instructions to Tenderers according to which [a]ny attempt by a tenderer to influence the Evaluation Committee in the process of examination, clarification, evaluation and comparison of tenders, to obtain information on how the procedure is progressing or to influence the Contracting Authority in its decision concerning the award of the contract shall result in the immediate rejection of its tender. 31 The Commission also points out that, in the present case, five other tenderers were excluded by the Evaluation Committee at the Opening Session following a variety of errors on their part and that to accept the arguments of the applicant would, at the very least, call into question the situation of those other tenderers. More generally, it contends that the precedent created by a judgment in the applicant's favour in the present case would oblige the Commission to justify why it had followed its own rules whenever a decision it had taken in accordance with those rules was queried by one or more of the unsuccessful tenderers. 32 Finally, in response to the applicant's allegation that it acted disproportionately, the Commission reiterates that the alleged existence of a suspicion as regards the offer's validity is irrelevant in view of the clarity with which the timelimit at issue was set out in the tender and the strictness of the rules governing tender procedures. Findings of the Court 33 The Court recalls that the Commission enjoys a broad margin of assessment with regard to the factors to be taken into account for the purpose of deciding to award a contract following an invitation to tender. Review by the Community courts is therefore limited to checking compliance with the applicable procedural rules and the duty to give reasons, the correctness of the facts found and that there is no manifest error of assessment or misuse of powers (Case T-145/98 ADT Projekt v Commission [2000] ECR II-387, paragraph 147). 34 Moreover, it is essential, in the interests of legal certainty, that the Commission should be able to ascertain precisely what a tender offer means and, in particular, whether it complies with the conditions set out in the call for tenders. Thus, where a tender is ambiguous and the Commission does not have the possibility to establish what it actually means quickly and efficiently, the institution has no choice but to reject that tender. 35 However, section 19.5 of the Instructions to Tenderers issued in the present case expressly empowered the Commission's Evaluation Committee to seek clarification of tenders submitted within 24 hours subject to the condition that any such clarification must not seek the correction of formal errors or major restrictions affecting performance of the contract or distorting competition. The possibility of seeking such clarification, as a general practice, is also confirmed at section 4.3.9.4 of the document entitled Practical Guide to EC external aid contract procedures, produced by the Commission at the hearing. The issue to be resolved is therefore whether or not the Evaluation Committee acted legally in deciding not to make use of that possibility in respect of the period of validity of the applicant's tender. 36 As to the Commission's contention that the applicant's tender contained a formal error, because its validity was unambiguously and expressly limited to 28 July 2002, and that no request for clarification under section 19.5 of the Instructions to Tenderers was therefore necessary or indeed permissible, the Court finds as a fact that the statement on which the Commission relies in this regard, quoted at paragraph 2 above, was ambiguous with regard to the period for which the tender remained valid. It follows that the statement in question did not necessarily constitute a formal error, but rather gave rise to an ambiguity which might or might not have revealed the existence of such an error, depending on the way that ambiguity was resolved, and in respect of which the Evaluation Committee had power to seek clarification. In the present case, it was therefore only if, after clarification, the tender's validity turned out to be limited to 28 July 2002 that it could have been said to contain a formal error. 37 In response to the Commission's argument that its Evaluation Committee was nevertheless under no obligation to seek clarification from the applicant, the Court holds that the power set out in section 19.5 of the Instructions to Tenderers must, notably in accordance with the Community law principle of good administration, be accompanied by an obligation to exercise that power in circumstances where clarification of a tender is clearly both practically possible and necessary (see, by analogy, Cases T-22/99 Rose v Commission [2000] ECR-SC I-A-27 and II-115, paragraph 56, T-182/99 Carvelis v Parliament [2001] ECR-SC I-A-13 and II-523, paragraphs 32 to 34; see also, more generally, Case T-231/97 New Europe Consulting and Brown v Commission [1999] ECR II-2403, paragraph 42, and Article 41 of the Charter of fundamental rights of the European Union, OJ 2000 C 364, p. 1, proclaimed in Nice on 7 December 2000). While the Commission's evaluation committees are not obliged to seek clarification in every case where a tender is ambiguously drafted, they have a duty to exercise a certain degree of care when considering the content of each tender. In cases where the terms of a tender itself and the surrounding circumstances known to the Commission indicate that the ambiguity probably has a simple explanation and is capable of being easily resolved, then, in principle, it is contrary to the requirements of good administration for an evaluation committee to reject the tender without exercising its power to seek clarification. A decision to reject a tender in such circumstances is liable to be vitiated by a manifest error of assessment on the part of the institution in the exercise of that power. 38 It would, moreover, be contrary to the principle of equality, to which section 19.5 of the Instructions to Tenderers in the present case makes reference, for an evaluation committee to enjoy an unfettered discretion to seek or not to seek clarification of an individual tender regardless of objective considerations and free from judicial supervision (see, by analogy, Joined Cases T-112/96 and T-115/96 Séché v Commission [1999] ECR-SC I-A-115 and II-623, paragraph 127). Moreover, contrary to the Commission's argument, the principle of equality did not preclude the Evaluation Committee from allowing tenderers to clarify any ambiguities in their tenders, since section 19.5 made express provision for such clarification to be sought and the Evaluation Committee was obliged to treat all tenderers in a similar manner with regard to the exercise of this power. 39 It is also relevant to recall, in the present context, that the principle of proportionality requires that measures adopted by Community institutions do not exceed the limits of what is appropriate and necessary in order to attain the objectives pursued and that where there is a choice between several appropriate measures recourse must be had to the least onerous (see, for example, Case C-157/96 National Farmers' Union and Others [1998] ECR I-2211, paragraph 60). 40 In the present case, the Court finds as a fact that the applicant did indeed, as it claims, simply resubmit its original tender documents on 10 June 2002, without modification, on the basis that the modification to Item 4.2.2 of Lot 1 resulting from the Addendum did not necessitate any change to the terms of its tender. 41 Furthermore, given that the date of 28.07.02 corresponded to the 90 day period for which tenders were required to remain valid under the initial call for tenders of 27 February 2002, the Court considers that the Evaluation Committee should have realised that the applicant was probably not intending to make its tender subject to a different period of validity than that required by section 8.1, but had probably omitted by an oversight to modify that date when it resubmitted its tender following the Addendum. Not only did the applicant's tender documentation submitted on 10 June 2002 state in two other places that the applicant's tender remained valid for the requisite period of 90 days, namely in the letter of 25 April 2002 itself where the letter states, directly above the signature, that [t]his tender is subject to acceptance within the validity period stipulated in [section] 8 of the Instructions to tenderers and in the Terms and Conditions attached to the tender which state [v]alidity of offer: 90 days, but that same letter also stated that the applicant accept[ed] without reserve or restriction the entire contents of the tender dossier for the procedure referred to above. 42 In those circumstances, the principle of good administration required the Evaluation Committee to resolve the resulting ambiguity by seeking clarification of the period for validity of the applicant's tender. 43 In addition, as regards the principle of proportionality, the Court finds that in the present case the Evaluation Committee, faced with the applicant's ambiguous tender, had a choice between two courses of action, either of which would have produced the legal certainty referred to at paragraph 34 above, namely to reject the tender outright or to seek clarification from the applicant. Given the likelihood, noted at paragraph 41 above, that the tender was indeed intended to remain valid for 90 days from 11 June 2002 until 9 September 2002 as required by section 8.1 of the Instructions to Tenderers and the fact that the applicant would have been obliged to provide within 24 hours any clarification sought so that the tender procedure as a whole would have suffered only minimal disruption and delay, the Court holds that the Evaluation Committee's decision to reject the tender without seeking clarification of its intended period of validity was clearly disproportionate and thus vitiated by a manifest error of assessment. 44 As to the Commission's argument that the situation of other tenderers whose offers were rejected might be affected by the annulment of the decision to reject the applicant's tenders, that circumstance can in no way justify rejection of the present application. Under Article 233 EC, it is for the institution whose act has been declared void to take the necessary measures to comply with the judgment. Those measures involve, inter alia, the removal of the effects of the illegal conduct found in the judgment annulling the act, and the institution is thus required to take adequate steps to restore the applicant to its original position (see, for example, the judgments in Case 22/70 Commission v Council [1971] ECR 263, paragraphs 59 and 60, and in Joined Cases T-481/93 and T-484/93 Exporteurs in Levende Varkens and Others v Commission [1995] ECR II-2941, paragraph 47). However, the judgment annulling the act cannot entail the annulment of other acts not challenged before the Community courts but which may be alleged to be vitiated by a similar illegality (see Case C-310/97 P Commission v AssiDomän Kraft Products and Others [1999] ECR I-5363, paragraph 55). 45 As to the Commission's allegation that the applicant's conduct after the rejection of its tender violated section 19.6 of the Instructions to Tenderers, it is sufficient to state that even were it to be founded in law and in fact, this allegation can have no bearing on the present case since it cannot affect the legality of the decision annulment of which is sought. 46 It follows from all of the above reasoning that the Evaluation Committee committed a manifest error of assessment in failing to exercise its power to seek clarification from the applicant in accordance with section 19.5 of the Instructions to Tenderers. 47 In consequence, the Commission decision of 17 June 2002 rejecting the tender submitted by Tideland Signal Limited for Lot 1 in the tender procedure for EuropeAid/112336/C/S/WW - TACIS - (Re-tender) must be annulled, without its being necessary to examine the first plea raised by the applicant. 48 Finally, the Court observes that an application for annulment may, exceptionally, not become devoid of purpose despite the withdrawal of the act whose annulment is sought in circumstances where the applicant nevertheless retains a sufficient interest in obtaining a judgment formally annulling it (see, by analogy, Joined Cases 294/86 and 77/87 Technointorg v Commission and Council [1988] ECR 6077, paragraph 11). In the present case, the applicant claims that it retains such an interest. 49 The Court recalls that no settlement agreement has been reached between the parties following the informal meeting of 17 September 2002 and considers that it is not clear from the responses made by the Commission on 19 and 23 September 2002 whether the decision to reject the applicant's tender has truly disappeared from the Community legal order and ceased to have any legal effects (see, for example, the order in Case T-26/97 Antillean Rice Mills v Commission [1997] ECR II-1347, paragraph 14). In those circumstances, the Court concludes that the applicant does retain an interest in obtaining the judgment it seeks and, given the urgency of the present case and the requirements of legal certainty, it is therefore appropriate for the Court to proceed to judgment immediately in order to resolve formally and definitively the continuing uncertainty as to the legality and current status of the decision rejecting the applicant's tender. Decision on costs Costs 50 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. Since the Commission has been unsuccessful and the applicant made application in that regard, the Commission must be ordered to pay the costs. Operative part On those grounds, THE COURT OF FIRST INSTANCE (First Chamber), hereby: 1. Annuls the Commission decision of 17 June 2002 rejecting the tender submitted by Tideland Signal Limited for Lot 1 in the tender procedure for EuropeAid/112336/C/S/WW - TACIS - (Re-tender); 2. Orders the Commission to pay the costs.

COURT OF APPEAL FOR ONTARIO CITATION: Cormier v. 1772887 Ontario Limited (St. Joseph Communications), 2019 ONCA 965 DATE: 20191206 DOCKET: C66596 Feldman, Fairburn and Jamal JJ.A. BETWEEN Kelly Cormier Plaintiff (Respondent) and 1772887 Ontario Limited carrying on business as St. Joseph Communications Defendant (Appellant) Ian R. Dick, for the appellant Christopher Perri and Genevieve Cantin, for the respondent Heard: October 21, 2019 On appeal from the judgment of Justice Paul M. Perell of the Superior Court of Justice, dated January 24, 2019, with reasons reported at 2019 ONSC 587, 53 C.C.E.L. (4th) 60. REASONS FOR DECISION A. overview [1] This is an appeal from summary judgment arising from a wrongful dismissal claim. [2] The respondent worked for the appellant as a wardrobe stylist and later as a fashion studio manager from 1994 until she was dismissed without cause in 2017. The motion judge determined that the respondent acted in the capacity of a dependent contractor between 1994 to 2004, after which she became the appellant’s employee. The respondent brought an action seeking damages for wrongful dismissal. She also sought to be reimbursed for amounts that she said had been improperly deducted from her wages while she was still employed. [3] The motion judge found that the termination clause in the employment agreement was void because it attempted to contract out of the minimum standards provided for under s. 5 of the Employment Standards Act , 2000 , S.O. 2000, c. 41 (“ ESA ”). He granted summary judgment in favour of the respondent and awarded her 21 months’ pay in lieu of notice, 10 percent of her base salary for loss of benefits, and $2,373 owing under her cellphone allowance, less any amounts that had been paid to date. The motion judge also held that the appellant had made unlawful deductions from the respondent’s wages beginning in 2016, contrary to s. 13 of the ESA , and awarded her compensation for the lost wages. [4] The summary judgment is appealed on several grounds. For the following reasons, the appeal is dismissed. B. analysis (1) Was this an appropriate case for summary judgment? [5] First, the appellant suggests that this was not an appropriate case for summary judgment because: there were material facts in issue; credibility findings had to be made; the respondent had not put her best foot forward by producing necessary documents, such as tax returns, to show her dependent contractor status; and the respondent did not plead that she was a dependent contractor between 1994 to 2004. [6] In determining that this was an appropriate matter for summary judgment, the motion judge specifically referred to and applied Hryniak v. Mauldin , 2014 SCC 7, [2014] 1 S.C.R. 87. He concluded that there was no genuine issue requiring a trial and that this case was appropriate for summary judgment. We see no error in that determination. [7] As the motion judge noted, there were really only two factual issues in dispute: how to correctly characterize the parties’ employment relationship between 1994 and 2004; and whether the respondent failed to mitigate her damages. Those issues turned largely upon non-disputed facts. The rest of the issues were largely ones focused upon contractual and statutory interpretation. [8] The motion judge turned his mind to the question of credibility and found that there were no significant issues of credibility to be determined as few facts were even in dispute. Moreover, he specifically noted that there had been cross-examinations conducted with respect to all of the factual issues and it appeared that the parties had done their best to put forward all records and documents. As such, the quality and quantity of the record would not appreciably change at a trial. We see no error in those conclusions, all of which are supported by the factual record in this case. [9] While the appellant claims that the respondent failed to put her best foot forward as it relates to documents supporting the issue of her employment status and her mitigation efforts, we disagree. During her cross-examination relating to outstanding documents for the period of 1994 to 2004, she gave explanations as to why those documents were missing. She also swore two affidavits about her efforts to mitigate her damages, which were subject to cross-examination. The appellant did not ask for further documents related to the respondent’s mitigation efforts, apart from a request for her 2017 tax documents, which the respondent provided. A trial would not have improved the factual record on these points. In any case, the burden was on the appellant to demonstrate that the respondent had not mitigated her damages: Red Deer College v. Michaels , [1976] 2 S.C.R. 324 , at p. 332; Belton v. Liberty Insurance Co. of Canada (2004), 72 O.R. (3d) 81 (C.A.), at paras. 32-34. [10] As for the pleadings argument, it is made for the first time on appeal. While the respondent did not specifically plead that she was a “dependent contractor” from 1994 to 2004, the pleadings were clear that the respondent was claiming that she had been employed since 1994 and was entitled to damages arising from that point in time. While the legal characterization of that employment relationship was not described by its precise name, the pleadings were clear as to what was being claimed. Both pleadings put in issue the nature of the relationship between the parties between 1994 and 2004. No one was taken by surprise. The parties had the opportunity to lead evidence on the degree of economic exclusivity in the work relationship and made written submissions that squarely addressed whether the respondent was a dependent contractor during that period. Accordingly, we would not give effect to this submission. (2) Did the motion judge err by finding that the respondent was a dependent contractor between 1994 and 2004? [11] The appellant also claims that the motion judge erred in concluding that the respondent was a dependent contractor from 1994 to 2004. The appellant argues that the motion judge erred by failing to consider all relevant factors. Specifically, the appellant says that the motion judge erred by focusing upon the exclusivity of the parties’ working relationship, thereby failing to focus upon whether the respondent was economically dependent upon the appellant. [12] We see no error in the motion judge’s approach to this issue. He referred to all of the pertinent authorities. Among other authorities, the motion judge referred to both McKee v. Reid’s Heritage Homes Ltd. , 2009 ONCA 916, 315 D.L.R. (4th) 129, and Keenan v. Canac Kitchens Ltd. , 2016 ONCA 79, 29 C.C.E.L. (4th) 33 . The motion judge adverted to the correct legal test for determining dependent contractor status. [13] We do not agree that the motion judge ignored whether the respondent was economically dependent upon the appellant. Indeed, relying upon the test set out in McKee , the motion judge specifically listed that consideration as one of the factors that differentiate a dependent from an independent contractor. His factual conclusion that, within a short time of engagement, the respondent “worked exclusively for [the appellant] and, practically speaking, [the appellant] was her boss” was telling. Read contextually, the motion judge clearly concluded that the respondent was not only in an “exclusive” relationship with the appellant, but an economically dependent one. We would defer to the motion judge’s ultimate conclusion that “[w]hat stands out is that [the respondent] had a twenty-three [year] solid workplace relationship with [the appellant].” We would not give effect to this ground of appeal. (3) Did the motion judge err by finding that the termination clause was unenforceable? [14] The appellant also suggests that the motion judge erred in finding that the termination clause was unenforceable because it purported to contract out of the requirements of the ESA . While the appellant acknowledges that an employer cannot contract out of the minimum standards provided for under the ESA unless that contracting out provides a greater benefit for the employee than that provided for under the ESA , the appellant says that the motion judge erred in concluding that there had been a contracting out. [15] This is a matter of contractual interpretation to which the standard of review requiring a palpable and overriding error applies: Sattva Capital Corp. v. Creston Moly Corp. , 2014 SCC 53, [2014] 2 S.C.R. 633, at para. 50. We would not give effect to this ground of appeal. [16] Section 60(1)(c) of the ESA says that during a notice period, the employer “shall continue to make whatever benefit plan contributions would be required to be made in order to maintain the employee’s benefits under the plan until the end of the notice period.” Accordingly, the ESA requires that an employer continue all benefits during the applicable notice period. Yet the impugned clause in this case purported to contract out of two things: (a) short-term and long-term disability benefits during the notice period; and (b) other benefits absent the “consent of the Company’s insurers”: Termination without Cause (b) In addition to the foregoing and subject to the consent of the Company’s insurers , you will be entitled to continue to receive Company benefits ( excluding STD and LTD benefits ) during the notice period specified above. [Emphasis added.] [17] We find no palpable and overriding error in the motion judge’s interpretation of the impugned clause within the employment contract. He concluded that it allowed the employer “upon termination to provide [the respondent] with only some of the employee benefits that she received before termination and even then, only subject to the consent of [the appellant’s] insurers.” Clearly, the long and short-term disability benefits were excluded and other benefits would be excluded unless the insurer consented to giving effect to those benefits. This constituted a contracting out of and fell short of the s. 60(1) ESA benefit protections. As such, in accordance with this court’s decision in Wood v. Fred Deeley Imports Ltd. , 2017 ONCA 158, 134 O.R. (3d) 481, at para. 46, the termination clause was unenforceable and the motion judge was correct to apply the common law to determine the appropriate period of notice. (4) Did the motion judge err in calculating the damages for wrongful dismissal? [18] The appellant also submits that the motion judge erred in calculating the amount of damages arising from the duration of employment (including the stage when the respondent worked as a dependent contractor) and the amount of damages for lost benefits. This was a matter within the discretion of the motion judge. [19] The appellant argues that the respondent was required to provide contributions toward her benefits and, therefore, should not have benefited from the typical calculation that provides for 10 percent of base salary for loss of benefits. We would not interfere with the conclusion reached by the motion judge. While there may be cases where an employee’s contribution to benefits could reduce the typical percentage of base salary awarded in lieu of benefits during the notice period, this is not one of those cases. There was no evidence to support the claim that the amount of damages in lieu of benefits should be reduced to five percent. The real question was what the appellant paid for the benefits. That information lay exclusively within their knowledge and no evidence was led on this point. Accordingly, we would not interfere with the motion judge’s calculation. [20] The appellant also challenges the 21 months of notice, claiming that it was unreasonable and that the motion judge wrongly thought that it had conceded the point. The motion judge said that, although the appellant asked for a lesser notice period, that request “depended in the main on the enforcement of the termination clause or on defining [the respondent’s] years of employment as commencing with an original hire date of June 7, 2004.” If the respondent was found to have had a longer employment relationship, though, the motion judge noted that the appellant “actually suggested that the appropriate notice period was around twenty to twenty-one months.” [21] We agree with the motion judge’s characterization of the appellant’s position. In the appellant’s written submissions on the motion, it accepted that based upon a “hire date of 1994”, the reasonable notice period would be 21.6 months. In any event, in the circumstances of this case, and considering the 23-year work history, 21 months of common law notice was squarely within a reasonable range. [22] The appellant also points out that there is a clause in the employment contract that says, “Your original hire date of June 7, 2004 will be recognized as your start date for the calculation of your years of service, vacation entitlement and heath care benefits under this agreement.” The appellant argues that this clause means that the length of the reasonable notice period at common law should not be calculated with regard to the period of time prior to June 7, 2004, when the respondent acted as a dependent contractor. We disagree. Years of service may be used for any number of purposes that do not relate to an employee's rights on termination. If an employer wishes to contract out of the common law reasonable notice period, the contract must clearly specify another period of notice: Wood , at para. 15, citing Machtinger v. HOJ Industries Ltd. , [1992] 1 S.C.R. 986, at p. 998. This contract did not contain the type of clear language that would be needed to contract out of that notice. (5) Did the motion judge err in finding that the appellant had made wrongful deductions from the respondent’s wages, contrary to s. 13 of the ESA ? [23] There is also an issue about whether the motion judge was correct in concluding that there was a deduction from the respondent’s wages that offended s. 13 of the ESA . [24] In June 2016, the appellant advised the respondent that as part of a cost-saving measure, all employees would be required to take two weeks of unpaid vacation between July 1, 2016 and June 30, 2017. Starting on July 1, 2016 until the end of her employment, the appellant held back $125.54 from the respondent’s biweekly pay. This was all done on a unilateral basis. No amendment was made to the employment contract. At the time of termination, a total of $3,264 had been deducted from the respondent’s pay. [25] The motion judge concluded that the “unpaid vacation plan did not comply” with the ESA because it was “implemented by deductions from wages, and s. 13 of the [ ESA ] prohibits an employer [from] making deductions from wages unless, among other things, the deductions are authorized by court order or by the employee’s written authorization.” Section 13(1) reads: 13(1) An employer shall not withhold wages payable to an employee, make a deduction from an employee’s wages or cause the employee to return his or her wages to the employer unless authorized to do so under this section. [Emphasis added.] [26] As there was no authorization in this case, the motion judge found that s. 13 of the ESA had been offended and damages to replace the deducted wages should be granted. [27] The appellant argues that the motion judge erred in concluding that the wages had been “deducted” as opposed to reduced. The appellant argues that s. 13(1) is designed to prevent deductions from earned wages, but not a reduction of wages. According to the appellant, in effect, the appellant imposed a two-week layoff on all of its employees with a corresponding “reduction” in wages that were to be paid in the coming year. The ESA is said not to apply to this kind of situation. Although such a reduction could amount to a material change in the employment terms and, theoretically, constitute a constructive dismissal (a claim that the appellant presumably would have opposed), the respondent did not claim constructive dismissal. As a result, she was not owed the money because the lesser amount did not constitute a “deduction from” her wages as captured by s. 13(1) of the ESA . [28] In all of the circumstances here, we see no error in the motion judge’s conclusion that the appellant’s conduct breached s. 13(1) of the ESA . The appellant acknowledges that the unpaid vacation leave was tantamount to a temporary lay-off, the cost of which was spread out over multiple pay periods. The program was for all intents and purposes funded through periodic deductions from the employees’ wages. [29] Any suggestion that the respondent effectively waived her contractual rights does not answer the breach of s. 13(1). For a binding waiver to apply, the respondent would have had to authorize the reductions in writing in accordance with ss. 13(3) and (5) of the ESA . (6) Did the motion judge err in awarding the respondent damages to compensate for the loss of her cell phone allowance? [30] The appellant maintains that the motion judge erred when he awarded the respondent $2,712 to compensate her for the loss of her cell phone allowance over the notice period. She received $113 per month to cover the cost of a cell phone. The appellant argues that no damages are owed for the cell phone because the payments were intended as nothing more than reimbursement for the respondent’s business expenses, which she was no longer required to incur after termination. [31] We note that the employment contract refers to the appellant as being required to “reimburse” the respondent for “all expenses actually and properly incurred” in the performance of her services under the employment agreement. Under that agreement, “acceptable expenses” included cell phone expenses. [32] The point of a damages award for wrongful dismissal is to compensate for “all losses arising from the employer’s breach of contract in failing to give proper notice”, and to “place the employee in the same financial position he or she would have been in had such notice been given”: Paquette v. TeraGo Networks Inc. , 2016 ONCA 618, 352 O.A.C. 1, at para. 16 (citation omitted). [33] It was open to the motion judge to arrive at the conclusion that, while the respondent was being reimbursed for her cell phone expenses, she personally benefited from the use of the cell phone. Accordingly, it was open to the motion judge to award damages on that basis. We see no error in his approach. C. disposition [34] The appeal is dismissed. [35] On the agreement of the parties, we award costs to the respondent in the amount of $15,000, inclusive of disbursements and applicable taxes. “K. Feldman J.A.” “Fairburn J.A.” “M. Jamal J.A.”

Order of the Court (Second Chamber) of 23 September 1986. - Emmanuel Du Besset v Council of the European Communities. - Officials - Inadmissibility. - Case 130/86. European Court reports 1986 Page 02619 Parties Subject of the case Grounds Decision on costs Operative part Keywords 1 . OFFICIALS - ACTION - PRIOR COMPLAINT THROUGH OFFICIAL CHANNELS - OBLIGATORY - PERSONS SEEKING A POST IN THE COMMUNITY CIVIL SERVICE ( STAFF REGULATIONS OF OFFICIALS , ARTS 90 AND 91 ) 2 . OFFICIALS - ACTION - PRIOR COMPLAINT THROUGH OFFICIAL CHANNELS - COMPLAINT NOT YET REJECTED - ACTION INADMISSIBLE ( STAFF REGULATIONS OF OFFICIALS , ART . 91 ( 2 )) 3 . PROCEDURE - COSTS - ARTICLE 70 OF THE RULES OF PROCEDURE - SCOPE RATIONE PERSONAE ( RULES OF PROCEDURE , ART . 70 ) Parties IN CASE 130/86 EMMANUEL DU BESSET , REPRESENTED AND ASSISTED BY D . DELAFON OF THE GRENOBLE BAR , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF MRS KOLLER , 3 RUE DES ARQUEBUSIERS , APPLICANT , V COUNCIL OF THE EUROPEAN COMMUNITIES , REPRESENTED AND ASSISTED BY D . LAGASSE OF THE BRUSSELS BAR , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF MR KASER , DIRECTOR OF THE LEGAL DEPARTMENT OF THE EUROPEAN INVESTMENT BANK , 100 BOULEVARD KONRAD-ADENAUER , DEFENDANT , Subject of the case APPLICATION FOR THE ANNULMENT OF ( I ) THE IMPLIED DECISION CONTAINED IN A LETTER OF 7 MAY 1986 WHEREBY THE APPOINTING AUTHORITY REFUSED TO OFFER A POST TO THE APPLICANT ; ( II ) THE EXPRESS DECISION CONTAINED IN THE LETTER OF 7 MAY 1986 REJECTING THE APPLICANT ' S REQUEST THAT THE PERIOD OF VALIDITY OF THE LIST OF SUITABLE CANDIDATES IN COUNCIL COMPETITION NO A/184 SHOULD BE EXTENDED ; ( III ) ALL THE DECISIONS APPOINTING ADMINISTRATORS FOLLOWING COUNCIL COMPETITION NO A/184 , Grounds 1 BY APPLICATION RECEIVED AT THE COURT REGISTRY ON 19 MAY 1986 EMMANUEL DU BESSET BROUGHT AN ACTION FOR THE ANNULMENT OF SEVERAL COUNCIL DECISIONS . 2 SINCE THE APPLICANT WAS SUCCESSFUL IN COUNCIL COMPETITION NO A/184 , HIS NAME WAS PLACED ON THE LIST OF SUITABLE CANDIDATES DRAWN UP IN 1980 AT THE CONCLUSION OF THE COMPETITION . THE PERIOD OF VALIDITY OF THAT LIST WAS EXTENDED UNTIL 1 APRIL 1986 . ON SEVERAL OCCASIONS , AND MOST RECENTLY ON 20 MARCH 1986 , THE APPLICANT POINTED OUT TO THE COUNCIL THAT HE WAS STILL WAITING FOR A POST . 3 BY LETTER DATED 7 MAY 1986 THE APPOINTING AUTHORITY INFORMED THE APPLICANT THAT IT HAD DECIDED NOT TO EXTEND THE PERIOD OF VALIDITY OF THE LIST OF SUITABLE CANDIDATES ANY MORE . THE ACTION IS PRIMARILY DIRECTED AGAINST THE REFUSAL TO OFFER HIM A POST , AND ALTERNATIVELY THE REFUSAL TO EXTEND THE PERIOD OF VALIDITY OF THE LIST OF SUITABLE CANDIDATES , CONTAINED IN THE LETTER OF 7 MAY 1986 . 4 ON 16 JULY 1986 THE APPLICANT SUBMITTED TO THE APPOINTING AUTHORITY A COMPLAINT PRIOR TO INITIATING AN ACTION PURSUANT TO ARTICLE 90 ( 2 ) OF THE STAFF REGULATIONS OF OFFICIALS OF THE EUROPEAN COMMUNITIES . 5 BY APPLICATION ON A PROCEDURAL ISSUE PURSUANT TO ARTICLE 91 OF THE RULES OF PROCEDURE THE COUNCIL RAISED A PRELIMINARY OBJECTION AS TO ADMISSIBILITY AND REQUESTED THE COURT TO GIVE A DECISION THEREON WITHOUT GOING INTO THE SUBSTANCE OF THE CASE . IN THAT RESPECT IT SUBMITS THAT THE ACTION WAS NOT PRECEDED BY A COMPLAINT WHICH WAS REJECTED BY AN EXPRESS OR IMPLIED DECISION . 6 THE APPLICANT SUBMITS THAT ARTICLES 90 AND 91 OF THE STAFF REGULATIONS OUGHT NOT TO APPLY IN THE PRESENT CASE BECAUSE HE IS NEITHER AN OFFICIAL NOR AT PRESENT A CANDIDATE IN A COMPETITION . 7 THE APPLICANT ' S ARGUMENT CANNOT BE ACCEPTED . IT IS CLEAR FROM THE ESTABLISHED CASE-LAW OF THE COURT THAT ARTICLES 90 AND 91 OF THE STAFF REGULATIONS APPLY NOT ONLY TO THOSE WHO ARE OFFICIALS BUT ALSO TO CANDIDATES FOR A POST ( SEE THE JUDGMENT OF 23 OCTOBER 1975 IN JOINED CASES 81 TO 88/74 , MARENCO AND OTHERS V COMMISSION , ( 1975 ) ECR 1247 ). THE APPLICANT HAS NOT CEASED TO BE A CANDIDATE BECAUSE THE PERIOD OF VALIDITY OF THE LIST OF SUITABLE CANDIDATES WAS NOT EXTENDED . SINCE THE MEASURE ADVERSELY AFFECTING THE APPLICANT ORIGINATES FROM THE APPOINTING AUTHORITY THE ACTION CHALLENGING THE MEASURE MUST NECESSARILY BE PRECEDED BY A COMPLAINT WHICH HAS BEEN REJECTED BY EXPRESS OR IMPLIED DECISION . THE OBJECT OF THAT PROCEDURE IS TO ALLOW THE ADMINISTRATION TO RECONSIDER THE CONTESTED MEASURE . BY VIRTUE OF ARTICLE 91 ( 2 ) OF THE STAFF REGULATIONS AN ACTION BROUGHT BEFORE THAT PRELIMINARY PROCEDURE HAS BEEN COMPLETED IS PREMATURE AND THEREFORE INADMISSIBLE . 8 SINCE THE DOCUMENTS BEFORE THE COURT CONTAIN ALL THE FACTS NECESSARY FOR A DECISION IT IS NOT NECESSARY TO HEAR THE PARTIES . Decision on costs COSTS 9 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE , THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS . HOWEVER , ARTICLE 70 OF THE RULES OF PROCEDURE PROVIDES THAT THE INSTITUTIONS ARE TO BEAR THEIR OWN COSTS IN PROCEEDINGS BROUGHT BY SERVANTS OF THE COMMUNITIES . THAT PROVISION MUST APPLY TO ALL PERSONS TO WHOM ARTICLE 90 OF THE STAFF REGULATIONS APPLIES . Operative part ON THOSE GROUNDS , THE COURT ( SECOND CHAMBER ), PURSUANT TO ARTICLE 91 OF THE RULES OF PROCEDURE AND AFTER HEARING THE ADVOCATE GENERAL , MAKES THE FOLLOWING ORDER ( 1 ) THE ACTION IS DISMISSED AS INADMISSIBLE . ( 2 ) THE PARTIES SHALL BEAR THEIR OWN COSTS .

Judgment of the Court of 6 October 1976. - Industrie Tessili Italiana Como v Dunlop AG. - Reference for a preliminary ruling: Oberlandesgericht Frankfurt am Main - Germany. - Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, Article 5 (1). - Case 12-76. European Court reports 1976 Page 01473 Greek special edition Page 00533 Portuguese special edition Page 00585 Spanish special edition Page 00495 Swedish special edition Page 00177 Finnish special edition Page 00185 Summary Parties Subject of the case Grounds Decision on costs Operative part Keywords 1 . PROCEDURE - CONVENTIONS FOR WHICH PROVISION IS MADE IN ARTICLE 220 OF THE EEC TREATY - INTERPRETATION - NEW MEMBER STATES - OBSERVATIONS - PERMISSIBILITY ( ACT OF ACCESSION , ARTICLE 3 ( 2 ) 2 . CONVENTION OF 27 SEPTEMBER 1968 ON JURISDICTION AND THE ENFORCEMENT OF JUDGMENTS IN CIVIL AND COMMERCIAL MATTERS - INTERPRETATION - GENERAL RULES . 3 . CONVENTION OF 27 SEPTEMBER 1968 - SPECIAL JURISDICTION - DISPUTE HAVING AN INTERNATIONAL CHARACTER - MATTER RELATING TO A CONTRACT - COURT HAVING JURISDICTION - PLACE OF PERFORMANCE OF THE OBLIGATION ( CONVENTION OF 27 SEPTEMBER 1968 , ARTICLE 5 ( 1 ) Summary 1 . THE NEW MEMBER STATES ARE ENTITLED TO SUBMIT OBSERVATIONS IN THE CONTEXT OF PROCEEDINGS RELATING TO THE INTER- PRETATION OF ONE OF THE CONVENTIONS , FOR WHICH PROVISION IS MADE IN ARTICLE 220 OF THE TREATY , TO WHICH THEY ARE REQUIRED BY ARTICLE 3 ( 2 ) OF THE ACT OF ACCESSION TO BECOME PARTIES . 2 . THE CONVENTION OF 27 SEPTEMBER 1968 MUST BE INTERPRETED HAVING REGARD BOTH TO ITS PRINCIPLES AND OBJECTIVES AND TO ITS RELATIONSHIP WITH THE TREATY . AS REGARDS THE QUESTION WHETHER THE WORDS AND CONCEPTS USED IN THE CONVENTION MUST BE REGARDED AS HAVING THEIR OWN INDEPENDENT MEANING AND AS BEING THUS COMMON TO ALL THE MEMBER STATES OR AS REFERRING TO SUBSTANTIVE RULES OF THE LAW APPLICABLE IN EACH CASE UNDER THE RULES OF CONFLICT OF LAWS OF THE COURT BEFORE WHICH THE MATTER IS FIRST BROUGHT , THE APPROPRIATE CHOICE CAN ONLY BE MADE IN RESPECT OF EACH OF THE PROVISIONS OF THE CONVENTION TO ENSURE THAT IT IS FULLY EFFECTIVE HAVING REGARD TO THE OBJECTIVES OF ARTICLE 220 OF THE TREATY . 3 . THE ' PLACE OF PERFORMANCE OF THE OBLIGATION IN QUESTION ' WITHIN THE MEANING OF ARTICLE 5 ( 1 ) OF THE CONVENTION OF 27 SEPTEMBER 1968 IS TO BE DETERMINED IN ACCORDANCE WITH THE LAW WHICH GOVERNS THE OBLIGATION IN QUESTION ACCORDING TO THE RULES OF CONFLICT OF LAWS OF THE COURT BEFORE WHICH THE MATTER IS BROUGHT . Parties IN CASE 12/76 REFERENCE UNDER ARTICLE 1 OF THE PROTOCOL OF 3 JUNE 1971 ON THE INTERPRETATION BY THE COURT OF JUSTICE OF THE CONVENTION OF 27 SEPTEMBER 1968 ON JURISDICTION AND THE ENFORCEMENT OF JUDGMENTS IN CIVIL AND COMMERCIAL MATTERS BY THE OBERLANDESGERICHT FRANKFURT AM MAIN FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN INDUSTRIE TESSILI ITALIANA COMO , WHOSE REGISTERED OFFICE IS IN COMO , ITALY , AND DUNLOP AG , WHOSE REGISTERED OFFICE IS IN HANAU AM MAIN ( FEDERAL REPUBLIC OF GERMANY ), Subject of the case ON THE INTERPRETATION OF THE CONCEPT OF ' PLACE OF PERFORMANCE OF THE OBLIGATION IN QUESTION ' WITHIN THE MEANING OF ARTICLE 5 ( 1 ) OF THE CONVENTION OF 27 SEPTEMBER 1968 , Grounds 1 BY ORDER DATED 14 JANUARY 1976 , RECEIVED AT THE COURT REGISTRY ON 13 FEBRUARY 1976 , THE OBERLANDESGERICHT FRANKFURT AM MAIN REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER THE PROTOCOL OF 3 JUNE 1971 ON THE INTERPRETATION OF THE CONVENTION OF 27 SEPTEMBER 1968 ON JURISDICTION AND ENFORCEMENT OF JUDGMENTS IN CIVIL AND COMMERCIAL MATTERS ( HEREINAFTER REFERRED TO AS ' THE CONVENTION ' ) A QUESTION ON THE INTERPRETATION OF ARTICLE 5 ( 1 ) OF THE CONVENTION . 2 IT APPEARS FROM THE ORDER OF REFERENCE THAT AT THIS STAGE THE CASE , WHICH HAS BEEN BROUGHT AS AN APPEAL TO THE OBERLANDESGERICHT , RELATES TO THE JURISDICTION OF THE COURT OF FIRST INSTANCE AT HANAU TO HEAR A CASE BROUGHT BY AN UNDERTAKING ESTABLISHED WITHIN THE JURISDICTION OF THAT COURT AGAINST AN ITALIAN UNDERTAKING WITH ITS REGISTERED OFFICE AT COMO IN CONNEXION WITH THE PERFORMANCE OF A CONTRACT RELATING TO THE DELIVERY BY THE ITALIAN UNDERTAKING TO THE GERMAN UNDERTAKING OF A CONSIGNMENT OF WOMEN ' S SKI SUITS . IT APPEARS FROM THE FILE THAT THE GOODS WERE MANUFACTURED BY THE ITALIAN UNDERTAKING IN ACCORDANCE WITH INSTRUCTIONS GIVEN BY THE GERMAN UNDERTAKING AND DELIVERED TO A CARRIER IN COMO APPOINTED BY THE GERMAN UNDERTAKING . 3 THE GERMAN UNDERTAKING AFTER TAKING DELIVERY OF THE GOODS AND SELLING SOME OF THEM CONSIDERS AS A RESULT OF COMPLAINTS FROM ITS CUSTOMERS THAT THE SUITS DELIVERED BY THE MANUFACTURER ARE DEFECTIVE AND DO NOT CORRESPOND TO THE SPECIFICATIONS AGREED BETWEEN THE PARTIES . FOR THIS REASON IT BROUGHT AN ACTION IN ITS LOCAL COURT AGAINST THE ITALIAN MANUFACTURER . 4 THE COURT BY INTERLOCUTORY JUDGMENT DATED 10 MAY 1974 DECLARED ITSELF TO HAVE JURISDICTION TO HEAR THE CASE WHEREUPON THE ITALIAN UNDERTAKING BROUGHT AN APPEAL BEFORE THE OBERLANDESGERICHT FRANKFURT AM MAIN . IN THE VIEW OF THIS LATTER COURT THE QUESTION OF JURISDICTION RAISED MUST BE SETTLED IN ACCORDANCE WITH THE PROVISIONS OF THE CONVENTION . IN ITS VIEW THERE IS NO VALID AGREEMENT BETWEEN THE PARTIES CONFERRING JURISDICTION WITHIN THE MEANING OF ARTICLE 17 OF THE CONVENTION . ON THE OTHER HAND THE OBERLANDESGERICHT DOES NOT RULE OUT THE POSSIBILITY THAT THE COURT OF FIRST INSTANCE MAY HAVE JURISDICTION UNDER ARTICLE 5 ( 1 ) OF THE CONVENTION AS BEING THE PLACE ' OF PERFORMANCE OF THE OBLIGATION IN QUESTION ' . TO SETTLE THIS QUESTION IT ASKS THE COURT OF JUSTICE TO RULE ON THE INTERPRETATION OF THAT PROVISION . PROCEDURE 5 THE REPUBLIC OF IRELAND AND THE UNITED KINGDOM SUBMITTED OBSERVATIONS DURING THE WRITTEN PROCEDURE AND THE COURT THEREFORE REQUESTED THE PARTIES IN THE MAIN ACTION , THE MEMBER STATES AND THE COMMISSION TO GIVE THEIR VIEWS ON THE QUESTION WHETHER THE NEW MEMBER STATES WHICH ARE NOT YET PARTIES TO THE CONVENTION ARE ENTITLED TO PARTICIPATE IN PROCEEDINGS RELATING TO ITS INTERPRETATION . 6 ARTICLE 3 ( 2 ) OF THE ACT OF ACCESSION PROVIDES THAT ' THE NEW MEMBER STATES UNDERTAKE TO ACCEDE TO THE CONVENTIONS PROVIDED FOR IN ARTICLE 220 OF THE EEC TREATY , AND TO THE PROTOCOLS ON THE INTERPRETATION OF THOSE CONVENTIONS BY THE COURT OF JUSTICE , SIGNED BY THE ORIGINAL MEMBER STATES , AND TO THIS END THEY UNDERTAKE TO ENTER INTO NEGOTIATIONS WITH THE ORIGINAL MEMBER STATES IN ORDER TO MAKE THE NECESSARY ADJUSTMENTS THERETO ' . THE FIRST PARAGRAPH OF ARTICLE 63 OF THE CONVENTION PROVIDES THAT ' THE CONTRACTING STATES RECOGNIZE THAT ANY STATE WHICH BECOMES A MEMBER OF THE EUROPEAN ECONOMIC COMMUNITY SHALL BE REQUIRED TO ACCEPT THIS CONVENTION AS A BASIS FOR THE NEGOTIATIONS BETWEEN THE CONTRACTING STATES AND THAT STATE NECESSARY TO ENSURE THE IMPLEMENTATION OF THE LAST PARAGRAPH OF ARTICLE 220 OF THE TREATY ESTABLISHING THE EUROPEAN ECONOMIC COMMUNITY ' . THE NEW MEMBER STATES THUS HAVE AN INTEREST IN EXPRESSING THEIR VIEWS WHEN THE COURT IS CALLED UPON TO INTERPRET A CONVENTION TO WHICH THEY ARE REQUIRED TO BECOME PARTIES . 7 IT SHOULD FURTHER BE OBSERVED THAT ARTICLE 5 ( 1 ) OF THE PROTOCOL OF 3 JUNE 1971 STIPULATES THAT , EXCEPT AS OTHERWISE PROVIDED , ' THE PROVISIONS OF THE TREATY ESTABLISHING THE EUROPEAN ECONOMIC COMMUNITY AND THOSE OF THE PROTOCOL ON THE STATUTE OF THE COURT OF JUSTICE ANNEXED THERETO , WHICH ARE APPLICABLE WHEN THE COURT IS REQUESTED TO GIVE A PRELIMINARY RULING , SHALL ALSO APPLY TO ANY PROCEEDINGS FOR THE INTERPRETATION OF THE CONVENTION ' . 8 AS A RESULT THE NEW MEMBER STATES TO WHICH ARTICLE 177 OF THE EEC TREATY AND ARTICLE 20 OF THE PROTOCOL ON THE STATUTE OF THE COURT OF JUSTICE APPLY ARE ENTITLED TO SUBMIT OBSERVATIONS IN ACCORDANCE WITH THE SAID ARTICLES IN PROCEEDINGS FOR THE INTERPRETATION OF THE CONVENTION . NO VALID OBJECTION TO THIS CONCLUSION IS CONSTITUTED BY ARTICLE 4 ( 4 ) OF THE PROTOCOL OF 3 JUNE 1971 ON A SPECIAL PROCEDURE WHICH IS NOT RELEVANT FOR THE PRESENT PURPOSES . FURTHER IN THE CONTEXT OF THAT PROTOCOL , WHICH ORIGINATED BEFORE THE ENLARGEMENT OF THE EUROPEAN COMMUNITIES , THE WORDS ' CONTRACTING STATES ' REFER TO ALL THE MEMBER STATES . THE INTERPRETATION OF THE CONVENTION IN GENERAL 9 ARTICLE 220 OF THE EEC TREATY PROVIDES THAT MEMBER STATES SHALL , SO FAR AS NECESSARY , ENTER INTO NEGOTIATIONS WITH EACH OTHER WITH A VIEW TO SECURING FOR THE BENEFIT OF THEIR NATIONALS THE ESTABLISHMENT OF RULES INTENDED TO FACILITATE THE ACHIEVEMENT OF THE COMMON MARKET IN THE VARIOUS SPHERES LISTED IN THAT PROVISION . THE CONVENTION WAS ESTABLISHED TO IMPLEMENT ARTICLE 220 AND WAS INTENDED ACCORDING TO THE EXPRESS TERMS OF ITS PREAMBLE TO IMPLEMENT THE PROVISIONS OF THAT ARTICLE ON THE SIMPLIFICATION OF FORMALITIES GOVERNING THE RECIPROCAL RECOGNITION AND ENFORCEMENT OF JUDGMENTS OF COURTS OR TRIBUNALS AND TO STRENGTHEN IN THE COMMUNITY THE LEGAL PROTECTION OF PERSONS THEREIN ESTABLISHED . IN ORDER TO ELIMINATE OBSTACLES TO LEGAL RELATIONS AND TO SETTLE DISPUTES WITHIN THE SPHERE OF INTRA-COMMUNITY RELATIONS IN CIVIL AND COMMERCIAL MATTERS THE CONVENTION CONTAINS , INTER ALIA , RULES ENABLING THE JURISDICTION IN THESE MATTERS OF COURTS OF MEMBER STATES TO BE DETERMINED AND FACILITATING THE RECOGNITION AND EXECUTION OF COURTS ' JUDGMENTS . ACCORDINGLY THE CONVENTION MUST BE INTERPRETED HAVING REGARD BOTH TO ITS PRINCIPLES AND OBJECTIVES AND TO ITS RELATIONSHIP WITH THE TREATY . 10 THE CONVENTION FREQUENTLY USES WORDS AND LEGAL CONCEPTS DRAWN FROM CIVIL , COMMERCIAL AND PROCEDURAL LAW AND CAPABLE OF A DIFFERENT MEANING FROM ONE MEMBER STATE TO ANOTHER . THE QUESTION THEREFORE ARISES WHETHER THESE WORDS AND CONCEPTS MUST BE REGARDED AS HAVING THEIR OWN INDEPENDENT MEANING AND AS BEING THUS COMMON TO ALL THE MEMBER STATES OR AS REFERRING TO SUBSTANTIVE RULES OF THE LAW APPLICABLE IN EACH CASE UNDER THE RULES OF CONFLICT OF LAWS OF THE COURT BEFORE WHICH THE MATTER IS FIRST BROUGHT . 11 NEITHER OF THESE TWO OPTIONS RULES OUT THE OTHER SINCE THE APPROPRIATE CHOICE CAN ONLY BE MADE IN RESPECT OF EACH OF THE PROVISIONS OF THE CONVENTION TO ENSURE THAT IT IS FULLY EFFECTIVE HAVING REGARD TO THE OBJECTIVES OF ARTICLE 220 OF THE TREATY . IN ANY EVENT IT SHOULD BE STRESSED THAT THE INTERPRETATION OF THE SAID WORDS AND CONCEPTS FOR THE PURPOSE OF THE CONVENTION DOES NOT PREJUDGE THE QUESTION OF THE SUBSTANTIVE RULE APPLICABLE TO THE PARTICULAR CASE . THE QUESTION RAISED BY THE NATIONAL COURT 12 ARTICLE 5 OF THE CONVENTION PROVIDES : ' A PERSON DOMICILED IN A CONTRACTING STATE MAY , IN ANOTHER CONTRACTING STATE , BE SUED : ( 1 ) IN MATTERS RELATING TO A CONTRACT , IN THE COURTS FOR THE PLACE OF PERFORMANCE OF THE OBLIGATION IN QUESTION ' . THIS PROVISION MUST BE INTERPRETED WITHIN THE FRAMEWORK OF THE SYSTEM OF CONFERMENT OF JURISDICTION UNDER TITLE II OF THE CONVENTION . IN ACCORDANCE WITH ARTICLE 2 THE BASIS OF THIS SYSTEM IS THE GENERAL CONFERMENT OF JURISDICTION ON THE COURT OF THE DEFENDANT ' S DOMICILE . ARTICLE 5 HOWEVER PROVIDES FOR A NUMBER OF CASES OF SPECIAL JURISDICTION AT THE OPTION OF THE PLAINTIFF . 13 THIS FREEDOM OF CHOICE WAS INTRODUCED IN VIEW OF THE EXISTENCE IN CERTAIN WELL-DEFINED CASES OF A PARTICULARLY CLOSE RELATIONSHIP BETWEEN A DISPUTE AND THE COURT WHICH MAY BE MOST CONVENIENTLY CALLED UPON TO TAKE COGNIZANCE OF THE MATTER . THUS IN THE CASE OF AN ACTION RELATING TO CONTRACTUAL OBLIGATIONS ARTICLE 5 ( 1 ) ALLOWS A PLAINTIFF TO BRING THE MATTER BEFORE THE COURT FOR THE PLACE ' OF PERFORMANCE ' OF THE OBLIGATION IN QUESTION . IT IS FOR THE COURT BEFORE WHICH THE MATTER IS BROUGHT TO ESTABLISH UNDER THE CONVENTION WHETHER THE PLACE OF PERFORMANCE IS SITUATE WITHIN ITS TERRITORIAL JURISDICTION . FOR THIS PURPOSE IT MUST DETERMINE IN ACCORDANCE WITH ITS OWN RULES OF CONFLICT OF LAWS WHAT IS THE LAW APPLICABLE TO THE LEGAL RELATIONSHIP IN QUESTION AND DEFINE IN ACCORDANCE WITH THAT LAW THE PLACE OF PERFORMANCE OF THE CONTRACTUAL OBLIGATION IN QUESTION . 14 HAVING REGARD TO THE DIFFERENCES OBTAINING BETWEEN NATIONAL LAWS OF CONTRACT AND TO THE ABSENCE AT THIS STAGE OF LEGAL DEVELOPMENT OF ANY UNIFICATION IN THE SUBSTANTIVE LAW APPLICABLE , IT DOES NOT APPEAR POSSIBLE TO GIVE ANY MORE SUBSTANTIAL GUIDE TO THE INTERPRETATION OF THE REFERENCE MADE BY ARTICLE 5 ( 1 ) TO THE ' PLACE OF PERFORMANCE ' OF CONTRACTUAL OBLIGATIONS . THIS IS ALL THE MORE TRUE SINCE THE DETERMINATION OF THE PLACE OF PERFORMANCE OF OBLIGATIONS DEPENDS ON THE CONTRACTUAL CONTEXT TO WHICH THESE OBLIGATIONS BELONG . 15 IN THESE CIRCUMSTANCES THE REFERENCE IN THE CONVENTION TO THE PLACE OF PERFORMANCE OF CONTRACTUAL OBLIGATIONS CANNOT BE UNDERSTOOD OTHERWISE THAN BY REFERENCE TO THE SUBSTANTIVE LAW APPLICABLE UNDER THE RULES OF CONFLICT OF LAWS OF THE COURT BEFORE WHICH THE MATTER IS BROUGHT . Decision on costs COSTS 16 THE COSTS INCURRED BY THE GOVERNMENT OF THE FEDERAL REPUBLIC OF GERMANY , THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE COMMISSION OF THE EUROPEAN COMMUNITIES WHICH HAVE SUBMITTED OBSERVATIONS TO THE COURT ARE NOT RECOVERABLE AND , AS THESE PROCEEDINGS ARE , IN SO FAR AS THE PARTIES TO THE MAIN ACTION ARE CONCERNED , IN THE NATURE OF A STEP IN THE ACTION PENDING BEFORE THE OBERLANDESGERICHT FRANKFURT AM MAIN , THE DECISION AS TO COSTS IS A MATTER FOR THAT COURT . Operative part ON THOSE GROUNDS , THE COURT IN ANSWER TO THE QUESTION REFERRED TO IT BY THE OBERLANDESGERICHT FRANKFURT AM MAIN BY ORDER DATED 14 JANUARY 1976 , HEREBY RULES : THE ' PLACE OF PERFORMANCE OF THE OBLIGATION IN QUESTION ' WITHIN THE MEANING OF ARTICLE 5 ( 1 ) OF THE CONVENTION OF 27 SEPTEMBER 1968 ON JURISDICTION AND THE ENFORCEMENT OF JUDGMENTS IN CIVIL AND COMMERCIAL MATTERS IS TO BE DETERMINED IN ACCORDANCE WITH THE LAW WHICH GOVERNS THE OBLIGATIONS IN QUESTION ACCORDING TO THE RULES OF CONFLICT OF LAWS OF THE COURT BEFORE WHICH THE MATTER IS BROUGHT .

Mr. Justice Teare: This is an application by the Defendant to set aside an order made by Flaux J. on 25 November 2008 permitting substituted service on the Defendant. The grounds of the application are that the Defendant "is a State-owned entity (within the definition of a State for the purposes of the State Immunity Act 1978) and service on a State is only permitted via the method prescribed in s.12 of the State Immunity Act 1978 and rule 6.44 of the CPR, and accordingly the court has no jurisdiction either to make the Order or hear the proceedings unless and until validly served." By his order Flaux J. ordered that the Claimant was not obliged to adhere to the procedural requirements of s.12 of the State Immunity Act 1978 and rule 6.44 of the CPR. He gave the Claimant permission to serve the Claim Form by the alternative method of sending it by first class post to the Defendant's solicitors Eversheds LLP pursuant to CPR 6.15. The basis upon which that order was made appears from the witness statement of Mark Terence O'Neil dated 18 November 2008. Mr. O'Neil informed the court that Field J. had granted permission for the service of proceedings on the Defendant out of the jurisdiction at its address in Buenos Aires, Argentina and that the Defendant's solicitors Eversheds had taken the point that the Claimant was obliged to serve the proceedings only through diplomatic channels in accordance with s.12 of the State Immunity Act 1978 and/or CPR 6.44. He referred to s.14 of the State Immunity Act 1978 which excluded from the definition of State "any entity (hereinafter referred to as a separate entity) which is distinct from the executive organs of the government of the State and capable of suing and being sued" and submitted that the Defendant is a separate entity. He said that it is "a shipyard which entered into a shipbuilding contract with a private purchaser. It is not on any sensible view one of the executive organs of the government of the State". By making his order Flaux J. accepted that submission but, because the application was ex parte, stated that the Defendant had the right to apply to set aside or vary the order. The claim in this action is for a declaration that two Deeds arising out of a contract for the construction and sale of a ship are void. The shipbuilding contract described the Defendant as "a corporation organised and existing under the laws of Argentina" and the vessel to be built as a bulk carrier of about 27,000 DWT. Notwithstanding that the contract contains a condition precedent that the contract be approved by the Government of the Province of Buenos Aires the contract has every appearance of being a standard commercial contract. S.12(1) of the State Immunity Act provides that any writ or other document required to be served for instituting proceedings against a State shall be served by being transmitted through the Foreign and Commonwealth Office to the Ministry of Foreign Affairs of the State. S.14(1) provides that references to a State "include references to a) the sovereign or other head of that State in his public capacity; b) the government of that State; c) any department of that government, but not to any entity (hereinafter referred to as a separate entity) which is distinct from the executive organs of the government of the State and capable of suing and being sued." The question for the court to determine is therefore whether the Defendant is "a State" or a "separate entity". The Act refers to two qualities which a separate entity must possess, namely, that it is distinct from the executive organs of the government of the State and is capable of suing or being sued. Before examining the evidence on this question it is necessary to refer to the guidance in the authorities as to the nature of a separate entity in section 14 of the State Immunity Act. In Kuwait Airways Corporation v Iraqi Airways [1995] 1 WLR 1147 at p.1158 Lord Goff expressed the view that it was probable that the expression "separate entity" was intended to refer to an entity "of a state" and that such construction was reinforced by the description of a separate entity being "distinct from the executive organs of the government of the State". In Propend Finance v Sing [1997] EWCA Civ 1433 the Court of Appeal followed this view. Thus the fact that an entity may be created by the state does not by itself cause the entity not to be a separate entity. In I Congresso del Partido [1983] 1 AC 244 Lord Wilberforce referred (at p.262) to the difference in international law between acta iure imperii and acta iure gestionis. The former are sovereign or public acts and the latter are acts of a private law character such as a private citizen might have entered into. The distinction is between "an area of activity, trading or commercial, or otherwise of a private law character, in which the state has chosen to engage" and activities outside that area and "within the sphere of governmental or sovereign activity" (at p.267). Lord Wilberforce observed (at p.258) that "state controlled enterprises, with legal personality, ability to trade and to enter into contracts of private law, though wholly subject to the control of their state, are a well known feature of the modern commercial scene". In that case a state trading enterprise was not a department of the Cuban state notwithstanding that it was subject to direction and control by the state which provided all the funds necessary for its operation. In Propend Finance v Sing the Court of Appeal said that the concept of acta iure imperii was relevant to a determination of what bodies were part of the "State" and the "government" for the purposes of s.14(1) of the State Immunity Act. "Government" should be given a broad meaning commensurate with the concept of acta jure imperii.[1] I therefore approach the phrase "department of government" and the phrase "executive organs of government" in s.14(1) with that guidance in mind. In Trendtex Trading v Bank of Nigeria [1977] 1 QB 529 at pp.564 and 575 it was observed by the Court of Appeal that where an entity has been created by the state the absence of a clear expression of an intent to confer the status of a government department was said to be a pointer to the conclusion that such status was not the intent of the state. Finally, in The Altair [2008] 2 Lloyd's Rep 90 Gross J. had to consider whether the Grain Board of Iraq was a department of the Ministry of Trade of the Republic of Iraq or was a separate entity. At paragraph 64 he cited the following principles from Dickson, Lindsay and Loonam, State Immunity: Selected Materials and Commentary: a) The characterisation of a party to proceedings as a department of the government of a foreign sovereign State depends not on any single factor, but on a consideration of all relevant circumstances. b) The status of the party under the law of its home state is one relevant factor but is not decisive. Nor is the presence of separate legal personality itself decisive against characterising a party as a department of government. c) A detailed analysis of the constitution, function, powers and activities of the party and of its relationship with the state is likely to be essential. The existence of State control is not, however, a sufficient criterion. d) The courts are likely to exercise caution before treating a party having separate legal personality as a department of government…". Gross J. added: "The authors go on to say that there should not be a 'judicial no-man's land'; the principles to be applied in determining whether an entity is a 'department of government' should mirror those for determining whether the entity is a 'separate entity'." The evidence Both parties adduced written evidence as to how the Defendant is viewed as a matter of Argentine law, in particular, whether the Defendant was "autarchycal" or economically independent. There was a considerable and lengthy dispute between the parties' Argentine lawyers on this point. However, it is to be noted that whether or not the Defendant is "autarchycal" or economically independent according to Argentine law will not necessarily determine the question whether, in English law and for the purposes of s.14 of the State Immunity Act 1978, the Defendant is to be regarded as a department of government or a separate entity. As from 1953 there was a shipyard known as Astilleros y Fabricas Navales del Estado (AFNE). Decree No.10.627 of 1953 created AFNE as a state enterprise, "dependent" on the Naval Department of the Argentine state and directed by a board of directors led by a senior official of the Navy. Article 2 of the decree provided that it was to construct both merchant and naval vessels. Decree No.10.874 of 1953 provided that Astillero Rio Santiago, which was also "dependent" on the Naval Department, was to form part of AFNE. Article 2 provided that it was to be involved in the Navy's activities relating to the construction of war ships and merchant vessels. It was to be directed by a senior official or engineer of the Navy.[2] It was however common ground that the Defendant was created in 1993. In that year the employees and assets of AFNE were transferred from the Ministry of Defence to the Province of Buenos Aires in preparation for privatisation of the shipyard. Article 4 of the Transfer Agreement provided that the Province of Buenos Aires "agreed to go ahead with the privatisation of the assets transferred." Article 4.2 provided that once "the said privatisation is implemented, the Province State shall require and control that the capacity of the Shipyard or Productive Unit are effectively maintained for the construction and repairs of War Ships." It appears that the Transfer Agreement was approved by National Decree No.1787/93 and ratified by Law No.11.615 of the Province of Buenos Aires. Article 11 of that law provided that "any operative expenses as well as those of the transferred assets, including the costs of the personnel to be paid from this date will be borne by the Province of Buenos Aires." The Transfer Agreement having been approved both nationally and provincially it was necessary for the Governor of the Province of Buenos Aires to maintain the shipyard until privatisation. He did so by means of a Decree No.4538 dated 20 December 1993. The preamble to that decree stated that "it is necessary immediately to support actions leading to the maintenance of the productive continuity of the Shipyard until its definitive privatisation, due to the social importance of the company" and that it was "essential to give the Shipyard adequate capacity for this purpose by conferring on it economic independence until privatisation is completed." The decree provided as follows: "Article 1: The creation of Ente Administrador del Astillero Rio Santiago in the jurisdiction of the Province of Buenos Aires as a State-Owned Economically Independent Entity. Article 2: The Entity created shall have sufficient power to act either in public or private areas, within the areas of competence defined by this Decree. The Entity shall be domiciled in the city of Ensenada and shall be responsible to the Executive Power through the Ministry of Production. Article 3: The objects of the Entity will be: (a) the faithful observance of the National Agreement signed on 26 August 1993, by which the Government transferred to the Province of Buenos Aires the personnel and assets of ASTILLEROS Y FABRICAS NAVALES DEL ESTADO SA (AFNE SA); and (b) the development, exploitation and marketing of its activities and those connected with the shipping industry, as well as performing any other activity within the basic-metal industries and in general; machinery and equipments, and the respective complements related to the categories indicated above. Article 4: The Administration of the Economically Independent Entity will be exercised by a Board of Directors which – as proposed by the Ministry of Production – will be nominated by the Executive Power, and will be made up as follows: (a) A President whose remuneration will be equivalent to the pay of the Under-Secretary. (b) Four (4) Directors whose remuneration will be equivalent to the pay of the Province Director. Article 5: The Entity shall administer and exploit the assets transferred by the National State, until the time it is privatised. For the fulfilment of its objectives, the Entity will have the following attributions:- (a) To determine and carry out the commercial policy of the transferred Shipyard. (b) To sign agreements with local, provincial, national, international companies, persons or public or private entities for the compliance of the objectives indicated in this decree, notwithstanding the observance of the measures required by the legislation in force in this respect. (c) To contract the purchase of assets, construction of works or services, with adjustment to the provincial laws applicable in this subject. (d) To practice and perform the General Inventory of each of the assets transferred by the National State, with adjustment of the general provisions in this subject. (e) To administer the resources resulting from its activity, and apply them to the exploitation following the norms and subject to the Control Bodies. (f) To request a complete health examination to the transferred personnel in order to determine the possible labour incapacity of workers. Article 6: The Shipyard shall submit to the Executive Power a draft copy of the Functional Organisation Chart required for the fulfilment of the entrusted functions. Article 7: On the basis of strategic and political aspects derived from the Executive Power, the Shipyard shall submit an annual report of management, without prejudice to the audit and management control tasks carried out by the Ministry of Production. Article 8: Each contract by the Shipyard will be made in accordance with the Accountancy Law and its regulations. Article 9: Create the PROVINCIAL FUND OF ASTILLERO RIO SANTIAGO to be administered by the Shipyard and used for the financing of the expenses required for the fulfilment of the basic objectives that this decree imposes upon the Shipyard. The PROVINCIAL FUND OF ASTILLERO RIO SANTIAGO will be formed from the following resources: (a) Those arising from the exercise of the attributions granted by this Decree. (b) Those stated by special legal acts. (c) Contributions and donations made by the Nation, the Province, municipalities and citizens. (d) Those arising from the credit use in accordance with the laws applicable to each case. Article 10: The Executive Power will make all the modifications to the Budget and the budgetary system that are required for the fulfilment of this decree. ………………" Thus the Defendant was created in 1993 to manage or administer the shipyard until it was privatised. I am told that the shipyard has not yet been privatised. However, the Defendant has carried on business as a shipyard. A schedule of contracts between the Defendant and Argentine government bodies to which I was referred shows that it builds and repair vessels for the Argentine Navy. But the shipbuilding contract dated 15 April 2003 which has given rise to the present dispute suggests that it also builds commercial vessels (the yard number of the hull being Hull No.075) as does the contract dated 12 March 1996 to build a 27,000 DWT bulk carrier which gave rise to a dispute between Milantic Trans SA (a Panamanian company owned by the Dutch shipping group Orient Shipping) and the Defendant. The characteristics of the Defendant as revealed by the 1993 decree which created the Defendant may be summarised as follows. It is a state owned entity responsible to the Ministry of Production (article 1). Whilst it has a board of directors the board is proposed by the Ministry of Production and nominated by the Executive Power, which appears to be a reference to the government either of Argentina or of the Province of Buenos Aires (article 4). The Ministry of Production also carries out audit and management control tasks (article 7) and the Executive Power has power to modify the Defendant's budget (article 10). The objects or purposes of the Defendant include the objects of the Transfer Agreement (managing the shipyard pending privatisation and preserving its capacity for building and repairing war ships) and the development, exploitation and marketing of the shipyard's business (article 3). It has power to act in both the public and private sectors (article 2) and to determine and carry out the commercial policy of the shipyard (article 5(a)). It has power to sign agreements with public or private entities, including international companies, and to purchase assets or services (article 5(b) and (c)) The expenses required to fulfil its objectives come from the Provincial Fund of Astillero Rio Santiago which is funded by the income earned from managing the shipyard (article 9(a)) and by contributions from the state (article 9(c)). Thus, whilst the Defendant is owned and to a significant extent controlled and financed by the state, its functions and activities appear to be those of a commercial shipyard which builds and repairs ships for both the Argentine Navy (and other governmental or public bodies) and private shipowners. If the 1993 Decree were the only evidence as to the nature of the Defendant one would conclude that although it is a state owned shipyard controlled and financed to a significant extent by the state it appears to be an entity which is distinct from the executive organs of the government of the state in that it carries on the business or activity of a shipyard. That business or activity is such as a privately owned company might conduct and is not typically recognised as governmental or sovereign activity. That business or activity, together with the fact that the Defendant has power to sign agreements with public and private entities, indicates that it has the capacity to sue and be sued. The 1993 Decree is thus cogent evidence that the Defendant is, within the meaning of s.14(1) of the State of Immunity Act 1978, a separate entity and not a department of government. However, the 1993 Decree is not the only evidence as to the nature of the Defendant. In 2006 an Argentine court was called upon to decide whether, in circumstances where Milantic Trans SA (a purchaser of a vessel built by the Defendant) had obtained a London arbitration award against the Defendant, that award could be enforced against the Province of Buenos Aires. It was held that it could be, notwithstanding that Counsel for the Province had argued that, having regard to the terms of the 1993 decree, the Defendant was "an entity separate from the provincial state, that the Yard has legal capacity and its own assets (Article 9), and accordingly cannot be equated with the province". The court held that although the Defendant was "formally conferred with economic independence until privatisation could be effected (decree No.4583/93)…. the legal reality shows that in fact the said "independence" of [the Defendant] never materialised." The reasoning underlying this conclusion centred upon the question whether the Defendant had the quality of "autarchy" or economic independence which the state intended to confer by article 1 of the 1993 decree. It was held that it did not and that in those circumstances the arbitration award could be enforced against the Province. The reasoning of the court may be summarised as follows: i) Autarchy or economic independence requires three elements to be satisfied: status, patrimony and public purpose. ii) The Defendant lacks status because it "continues to be hierarchically dependant on the Executive Power." That is because its functional organization chart or (pursuant to another translation) memorandum of association had not been approved, the board of directors was nominated or designated by the Executive Power (article 4 of the 1993 Decree) and subsequent decrees (nos. 1045/04 and 1987/04) stated that "matters pertinent to the President would come under the responsibility of the Minister of Government and later of the Chief of the Under-Secretary of Co-Ordination of Public Policy of the Chief of Cabinet of the Province". iii) The Defendant also lacks patrimony because it lacks assets as indicated by statute 11.837 which required the Executive Power to act as guarantor of the Defendant in connection with bank guarantees issued in connection with the construction of vessels by the Defendant for export. iv) It follows that the Defendant, although intended by the state to be autarchycal or economically independent, was not so in fact. v) The Defendant was a decentralised body to which functions had been assigned but which was hierarchically subject to the "central organ". This decision is plainly cogent evidence that the Defendant lacks the quality known in Argentine law as autarchy. The actual decision permitting the arbitration award to be enforced against the Province has been set aside on appeal but for reasons which do not affect the reasoning of the court on the question of autarchy. The question therefore for this court is whether the Milantic decision means that the Defendant is not, as matter of English law, a separate entity within the meaning of s.14(1) of the State Immunity Act 1978. The Defendant adduced expert evidence of Argentine law from Professor Ruben Miguel Citara, an Argentine lawyer who successfully argued in the Milantic case that the Defendant was not independent or autarchycal. One of the matters he addresses in his first witness statement is whether the Defendant "has the legal capacity to sue or be sued in its own name." This is an essential quality of a separate entity as provided in s.14(1) of the State Immunity Act 1978. Professor Citara dealt with this topic in several places in his first witness statement. He stated that because the Defendant is not an autarchycal entity it lacks legal personality and the capacity to sue or to be sued in its own name; see paragraph 14 of his first witness statement. He said that the Defendant was established by the State without legal capacity; see paragraphs 56-59. He said that the Defendant had no capacity to sue or be sued because (i) it must be represented by the Fiscalia de Estado (translated as Attorney General) and (ii) it has no legal standing and is therefore not autonomous or separate from the Province of Buenos Aires; see paragraphs 60-65. The other essential quality of a separate entity mentioned in s.14 of the State Immunity Act is that it must be "distinct from the executive organs of the government". Conversely it must not be a "department of that government". This topic is dealt with by Professor Citara in his second witness statement. He refers to the Defendant as "a department" which "performs functions which are sovereign in nature". It remains "no less a governmental organ or department of the Federal Republic of Argentina"; see paragraphs 9-11. Capacity to sue and be sued Professor Citara's first reason for saying that the Defendant lacks the capacity to sue and be sued is that it is a conclusion which flows from the decision in Milantic that the Defendant is not autarchycal; see paragraph 14 of his first witness statement. Whilst this conclusion may at first sight seem to follow it is necessary to be cautious in drawing such a conclusion because the court in Milantic did not expressly deal with the question whether the Defendant had "the capacity to sue or be sued" in its reasoning. Indeed, the court referred to the argument of counsel for the Province being that the "joint and several responsibility of the Provincial State should be dismissed." The use of that phrase suggests that the argument to be met was not that the Defendant was not liable to be sued but that the Province could also be sued for the debts of the Defendant. However, other language used, for example, whether the Province is "the holder of the legal relation on which the claim is based" and a reference to the opinion of the legal writer Miguel Marienhoff as to what "status" enables an entity to do (acquire rights and obligations and dispute a lawsuit) suggest that the argument was that the Province was liable and the Defendant was not. This lack of clarity makes it appropriate to exercise caution in drawing conclusions from the decision and to focus upon the reasoning for decision. The court held that the Defendant lacked status because it "continues to be hierarchically dependant on the Executive Power." This was because the functional organisational chart (or memorandum of association) had not been approved, the board of directors was nominated or designated by the Executive Power (article 4 of the 1993 Decree) and subsequent decrees (nos. 1045/04 and 1987/04) stated that "matters pertinent to the President would come under the responsibility of the Minister of Government and later of the Chief of the Under-Secretary of Co-Ordination of Public Policy of the Chief of Cabinet of the Province". Thus the court was relying upon the circumstance that the Executive Power had a significant degree of control over the Defendant. However, it is not an obvious conclusion from the fact that the Defendant is hierarchically dependant on the Executive Power in the sense explained by the court that the Defendant lacks the capacity to sue or be sued. The circumstance that the Executive Power has control over the Defendant does not lead logically or necessarily to the conclusion that the Defendant lacks the capacity to sue or be sued. It could be argued, based upon the reference made to the opinion of Marienhoff in the Milantic judgment, that if an entity lacks status and so lacks a capacity to acquire rights and obligations and to dispute a lawsuit it therefore lacks a capacity to sue and be sued. I am not however convinced that this argument is correct. (a) An argument based upon this extract from the opinion of Marienhoff has not been put in precisely these simple terms by Professor Citara. (Nor does the relevant passage from Marienhoff appear to have been translated in exhibit 6 to Professor Citara's his first statement, although it is set out in the judgment.) By contrast other reasons (with which I shall deal) were put forward in his witness statement to support the proposition that the Defendant lacked the capacity to sue and be sued. (b) It is not apparent that Marienhoff was considering an entity such as the Defendant, namely, one which was created by decree and was intended to be autarchycal or economically independent but was not so in fact. (c) The reasoning in support of the conclusion that the Defendant lacks status, namely, that it is hierarchically dependant on the Executive Power, does not lead logically or necessarily to the conclusion that it lacks the capacity to sue and be sued. (d) I am sceptical that the argument can be right in circumstances where a capacity to sue and be sued is to be expected of the entity created by the 1993 decree, even if the intended quality of autarchy or economic independence was not in fact achieved. It is to be noted that the Defendant has a domicile and power to enter agreements. The court also held that the Defendant lacked patrimony or assets because the Executive Power was required by statute 11.837 to act as guarantor of the Defendant in connection with bank guarantees issued in connection with the construction of vessels by the Defendant. It does not logically or necessarily follow from the absence of patrimony or assets in the sense explained that the Defendant lacks the capacity to sue or be sued. Indeed, the notion of the Executive acting as guarantor of the Defendant's obligations to a bank suggests that the Defendant has the capacity to incur obligations. I am therefore not persuaded by Professor Citara that it follows from the decision in Milantic that the Defendant lacks the capacity to sue or be sued. Mr. Ruggiero, the Argentine lawyer instructed by the Claimant, has drawn attention to two decisions of higher courts in Argentina in which the Defendant has been sued as an independent entity. One was in June 2001 and the other was in August 2006; see paragraph 5 of his witness statement. Professor Citara does not dispute that the Defendant was sued as an independent entity in these cases. He merely describes them as "highly irregular" and decided before Milantic (which was decided in November 2006); see paragraphs 66-68 of his first witness statement. In his second statement at paragraph 41 he states that no issue as to the capacity to sue or be sued was raised in them. Nevertheless they are evidence that the Defendant can be sued. They are not commented upon in the reasoning in Milantic. Professor Citara's second reason for saying that the Defendant lacks the capacity to sue and be sued is that that the Defendant was established by the State without "legal capacity"; see paragraphs 56-59. But again, I am not convinced by his reasoning. In paragraph 57 he relies on the Defendant being owned by the Provincial State and on all decisions being taken by the Province. However, it is not a logical or necessary inference from state ownership that the Defendant lacks the capacity to sue or be sued. Further, the court in Milantic did not say in terms that "all decisions [are] taken by the Province". This appears to be a somewhat loose reference to the circumstance that the Defendant is hierarchically dependant on the Executive Power. It is not a necessary consequence from that that the Defendant lacks capacity to sue or be sued. In paragraph 58 he says that the Defendant cannot conclude contracts in its own name and refers to the condition precedent in the shipbuilding contract in the present case that Government approval must be given to the contract. But that condition precedent does not indicate that the Defendant cannot conclude contracts in its own name. Indeed, the contract itself shows that the Defendant does conclude contracts in its own name. Finally, Professor Citara's says that the Defendant had no capacity to sue or be sued because (i) it must be represented by the Fiscalia de Estado (translated as Attorney General) and (ii) it has no legal standing and is therefore not autonomous or separate from the Province of Buenos Aires; see paragraphs 60-65. As to the requirement that the Fiscalia de Estado represent the Province, its autarchycal entities and any other form of administrative decentralised body, I do not understand why it logically follows from that requirement that the Defendant cannot sue or be sued. No explanation is given by Professor Citara as to why that conclusion follows. If the conclusion were correct it would follow that the Province also had no capacity to sue or be sued since it too must be represented by the Fiscala de Estado. As to the Defendant having no legal standing and being not autonomous or separate from the Province, reliance is placed on the fact that the Province "pays lawsuits brought against Astillero" and that "the Province is responsible for the payment of judgments". Again, it is not a logical or necessary consequence of such matters that the Defendant cannot sue or be sued. On the contrary, the notion of "lawsuits brought against Astllero" suggests that the Defendant can be sued. Reliance is also placed by Professor Citara upon the Law of Ministries No.13.757. However, that provides that the Ministry of Agrarian Affairs and Production is "responsible for the management control and promotion of port activities, construction industry and shipping repairs, as well as the intervention in the relations with the [Defendant]." That perhaps reflects Article 2 of the 1993 decree but does not indicate that the Defendant lacks the capacity to sue or be sued. Reliance is also placed on the Budget Statute but it is not explained why. Finally, reliance is placed on the fact that in order to pay salaries and judicial decisions the Defendant must apply to the Provincial State. But it does not follow from that that the Defendant lacks capacity to sue or be sued.[3] I am therefore unconvinced by Professor Citara's witness statements that the Defendant lacks the capacity to sue or be sued. I consider, on the balance of probabilities, that the Defendant has the capacity to sue and be sued: i) It has been sued in two cases in Argentina in recent years. ii) It enters into shipbuilding contracts in its own name which suggests that it is capable of being sued and being sued. iii) The Defendant's constitution, function, powers and activities as revealed by the 1993 decree (but omitting the quality of autarchy or economic independence which it has been held to lack notwithstanding the terms of article 1) make it probable that the Defendant has the capacity to sue and be sued; see paragraph 20 of this judgment. iv) It is improbable that an entity which, by the 1993 decree which created it, has a domicile (article 2) and is given power to sign agreements (article 5) lacks capacity to sue and be sued. v) It is improbable that an entity which, in addition to contracting with government bodies such as the Argentine Navy, contracts with foreign shipowners such as the Claimant in this action and Milantic Trans SA does not have a capacity to sue and be sued. I therefore find on the balance of probabilities that the Defendant is an entity which has the capacity to sue and be sued. I do not consider that the decision or reasoning in the Milantic case compels a different conclusion. In reaching this conclusion I have not found it necessary to rely upon the expressions of opinion by Mr. Ruggiero. It is clear that his opinion supports the conclusion which I have reached but I did not feel able simply to accept his opinion. The manner in which he put the Milantic decision to one side on the grounds that it was a first instance decision which had been set aside on appeal without considering the reasoning in the decision at first instance or the reasons for the appellate decision dissuaded me from placing compete confidence in the views he expressed. "Distinct from the executive organs of the government" The second essential quality of a separate entity mentioned in s.14 of the State Immunity Act is that it must be "distinct from the executive organs of the government." Professor Citara refers to the Defendant as "a governmental organ or department of the Republic of Argentina". However, the Defendant is not described as such in the 1993 decree which created it. On the contrary it is described as a state-owned economically independent entity. The Argentine court in the Milantic case found that the said "independence" (or autarchy) was not in fact created but did not consider the nature of the entity otherwise created by the 1993 decree beyond saying that there was "just decentralisation …………..a form of organisation consisting in the assignment of functions of the central authority to an organ or an officer to exercise them freely, but they continue to be hierarchically subject to the central organ…". Importantly, there was no analysis by the court of the nature of the functions of the Defendant, in particular whether they are of a sovereign nature or distinct from the executive organs of the government of the state. No doubt that was because such issue was not a matter which had to be determined by the court. It is however an issue which must be addressed by this court because it is relevant to the application of s.14(1) of the State Immunity Act; see Propend Finance v Sing [1997] EWCA Civ 1433. Professor Citara appears to say that, shorn of the characteristic of autarchy, the Defendant "remains" a department of government. Consistently with the decision in the Milantic case he describes the Defendant as a "decentralised body". He then expresses his opinion that the Defendant performs "functions which are sovereign in nature" and is not a commercial shipyard. It is striking that his opinion as to the character of the Defendant's functions makes no reference to the construction of merchant ships; see paragraphs 9-11 and 26-33 of his second witness statement. However, the shipbuilding contract in this case and the shipbuilding contract in the Milantic case show that this must be a significant part of the Defendant's work. That is the normal work of a commercial shipyard. Indeed, in his argument in the Milantic case he explained that the shipyard was required to look for purchasers of its ships abroad because the economic situation in the 1990s, including the liquidation of state companies, left it without clients. Yet Professor Citara says there is no basis for Mr.O'Neil's description of the Defendant as a commercial shipyard. This firm dismissal of Mr.O'Neil's description of the Defendant in circumstances where there is, at the very least, a basis for it does not encourage me to place confidence in the opinion expressed by Professor Citara as to functions of the Defendant being "sovereign in nature". In any event, his opinion does not seem to me to be right, at any rate as a matter of English law. As I have said earlier in this judgment the functions of the Defendant do not appear to me to fall within Lord Wilberforce's description of sovereign or public acts. In Kuwait Airways Corporation v Iraqi Airways [1995] 1 WLR 1147 at p.1160 B Lord Goff said: "It is apparent from Lord Wilberforce's statement of principle that the ultimate test of what constitutes an act jure imperii is whether the act in question is of its own character a governmental act, as opposed to an act which any private citizen can perform. It follows that, in the case of acts done by a separate entity, it is not enough that the entity should have acted on the directions of the state, because such an act need not possess the character of a governmental act." Whilst the Defendant does work pursuant to contracts with the Argentine government which is of benefit to the Argentine government and which the government requires as a sovereign, for example, the building or repair of warships, it does not follow that the construction or repair work which the Defendant does pursuant to contract with the government is sovereign in nature or not "distinct from the executive organs of the government of the state". On the contrary the work of the Defendant both for the Argentine Navy and for commercial shipowners appears to me to be that which a private shipyard does. It was submitted on behalf of the Defendant that the commercial nature of the specific transaction between the parties was "completely irrelevant" because states and state entities engage in commercial activities without altering their status as sovereign entities. However, the nature of the Defendant's functions have to be examined in order to decide whether the Defendant is, within the meaning of s.14 of the State Immunity Act 1978 as explained by the English authorities to which I have referred, a department of government or an entity distinct from the executive organs of the government of the state. For these reasons I am unconvinced by Professor Citara's opinion that the Defendant is a department of government, at any rate in the sense in which that expression is used in s.14(1) of the State Immunity Act 1978. On the contrary I consider, on the balance of probabilities, that it is not a department of government and is an entity distinct from the executive organs of the government of the State, for these reasons: i) The Defendant was created with the object of managing the shipyard (or more accurately the assets transferred by the national to the provincial state) until the time when the shipyard was privatised. ii) It determines and carries out the commercial policy of the shipyard (see article 5 of the 1993 decree). iii) It has power "to act either in the public or private areas" (see article 2 of the 1993 decree) and does so. iv) The Defendant is, as Professor Citara accepts (see paragraph 57 of his first statement), "an organisation aimed at the production of goods and services". v) The work the Defendant does is not work of a type associated with the executive organs of government. It is on the contrary work such as a private company might do. I have not overlooked the facts that the Defendant is owned by the state, that the government nominates the board of directors, that the Chief of Cabinet of the Province of Buenos Aires was assigned the responsibilities of the President of the board[4], that the Defendant is responsible to the government through the Ministry of Production or that financial support is provided by the government. These factors show that the entity is "of the state" but the English authorities to which I have referred make clear that such characteristics are insufficient to make the Defendant a department of government or an entity which is not distinct from the executive organs of government of the state in circumstances where its functions or activities are those which a private company might have in trade or commerce. Conclusion as to separate entity Having considered, as best I can on the material placed before the court, the constitution, function, powers and activities of the Defendant and of its relationship with the state I have concluded that the Defendant is a separate entity within the meaning of s.14 of the State Immunity Act 1978. It follows that the order made by Flaux J. for alternative service on Eversheds was not in conflict with s.12 of the State Immunity Act 1978. Non-disclosure At the hearing it was submitted on behalf of the Defendant that the order made by Flaux J. should also be set aside on the grounds that there had been a failure to disclose to the judge that, although the Claimant asserted that the Deeds in question contained English jurisdiction clauses, the Claimant did not inform the judge that there was a dispute between the parties as to whether the Deeds in fact contain a English jurisdiction clause of the type alleged (as opposed to an agreement to London arbitration with the English court having supervisory jurisdiction). This ground was not relied upon in the Application Notice. Although the witness statement in support of the application said that full disclosure of the background to the parties' disputes had not been made to the judge, the particular complaint now relied upon was not identified as such. The complaint in the witness statement was understood to be a complaint that the Claimant had not informed the judge of the arbitration under the shipbuilding contract and of the Defendant's intention to seek a stay of this claim on the grounds that it should be referred to an existing arbitration. A witness statement of Mr. O'Neil responded to that complaint. It was submitted on behalf of the Claimant that if there was any force in the complaint now made that would be a ground for challenging the order made by Field J. for service out of the jurisdiction rather than the order made by Flaux J. permitting alternative service on Eversheds. There seems to me to be force in this submission. First, the question whether there was an English jurisdiction clause was relevant to the application before Field J. It was not relevant to the application before Flaux J. Secondly, paragraph 8 of the witness statement of Mr. O'Neil which is the subject of complaint states that that the ground of jurisdiction relied upon before Field J. was that the Deeds contained an English jurisdiction clause. That was indeed the ground relied upon before Field J. I therefore do not accede to the submission that the order made by Flaux J. should be set aside on the grounds of non-disclosure. No application was made before me that the order of Field J. should be set aside on the grounds of non-disclosure. Conclusion For the reasons which I have endeavoured to express I must dismiss the application to set aside the order of Flaux J. Note 1   The transcript of Propend Finance v Sing contains neither page numbers nor paragraph numbers. The passages to which I have referred are in the judgment of Leggatt LJ in the section headed State Immunity. They appear in the authorities bundle D2 between pages 675 and 677.    [Back] Note 2   The two decrees were not available at the hearing but partial translations of them were provided after the hearing without objection from the Claimant.     [Back] Note 3   After the hearing the Defendant applied to adduce in evidence a letter from Ms. Maduri, the Legal Affairs Manager of the Defendant. In so far as she expresses an opinion I do not consider that it should be admitted in evidence because the Defendant relied upon the expert opinion of Professor Citara. In so far as she gives evidence of fact, that the Defendant’s current accounts are fiscal accounts (which are used for funds belonging to the provincial public treasury) and that the Defendant still lacks a memorandum of association, I admit it. However, it does not seem to me that either matter leads necessarily to the conclusion that the Defendant lacks the capacity to sue or be sued. The lack of a memorandum of association (if it is that which is referred to by the court in Milantic as the functional organisational chart) may assist to show that the Defendant is hierarchically dependent on the state and the use of fiscal accounts may assist to show that the Defendant is owned by and financially dependent on the state but neither is sufficient to show that the Defendant lacks the capacity to sue or be sued. Professor Citara did not place any particular reliance on either the nature of the Defendant’s bank accounts or the lack of a memorandum of association as indicating that the Defendant lacked a capacity to sue or be sued. I therefore do not consider that it is necessary to delay giving judgment in this matter to enable the Claimant to make any further submissions with regard to the two matters of fact mentioned by Ms. Maduri.     [Back] Note 4   I was, however, informed at the hearing that a president has now been appointed.     [Back]

LORD JUSTICE ALDOUS: With leave of the judge Messrs Richard and Charles Deakin appeal the order of Rimer J of 22nd May 2000 which dismissed their application to strike out the proceedings brought by Specialist Group International Ltd. The facts relevant to the appeal are not in dispute and the parties accept that they are correctly set out in the opening paragraphs of the judgment. That being so, I adopt them. "1. SGI is a company whose principal business is the provision of the specialist skills needed for the purpose of rescuing people or property from confined spaces, whether tunnels, wells, caves, drains or collapsed buildings. It is a two person company, the two being Peter Faulding and his mother Nora. They each hold one of its two issued shares. There is a dispute between the parties as to whether Nora Faulding holds her share as a nominee or trustee for Peter, but I am not required - or in a position - to resolve that on this application, and am invited to assume for present purposes that she holds it beneficially. 2. Peter Faulding is and has always been a full-time working director of SGI. The Deakins became involved with SGI in about December 1995, although not on a full-time basis: they each have other employments, Richard Deakin being an employee of British Aerospace plc and Charles Deakin being a doctor employed by the NHS. They both became directors of SGI on 24 June 1997 and remained in office until they were removed on 10 February 1999. 3. In November 1997 £338,200 (less deductions of income tax and national insurance) was awarded and paid to the Deakins by way of directors' remuneration. In June 1998 a further sum of £120,000 (£60,000 each) was also awarded and paid to them (also less the like deductions). The net amount of the latter payments after such deductions totalled £68,008.48. That sum was not actually paid out to the Deakins, in the sense that no payment of it actually moved from SGI to them. What instead happened was that it was agreed that the Deakins should be treated as having received it and then immediately lent it back to SGI; and SGI was then treated as becoming a debtor of the Deakins in respect of the amounts so lent, the loans being repayable on demand. These loans were thereafter referred to as directors' loans and there is no doubt that is how everyone always regarded them. The remuneration awarded to the Deakins in November 1997 and June 1998 was referred to in the argument as "the 1997 bonus" and "the 1998 bonus" respectively. 4. By the autumn of 1998 relationships between the Deakins and Mr Faulding had soured. Both sides consulted solicitors. Boyd & Hutchinson acted for the Deakins. Morrisons acted initially for Mr Faulding, although by December 1998 Manches had taken over from Morrisons and they acted for SGI, Peter and Nora Faulding, as they still do. 5. Mr Faulding's stance in late 1998 was that he wanted the Deakins to sever their connection with SGI finally, although he recognised that money was due to them under the loans created on the occasion of the award of the 1998 bonus; and by their letter of 15 December 1998 Manches also recognised that SGI owed the Deakins this money although they there expressed an unwillingness on SGI's part to pay it as they said it would leave SGI with insufficient working capital to pay its other creditors as their debts fell due. The Deakins appear to have regarded their claim for payment of the directors' loans as unanswerable. Apart from this, they were also claiming that they were each entitled to one third of the issued shares in SGI, a claim based on an agreement said to have been made with Mr Faulding although he disputed that claim and still disputes it. 6. The differences between the parties led to the issue by the Deakins of two writs on 15 December 1998. In one action ("the loans action") they sued SGI for repayment of their directors' loans. The statement of claim comprised a mere four paragraphs, (two of them being devoted to claims for reimbursement of expenses and interest, which are irrelevant for present purposes). Paragraph 1, relating to the loans, reads: "The Plaintiffs [the Deakins] seek repayment of monies lent by them to the Defendant [SGI] on 30th June, 1998 and in the total sum of £68,008.48. which monies were repayable on demand. By letter dated 1st December, 1998, the Plaintiffs demanded repayment of the monies, but the Defendant has failed to repay the same." Paragraph 3 claimed interest on the loans under s.35A of the Supreme Court Act 1981 from 30 June 1998 at 8%. The other action ("the shareholders action") was one commenced against Mr Faulding alone and by it the Deakins claimed to establish their entitlement to two thirds of the issued shares of SGI. 7. The loans action was promptly settled. Julie Bond, a partner in Manches, said in a witness statement made on 17 April 2000 that it was settled on the basis that it was believed that SGI "had little or no defence to that claim at the appropriate time". The only defence which she appears to have considered SGI might have had was the point that a satisfaction of the claim might have left SGI with insufficient working capital, although that was obviously no defence to the action: it meant at most that the action might result in SGI having to enter some appropriate insolvency regime. For the purposes of this application it is agreed that no other line of defence had occurred to SGI or its advisers. The settlement of the loans action was effected by a consent order dated 18 January 1999 made by Master Moncaster. That recorded the written consent to it of both sides' solicitors and ordered SGI to pay the Deakins £71,687.69 in two instalments by 29 January 1999, plus costs. That sum was expressed to be in "full and final satisfaction of the [Deakins'] claims particularised in the Statement of Claim inclusive of interest". The judgment was satisfied in full and SGI continued to trade. Meanwhile the shareholders action proceeded towards trial, which was fixed to start on 2 May 2000. 8. That trial did not, however, start on that day because at some stage SGI and its advisers fell upon a new point. That is that SGI's articles of association incorporated regulation 82 of Table A in the Companies (Tables A to F) Regulations 1985. Under the heading "Remuneration of Directors" that provides: "The directors shall be entitled to such remuneration as the Company may by ordinary resolution determine and, unless the resolution provides otherwise, the remuneration shall be deemed to accrue from day to day." The new point is that it follows from this that the 1997 and 1998 bonuses would only have been validly declared and paid if they had been the subject of an ordinary resolution passed by Peter and Nora Faulding. It is said by SGI that there was no such resolution so that the two bonuses were invalidly declared and paid. The discovery of this point led on 6 March 2000 to the issue by SGI of a claim form against the Deakins. By it SGI claims from them the gross amount of those bonuses, a total of £458,200 plus interest ("the bonuses action"). There is no dispute between counsel that remuneration purportedly paid to directors in contravention of articles such as regulation 82, or otherwise than in accordance with the company's constitution or pursuant to a contract for service, is paid without the company's authority and can be recovered. Mr Kosmin referred me to various statements to this effect in some well-known text books on company law, and also to the decision of the House of Lords in Guinness PLC v Saunders [1990] 2 AC 663, in particular to Lord Templeman's speech at 689D to 692H. 9. The commencement of the bonuses action led to an application on 22 March 2000 by the Deakins to His Honour Judge Rich Q.C., sitting as a judge of the Chancery Division. The outcome was that the trial date of 2 May 2000 for the shareholders action was vacated and various other directions were given. One of them contemplated the making by the Deakins of a prompt application to strike out the bonuses action. That application was duly launched and is now before me for determination. I preface what follows by saying that, if the bonuses action is not to be struck out, the Deakins will, I am told, seek to raise various defences directed at avoiding the potentially painful impact of the regulation 82 point. But I am asked to approach this application on the basis that the point is on the face of it a good one, that is that the bonuses were not the subject of the required resolution and were improperly paid." The judge in paragraph 4 of his judgment referred to the bonus payments made in 1997 and 1998. He accurately recorded how the 1998 payments were not actually paid over to SGI but were lent back to it by the Deakins. However it is important to note that the 1997 payments were actually paid over and that the application was to strike out the claim for their return, although they were not the subject of the loans action. Before the judge and before us Mr John Dagnall, counsel for the Deakins, submitted that the bonuses action should be struck out because the claim should have been raised in the loans action, if at all. He relied on cause of action estoppel and issue estoppel. He also contended that the bonuses action was an abuse of the process of the court. At the outset Mr Dagnall submitted that the issue before the Court was a preliminary issue of law not a determination as to whether the action should be struck out. In support he drew attention to the order made by the judge that the question of whether the loans action should be struck out should be determined as a preliminary issue. That is correct, but it is of no importance to this appeal. The issue before the court was whether in law the bonuses action, as pleaded, should be struck out as it offended what can be called issues of res judicata. If the submissions of law were soundly based, then the action stood no real prospect of success and the claim should be struck out. If not, then the action would proceed to trial with the defendants confined to the other defences that they plead. I will come to the detailed submissions of the parties, but believe it best to set out the law upon what I have referred to as the res judicata issues. Mr Dagnall placed considerable emphasis upon the leading case of Arnold v National Westminster Bank Plc [1991] 2 AC 93 and in particular the leading speech of Lord Keith. At page 104 Lord Keith said: "It is appropriate to commence by noticing the distinction between cause of action estoppel and issue estoppel. Cause of action estoppel arises where the cause of action in the later proceedings is identical to that in the earlier proceedings, the latter having been between the same parties or their privies and having involved the same subject matter. In such a case the bar is absolute in relation to all points decided unless fraud or collusion is alleged, such as to justify setting aside the earlier judgment. The discovery of new factual matter which could not have been found out by reasonable diligence for use in the earlier proceedings does not, according to the law of England, permit the latter to be re-opened. The rule in Scotland, which recognises the doctrine of res noviter veniens ad notitiam, is different: see Phosphate Sewage Co. Ltd v Molleson (1879) 4 App. Cas. 801, 814, per Lord Cairns L.C. There is no authority there, however, for the view that a change in the law can constitute res noviter. The principles upon which cause of action estoppel is based are expressed in the maxims nemo debet bis vexari pro una et eadem causa and interest rei publicae ut finis sit litium. Cause of action estoppel extends also to points which might have been but were not raised and decided in the earlier proceedings for the purpose of establishing or negativing the existence of a cause of action. In Henderson v Henderson (1843) 3 Hare 100, 114-115, Sir James Wigram V-C expressed the matter thus: "In trying this question, I believe I state the rule of the court correctly, when I say, that where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time." It will be seen that this passage appears to have opened the door towards the possibility that cause of action estoppel may not apply in its full rigour where the earlier decision did not in terms decide, because they were not raised, points which might have been vital to the existence or non-existence of a cause of action. The passage has since frequently been treated as settled law, in particular by Lord Shaw, giving the advice of the Judicial Committee of the Privy Council in Hoystead v Commissioner of Taxation [1926] AC 155, 170. That particular part of it which admits the possible existence of exceptional cases was approved by Lord Kilbrandon in Yat Tung Investment Co. Ltd v. Dao Heng Bank Ltd [1975] AC 581, 590: "The shutting out of a 'subject of litigation' – a power which no court should exercise but after a scrupulous examination of all the circumstances – is limited to cases where reasonable diligence would have caused a matter to be earlier raised; moreover, although negligence, inadvertence or even accident will not suffice to excuse, nevertheless 'special circumstances' are reserved in case justice should be found to require the non-application of the rule." Issue estoppel may arise where a particular issue forming a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant one of the parties seeks to re-open that issue. This form of estoppel seems first to have appeared in Duchess of Kingston's Case (1776) 20 St. Tr. 355. A later instance is Reg. v Inhabitants of the Township of Hartington Middle Quarter (1855) 4 E. & B. 780. The name "issue estoppel" was first attributed to it by Higgins J. in the High Court of Australia in Hoystead v. Federal Commissioner of Taxation (1921) 29. C.L.R. 537, 561. It was adopted by Diplock L.J. in Thoday v. Thoday [1964] P. 181. Having described cause of action estoppel as one form of estoppel per rem judicatam, he said, at p. 198: "The second species, which I will call 'issue estoppel', is an extension of the same rule of public policy. There are many causes of action which can only be established by proving that two or more separate issues between the parties as there are conditions to be fulfilled by the plaintiff in order to establish his cause of action; and there may be cases where the fulfilment of an identical condition is a requirement common to two or more different causes of action. If in litigation upon one such cause of action any of such separate issues as to whether a particular condition has been fulfilled is determined by a court of competent jurisdiction, either upon admission by a party to the litigation, neither party can, in subsequent litigation between one another upon any cause of action which depends upon the fulfilment of the identical condition, assert that the condition was fulfilled if the court has in the first litigation determined that it was not, or deny that it was fulfilled if the court in the first litigation determined that it was." Issue estoppel, too, has been extended to cover not only the case where a particular point has been raised and specifically determined in the earlier proceedings, but also that where in the subsequent proceedings it is sought to raise a point which might have been but was not raised in the earlier proceedings." Lord Keith went on to refer to two cases where issue estoppel had been considered and concluded at page 108 G: "But there is room for the view that the underlying principles upon which estoppel is based, public policy and justice, have greater force in cause of action estoppel, where the subject matter is different. Once it is accepted that different considerations apply to issue estoppel, it is hard to perceive any logical distinction between a point which was previously raised and decided and one which might have been but was not. Given that the further material which would have put an entirely different complexion on the point was at the earlier stage unknown to the party and could not by reasonable diligence have been discovered by him, it is hard to see why there should be a different result according to whether he decided not to take the point, thinking it hopeless, or argue it faintly without any real hope of success. In my opinion your Lordships should affirm it to be the law that there may be an exception to issue estoppel in the special circumstance that there has become available to a party further material relevant to the correct determination of a point involved in the earlier proceedings, whether or not that point was specifically raised and decided, being material which could not by reasonable diligence have been adduced in those proceedings. One of the purposes of estoppel being to work justice between the parties, it is open to courts to recognise that in special circumstances inflexible application of it may have the opposite result, as was observed by Lord Upjohn in the passage which I have quoted above from his speech in the Carl Zeiss case [1967] 1 AC 853, 947." The most important modern statement of the law is contained in the speech of Lord Bingham in Johnson v Gore Wood [2001] 2 WLR 72. At page 89 H he said: "It may very well be, as has been convincingly argued (Watt, "The Danger and Deceit of the Rule in Henderson v Henderson: A new approach to successive civil actions arising from the same factual matter" (2000) 19 CLJ 287), that what is now taken to be the rule in Henderson v Henderson has diverged from the ruling which Wigram V-C made, which was addressed to res judicata. But Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel has much in common with them. The underlying public interest is the same: that there should be finality in litigation and a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party where those elements are present the later proceedings will be much more. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party's conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice." The principles upon which cause of action and issue estoppel are based are as stated by Lord Bingham: there must be finality in litigation and a litigant should not be twice vexed on the same matter. No doubt the phrases cause of action estoppel and issue estoppel are well known to lawyers, but they would not be recognised by educated members of the public as being an indication of those principles. It is therefore appropriate to use more recognisable names such as cause of action finality and issue finality. They are, as Lord Bingham pointed out, forms of abuse of process. That is misuse of the court's procedure in a way which would be manifestly unfair or otherwise bring the administration of justice into disrepute amongst right thinking people (see Lord Diplock in Hunter v Chief Constable of the West Midlands [1982] AC 529 at page 536. However it is important to bear in mind that the application of those principles involves the denial of the right of access to the courts conferred by common law and is a right protected by the European Convention for the Protection of Human Rights. Thus such principles should only be applied where the circumstances are such that their application is necessary to prevent misuse of the court's procedure amounting to an abuse of process. The courts have recognised the need for there to be finality of causes of action and that to relitigate the same issue amounts to an abuse of the process. Thus, as Lord Keith in Arnold pointed out, where the cause of action in the later proceedings is identical to that in the earlier proceedings, the bar is absolute unless fraud or collusion is alleged. However the same rigidity does not apply to issues that have been the subject of previous litigation. Arnold is one example. In that case a rent review clause had been wrongly construed in the earlier proceedings, but it was held that the construction was not binding on a subsequent rent review. Essentially the reason was that the contention that the rent review clause had the correct meaning was not an abuse of the process of the court. Another example is where the issue in the earlier proceedings was not fundamental to the conclusion. As Lord Diplock said in Mills v Cooper [1967] 2 QB 459 at 468: "[The] doctrine [of estoppel] … so far as it affects civil proceedings, may be stated thus: a party to civil proceedings is not entitled to make, as against the other party, an assertion, whether of fact or of the legal consequences of facts, the correctness of which is an essential element in his cause of action or defence …. in previous civil proceedings between the same parties or their predecessors in title and was found by a court of competent jurisdiction in such civil proceedings to be incorrect …" The requirement that the issue must have been an essential element in the earlier proceedings is logical when it is appreciated that the crucial question for decision is whether relitigation of that issue would amount to an abuse of process. It would normally not be right to bind a party to a finding of fact made by a court, when there was no need for that party to produce evidence to the contrary in those proceedings. An example is where the earlier proceedings take place abroad where procedures differ and the main issue is different (see Kirin Amgen Inc. v Boehringer Mannheim GmbH[1997] FSR 289). Of course what was an essential element can be difficult to discern, but that does not matter if the approach advocated by Lord Bingham in Johnson is adopted. In each case the court should decide "whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before." Mr Dagnall submitted that the award of the bonuses and the loans were one transaction. The money never left the company. All that happened was that there were book entries. The bonus payments were conditional upon the loans being made and if, as was accepted, for the purposes of this appeal, the bonuses were illegal, the loans were also invalid. There was no consideration. That being the position, the crucial allegation in the bonuses action namely that the bonuses were illegal, would have constituted a defence to the loans action. It followed that that allegation could and should have been raised in the loans action. It was therefore an issue which could not now be raised in the bonuses action. He went further and submitted that by raising the invalidity of the bonuses, SGI was attacking the basis of the judgment in the loans action. It followed the decisions in the loans action involved a decision on the merits of the bonuses action with the result that the action should be struck out on the ground of cause of action estoppel. I cannot accept Mr Dagnall's submissions as to what happened. In 1997 bonuses of £338,200 were paid with SGI deducting the appropriate income tax and national insurance which was then forwarded to the Inland Revenue. In 1998 a further sum of £120,000 was paid. Again tax and national insurance contributions were deducted. The loan of £68,008.48 was a separate transaction. The fact that it was accomplished by book entries cannot make the payment of the bonuses, the deduction of tax and national insurance and the loans all one transaction. Thus there was consideration for the loans, even if the bonus payments were illegal. The illegality of the bonus payments could have been pleaded as a counterclaim in the loans action and probably as a defence of equitable set off. But such a defence is not a true defence to the action. It is a right to set off a sum against the sum claimed in the action. The judge correctly rejected the submissions of Mr Dagnall on cause of action estoppel. "10. I do not accept this submission for the short reason that the causes of action in the loans action and the bonuses action are not identical, and Lord Keith's speech shows that to be fatal to a plea of cause of action estoppel. The difference between the two causes of action is that the loans action was in terms an action for money lent, whereas the bonuses action is one for the repayment of remuneration improperly paid. I do not regard this difference as a mere matter of form. Whilst I see much force in Mr Dagnall's submission that the 1998 bonus/loan transaction was all part of one transaction, I interpret the transaction as one in which all parties regarded the bonus as having in fact been paid on terms that the amount of the net payment to the Deakins was immediately lent back to SGI. The same result could have been arrived at by an exchange of cheques, although instead it was done by way of book entries, but I do not regard this as affecting the substance of what was done. The claim in the loans action was not, therefore, one for unpaid remuneration. It was a claim for repayment of loans which all parties recognised had arisen. The Deakins did not need to plead, as part of their cause of action, the source of the moneys lent. If SGI wanted to make something of this by way of a defence, then it was up to it to raise it. For these reasons I reject the Deakins' application in so far as it is founded on cause of action estoppel." Because of the conclusion the judge reached he did not have to consider separately the 1997 bonuses. They of course were not the subject of the loans action and therefore could not have been relevant to it. The suggestion made by Mr Dagnall that the principle of cause of action estoppel should apply to them as they were part of the whole picture is unarguable. They were actually paid and there was no loan. They were irrelevant to the cause of action and the issues in the loans action. The judge did not have the advantage that we have had of reading that part of the speech of Lord Bingham in Johnson which dealt with issue estoppel, but even so he came to his conclusion in the way suggested by Lord Bingham. Having reviewed the statements of the law on issue estoppel in Arnold, he rightly rejected the submission that the issues in the bonuses action were the same as in the loans action. The loans were as he said, a separate transaction and their illegality had simply been overlooked by everybody. He then went on to consider issue estoppel in the wider form, namely whether the illegality issue could and should have been pleaded and, if so, whether SGI should be able to litigate that issue in the bonuses action. He said: "11. I approach this application, therefore, on the basis that the bonuses action involves an issue which was not raised in the loans action, and was not the subject of a decision or admission in it, and so at most involves the concept of issue estoppel in the "wider sense" referred to by Lord Wilberforce in the Brisbane case. I interpret Lord Wilberforce's statement of principle as requiring me not to apply the Henderson principle in the almost mechanistic way which Mr Dagnall invites, but instead to look at the particular facts of the case in order to see whether the bringing of the bonuses action amounts to an abuse of the process of the court and should for that reason be struck out, or whether in all the circumstances it involves no such abuse so that to strike it out would involve the shutting out of a legitimate claim. If I may respectfully say so, it appears to me to accord with basic justice that the court's approach to issue estoppel in the so-called "wider sense" should be rather more flexible than it is to issue estoppel in the narrower sense. If an issue has been the subject of decision or admission in earlier proceedings, it is easy to see that to raise it anew in later ones is, on the face of it, something which the courts ought not ordinarily be willing to permit, since the essence of the Henderson principle is that there should be an end to litigation. But it does not follow that the full rigour of the principle should apply also to points which were not the subject of the decision or admission in the earlier proceedings, although of course in the particular circumstances of any case it may in fact be an abuse of the process to seek to raise them in later proceedings between the same parties." Having set out passages from Auld LJ's judgment in Bradford & Bingley Building Society v Seddon Hancock [1999] 1 WLR 1482, he concluded: "24. I consider, therefore, that my task in the present application requires me to look at all the circumstances leading up to the commencement of the bonuses action and to consider whether the raising in it by SGI of the regulation 82 point - one which could also have been raised in the loans action by way of defence and counterclaim - constitutes an abuse of the process of the court which should be stopped here and now. The Bradford & Bingley case shows that the mere fact that the regulation 82 point could have been taken in the loans action is not by itself enough to make the bonuses action an abuse. Some additional factor turning the bonuses action into an abuse must also be pointed to, and the onus is on the Deakins to identify it. In my view, the Deakins have not identified any such additional factor and I am not satisfied that the bonuses action constitutes an abuse of the process of the court. 25. First, whilst I agree with Mr Dagnall that the regulation 82 point could have been raised by SGI as a defence to the loans action, I do not consider that the bonuses action involves any attack, whether collateral or otherwise, on the consent judgment in the loans action. I have no doubt that that judgment estops SGI from denying that the Deakins made the loans to it on which they sued; and it may be that it also estops SGI from denying that they gave any consideration for the loans. But issues of that sort are not going to arise for consideration in the bonuses action. The issue in that action will simply be whether the 1997 and 1998 bonuses were validly awarded. If it is decided that they were not, it may follow that the court will order their repayment; but I cannot see that will involve an attack on the consent order in the loans action. 26. Secondly, although it is said that the regulation 82 point could have been raised as a defence to the loans action, the real thrust of the point made by the Deakins is that they say that SGI should have taken the opportunity then open to it to counterclaim against them not just in respect of the 1998 bonus but also in respect of the 1997 bonus. In fact, SGI raised neither counterclaim but simply submitted to judgment. There is no basis for any suggestion that it deliberately elected not to bring such counterclaims. No doubt, had the regulation 82 point occurred to SGI, it would have brought them. The penny has now dropped and SGI now wishes to bring by way of action the claims which it could have brought by counterclaim in the loans action. The loans action, whose real substance involved issues which were different from the bonuses action, was all over within a matter of weeks and involved virtually no contest or argument at all. No defence was served and the substance of the outcome was not very different from one in which the Deakins had obtained a judgment by default. The case is, therefore, on its facts very different from cases such as Yat Tung Investment Co. Ltd. v. Dao Heng Bank Ltd. and Another [1975] AC 581. I cannot regard SGI's wish to pursue the bonuses action as involving any unfair hounding of the Deakins with successive claims or as otherwise amounting to an abuse of the process. In my view, to shut SGI out from bringing the bonuses action would be to shut out the bringing of a proper claim and would be a wrong exercise of the court's jurisdiction." Those passages from the judgment are right, save for the use of the word "must" in the penultimate sentence of paragraph 24. Lord Bingham in Johnson at page 901 said that such an attitude would be too dogmatic an approach. As the judge said the true question is whether the bonuses action is an abuse of process. I agree with the judge that it is not. There is no basis for any allegation that SGI failed to raise the illegality of the loans as a tactical manoeuvre. Also the illegality of the bonuses would not have been a true defence. The loans action involved just two issues namely – were the loans made and if so how much was lent? Those issues did not involve consideration of the legality of bonuses. It could not have been an abuse of the process of the court to pay back the loans and at the same time start an action to recover the bonus payments. To start such an action at a later stage, when the point had been discovered, would not be an abuse. That is illustrated by the nature of the claim in the bonuses action. There it is alleged that the directors, in breach of the fiduciary duty to SGI, paid themselves bonuses. Such a claim differs in nature and purpose to the claim made in the loans action. Further and importantly it would be wrong to prevent SGI having their claim that the bonuses were illegal determined in court, unless there are compelling reasons, which there are not. In fact to accept the submissions of the Deakins would provide them with a windfall to which they were not entitled. In my view the judge came to the right decision. I would dismiss this appeal. LORD JUSTICE MAY: I agree that this appeal should be dismissed for the reasons given by Aldous LJ, whose account of the facts I gratefully adopt. As Aldous LJ said during the hearing, the authorities taken as a whole tend to encourage elaborate technical submissions which many percipient non-lawyers would scarcely understand. Cause of action estoppel and issue estoppel are not readily understandable phrases to a non-lawyer. It should not be necessary to have to pick for hours over the precise text of a dozen or so law reports to find out what in the end is reasonably straight forward and understandable law capable of being simply expressed. I would try to express it simply as follows. If a claim has been explicitly determined in previous concluded proceedings between the same parties, that claim cannot be raised again, other than on an appeal, unless there is fraud or collusion. If a necessary element of a claim has been explicitly determined in previous concluded proceedings between the same parties, that issue cannot be raised again, if, as is likely but not inevitable, it would be an abuse to raise that issue again. This may also extend to an implicitly necessary element of the previous determination. The previous determination may include a settlement. If a claim or issue has not been determined in previous concluded proceedings between the same parties, there may nevertheless be circumstances in which, as a matter of public and private interest on a broad merits-based procedural judgment, it would be an abuse for a party to raise that claim or issue. Such circumstances may, depending on the facts, exist where the litigant could and should have raised the matter in question in earlier concluded proceedings. There may in particular cases be other elements of abuse, including oppression of another party; but abuse of process is a concept which defies precise definition in the abstract. The court will only stop a claim as an abuse after most careful consideration. The main sources of this summary are Arnold v. NatWest Bank plc [1991] 2 AC 93 at 104-107 and Johnson v. Gore Wood & Co [2001] 2 WLR 72 at 90 and 118. The issue which the judge decided assumed that the 1997 and 1998 bonuses had been unlawfully awarded and paid. I am persuaded that, on this assumption, the defendants were fiduciaries obliged to reimburse the company. The 1997 bonuses were paid. They were not retained as directors' loans. There seems to me to be no case whatever that settlement of an action to recover the 1998 loans carried with it any implicit acceptance as to the lawfulness of the 1997 bonuses. These were awarded and paid on different occasions and, it could be, in different circumstances. They were not a relevant subject matter of the loans action. In my view, the fact that the constitution of the 1998 loans was effected as a book transaction (and not by payment of the bonuses and repayment of the same amount as loans) does not mean that the awarding of the bonuses and the constitution of the loans were parts of the same single transaction. The settlement of the loans action did not determine that the bonuses were lawfully awarded. Nor am I persuaded that the defendants' claims to recover the 1998 loans implicitly carried with them the proposition that the 1998 bonuses were lawfully paid. If I were wrong about that, and taking account of the fact that the claim to recover the bonuses probably could – but need not – have been raised as an equitable set off as a defence to the loans action, I would nevertheless conclude without hesitation that there was no abuse or oppression in permitting the company to claim, notwithstanding the settlement of the loans action, repayment of the bonuses on the ground that they were unlawfully awarded. On the contrary, it seems to me that justice requires that the question whether the bonuses were unlawfully awarded and paid should be open for determination. If the company's claims were to be regarded as an abuse, this would generate a potential for directors to award themselves bonuses unlawfully and retain them, in breach of their fiduciary obligation to repay them, by the device of converting them into loans. It seems to me that there would have been no abuse, if the company had consciously decided to compromise the loans action and then proceed to make a claim to recover the bonuses. In fact, there was no such conscious decision. ORDER: Appeal dismissed; adjourned until 8th June 2001 at 10.00am, unless order by consent. (Order does not form part of approved Judgment)

civil appellate jurisdiction civil appeals number. 477 to 488 of 1964. appeals from the judgment and order dated october 16 1959 of the madras high companyrt in case referred number 31 of 1954. a. palkhivala c. ramakrishna 0. c. mathur and b. dadachanji for the appellants. v. viswanatha sastri gopal singh r. n. sachthey and b. r. g. k. achar for the respondent. the judgment of the companyrt was delivered by subba rao j. these appeals raise the question of the liability of the appellants to pay income-tax under s. 44d 1 of the indian income-tax act 1922 hereinafter called the act in respect of the income of the m.c.t.m. banking corporation limited. sir m.ct.m. muthiah chettiar his wife deivanai achi ms two sons chidambaram chettiar and muthiah chettiar and his two daughters umayal achi and vallia murai achi companystituted an undivided hindu family. the said family carried on moneylending business on an extensive scale in british india burma and elsewhere. upto and inclusive of the year 1927-28 the undivided hindu family was assessed to income- tax as such. during the assessment year 1928-29 it was claimed that a partition had taken place in the said family and that sir m.ct.m. muthiah chettiar and his two sons constituted a firm. the said firm was duly registered and it was assessed to income-tax. after the death of the said sir m.ct.m. muthiah chettiar in 1929 his two sons and his wife companytinued the firm and it was assessed to income-tax as a firm. in june 1929 the said firm started a new money-lending business at kuala lumpur in the federated malaya states with a capital of rs. 12 lakhs. the said capital was transferred from its business in burma. on march 24 1932 a companypany called the m.ct.m. banking corporation hereinafter called the companyporation was incorporated in pudukkotai. it companymenced business on and from march 31 1932. one of the purposes of the said corporation was to acquire and carry on business which was being carried on by the firm in kuala lumpur. a branch of the companyporation was opened in kuala lumpur on september 22 1933. between numberember 1 1933 and numberember 31 1937. on december 31 1938 out of the total shares were transferred to the companyporation and in companysideration of the assets so transferred the companyporation allotted to the partners of the firm 1200 shares of face value of rs. 1000 each. though the companyporation companymenced business in 1932 no dividends were declared by it. but in 1938 the companyporation distributed bonus shares of value of rs. 5 lakhs out of the profits of rs. 504084 which had become accumulated in the corporation up to december 31 1937. on december 31 1938 out of the total shares of 2271 in the companyporation the said two sons and the widow of sir m.ct.m. muthiah chettiar held 1944 shares. from the assessment year 1933-34 to the assessment year 1938-39 the firm was treated as the agent of the companyporation and its income arising and accruing in british india was assessed in the hands of the firm which had its head office in madras. for the assessment years 1939-40 1940-41 and 1941-42 the income-tax officer i circle madras assessed the said partners of the firm separately under s. 44d of the act in respect of the income of the companyporation. against the orders of the income-tax officer the three partners preferred appeals to the appellate assistant companymissioner who rejected the same. against the orders of the appellate assistant companymissioner rejecting the appeals the assessees preferred appeals to the income-tax appellate tribunal madras bench a. the tribunal allowed the appeals of the assessees on the ground that the income from the assets transferred to the corporation was number assessable to income-tax at the time of the transfer and that therefore the income therefrom was number liable to tax during the assessment years under s. 44d of the act. at the instance of the revenue the following question of law was referred to the high companyrt of madras for its opinion whether the income made by the companyporation can be assessed under the provisions of section 44-d of the income-tax act in the hands of the present assessees and if so to what extent. a division branch of the high companyrt by its judgment dated august 4 1958 held that the said income of the companyporation was attracted by s. 44d of the act but before giving a final answer to the question propounded it directed the tribunal to furnish a further statement of case on the question whether the assessees were entitled to relief under sub-s. 3 a of s. 44d of the act. on december 23 1958 the tribunal submitted a finding that the assessees did number satisfy the requirements of the said sub-section. the high court accepted the said finding and answered the question against the assessees in the affirmative. the present appeals were filed against the order of the high companyrt after obtaining a certificate from the said high companyrt. we shall number proceed to companysider the arguments advanced by mr. palkhivala learned companynsel for the assessees in support of his companytention that the income of the corporation was number assessable to tax in the hands of the assessees. as all his arguments turned upon the provisions of s. 44d of the act it would be companyvenient to read the same at the outset where any person has by means of a transfer of assets by virtue or in companysequence whereof either alone or in companyjunction with associated operations any income which if it were the income of such person would be chargeable to income-tax becomes payable to a person number resident or to a person resident but number ordinarily resident in the taxable territories acquired any rights by virtue or in companysequence of which he has within the meaning of this section power to enjoy such income whether forthwith or in the future that income shall whether it would or would number have been chargeable to income-tax apart from the provisions of this section be deemed to be income of such first mentioned person for all purposes of this act. chapter vb was inserted in the income-tax act 1922 by the indian income-tax amendment act 1939 act vii of 1939 . section 44d is one of the sections of that chapter. the provisions of this chapter were modelled on s. 18 of the english finance act of 1936 as amended by s. 28 of the english finance act of 1938. the object of s. 44d of the act as disclosed by the provisions thereof was to prevent residents. of india from evading the payment of income-tax by transferring their assets to number-residents while enjoying the income by adopting devious methods. the sub-section suffers from want of clarity but a deeper scrutiny brings out the following ingredients of it there must be a transfer of assets ii by reason of that transfer income traceable to the said assets becomes payable to a person number-resident or to a person resident but number ordinarily resident in the taxable territories iii the resident by means of the transfer alone or in conjunction with associated operations acquires right to enjoy such income iv the income from the said assets if it was the income of the resident would be chargeable to income-tax and v in that event the income of the number- resident would be deemed to be the income of the resident for all the purposes of the act. shortly stated under this section if a resident has power to enjoy the income accruing or arising out of the assets transferred to a number- resident he would be deemed to have received that income and. therefore would be liable to be assessed under the act. the first companytention of mr. palkhivala is that the expression by means of a transfer in s. 44d 1 of the act means a transfer by an assessee and that as in the instant case the transfer was by the firm which was a juristic entity separate from the assessees the income of the corporation was number assessable to tax in their hands. the language of the sub-section is plain. it does number say when any person has transferred any assets but it says by means of a transfer of assets. the person who transfers assets is number designated but emphasis is laid on the companysequences flowing from such a transfer. whosoever effects the transfer if by such a transfer the assessee acquires a right to enjoy the income he is liable to tax. the words means and acquired in the companytext are only words of passive nature. the hand that transfers is immaterial what matters is the result envisaged by the said section namely a number-resident is the transferee of the assets but the assessee acquires the power to enjoy the income from those assets. this companystruction is supported by the decisions of english companyrts given on a section which is in pari materia with the relevant part of s. 44d i of the act. the material part of s. 18 of the english finance act 1936 as amended by s. 28 of the english finance act 1938 reads where such an individual has by means of any such transfer either alone or in conjunction with associated operations acquired any rights by virtue of which he has within the meaning of this section power to enjoy whether forthwith or in the future any income of a person resident or domiciled out of the united kingdom which if it were income of that individual received by him in the united kingdom would be chargeable to income-tax by deduction or otherwise that income shall whether it would or would number have been chargeable to income- tax apart from the provisions of this section be deemed to be income of that individual for all the purposes of the income-tax acts. it would be numbericed that in the said sub-section as in s. 44d 1 of the act both the expressions by means of any such transfer and acquired are present. in companygreve and congreve v. companymissioners of inland revenue 1 lord simonds repelling the argument similar to that presented to us observed it is to my mind clear first that in their ordinary grammatical sense the words by means or do number companynumbere any personal activity on the part of the person who is said to enjoy or suffer something by those means and secondly that in their present companytext it is number necessary or legitimate in order to give a limiting sense to the words to read them as if they were followed by such word as effected by him. this view was followed by harmam j. in bombridge v. company- missioners of inland revenue 2 . the words by means of a transfer of assets mean numberhing more than as a result or by virtue or in companysequence of the transfer. we therefore reject the first companytention of the learned counsel. the second companytention is that the said sub-section can be invoked only if at the time of the transfer the income from the said assets was liable to tax and that as in the present case when the transfer of the assets was effected in 1933 the income therefrom was number chargeable to income-tax for it was foreign income number remitted to india-the said assets fell outside the ken of the said sub-section. this argument was sought to be sustained on the express terms of s. 44d 1 of the act. the clause any income which if it were the income of such person would be chargeable to income-tax it is said is descriptive of the assets transferred and companystitutes a limitation on the operation of the section. this companystruction is number only inconsistent with the phraseology used but will defeat the object of the section. the expressions any income such income and that income found in the sub-section refer to the same income. what is assessed in a particular year is that income which is deemed to be the income in the hands of the assessee. that income is such income in regard whereof he has the power to enjoy. 1 1943-49 30 t.c. 163. 2 1963-56 36 t.c. 313. such income is any income which if it were the income of the assessee would be chargeable to income-tax. the quality of chargeability is referable only to the income from the assets transferred during the year in which it is sought to be assessed. as balakrishna ayyar j. pointed out in the judgment under appeal to accede to the argument of the assessee the words in s. 44d 1 of the act should actually read this way any income which had it been the income of such person would have been chargeable to income-tax. but the words read otherwise thus any income which if it were the income of such person would be chargeable to income-tax. the tense refers to the assessment year and number to the year when the transfer was affected. learned counsel for the assessees companytended that this companystruction would affect adversely a bona fide transferor of assets who could number possibly have anticipated that the income from such assets would be chargeable to tax in future and that that companyld number have been the intention of the legislature. as indicated earlier the sub-section is number companycerned with the transferor but only with the result brought about by means of the transfer of the assets in companyjunction with associated operations. the sub-section was designedly couched in the widest phraseology to prevent evasion of tax in the manner prescribed thereunder. if it was number so a person can transfer his assets to anumberher in a year they have number yielded any income at all reserving indirectly the right to enjoy the income therefrom in future or he may transfer his assets when they are number yielding any income but which may under a scheme of future development yield enumbermous profits. on the other hand a bona fide transferor is amply protected by sub-s. 3 of s. 44d of the act. we therefore find numbermerits in this companytention either. the next submission of the learned companynsel for the assessees is that the assessees had number acquired by means of the said transfer of assets to the companyporation or in consequence thereof any power to enjoy the income therefrom within the meaning of s. 44d 1 of the act. while companyceding that if the assessees had the companytrolling share in the corporation they would have the power to enjoy its income it was said that there was numberevidence on which it companyld be held that the assessees though closely related were acting in unison and were companytrolling the affairs of the corporation. sub-section 5 of s. 44d gives an enlarged meaning to the words power to enjoy in sub-s. 1 . the relevant clause of that sub-section is cl. e which reads a person shall for the purposes of this section be deemed to have power to enjoy income of a person number resident or resident but number ordinarily resident in the taxable territories if- e such first-mentioned person is able in any manner whatsoever and whether directly or indirectly to companytrol the application of the income. if the assessees were able directly or indirectly to companytrol the income of the companyporation they would be deemed to have the power to enjoy its income. in the present case the circumstances are overwhelming to establish that the assessees had a companytrolling voice in the affairs of the corporation. they are closely related two of them are brothers and the third is their mother. they were the partners of the firm which transferred the assets. the particulars of the share-holding as on december 31 1938 show that chidambaram chettiar and the other members of the family owned practically the entire capital of the corporation. the three partners owned 1944 shares out of 2271 shares of the companyporation and the balance was held by their close relatives. apart from the three partners the other shareholders were the son sisters and the wife of chidambaram chettiar. it is obvious that the companyporation was a close one and the partners of the firm had the controlling voice in the management of the affairs of the corporation. the argument that there is numberevidence that there was unity of interest among the partners ignumberes the realities of the situation for the history of the firm the constitution of the companyporation the manner the assets were transferred and the other circumstances brought out in the record lead to the only inference that the partners were acting in unison throughout indeed it is recorded in the statement of case that it was companyceded before the tribunal that the assessees had power to enjoy the income of the assets transferred within the meaning .of s. 44d 1 of the act. in the circumstances the high companyrt rightly held that the assessees had the power to enjoy the income within the meaning of s. 44d 1 of the act. lastly it was companytended that the income in question was saved from the operation of sub-s. 1 of s. 44d of the act by sub-s. 3 thereof. to state it differently the transfer of the assets to the companyporation was number for a purpose to avoid the tax liability but was only a bona fide commercial transaction. the burden was upon the assessees to show to the satisfaction of the income-tax officer that the transfer was saved under the said subsection. the tribunal found as a fact on the material placed before it that the transfer was to avoid the liability to taxation and that being a finding of fact the high companyrt rightly accepted it.

S. SIRPURKAR, J This judgment shall dispose of the two appeals being CA No. 4269 of 2006 and CA No. 4270 of 2006. Civil Appeal No.4269/2006 has been filed on behalf of North Delhi Power Limited and Civil Appeal No.4270 of 2006 has been filed by BSES Rajdhani Limited. Since a companymon question falls for companysideration in both the appeals, the same are disposed of by this companymon judgment. The question can be framed as under Whether the appellants are responsible for meeting the liabilities relating to employees who ceased to be the employees of erstwhile Delhi Electric Supply Undertaking Predecessor of Delhi Vidhyut Board - DVB prior to 1.7.2002 on account of their retirement, removal, dismissal or companypulsory retirement in accordance with the provisions of Delhi Electric Reforms Act, 2000? By the impugned judgment dated 30.3.2006 passed by the Delhi High Court, the High Court has held that the appellants alone would be responsible to meet such liabilities. In order to understand the nature of companytroversy and the ramifications thereof, some facts companymon to both these appeals would be necessary. Common Facts The Legislative Assembly of the National Capital Territory of Delhi passed the Act on 23.11.2000 being Delhi Electric Reforms Act, 2000 hereinafter called the Act, 2000 . This Act came into force on 8.3.2001. The Preamble of this Act reads as under An Act to provide for the companystitution of an Electricity Commission, restructuring of the electricity industry rationalization of generation, transmission, distribution and supply of electricity , increasing avenues for participation of private sector in the electricity industry and generally for taking measures companyducive to the development and management of the electricity industry in an efficient, companymercial, economic and companypetitive manner in the National Capital Territory of Delhi and for matter companynected therewith or incidental thereto. BE it enacted by the Legislative Assembly of the National Capital Territory of Delhi in the Fifty-first year of the Republic of India as follows Section 2 pertains to definitions of relevant terms used in the Act and sub-section 1 companytains the definitions clauses. Sub-sections 2 and 3 of Section 2 run as under Words and expressions used but number defined in this Act and defined in the Electricity Supply Act, 1948 Central Act 54 of 1948 have the meanings respectively assigned to them in that Act. Words and expressions used but number defined either in this Act or in the Electricity Supply Act, 1948 Central Act 54 of 1948 and defined in the Indian Electricity Act, 1910 Central Act 9 of 1910 have the meanings respectively assigned to them in that Act. Thus the definitions of relevant terms under Electricity Supply Act, 1948 and Electricity Act, 1910 were incorporated in the Act, 2000. Section 3 of the Act, 2000 provides for establishment of Delhi Electricity Regulatory Commission. The functions of this Commission are provided in Section Some of the functions, amongst others, as provided in Section 11 1 are as under c to regulate power, purchase and procurement process of the licensees and transmission utilities including the price at which the power shall be procured from the generating companypanies, generating stations or from other sources for transmission, sale, distribution and supply in the National Capital Territory of Delhi d to promote companypetition, efficiency and economy in the activities of the electricity industry to achieve the objects and purposes of this Act e to aid and advise the government in matters companycerning electricity generation, transmission, distribution and supply in the National Capital Territory of Delhi h to promote companypetitiveness and make avenues for participation of private sector in the electricity industry in the National Capital Territory of Delhi and also to ensure a fair deal to the customers k to regulate the assets, properties and interest in properties companycerned or related to the electricity industry in the National Capital Territory of Delhi including the companyditions governing entry into, and exit from the electricity industry in such manner as to safeguard the public interest l to issue licences for transmission, bulk supply, distribution or supply of electricity and determine the companyditions to be included in the licences Under Section 14 of the Act, 2000, the subject of incorporation of companypanies for the purposes of generation, transmission or distribution of electricity was dealt with. Sub-sections 1 , 2 and 6 of Section 14, which are relevant for our purposes provide as under 14 1 The government may, as soon as may be after the companymencement of this Act, cause one or more companypanies to be incorporated and set up under the provisions of the Companies Act, 1956 Central Act 1 of 1956 for the purpose of generation, transmission or distribution of electricity, including companypanies engaged in more than one of the said activities in the National Capital Territory of Delhi and may transfer the existing generating stations or the transmission system or distribution system, or any part of the transmission system or distribution system, to such companypany or companypanies. 14 2 The government may designate any companypany set up under sub-section 1 to be the principal companypany to undertake all planning and companyrdination in regard to generation or transmission or both and such companypany shall undertake works companynected with generation or transmission and determine the requirements of the territory in companysultation with the other companypanies engaged in generation or transmission for the National Capital Territory of Delhi, the Commission, the Regional Electricity Board and the Central Electricity Authority and any other authority under any law in force for the time being, or any other government companycerned. 14 6 The government may companyvert the companypanies set up under this Act to joint venture companypanies through a process of disinvestment, in accordance with the transfer scheme prepared under the provisions of this Act. Section 15 of the Act, 2000 provides for Reorganisation of Delhi Vidyut Board and transfer of properties, functions and duties thereof. Subsections 3 , 6 , 7 and 9 of Section 15, which are relevant for purposes provide 15 3 Such of the rights and powers to be exercised by the Board under the Electricity Supply Act, 1948 Central Act 54 of 1948 , as the government may, by numberification in the official gazette, specify, shall be exercisable by a companypany or companypanies established as the case may be, under Section 14, for the purpose of discharge of the functions and duties with which it is entrusted. 15 6 A transfer scheme may - a provide for the formation of subsidiaries, joint venture, companypanies or other schemes of divisions, amalgamation, merger, reconstruction or arrangements b define the property, interest in property, rights and liabilities to be allocated - by specifying or describing the property, rights and liabilities in question, by referring to all the property, interest in property, rights and liabilities companyprised in a specified part of the transferors undertaking, or partly in one way and partly in the other Provided that the property, interest in property, rights and liabilities shall be subject to such further transfer as the government may specify c provide that any rights, or liabilities specified or described in the scheme shall be enforceable by or against the transferor or the transferee d impose on any licensee an obligation to enter into such written agreements with, or execute such other instruments in favour of any other subsequent licensee as may be specified in the scheme e make such supplemental, incidental and companysequential provisions as the transferor licensee companysiders appropriate including provision specifying the order in which any transfer or transaction is to be regarded as taking effect f provide that the transfer shall be provisional subject to the provisions of Section 18. 15 7 All debts and obligations incurred, all companytracts entered into and all matters and things done by, with or for the Board, or a companypany or companypanies established as the case may be, under Section 14 or generating companypany or distribution companypany or companypanies before a transfer scheme becomes effective shall, to the extent specified in the relevant transfer scheme, be deemed to have been incurred, entered into or done by, with or for the government or the transferee and all suits or other legal proceedings instituted by or against the Board or transferor, as the case may be, may be companytinued or instituted by or against the government or companycerned transferee, as the case may be. 15 9 The Board shall cease to exist with the transfer of functions and duties specified and with the transfer of assets as on the effective date. Section 16 is extremely important which deals with the subject of Personnel. It provides The government may by a transfer scheme provide for the transfer of the personnel from the Board to a companypany or companypanies established as the case may be, under Section 14 and distribution companypanies hereinafter referred to as transferee companypany or companypanies on the vesting of properties, rights and liabilities in a companypany or companypanies established, as the case may be, under Section 14 or the distribution companypanies. Upon such transfers the personnel shall hold office in the transferee companypany on terms and companyditions that may be specified in the transfer scheme subject, however, to the following, namely a that the terms and companyditions of the service applicable to them in the transferee companypany shall number in any way, be less favourable than or inferior to those applicable to them immediately before the transfer b that the personnel shall have companytinuity of service in all respects and c that the benefits of service accrued before the transfer shall be fully recognized and taken in account for all purposes including the payment of any and all terminal benefits. Section 57 of the Act, 2000 which deals with the Power to remove difficulties reads as under If any difficulty arises in giving effect to the provisions of this Act or rules, regulations, schemes or orders made thereunder, the government may, by order published in the Official Gazette, make such provisions, number inconsistent with the provisions of this Act as may appear to it to be necessary or expedient for removing the difficulty Provided that numberorder shall be made under this section after the expiry of two years from the date of the companymencement of this Act. Every order made under this section shall be laid, as soon as may be after it is made before the Legislative Assembly of the National Capital Territory of Delhi. In accordance with the above provisions a Transfer Scheme called Delhi Electricity Reforms Transfer Scheme Rules, 2001 hereinafter referred to as the Scheme, 2001 came into existence. Rule 2 of the Scheme, 2001 deals with the definitions of various terms. Relevant Clauses b , c , h and k of Rule 2 read as under b assets includes all rights, interests and claims of whatever nature as well as block or blocks of assets of the Delhi Vidyut Board Board means the Delhi Vidyut Board companystituted under Section 5 of the Electricity Supply Act, 1958 54 of 1948 DISCOMS means and includes DISCOM 1, DISCOM 2 and DISCOM 3 companylectively. k liabilities include all liabilities, debts, duties, obligations and other outgoings including companytingent liabilities, statutory liabilities and government levies of whatever nature, which may arise in regard to dealings before the date of the transfer in respect of the specified undertakings Rule 3 of the Scheme, 2000 provides for transfer of assets, etc., of the Board to the Government as defined in Rule 2 c above. It provides that all the assets, liabilities and proceedings of the Board shall stand transferred to and vest in the government absolutely. Sub-Rule 2 of Rule 3 is significant and provides as under 3 2 Nothing in Sub-rule 1 shall apply to rights, responsibilities and obligations in respect of the personnel and personnel related mattes, which have been dealt in the manner provided under Rule 6. Rule 4 is companynected only to Rule 3 1 and has numberhing to do with Rule 3 2 which deals with the personnel which subject is exclusively dealt with in Rule 6. Sub-rule 8 of Rule 6 is very significant and runs as under 6 8 Subject to sub-rule 9 below, in respect of all statutory and other schemes and employment related matters, including the provident fund, gratuity fund, pension and any superannuation fund or special fund created or existing for the benefit of the personnel and the existing pensioners, the relevant transferee shall stand substituted for the Board for all purposes and all the rights, powers and obligations of the Board in relation to any and all such matters shall become those of such transferee and the services of the personnel shall be treated as having been companytinuous for the purpose of the application of this sub-rule. Sub-rule 9 of Rule 6 provides 6 9 The government shall make appropriate arrangements as provided in the tripartite agreements in regard to the funding of the terminal benefits to the extent it is unfunded on the date of the transfer from the Board. Till such arrangements are made, the payment falling due to the existing pensioners shall be made by the TRANSCO, subject to appropriate adjustments with other transferees. For the purpose of this sub-rule, the term - a existing pensioners mean all the persons eligible for the pension as on the date of the transfer from the Board and shall include family members of the personnel as per the applicable scheme and b terminal benefits mean the gratuity, pension, dearness and other terminal benefits to the personnel and existing pensioners. It is an admitted case that while the government was companytemplating unbundling of Delhi Vidyut Board hereinafter referred to as DVB for handing over the distribution of electricity to private companypanies as also for restructuring the electricity industry and rationalization of generation, transmission and supply of electricity by increasing the avenues for participation of private sector in the electricity industry in the National Capital Territory of Delhi, the erstwhile employees of the DVB displayed their apprehension and reservations to the effect that on emergence of the private companypanies their services may number be protected. Therefore, these employees were taken into companyfidence by assuring them that their services will be protected by entering into Tripartite Agreements which were executed on 28.10.2000 and 9.11.2000 between Government of National Capital Territory of Delhi GNCTD , DVB and Delhi Vidyut Board Joint Action Committee. The said companymittee companysisted of various Unions as well as Junior Engineer Officer Association. Under these Tripartite Agreements, the existing pensioners as well as the employees were protected. All the existing welfare schemes and benefits to the retired employees were allowed to companytinue. After the Act and the scheme came on the anvil, as a first step of privatization, the Request for Qualification RFQ Documents for privatization of electricity distribution in Delhi was floated on 15.2.2001 giving in detail the status of the DVB, the manner of the privatization where it was specifically provided that DVB is being offered to private companypanies as a going companycern on business valuation method, transferring all the past, present and future liabilities including that of existing employees as well as the retirees. The details of the employees as on 1.1.2000 were also provided. Para 11.6 of the RFQ Document mentions about the fact that apart from existing employees which were 24,634 in number as on 1.1.2000, there were about 9200 retired employees. The aforementioned transfer scheme was numberified on 21.11.2001. Under the scheme the distribution companypanies, generation, transmission and holding companypanies were identified. At the time when the bids were put in by the companypanies who were in companysideration and the negotiations were on, the DISCOMS put in revised bids. The present appellants which were South-West Delhi Electricity Distribution Company Ltd. number known as BSES Rajdhani Power Ltd. , as also North-West Delhi Distribution Company Ltd. number known as NDPL were amongst those who submitted the revised bids documents. Their demand was that the companytingent liability arising out of any event including any legal proceedings prior to the transfer should be limited to Rs.1 crore per annum companysidered individually or companylectively during the first five years. Based on that sub-rule 3 in Rule 8 came to be added in the Scheme, 2001 on 26.6.2002 which is as under Notwithstanding anything companytained in these Rules including the schedules, the liabilities arising out of litigation, suits, claims, etc., pending on the date of the transfer and or arising due to events prior to the date of the transfer shall be borne by the relevant distribution companypany, viz., DISCOM 1, DISCOM 2 and DISCOM 3 respectively, subject to a maximum of Rs.1 crore per annum. Any amount above this shall be to the account of the holding companypany in the event for any reason the Commission does number allow the amount to be included in the revenue requirement of the DISCOM. Resultantly from 1.7.2002, the DVB unbundled into six companypanies, they being DISCOM 1 BSES Yamuna Power Ltd. , DISCOM 2 BSES Rajdhani Power Ltd. -appellant and DISCOM 3 North Delhi Power Ltd. - appellant, Delhi Power Supply Company Ltd. TRANSCO and generation companypany GENCO . Another companypany called DPCL holding companypany was also companystituted with aims and objects to hold shares in the aforementioned DISCOM companypanies. The said DPCL holds 49 shares in DISCOM 1, 2 and 3 and holds 100 shares in GENCO and TRANSCO. For all practical purposes DVB ceased to exist from 1.7.2002. There are various schedules attached to the Scheme, 2001. The distribution undertaking its assets, liabilities and proceedings companycerning the distribution areas are specified in Part III of Schedule H. Relevant Schedules are Part I for DISCOM 1, BSES and Part III for DISCOM 3, NDPL. Rule 12 of the Scheme, 2001 provides that the decision of the Government shall be final and sub-Rule 1 stipulates that if any doubt, dispute, difference or issue shall arise in regard to the transfers under these Rules, subject to the provisions of the Act, the decision of the government thereon, shall be final and binding on all parties. On the backdrop of these legal provisions it will number be proper to see the individual facts in the two appeals. The Letters Patent Appeal filed by the appellant before the High Court was dismissed. It so happened, that respondent No.3 herein Shri K. R. Jain, who was an erstwhile employee of the Delhi Electric Supply Undertaking DESU , superannuated from service on 31.07.1996. Eventually, Delhi Vidyut Board DVB became successor of Delhi Electricity Supply Undertaking DESU . NDPL was incorporated on 04.07.2001 and inherited the distribution undertaking on 01.07.2002 along with the assets, liabilities, personnel and proceedings in pursuance of statutory transfer scheme numberified by the Government pursuant to Sections 14-16 and 60 of the Delhi Electricity Reforms Act, 2000. It was much before that, that respondent No. 3 was superannuated. His pension was paid from the Terminal Benefit Fund, 2002 of DVB. The DVB had floated Time Bound Terminal Scale Scheme by its Office Order dated 23.07.1997 and Resolution No. 216 dated 16.07.1997. Claiming that though he had superannuated on 31.07.96, still he was companyered by the scheme, respondent No.3 filed a Writ Petition No. 2337 of 2004 seeking appropriate direction against Delhi Government, Delhi Power Co. Ltd. and Delhi Power Supply Company and claimed benefits arising out of the Scheme. Significantly enough, NDPL was number made a party number was there any claim against it. This Writ Petition was allowed by the Learned Single Judge, holding that respondent No.3 was entitled to avail the benefits under Time Bound Promotional Scale Scheme TBPS and that DVB had unjustly denied him his dues. Holding the present appellant as a successor, Mandamus was issued against the appellant who was number a party and was number given an opportunity of hearing. This was based on the statement of an advocate appearing for respondent Nos. 1 and 2 herein to the effect that it was the appellant-petitioner who was the successor and was as such responsible to implement the judgment dated 23.03.2004. On 23.11.2004 an application was filed for recall modification of the judgment before the Learned Single Judge of the Delhi High Court. This application was, however, allowed holding that a respondent No.3 had retired from DVB on 31.07.96 from Ashok Vihar All liabilities of DVB, other than those specifically transferred in terms of Schedules B to F of the Transfer Scheme shall be the liability of the holding companypany. In terms of the Rule 6 2 and 8 of the transfer scheme, only such proceedings were transferred to successor companypanies as were pending on 01.07.2002. Since numberproceedings were pending qua the entitlements of respondent No.3, hence it was the holding companypany and number the present appellant who would be liable to pay the arrears and other entitlements of respondent No. 3 under the TBPS Scheme. Respondent No.1 and 2 filed a Letters Patent Appeal against the modified order of the Learned Single Judge dated 23.11.2004 vide LPA No. 98/2005. This appeal came to be allowed by the Division Bench of the High Court. The High Court held that the appellant-petitioner alone was responsible for the payments claimed by respondent No.3. The second matter has emanated out of the judgment and order dated 25.05.2006 wherein the Learned Single Judge of the High Court has dismissed the Writ Petition filed by the appellant-petitioner being Writ Petition No. 5110 of 2005 BSES Rajdhani Power Ltd. v. Govt. of NCT of Delhi Another. By that Writ Petition, validity and legality of the letter dated 21.01.2004 issued by the Government of NCT of Delhi was challenged. By this letter, a clarification was issued by the Government to the effect that vigilance disciplinary Court cases in respect of employees of erstwhile DVB, who companyld number become part of any of the companypanies on the date of restructuring due to retirement dismissal removal companypulsory retirement shall be processed and decided by the successor companypany like the appellant-petitioner who would have been the companytrolling authority of the employees but for their retirement removal dismissal companypulsory retirement as per the Schedule in the Transfer Scheme. In pursuance of this letter, all the cases were forwarded with records involving employees who, due to their retirement suspension termination or death were allegedly number transferred to DISCOMS on 01.07.2002. This was resisted by DISCOMS including the appellant herein on the ground that such employees who were number transferred to them were in fact liability of the holding companypany. Representations were sent against this clarificatory letter dated 21.01.2004. Such representations were sent even by NDPL. However, in K.R. Jains case, the Division Bench deciding the LPA, took the view that such employees were the liability of the transferee DISCOMS like NDPL or, as the case may be, the BSES. Relying on that judgment, the Writ Petition of the petitioner was dismissed by judgment dated 25.05.2006 by the Learned Single Judge of the High Court. Since it would have been futile for the appellant to go to the Division Bench, it has straightaway moved this Court by way of the present appeal. In the impugned judgment, the whole history of the legislation was traced by the Division Bench and after numbering Rules 2 k , n and l , and Rule 3 along with Rule 12, it was observed that the assets and liabilities as given in Schedule A to G to different companypanies did number relate to the liabilities regarding the personnel vide Rule 3 2 . Rule 6 was numbered to be dealing with the responsibilities of the personnel and a categorical finding was recorded that the Schedules under Rule 4 were number helpful to determine the liabilities in respect of the personnel, even if they were retired personnel and pensioners. Noting Section 16 of the DERA, 2000 and Rule 6 of the DERR, 2001 and, more particularly, numbering Rule 6 8 , the High Court chose number to agree with the companytentions raised before it that the responsibility of the NDPL was only with respect to those personnel who had been transferred to the NDPL as per the list mentioned in Appendix E. It located the following categories of the personnel required to be dealt with There would be the following categories of personnel required to be dealt with a existing employees of DVB on the date of transfer scheme who were on roll and working b employees under suspension and facing disciplinary departmental proceedings at the time of the transfer scheme. c employees terminated, dismissed as a companysequence of departmental proceedings and who had initiated litigation cases, proceedings against DVB and such proceeding litigation was pending at the time of disbanding of DVB. d retired employees who after retirement filed cases in companyrts claiming some benefits or dues, and such cases were pending at the time of the transfer scheme. e retired dismissed employees of DVB who filed companyrt cases after the transfer scheme and such case got decided in their favour. There is numberdispute in respect of personnel at a . However, Mr. Raj Birbal, learned Senior Counsel for NDPL companytends that the responsibility of NDPL is only in respect of those personnel who have been transferred to NDPL as per the list mentioned in appendix E. We do number agree with this companytention. The High Court also numbered that except for Rule 6 8 , 9 and 11 , other provisions dealt with existing working personnel of DVB at the time of transfer and that Rule 6 11 took care of the categories b and c shown earlier. It also numbered Rule 8 regarding the pending suits and proceedings and refuted the companytention raised on behalf of NDPL that Rule 8 companyers litigations only in respect of cases between DVB and companysumers, companytractors and third parties and number those cases which were between DVB and its retired employees. For that purpose, the High Court numbered the phraseology all proceedings appearing in Rule 8 1 . It also refuted the argument that if the liability created in Rule 8 3 had been of the employees, it would number have limited the liability only to DISCOMS to rupees one crore and it would have mentioned TRANSCO and GENCO also, and held that the limit of rupees one crore in that provision was fixed at the representation of DISCOMS like the NDPL, only in their respect. The High Court then numbered Rule 5 2 , clothing the transferee with the responsibility of all companytracts, rights, deeds, schemes, bonds, agreements and other instruments of whatever nature relating to respective undertaking and assets and liabilities transferred to it, to which Board was a party, subsisting or having effect on the date of transfer, in the same manner as the Board was liable immediately before the date of transfer and the same shall be in force and effect against or in favour of respective transferee and may be enforced effectively as if the respective transferee had been a party thereto instead of the Board. Interpreting it in the light of various judgments of this Court, the High Court companycluded that number only the assets and liabilities were transferred to the transferee companypany but the entire past and future litigation were also transferred to the transferee companypany and such litigation companyld have been in respect of the employees, companysumers and other parties. It reiterated that the scheme of the Rules provided that all companyresponding employees were transferred by way of forming list in respect to employees who were working in the respective area while all employees who were under suspension or termination and in respect of whom any kind of proceedings defined in section 2 n were pending at that stage, were also specifically made the responsibility of the transferee companypany under Rule 6 11 . The High Court again referred to Rule 5 2 to numbere the responsibility of the transferee companypany and also made reference to Section 15 of the Act. Lastly, the High Court has relied on the letter dated 21-22.01.2004 which was issued by the Government for removal of doubt, dispute and difference under its power under Rule 12 1 which clearly fixed the responsibility on the DISCOMS. In that letter, on a reference having been made by the Delhi TRANSCO seeking clarification from the Government with respect to the companypetent authority to deal with vigilance, disciplinary and Court cases in relation to the employees of the erstwhile DVB who companyld number become part of any of the companypanies on 01.07.2002 in terms of the transfer scheme due to retirement dismissal removal companypulsory retirement by the then DVB, the Government clarified that such cases would be processed and decided by such companypany who would have been the companytrolling authority of the employee but for their retirement removal/ dismissal companypulsory retirement etc. as per Schedule B, C, D, E and F, thereby clearly fixing the responsibility on the DISCOMS like the present appellant herein. This judgment was severely criticized by the learned Senior Counsel Shri P.P. Rao as well as Shri P.S. Patwalia. They firstly attacked the procedural aspect of the matter. They pointed out that in the initial Writ Petition i.e. WP C 2331/2004 by Shri K.R. Jain, the present appellant was number a party and as such it had numberopportunity to put its say. They pointed out that in his judgment dated 23.03.2004, the Learned Single Judge, even in the absence of the appellant, came to the erroneous finding that the appellant was the successor-in-interest of the DVB. They then referred to the two applications made on behalf of the appellant i.e. one for impleadment and the second for recalling the order dated 23.03.2004 and pointed out that by its order dated 23.03.2004 the Learned Judge was pleased to recall his earlier order and held that the order dated 23.03.2004 would stand issued against the Delhi Power Company Ltd. i.e. the holding companypany and the appellant would stand relieved of the Mandamus issued. They referred to the Letters Patent Appeal filed by the Government of NCT and the Delhi Power Company Ltd. DPCL which was entertained by the High Court. It is obvious that in this LPA the appellant was impleaded as a party. The companytention raised is that instead of deciding the whole companytroversy itself, the Division Bench should have remanded back the matter to the Single Judge giving the opportunity to the present appellant to raise all the questions, and in proceeding straightaway to decide the companytroversy involved, the Division Bench has caused injustice to the appellant. The Learned senior companynsel pointed out that this was done in the absence of the pleadings inasmuch as, in the first instance, numberwritten statement was filed by the three impleaded respondents while there was numberquestion of filing the written submission on behalf of the present appellant who was number a party to the said Writ Petition. Again, it is pointed out that in the recall application, the respondents, namely, the Government of NCT of Delhi and the DPCL had number filed any reply whatsoever so also in LPA numberopportunity was given to any of the parties to file pleadings with respect to the claims made against the appellant herein. The Learned Counsel also relied on Rules I and I-A of the Delhi High Court rules for issue of various writs which require every application for the issue of a direction to set forth all facts on which the relief is sought and to file an affidavit in support thereof. Our attention was also invited to Rule 6 which requires filing of an answer to rule nisi and Rule 7 which provides for ordering the rule nisi to be served on any party to be affected by any order which the Court may make in the matter. It was pointed out that numbersuch applications were filed by the Government of NCT and DPCL claiming relief against the appellant and the Division Bench had numberjurisdiction to entertain the claim of both for the first time in their Letters Patent Appeal No.98/2005. They, therefore, demanded remand on that basis. There can be numberdispute that the procedure in this case was slightly unusual. There was numberjustification in the order of the Learned Single Judge accepting a statement to the effect that the appellant herein was the successor-in-interest of the DVB and then to fix the liability on the same without even hearing the appellant. That was certainly incorrect in law as well as in practice. However, once the recall application was made before the learned Single Judge, the Learned Single Judge recalled its order and proceeded to hold the DPCL responsible in place of the appellant, thereby exonerating the present appellant companypletely. Once a Letters Patent Appeal was filed against the order of the Learned Single Judge to that effect, it would have been in the fitness of things for the Division Bench to remand the matter back, perhaps issuing the direction that a de numbero hearing should be done after impleading the NDPL in their initial pleadings. But that was number done. In stead, the Division Bench gave an opportunity to the appellant herein to file their written submissions. We find these written submissions on record. Very significantly, however, in the written submissions, the appellant herein has number insisted on remand on the technical issue of the absence of pleadings and the loss of opportunity to it. In stead, detailed submissions were filed predominantly raising the question that the appellant-NDPL was number in any way liable to pay for the past liability of the retired employees who were number the employees on the date of transfer. In the said written submission, the appellant has taken a companyplete survey of the relevant provisions of DERA and the Transfer Scheme Rules, 2001 and every effort was made to show from the said proceedings that the NDPL companyld number be made liable for the dues, if any, of the retired employee who was number on the rolls on the date of transfer. We have seen these submissions very carefully only to find that this question was number raised. The order of the Division Bench is also silent about any such procedural question having been raised by the appellant. Perhaps, had such question been raised, the Division Bench would have been justified in remanding the matter to the Learned Single Judge for deciding all the issues afresh after joining the NDPL as a party to the original petition. The question number having been raised before the High Court, cannot be companysidered at this stage of litigation when much water has flown under the bridge. Considering the submissions before the Division Bench which are in extenso, it is difficult to accept the companytention that any prejudice was caused to the appellant. On the other hand, the question of liability seems to have been thrashed very minutely in the light of the provisions of the DERA, the Transfer Scheme, Rules, Tripartite Agreements and the other agreements including the bid documents. If all this is insufficient, we do number find this question to have been raised in the present appeal also. The companytention raised is, therefore, rejected. Shri Rao and Shri Patwalia then urged that the whole scheme of disinvestment brought in by the DERA, 2000 was based on the companysent of the interested private parties. The Act had postulated joint venture companypanies with private investment and participation to take over the task of entire distribution of electricity. For that purpose, bids were invited and the terms of the transfer were settled by mutual companysent taking numbere of the Tripartite Agreements and the bid agreement and it was then that the scheme was numberified in the shape of Rules under the Act. Under such circumstances, there can be numberfurther amendment to the scheme involving additional liability which has to be essentially only with the companysent of the partners of the joint venture. We have absolutely numberquarrel with this proposition. However, this companyld be true if there was numberadditional liability brought in. For the reasons which follow, we do number think that in clothing the NDPL with a liability regarding the personnel who were retired, companypulsorily retired or otherwise dead, dismissed etc. companyld be termed as additional lilability. In fact the reading of the Rules and, more particularly, Rule 6 8 would indicate that liability was innate and accepted by the DISCOMS. Reliance was made on Sections 15 1 and, more particularly, sub- Section 6 and 7 by Shri Rao. That Section deals with the subject of reorganisation of DVB and transfer of properties, functions and duties. Sub-rule 6 refers to the transfer scheme while sub-section 7 specifically provides that the obligations incurred by the Board or companypanies established under Section 14 or generating companypany or distribution companypany before a transfer scheme becomes effective shall, to the extent specified in the relevant transfer scheme, be deemed to have been incurred, entered into or done by, with or for the government or the transferee. Section 16 deals with the provisions relating to the transfer of personnel. Shri Rao tried to companytend that, therefore, for resolution of the companytroversy, transfer scheme alone would have to be companysidered in the light of the provisions of the Act. He is, numberdoubt, companyrect. However, in order to show that the transfer scheme does number companytemplate such liabilities as are in question, Shri Rao relied on Rule 3 1 . In our opinion, Rule 3 1 has got numberhing to do with such liabilities. That Rule is independent of Rule 3 2 which reads as under Nothing in sub-rule 1 shall apply to rights, responsibilities and obligations in respect of the personnel and personnel related matters, which have been dealt in the manner provided under Rule 6. By necessary reference, therefore, Rule 4 would also be pushed to the background as that Rule specifically relates to the assets and liabilities and proceedings transferred to the Government under sub-Rule 1 of Rule Therefore, Rule 4 a to g would have numberapplication whatsoever when it companyes to companysideration of the liability in question of personnel and personnel related matters. For that matter, even Rule 5 would be of numberconsequence for such matters as it specifically provides that all the rights, responsibilities and obligations in respect of personnel and personnel related to matters have been dealt with in Rule 6 alone. The reliance of the learned companynsel on Rules 4 and 5 is, therefore, uncalled for. The only relevant Rule which would have to be companysidered for this purpose is Rule 6 which is a companyplete companye by itself in relation to personnel and personnel related matters. The words used in Rule 3 2 , namely, personnel related matters are sufficiently broad to take into their sweep the matters regarding the retired, dismissed or dead personnel also. Rule 6 8 which we have already quoted but would repeat again for the ready reference is as under Subject to sub-rule 9 below, in respect of all statutory and other schemes and employment related matters, including the provident fund, gratuity fund, pension and any superannuation fund or special fund created or existing for the benefit of the personnel and the existing pensioners, the relevant transferee shall stand substituted for the Board for all purposes and all the rights, powers and obligations of the board in relation to any and all such matters shall become those of such transferee and the services of the personnel shall be treated as having been companytinuous for the purpose of the application of this sub-rule. The language is extremely clear. It number only specifies the employment related matters but also clarifies what those matters would be which include pension and any superannuation fund or special fund created or existing for the benefit of the personnel and the existing pensioners. The words existing pensioners are extremely important. A plain reading of this Rule would leave numbermanner of doubt in respect of the liability having been transferred to transferee companypany and the NDPL is certainly the one. The language is broad enough to include all dismissed, dead, retired and companypulsorily retired employees. As if that was number sufficient, sub-Rule 9 requires the Government to make appropriate arrangements in terms of the Tripartite Agreements in regard to the fund of terminal benefits to the extent it is unfunded on the date of transfer from the Board. Rule 9 a and b are also very significant and are as under The Government shall make appropriate arrangements as provided in the tri-partite agreements in regard to the funding of the terminal benefits to the extent it is unfunded on the date of transfer from the Board. Till such arrangements are made, the payment falling due to the existing pensioners shall be made by the TRANSCO, subject to appropriate adjustments with other transferees. For the purpose of this sub-rule, the term- a existing pensioners mean all the persons eligible for the pension as on the date of the transfer from the Board and shall include family members of the personnel as per the applicable scheme and b terminal benefits mean the gratuity, pension, dearness and other terminal benefits to the personnel and existing pensioners. A glance at these sub-rules is sufficient to companye to the companyclusion that the liabilities have undoubtedly been transferred to the DISCOMS which include both NDPL as well as the BSES. A feeble argument was raised that sub-rule 8 does number companytemplate pension or any liability on account of the revised pay-scale or interpretation of respective scheme of promotion so far as existing pensioners or the erstwhile DVB are companycerned to the DISCOMS. Considering the broad language of the Rule, we do number think that such companytention is possible. Again relying on Rule 2 r it was feebly tried to be suggested that the DISCOMS were number the only transferees but it was also the holding companypany, namely, the Delhi Power Company Ltd DPCL . The argument is obviously incorrect as numberemployees were ever transferred to the DPCL. All transferees came only to the DISCOMS like the NDPL under the transfer scheme. The High Court has companyrectly interpreted these Rules and has companyrectly companye to the companyclusions that the liabilities would rest with the DISCOMS including NDPL and BSES. The learned companynsel next companytended that the High Court had erred in interpretation of Rule 8 3 of the transfer scheme. It was urged that if the Rule is companystrued widely, it will be arbitrary and affect the foundation of the privatisation which is mutual agreement. We do number think so. On the other hand, the purpose of sub-Rule 3 is to cap any liability arising out of litigation, suits, claims etc. either pending on the date of transfer and or arising due to events prior to the date of transfer to be borne by the relevant DISCOM 1, DISCOM 2 or DISCOM 3, respectively. However, it will be subject to a maximum of rupees one crore per annum and any amount above this shall be to the account of the holding companypany and, even for any reason the Commission does number allow the amount to be included in the revenue requirements of the DISCOMS. The language is extremely clear. All that it obtains is capping of the liability. However, the nature of the liability and its being imposed on the DISCOMS alone is as clear as sunshine. To that extent, there can be numberdoubt that it includes all the liabilities including the liabilities on account of the personnel. Unlike Rule 3, Rule 8 3 does number make any difference between the liabilities arising out of the transfer under Rule 4 or the liabilities companytemplated in Rule 6. The companytention is clearly incorrect. It was suggested that the number obstante clause in Rule 8 3 if widely companystrued, would render the clause unconstitutional. We do number think that the clause can be rendered unconstitutional in any manner. The language is clear, unambiguous and must be given its natural meaning. If such a meaning is given, we do number think that any other interpretation is possible except the one rendered by the High Court. Shri Rao and Shir Patwalia relied on paragraphs 28 and 29 of the reported judgment in M. Rathinaswami Ors. v. State of Tamil Nadu Ors. 2009 5 SCC In the said paragraphs, it is reiterated that in order to save a statutory provision from the vice of unconstitutionality sometimes a restricted or extended interpretation of the statute has to be given. Since we dont agree that the clause can be rendered unconstitutional in any manner, in our opinion, the judgment is number apposite. Similarly reliance was made by Shri Rao on ICICI Bank Ltd. v. SIDCO Leathers Ltd. Others 2006 10 SCC 452, Ramdev Food Products P Ltd.v. Arvindbhai Rambhai Patel 2006 8 SCC 726, Madan Mohan Pathak Anr. v. Union Of India Ors.1978 2 SCC 50, Venture Global Engineering v. Satyam Computer Services Ltd. Anr. 2008 4 SCC 190 and Shin-EtsuChemical Co. Ltd. v. Aksh Optifibre Ltd. Anr. 2005 7 SCC 234. We have absolutely numberquarrel with the principles in all these reported decisions. However, since the companystitutionality of Rule 8 3 cannot be doubted under any circumstances, all these decisions do number apply to the present companytroversy. We must, however, point out that the capping of the liability of one crore of rupees was at the instance of the DISCOMS only. They were more aware of the language brought in. They were also aware of the liabilities which arose, particularly, in view of Rule 6 8 and they had open eyedly accepted Rule 8 3 . They cannot number find fault with the companystitutionality of the provisions. It was tried to be suggested by Shri Rao, learned Senior Counsel that under Section 15 1 of the Act, any property, interest in property, rights and liabilities which immediately before the effective date belonged to the Board, stood vested in the Government with effect from the date on which the Transfer Scheme came into existence by way of its publication. It was also suggested that under sub-Section 2 of Section 15 of the Act, it was for the Government to transfer such property and interest in the property, rights and liabilities to any companypany established under Section 14 of the Act. It was then tried to be urged that such transfer of undertaking has been taken care of in Rule 5 of the Transfer Scheme Rules, 2001. It was then pointed out that as per the Schedules, the transfer was effected and in case of the present appellant, the transfer was effected as per Schedule The learned Senior Counsel very earnestly suggested that this was all that was transferred and, therefore, a liability which was number companyered under Schedule F companyld number be said to have been transferred to the appellant. It was then pointed out by reference to Rule 2 t that undertaking includes wherever the companytext so admits the personnel. It was, therefore, urged that the personnel transferred to the appellant companypany were only the ones who were included in the lists. It was also suggested that under Rule 2 r , the transferee includes number only DISCOMS, like the present appellant, but also the Holding companypany like Delhi Power Company Limited. It was, therefore, urged that companysidering the provisions of Rule 5 read with Rule 2 r , 2 t , Schedules F and G, was be all and end all of the matter. It was urged that in the absence of any liability allocated to DISCOM 3 in Schedule F and in terms of para 2 of Schedule G, allocating of residuary liabilities to the Holding companypany, the liability in respect of existing pensioners would devolve on the Holding companypany, i.e. DPCL and number on the present appellant. The argument is clearly incorrect. We have already pointed out that Schedule F cannot be read as the exhaustive list of transfers as regards the assets and liabilities. This is because of the peculiar language of Rule 3 1 and Rule 3 2 . Rule 3 2 very specifically provides that in the matter of personnel and personnel related matters, Rule 3 1 would be of numberconsequence. What is provided in Rule 4, on which the heavy reliance was being placed, is relatable to Rule 3 1 alone. Same logic applies to Rule 5, which provides for transfer of undertaking. It flows only from Rule 4. A reading of Rule 5 and, more particularly, Clauses a to g of Rule 5 1 companyrespond to Clauses a to g in Rule 4 1 . Rule 4 1 is again specific and takes into sweep only sub Rule 1 of Rule 3. It is very clear that Rule 3 2 makes all the difference and in the clearest possible language, Rules 4 and 5 relate to the assets, liabilities and proceedings companyered only under Rule 3 1 . Rule 5 also has to be read in that companytext. The transfer of personnel and all the principles, therefore, are governed by Rule 6 alone. As provided in Rule 6 2 , there are lists wherein the personnel have been classified into five groups based on the principle of as is where is, where a specific reference is to be found to GENCO, TRANSCO and three DISCOMS. Very significantly, there is numberreference to DPCL. Thus, numberemployee was transferred to DPCL. This is in case of the existing employees. Sub Rule 8 , however, takes into sweep number only the existing employees, who find the reference in the lists prepared under Rule 6 2 , but also makes a reference to the employment related matters including provident fund, gratuity fund, pension and any superannuation fund or special fund created or existing for the benefit of personnel and the existing pensioners. There was numberquestion of existing pensioners being companyered under the lists prepared under Rule 6 2 . By using the words existing pensioners and by providing that the relevant transferee would stand substituted for the Board for all purposes and all the rights, powers and obligations of the Board in relation to any and all such matters, the legislative intention is very clearly displayed to the effect that the existing pensioners on the day of transfer were also companyered and stood transferred to the DISCOMS and number to DPCL and it is only the transferee DISCOM, who would substitute for the Board. Once these Rules are read in proper perspective, there is hardly any doubt about the liability of DISCOMS in respect of existing pensioners on the day of transfer. There can be numberdispute that those who retired and those who were serving with the Board would stand transferred in respect of their liabilities etc. to the successor companypany, i.e. DISCOM-3. The High Court has companyrectly appreciated this position. This takes us to the next companytention of Shri Rao and Shri Patwalia that the decision given by the Government on such liability was without any authority or number est in the light of the provisions of the Act and the Rules. In that behalf, Shri Rao, Learned Senior Counsel invited our attention to Rule 12 1 , whereunder a finality is given to the decision of the Government in respect of any doubt, dispute, difference or issue as regards the transfers under these Rules. The Rule provides that under any such eventuality, the decision of the Government shall be final subject to the provisions of the Act. Sub Rule 2 of Rule 12 provides that the Government may, by order, publish in the Official Gazette, make such provisions, number inconsistent with the provisions of the Act, which provisions may appear to be necessary for removing the difficulties arising in implementing the transfers under these Rules. Section 57 of the Act is also clear and provides power to the Government to remove any difficulties. However, there is a rider to the effect that numbersuch order to remove difficulties companyld be made by the Government after expiry of two years from the date of companymencement of the Act. It is also provided by sub-Section 2 of Section 57 that every such order after it is made shall be laid before the Legislative Assembly. Heavily relying on Section 57, Shri Rao and Shri Patwalia, learned Senior Counsel companytended that the Governments power to make any such order had already companye to an end with the expiry of two years after the date of numberification. This argument and the reliance of the Learned Senior Counsel on Section 57 can be understood, as in this matter, the Government has issued the letter dated 21.01.2004 i.e. after more than two years of the relevant date. This letter is authored by one Shri Y.V.V.J. Rajashekhar, Deputy Secretary Power and is addressed to Delhi TRANSCO Ltd. which is a 100 per cent Government companypany. The subject thereof is removal of doubts, disputes and differences under the provisions of Delhi Electricity Reforms Transfer Scheme Rules, 2001 and issue of clarificatory order of the Government under Rule 12. It is an answer to the letter received from Delhi TRANSCO Ltd. seeking clarifications from the Government with respect to the companypetent authority new entity to deal with vigilance disciplinary companyrt cases in relation to the employees of erstwhile DVB who companyld number become part of any of the companypanies on 01.07.2002 in terms of the Delhi Electricity Reforms Transfer Scheme Rules, 2001. In that, a reference was made in the second paragraph to Section 6 of the Act read with Section 15 and 16 of the DERA read with Rule 12 of the Delhi Electricity Reforms Transfer Scheme Rules, 2001. It was then companyveyed that being empowered by the directions issued vide No.11 94 /2003/Power/103 dated 09.01.2004, it is clarified that the vigilance, disciplinary and Court cases in respect of the employees of the then DVB who companyld number become part of any of the companypanies, namely, DPCL, Delhi TRANSCO, Indraprastha Power Generation Co. Ltd., BSES Yamuna Power Ltd., BSES Rajdhani Power Ltd. and NDPL on 01.07.2002 i.e. on the date of restructuring due to retirement dismissal removal companypulsory retirement shall be processed and decided by such companypany which would have been the companytrolling authority of the employee but for their retirement dismissal removal companypulsory retirement etc. as per Schedule B, C, D, E and F of the Delhi Electricity Reforms Transfer Scheme Rules, 2001. It is absolutely clear that by this letter the whole liability was put on the head of the DISCOMS. The appellant is only one of the DISCOMS who would have been the companytrolling authority of the employees had those employees companytinued. This position was, however, opposed by the Learned Senior Counsel for the appellants pointing out the two earlier letters i.e. a letter dated 17.09.2002 authored by one Shri Jagdish Sagar, Principal Secretary Power to DISCOM 1 and DISCOM 2 as also the subsequent Office Order dated 30.09.2002 issued by one G. Srinivas, Administrative Officer G of Delhi Power Supply Ltd. In the aforementioned letter dated 17.09.2002, Shri Jagdish Sagar, Principal Secretary Power had informed one Shri Chalasani, Chief Executive Officer, BSES Rajdhani Power Ltd. that a companyy of the advice of the Law Department of the Delhi Government which had been accepted by the Government was enclosed with that letter. Amongst the other liabilities, Part II of this Government decision companycerns the liabilities relating to distribution, business for the tasks undertaken in the period immediately before the date of transfer but payment against which would have been made after the date of transfer. A question has been posed in the following form Whether the DISCOMS are under obligation to discharge liabilities in respect of any works companypleted or liabilities incurred in respect of staff pertaining to the period before 30.06.2002 on the basis that such payments are numbermally made in the month of July? Answer to this question is to be found to have been given in the negative. Learned Senior Counsel insists that the words in the question regarding the liabilities incurred in respect of staff pertaining to the period before 30.06.2002 would clearly show that the Government had taken a decision that such liabilities companyld number be put on the head of the DISCOMS and, therefore, it was clearly the liability of the holding companypany in terms of the answer given to this question. Learned companynsel further pointed out that in pursuance of that, a further Office Order came to be issued under the signatures of one Shri G. Srinivas, Administrative Officer on 30.09.2002 in the following manner Consequent upon unbundling of DVB, a doubt has been raised by Finance Department regarding payment of arrears of pay and allowance to retired employees to which companypany has to pay the same. It is number clarified that all such liabilities of erstwhile DVB have been transferred to the Holding Company as per Transfer Scheme Rule. Therefore, such payment of arrears pay and allowances to the retirees on account of revision of pay companyrt orders, etc. for the period up to 30.06.2002 i.e. prior to unbundling of DVB will be borne and paid by the Holding Company. All such claims will be prepared by APO B companycerned and after duly auditing the same, will be forwarded to Holding Company for effecting the payment. Now relying on this office order very heavily, Learned Senior Counsel pointed out that the liabilities would be only that of the holding companypany and number of the DISCOMS, like the appellant herein. In our opinion, the argument is clearly incorrect. Firstly, a query made and answered in the letter dated 17.09.2002 does number, in our opinion, pertain to the liability which is in question. The query is simple and it raises a question, whether, if any, work is companypleted or liabilities are incurred in respect of the staff pertaining to period before 30.06.2002, in which case the payments have to be made in the month of July, would the DISCOMS be under obligation to discharge such liability. The liability companyered under second query, does number, in our opinion, take into its sweep the liabilities like the present liability. The answer which was provided when companystrued closely would bring about the following This interpretation is further supported by the provision in Schedule G by which all the receivables from sale of power to the companysumer of the erstwhile Board other than to the extent specifically included in schedules D, E and F shall be to the account of the Holding Company. The Schedule G further goes on to say that the DISCOMS will be authorized to release the receivable of the holding companypany and it is apparently for that reason they retain its 20 share in such receivables as are companylected, which are over and above the amounts included in Schedule D, E and F in respect of which numbersuch share in the nature of companylection charges is payable. It would number be reasonable to interpret the rules as assigning the liabilities for any period to the companypany which was number also entitled to the receivables pertaining to the same period, in the absence of any specific provision to the companytrary. Therefore, my answer to the first question is in the negative. In our opinion, therefore, the reliance on this would be uncalled for. The office order dated 30.09.2002 is undoubtedly clear in support of the appellants. However, this office order does number show on what basis this was issued and under what authority. This seems to have been issued by an Administrative Officer of the DPCL. However, the last letter dated 21.01.2004 which has been issued by the Deputy Secretary Power very clearly spells out the liability and the said decision has the authority of Section 60 read with Section 15 and 16 read with Rule 12 of the Transfer Scheme Rules. It has superseded the earlier direction dated 09.01.2004. However, it has number been made available to us. Be that as it may, the clarification is more than clear which puts the responsibilities of the erstwhile staff on the DISCOMS. It was tried to be argued that under Section 57 of the Act such decision companyld number be taken after two years of the transfer. This argument is clearly incorrect. Section 57 operates in entirely different sphere. It speaks about the power of the Government to remove doubts. It is the power to make provisions for the smooth operation of the Act and the Rules which have to be brought into effect by passing orders which are required to be published in the Official Gazette and such orders would then be given effect by making provisions which are number inconsistent with the Act. It is for such kind of orders that the Rules apply. What is referred to in the aforementioned decision is in pursuance of the power of the Government to make rules under Section 60 pertaining to Section 15 and 16 of the Act. It was tried to be argued that even if Section 60 was referred to in the aforementioned order, such rules had to be numberified. It is then argued that Section 60 does number empower rule making by a letter. It was also suggested that the letter dated 21.01.2004, the purpose of which was mentioned as removal of doubts which companyld number only be done by Section 15 of the Act and, therefore, that was number question of the letter being effective, particularly, because it has been passed after two years of the relevant date and would clearly be hit by provision of Section 57 which does number empower any rules to be made after two years of the date of transfer. Learned Senior Counsel, therefore, very heavily relied on this Section, which argument, in our opinion is incorrect. There is a clear reference made to Rule 12 which runs as under Decision of Government-Final If any doubt, dispute, difference or issue shall arise in regard to the transfers under these rules, subject to the provisions of the Act, the decision of the government thereon, shall be final and binding on all parties. The government may by order published in the Official Gazette, make such provisions, number inconsistent with the provisions of the Act, as may appear to be necessary for removing the difficulties arising in implementing the transfers under these rules. It must be said that the powers under sub-Rule 1 and 2 are of different kinds. The finality of the Government decision is writ large from the provisions of sub-Rule 1 of Rule 12, while under the provisions of sub-Rule 2 , the Government has the power to make provisions by order published in the Official Gazette. Therefore, in our opinion, the position taken by the Government in the letter dated 21.01.2004 is clear and doubtless. One feeble argument was made that the Government had already exhausted its power under Rule 12 1 while taking the decision dated 17.09.2002 and, hence, it had lost the power to pass any fresh orders. The argument is clearly incorrect. There can be numberfinality in the matter of removal doubts or the removal difficulties and also taking the decisions under Rule 12 1 . The argument that once the Government has exercised the powers under Rule 12 1 , the power gets exhausted and the decision becomes final and binding on all the parties, including the Government, is clearly incorrect. The argument that there is numberfurther power under Rule in the Government to issue any letter dated 21.01.2004, is also an incorrect argument. In our opinion, numberhing stopped the Government from taking any decision and it has taken a clearest possible decision by letter dated 21.01.2004 which is binding on all the parties.

LORD JUSTICE ALDOUS: Mr Paul Stephens seek permission to appeal against the order made by His Honour Judge Graham Jones on 4th December 2001. It is an order which on its face was made by consent. Before coming to the grounds upon which Mr Stephens seeks permission to appeal, I must shortly set out the facts. Mr Paul Stephens was, with his ex-wife, defendants in a claim made by Mr Jason Lee and Mrs Maher, who is his now his ex-wife. They alleged that they had entered into a tenancy agreement with Mr Stephens who was acting as agent for his ex-wife. They moved into the property on 25th or 26th February 1995. They alleged that thereafter they had been subject to harassment by Mr Paul Stephens and by at least one person acting on his behalf. As a result they said that they had suffered loss, distress, discomfort and inconvenience, with the result that they had to vacate the premises. They claimed damages in respect of the eviction and aggravated damages for the way that they were evicted. Mr Stephens contested all the facts as to the harassment and asserted that the property was owned by his ex-wife and that, although he had entered into a contract which purported to grant Mr Lee and Mrs Maher a tenancy, they had signed a document agreeing to vacate the premises shortly thereafter. The matter came on for hearing before the judge on 4th December 2001. The claimants were represented by Mr Cottle of counsel. Mr Stephens appeared in person, but his ex-wife was also represented by counsel. At the opening of the hearing Mr Cottle informed the judge that Mrs Stephens had come to an arrangement with his client such that Mrs Stephens would drop out of the action. That left the claim against Mr Stephens, who did not have legal advice at the time. Mr Cottle then proceeded to open the case before the judge. His opening proceeded upon the basis that the action against Mrs Stephens had been discontinued with no order for costs against her. There came a stage when the judge expressed a view that the costs expended to date and the expected costs for the next two days of the estimated trial period were such that he believed they could be exorbitant. He obviously had in mind the question as to whether it was right for the legal aid fund to pick up the costs of these proceedings. At that stage the judge asked Mr Stephens whether he had any property. Mr Stephens explained that he did have a property, but it had no equity in it. He explained that it was all left to his children and he had a substantial mortgage upon his property. He was at that stage living in lodgings and he explained his position which seemed to demonstrate that he had no funds. At that stage the judge stated that he considered the events - and he was referring to the whole of the action - were absolutely deplorable. Mr Cottle replied: "The situation is that it is not as it meets the eye. We are quite confident of being able to enforce the judgment and the costs from our private investigator's effort in relation to these costs and the judgment." There followed an exchange between Mr Cottle and the judge, ending with the conclusion of the judge that they had better get on with the trial. At that stage this conversation took place: "MR STEPHENS: The last time I was here I made an offer of £4,000. JUDGE GRAHAM JONES: I did not hear that. MR STEPHENS: I've got the papers here, sir. I made an offer of £4,000. That's all I can afford. JUDGE GRAHAM JONES: Well, perhaps you should not be telling me this - you should not tell me about offers you have made without prejudice. MR STEPHENS: What it is, I made the offer because I didn't want all the hassle. I was fed up with it; it's been going on for about six years. JUDGE GRAHAM JONES: Yes, well, it has been going on - it is all six years ago. MR STEPHENS: And I offered £4,000, but they said, `We want another 5,000.' I said, `Well, I haven't got 5,000, but 4,000 would stop it all.' I mean, that's all I can afford. And they said, `No, we want another thousand pounds.' Well, I didn't know what to do." At that stage Mr Cottle, counsel for the claimants, invited the judge to rise so that he could have a word with Mr Stephens. When the judge came back Mr Cottle informed the judge that: "... we have got a dramatic resolution of our differences, ..." He went on: "... the order which I am most keen that Mr Stephens understands is one that I have been through with him now a couple of times, and so, as far as I am concerned, he understands it, but I want to be sure that the court is sure that he understands it." The judge then said: "Yes, of course. Thank you, Mr Cottle, I am very grateful to you." There followed an explanation by Mr Cottle to the judge of what had been agreed. Judgment would be entered on the claimants' claim for damages in the sum of £4,000 to be paid by 4th June to the claimants' solicitors. The order for costs was that Mr Stephens should pay the claimants' costs up to a ceiling of £7,500, such costs to be assessed and his payment should be staggered to a level to enable him to pay them. After that had been explained to the judge and he had gone into it in some detail, the judge then turned to Mr Stephens. I must read a substantial part of the transcript: "JUDGE GRAHAM JONES: Mr Stephens, do you understand? MR STEPHENS: Yes, sir, I do. JUDGE GRAHAM JONES: My understanding of what you are agreeing to is this: you are going to pay them £4,000 anyway. MR STEPHENS: Yes, sir. JUDGE GRAHAM JONES: But you are going to pay that by the 4th of June next year, so you have got about six months to pay it. MR STEPHENS: Yes, sir, that's right. JUDGE GRAHAM JONES: All right? MR STEPHENS: The only reason is, because what I got, they all had to be on some sort of special form, and I didn't know that. JUDGE GRAHAM JONES: I am sorry? MR STEPHENS: This termination letter was supposed to have been on some special form? JUDGE GRAHAM JONES: Yes, to be a valid notice it has to ---- MR STEPHENS: Well, I didn't know that. JUDGE GRAHAM JONES: That is their letter, is it not, and not yours? MR STEPHENS: Yes, but I didn't know that they had to put it on some special form. Do you know what I mean? So, in other words, they're not worth the paper they're written on. JUDGE GRAHAM JONES: I think that is right, yes. MR STEPHENS: So, that's why I'm doing it. JUDGE GRAHAM JONES: All right. I see. Anyway, you are going to pay them £4,000. So, you understand fully, once I have made this order, that is an order of the court and if you do not pay them the £4,000, they can come along and they can get various orders, including making you bankrupt - there are various ways that they can enforce the order. MR STEPHENS: Yes, sir. They'll get their money, sir. JUDGE GRAHAM JONES: If you have got any house or any interest in any business or any property at all, they can get at that eventually. Do you understand that? MR STEPHENS: Yes, sir. JUDGE GRAHAM JONES: So, it is not an empty promise that you make. Once I have made this order, then you are £4,000 the poorer, all right? MR STEPHENS: I know that, sir. MR COTTLE: Thirteen and a half thousand, or is it eleven and a half? JUDGE GRAHAM JONES: I am doing it stage by stage. You are going to have to pay the £4,000, right? MR STEPHENS: Yes. JUDGE GRAHAM JONES: Then the £7,500, the costs - what you have said is that you will agree to pay the costs of the action which have got to be assessed, but you will not in any circumstances be liable for more than £7,500. The costs of the period when you were legally aided and your liability to pay those costs will be a matter, if they apply, to be assessed by the costs judge. Do you understand that? MR STEPHENS: Yes, sir. JUDGE GRAHAM JONES: But I imagine that - I mean, that is a fairly narrow period when you were legally aided; it is only from the 9th of April to the 1st of July. So, that is, what, two/two and a half months or thereabouts - it will only be, I would have thought - I do not know, obviously, because I do not know what work was done - but I would have thought it is a fairly small part of the costs - do you follow? MR STEPHENS: Yes. JUDGE GRAHAM JONES: So, realistically, you are going to have to pay pretty well the £7,500. MR STEPHENS: Yes, sir. JUDGE GRAHAM JONES: Pretty well; it may be that something can be reduced from it. MR STEPHENS: Yes, but I'll have to do it monthly, though. JUDGE GRAHAM JONES: The defendant's payments to be staggered to a level he can afford." There was then a discussion about the staggering of the payments. There followed an order that Mr Stephens should pay £4,000 by way of damages and costs up to a ceiling of £7,500 to be paid by instalments. Mr Stephens seeks permission to appeal because he says he was under a misunderstanding as to the position as to the claimants' legal aid. He says that he did not receive the trial bundle until the morning of the trial. He had had to leave the place where he lived at 3 o'clock in the morning and he had been ill with a migraine and collapsed. I will come to Mr Stephens being ill later. But the late receipt of the trial bundle cannot bear upon the question upon whether he can now dispute this consent order. He stood up and said he had offered £4,000. There was then a discussion in the absence of the judge. The judge then came back and counsel explained to him the order. That has absolutely nothing to do with whether he had a trial bundle at all. I come back to Mr Stephens' health. He said that he had to leave home at 3 o'clock in the morning and that he had a migraine. He went to pick up a witness and collapsed at his house and was in considerable distress. During the hearing he had a further terrible migraine and agreed to do everything that was asked of him to get out of court. The fact of his ill health was supported by the statement of Mr Smith. It is Mr Stephens' belief that he had a defence to the action and in essence he wishes to argue before this court that he had a valid defence, but he entered into the agreement because of his ill health. If he succeeded on appeal the matter would have to go back for a trial. No trial took place. I have read at length the relevant extracts from the transcript of the proceedings, and it is quite clear that Mr Stephens never at any stage during the proceedings sought an adjournment because of ill health. He never told the judge that he was suffering of any ill health. There is no indication in the transcript that he was not able to comprehend what was going on. I have no doubt, having read the transcript, that if he had mentioned his health, the judge would have taken even more care to ensure that Mr Stephens was in a position to arrive at the decision that he seems to have done. In my view it is clear from the transcript that both Mr Cottle, the counsel who appeared on behalf of the claimants, and the judge were at pains to explain to Mr Stephens the form of the order that was to be made and his obligations under it. Of course one has sympathy with Mr Stephens in his position and his ill health, but he entered into an agreement with the claimants which was recorded in the court order. It was fully explained to him and I can see no real prospect of this court setting aside such a judgment. Permission to appeal is refused. ORDER: Application for permission to appeal refused. (Order not part of approved judgment)

FIRST SECTION CASE OF JAFARLI AND OTHERS v. AZERBAIJAN (Application no. 36079/06) JUDGMENT STRASBOURG 29 July 2010 FINAL 21/02/2011 This judgment has become final under Article 44 § 2 (c) of the Convention. It may be subject to editorial revision. In the case of Jafarli and Others v. Azerbaijan, The European Court of Human Rights (First Section), sitting as a Chamber composed of: Christos Rozakis, President,Nina Vajić,Khanlar Hajiyev,Dean Spielmann,Sverre Erik Jebens,Giorgio Malinverni,George Nicolaou, judges,and Søren Nielsen, Section Registrar, Having deliberated in private on 6 July 2010, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 36079/06) against the Republic of Azerbaijan lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by three Azerbaijani nationals, Mr Safarali Jafarli, Ms Valida Baghirzade and Mr Elchin Jafarov (“the applicants”), on 8 August 2006. 2. The applicants, who had been granted legal aid, were represented by Mr M. Mustafayev and Mr A. Huseynov, lawyers practising in Baku. The Azerbaijani Government (“the Government”) were represented by their Agent, Mr Ç. Asgarov. 3. The applicants alleged, in particular, that the delay in the execution of the judgment of 9 July 2002 had violated their right to a fair trial and their property rights, as guaranteed by Article 6 of the Convention and Article 1 of Protocol No. 1 to the Convention. 4. On 14 March 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 § 1). THE FACTS I. THE CIRCUMSTANCES OF THE CASE 5. The applicants are Azerbaijani nationals who were born in 1951, 1956 and 1978 respectively and live in Nakhchivan, Azerbaijan. 6. The applicants were members of a cooperative (“Əlincə” Kooperativi – “the Cooperative”) incorporated in Nakhchivan. The Cooperative was created by a decision of a general meeting of 5 April 1989 and was initially composed of five members, including the first applicant. 7. The Cooperative's charter was officially registered on 19 September 1994 by the Ministry of Justice of the Nakhchivan Autonomous Republic. According to this charter, the Cooperative was to be liquidated, inter alia, if the number of its members dropped to less than three. 8. According to the minutes of the Cooperative's general meetings available in the case file, there were subsequently some changes in the membership of the Cooperative. Following the departure of four members of the Cooperative, on 18 December 1996 the second and third applicants became its new members and the total number of the members amounted to three. In all these documents the first applicant was mentioned as the chairman of the Cooperative. 9. Pursuant to a number of contracts concluded in the period from 1997 to 2000, the Cooperative supplied one of the units of the Chief Department of Border Troops of the Ministry of National Security (“the Department of Border Troops”) with various foodstuffs. 10. Although the Cooperative had fulfilled its contractual obligations, it was not fully paid. 11. On an unspecified date the Cooperative brought an action against the Department of Border Troops and Border Troops Unit No. 2006, asking for payment of an accrued debt in the amount of 290,167,334 old Azerbaijani manats (AZM) plus 10% interest, as stipulated by the contract. 12. On 9 July 2002 Local Economic Court No. 1 dismissed the claim against the Department of Border Troops. However, Local Economic Court No. 1 upheld the claim against Border Troops Unit No. 2006 and ordered the latter to pay AZM 319,183,067 in total to the Cooperative. This amount included the principal debt of AZM 290,167,334 and the penalty charge of AZM 29,016,733. 13. No appeals were lodged against that judgment and, pursuant to the domestic law, it became enforceable within one month of its delivery. 14. On 21 October 2002 Local Economic Court No. 1 issued a writ of execution of the judgment. However, Border Troops Unit No. 2006 refused to comply with the judgment and, despite the applicants' complaints to various authorities, it was not enforced. 15. In the meantime the Department of Border Troops was reorganised and renamed as the State Border Service. 16. The documents in the case file show that, on the basis of a request by the Cooperative dated 9 March 2004, signed by the first applicant, the Cooperative's activity as a taxpayer was ceased and this fact was recorded by the Ministry of Taxes. 17. On an unspecified date in 2005 the Cooperative brought an action against the State Border Service and the Ministry of Finance complaining about the non-enforcement of the judgment of 9 July 2002. The Cooperative claimed AZM 58,033,446 for lost earnings, AZM 649,900,896 for material damage and AZM 300,000,000 for non-pecuniary damage. 18. On 7 November 2005 Local Economic Court No. 1 dismissed the claim, finding that neither of the defendants could be held responsible for the non-enforcement of the judgment, because the amount awarded to the Cooperative by the judgment of 9 July 2002 had not been paid due to the refusal of the State Treasury to allocate state funds for this purpose. 19. On 6 February 2006 the Economic Court and on 16 June 2006 the Supreme Court upheld the first-instance court's judgment. 20. In the period from March to August 2006, the judgment of 9 July 2002 was fully executed and the total amount of AZM 319,183,067 was paid into the bank account that the Cooperative held at the Kapital Bank. 21. By a decision of 1 May 2007 the Economic Court of the Nakhchivan Autonomous Republic terminated the enforcement proceedings owing to the execution of the judgment of 9 July 2002. II. RELEVANT DOMESTIC LAW 22. The Law on Cooperation in the USSR of 26 May 1988 of the USSR provided that a cooperative was established on a voluntary basis. The number of members of a cooperative could not be less than three (Article 11). 23. The Law of 28 October 1992 on the temporary remaining in force of former USSR laws on the territory of the Republic of Azerbaijan and their application provided a list of former USSR laws which would remain in force in Azerbaijan until the relevant laws of the Republic of Azerbaijan were adopted. The Law on Cooperation in the USSR of 26 May 1988 appeared on this list. This Law ceased to apply on 12 October 2001. 24. The Civil Code of 1 September 2000 provides that a cooperative is a type of commercial company which is a voluntary union of individuals or legal entities established for the purpose of satisfying material and other needs of its members through consolidation of their material contributions (Article 109.1). A cooperative can be established by at least five members (Article 109-1.1). 25. Members of a cooperative, in essence, enjoy rights similar to those of founders or shareholders of other types of legal entities, including the right to participate in the management of the cooperative and to receive a share of its profits (Articles 109.2 and 109.4 in fine). The cooperative's property is divided among the members in accordance with its charter (Article 110). The cooperative's profits are distributed to the members in accordance with their shares, as well as the extent of their participation in the function of the cooperative, by way of contributing personal labour or otherwise (Article 110-2). 26. The supreme management body of a cooperative is the general meeting of members. Each member has one vote at the general meeting regardless of the size of his or her contribution to the cooperative's capital fund (Articles 111.1 and 111.5). 27. The executive bodies of a cooperative are a management board and/or a chairman. A cooperative's chairman may only be elected from among the cooperative's members. The chairman is elected for a specified term at the general meeting of members and has the right to represent the cooperative (Articles 111.1 and 111.10). A cooperative may be voluntarily reorganised or liquidated by a decision of its members' general meeting (Article 113.1). 28. Article 69.2 of the Code of Civil Procedure provides that legal entities can be represented before courts by their bodies, acting within the scope of powers conferred on them by law, regulations or constitutive documents of the legal entity, or by representatives acting on the basis of a power of attorney. THE LAW I. ALLEGED VIOLATIONS OF ARTICLE 6 § 1 AND ARTICLE 13 OF THE CONVENTION AND ARTICLE 1 OF PROTOCOL No. 1 IN RESPECT OF THE DELAY IN THE EXECUTION OF THE JUDGMENT OF 9 JULY 2002 29. Relying on Articles 6 § 1 and 13 of the Convention and Article 1 of Protocol No. 1, the applicants complained about the delay in the enforcement of the judgment of 9 July 2002 of Local Economic Court no. 1. Article 6 § 1 of the Convention reads as follows: “1. In the determination of his civil rights and obligations ..., everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...” Article 13 of the Convention reads as follows: “Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.” Article 1 of Protocol No. 1 reads as follows: “Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. 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.” A. Admissibility 1. The applicants' victim status 30. The Government contested the applicants' victim status, noting that they had not been a party to the domestic proceedings and could not claim to be victims. In this connection, the Government submitted that there was no information concerning the ownership of the Cooperative by the applicants or any documents proving their membership of it. The Government further alleged that the applicants could not be considered the only owners of the Cooperative, because according to the domestic law a cooperative should be composed of at least five members. 31. The applicants alleged that they did not lodge the application with the Court only as individuals, but also on behalf of the Cooperative, because the application was signed by the person who was entitled to represent the Cooperative. They submitted that as the Cooperative had ceased its activity on 9 March 2004 the application had been lodged with the Court by all of its members. 32. The applicants further submitted that there was no member of the Cooperative other than them and that, jointly, they were the full owners of it. In this regard, the applicants produced minutes of the Cooperative's general meetings showing the changes in the membership of the Cooperative. The applicants also produced documents, signed by the previous members of the Cooperative and confirmed by the public notary, stating that the previous members had no claim to the Cooperative. The applicants argued that, in accordance with the domestic law in force at the time of the establishment of the Cooperative, a cooperative could be composed of three members. 33. The Court reiterates at the outset that the term “victim” in Article 34 of the Convention denotes the person directly affected by the act or omission which is at issue (see Eckle v. Germany, 15 July 1982, § 66, Series A no. 51). It further notes that disregarding a company's legal personality as regards the question of being a “victim” will be justified only in exceptional circumstances, in particular where it is clearly established that it is impossible for the company to apply to the Court through the organs set up under its articles of incorporation or – in the event of liquidation or bankruptcy – through its liquidators or trustees in bankruptcy (see Capital Bank AD v. Bulgaria (dec.), no. 49429/99, 9 September 2004; Camberrow MM5 AD v. Bulgaria (dec.), no. 50357/99, 1 April 2004; and Agrotexim and Others v. Greece, 24 October 1995, § 66, Series A no. 330‑A). 34. On the other hand, the Court reiterates that the sole owner of a company can claim to be a “victim” within the meaning of Article 34 of the Convention in so far as the impugned measures taken with regard to his or her company are concerned, because in the case of a sole owner there is no risk of differences of opinion among shareholders or between shareholders and a board of directors as to the existence and nature of infringements of the Convention rights or the most appropriate way of reacting to such infringements (see Ankarcrona v. Sweden (dec.), no. 35178/97, 27 June 2000). However, the executive director of or a minority shareholder in a company cannot claim to be a “victim” of a violation of the Convention, having lodged an application in his or her own name rather than on behalf of the company, if the company and not the applicant was a party to the domestic proceedings at issue (see Rahimov v. Azerbaijan (dec.), no. 22759/04, 3 January 2008). 35. The Court observes that in the present case the Cooperative was a party to the domestic proceedings and the judgment of 9 July 2002 was delivered in its favour. 36. Having thoroughly examined the applicants' submissions, the Court finds that it does not transpire from these submissions that the applicants intended to lodge the present application on behalf of the Cooperative. On the contrary, the applicants lodged the application solely in their own names and complained of violations of their personal rights as the members of the Cooperative. In this connection, the Court notes that any company under Azerbaijani law possesses a legal personality which is distinct from those of its directors and shareholders (see Rahimov, cited above) and, in so far as the application has been lodged by the applicants in their own names, it remains to be seen whether there were any exceptional circumstances, such as bankruptcy or liquidation of the Cooperative, allowing the applicants to claim to be “victims” of the alleged violations in disregard of the Cooperative's legal personality or whether recognition of the applicants' victim status would risk affecting the interests of other persons (in other words, whether they are the only owners of the Cooperative in question). 37. The Court cannot agree with the applicants' argument that they lodged the application with the Court in their names because the Cooperative had ceased its activity. The Court observes that the Cooperative ceased its activity only as a taxpayer. It appears that this had not made an impact on its legal personality, as the Cooperative brought an action against the State Border Service and the Ministry of Finance after 9 March 2004 and was a party to the domestic proceedings in 2005 and in 2006. Moreover its bank account was operational in 2006 when the judgment of 9 July 2002 had been executed. Therefore, the Court finds that the deregistration of the Cooperative as a taxpayer did not deprive it of its legal personality or of its capacity to lodge an application with the Court. 38. Turning to the question whether the applicants were the only owners of the Cooperative, the Court notes that, according to the minutes of the Cooperative's general meeting submitted by the applicants, all three applicants were members of the Cooperative and there was no member other than them. Moreover, according to these documents, the first applicant was the Cooperative's chairman, competent to act on its behalf in the domestic proceedings. 39. The Court agrees with the Government on the point that there is no detailed information in the case file concerning the share of each applicant in the Cooperative's property. However, that point is not relevant. According to the minutes of the Cooperative's general meeting and in the absence of any document contesting the information described in the above‑mentioned minutes, it appears that the applicants are the only three members of the Cooperative. Furthermore, in the light of the particular circumstances of the instant case, the Court also finds the Government's argument that at least five members were required for establishment of a cooperative irrelevant. The Court observes that according to the Cooperative's charter as registered by the domestic authorities and the relevant domestic law in force at the time of the establishment of the Cooperative, at least three members were required for its establishment and this rule was not infringed. There is no evidence to prove that, at any time, the domestic authorities ceased to recognise the Cooperative as a legal entity based on this ground (number of members). 40. In contrast to the situation in the Rahimov case, in which the applicant was the chairman of a cooperative and there was no information about other members of that cooperative, in the present case all the applicants are the members of the Cooperative and it has been established that there was no other member than them. 41. Taking into consideration that a cooperative's property and profits belong to its members (Article 110 and 110-2 of the Civil Code) and having regard to the absence of competing interests which could create difficulties, for example, in determining who is entitled to apply to the Court, and in the light of the circumstances of the case as a whole, the Court considers that the applicants can reasonably claim to be “victims” within the meaning of Article 34 of the Convention, in so far as the impugned measures taken with regard to their Cooperative are concerned (see, mutatis mutandis, Ankarcrona, cited above). 42. Accordingly, the Court rejects the Government's objection. 2. Loss of the applicants' victim status due to the enforcement of the judgment 43. The Government argued that as the judgment of 9 July 2002 had been fully enforced the applicants could no longer be considered as “victims” within the meaning of the Convention. 44. The applicants contested the Government's objection and maintained their complaints. 45. The Court reiterates that a decision or measure favourable to an applicant is not in principle sufficient to deprive him of his status as a “victim” unless the national authorities have acknowledged, either expressly or in substance, and then afforded redress for, the breach of the Convention (see Amuur v. France, 25 June 1996, § 36, Reports of Judgments and Decisions 1996‑III, and Dalban v. Romania [GC], no. 28114/95, § 44, ECHR 1999‑VI). Only when these conditions are satisfied does the subsidiary nature of the protective mechanism of the Convention preclude examination of an application. 46. The Court notes that the mere fact that the authorities finally carried out the payment of the debt after a significant delay cannot be viewed as automatically depriving the applicants of their victim status under the Convention. The full enforcement of the judgment of 9 July 2002, after about four years, may have arguably constituted an acknowledgment by the authorities of the alleged violations of the Convention. 47. However, even assuming that there has been such an acknowledgment, the Court notes that no compensation was awarded to the applicants in respect of the alleged violation of the Convention, namely, the lengthy delay in the enforcement of the judgment of 9 July 2002. Therefore, the Court finds that the measures taken in the applicants' favour were insufficient to deprive them of their “victim” status in the present case (see, mutatis mutandis, Ramazanova and Others v. Azerbaijan, no. 44363/02, §§ 36-38, 1 February 2007, and Efendiyeva v. Azerbaijan, no. 31556/03, §§ 48-50, 25 October 2007). 48. Accordingly, the Court rejects the Government's objection as to the applicants' loss of victim status. 3. Conclusion 49. The Court considers that the application is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention or inadmissible on any other grounds. It must therefore be declared admissible. B. Merits 1. The parties' submissions 50. The Government did not make any submissions on the merits of the case. 51. The applicants reiterated their complaints, noting that the delay in the enforcement of the judgment of 9 July 2002 had infringed their right to a fair trial and their right to the peaceful enjoyment of their possessions. 2. The Court's assessment (a) Articles 6 and 13 of the Convention 52. At the outset, the Court reiterates that Article 6 § 1 secures to everyone the right to have any claim relating to his civil rights and obligations brought before a court or tribunal; in this way it embodies the “right to a court”, of which the right of access, that is the right to institute proceedings before courts in civil matters, constitutes one aspect. However, that right would be illusory if a Contracting State's domestic legal system allowed a final, binding judicial decision to remain inoperative to the detriment of one party. It would be inconceivable that Article 6 § 1 should describe in detail procedural guarantees afforded to litigants – proceedings that are fair, public and expeditious – without protecting the implementation of judicial decisions; to construe Article 6 as being concerned exclusively with access to a court and the conduct of proceedings would be likely to lead to situations incompatible with the principle of the rule of law which the Contracting States undertook to respect when they ratified the Convention. Execution of a judgment given by any court must therefore be regarded as an integral part of the “trial” for the purposes of Article 6 (see Hornsby v. Greece, 19 March 1997, § 40, Reports of Judgments and Decisions 1997‑II). 53. The Court further notes that a delay in the execution of a judgment may be justified in particular circumstances. But the delay may not be such as to impair the essence of the right protected under Article 6 § 1 of the Convention (see Burdov v. Russia, no. 59498/00, § 35, ECHR 2002‑III). The Court observes that in the present case the judgment of 9 July 2002 was enforced in full only in August 2006, about four years after its delivery (compare Timofeyev v. Russia, no. 58263/00, §§ 41-42, 23 October 2003). No reasonable justification was advanced by the Government for this delay. 54. There has accordingly been a violation of Article 6 § 1 of the Convention. 55. In view of the above finding, the Court does not consider it necessary to rule on the complaint under Article 13 of the Convention because Article 6 is lex specialis in regard to this part of the application (see, for example, Efendiyeva, cited above, § 59, and Jasiūnienė v. Lithuania, no. 41510/98, § 32, 6 March 2003). (b) Article 1 of Protocol No. 1 to the Convention 56. The Court reiterates that a “claim” can constitute a “possession” within the meaning of Article 1 of Protocol No. 1 if it is sufficiently established to be enforceable (see Stran Greek Refineries and Stratis Andreadis v. Greece, 9 December 1994, § 59, Series A no. 301‑B ). 57. The judgment of 9 July 2002 of Local Economic Court no. 1 became enforceable and final one month after its delivery. The impossibility of obtaining execution of this judgment for such a long period of time constituted an interference with the applicants' right to peaceful enjoyment of their possessions, as set out in the first sentence of the first paragraph of Article 1 of Protocol No. 1 (see Burdov, cited above, § 40, and Jasiūnienė, cited above, § 45). The Government have not advanced any acceptable justification for this interference. 58. The foregoing considerations are sufficient to enable the Court to conclude that there has also been a violation of Article 1 of Protocol No. 1. II. ALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION IN RESPECT OF UNFAIRNESS OF THE PROCEEDINGS CONCERNING THE APPLICANTS' COMPENSATION CLAIM FOR THE DELAY IN THE ENFORCEMENT OF THE JUDGMENT OF 9 JULY 2002 59. Relying on Article 6 of the Convention, the applicants complained that the proceedings concerning their compensation claim for the delay in the enforcement of the judgment of 9 July 2002 were unfair and that the domestic courts had misinterpreted the domestic law. 60. In the light of all the material in its possession, and in so far as the matters complained of are within its competence, the Court considers that this part of the application does not disclose any appearance of a violation of the Convention. It follows that it is inadmissible under Article 35 § 3 as manifestly ill-founded and must be rejected pursuant to Article 35 § 4 of the Convention. III. APPLICATION OF ARTICLE 41 OF THE CONVENTION 61. 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.” 62. The applicants did not submit a claim for just satisfaction in the manner required by Rule 60 of the Rules of Court. Accordingly, the Court considers that there is no call to award them any sum on that account. FOR THESE REASONS, THE COURT UNANIMOUSLY 1. Declares the complaints under Articles 6 § 1 and 13 of the Convention and Article 1 of Protocol No. 1 to the Convention (in respect of the delay in the execution of the judgment of 9 July 2002) 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 that there is no need to examine the complaint under Article 13 of the Convention; 4. Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention. Done in English, and notified in writing on 29 July 2010, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Søren NielsenChristos RozakisRegistrarPresident

Mr Justice Blackburne : This is an application by the fifth defendant, Mr Dan Firer, to set aside five orders, each made without notice, extending the time for service of the claim form and, if that relief is granted (at any rate if that relief is granted in respect of the latest of the time extensions), to set aside the service of the claim form on him. The claim form was served on him at an address in Israel on 15 February 2009 which was during the currency of a period of extension granted by the fifth of the five orders. The claim form was issued on 1 November 2007. It was issued out of the Queen's Bench Division. On 6 February 2009 the claim was transferred to this Division. The claimant is a company in liquidation. It went into insolvent liquidation on 8 February 2006. Mr James Duckworth was appointed liquidator with effect from 12 January 2007. The defendants are former directors of the claimant. The claim arises out of the declaration of a dividend of £12.5 million resolved on by the directors on 6 November 2001 and (according to the particulars of claim) recorded in the minutes of the claimant's annual general meeting that same day. It is alleged that the dividend was paid out by 31 December 2001 in that the claimant's audited accounts for that calendar year record the payment by the year end. The claimant, acting by Mr Duckworth, claims that the declaration and payment of the dividend constituted a breach of the duty which each defendant owed to it, alternatively a misfeasance on the part of each of them. It sues to recover the £12.5 million from them, together with interest. Given the date of the dividend's declaration on 6 November 2001 and its payment then or shortly thereafter, it was evident that the six year limitation period relevant to the claim to recover it was likely to be on or shortly after 6 November 2007. The claim form, as I have mentioned, was issued on 1 November 2007, a matter of days before the sixth anniversary of the declaration. Of the five defendants, the first and third reside in this country and were served on 25 February 2008, just before the expiry of the four months within which, by rule 7.5(1), they were to be served without the need for an extension of time under rule 7.6. But the second, fourth and fifth defendants reside in Israel and although by rule 7.5(2) the time for service on them out of the jurisdiction was six months of the date of issue of the claim form the claimant, more particularly Mr Duckworth its liquidator together with the solicitors acting for him in the claim, Messrs Clarke Willmott, considered it advisable to apply not only for permission to serve out on those defendants in Israel (as was required in any event) but also for an extension of time to 1 July 2008 within which to do so. This led to the making of the first of the five orders extending time for the service of the claim form. The fifth defendant now seeks to have it set aside so far as it relates to him. The first extension of time was applied for on or about 4 February 2008 and therefore well within the six months available for service on the three defendants outside the jurisdiction (assuming that permission to serve out was also obtained). The application was supported by a witness statement dated 4 February 2008 made by Ms Lisa Saxby, a solicitor and employee with Clarke Willmott and the person who, at that time, had day to day conduct of the proceedings. The application was dealt with, as the claimant had requested, without a hearing and necessarily without notice to the three intended defendants. It came before Master Foster who on 7 February gave permission for service of the claim form on them and extended the period for so doing so to 1 July 2008. In Collier v Williams [2006] EWCA Civ [2006] 1WLR 1945 at [38], the Court of Appeal said this of applications to extend time for the service of a claim form: "…On receipt of a without notice application with a request for the matter to be disposed of on paper, the court should consider whether it is appropriate to dispose of the matter without a hearing. In our view, there is a danger in dealing with important applications on paper. An application for an extension of time for service of the claim form is potentially of critical importance, especially where the application is made shortly before the end of the four months period for service and where the cause of action has become time-barred since the date on which the claim form was issued. If the application is allowed and an extension of time is given, the defendant can always apply under CPR r 23.10 for the order to be set aside, in which case the applicant may be worse off than if it had been refused in the first place. It is highly desirable that on the without notice application, full consideration (with proper testing of the argument) is given to the issue of whether the relief sought should be granted. Equally, if an application is made late in the day and refused on paper when proper argument would have made it proper to grant, a great deal of heartache can be saved. We think that applications of this kind, where time limits are running out, should normally be dealt with by an urgent hearing. We accept, however, that owing to time constraints, pressure of business and the like, it will sometimes not be possible to deal with such an application other than on paper. Even in such cases, however, consideration should be given to dealing with the application by telephone." It is a noteworthy feature of all five applications to extend time for the service of the claim form in this case that this cautionary advice was ignored: not one of the applications was dealt with by hearing; all were dealt with on paper. All were made after the cause of action had become time-barred. As will appear, one of them was made on the very last day of the extended period for service. With the possible exception of the first of them, the evidence in support - in each case it was a witness statement by Ms Saxby - was in the briefest of terms. It was evidently thought unnecessary to exhibit to those brief statements any correspondence or other background material. Although I have no reason to think that there was the slightest intention to mislead the court, none of the applications after the first of them drew attention to the fact that the application had been preceded by another or others. By the time of the second and subsequent applications it would have been apparent from a reference in each witness statement to the fact that the claim form had been issued on 1 November 2007 that there must have been at least one earlier extension of time. But that was left to the reader to divine. Miss Rachel Sleeman who appeared for the claimant submitted, correctly, that it was not mandatory to have a hearing. She submitted that the advice of the Court of Appeal was directed as much to the court as to the applicant for the extension of time. The point was also made that although none of the later applications referred to any earlier application, it would have been evident from the file that there were earlier applications and what the evidence was that had supported those earlier applications. In my view, the onus is on the applicant for the extension to ensure that the correct practice is followed. It is not for the busy Master before whom the application comes to search the file to see if there have been any and if so how many earlier extensions and what the evidence was upon which those earlier applications were based. The onus, in my view, is on the applicant to ensure on each application that all relevant material is drawn to the court's attention. The strong impression I have from the manner in which these applications were approached is that the matter was regarded as something of a formality and that it was expected that the extension would be granted almost as a matter of course. I cannot think that if Ms Saxby or those supervising had had in mind the advice of the Court of Appeal in Collier v Williams the matter would have been approached in the way that it was. Having obtained the extension of time pursuant to the first application, nothing was done to initiate any steps to effect service on the Israeli-based intended defendants until almost five weeks had passed. It appears that there was a delay in obtaining sealed copies of the order. It is not clear why it was considered necessary to await obtaining a sealed copy of the order. It was not needed to effect service on the Israeli defendants. As soon as the order was forthcoming, which was on 13 March 2008, Ms Saxby forwarded a request for service of the claim form and the particulars of claim (which by then had been prepared) and the order of 7 February to the Foreign Process Section ("FPS") in the Royal Courts of Justice, requesting service on the Israeli-based defendants. This is a well recognised means of effecting service on persons who are outside the jurisdiction. Ms Saxby had earlier been given to understand that it would take the FPS up to five days to process the request and that there could thereafter be a delay of anywhere up to four months for actual service to be effected. In her witness statement of 4 February Ms Saxby referred to a delay of "up to five months". Mr Orlando Gledhill, who appeared for the fifth defendant, was critical of this. As I do not think that she would have secured any lesser period of extension if she had referred to four months for service I do not consider that anything turns on this discrepancy between what she had been given to understand and what she put in her witness statement. What is less easy to understand is why Clarke Willmott waited until an extension of time had been obtained before even getting around to initiating the process of serving the Israeli-based defendants. It appears that this was to await finalisation of the particulars of claim which, it appears, were not approved until 22 February 2008. The requirement under the rules is to serve the claim form within the period allowed. The justification for an extension of time must, in my view, relate to why it is that the claim form has not been served within the generous period allowed by the rules. Awaiting the finalised particulars of claim (or a sealed or any order extending time) is not a good reason for delaying service of the claim form, convenient though it may be to serve both at the same time. (See also Collier v Williams at [148].) An issue that was debated before me was whether the application for the second extension of time was made by 4 pm on 1 July 2008, the day on which the first extension of time expired. The evidence in support of the application, a witness statement by Ms Saxby, is dated 1 July. It was sent under cover of a letter, also dated 1 July. The letter is headed "urgent" and marked "By Fax and DX". It was common ground that the critical question is the date when and time by which the application was received by the court, rather than the date when, having been received by the court, the application is stamped. It was also common ground that the application must be received by 4 pm if it is to be treated as received on that day. The date by which the application is received is important as regards the exercise of the court's power to extend time under rule 7.6. If the application is made after the time for service has expired (whether that time is the original or an extended period for service) the exercise of the court's power to extend time is conferred by rule 7.6(3) rather than by rule 7.6(2). Rule 7.6(3) is subject to preconditions and relief cannot be granted if the preconditions have not been satisfied. See Collier v Williams. Rule 7.6(2), by contrast, has no preconditions and relief may be granted under that rule even if the court is not satisfied that the claimant has taken all reasonable steps to serve and has acted promptly (these being the relevant preconditions under rule 7.6(3)). Unfortunately, Ms Saxby has been on a career break since 9 April of this year and has been uncontactable since that date to explain just when she sent the application from her office in Southampton to the Royal Courts of Justice for the second extension and, not least, why she left it to the last day. Mr Gledhill submitted that the burden was on the claimant to persuade the court, if this was its contention, that the application reached the court by 4 pm on 1 July. He submitted that, on the evidence, it had failed to discharge that burden. Mr Matthew Barker, the partner in Clarke Willmott who has overall charge of the litigation by his firm on the claimant's behalf and has made two witness statements on this application, was of the view, based on the terms of Ms Saxby's accompanying letter, that the application was indeed made on 1 July and, what is more, that it was received by the court before 4 pm that day. I am persuaded on a balance of probabilities that the application did reach the court by 4 pm on 1 July. Uniquely among the five applications, the letter accompanying the second application was marked "By Fax and DX". It seems fairly clear that Ms Saxby was alerted, albeit very belatedly, to the need to get the application before the court that day. I find that she faxed it to the court. There would have been little point in sending it after 4 pm. I therefore find that it was received by the court by 4 pm that day and that, accordingly, the court's power to extend time was that conferred by rule 7.6(2). Ms Saxby's evidence in support of the second application was exceedingly brief. It made no reference to the earlier application. It omitted any reference to the fact, set out in the evidence which supported the earlier application, that the statutory time limit applicable to the claim had expired. Its first six paragraphs (the witness statement was only eight paragraphs in length) had all the hallmarks of a "cut and paste job" (as Mr Gledhill described it) based on the equivalent paragraphs in the witness statement which supported the first extension. The only paragraphs which were material to the further application were paragraphs 7 and 8: "7. Three of the five Defendants reside in Israel. Two of the above Defendants have been served, however The Foreign Process Office within the Royal Courts of Justice have been unable to serve the Fifth Defendant, Mr Dan Firer of 21 Robinson, Petach Tikva, Israel 8. Permission is therefore sought to extend the deadline for service of the Claim Form upon the Fifth Defendant until 1 September 2008. It is understood that the Fifth Defendant is in contact with the solicitors instructed by the remaining four Defendants and therefore it is anticipated that service can take place very shortly potentially through solicitor [sic] instructed by the other Defendants." Thus, the statement in paragraph 8 suggested that service was expected to be via the solicitors acting for the other defendants. In fact the solicitors in question, Taylor Vinters, had informed Clarke Willmott in a letter dated 17 June that, although they had instructions from the other two Israeli-based defendants, they had not heard from the fifth defendant although they were attempting to make contact with him "and anticipate that we will be able to confirm whether or not we are instructed on his behalf shortly". On the available correspondence there was therefore no basis for the statement that the fifth defendant was actually in contact with Taylor Vinters and no basis for the expectation that service on him could take place "very shortly" through the solicitors instructed by the other defendants. As Mr Gledhill put it, this was a wishful overstatement of the position. It would surely have been far better if Ms Saxby had exhibited the correspondence and explained exactly what steps were being taken and with what expectation to effect service so that the court could assess for itself whether any further extension of time was justified and if so for how long. In my judgment, this was a misleading statement although I have no reason to think that it was intentionally so. It resulted in the grant of a further extension, this time to 31 August 2008. On 20 August or thereabouts, but well before the expiry of the second extension of time, Ms Saxby applied for a third extension. The first six paragraphs of her witness statement in support were identical to the first six paragraphs of her previous witness statement. So also was the seventh paragraph except for the addition of a sentence to the effect that the FPS had recently returned the documents confirming that service of them had not been executed. This was a reference to the fact that the previous day Clarke Willmott had received from the FPS a notification from the Directorate of Courts in Jerusalem that service on the fifth defendant had not been executed because he had "moved to an unknown address". In fact, as Clarke Willmott were later to discover, the fifth defendant had not moved address at all: he had lived at the same address at least since 2002. It was just that the claimant and Clarke Willmott had the wrong address for him. Paragraph 8 of Ms Saxby's witness statement was also almost identical to the corresponding paragraph in her previous witness statement. The only difference was that the application was for an extension of time to 1 December 2008 and that it was "to enable the Claimant to investigate and attempt to undertake alternative means of service of the documents upon the Fifth Defendant". Like the second application, this application, which came before a Deputy Master, did not refer to the earlier applications or the grounds upon which they had been made. It explained nothing of the steps taken to serve the claim form beyond the fact that the FPS was involved, not least, how the claimant came to have an address for the fifth defendant which turned out to be incorrect. It failed to exhibit any correspondence. It was perfunctory in the extreme. Although the witness statement did not refer to this, there had been a change of solicitors acting for the defendants. The defendants' present solicitors, Brabners Chaffe Street LLP ("BCS"), had been instructed at the end of July. In his witness statement Mr Barker made the point that the letter which Clarke Willmott had received from BCS enclosing a notice of change of solicitor to BCS did not make clear that they did not have instructions to accept service on behalf of the fifth defendant and that this was despite a request from Clarke Willmott for confirmation "whether you are in contact with the fifth defendant and whether you are instructed to accept service of the claim form on his behalf". It is quite true that BCS did not in terms respond to that letter indicating whether they did or did not have instructions. On the other hand their subsequent correspondence referred simply to the first to fourth defendants. It gave no indication that they were acting for the fifth defendant and no indication, contrary to the impression conveyed by paragraph 8 of Ms Saxby's witness statement, that there were grounds for hoping that service on the fifth defendant could take place shortly through them. In fact, although this only emerged in answer to a question I put to Mr Gledhill during the course of the hearing, the fifth defendant instructed BCS in late July 2008. But, as Mr Gledhill submitted and as the correspondence passing between Clarke Willmott and BCS confirmed, BCS did not at any stage make any statement on the fifth defendant's behalf, let alone suggest, that the firm had or would shortly have instructions to accept service on the fifth defendant's behalf. Ms Saxby appears to have grounded her hope that service on the fifth defendant would shortly take place on her understanding that BCS were in contact with the fifth defendant (as in fact they were) from which she jumped to the conclusion that BCS would thereby obtain instructions to accept service on his behalf. In short, she was relying on the fifth defendant's co-operation to enable service to be effected. Since, as she knew, the limitation period had expired, this was optimistic to say the least. She was taking no steps at all in the meantime to effect service should this hope prove unfounded. The further application for an extension of time was successful. The Deputy Master granted the extension sought, this time to 1 December. Whereas each of the first two extensions had been for two months, this one was for three months. It had the effect of extending the limitation period for the bringing of the claimant's action against the fifth defendant by seven months, over and above the six months (less a few days) conferred (in effect) by rule 7.5(2). At the time that the application was made the claimant and its advisers had no idea where the fifth defendant resided except that it was in Israel (the only address they had was, according to the information of the Directorate of Courts in Jerusalem, incorrect) and, subject to one possible point, were taking no steps to find out where he might be and had put in hand no arrangements to have him served once his correct address had been established. That one point is a remark in a letter from Ms Saxby to the QB Masters' Support Unit. The letter, dated 22 August 2008, was sent the same day as the letter enclosing the third application. It was in response to an earlier letter from the Court (although that earlier letter was not in evidence before me) which had evidently instructed Clarke Willmott to "serve a photocopy of the Application Notice upon the relevant parties". Ms Saxby's letter stated that "We have forwarded this to the foreign process servers who are in the process of arrange [sic] to serve the fifth defendant. However, they have reverted to us confirming that they require a sealed Order…". This letter was a complete mystery. Neither Miss Sleeman nor those from Clarke Willmott who were instructing her could assist with its contents. I have the very strong suspicion that the letter was written in reference to the earlier attempt to effect service via the FPS which, however, had got nowhere on account of the incorrect address for the fifth defendant. The oddity is why Ms Saxby should have written this letter when she had been made aware three days earlier that service by the FPS had not been possible. There was certainly nothing to indicate that Ms Saxby, or anyone else from Clarke Willmott, had by then taken any steps to identify another process server in Israel (or anywhere else for that matter) to effect service or even to initiate any process with a view to establishing where the fifth defendant was to be found. As will appear, those steps were only started several months later. At that stage, and for many weeks to come, Clarke Willmott's hopes appear to have been pinned on co-operation from the fifth defendant via BCS. This brings me to the fourth application for an extension of time. This was dated 19 November 2008. I am satisfied that the application reached the court well before the expiry of the then extended period for service, namely 1 December 2008. The first seven paragraphs of Ms Saxby's witness statement in support were word for word the same as the corresponding paragraphs in her witness statement in support of the third extension. The statement in paragraph 7 that "the Foreign Process Section has recently returned the documents confirming that the service of documents has not been executed" (emphasis added) was misleading. The documents in question had been returned on or about 19 August. In the context of an application for an extension of time where, at the very least, the applicant must expect to be able to show that he is pursuing the matter of service with all due diligence it is hardly correct to describe a critical event which occurred three months earlier as having occurred "recently". Miss Sleeman accepted that the use of the expression was "unfortunate". Master Foster who dealt with this further application would only have known that the FPS had returned the documents three months earlier if he had read the file and seen what it was that had been placed before the Deputy Master three months earlier. And why should he? Paragraphs 8 and 9 of Ms Saxby's witness statement were in the following terms: "8. We have been in contact with the solicitor acting on behalf of the First, Second, Third and Fourth Defendant. We understand that the solicitors are in contact with the Fifth Defendant and it was anticipated that it would be agreed that they would be instructed to accept service on behalf of the Fifth Defendant, however they have now confirmed that they are not instructed to do so. 9. It will now be necessary to instruct a process server in Israel to attempt to serve the Fifth Defendant. In the meantime it has also been agreed that the claim will be stayed in order to attempt a settlement of this matter." The second sentence of paragraph 8 is unhappily worded. Nothing that BCS said to Clarke Willmott justified Ms Saxby's expectation that BCS would be instructed by the fifth defendant to accept service on his behalf. On the contrary, by mid-October, which was over a month before this further application was submitted and Ms Saxby had made her witness statement in support, BCS had indicated in clear terms that they had no instructions to accept service on the fifth defendant's behalf. The fact, as it appears to be, that Ms Saxby was questioning in subsequent correspondence whether BCS's lack of instructions was founded on a mistaken belief on their part that the time for service had already expired and that she then went on to ask whether, in the light of the fact that, by reason of the third extension, the time for service had not yet expired, BCS could indicate whether they were in a position to accept service but they failed to respond, does not, in my view, excuse the way the matter was explained by Ms Saxby. To describe BCS's clear statement, a month earlier, that they were not instructed to accept service as confirmation which Clarke Willmott had "now" received is, likewise, unfortunate. The fact is that, over the previous four months, Ms Saxby had been hoping that service on the fifth defendant could be effected entirely through co-operation from the fifth defendant himself. But she had absolutely no grounds for supposing that this co-operation would be forthcoming and, for reasons I have already mentioned (based on limitation), good grounds for supposing that it would not. Nothing said by BCS justified her hope. The first sentence of paragraph 9 supports the view that up to 19 November at least, no steps had in fact been taken to instruct a process server in Israel to effect service on the fifth defendant. The fact, adverted to in the second sentence, that a stay of the claim to attempt a settlement had been agreed between the claimant and the other defendants is, in my view, irrelevant to the need to effect service on the fifth defendant and provides no excuse for the dilatory way in which the matter was apparently being pursued. In the tenth and last paragraph of her witness statement Ms Saxby sought a further two months extension to 1 February 2009. She stated "Given the stay agreed by the parties it is submitted that none of the parties will be prejudiced by the further extension". That might have been true of the other defendants but it was most certainly not true as regards the fifth defendant. Every extra period of extension operated to extend the limitation period for the bringing of the claim against him. That was manifestly prejudicial to him. The application succeeded and an order was made on 2 December extending the period to 1 February 2009. Despite having this further (and fourth) extension for service of the claim form, service was not effected prior to the expiry on 1 February of this further period. Indeed, it is far from clear that any steps were taken towards achieving service during this further extension until near the end of the two months. This led to the fifth application and, in due course, to the fifth extension. As on previous occasions the application was supported by a witness statement of Ms Saxby. As on previous occasions the matter was dealt with on paper and without therefore a hearing. As on previous occasions Ms Saxby's witness statement failed to set out just what earlier extensions had been granted, the reasons for them and, except in the briefest terms, why it was that previous extensions had proved insufficient. The first seven paragraphs of her witness statement followed word for word the first seven paragraphs of her previous witness statement. By 26 January 2009, the date of the new witness statement, the assertion in paragraph 7 that "the Foreign Process Section has recently returned the documents confirming that the service of documents has not been executed" (emphasis again added) was even more out of date and inaccurate than it had been in the previous witness statement: the return of documents had, by then, occurred five months earlier. Ms Saxby added a further sentence to paragraph 7 stating that: "No explanation has been given as to why service was not effected by the Foreign Process Section." That was simply untrue: the Directorate of Courts of Jerusalem had indicated in a document which had been supplied by the Royal Courts of Justice to Clarke Willmott on or about 19 August that the "recipient" (ie the fifth defendant) had "moved to an unknown address". What was conspicuously absent from Ms Saxby's fifth witness statement (as with all of the others it is designated a "first" witness statement) as it had been in the witness statement in support of the application for the fourth extension, was what steps Clarke Willmott (or others on their behalf) were taking to ascertain the fifth defendant's current address. Instead, what Ms Saxby stated, in paragraphs 8 to 11 of the witness statement, was that: "8. We have been in contact with the solicitor acting on behalf of the First, Second, Third and Fourth Defendant. The solicitors have been/are in contact with the Fifth Defendant and previously indicated that they were instructed by the Fifth Defendant and that they would be making an application to the court on his behalf. However they have informed us that they are not instructed to accept service on behalf of the Fifth Defendant. 9. It has therefore been necessary for the Claimant to attempt to instruct a process server in Israel to attempt to serve the Fifth Defendant. Some delay has been caused due to difficulty obtaining a suitable agent, such an agent has now been instructed and we hope that service can be [e]ffected fairly swiftly. 10. A case management conference has been listed for 9 February 2009 and the directions sought will include disclosure followed by the filing of a reply by the Claimant to the defence. 11. Permission is sought to extend the deadline for service of the Claim Form upon the Fifth Defendant until 1 May 2009 to enable the Claimant to attempt to undertake alternative means of service of the documents upon the Fifth Defendant in Israel. Given the directions sought, it is submitted that none of the parties will be prejudiced by the further extension." The second sentence of paragraph 8 was not correct. A letter dated 17 October 2008 from BCS on which, it appears, that sentence is based, stated in terms (in repetition of an earlier letter) that: "We confirm that we are not instructed to accept service on behalf of the Fifth Defendant." Then, after stating, incorrectly because Clarke Willmott had not thought it necessary to inform BCS of the third extension, that the extended time for service had expired, the writer of the letter, a Mr Lancefield of BCS (and the person within BCS having care and conduct of the matter), stated that: "We are presently considering an Application to have the proceedings against the Fifth Defendant dismissed with costs." Since the fifth defendant had not been served and BCS had no instructions to accept service on his behalf and believed that the time for service had in any event expired, that last sentence could only sensibly have referred to an application by the other defendants. But even if Ms Saxby misunderstood it to mean that the fifth defendant would somehow be applying to have the unserved claim against him dismissed, a further three months had passed since that letter was sent before Ms Saxby made her statement in paragraph 8. The reference in paragraph 8 to the necessity to attempt to instruct a process server in Israel to attempt to serve the fifth defendant and to "some delay" having been encountered owing to the difficulty in obtaining a suitable agent, failed to point out that by an e-mail dated 17 October to Mr Lancefield Ms Saxby had stated that Clarke Willmott "are in the process of attempting to serve the fifth defendant personally". But neither in her fourth witness statement (made on 19 November) nor in her fifth witness statement (made on 26 January) did Ms Saxby indicate what if any steps to achieve that end she had taken. The statement in paragraph 9 that an agent had "now" been instructed and that Clarke Willmott "hoped that service can be [e]ffected fairly swiftly" is likewise shrouded in some mystery. This is because, apparently, there is nothing in Ms Saxby's file, neither a letter nor any kind of note however brief, to indicate when she first approached, or attempted to approach, a process server in Israel prior to the only relevant letter that does exist, namely one dated 2 February 2009 to a firm called EMT Israel Investigation based in Tel-Aviv. A later letter from Clarke Willmott to BCS dated 5 May 2009 suggested, as might be expected, that before the letter of 2 February was sent to EMT Israel Investigation there had to be agreement on timescales and terms of payment. If this was so none of these matters was reflected in any contemporary correspondence or internal memoranda. Nor was Mr Barker able to shed any light on quite what steps prior to 2 February Ms Saxby had been taking with a view to finding a process server. Ms Saxby's continuing absence since 9 April 2009 has meant that she cannot be contacted. That said, it is to be noted that Clarke Willmott had an opportunity to obtain full instructions from her before she departed because the present application, dated 19 March, and a detailed supporting witness statement of Mr Lancefield with exhibits were sent to Ms Saxby under cover of a letter dated 25 March 2009 to which Ms Saxby herself replied on 6 April. Paragraph 11 of Ms Saxby's witness statement repeated the same assertion that the further extension would not cause any prejudice. The other defendants may not have been prejudiced but it was certainly prejudicial to the fifth defendant who, as a result of the further extension, found the limitation period for the claim against him extended by a further three months. In her submissions to me, Miss Sleeman referred to the fact that the order made on the fourth application, extending time to 1 February 2009, was only stamped on 16 January 2009. The suggestion, apparently, was that the sealed order was needed for supply to the process server in Israel and that in view of the delay in getting it back a further extension - the fifth - was needed because, by the time the stamped order was received, only two weeks remained of the fourth extension. But as Mr Gledhill submitted, if following its making on 2 December Clarke Willmott had wanted a sealed copy as a matter of any urgency, it could have been asked for and would assuredly have been provided without delay. Indeed, sealing such a simple pre-prepared two-sentence order (which merely extends the time to 1 February and makes costs in the case) would have been readily forthcoming in a matter of hours if not minutes. But, in any event, it was not necessary to serve that order in order to achieve service of the claim form. The requirement of the rules is merely to serve the claim form. If challenged, subsequent to service, to demonstrate that the service had been within the period allowed for it, the order could have been produced to show that the necessary extension of time had been secured. There was therefore nothing in this further point. The fifth application which, I accept, was lodged with the court before 1 February (it appears to have been sent by DX on Thursday 29 January and would likely have reached the court on Friday 30 January) led to the grant of the fifth extension, this time for three months to 1 May 2009. As matters turned out, such a lengthy extension was not necessary. Instructed by the letter from Clarke Willmott dated 2 February 2009, EMT Israel Investigation were able to find and serve the fifth defendant in less than two weeks, by 15 February 2009. It appears that he had been resident at least since 2002 at the address where he was located. There is no evidence that he had sought in any way to conceal his address or his presence there, or put forward a false address. The very strong likelihood is that if Clarke Willmott had attempted at the outset to find a local process server, and had done so with the diligence that they showed in late January/early February 2009 service could have been effected in little more than the two weeks that it eventually took. In that event, no extension of time would have been needed, let alone the five extensions totalling twelve months that were in fact obtained. Before coming to counsels' submissions there is one further matter which I should mention. This is a suggestion in Mr Barker's evidence that BCS were aware that the claimant and those advising him (including Clarke Willmott) had the wrong address for the fifth defendant but failed to volunteer what his correct address was. In a second witness statement Mr Lancefield of BCS made three points in response to that. The first was that he was unaware that the claimant had the wrong address until he reviewed his files in response to Mr Barker's second witness statement of 29 April 2009 and had no reason to check that the fifth defendant's address was correct until the point was raised in Mr Barker's second witness statement. That is not a matter which I can resolve on an application of this kind. Second, Clarke Willmott did not even ask BCS what the fifth defendant's address was until they asked in a letter dated 4 February 2009. The matter was then raised again in a telephone conversation the next day between Ms Saxby and Mr Lancefield. Third, and in any event, BCS did not have the fifth defendant's authority to disclose his address when Ms Saxby raised the matter with him in their 5 February conversation. As matters turned out her request was overtaken by the success of the Israeli process server in locating and serving the fifth defendant a few days later. It was also suggested that the fifth defendant knew that the claimant was seeking to serve him at the wrong address and that he failed to disclose his correct address. The only evidence to support this is the presence on the face of the claim form itself of the fifth defendant's incorrect address. It turns on the fact, which is not disputed, that on or about 29 July 2008 BCS supplied the fifth defendant with a copy of the claim form, particulars of claim and various exhibits for the purpose (as it is put in a letter dated 27 April 2009 from BCS to Clarke Willmott) "of obtaining factual input into the Defence of the First to Fourth Defendants…". Even if the fifth defendant did notice the incorrect address (it does not appear in the particulars of claim) I do not see that his failure to disclose his correct address - presumably to the claimant or to the claimant's solicitors - is something that is to be held against him. I will refer later to this when I consider the question whether to any extent a defendant who has not been served with proceedings is under any duty to assist a claimant to find and serve him. Counsels' submissions Mr Gledhill submitted that, these being without notice applications, the orders made on them should be set aside by reason of misstatements and non-disclosures in the evidence of Ms Saxby. At all events, he submitted, this should be the consequence as regards the orders made on the fourth and fifth applications. This is because the evidence breached the duty of full and frank disclosure implicit in any without notice application. The defects in Ms Saxby's evidence meant that the court was given a one-sided and inaccurate view of the merits of granting any and if so what extensions and what points might fairly be made on the fifth defendant's behalf. He submitted that if the conclusion reached was that the duty had been broken it was not necessary for the court to enquire further into the matter: the orders should simply be set aside. He went on to submit that, even if there had been no breach of the duty or none which would attract the sanction of a discharge of the orders made on the occasions in question, the orders made on the fourth and fifth occasions should be set aside - it was not necessary to consider the point in relation to the earlier applications - because the evidence did not disclose grounds for any extension, let alone the extensions granted. Even assuming that, having on 19 August heard that service by the FPS was not going to take place so that the third application (submitted shortly afterwards) might have been justified, Clarke Willmott were not justified, having secured that further (third) extension, in doing nothing thereafter to ascertain the fifth defendant's whereabouts with a view to effecting service on him and, instead, hoping that the fifth defendant would instruct solicitors to accept service on his behalf. On any view BCS, acting for the other defendants, had made clear by 15 October 2008 at the latest that they had no instructions to accept service on behalf of the fifth defendant. Yet it was only towards the end of the fourth extension, at the very earliest, that steps were taken to instruct a local process server with a view to locating and serving the fifth defendant. Once this was done (in very early February), service was effected within days. This went to show, Mr Gledhill suggested, how quickly and easily service could have been effected if only Clarke Willmott had set about the matter at an earlier stage. Miss Sleeman submitted that, even if (which she did not accept) there had been material misstatements and non-disclosure in the evidence of Ms Saxby, such failings were unintended and should not automatically justify the draconian steps of setting aside the orders and thereby invalidating the service effected on the fifth defendant. It was necessary, she submitted, to look at the matter more broadly and take into account the overriding objective, in particular the need to deal justly with a case and do so in ways which are proportionate. It was proportionate, she said, to grant the various extensions having regard to all of the circumstances of the matter. This, she said, was emphatically not a case where a claimant has waited to the last minute to initiate its process against the defendant; Mr Duckworth, the claimant's liquidator, had only been appointed in January 2007 which was less than a year before the expiry of the relevant limitation period. He had to undertake a complex investigation. The claim form was issued (on 1 November 2007) while his investigations were still in progress. It was proportionate and just in the interests of saving expense to wait until the particulars of claim had been finalised before serving the claim form on the five defendants. Given the likely time for service in Israel that the FPS would need (over four months), it was sensible and prudent to launch the first application for an extension when it was realised that further time would probably be needed to enable this to be achieved: the application was made well in advance of the 1 May 2008 expiry of the six months allowed by CPR 7.5(2) for service out of the jurisdiction. The second application, admittedly left to the last day of the two months extension provided by the first order but nevertheless lodged by close of business that day, was made because the FPS had not yet come back with the result of its attempts to serve the fifth defendant. It was, submitted Miss Sleeman, sensible and proportionate to grant further time to await the outcome of these efforts before taking steps to locate and instruct someone else to find and serve the fifth defendant. The fact that Ms Saxby was aware by June 2008 that the other two Israeli-based defendants had been served did not imply - and there is no evidence to suggest - that Ms Saxby was aware of any particular difficulties experienced by the FPS in serving the fifth defendant. The four months needed by FPS had not yet expired. There could have been all sorts of reasons why the FPS had not served him. The third extension was necessary because Clarke Willmott were informed that the FPS had been unable to serve the fifth defendant. It was launched within three days of that information reaching them. By then the second extension had no more that twelve days to run. Thereafter, for several months, there was uncertainty, she submitted, over whether BCS would accept service on the fifth defendant's behalf. The inter-solicitor correspondence continued until not much of the third extension was left, so necessitating the fourth extension. In the meantime, Clarke Willmott were looking to instruct an agent in Israel to trace and serve the fifth defendant. Rightly or wrongly, there was a delay in obtaining a sealed copy of the order granting the fourth extension. When it became clear that the fourth extension would expire before the process server in Israel could locate and served the fifth defendant, a fifth application was necessary, leading to the fifth extension. Service was effected very shortly after the fifth extension was granted. Miss Sleeman went on to submit that a most important factor in the exercise of the court's discretion to extend time is that by late July 2008, if not earlier, the fifth defendant was aware of the claim which the claimant was bringing: BCS had by then been retained by him and had supplied him with a copy of the claim form and particulars of claim. She submitted that a defendant with full knowledge of the case and having the benefit of legal advice should not be allowed to avoid his potential liability for the claim because the claimant experiences difficulty in locating and serving him out of the jurisdiction. This would not be dealing with the case justly. Moreover, she submitted, the fifth defendant had not identified any prejudice caused to him by the late service. It was unlikely that his defence would differ from that of the other defendants, disclosure had only just taken place, all five defendants had instructed the same solicitors and no trial date had yet been fixed. There was no reason why the claim against him could not be heard at the same time as the claim against the other defendants. Indeed, she submitted, if the fifth defendant was not a defendant to the claim, the other defendants might consider seeking an indemnity or contribution from him in the event that the claim against them should succeed. Were this to happen, the result would be increased costs and a need for more of the court's resources to be diverted to the matter. The legal position The discretion to extend time under rule 7.6(2) is at large: the rule does not lay down any explicit guidance as to how the discretion is to be exercised. As might be expected, however, the correct approach has been the subject of judicial decision, notably Hashtroodi v Hancock [2004] EWCA Civ 652; [2004] 1WLR 3206, Collier v Williams, Carnegie v Drury [2007] EWCA Civ 497 and Hoddinott & ors v Persimmon Homes (Wessex) Ltd [2007] EWCA Civ 1203; [2008] 1WLR 806, from which I derive the following propositions. (1) An application to set aside an order extending time obtained on a without notice application is a rehearing of the matter, not a review of the decision to extend time. (2) The principal and frequently the only question is to determine whether there was a good reason for the claimant's failure to serve the claim form within the period allowed by the rules. (3) If there was a very good reason for the failure to serve within the specified period, an extension of time will usually be granted, for example where the court has been unable to serve the claim form or the claimant has taken all reasonable steps to serve but has been unable to do so. (4) Conversely, the absence of any good reason for the failure to serve is likely to be a decisive factor against the grant of an extension of time. (5) The weaker the reason for failure to serve, the more likely the court will be to refuse to grant the extension. (6) Whether the limitation period applicable to the claim has expired is of importance to the exercise of the discretion since an extension has the effect of extending the period of limitation and disturbing the entitlement of the potential defendant to be free of the possibility of any claim. (7) The fact that the claimant has delayed serving the claim form until the particulars of claim were ready is not likely to provide a good reason for the failure to serve. (8) The fact that the person to be served has been supplied with a copy of the claim form or is otherwise aware of the claimant's wish to take proceedings against him is a factor to be considered. (9) Provided he has done nothing to put obstacles in the claimant's way, a potential defendant is under no obligation to give any positive assistance to the claimant to serve the claim form, so that the fact that the potential defendant has simply sat back and awaited developments (if any) is an entirely neutral factor in the exercise of the discretion. Decision The truly remarkable fact in this case is that the claimant needed no less than five extensions over and above the initial (and generous) six months afforded by rule 7.5(2) within which to effect service of the claim form on the fifth defendant. Altogether, extensions totalling twelve months were obtained although, as it happens, service was achieved shortly into the period of the fifth extension. The question I ask myself is whether the claimant has shown good reasons for obtaining extensions of the length needed to enable the claim form to be served on the date when actual service was effected. I accept that this is not one of those cases where the claimant, desirous of making a claim, has stood idly by until the last minute (in limitation terms) before issuing the claim form. I accept that the liquidator was active in conducting the investigations he felt that he needed before a decision could be made whether to make a claim. It was nevertheless incumbent upon the claimant, acting by the liquidator, having issued the claim form to proceed without undue delay to ascertain the whereabouts of the five potential defendants and serve them with the claim form. It was incumbent upon it to do so because, as the liquidator and those advising him understood only too well, the limitation period expired a matter of days after the claim form was issued. In particular, it was not reasonable to await finalisation of the particulars of claim in February before taking steps to serve. This resulted in the loss of three months or so in the case of the English-based defendants and even longer in the case of the three Israeli-based defendants and, given the time that the FPS were likely to take to effect service on the latter, made inevitable the need for an extension of time. Having belatedly taken steps to use the FPS to effect service on the Israeli-based defendants, it was reasonable for the claimant to await the outcome of those attempts before taking steps to effect service, by then on the fifth defendant alone, by some other means. Aware by July 2008 that BCS were in touch with the fifth defendant, it was reasonable for Clarke Willmott by letter dated 31 July 2008 to enquire whether BCS had instructions to accept service on the fifth defendant's behalf (and this notwithstanding that BCS's predecessor, Taylor Vinters, had stated, by their letter of 17 June 2008, that they had no instructions from the fifth defendant) but, not having heard in response that BCS did have such instructions, it was incumbent upon them to take steps without undue delay to locate and instruct an Israeli-based process server with a view to finding and serving the fifth defendant. This Clarke Willmott failed for many months to do. I have seen no good reason why they did not. Instead, they persisted in the attempt to establish whether BCS had instructions to accept service. By mid-October, BCS had made plain that they had no such instructions. Ms Saxby's belief that BCS might have laboured under a misconception as to whether by then there was an unexpired extension of the period for service and that their response was influenced by their belief that there was no such extension, does not provide a good reason for not taking immediate steps to locate and instruct an Israeli-based (or some other) process server to find and serve the fifth defendant. Clarke Willmott appears to have allowed the matter to drift until, it would seem, early 2009 (there being no evidence to suggest that it was any earlier) before taking steps to identify and instruct an Israeli-based process server. The fact that there was delay in receiving stamped copies of the court orders extending time provides no good reason for delaying matters. I conclude therefore that no good reasons have been shown to justify all of the extensions obtained, in particular the fourth and fifth extensions. Are there any factors which should persuade me to leave the orders in place notwithstanding the absence of good reason for the failure to serve before February 2009? I am not persuaded that there are. A most significant factor in this regard is the expiry of the limitation period. The importance of this is something which Ms Saxby's witness statements appear to ignore and which Miss Sleeman's skeleton argument appears to underrate. It is no answer to say that the other defendants might seek to join the fifth defendant with a view to recovering an indemnity or contribution from him in the event that they should be held liable to the claimant. The fact is that they may not. The fifth defendant is entitled to take his chance on that. To deprive him of his limitation defence by extending time is not to any material degree outweighed by the possibility that the other defendants may seek to join him at a later stage. In reaching my decision I have borne in mind, but attach no great weight to the fact, that the fifth defendant was supplied in late July 2008 with a copy of the claim form and particulars of claim. Result The application succeeds. I shall set aside the orders extending time made on 2 December 2008 and 13 February 2009. It is not necessary to set aside the earlier orders. It follows that I shall set aside (or declare to be ineffective) the service of the claim form on the fifth defendant. The consequence is that the action will proceed against the other four defendants alone. I add the following footnote. The fact that Ms Saxby's witness statements in support of the various applications to extend time contained the misstatements to which I have drawn attention and may be criticised for failing to point out, for example, the number of earlier extensions there had been, or exactly what steps were being taken (if any) to identify and instruct an process server to find and serve the fifth defendant, or to highlight the fact that the limitation period had long since passed, would not have led me to set aside the orders made if I had been otherwise persuaded that good reasons existed for the extensions granted. Instead, they reinforced my impression that this whole process was approached in a perfunctory manner and without proper regard for the need to effect service as a matter of urgency and not to rely on obtaining extensions of time.

Uday Umesh Lalit, J. These Appeals arise out of the judgment and order dated Signature Not Verified 27.02.2014 passed by the High Court of Judicature at Madras in Writ Digitally signed by MUKESH KUMAR Date 2019.11.28 Appeal No.504 of 2012 and all other companynected matters. 112420 IST Reason Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others After the recommendations were given in March 2008 for revision of pay-scales by the 6th Central Pay Commission, an Official Committee was companystituted by the Government of Tamil Nadu to examine and make recommendations about the pay-scales of Government Employees in companysonance with the recommendations made by the 6th Central Pay Commission. This Official Committee submitted its report on 27.05.2009 making certain recommendations on pay-scale to pay-scale basis i.e. to say that for the existing scales of pay, the revised pay pay band and grade pay were recommended. The recommendations were accepted by the State Government by GO No.234 dated 01.06.2009. For the present purposes the relevant part of GO No.234 may be quoted here Further, the Government of India has granted two different revised scales of pay for the existing scale of Rs.8000-13500, one for promotees on the revised pay scale of Rs.9300-34800 Pay Band 2 with a Grade Pay of Rs.5,400/- and the other for direct recruits Group A entry on the revised pay scale of Rs.1560039100 Pay Band-3 with the same Grade Pay of Rs.5,400/-. The scale of pay of Section Officers in Central Secretariat has been placed in the Pay Band-3 i.e. Rs.15600-39100 Grade Pay of Rs.5400/-. As the State Government is extending the same pay scale to the Section Officer Private Secretary in Tamil Nadu Secretariat Service on par with their companynterparts in Central Secretariat, the Government direct that the Section Officer Private Secretary in Secretariat High Court Tamil Nadu Public Service Commission shall also be placed in Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others Pay Band3. Further, all middle management posts, such as Administrative Officer, Accounts Officer, Deputy Collector etc. including GroupI entry level posts are presently granted a uniform scale of pay both for promotees and direct recruits. Hence, the Government direct that all the posts carrying the present scale of pay of Rs.8000-13500 shall be placed uniformly in Pay Band3 and given the revised pay scale of Rs.15600-39100 with the Grade Pay of Rs.5,400/-. Further, taking numbere of the fact that the same Grade Pay is allowed to the employees in Pay Band-2 from Rs.5000-8000 to Rs.6500-10500 in the Government of India, the Government has modified the Grade Pay as shown below so as to maintain the existing local relativity - Sl. Existing Scale of pay Revised Pay Revised No. w.e.f. 1-1-96 Pay Band Grade Pay 1. 5000-8000 9300-34800 4,200 2. 5300-8300 9300-34800 4,300 3. 5500-9000 9300-34800 4,400 4. 5900-9900 9300-34800 4,500 5. 6500-10500 9300-34800 4,600 6. 6500-11100 9300-34800 4,700 In terms of GO No.234 numberional effect was given from 01.01.2006 while monetary benefits were accruable to the employees w.e.f. 01.01.2007. Separate Government Orders were issued in respect each of the departments based on GO No.234. Thereafter, One Man Commission headed by Mr. Rajiv Ranjan, Principal Secretary to the Government of Tamil Nadu, Industries Department was companystituted to rectify pay anomalies which had arisen as a result of implementation of the revised pay-scales pursuant to GO No.234. Said One Man Commission submitted its report on 31.03.2010. Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others The State Government, through GO Nos.254 to 340 86 GOs accepted the recommendations of The One Man Commission. By way of illustration, GO No.312 dated 26.08.2010 with respect to certain categories of Public Works Department stated as under The One Man Commission companystituted in the G.O. second read above to examine anomalies, if any, companysequent on the implementation of the recommendations of the Official Committee 2009 has recommended for revision of scales of pay of certain categories in Public Works Department. After careful examination, the Government has decided to accept the recommendations made by the One Man Commission in respect of the above department. Accordingly, Government direct that the scales of pay of the following posts shall be revised as shown below- Existing scale of Revised Sl. Name of the pay Grade Pay Scale of No. Posts pay Grade Pay Rs. Rs. 1 Executive 15600- 15600-39100 Engineer 391006600 7600 2 Assistant 15600-39100 15600-39100 Executive 5400 6600 Engineer 3 Assistant 9300-34800 15600-39100 Engineer 4700 5400 4 Head 15600-39100 15600-39100 Draughting 5700 6600 Officer The revision of scales of pay ordered in para -1 above shall take numberional effect from 1-1-2006 for the purpose of fixation of pay in the revised scales of pay and with monetary benefit from 01-08-2010. Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others It is a matter of record that all Assistant Engineers who were earlier put in the pay-scale of Rs.9300-34800 with Rs.4700 as Grade Pay were thus placed in the revised scale of pay of Rs.15600-39100 with Rs.5400 Grade Pay, as a result of GOs dated 26.08.2010 and the benefit in terms thereof was extended to the companycerned persons and their pay-scale stood revised accordingly. The State Government, however, issued GO No.71 dated 26.02.2011 scaling down certain benefits which were granted in pursuance of said GOs dated 26.08.2010. Such exercise was done without issuing any numberice or affording any hearing to the persons companycerned. As a result of this exercise, 52 categories of posts in various departments were downgraded to lower pay-scales. It was, however, made clear that whatever payment was made in terms of the earlier decision, would number be recovered. The State Government also companystituted Pay Grievance Redressal Cell PGRC, for short in Finance Department headed by Thiru R. Thiyagrajan, Special Secretary to Government, Finance Department to look into the grievances and companysider the representations of the employees aggrieved as a result of scaling down of the pay-scales. Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others Various writ petitions were filed by the companycerned employees challenging the companyrectness and validity of GO No.71 dated 26.02.2011. These petitions were dismissed by a Single Judge of the High Court by judgment and order dated 08.03.2012 passed in Writ Petition No.7006 of 2011 and all companynected matters. Since the services of Thiru R. Thiyagrajan were number available, the Single Judge directed the State Government to re-constitute the PGRC. The decision of the Single Judge was challenged by way of Writ Appeals and the Division Bench of the High Court by its order dated 27.03.2012 granted interim stay except with regard to the companystitution of the PGRC. Consequently, the State Government issued GO No.123 dated 10.04.2012 and re-constituted the PGRC with Mr. Krishnan, Secretary to the Government as the Chairperson. The PGRC received around 4376 representations from various associations of employees individuals. The PGRC gave hearing to the companycerned representationists on 09.07.2012, 10.07.2012, 11.07.2012 and 16.08.2012 and thereafter submitted its recommendations to the State Government. The relevant portion of the recommendations was- The scales of pay of the employees in every pay revision from Tamil Nadu Fifth Pay Commission is based on the parity with similar posts in Government of India. Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others In Government of India both the Junior Engineer Assistant Engineers are placed at the section level and its promotional posts Assistant Executive Engineer is placed at Sub-divisional level. In Central Public Works Department the post of Assistant Engineer are placed in the scale of pay of Rs.9300-34800 G.P. Rs.4600 as against the prerevised scale of pay of Rs.7400-11100 based on the Sixth Central Pay Commission recommendations. Further, the Junior Engineers are also claiming pay hike given to Assistant Engineer due to the huge variation in emoluments companysequent on placing the Assistant Engineers erroneously in Pay Band-3 Rs.15600-39100 G.P. Rs.5400 as both these posts are placed at section level and discharging the same work. The companyparison with Medical Doctor is also number appropriate as there is numberequivalent of Diploma holder in that line. In the Engineering line, there is a separate category of Diploma holders, who are Junior Engineers and holding charge as section in-charge like Assistant Engineers. The recommendation of the One man Commission to place Assistant Engineers in Pay Band-3 opened up a huge differential with Junior Engineers, which appears unjustified. Therefore, it is appropriate that the scale of pay of Assistant Engineers in State Government may be brought down to Pay Band-2 at Rs.9300-34800. However, the Grade Pay of Rs.5100 already fixed in G.O.Ms.No.71, Finance PC Department, dated 26-2-2011, which is at a level above their companynterparts in Government of India would be appropriate. It also maintains an appropriate difference of Rs.700/- in Grand Pay from Junior Engineer. The Committee also recommend that the excess payments made till the issue of revised orders may be waived and number recovered. It is observed that the Official Committee, 2009 had rightly placed the post of Assistant Engineer at Rs.9300-34800 G.P. Rs.4700 as against the prerevised scale of pay of Rs.6500-11100. In the light of the above facts, the Committee companysider it appropriate Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others to place the post of Assistant Engineers on par with similar posts in Central Public Works Department and also companysidering the local pay relatively among other higher posts, the Committee recommends that it would be appropriate that the pay scale of Assistant Engineers may be brought down to Pay Band-2 from Pay Band-3 and granted an enhanced Grade Pay in the scale of pay of Rs.9300-34800 G.P. Rs.5100 i.e. with the same Grade pay as ordered in G.O.Ms.No.71, Finance Pay Cell Department dated26-02-2011. This implies that the Assistant Engineer in State Public Works Department would be placed with a difference in Grade pay of Rs.500/- in Grade Pay above the Assistant Engineers in the Central Public Works Department. Likewise, the Committee also recommends to place the post of Executive Engineer and Assistant Executive Engineer in the appropriate revised scale of pay of Rs.15600-39100 GP. Rs.6600 and Rs.15600-39100 G.P. Rs.5400 respectively as originally recommended by the Official Committee, 2009 duly endorsing the orders issued by Government in G.O.Ms.No.71, Finance Pay Cell Department dated26-02-2011 uniformly on par with the equivalent posts in other Government Departments. The recommendations of the PGRC were accepted by the State Government and GO No.242 was issued on 22.07.2013 to implement the recommendations. After quoting certain portions of the recommendations given by the PGRC, GO No.242 stated as under After careful examination, the Government has decided to implement the above recommendations of the Pay Grievance Redressal Cell companysidering the level of Assistant Engineer in Central Public Works Department and the companysequential changes made thereon by endorsing modifying the scales of pay of Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others certain categories ordered in the G.O.Ms. No. 71, Finance Pay Cell Department, dated 26.02.2011 read above. GO No.242 also gave a tabulated chart about various departments and insofar as Public Works Department was companycerned, the tabulated chart was as under 1 2 3 4 5 6 7 Name of the Pre-Revised Correspondin Scale of pay Scale of Pay Revised No. Post Scale of Pay g revised granted based as per Scale of pay Department scale of pay on OMC G.O.Ms P. subsequent No.71 dated GOS 26.02.2011 Rs. Rs. Rs. Rs. Rs. 1 . . to 32. XII PUBLIC WORKS DEPARTMENT Assistant 6500-11100 9300-34800 15600-39100 15600-39100 9300-34800 Engineer 4700 5400 5100 5100 Assistant 8000-13500 15600-39100 15600-39100 15600-39100 15600-39100 Executive 5400 6600 5400 5400 Engineer Executive 10000-15200 15600-39100 15600-39100 15600-39100 15600-39100 Engineer 6600 7600 6600 6600 Head 9100-14050 15600-39100 15600-39100 15600-39100 15600-39100 Draughting 5700 6600 5700 5700 Officer 37. to 52. It was also stated The revision of scale of pay ordered above shall take numberional effect from 01.01.2006/12.12.2007 as the case may be with monetary benefit from 01.04.2013. However, the excess payments, if any made to the employees so far shall be waived and the pay refixed in the appropriate scales of pay as ordered above. Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others Number of writ petitions were filed challenging GO No.242 dated 22.07.2013. Those writ petitions as well as the pending writ appeals were taken up together and disposed of by the Division Bench of the High Court by its judgment under appeal. The Division Bench found that by fixing higher pay by virtue of GO No.234 dated 01.06.2009 and companysequential separate Government Orders issued for various departments, the companycerned government employees were paid higher salaries pay-scales w.e.f. 01.01.2007 and such benefits were number reduced by the Orders which were under challenge and the reduction in benefits was without following principles of natural justice. Following directions were, therefore, issued by the Division Bench As we found illegality in number following the principles of natural justice, before reducing the scales of pay, it is necessary that the matter is to be companysidered afresh by the Government after giving opportunity to all companycerned especially, for reducing the scale of pay grade pay. It is number in dispute that if really, there is any pay anomaly, the government is entitled to remove the same by following the due procedures. As rightly companytended by the learned Senior Counsels and other learned companynsels for the petitioners, the One-Man Committee and the PGRC appointed by the Government, all its members are Government Officers and they have already decided to reduce the pay scale of 52 categories of 20 Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others departments, including pensioners and family pensioners in those departments, it may number be appropriate again to permit the Government to reconsider the issue on the recommendations of the Government officials alone. At this juncture it is relevant to numbere that the Central Government appointed retired Judge of the Honble Supreme Court to head the V Central Pay Commission. Similarly, a retired Judge of Honble Supreme Court was appointed as the Chairman of VI Central Pay Commission. The Honble Supreme Court appointed a retired Judge of this Court to companysider the pay anomaly among the Judicial Officers Judicial Pensioners at All India level. It is also number disputed that while extending the Pay Commission benefits, the technicalities as well as the legal issues regarding the claim of Equal Pay for Equal Work, qualifications, nature of duties etc. are also to be analysed and companysidered. Hence, we are of the view that it is just and appropriate to appoint a retired Judge to head the Pay Grievance Redressal Committee. In such circumstances, the writ appeals and writ petitions are disposed of with the following directions The Government shall companystitute a Pay Grievance Redressal Committee under the Chairmanship of Honble Mr. Justice A.S. Venkatachalmoorthy, formerly Judge of this Court, who was elevated and retired as Chief Justice of the Chattishgarh High Court. The Government is at liberty to numberinate one or two Senior level IAS Officers at the level of Principal Secretary, serving retired as Member s of the Pay Grievance Redressal Committee. Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others The Pay Grievance Redressal Committee shall be given specific terms of reference by the Government, with a request to submit a report recommendations for taking fresh decision regarding the enhancement reduction of the pay scales grade pay of 52 or more categories of 20 or more departments, etc. The Government is directed to companystitute the above said companymittee within a period of three weeks from the date of receipt of companyy of this order, prescribing time limit, within which report recommendations is to be submitted for taking fresh decision. In view of the companystitution of the above said Committee as ordered above, the implementation of O.Ms.No.71 dated 26.2.2011 and G.O.Ms.No.242 dated 22.7.2013 insofar as it affects any category of Government Servants pensioners family pensioners, which are number implemented as on today shall number be implemented till fresh decision is taken. If any of the categories of Government servants of any department, who have been offered higher scales of pay as on today, it is open to the Government to implement the same insofar as the pay scales, which are beneficial to the employees of such categories. As we have appointed the Chairman of the PGRC, we direct the Government of Tamil Nadu to make available office premises with supporting staff and to provide a Government car with driver for the use of the Chairman for effective functioning of the Committee. We fix the remuneration for the Chairman of the Committee as Rs.1.50 lakhs per month and direct the Government to sanction necessary funds towards remuneration and for meeting other expenses for effective functioning of the Committee. Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others It is open to the Government to fix remuneration of the Members Member of the Committee, to be numberinated by the Government, if they are retired IAS officer s . Two sets of appeals have been filed in this Court challenging the decision of the Division Bench. The first set is by the Government Employees and their Associations submitting inter alia that once the process undertaken by the State Government was found to be in violation of the principles of natural justice, companyplete benefit of setting aside the impugned decisions ought to have been extended. It is also submitted that the exercise undertaken by the One Man Commission was a proper exercise and its recommendations were accepted by the State Government after companysidering the matter carefully and thus there was numberoccasion for the State Government to take any different view in the matter. On the other hand, the second set of appeals, at the instance of the State Government submits inter alia that the exercise undertaken by the PGRC was after giving due opportunity to the companycerned employees and their Associations and as such the High Court was number justified in setting aside GO No.242 seeking to implement the recommendations given by the PGRC. Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others By interim order passed in these matters, stay of operation of the judgment under appeal, to the extent fresh PGRC was directed to be set up, was granted by this Court which status is still companytinuing. We heard Mr. Dushyant Dave, Mr. R. Venkataramani, Mr. C.A. Sundaram, Mr. P. S. Patwalia, Mr. Vinay Navare, learned Senior Advocates and Mr. Prashant Bhushan, learned Advocate for the appellants in the first set of appeals and Mr. Vijay Narayan, learned Advocate General for the State. It was submitted by the learned companynsel appearing for the Government Employees and their Associations that having accepted the recommendations made by the One Man Commission and having given benefits in terms of said recommendations, the State Government companyld number have lowered the pay scales of the companycerned employees. On the other hand, it is the submission of the State that the acceptance of the recommendations of the One Man Commission resulted in greater anomalies that the level of Assistant Engineers, which is the entry level in various Engineering services was wrongly clubbed with other entry level services like Assistant Surgeons and that as a result of upward revision for Assistant Engineers the gap between the level of the Assistant Engineers and the subordinate ranks got widened to a companysiderable level while the Assistant Engineers and the promotional level for Assistant Engineer were Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others brought almost at the same levels. According to the learned Advocate General, various such anomalies were required to be sorted out which in turn made the State Government to companystitute the PGRC. According to the State Government, numbermally the pay scales afforded to equivalent ranks in the Central Government are higher than the ranks in the State Government but the entry level of Assistant Engineers in the State Government, as a result of the recommendations of the One Man Commission was kept at a level far too higher than their companynterparts in the Central Government. The Tabulated Chart which is part of GO No.242 indicates very clearly that the Assistant Engineers who were in the pre-revised pay scale of Rs.6500-11100 companyumn No.3 , by virtue of acceptance of the recommendations made by the 6th Central Pay Commission were kept in the pay scale of Rs.9300-34800 with grade pay of Rs.4700/- companyumn No.4 as a result of GO No.234 dated 01.06.2009, while the next promotional level i.e. of the Assistant Executive Engineers was kept at Rs.15600-39100 with grade pay of Rs.5400/-. The recommendations of the One Man Commission resulted in upward revision to the extent of Rs.15600-39100 with grade pay of Rs.5400/- companyumn No.5 for the Assistanct Engineers. The recommendations of the PGRC resulted in refixation for Assistant Engineers in the scale of Rs.9300-34800 with Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others marginal increase of grade pay to Rs.5100/- companyumn No.7 as against what was available pursuant to GO No.234 dated 01.06.2009. The recommendations of the PGRC dealt with the effects of the acceptance of the recommendations by the One Man Commission. Para 3 of the recommendations quoted hereinabove shows that certain aspects of the matter were found to be anomalous. The submissions advanced by the learned Advocate General also show how the difference between the Assistant Engineers and the post immediately lower than that was getting widened, while at the same time, the post of Assistant Engineer and the next level of promotion i.e. the post of Assistant Executive Engineer were brought almost at the same level. These anomalies found by the State Government, had to be addressed. If the State Government, therefore, companystituted the PGRC, such decision by itself cannot be found to be illegal or invalid. It has always been accepted by this Court that prescription of payscales and the assessment in that behalf is a companyplex matter which requires expertise. For instance, in Dy. Director General of Geological Survey of India and another v. R. Yadaiah and others1 it was observed 1 2001 10 SCC 563 Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others Ordinarily, the companyrts or tribunal should number go into the question of fitment of the officers in a particular group or the pay scales thereof, and leave the matter to the discretion and expertise of the special companymission like the Pay Commission. In State of Bihar and others v. Bihar Veterinary Association and others2 it was observed - If the companyrts start disturbing the recommendations of the pay scale in a particular class of service then it is likely to have cascading effect on all related services which may result into multifarious litigation. The Fitment Committee has undertaken the exercise and recommended the wholesale revision of the pay scale in the State of Bihar and if one class of service is to be picked up and granted higher pay scale as is available in the Central Government then the whole balance will be disturbed and other services are likely to be affected and it will result in companyplex situation in the State and may lead to ruination of the finances of the State. In Hukumchand Gupta v. ICAR3 it was stated - Prescription of pay scales on particular posts is a very companyplex exercise. It requires assessment of the nature and quality of the duties performed and the responsibilities shouldered by the incumbents on different posts. Even though, the two posts may be referred to by the same name, it would number lead to the necessary inference that the posts are identical in every manner. These are matters to be assessed by expert bodies like the employer or the Pay Commission. 2 2008 11 SCC 60 3 2012 12 SCC 666 Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others It may be stated here that the 6th Central Pay Commission companyprising of experts in the field had recommended certain pay-scales for various posts. The Official Committee which companyprised of Principal Secretary to the State of Tamil Nadu, Home Department, as Chairperson with i Principal Secretary, Finance Department ii Principal Secretary, Personnel and Administrative Reforms Department and iii Principal Secretary, School Education Department as Members, had examined the matter and made certain recommendations which were accepted by the Government by GO No.234 dated 01.06.2009. The One Man Commission appointed to companysider the anomalies, however, recommended something which was far in excess of what was accepted by GO No.234 dated 01.06.2009 which in turn was in tune with the recommendations of the 6th Central Pay Commission. It is true that the Government had accepted the recommendations of the One Man Commission but if further anomalies were found which called for action on part of the Government, any exercise to reconsider the matter by the State Government companyld number be faulted number companyld the companystitution of the PGRC be said to be invalid or illegal. Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others Further, if there was any infirmity in the exercise of power by the PGRC in number granting adequate numberice and hearing to the companycerned, such infirmity companyld certainly be sorted out. That is exactly what the Division Bench undertook while passing the directions quoted hereinabove. We, therefore, see numbererror in the approach of and the directions issued by the Division Bench of the High Court. But, it has been more than five years since the directions were issued by the Division Bench of the High Court and as a result of the interim orders passed by this Court, the PGRC companyld number be set up. In the circumstances, certain modifications in the directions issued by the Division Bench in para 5 of its order are called for and we proceed to direct- Direction No. i as issued by the Division Bench is reiterated except that Mr. Justice A.S. Venkatachalamoorthy having number expressed his unwillingness, Mr. Justice D. Murugesan, formerly Chief Justice, High Court of Delhi is appointed as Chairman of the Pay Grievance Redressal Committee. Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others Direction No. ii as issued by the Division Bench is accepted and it is added that the Chairman of the PGRC will be at liberty to companyopt any two experts as he deems appropriate as members of the PGRC, who shall be paid such honorarium by the State Government, as the Chairman deems appropriate. Direction Nos. iii and v to vii issued by the Division Bench are accepted and do number call for any change. Instead of Rs.1.5 lakhs per month, we fix the honorarium of the Chairman of the PGRC at Rs.3.5 lakhs per month but the other parts of Direction No. viii are maintained. Direction No. ix issued by the Division Bench is accepted and does number call for any change. It is further directed- Within a week from today, the State Government shall issue appropriate orders companystituting the PGRC as stated above. Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others Within a week thereafter, the State Government shall make appropriate and adequate arrangements and provide office space befitting the status of the Chairperson and other Members and also provide adequate staff, secretarial assistance and other facilities. Within two weeks of the companystitution of the PGRC all the companycerned individuals associations shall file their representations. No representation filed beyond the period of two weeks shall ordinarily be accepted by the PGRC. Direction No. iv issued by the Division Bench shall stand modified to the aforesaid extent. These directions are in addition to and in further elaboration of direction No. vii issued by the Division Bench. Civil Appeal No.10029 of 2017 etc. Tamil Nadu Rural Development Engineers and Assistant Engineers Association vs. Government of Tamil Nadu and Others It is clarified that regardless of the decision to be taken by the PGRC, any amount paid by way of financial benefit extended to and enjoyed by the companycerned employees shall number be recovered i.e. to say that in case the decision in pursuance of the recommendations of the PGRC results in reduction in pay-scales or emoluments as were granted pursuant to GOs dated 26.08.2010, such reduction shall be prospective in application from the day the recommendations of the PGRC companye into effect. It must be stated that the recommendations of the 7 th Central Pay Commission have since been made and the issue regarding implementation of such recommendations is presently under active companysideration. The present matters which pertain to the recommendations of the 6th Central Pay Commission therefore need to be resolved at the earliest. In the circumstances, we request the PGRC to companyclude the entire exercise within four months from today.

SECOND SECTION CASE OF MAJS EKSPORT-IMPORT v. SERBIA (Application no. 35327/09) JUDGMENT STRASBOURG 5 November 2013 This judgment is final. It may be subject to editorial revision. In the case of Majs Eksport-Import v. Serbia, The European Court of Human Rights (Second Section), sitting as a Committee composed of: Paulo Pinto de Albuquerque, President,Dragoljub Popović,Helen Keller, judges,and Seçkin Erel, Acting Deputy Section Registrar, Having deliberated in private on 15 October 2013, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 35327/09) against the Republic of Serbia lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by Majs Eksport-Import (“the applicant”), a company registered in Serbia, on 11 June 2009. 2. The applicant was represented by Mr V. Božović, a lawyer practising in Belgrade. The Serbian Government (“the Government”) were represented by their Agent, Mr S. Carić. 3. On 11 October 2011 the application was communicated to the Government. THE FACTS I. THE CIRCUMSTANCES OF THE CASE A. The proceedings concerning the applicant’s claim 4. The applicant and Beogradski Pamučni Kombat, a company based in Belgrade (hereinafter: “the debtor”) concluded a contract on 7 March 2000. The debtor failed to fulfil its obligations arising from the contract. 5. On 11 December 2001 the Commercial Court in Belgrade instituted insolvency proceedings against the debtor. This decision was published on the court’s notice board on 19 December 2001. 6. On 12 March 2002 the applicant lodged its pecuniary claim within the insolvency proceedings. 7. As its claim had been disputed, on 11 October 2002 the applicant filed a separate civil suit before the Commercial Court in Belgrade and requested the determination of its claim. 8. On 2 September 2004 the Commercial Court in Belgrade determined one part of the applicant’s claim and ordered the debtor to pay the applicant 6,686.15 euros (EUR). 9. On an unspecified date thereafter this judgment became final. 10. On 4 April 2005 the Commercial Court determined the reminder of the applicant’s claim and ordered the debtor to pay the applicant EUR 11,409 as well as 80,500 Serbian dinars in respect of the costs of civil proceedings. 11. This judgment became final on 9 June 2005. 12. On 30 September 2009 the applicant lodged an application for the enforcement of the judgment of 4 April 2005 in respect of the costs awarded. On the same day the Commercial Court in Belgrade allowed the application and issued an enforcement order. 13. The judgment of 2 September 2004 and the reminder of the judgment of 4 April 2005 were to be enforced in the context of the insolvency proceedings. B. The status of the debtor 14. Before the insolvency proceedings the debtor company was predominantly socially owned. It has remained registered as predominantly socially owned in the relevant public registries throughout the insolvency proceedings. 15. On 18 December 2009 the Commercial Court in Belgrade terminated the insolvency proceedings against the company. This decision became final on 11 January 2011. On 1 June 2011 the debtor was erased from the Companies’ Register. II. RELEVANT DOMESTIC LAW 16. The relevant domestic law is set out in the Court’s judgments of R. Kačapor and Others v. Serbia (nos. 2269/06, 3041/06, 3042/06, 3043/06, 3045/06 and 3046/06, §§ 57-82, 15 January 2008); Vlahović v. Serbia (no. 42619/04, §§ 37-47, 16 December 2008); Crnišanin and Others v. Serbia (nos. 35835/05, 43548/05, 43569/05 and 36986/06, §§ 100-104, 13 January 2009); EVT Company v. Serbia (no. 3102/05, §§ 26 and 27, 21 June 2007); Marčić and Others v. Serbia (no. 17556/05, § 29, 30 October 2007); Adamović v. Serbia, (no. 41703/06, §§ 17-22, 2 October 2012); and Marinković v. Serbia ((dec.) no. 5353/11, §§ 26-29 and §§ 31-44, 29 January 2013). THE LAW I. ALLEGED VIOLATION OF ARTICLES 6 AND 13 OF THE CONVENTION AND ARTICLE 1 OF PROTOCOL NO. 1 TO THE CONVENTION 17. The applicant complained about the respondent State’s failure to enforce two final judgments rendered in its favour against the debtor and about the lack of an effective remedy in this connection. It relied on Articles 6 and 13 of the Convention and Article 1 of Protocol No. 1, which, in so far as relevant, read 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.” Article 1 of Protocol No. 1 “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.” Article 13 “Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.” A. Admissibility 1. The six-month rule 18. The Government submitted that the applicant had lodged the application with the Court outside the six-month time-limit. In particular, this time-limit had started to run when the opening of the insolvency proceedings against the debtor was announced on the Belgrade Commercial Court’s notice board, that is, on 19 December 2001. Since the applicant must have known that it was not certain whether it would be able to settle its claim in full within the insolvency proceedings, it should have lodged the application within six months from the date of the Convention entering into force in respect to the respondent State, which is 3 March 2004. Since the applicant had failed to do so, the Government invited the Court to reject the application as out of time. 19. The Court notes that the present case concerns the non-enforcement of the final domestic judgments in the applicant’s favour. The judgments here at issue became final and enforceable in 2004 and 2005 and remain fully unenforced to the present day. At the time of the introduction of this application, there were no effective domestic remedies for this complaint in the respondent State (see Milunović and Čekrlić v. Serbia (dec.), nos. 3716/09 and 38051/09, 17 May 2011). The Court concludes, therefore, that the alleged violation in the present case constitutes a continuous situation and accordingly rejects the Government’s objection. 2. Compatibility ratione personae 20. The Government argued that the State could not be held responsible for the debtor in the present case which was a separate legal entity not controlled by the State. 21. The Court has already held in comparable cases against Serbia that the State is liable for debts of socially-owned companies (see, for example, R. Kačapor and Others, cited above, §§ 97-98, Rašković and Milunović v. Serbia, nos. 1789/07 and 28058/07, § 71, 31 May 2011, and Adamović v. Serbia, cited above, § 31).The Court sees no reason to depart from that jurisprudence in the present case. Consequently, this argument must be rejected. 3. Conclusion 22. The Court considers that the application is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention and finds no other ground to declare it inadmissible. It must therefore be declared admissible. B. Merits 23. The Court has already examined a similar situation in Adamović v. Serbia, cited above, and found a breach of Article 6 of the Convention and Article 1 of Protocol No. 1 to the Convention. 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. Accordingly, there has been a breach of Article 6 of the Convention and Article 1 of Protocol No. 1 to the Convention also in this case. 24. The Court does not find it necessary in the circumstances of this case to examine essentially the same complaint under Article 13 of the Convention (see mutatis mutandis, Kin-Stib and Majkić v. Serbia, no. 12312/05, § 90, 20 April 2010). II. APPLICATION OF ARTICLE 41 OF THE CONVENTION 25. 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.” 26. The applicant did not submit a claim for just satisfaction. Accordingly, the Court considers that there is no call to award it any sum on that account. 27. It must, however, be noted that a judgment in which the Court finds a violation of the Convention or of its Protocols imposes on the respondent State a legal obligation not just to pay those concerned the sums awarded by way of just satisfaction, but also to choose, subject to supervision by the Committee of Ministers, the general and/or, if appropriate, individual measures to be adopted in its domestic legal order to put an end to the violation found (see Apostol v. Georgia, no.40765/02, §§ 71-73, ECHR 2006, Marčić and Others v. Serbia, cited above, §§ 64-65, and Pralica v. Bosnia and Herzegovina, no. 38945/05, § 19, 27 January 2009). 28. Having regard to its finding in the instant case, and without prejudice to any other measures which may be deemed necessary, the Court considers that the respondent State must secure the enforcement of the final domestic decisions rendered in the applicant’s favour by way of paying the applicant, from their own funds, the sums awarded in the said final decisions, less any amounts which may have already been paid in respect of the said decisions. FOR THESE REASONS, THE COURT, UNANIMOUSLY, 1. Declares the application admissible; 2. Holds that there has been a violation of Article 6 of the Convention and of Article 1 of Protocol No. 1 to the Convention; 3. Holds that there is no need to examine the complaint under Article 13 of the Convention; 4. Holds (a) that the respondent State shall, from its own funds and within three months, pay the applicant, the sums awarded in the final court decisions under consideration in the present case, less any amounts which may have already been paid on the basis of the said decisions; (b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points. Done in English, and notified in writing on 5 November 2013, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Seçkin ErelPaulo Pinto de Albuquerque Acting Deputy RegistrarPresident

THIRD SECTION CASE OF TÖRE v. TURKEY (Application no. 48095/99) JUDGMENT STRASBOURG 14 April 2005 FINAL 14/07/2005 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 Töre v. Turkey, The European Court of Human Rights (Third Section), sitting as a Chamber composed of: MrB.M. Zupančič, President,MrJ. Hedigan,MrL. Caflisch,MrR. Türmen,MrC. Bîrsan,MrsM. Tsatsa-Nikolovska,MrV. Zagrebelsky, judges,and Mr V. Berger, Section Registrar, Having deliberated in private on 24 March 2005, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 48095/99) 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, Nazif Töre (“the applicant”), on 17 April 1999. 2. The applicant was represented by Madame E. Çıtak, a lawyer practising in Istanbul. The Turkish Government (“the Government”) did not designate an Agent for the purposes of the proceedings before the Court. 3. On 29 April 2004 the Court declared the application partly inadmissible and decided to communicate the complaint concerning the applicant's right to a fair trial by an independent and impartial tribunal to the Government. Under the provisions of Article 29 § 3 of the Convention, it decided to examine the merits of the application at the same time as its admissibility. 4. On 1 November 2004 the Court changed the composition of its Sections (Rule 25 § 1). The case was assigned to the newly composed Third Section. THE FACTS I. THE CIRCUMSTANCES OF THE CASE 5. The applicant was born in 1964 and lives in Istanbul. 6. In 1988 the applicant was convicted of membership in an illegal organisation, namely the Marxist-Leninist Communist Party. On 15 April 1991 he was conditionally released from prison. 7. On 16 March 1996 the applicant was arrested and taken into custody by the police. On 9 April 1996 the applicant was interrogated by the police officers at the Tunceli Security Directorate. 8. On 9 April 1996 the Malatya State Security Court ordered his detention on remand. 9. On 22 April 1996 the public prosecutor at the Malatya State Security Court filed an indictment with the latter, accusing the applicant of membership in an illegal armed organisation, namely the Marxist-Leninist Communist Party. The public prosecutor requested that the applicant be convicted and sentenced under Article 146 § 1 of the Criminal Code and Section 5 of Law no. 3713. 10. In the meantime on 7 May 1996 the public prosecutor at the Istanbul State Security Court filed an indictment with the latter accusing the applicant of being an accessory to a bank robbery and murder of a clerk on 18 May 1992. On 26 December 1996 the two cases were joined and the criminal proceedings against the applicant continued before the Malatya State Security Court. 11. On 16 December 1997 the Malatya State Security Court, composed of two civilian judges and a military judge, convicted the applicant as charged and sentenced him to life imprisonment. 12. On 30 November 1998 the Court of Cassation upheld the judgment of the Malatya State Security Court without conducting a hearing since the applicant's lawyer was absent without justification. 13. On 10 October 2002 the applicant's representative informed the Court that the applicant was released from prison due to ill-health pursuant to Article 399 of the Criminal Procedure Code. Accordingly, the applicant was imprisoned, in total, for about six years and six months. II. RELEVANT DOMESTIC LAW 14. The relevant domestic law and practice in force at the material time are outlined in the following judgments: Özel v. Turkey (no. 42739/98, §§ 20-21, 7 November 2002) and Gençel v. Turkey (no. 53431/99, §§ 11‑12, 23 October 2003). THE LAW I. ALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION 15. The applicant submitted that he had been tried and convicted by the Malatya State Security Court which was neither independent nor impartial. He further complained that he had been deprived of his right to the assistance of a lawyer in police custody and that the written opinion of the principal public prosecutor to the Court of Cassation was never served on him, thus depriving him of the opportunity to put forward his counter‑arguments. He relied on Article 6 §§ 1 and 3 (c) of the Convention. A. Admissibility 16. The Government argued under Article 35 of the Convention that the applicant's complaint in respect of the independence and impartiality of the Malatya State Security Court must be rejected for failure to comply with the six-month rule. In this respect, they maintained that as the applicant was complaining of the lack of independence and impartiality of the Malatya State Security Court, he should have lodged his application with the Court within six months of the date on which that court rendered its judgment. 17. The Court reiterates that it has already examined in several cases similar preliminary objections of the Government in respect of the non‑compliance with the six months' rule and has rejected them (see Özdemir v. Turkey, no. 59659/00, § 29, 6 February 2003, and Doğan and Keser v. Turkey, nos. 50193/99 and 50197/99, § 17, 24 June 2004). The Court finds no particular circumstances in the instance case, which would require it to depart from its findings in the above-mentioned cases. 18. Accordingly, the Court rejects the Government's preliminary objection. 19. In the light of its established case law (see, amongst many authorities, Çıraklar v. Turkey, judgment of 28 October 1998, Reports of Judgments and Decisions 1998-VII), and in view of the materials submitted to it, the Court considers that the case raise complex issues of law and fact under the Convention, the determination of which should depend on an examination of the merits. The Court therefore concludes that the remainder of the application is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. No other grounds for declaring it inadmissible have been established. B. Merits 1. Independence and impartiality of the State Security Court 20. The Court has examined a large number of cases raising similar issues to those in the present case and found a violation of Article 6 § 1 of the Convention (see Özel, cited above, §§ 33-34, and Özdemir, cited above, §§ 35-36). 21. As to the instant case, the Court considers that the Government have not submitted any facts or arguments capable of leading to a different conclusion. It considers it understandable that the applicant – prosecuted in a State Security Court for offences relating to “national security” – should have been apprehensive about being tried by a bench which included a regular army officer, who was a member of the Military Legal Service. On that account they could legitimately fear that the State Security Court might allow itself to be unduly influenced by considerations which had nothing to do with the nature of the case. Consequently, the applicant's doubts about that court's independence and impartiality may be regarded as objectively justified (see Incal v. Turkey, judgment of 9 June 1998, Reports 1998‑IV, p. 1568, § 72 in fine). 22. In conclusion, the Court considers that the State Security Court which tried and convicted the applicant was not an independent and impartial tribunal within the meaning of Article 6 § 1 of the Convention. Accordingly, there has been a violation of this provision. 2. Fairness of the proceedings 23. Having regard to its finding of a violation of applicant's right to a fair hearing by an independent and impartial tribunal, the Court considers that it is not necessary to examine the other complaints under Article 6 of the Convention relating to the fairness of the proceedings before the domestic courts (see, among other authorities, Incal, cited above, § 74, and Ükünç and Güneş v. Turkey, no. 42775/98, § 26, 18 December 2003). II. 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 300,000 euros (EUR) in respect of non‑pecuniary damage. He also requested an amount of compensation in respect of pecuniary damage. He left the determination of this amount to the discretion of the Court. 26. The Government contested those claims. 27. As regards the alleged pecuniary damage sustained by the applicant, the Court notes that the applicant has not produced any receipt or documents in support of his claim. The Court accordingly dismisses this claim. 28. The Court further considers that the finding of a violation of Article 6 constitutes in itself sufficient compensation for any non-pecuniary damage suffered by the applicant in this respect (see Incal, cited above, p. 1575, § 82, and Çıraklar, cited above, § 45). 29. Where the Court finds that an applicant was convicted by a tribunal which was not independent and impartial within the meaning of Article 6 § 1, it considers that, in principle, the most appropriate form of relief would be to ensure that the applicant is granted a prompt retrial by an independent and impartial tribunal (Gençel, cited above, § 27). B. Costs and expenses 30. The applicant did not submit any receipts or invoices indicating the costs and expenses he had incurred before the domestic proceedings and the Court. He left it to the Court's discretion to asses the appropriate amount. 31. The Government maintained that only actually incurred expenses can be reimbursed. In this connection, they submitted that all costs and expenses must be documented by the applicant or his representative. 32. According to the Court's case-law, an applicant is entitled to reimbursement of his costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and were reasonable as to quantum. In the present case, regard being had to the information in its possession and the above criteria, the Court rejects the claim for costs and expenses in the domestic proceedings and considers it reasonable to award the sum of EUR 2,000 for the proceedings before the Court. C. Default interest 33. 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 as regards the complaint relating to the independence and impartiality of the Malatya State Security Court; 3. Holds that it is not necessary to consider the applicant's other complaints under Article 6 of the Convention; 4. Holds that the finding of a violation constitutes in itself sufficient just satisfaction for non-pecuniary damage 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 according to Article 44 § 2 of the Convention, EUR 2,000 (two thousand euros) in respect of costs and expenses to be converted into new Turkish liras at the rate applicable at the date of the settlement and free of any charge that may be payable; (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 14 April 2005, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Vincent BergerBoštjan M. ZupančičRegistrarPresident

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1741 of 1980. From the Judgment and Order dated 16th January, 1980 of the High Court of Delhi at New Delhi, in Letters Patent Appeal No. 25 of 1970. R. Lalit, V.N. Ganpule and Mrs. V.D. Khanna for the Appellant. Jitendra Sharma for the Respondent. The Judgment of the Court was delivered by DESAI, J. Respondent Shri Niranjan Dass was employed as a Senior Clerk by the appellant-company as per the appointment order companytained in the letter dated April 10, 1962. The letter of appointment inter alia provided that the respondent may be posted any where in India or abroad as per the requirements of the companypany and it was signed by its Zonal Manager, Central Zone, Delhi. Respondent companytinued to serve in that capacity when on September 14, 1967, he was served with a numberice terminating his services. The numberice reads as under Due to the reduction in the volume of business of the Company as a result of the recession in sic services will number be required by the companypany after the 14th October, 1967, and this may be treated as statutory numberice of one month of termination of your service. Your leave shall run companycurrently with the numberice period, and you may avail of leave due to you, if any, during the numberice period. Personnel Section at Head Office have been advised to settle your dues, and you may write to them in the matter. We take this opportunity to thank you for your past services, and it is very unfortunate that the present circumstances have companypelled us to issue this numberice. Should it be possible for us to offer you a job at any of our works sites at a later date, we shall make you a fresh offer at that time. Respondent raised an industrial dispute and the appropriate Government by the order dated May 30, 1968 referred the industrial dispute for adjudication to the Industrial Tribunal. The reference was companyched in the following language. Whether the retrenchment of Shri Niranjan Dass is unjustified or illegal and if so, what directions are necessary in this respect. By the award dated February 25, 1969. the Industrial Tribunal held that the retrenchment of the respondent was illegal and unjustified and gave a declaration that he companytinues to be in service of the appellant-company and is entitled to his wages till he is lawfully retrenched. Appellant-company challenged the award in Civil Writ No. 462 of 1969 filed by it in the High Court of Delhi. A learned Single Judge held that as the Delhi office of the appellantcompanypany was closed, the case of the respondent would be governed by Sec. 25FFF being termination companysequent upon closure, and therefore payment of companypensation was number a companydition precedent and the termination of service was valid, The learned Judge accordingly set aside the award and remitted the matter to the Tribunal to decide what directions, if any, are necessary in respect of retrenchment of the respondent in the light of the discussion in the judgment Respondent preferred Letters Patent Appeal No. 25 of 1970 against the decision of the learned Single Judge. A Division Bench of Delhi High Court held that the reference made by the appropriate Government required the Industrial Tribunal to companysider whether the retrenchment was illegal or unjustified and therefore it was implicit in the reference itself that it was a case of retrenchment, validity of which to be examined in the reference and therefore it was number open to the learned Single Judge to change the base of the reference and to companye to the companyclusion that the case was one of closure of the industrial undertaking governed by Sec. 25FFF of the Industrial Disputes Act. Approaching the matter from this angle, the Division Bench set aside the decision of the learned Single Judge and restored the award made by the Industrial Tribunal. Hence this appeal by the companypany by special leave. The Industrial Tribunal held that respondent was retrenched from service by the appellant and the precompanyditions for a valid retrenchment were number companyplied with and therefore the respondent was entitled to a declaration that he companytinues to be in service with all the benefits flowing from the said declaration. A learned Single Judge of the High Court interfered with this award holding that the appellant-company had closed its Delhi office and therefore the termination of service was companysequent upon the closure and even if it companystitutes retrenchment, the case would be governed by Sec. 25FFF which does number prescribe payment of companypensation as a companydition-precedent to a valid termination of service by way of retrenchment. In the Letters Patent Appeal at the instance of the respondent, the Division Bench set aside the judgment of the learned Single Judge holding that it was number open to the learned Single Judge to hold that it was a case of closure companyered by Sec. 25FFF because it was implicit in the reference that the case was one of retrenchment and the only question with the Industrial Tribunal was called upon to decide was whether the retrenchment was unjustified or illegal. It is number necessary to examine the view expressed by the Division Bench of the High Court whether the assumption underlying an order of reference is unquestionable at the hearing of the reference. The question, however, is whether the learned Single Judge, who interfered with the award of the Tribunal was justified in companying to the companyclusion that the case was one of closure companyered by Sec. 25FFF or the Industrial Tribunal was right in holding that it is a case of retrenchment companyered by Sec. 25F of Industrial Disputes Act. This point can be answered by mere reference to the numberice served by the appellantcompanypany on the respondent intimating to him that his services will numbermore be required effective from October 14, 1967. The numberice as a whole has been extracted hereinbefore. The numberice recites that as a result of recession in the volume of work of the companypany, services of the respondent would numbermore be required by the companypany after October 14, 1967 and this numberice may be treated as a statutory numberice as companytemplated by Sec. 25F a . There is number even a whisper in the numberice that as the Delhi office is being closed down, the services of the respondent would number be required. An attempt was made while leading evidence before the Industrial Tribunal to show that the Zonal office at Delhi was closed on January 31, 1968 while the Central Zone office was closed somewhere in October, 1967. If by September, 1967, the appellant companypany had resolved to close the office at Delhi to which the respondent was attached, it is unthinkable that aspect would number be recited in the numberice. The necessity for termination of service of the respondent recited in the numberice was recession in the work handled by the companypany. Not even one word is stated in the numberice that the office to which the respondent was attached was in the process of being closed down, so his services would numbermore be required. On a true companystruction of the numberice, it would appear that the respondent had become surplus on account of reduction in volume of work and that companystitutes retrenchment even in the traditional sense of the term as interpreted in Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union 1 though that view does number hold the field in view of the recent decisions of this Court in State Bank of India v. N. Sundara Money 2 Hindustan Steel Ltd. v. The Presiding Officer, Labour Court, Orissa and Others 3 Santosh Gupta v. State Bank of Patiala 4 Delhi Cloth and General Mills Ltd. v. Shambu Nath Mukerjee 5 Mohan Lal v. Management of M s Bharat Electronics Ltd 6 and L. Robert Dsouza v. The Executive Engineer, Southern Railway Anr. 7 The recitals and averments in the numberice leave numberroom for doubt that the service of the respondent was terminated for the reason that on account of recession and reduction in the volume of work of the companypany, respondent has become surplus. Even apart from this, the termination of service for the reasons mentioned in the numberice is number companyered by any of the clauses a , b and c of Sec. 2 oo which defines retrenchment and it is by number well-settled that where the termination of service does number fall within any of the excluded categories, the termination would be ipso facto retrenchment. It was number even attempted to be urged that the case of the respondent would fall in any of the excluded categories. It is there indisputably a case of retrenchment. It is number disputed that the pre-requisite for a valid retrenchment as laid down in Sec. 25f has number been companyplied with and therefore the retrenchment bringing about termination of service is ab initio void. Viewed from this angle, the award of the Industrial Tribunal was companyrect and unassailable and the learned Single Judge was in error in interfering with the same. Undoubtedly, the Division Bench of the High Court has set aside the order of the learned Single Judge and restored the award for reasons of its own. However, for the reasons herein indicated, the decision of the Division Bench in Letters Patent Appeal No. 25 of 1970 is upheld and companyfirmed and this appeal must therefore fail and accordingly it is dismissed. In the companyrse of hearing of this appeal, it was stated that the respondent has reached the age of superannuation therefore physical reinstatement in service is number possible. Appellant will have to establish that fact but in the event, the appellant shows that under a valid rule, respondent has reached the stage of superannuation and therefore physical reinstatement is number possible, it is hereby declared that the respondent shall companytinue to be in service uninterruptedly from the date of the attempted termination of service till the date of superannuation. Respondent would be entitled to all back wages including the benefit of revised wages or salary if during the period there is revision of pay-scales with yearly increment, revised dearness allowance or variable dearness allowance and all terminal benefits if he has reached the age of superannuation such as Provident Fund, Gratuity etc. Back wages should be calculated as if the respondent companytinued in service uninterrupted. He is also entitled to leave encashment and bonus if other workmen in the same category were paid the same. It appears that the respondent has been unlawfully kept out of service, therefore it is but just that the appellant-company shall pay all the arrears as calculated according to the directions herein given with 12 interest from the date the amount became due and payable till realisation. Appellant shall also pay companyts to the respondent quantified at Rs. 5,000. The appellant is directed to pay the amount as herein directed to be paid within 3 months from today. Mr. Jitendra Sharma, learned companynsel for the respondent stated that the companyts awarded to the respondent be paid to the Legal Aid Cell set up by Indian Association of Lawyers in companylaboration with Womens Council. Order accordingly.

Opinion of Mr Advocate General Ruiz-Jarabo Colomer delivered on 16 January 2001. - Criminal proceedings against Christina Bellamy and English Shop Wholesale SA, party liable at civil law. - Reference for a preliminary ruling: Tribunal de première instance de Bruxelles - Belgium. - Free movement of goods - Measures having an effect equivalent to a quantitative restriction - Marketing of bread - Advertising of foodstuffs. - Case C-123/00. European Court reports 2001 Page I-02795 Opinion of the Advocate-General 1. The Tribunal de Première Instance de Bruxelles (Court of First Instance, Brussels), Belgium, is seeking a ruling under Article 234 EC on the interpretation of Articles 28 EC and 30 EC in order to decide whether Belgian laws (i) prohibiting the sale of bread containing more than 2% salt and the advertising of foodstuffs in such a way as to suggest that a product possesses particular characteristics even though all similar products have the same characteristics and (ii) requiring the packaging of fresh milk to be marked whole and pasteurised constitute quantitative restrictions on imports or measures having an equivalent effect. I - Facts 2. A judgment in default was delivered in December 1998 against Mrs Bellamy, the director of English Shop Wholesale, a limited company which imports foodstuffs from the United Kingdom for retail sale in Belgium, on the ground that in 1994 and 1995 she had contravened provisions of the Royal Decree of 2 September 1985 on bread and other bakery products (hereinafter the 1985 Royal Decree), the Royal Decree of 17 April 1980 concerning advertising of foodstuffs (hereinafter the 1980 Royal Decree) and Article 14 of the Law of 24 January 1977 on the protection of consumers' health (hereinafter the 1977 Law). The contraventions consisted in selling bread with a salt content of 2.88% in breach of the provisions of Article 3(2) of the 1985 Royal Decree, in giving the impression, in breach of Article 4(2) of the 1980 Royal Decree, that fresh whole pasteurised milk possessed particular qualities by stating that the product did not contain additives or preservatives and in selling milk with the name Breakfast Milk without describing it as fresh whole pasteurised milk. 3. Mrs Bellamy contested the judgment and contends that the charges are contrary to provisions of European Community legislation, in particular, Article 28 EC. II - The questions referred for a preliminary ruling 4. In order to enable it to give judgment in the proceedings, the Tribunal de Première Instance referred the following questions to the Court of Justice for a preliminary ruling: 1. Are Articles 1.3 and 8 of the Royal Decree of 2 September 1985 on bread and other bakery products and Article 14 of the Law of 24 January 1977 on the protection of consumers' health in relation to foodstuffs and other products, in so far as they prohibit the marketing of bread whose cooking salt content, expressed in terms of sodium chloride and calculated on the basis of the dry matter, exceeds 2.0%, compatible with the requirements of Article 28 [...] and are they capable of being justified under Article 30 of the [Treaty on European Union]? 2. Are Articles 1(3) and 8 of the Royal Decree of 2 September 1985 on bread and other bakery products and Article 14 of the Law of 24 January 1977 on the protection of consumers' health in relation to foodstuffs and other products compatible with the requirements of Article 28 of the Treaty on European Union and are they capable of being justified under Article 30 of that instrument? 3. Are Articles 4(2) and 5 of the Royal Decree of 17 April 1980 concerning advertising of foodstuffs and Article 14 of the Law of 24 January 1977 on the protection of consumers' health in relation to foodstuffs and other products compatible with the requirements of Article 28 of the Treaty on European Union and are they capable of being justified under Article 30 of that instrument? 5. I would like to make it clear that, although the order for reference sought a ruling on the interpretation of Articles 28 and 30 of the Treaty on European Union, it is actually a question of Articles 28 and 30 of the Treaty establishing the European Community, as renumbered and amended by the Treaty of Amsterdam. III - Procedure before the Court of Justice 6. The applicant in the main proceedings and the Commission have submitted written observations in these proceedings, within the period prescribed for those purposes by Article 20 of the EC Statute of the Court of Justice. Since none of the interested parties has asked to present oral argument, the Court has decided not to hold a hearing, in accordance with Article 104(4) of the Rules of Procedure. IV - Consideration of the questions submitted by the national court A. The first question 7. By this question, the Belgian court is seeking to ascertain whether Article 28 EC precludes the application of a Member State's legislation which prohibits the marketing in its territory of bread and other bakery products whose salt content, calculated on the basis of the dry matter, exceeds 2.0%, where those products have been lawfully manufactured and marketed in another Member State. If the answer to that question is affirmative, the national court is asking whether the legislation may be justified under Article 30 EC. 8. Article 28 EC prohibits quantitative restrictions on imports between Member States as well as all measures having equivalent effect. For its part, Article 30 EC provides that Articles 28 and 29 are not to preclude prohibitions or restrictions on imports, exports or goods in transit which can be justified on grounds of inter alia the protection of health and life of humans and animals, provided that such prohibitions or restrictions do not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. 9. It appears from the order for reference that the first question was drawn up as a consequence of Mrs Bellamy being fined for contravention of Article 1(3) and Article 8 of the 1985 Royal Decree and Article 14 of the 1977 Law. I must point out, in the interests of clarity, that the requirement relating to the maximum salt content in bread is to be found in Article 3(2) of the 1985 Royal Decree and not in Article 1(3) or Article 8. 10. That question has already been answered by the Court of Justice in its judgment in Van der Veldt, delivered in response to a question from another Belgian court hearing a case dealing with facts similar to those described here. 11. In that judgment, the Court confirmed that, in the absence of common or harmonised rules on the making and marketing of bread and other bakery products, it is for Member States to regulate all matters relating to the composition, making and marketing of those foodstuffs, provided that they do not thereby discriminate against imported products or hinder the importation of products from other Member States. 12. A requirement that they contain no more than a specific amount of salt, calculated by reference to the dry matter, may prevent bread and other bakery products originating in other Member States from being marketed in the State concerned. Complying with such a requirement may make it necessary, if identical manufacturing standards are not prescribed for the manufacture of bread, to vary the method of manufacture according to the place where the bread or bakery products are to be sold and may thus impede the movement of the products. Accordingly, the Court held that a Member State's legislation prohibiting the marketing of bread and other bakery products whose salt content by reference to the dry matter exceeds the maximum permitted level of 2%, when applied to products which have been lawfully manufactured and marketed in another Member State, constitutes a measure having an effect equivalent to a quantitative restriction within the meaning of what is now Article 28 EC. 13. I also consider the legal arguments deployed by the Court of Justice to refute the argument that the Belgian legislation was justified on grounds of the protection of public health to be valid, since the national authorities responsible for health policy had alleged that if the Netherlands rules on salt content in bread were adopted, the daily intake of that type of chloride would amount to 3.1 g, which was too high. However, according to that judgment, general conjecture of that nature does not prove that increasing salt intake by such an amount poses a risk to public health. Furthermore, although the mere fact that there is a risk to consumers is sufficient to make legislation of the kind at issue compatible with the requirements of Article 30, the risk must be measured, not according to the yardstick of general conjecture, but on the basis of relevant scientific investigation. Since no scientific data of that kind had been produced, on which the Belgian legislature could have relied, the Court of Justice held that, instead of prohibiting and penalising the marketing of bread whose salt content was higher than 2%, the Belgian legislature could have prescribed suitable labelling to give consumers the desired information regarding the composition of the product. The protection of public health would thus have been ensured without such serious restrictions on the free movement of goods. 14. In the case that I am considering, no new arguments have been presented to show that the legislation is necessary for the protection of public health or that it is proportionate to that end. Consequently, it must be held that Article 28 EC precludes the application of a Member State's legislation prohibiting the marketing in its territory of bread and other bakery products whose salt content, calculated by reference to the dry matter, exceeds 2%, where those products have been lawfully manufactured and marketed in another Member State, and that the legislation cannot be regarded as justified under Article 30 EC on the ground of the protection of public health. B. The second question 15. I confess that the wording of this question puzzles me since, to a large extent, it is the same as that of the first question, although there is no reference to the maximum salt content in bread. I understand from my reading of the national legislation referred to in the order for reference (i) that Article 1(3) of the 1985 Royal Decree defines speciality breads; (ii) that under Article 8 contraventions of the Decree are investigated, prosecuted and punished in accordance with the Law on the protection of consumers' health; and (iii) that Article 14 of that law lays down that a person who manufactures or imports foodstuffs or other products referred to therein, or a person who is neither the manufacturer nor the importer but who knowingly places such foodstuffs or other products on the market, is liable either to imprisonment for a period of between eight days and six months or to a fine of between 50 and 1 000 francs, or to both. The national court is asking whether that legislation is consistent with Article 28 EC and whether it can be justified by reason of Article 30 EC. 16. As the Commission rightly points out in its observations, it is apparent from the national court's description of the facts that the dispute before it does not concern the applicable legislation, the nature of the penalties imposed on the persons who have contravened it, or the amount of the fines. Nor is there any dispute as to the definition of bread. 17. The Court of Justice has stressed how important it is for a national court making a reference to give the precise reasons which have prompted it to raise a question on the interpretation of Community law and to submit questions seeking a preliminary ruling, and has held that it is essential that it should give at the very least some explanation of the reasons for the choice of the Community provisions of which it requests an interpretation and on the link between those provisions and the national legislation applicable to the dispute. 18. Taking account of the fact that the national court has not given any such explanation and that Mrs Bellamy and English Shop Wholesale are alleged to have contravened the prohibition in Article 3(2) of the 1985 Royal Decree, a matter covered by the first question referred for a ruling, I consider that the Court should not answer the second question. C. The third question 19. By this question, which needs to be reformulated, the national court is seeking to ascertain whether Article 28 EC precludes legislative provisions of the kind found in Article 4(2) of the 1980 Royal Decree, which prohibits presenting a branded product in such a way as to suggest that it possesses particular qualities although all similar products have such qualities. It is also seeking to establish whether Article 28 EC prohibits the application of a national rule such as that found in Article 5 of the 1980 Royal Decree, under which all advertising of foodstuffs must use in a clearly visible manner a description laid down, where appropriate, by provisions of laws or regulations, in order to ensure that consumers are not misled as to the nature of the foodstuff. If the answer to the question is affirmative, an analysis of whether the national legislation in question can be justified under Article 30 EC will be called for. 20. According to the case-law of the Court of Justice, obstacles to free movement of goods which are the consequence of rules that lay down requirements to be met by goods (such as requirements relating to designation, form, size, weight, composition, presentation, labelling, packaging) constitute measures of equivalent effect prohibited by Article 28 EC. This is so even if the rules apply without distinction to all products unless their application can be justified by a public-interest objective taking precedence over the free movement of goods. The Court has also interpreted Article 28 EC as meaning that the application of national legislation, enacted in the absence of common or harmonised rules, to products imported from other Member States, where they are lawfully manufactured and marketed, is compatible with the Treaty only in so far as it is necessary on grounds of public interest under Article 30 or in order to satisfy mandatory requirements relating inter alia to fair trading and consumer protection. Where, in application of Article 100 of the EC Treaty (now Article 94 EC), Community directives provide for the harmonisation of the measures necessary to ensure the protection of animal and human health and establish Community procedures to check that they are observed, recourse to Article 30 EC is no longer justified and the appropriate checks must be carried out, and the measures of protection adopted, within the framework outlined by the harmonising directive. 21. As the Commission has pointed out in its observations, Directive 79/112/EEC (Directive 79/112) constitutes the first stage in the process of harmonisation which is intended to remove progressively all obstacles to the free movement of goods resulting from the differences between the laws of the Member States in relation to labelling. Similarly, Directive 92/46/EEC harmonises the rules regulating the heat treatment of drinking milk and Chapter III of Annex C thereto sets out the rules applicable to wrapping and packaging. 22. Under Article 2(1)(a) of Directive 79/112, the labelling and methods used must not be such as could mislead the purchaser to a material degree, particularly (i) as to the characteristics of the foodstuff and, in particular, as to its nature, identity, properties, composition, quantity, durability, origin or provenance, method of manufacture or production; (ii) by attributing to the foodstuff effects or properties which it does not possess; and (iii) by suggesting that the foodstuff possesses special characteristics when in fact all similar foodstuffs possess such characteristics. 23. Article 4(2) of the 1980 Royal Decree, in prohibiting advertising of foodstuffs which suggests that they possess special characteristics when in fact all similar products possess such characteristics, incorporates into national law the provision found in Article 2(1)(a)(iii) of Directive 79/112. 24. It must therefore be held that Article 28 EC and Article 2 of Directive 79/112 do not preclude a national legislative provision of the kind found in Article 4(2) of the 1980 Royal Decree. 25. The obligation imposed by Article 5 of the 1980 Royal Decree to use a recognised name in all advertising material, in order to avoid giving a misleading impression, applied in the case before the national court to whole pasteurised milk called Breakfast Milk on the ground that the description fresh whole pasteurised milk had been omitted. 26. Like the Commission, I infer from the facts explained by the national court that in the case in question Article 5 of the Royal Decree applied to the labelling on the milk's packaging. The obligation imposed relates to the product's characteristics and does not have any effect on advertising. Advertising is distinct from the product itself and its packaging and constitutes a selling arrangement of the kind referred to in paragraph 16 of the judgment in Keck and Mithouard, which falls outside the scope of Article 28 EC. 27. Under Article 3(1)(1) of Directive 79/112, the name under which the product is sold is one of the compulsory details to be included on the labelling of foodstuffs. Therefore, the application of Article 5 of the 1980 Royal Decree to the labelling of a food product, is neither more nor less than the implementation in national law of the provision in the Directive. 28. It remains to be seen whether Community legislation precludes a Member State from requiring milk which is marketed under the name Breakfast Milk to include in the name under which it is sold the words whole and pasteurised. Article 5(2) of Directive 79/112 lays down that no trade mark, brand name or fancy name may be substituted for the name under which the product is sold. Under Article 2(2) of Regulation (EC) No 2597/97 (Regulation No 2597/97), the sales descriptions to be used for milk products are those given in Article 3, paragraph 1 of which requires the name under which the product is sold to indicate whether the milk is raw, whole, semi-skimmed or skimmed. 29. As for the requirement that the word pasteurised should appear on the packaging, Article 5(3) of Directive 79/112 provides that the name under which the product is sold is to include or to be accompanied by particulars as to the physical condition of the foodstuff or the specific treatment which it has undergone (for example, powdered, freeze-dried, deep-frozen, concentrated, smoked), in all cases where omission of such information could create confusion in the mind of the purchaser. In spite of the fact that pasteurisation is not mentioned among the examples, I agree with the Commission that it must be regarded as a specific treatment undergone by the food product and that its omission from the name under which the product is sold could confuse the consumer. 30. Furthermore, in accordance with Article 5 of Directive 92/46, Member States are obliged to ensure that drinking milk is placed on the market only if it meets inter alia the conditions of having been treated in the way provided for in Annex C, Chapter I.A, labelled in accordance with Annex C, Chapter IV, and wrapped in accordance with Annex C, Chapter III, at a treatment establishment where the milk has been subjected to final treatment. Paragraph 5 of Chapter III of Annex C to the directive, which regulates wrapping and packaging, requires the operator or manager of the establishment to ensure for control purposes that, in addition to the information required by Chapter IV, the nature of the heat treatment which the raw milk has undergone and other information whereby the date of the heat treatment may be established and the temperature at which the pasteurised milk must be stored is visibly and legibly displayed on the packaging of the milk and milk-based products. 31. In view of those provisions, I must conclude that, since Regulation No 2597/97 and Directives 79/112 and 92/46 have made it compulsory to include the words whole and pasteurised in order to approximate the laws of the Member States, the requirement in Article 5 of the 1980 Royal Decree cannot be regarded as contrary to Community law. Therefore, the answer to the national court's question must be that Article 28 EC and Article 5 of Directive 79/112 do not preclude a national legislative provision such as Article 5 of the Royal Decree of 17 April 1980, which provides that any advertising of foodstuffs must use in a clearly visible manner a sales description of the product laid down, where appropriate, by laws or regulations. V - Conclusion 32. In the light of the foregoing, I propose that the Court of Justice should give the following answers to the questions submitted by the Court of First Instance, Brussels: (1) Article 28 EC precludes the application of a Member State's legislation which prohibits the marketing in its territory of bread and other bakery products whose salt content, calculated by reference to the dry matter, exceeds 2%, where those products have been lawfully manufactured and marketed in another Member State and where that legislation cannot be regarded as justified under Article 30 EC on the ground of the protection of public health. (2) Article 28 EC and Article 2 of Council Directive 79/112/EEC of 18 December 1978 on the approximation of the laws of the Member States relating to the labelling, presentation and advertising of foodstuffs for sale to the ultimate consumer do not preclude a national legislative provision such as Article 4(2) of the Royal Decree of 17 April 1980, which prohibits advertising attributing particular qualities to products where all similar products have such qualities. Article 28 EC and Article 5 of Directive 79/112 do not preclude a national provision such as Article 5 of the Royal Decree of 17 April 1980, which requires any advertising of foodstuffs to use in a clearly visible manner a sales description laid down, where appropriate, by provisions of laws or regulations, such as the words whole and pasteurised for a product having such characteristics.

S. Radhakrishnan, J. This appeal is being prosecuted by the widow and children of one Shiv Pujan Prasad who died pending this appeal. On the eve of his retirement, as an Executive Engineer, he was served with an order of dismissal vide Office Memo dated 29.7.2005 dismissing him from service following a disciplinary enquiry initiated under Rule 7 of the U.P. Government Servant Discipline and Appeal Rules, 1999. Shiv Pujan Prasad challenged the above mentioned order before the High Court of Allahabad, in Writ Petition No.5709/2005 and also sought a direction to disburse the entire post-retiral benefits including the provident fund, leave encashment, gratuity, group insurance, etc. and also the pension due to him. Shiv Pujan Prasad was initially appointed as an Overseer in the Public Works Department of the State of Uttar Pradesh on 25.06.1971. While entering service he produced a certificate dated 22.02.1971 issued by the Sub-Divisional Magistrate, Chakia, showing that he belonged to Manjhi Majhwar Community, a scheduled caste. The post of Overseer was subsequently designated as Junior Engineer and he was companyfirmed in that post on 14.01.1974. On 01.04.1978, Shiv Pujan Prasad was awarded selection grade. Later, on 27.1.1982, he was promoted as an Assistant Engineer, a post reserved for scheduled castes. The Chief Engineer, however, subsequently passed an order reverting him to the post of Junior Engineer on the ground that he did number belong to the scheduled caste companymunity. Aggrieved by the order of reversion, Shiv Prasad preferred Writ Petition No.4080 of 1984 before the Lucknow Bench of the Allahabad High Court which was dismissed on 24.08.1984. Shiv Pujan Prasad brought up the matter before this Court, by way of appeal by special leave, in Civil Appeal No.2964/1985. It was companytended before this Court that the caste status of Shiv Pujan Prasad was determined without giving him any effective opportunity to submit his defence. Counsel appearing for the State of Uttar Pradesh fairly companyceded to that fact. This Court, therefore, set aside the impugned order and directed the District Collector, Varanasi, to hold a fresh enquiry after giving reasonable opportunity to Shiv Pujan Prasad to defend his case. Shiv Pujan Prasad was also permitted to hold the post of Assistant Engineer, and it was ordered that his further posting would be governed by the outcome of the enquiry which was directed to be companypleted within two months. Pursuant to the directions of this Court, a fresh inquiry was held by Collector, Varanasi, through Sub-Divisional Officer, Chakiya, Varanasi. It was found that Shiv Pujan Prasad belonged to Manjhi Majhwar by caste, which is a scheduled caste. A companyy of the report dated 25.8.1985 was submitted by the Sub-Divisional Magistrate to the District Magistrate, Varanasi. The District Magistrate, Varanasi, referring to the judgment of this Court in Civil Appeal No.2964 of 1985 forwarded a companymunication to the Registrar of Supreme Court of India, enclosing a companyy of the order passed in pursuance of the directions of this Court. A companyy of the letter was also forwarded to the Special Secretary, Government of Uttar Pradesh, Public Works Department, Section 8, Lucknow. Shiv Pujan Prasad had to file a companytempt petition before this Court since authorities did number permit him to function as Assistant Engineer in spite of the determination of his caste as ordered by this Court. The Respondents had to express their unconditional apology for number companyplying with the order of this Court. Accepting the apology, the companytempt proceedings were dropped by this Court vide order dated 27.11.1987, Shiv Pujan Prasad was permitted to resume work as an Assistant Engineer and companytinued in service. He was promoted as Executive Engineer vide order dated 02.02.1985. The State Government later received a companyplaint dated 03.02.1998 from the General Secretary of an Association called Kisan Sangharsh Samiti, Mirzapur, Sonebhadra, questioning the caste status of the appellant. Another companyplaint was registered before the Uttar Pradesh Schedule Caste and Schedule Tribe, Commission, by the All India SC, ST, Backward Classes and Minority Employees Welfare Association, Pipri, on 20.04.1999. The Commission ordered yet another enquiry on the caste status of Shiv Pujan Prasad under Section 11 of U.P. Schedule Caste and Schedule Tribe Commission Act, 1995. Enquiry revealed that Shiv Pujan Prasad belonged to Mallah companymunity which is a backward companymunity and that he did number belong to Manjhi companymunity which is a Scheduled Caste. Pointing out that Shiv Pujan Prasad had obtained appointment on the basis of forged caste certificate, an FIR was lodged against him by the Department for an offence punishable under Section 420 IPC. Shiv Pujan Prasad was then placed under suspension pending disciplinary proceedings. The Enquiry Report held that Shiv Pujan Prasad got appointment on the basis of forged caste certificate in which the caste Manjhi was written in place of Mallah and got several promotions in the service. The Government accepted the report and dismissed Shiv Pujan Prasad from service on 29.7.2005, two days prior to the date of his superannuation. The companyrectness of that order is in issue before us. Shri Dinesh Dwivedi, learned senior companynsel appearing for the appellants submitted that the respondents have companymitted a grave error in dismissing Shiv Pujan Prasad from service few days before his retirement. Learned companynsel submitted that the companyrectness or otherwise of the certificate issued on 22.02.1971 by the District Magistrate holding that Shiv Pujan Prasad belonged to Manjhi companymunity, which was a Scheduled Caste, was the specific issue before this Court in Civil Appeal No.2964/1985. This Court ordered a fresh enquiry by the Collector, Varanasi, which was endorsed by the learned companynsel appearing for the State Government as well. Consequently, the Collector was directed to companyduct a fresh enquiry with regard to the genuineness of the caste certificate issued on 22.02.1971. Enquiry revealed that the certificate issued on 22.02.1971 was in order. Later Shiv Pujan Prasad was also promoted as Assistant Engineer and thereafter as Executive Engineer. The matter, therefore, attained finality. In such a situation learned companynsel submitted that there was numberjustification in re-opening an issue at the instance of the third party, that too after a decade. Shri Pramod Swarup, learned senior companynsel for the respondents submitted that Shiv Pujan Prasad was guilty of forging the caste certificate, thereby entered service in the PWD Department and, accordingly, got further promotions in service. Learned senior companynsel submitted that the respondents were therefore justified in companyducting a detailed enquiry in spite of the earlier enquiry companyducted on the basis of the direction of this Court. We fail to see how the State Government can companyduct a fresh enquiry when this Court had specifically directed the District Collector to companyduct an enquiry to determine the caste status of Shiv Pujan Prasad, who found that he belonged to Manjhi caste which was accepted by the Department as a companysequence of which he was taken back and companytinued in service and was even given further promotions. Further, the Division Bench of the Allahabad High Court has also recorded a clear finding that Shiv Pujan Prasad had number forged his caste certificate dated 25.08.1985 showing his caste as Majhwar or Manjhi belonging to the scheduled caste and that he had number forged his earlier caste certificate issued on 22.02.1971. The Division Bench also recorded a clear finding rejecting the companytention of the respondents that Shiv Pujan Prasad had earlier obtained caste certificate fraudulently by playing fraud or misrepresenting the authorities and held that such a companytention was wholly misconceived and misplaced. The High Court also expressed the opinion that the criminal prosecution initiated against Shiv Pujan Prasad on the basis of the report of the Sub-Divisional Magistrate dated 30.03.2000 was number justified under law. The findings recorded by the Division Bench have number been challenged by the respondents before this companyrt and hence those findings have become final. In such a situation, we fail to see how the respondents can re-open the entire issue which was given a quietus in the year 1985 that too at the instance of a third party. On the strength of the order passed by the authorities, Shiv Pujan Prasad was promoted as Assistant Engineer and later as Executive Engineer and few days before his retirement he was dismissed from his service, which in the facts and circumstances of this case was totally unjustified. We have already indicated that while this matter was pending before this Court, Shiv Pujan Prasad died and, therefore, wife and children are claiming entire post retiral benefits including the provident fund, leave encashment, gratuity, group insurance, etc. and also the pension due to him which have been denied to them, which they are entitled to get. For the reasons stated above we are inclined to allow this appeal and set aside the judgment of the High Court passed in Writ Petition No.5709/2005 and also the order of dismissal dated 29.07.2005. There will be a further direction to the respondents to disburse entire post-retiral benefits including the provident fund, leave encashment, gratuity, group insurance, etc.

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 2403-05 of 1989 From Orders Nos. 568 to 570/88-A dated 31.10.1988 of the Customs Excise and Gold Control Appellate Tribunal, New Delhi in Appeal No. C A. No. 808 to 810 of 1987-A and C Misc. No. 390 of 1987-A. K. Dholakia and S.K. Kulkarni for the Appellant. Kapil Sibal, Additional Solicitor General, P. Parmeswaran and Mrs. R. Rangaswamy for the Respondent. The Judgment of the Court was delivered by KASLIWAL, J. All these appeals under Sec. 130 e of the Customs Act, 1962 hereinafter referred to as the Act are directed against the companymon order made by the Customs, Excise and Gold Control Appellate Tribunal, New Delhi dated 31.10.88 in C.A. Nos. 808 to 8 10/87-A. Brief facts of the case are that M s. Sharp Business Machines Pvt. Ltd., Bangalore hereinafter referred to as the companypany is a small scale manufacturing unit duly registered as such since 1984. The companypany had started the phased manufacture of plain paper companyiers and obtained a licence in this regard dated 25.11.86 for Rs.4,94,500 from the licensing authority. The companypany imported companyponents and companysumables in SKD CKD for plain paper companyiers. Three companysignments were imported from M s. Paralax Industrial Corp., Hongkong under airways bill numbers 098, 4960, 3120 098, 4960, 3116 and 098, 4960, 3105 all dated 21.1.87. The goods were received at the air cargo companyplex, Bangalore. The companypany sought the clearance of the imported goods under bills of entry Nos. 2044, 2045 and 2046 all dated 3.2.87. Similarly, the goods were also imported from M s. Alpha Papyrus Trading Co. Pvt. Ltd., Singapore under airway bill No. 098 4925 4914 dated 19.2.87. the clearance for this companysignment was sought under bill of entry No. 4993 dated 11.3.87. The companypany had declared the value of each of the companysignments at Rs.32,182 Rs.43.359 , Rs.5,412 and Rs.18,659 respectively in respect of the above mentioned bills of entry Nos. 2044, 2045. 2046 and 4993. The total value declared was Rs.99,612 under all the four bills. Proceedings were held before the Appraiser of Customs air cargo companyplex Bangalore for verification of the goods and their valuation etc. and the statements of the companypanys Managing Director Sh. Sadanand were also recorded on 11.2.87.10.3.87 and 18.3.87 under Sec. 108 of the Act. The Collector of Customs issued a numberice to the companypany under Sec. 124 of the Act on 4.3.87 relating to the first companysignment. In the said numberice it was stated that 4 items were number companyered by the licence and the same were liable for companyfiscation. However. on 30.3.87 the Collector issued another numberice in supersession of the earlier numberice dated 4.3.87. Notice was also issued on the same date in respect of bill of entry dated 11.3.87. By the said numberices the Collector proposed to enhance the value of the goods imported and further proposed to companyfiscate the entire goods imported and also to levy a fine and other penalties. The companypany was accused of misdescription of the goods, misdeclaration of value, suppression of the relationship with the suppliers, suppression of the place of origin of goods etc. The Collector by his order dated 13.4.87 decided all the points against the companypany. The Collector held that the quotations given by M s. Shun Hing Technology Ltd. alongwith the application for approval of their PMP during July 1986 should be taken as the companyrect value of the goods imported. and the plea of the companypany that it had received a special discount in view of the bulk purchases and promise of future purchases was number accepted. The Collector in these circumstances determined the price of the goods at Rs.7,15,485 for the purposes of Sec. 14 1 of the Act. The Collector thus held that there was a misdeclaration of the value to the tune of Rs.6,15,873 and the duty payable thereon would be Rs.10.96,228.20p. The Collector further held that the entire goods imported were liable to companyfiscation under Sec. 111 m of the Act. The Collector also held that the goods imported were fully finished companyiers in SKD CKD form and as such there was a misdeclaration that the imported goods were only parts of the companyiers. The Collector also held that description of most of the items in the invoices had been deliberately manipulated to suit the description in the licence. The goods companyered by three bills 2044, 2045 and 2046 were held to be one companysignment and one AWB and thus viewed as one companysignment, it amounted to the import of ten companyiers. The goods imported under the 4th bill No. 4993 were four fully finished companyiers in SKD CKD form. The Collector further held that in terms of numbere i to Imports Control Order. 1955 and Customs Tarrif Act, 1975, these goods will be deemed to be filly assembled companyiers for the purpose of valuation and licence. Thus the goods imported as fully assembled companyiers were number permissible to be imported and this was a clear violation of the Act and the terms of the licence. It was also held in the alternative that even if all the parts imported were viewed individually, numbere of the items tally with the licence. The Collector in this regard gave detailed reasons for arriving at this companyclusion. The Collector also held that the value of the parts imported for the purposes of Sec. 14 1 of the Act would be Rs.5,63,332 whereas the importers were permitted to import goods worth Rs.4,94,500. There was thus an excess of Rs.68,832 and as such the goods were liable to companyfiscation under Sec. III d of the Act. The Collector in these circumstances passed an order for companyfiscation of the entire goods with an option to the companypany to redeem them on payment of a fine of Rs.3 lacs. The Collector also imposed a fine of Rs.1 lac on the companypany and Rs. 1 lac on Sh. Sadanand the Managing Director of the Company. The companypany filed two appeals aggrieved against the companymon order of the Collector relating to both the numberices and a separate third appeal was preferred by the Managing Director before the Customs, Excise and Gold Control Appellate Tribunal. The Tribunal dismissed all the three appeals by a companymon order dated 31.10.88. The companypany and the Managing Director aggrieved against the order of the Tribunal have filed the above mentioned three appeals before this Court. One of the arguments raised before the Tribunal was that the Collector erred in treating SKD CKD parts of the companyiers imported, as assembled companyiers, for the purpose of Schedule I to the Imports Control Order. 1955 and the case Union of India v. Tarachand Gupta Bros., AIR 1971 SC 1558 applied on all force to the instant case. The Tribunal in this regard set aside the finding recorded by the Collector and placing reliance on a decision of the Calcutta High Court in Collector of Customs, Calcutta v. Misuny Electronic Works, 1987 30 ELT, 345 held that one has to look into the respective licence and number to the fact that if all the companysignments companyered by all the bills of entry are assembled together, there will be companyplete machines. The Tribunal, however, upheld the other findings recorded by the Collector to the effect that even if all the imported parts companytained in SKD CKD packs of companyiers were viewed individually the licence produced was number valid for any of the items imported. The. Tribunal thus held that the Collector was right in holding that the imported goods were number companyered by the valid licence. The Tribunal also held that the Collector was right in rejecting the price shown by the companypany in the invoices. The Tribunal also rejected the companytention made by the companynsel for the companypany that the valuation made by the Collector was exorbitant. As regards the question of imposing fine and penalty also the Tribunal found the order of the Collector as companyrect. and did number find any companyent reason to interfere in the order of the Collector. We have heard Mr. Dholakia for the appellants and Mr. Kapil Sibley learned Addl. Solicitor General for the respondents. It was argued by Mr. Dholakia that the Tribunal companymitted a serious error in holding that the invoices submitted by the companypany were undervalued and companyld number be relied upon for determining the companyrect value of the goods imported. It was companytended that the Collector Customs was number companyrect in determining the value of the imported goods on the basis of the quotations of M s. Shun Hing Technology Ltd., Hongkong. The quotation of Shun Hing indicated prices at Hongkong and number the place of importation. There was numberother material on record to determine the value of the imported goods. It was thus companytended that in the absence of any other relevant material, the invoice price has to be taken as the basis for valuation. It was also submitted that there was numberjustification in discarding the price shown in the invoices which companytained the companyrect value of the goods imported and in case of Customs authorities were number placing reliance on such prices mentioned in the invoices. then the burden lay on the Customs department to find out the companyrect value of the goods by companylecting material and other adequate evidence before enhancing the value of the imported goods. The onus to prove the charge of undervaluation against the companypany was on the Customs department and the evidence relied upon by them, as companytained in the adjudication order. is number at all sufficient to discharge that onus. It was further argued that any reliance placed on the quotations furnished at the time of submitting the application for grant of licence was wholly erroneous. At the time of submitting the application for grant of licence the prices are quoted for fixing the upper limit of the value of the licence. When the actual purchase transactions were entered into, the companypany negotiated for the price and having regard to the quantum of purchase and the prospects of future sales, the companypany was given 25 , companynt by the suppliers. It was also submitted that the prices quoted by M s. Shun Hing Technology Ltd., Hongkong were number the value of the companyponents imported by the companypany in SKD CKD form of plain paper companyiers. Thus any price quoted by M s. Shun Hing can never form any basis for arriving at a proper and companyrect valuation of the goods imported by the companypany in the present case. On the other hand it was submitted by the learned Addl. Solicitor General that it has been admitted by Sh. P.N. Sadanand, Managing Director of the companypany in his statement dated 10.3.87 that the goods imported in the present case by the companypany were of Japanese origin and manufactured by M s. Matushita Electric Company Ltd., Japan. M s. Shun Hing Technology Ltd., Hongkong were the authorised agents of M s. Matushita Electric Co. Ltd., Japan, who are the manufacturers of Panasonic companyies. He further admitted that numbermally the Panasonic companyies were supplied to Hongkong in fully assembled form and then they were dismantled in Hongkong by the agents and thus supplied in India in SKD CKD form. Sh. Sadanand admitted to have visited Hongkong during January, 1987 alongwith his Engineer Sh. K.S. Radhakrishan for purchase of 10 companyiers--6 Nos. Model EP 1300 and 4 Nos. Model EP 2625 and that he alongwith the Engineer dismantled the fully assembled companyiers. It was submitted that the goods companytained in the cartons companyprised of all the parts required for full and companyplete assembly of companyiers. At the time of examination of the goods companyered by Bill of Entry No. 4993 dated 11.3.87, it was found that out of the six cartons, four cartons were the original cartons used for packing fully finished assembled companyiers Model EP 2625. The description, model number, brand, manufacturer and companyntry of origin manufacture of the companyier viz. Plain Paper Copier EP 2625 Panasoni, Matushita Electric Co. Ltd. and Japan respectively were clearly marked on these four cartons, one set of cassettes, trays, companyers, one drum, one developer unit and a bottle of developer. It was thus argued that the original packing cartons used for packing fully finished companyiers are numbermally supplied only if fully finished companyiers are purchased. It was submitted that the adjudicating authority has given detailed reasons for showing that the goods imported were number companyponents of plain paper companyiers as declared. In fact, the companypany had purchased 14 fully finished companyiers 10 in Hongkong and 4 in Singapore and had then dismantled for importing the same in the guise of companyponents of companyiers. The companypany had submitted application for approval of their phased manufacturing programme to the Development Commissioner, Small Scale Industries Govt. of India, New Delhi in July, 1986 and alongwith this application they had also submitted the quotations received by them from M s. Shun Hing Technology Ltd., Hongkong which companyered all the items imported except a few items like toner, drum and table for model FP 2625. The companypany in the present case number only violated the terms and companyditions of licence but also companymitted a companyplete fraud in importing fully finished companyiers which was a totally prohibited item, in the guise of separate companyponents and accessories by dismantling the fully finished companyiers. In the above circumstances the adjudicating authority was fully justified in number believing the value mentioned in the invoices and in placing reliance on the prices mentioned in the quotations given by M s. Shun Hing Technology Ltd., Hongkong. It was further argued by Mr. Sibbal that the prices quoted by M s. Shun Hing were based on the prices given by the manufacturers i.e. M s. Matushita Electric Co. Ltd., Japan and there was numberquestion of supplying the companyponents of the companyiers on a lesser price than given by the manufacturers themselves. The companypany had a special relationship with M s. Shun Hing Technology Ltd., Hongkong as a sort of companylaborator with numberformal agreement and that M s. Paralax Industrial Corp., Hongkong were in turn agents of M s. Shun Hing Technology Ltd., Hongkong. We have companysidered the submissions made by learned companynsel for the parties. Section 14 of the Act provides for valuation of goods for the purpose of assessment. Section 14 1 which is relevant for our purposes reads as under Valuation of goods for purposes of assessment For the purposes of the Customs Tariff Act, 1975 51 of 1975 , or any other law for the time being in force whereunder a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the companyrse of international trade, where the seller and the buyer have numberinterest in the business of each other and the price is the sole companysideration for the sale or offer for sale Provided that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under Section 46, or a shipping bill or bill of export, as the case may be, is presented under Section 50. According to the above provision the value of the goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation, in the companyrse of international trade where the seller and the buyer have numberinterest in the business of each other and the price is the sole companysideration for the sale or offer for sale. In the present case the companypany itself had produced a companyy of the quotations received by them from M s. Shun Hing Technology Ltd., Hongkong in respect of the companyiers and other items imported alongwith their application for approval of their phased manufacturing programme. The companypany itself having produced these quotations, they cannot dispute the companyrectness of the prices mentioned therein. The companypany has number only number disputed the companyrectness of these quotations but has number produced any other material on record to show that the value mentioned in the invoices was the companyrect market value of the goods imported at the relevant time. The adjudicating authority in these circumstances was perfectly justified in taking the prices mentioned in the quotations as a basis for determining the companyrect value of the imported goods. Mr. Dholakia next companytended that the Tribunal itself had set aside the finding of the adjudicating authority on the question of treating SKD CKD packs of the companyiers imported companyprised of all the 100 companyponents of companyiers. The companypany had tried to practice a fraud in defeating the import policy itself. The intention and purpose of the import policy was to give incentive and encouragement to the new entrepreneurs establishing small scale industries and in the first phase to import 62 of the companyponents of the companyiers and the balance of 38 was to be manufactured by them indigenously. According to the import policy this percentage of 62 was to be reduced in the subsequent years. The import policy was number meant for such entrepreneurs who instead of importing 62 of the companyponents, imported 100 of the companyponents of a fully finished and companyplete goods manufactured by a foreign companyntry. It is an admitted position that fully finished plain paper companyiers were a prohibited item for import and thus the device adopted by the companypany in the present case was a companyplete fraud on the import policy itself. Apart from the above circumstances in our view the Tribunal was number right in setting aside the finding of the adjudicating authority and in taking the view that one has to look into the respective licence and number to the fact that if all the companysignments companyered by all the bills of entry assembled together, there will be a full and companyplete machinery. It is an admitted position that goods companyered by the three bills of entry Nos. 2044, 2045 and 2046 were all dated 3.2.87 and had been shipped from Hongkong on the same day i.e. on 21.1.87. The entire goods had arrived on the same day and by the same flight on 30th January, 1987. The goods companyered under the three bills of entry have been supplied by the same supplier viz. M s. Paralax Industrial Corp., Hongkong. The goods companyered by these bills of entry are ten numbers companyiers in SKD CKD companydition, accessories, spares, companysumables and excess items. The goods companyered by the 4th bill of entry are four numbers companyiers in SKD CKD companydition and companysumables. the licence produced is valid for certain companyponents and is number valid for fully assembled companyiers. The fully assembled companyiers are the end products of the importers and hence cannot be imported by them. Plain Paper Copiers are electronic equipments. The case Union of India v. Tara Chand Gupta Bros. supra lends numberassistance to the appellants in the facts and circumstances of the present case. In the above case Tara Chand Bros. held an import licence dated July 10, 1956 permitting them to import parts and accessories of motorcycles and scooters as per Appendix XXVI of the Import Policy Book for July-December, 1956. Under the said licence, the respondents in that case imported certain goods which arrived in two companysignments, each companytaining 17 cases by two different ships. According to the respondents, the goods so imported by them were motorcycle parts which their licence authorised them to import. The Customs authorities, on the companytrary held, on the examination of the goods, that they companystituted 51 sets of Rixe Mopeds companyplete in a knocked down companydition. After holding an inquiry the Deputy Collector directed companyfiscation of the said goods with an option to the respondents to pay certain sums in lieu of companyfiscation and also personal penalties. That order was passed on the basis that the goods imported were number parts and accessories of motorcycles and scooters presumably under entry 295 of the Schedule to the Import Control Order but were motorcycles scooters in companypletely knocked down companyditions, prohibited under remark II against entry 294, a licence in respect of goods companyered by it would authorise import of motorcycles and scooters. The Deputy Collector held that though the goods were number in companypletely knocked down companydition it made numberdifference as the tyres, tubes and saddles were easily obtainable in India and their absence did number prevent the machines being otherwise companyplete. He also found that there was a trade practice under which traders were supplying motorcycles without tyres, tubes and saddles unless the purchaser specially asked for these parts. Accompanyding to him the goods companyld number be regarded as spare parts but were Moped in disassembled companydition. The respondents in the above case filed a civil suit and the matter went in appeal to the High Court. The Letters Patent Bench of the High Court held that the Collectors jurisdiction was limited to ascertain whether or number the goods imported by the respondents were spare parts and accessories companyered by entry 295 in respect of which they undoubtedly held the licence, and therefore, he companyld number have lumped together the two companysignments which. though imported under one licence, arrived separately and were received on different dates and companyld number have companye to the companyclusion that the plaintiffs had imported 51 Rixe Mopeds in companypletely knocked down companydition. The respondents were entitled to import the said goods and therefore. Section 167 8 of the Sea Customs Act did number apply and the respondents companysequently companyld number have been held guilty of breach either of that Section or Section 3 of the Imports Exports Control Act. It was further held that the decision of this Court in Girdhari Lal Bansi Dhar v. Union of India, 1964 7 SCR 62 did number over rule but only distinguished judgment in P. Anand v. Mls. T.M, Thakore Co., C.A. No. 4/1959 decided on August 17, 1960 H.C. and therefore, the binding force of that decision remained unshaken. The Union of India came in appeal to this Court by grant of certificate. This Court held as under Under entry 295, except for rubber tyres and tubes for whose import a separate licence companyld be obtained under entry 41 of Part V, there are numberlimitations as to the number or kind of parts or accessories which can be imported under a licence obtained in respect of the goods companyered thereunder. Prime facie, an importer companyld import all the parts and accessories of motor cycles and scooters and it would number be a ground to say that he has companymitted breach of entry 295 or the licence in respect of the goods described therein, that the parts and accessories imported. if assembled, would make motor cycles and scooters in CKD companydition. 3There are numberremarks against entry 295. as there are against entry 294, that a licence in respect of goods companyered by entry 295 would number be valid for import of spares and accessories which, if assembled, would make motor cycles and scooters in CKD companydition. Apart from that, the goods in question did number admittedly companytain tyres. tubes and saddles, so that it was impossible to say that they companystituted motor cycles and scooters in CKD companydition. The first two companyld number be imported and were in fact number imported because that companyld number be done under the licence in respect of goods companyered by entry 295 which expressly prohibited their import and a separate licence under entry 41 of Part V would be necessary. The third, namely. saddles were number amongst the goods imported. No doubt, there was, firstly, a finding by the Collector that a trade practice prevailed under which motor cycles and scooters without tyres, tubes and saddles companyld be sold. Secondly. the tyres and tubes companyld be had in the market here and so also saddles, so that if an importer desired, he companyld have sold these goods as motor cycles and scooters in CKD companydition. The argument was that since there was a restriction in entry 294 against imports of motor cycles and scooters in CKD companydition, the importer companyld number be allowed to do indirectly what he companyld number do directly. The argument apparently looks attractive. But the question is what have the respondents done indirectly what they companyld number have done directly. In the absence of any restrictions in entry 295, namely, that a licence in respect of goods companyered by entry 295 would number be valid for import of parts and accessories which. when taken together. would make them motor cycles and scooters in C.K.D. companydition. the respondents companyld import under their licence all kinds and types of parts and accessories. Therefore, the mere fact. that the goods imported by them were so companyplete that when put together would make them motor cycles and scooters in C.K.D. companydition. would number amount to a breach of the licence or of entry 295. Were that to be so, the position would be anomalous as aptly described by the High Court. Suppose that an importer were to import equal number of various parts from different companyntries under different indents and at different times, and the goods were to reach here in different companysignments and on different dates instead of two companysignments from the same companyntry as in the present case. If the companytention urged before us were to be companyrect, the Collector can treat them together and say that they would companystitute motor cycles and scooters in C.K.D. companydition. Such an approach would mean that there is in entry 295 a limitation against importation of all parts and accessories of motor cycles and scooters. Under that companytention, even if the importer had sold away the first companysignment or part of it, it would still be possible for the Collector to say that had the importer desired it was possible for him to assemble all the parts and make motor cycles and scooters in C.K.D. companydition. Surely, such a meaning has number to be given to entry 295 unless there is in it or in the licenee a companydition that a licensee is number to import parts in such a fashion that his companysignments, different though they may be, when put together would make motor cycles and Scooters in C.K.D. companydition. Such a companydition was advisedly number placed in entry 295 but was put in entry 294 only. The reason was that import of both motor cycles and scooters as also parts and accessories thereof was permitted, of the first under entry 294 and of the other under entry 295. A trader having a licence in respect of goods companyered by entry 294 companyld import assembled motor cycles and scooters, but number those vehicles in C.K.D. companydition, unless he was a manufacturer and had obtained a separate licence therefore from the Controller of Imports who, as aforesaid. was authorised to issue such a licence on an ad hoc basis. Thus the restriction number to import motor cycles and scooters in K.D. companydition was against an importer holding a licence in respect of goods companyered by entry 294 under which he companyld import companyplete motor cycles and scooters and number against an importer had a licence to import parts and accessories under entry 295. If Dr. Syed Mohammads companytention were to be right we would have to import remark ii against entry 294 into entry 295, a thing which obviously is number permissible while companystruing these entries. further, such a companydition, if one were to be implied in entry 295, would number fit in, as it is a restriction against import of motor cycles and scooters in C.K.D. companydition and number their parts and accessories. There is, therefore, numberquestion of a licensee under entry 295 doing indirectly what he was number allowed to do directly. What he was number allowed to do directly was importing motor cycles and scooters in C.K.D. companydition under a licence under which he companyld import companyplete motor cycles and scooters only. That restriction, as already observed, applied to a licensee in respect of goods described in entry 294 and number a licensee in respect of goods companyered by entry 295. The result is that when the Collector examines goods imported under a licence in respect of goods companyered by entry 295 what he has to ascertain is whether the goods are parts and accessories, and number whether the goods, though parts and accessories, are so companyprehensive that if put together would companystitute motor cycles and scooters in C.K.D. companydition. Were he to adopt such an approach, he would be acting companytrary to and beyond entry 295 under which he had to find out whether the goods imported were of the description in that entry. Such an approach would, in other words, be in number-compliance of entry 295. This Court distinguished the case of Girdhari Lal Bansi Dhar supra by making the following observation It will be numbericed that the Bombay decision in D.P. Anands case was number dissented from but only distinguished, and therefore, the High Court in the present case was justified in following it. It is true, however, that companynsel for the appellant there relied on that decision in support of his proposition that a ban on companypleted article cannot be read as a ban on the importation of its companystituents, which, when assembled, would result in the prohibited article, and this Court pointed out in answer that in D.P. Anands case, the imported companyponents companyld number have when assembled, made up the companypleted article because of the lack of certain essential parts which admittedly were number available in India and companyld number be imported. The real distinction, however, between the two cases was that the decision of the Collector in D.P. Anands case was number, as was the decision in Girdbari Lals case under which of the two companypeting entries the imported goods fell but that the imported goods in question, if assembled together, would number be the goods companyered by the entry, and therefore, number the goods in respect of which the licence was granted. Further, the articles in question, even when assembled together, were number prohibited articles as in Girdhari Lals case. Girdhari Lal case is clearly distinguishable because it is number as if motor cycles and scooters are prohibited articles as was the case there. The restriction is number against licensees importing motor cycles and scooters under entry 294 and parts and accessories under entry 295 but against the licensees under entry 294 importing motor cycles and scooters in CKD companydition. The question in the instant case was number under which of the two entries, 294 or 295, the goods fell, but whether the goods were parts and accessories companyered by entry 295. In our view the Tribunal was number companyrect in placing reliance on the case Union of India v. Tara Chand Gupta Bros. supra in the facts and circumstances of the present case. In the case before us the import of fully assembled companyiers was prohibited. The appellant was only entitled to import 62 of the companyponents. As already mentioned above, the device adopted by the appellant in the present case was a companyplete fraud on the Import Policy and the appellant was doing indirectly what he was number permitted to do directly. We are further of the view that the facts in the present case are more akin and similar to the facts of the case Girdhari Lal Bansi Dhar v. Union of India, supra which was distinguished in the case of Union of India v. Tara Chand Gupta Bros. supra . Mr. Dholakia also tried to assail the finding recorded by the Collector and upheld by the Tribunal and argued that the companyponents imported by the appellant tallied with the parts which were permitted under the licence. We do number find any force in this submission. The Collector has given detailed reasons for holding that the imported goods were number companyered by the valid licence and the Tribunal having upheld such finding, the same cannot be challenged by the appellant before this Court. Mr. Dholakia also submitted that in the facts and circumstances of the case the order companyfiscating the goods and imposing fine and penalty both on the companypany and Sh. Sadanand, the Managing Director was too high and ought to be reduced. We find numberforce in this submission as well. This is a case where the appellant had number only violated the terms and companyditions of the licence but also companymitted a fraud on the Import Policy itself. Thus we find numberground or justification to reduce the penalty or fine.

Lord Justice Thomas: In 2003 the claimant, which was an organisation concerned with the provision of healthcare, arranged for a Mr Cooper, a man then aged 78, to have a cataract operation at a private clinic in Huntingdon. The operation was carried out by a German ophthalmic surgeon, Dr Schock. The claimant was paid £1,475 by the patient, Mr Cooper. There is a significant factual issue as to whether Mr Cooper in fact needed the operation or has benefited from it. The Primary Care Trust of the area, who are the respondents to the proposed judicial review, reimburse the costs of operations undertaken privately if there was prior authorisation. The tariff for an operation of this kind, if it had been pre-authorised was £756. It was this sum that the claimants sought be paid by the Primary Care Trust to Mr Cooper. The Primary Care Trust declined to pay. Over four years ago on 13 January 2004 the claimant commenced proceedings, alleging that the failure to pay was a breach of Article 49 EC. It was stated that the Primary Care Trust was not entitled to impose a requirement of prior authorisation, as this was an unjustifiable restriction on the ability of the claimants to provide services as required by Article 49 EC. The particular relief sought is important and is to be found in the claim form. What the claimants sought was a mandatory order that the defendant "reimburse the Claimant's patient, Mr Harry Cooper, at the appropriate NHS rate for his cataract surgery performed by the Claimant's surgeon on 10 October 2003." They also sought a declaration that the defendant is obliged: "to reimburse patients under its care for treatment by EU providers such as those contracted to the claimant on the terms set out by the European Court of Justice. In particular, a declaration that the Defendant may not require advance authorisation for patients undergoing outpatient treatment, whether in hospitals or elsewhere." Progress in the proceedings was delayed as a result of a reference made to the European Court of Justice in R (Watts) v Bedford Primary Care Trust (C-372/04), which was decided by the ECJ on 6 May 2006. After that decision the proceedings that had been brought by the claimants continued and came to trial before Bennett J on 20 November 2007. At the time the matter came before Bennett J the position on the evidence before him was the following: (1) No claim was being made by Mr Cooper. (2) Mr Cooper had paid the claimants in full; they were not out of pocket. (3) The claimants had, despite the request of the Primary Care Trust, failed to produce the written consent of Mr Cooper to the proceedings being brought by the claimants. The judge took the view that the absence of any statement from Mr Cooper stating that he wished to be reimbursed by the Primary Care Trust spoke for itself. The judge decided, in the light of the position as it appeared to him on the evidence before him, that the argument being advanced by the Primary Care Trust (supported by the Department of Health) to the effect that, as Mr Cooper was making no claim, the claim by the claimants was misconceived, was a submission that he should hear at the outset of the trial before him, before turning to consider the more difficult factual issues that were raised in the application. Bennett J upheld the submission made by the Primary Care Trust and by the Department of Health. Although he accepted that the claimants had what he described as a commercial interest in establishing that the Primary Care Trust was bound to make a partial reimbursement for private operations, however, in relation to this particular case, as there was nothing due to the claimant and there was no claim by Mr Cooper, the Primary Care Trust had been under no duty to consider it. He had regard to CPR Part 54.1 where a claim for judicial review is defined as: "a 'claim for judicial review' means a claim to review the lawfulness of - (1) enactment; or (2) a decision, action or failure to act in relation to the exercise of a public function." He concluded that, on the facts as put before the court on the claimants' case, there was no decision or failure to act in relation to the exercise of a public function, as the only public function in issue was the question as to whether the Primary Care Trust was obliged to reimburse Mr Cooper and Mr Cooper had not made a claim against it. He went on to say that if Mr Cooper had a claim, it was a claim that should have been brought by him but, on the facts as they were before him, the claimants had no claim. He pointed out that the community law cases relied on by the claimants did not help; they were all claims by persons which sought to assert their own rights and not someone else's. He therefore concluded that the claim could not succeed and it was unnecessary for him to consider the further issues that arose on the claimants' claim for judicial review and the defence raised to it. The claimants sought, when their claim had thus been refused by Bennett J, permission to appeal. That permission only relates to the first ground of the claim, namely that relating to a mandatory order that the Primary Care Trust reimburse Mr Cooper at the appropriate NHS rate. The second claim for relief is no longer pursued. Permission to appeal was refused by Mummery LJ on 8 February 2008; he considered that the judge had come to the correct conclusion. Two days later, on 10 February 2008, a witness statement was provided by Mr Cooper, the patient. He said at paragraph 4: "I was from the outset and remain entirely in favour of the Claimant's application for my fee to be refunded to me by the PCT. I would have taken action myself, were it not for the fact that litigation would have been too expensive and risky for someone in my position. The Claimant sent me a copy of the claim bundle and kept me informed at various stages. I have been served by the Claimant with a copy of the Appeal Bundle." It is convenient first to consider the new evidence from Mr Cooper and whether this court would consider admitting it. We do so even though there is no application to that effect. It seems to me that it would be very difficult to see how this evidence could properly be admitted under the tests applicable in this court, which substantially follow the law as established by the well-known decision in Ladd v Marshall. This material could easily have been made available at the time of the hearing before Bennett J and there is no reason, therefore, why this court should now admit it. However, even assuming it could be admitted before this court and an application to that effect were to succeed once it had been made, I do not think that it would make any difference to the outcome of this application. Dr Roberts, in his submissions to us (both in his written skeleton argument and in his oral submissions today) has sought to try and persuade us that the claimant is entitled to bring these particular proceedings for judicial review. He has referred us to the decisions in various cases and argued that there is standing under community law to bring the claim. However, in my view this case is not about standing. This case is about whether the particular and singular procedure that the claimants have chosen is one that can be brought within the terms of Part 54 which I have set out. It is clear to me that when regard is had to that Rule, there was no decision, action or failure to act, in relation to the exercise of a public function in relation to this claim. Even on the evidence that has been put before this court as late as 10 February 2008 there is still no claim that has been made by Mr Cooper against the Trust; there was therefore no decision, action or failure of the Trust. It seems to me that that is the short answer to this application. The decision made by the judge does not seek to say there is no avenue under the law of this jurisdiction of England and Wales to bring an appropriate claim in respect of the issue about which these claimants complain. It is clear that the claim made involves a number of difficult factual issues; these include the issue as to the entitlement of the claimants and Mr Cooper; the question as to whether it was in hospital treatment or not; the issue as to the circumstances in which prior authorisation is sought and the justification for it; the factual issues in relation to whether the operation was necessary or not and other matters that go to circumstances which it would be necessary for a court to consider, if it was to make a decision under Article 49 EC. Some of those issues are by no means at all appropriate for a judicial review action in any event. If Mr Cooper sought the reimbursement of the £747 which is in issue it would be expected that he would do that by an ordinary action as a private law claim; he has a remedy but that is not being pursued. It seems to me, therefore, that the judge was entirely correct in reaching the decision he did and that the route by which these claimants have sought to bring their claim is misconceived. In those circumstances, as the Community leaves these issues to the national court and as the point is as narrow as the one I have set out, it seems to me this application should be refused as there is no real prospect of persuading the full court to the contrary. Lord Justice Tuckey: I agree. Order: Application refused.

MR JUSTICE CRESSWELL: The offences described in this judgment relate to two former partners of the appellant, to whom we will refer as LB and SM. On 20th September 2002, at the Kingston-upon-Thames Crown Court the appellant, who is 24, pleaded guilty to one count of putting a person in fear of violence by harassment and one of false imprisonment. On 1st November 2002 he was sentenced to a two-year community rehabilitation order, and a two-year restraining order was imposed under section 5 of the Protection from Harassment Act 1997, prohibiting him from contacting LB or her family, directly or indirectly, and from coming within one mile of an address in Hampton, Middlesex. The order directed that the appellant live at an address in Somerset after spending one night at his grandparents' home in Bedford, Middlesex. On 20th March 2003, at the Kingston-Upon-Thames Crown Court, for breaching the restraining order, the community rehabilitation order was revoked and the appellant was sentenced to nine months' imprisonment. A restraining order was imposed which replaced the previous order. The replacement order prohibited the appellant from contacting LB or any member of her family directly or indirectly and from entering the Feltham or Hanworth area of Middlesex. On 19th April 2005, at the Feltham Magistrates' Court, the appellant admitted breaching the replacement restraining order and was committed to the Crown Court for sentence. The order had effect until 1st November 2004. On 12th May 2005, at the North Surrey Magistrates' Court, the appellant pleaded guilty to offences of common assault and witness intimidation and was committed to the Crown Court for sentence. On 6th July 2005 at the Kingston-upon-Thames Crown Court the appellant was sentenced by Her Honour Judge Matthews QC as follows. The committal for sentence from North Surrey, offence one, common assault of SM, four months' imprisonment; offence two, witness intimidation (SM), nine months' imprisonment consecutive; committal for sentence from Feltham, breach of a restraining order, three months' imprisonment consecutive. The total sentence of imprisonment amounted to 16 months' imprisonment. In relation to LB the judge made a restraining order which prohibited the appellant from (a) contacting LB or her family directly or indirectly for a period of five years, and (b) entering within one mile of Feltham town centre, or entering within two miles of Hanworth town centre for a period of two years. In relation to SM, the judge made a restraining order for a period of five years which prohibited the appellant from (a) contacting SM or her family directly or indirectly, and (b) coming within a mile of a specified address in Stanwell. The appellant appeals against the restraining order relating to LB by leave of the single judge. The short facts of the offences were as follows. On 11th May 2004, LB received a telephone call from the appellant, who said, "Don't hang up I need you". He told her that his uncle was ill, which turned out to be untrue. The call was traced and it came from a telephone box near the appellant's home. On 25th June 2004, the appellant went to the home of his partner SM. During a dispute he took hold of a Stanley knife and used it to harm himself. The emergency services were called and the appellant was taken to hospital. On 26th June the appellant went back to SM's home purporting to collect belongings. There was a dispute which resulted in the appellant hitting SM on the shoulder with his open palm, thereby causing bruising. A neighbour came to the door concerned about what was going on. When SM went to the door to try and get away, the appellant pulled her from the door. The police were called. There was a second offence of common assault on 13th July 2004 involving SM. On 9th November of the same year, at the North Surrey Magistrates' Court, for that offence the appellant was sentenced to an 18 month community rehabilitation order. At about 11 pm on 18th July 2004, SM was preparing to go to bed. The appellant turned up at her home, let himself in, went up to the bedroom and said he had popped in for a coffee and a chat. He sat on the end of the bed and asked SM whether she was going to press charges. He put his hand across her throat and held her throat so that she had difficulty breathing. He eventually calmed down and left. The incident lasted about an hour. The appellant was arrested on 19th July 2004. In interview he made no comment. We have seen a number of reports: an addendum report dated 23 May 2005 by Dr Doctor, a consultant psychiatrist; a letter from the Domestic Violence Intervention Project; a letter from John Laing Training; and a pre-sentence report. Miss Culling in her submissions before this court, and in her skeleton argument, emphasises that the only part of the sentence against which the appellant wishes to appeal is the part of the sentence prohibiting the appellant from going within one mile of Feltham town centre and within two miles of Hanworth. Miss Culling submits as follows. That part of the sentence is unnecessary and manifestly excessive, as it would have the effect of rendering the appellant homeless upon his release from custody. The sentence is wrong in principle for the same reasons. The appellant's only place of abode is with his grandparents in Bedford. This is part of Feltham and within two miles of Hanworth. Such a sentence would render him homeless upon his release from custody and thereby hinder his rehabilitation into the community. The objective of preventing contact between the appellant and LB would be equally well achieved by the part of the order which prohibits him from contacting LB or her family. LB did not want her current address to be given in open court and it was therefore not possible to frame a restraining order in the form "within X miles of [a stated address]". The distance between the appellant's grandparents' home and the centre of Feltham exceeds one mile, but the distance between the appellant's grandparents' home and the High Street, which is the main shopping area, is barely one mile. The town centre shopping area extends slightly north-west of the High Street, which is further towards the appellant's grandparents' address and within one mile thereof. Everything depends upon how the town centre is defined. The distance between the appellant's grandparents' home and the nearest edge of the main part of Hanworth appears to be two and a half to three miles. However, Hanworth Park and Uxbridge Road, which could arguably said to be part of Hanworth, appear to be not quite two miles away. Again everything depends on how Hanworth is defined. We turn to consider these submissions. The power to impose the order with which this court is concerned is set out in section 5 of the Protection from Harassment Act 1997, as subsequently amended. We refer to subparagraphs (1), (2), (3), (4) and (7) of section 5. A restraining order must be drafted in clear and precise terms, so there is no doubt as to what the defendant is prohibited from doing. Orders should also be framed in practical terms, for example it may be preferable to frame restriction orders by reference to specific roads or a specific address. A radius restriction will not necessarily invalidate an order. If necessary a map should be prepared; R v Robert Beck, 28th July 2003, Mance LJ, paragraph 9. For the reasons advanced by Miss Culling in the present case, the second limb of the restraining order in relation to LB was not drafted in clear, precise, or practical terms. There is uncertainty as to what is intended by the town centre of Feltham and the Hanworth town centre, and where the town centres are found. It is most important that a defendant, subject to such a restraining order, should know in precise and clear terms what is and what is not prohibited. In all the circumstances, we consider that the second limb of the restraining order in the case of LB should be deleted. We amend the first limb to prohibit the appellant from contacting LB or her immediate family in any way whatsoever, directly or indirectly, for a period of five years. Thus, the first limb will stand in the case of LB, amended as above. Both limbs of the order in relation to SM will stand. To this limited extent this appeal is allowed.

Sathasivam, J. Leave granted in all the special leave petitions. These appeals seek to challenge the companymon judgment and order of the Division Bench of the High Court of Karnataka dated 05.06.2009 arising out of Writ Appeal No. 5084 of 2008 and allied matters and the decision of the State Government dated 26/27.02.2002 as well as the Central Government dated 29.07.2003. The appellants in these appeals are Sandur Manganese Iron Ores Ltd. in short Sandur and M s MSPL Ltd. The principal respondents are M s Kalyani Steels Ltd. in short Kalyani and M s Jindal Vijayanagar Steels Ltd. in short Jindal . Apart from these, the State of Karnataka and the Union of India are also arrayed as respondents. Factual matrix The case of Sandur Petitioner in SLP C No. 22077 of 2009 is as follows Shri Y.R. Ghorpade, ex-Ruler of Sandur State, was granted lease for mining of Iron Manganese Ores under Order No. GEO.Ms.068 dated 26.02.1953, for a period of 20 years companymencing from 01.01.1954 to the extent of 29 sq. miles, falling within the boundaries of the Sandur State. On 18.01.1954, the appellant-Company was incorporated as a Private Limited Company under the provisions of the Companies Act, 1956. On 21/23.06.1956, a lease was transferred in favour of the Company as per Government Order No. I.1432-38 GE43.55-22. On 28.11.1964, the Company was companyverted into a Public Limited Company. In 1965, the Company, with the aim of value addition to Ores mined by the Company and also to industrial area, set up a 15 MVA Metal and Ferro Alloys Plant at Vyasankere near Hospet at a substantial capital companyt. In 1980, Sandur also set up two more 20 MVA Furnaces in the Plant for manufacture of Ferro-Silicon by entering into an agreement with the State Government and the Karnataka Electricity Board to receive power at a viable tariff. On 19.09.1973, upon applying for renewal of the abovesaid lease, the Company was allotted an area of 20 sq. miles only instead of 29 sq. miles which was leased earlier. However, the Company was further granted renewal of lease for another 1.46 sq. miles out of the area held earlier. On the very same date, the State Government deleted an area of 9 sq. miles from the appellant-Companys lease agreement on the ground that the said area is reserved for exploitation by the National Mineral Development Corporation in short NMDC - a Government of India Undertaking. When the companypany numbericed that the NMDC did number initiate any Mining Lease Application on the said area, then on 29.09.1987, it applied for mining lease over an area of 2 sq. miles within the said deleted area. On 25.01.1989, the State Government rejected the application on the ground that the area applied for was already reserved by NMDC. However, NMDC was number granted lease and in 1992, one Sri H.G. Rangangoud was granted 60 Hectares out of the same applied area. Again, on 24.06.1993, again the Company applied for grant of lease over an area of 513.16 Hectares within the area deleted from its original lease but it was rejected by the State Government on the ground that the area applied by them has overlapped with the area granted to one Sri Rangangoud and nine others. On 11.12.1993, the Company challenged the above decision of the State Government by filing a Revision Petition before the Government of India, Ministry of Coal and Mines, New Delhi. On 09.04.1999, the Government of India by holding that the order passed by the State Government was in violation of Rule 26 1 of the Mineral Concession Rules, 1960 hereinafter referred to as MC Rules and opposed to the principles of natural justice remanded the matter to the State Government for early disposal as per the provisions of Mines Minerals Development and Regulation Act, 1957 hereinafter referred to as the MMDR Act and the Rules framed thereunder. On 26/27.02.2002, the Company got a letter from the State Government that out of the area of 513.16 Hectares applied for by it, only an extent of 256 Hectares 640 acres was available and it companyld choose either Block A 168 Acres or 67 Hectares or Block B 472 Acres or 189 Hectares . On 13.05.2002, the Company filed a revision petition before the Government of India against the said decision of the State Government. On 15.03.2003, the State Government issued a Notification in exercise of its power under Rule 59 of the MC Rules reserving the entire area calling for applications from the general public for grant of mining leases and by numberifying large extent of previously held areas as available for grant of mines including the area applied by the appellant-Company. On 16.04.2003, the appellant-Company, by way of abundant caution, applied afresh for grant of mining lease over an area of 200 Hectares in the numberified area without prejudice to its rights for companysideration of its earlier application dated 24.06.1993. On 29.07.2003, the Government of India allowed the revision petition filed by the appellant- Company and directed the State Government to companysider the application dated 24.06.1993 filed by the appellant- Company on merits, in terms of order dated 09.04.1999 of the Revisional Authority and pass a final order in the case. In spite of this order, the State Government has number passed any order. On 06.12.2004, a letter was issued by the State Government seeking approval of the Central Government for grant of lease to other applicants i.e. Jindal Kalyani. Being aggrieved by the said recommendation, on 11.06.2007, the appellant-Company filed Writ Petition No. 8971 of 2007 before the High Court. The learned single Judge clubbed this writ petition along with W.P. No. 21608 of 2005 filed by another applicant - MSPL Ltd. On 07.08.2008, the learned single Judge quashed the Notification dated 15.03.2003 and the Mining Licences granted in favour of Jindal and Kalyani with certain observations. On 22.08.2008, Jindal-Respondent No.5 herein filed A. No. 5026 of 2008 in the High Court. Being aggrieved by the order passed by the learned single Judge, Sandur preferred Writ Appeal No. 5084 of 2008 before the High Court. By the impugned companymon order dated 05.06.2009, the Division Bench of the High Court set aside the order of the learned single Judge dated 07.08.2008 and upheld the validity of Notification of the State Government dated 15.03.2003 and the proceedings dated 06.12.2004 and the companysequential approval of the Central Government were held valid. Aggrieved by the said order, the appellant-Company has filed S.L.P. C No. 22077 of 2009 before this Court. The case of MSPL Petitioner in SLP C Nos. 22943- 22952 of 2009 is as follows MSPL Limited filed above SLPs against the companymon judgment and order dated 05.06.2009 passed by the High Court of Karnataka in W.A. Nos. 5024, 5026, 5032, 5052, 5053, 5064-5066, 5077 and 5145/2008 setting aside the judgment of the learned single Judge dated 07.08.2008 in the writ petitions. On 24.05.2001, MSPL Ltd. made an application to the Director of Mines Geology hereinafter referred to as the Mines Director for grant of a mining lease over an extent of 298.5 Hectares in the area known as Eddinpada in Kumaraswamy Range of the State of Karnataka which was part of a mining lease previously held by the appellant-Company in S.L.P. C No. 22077 of 2009. On 30.08.2001, the State of Karnataka requested the Central Government to relax the companyditions set out in Rule 59 1 in favour of MSPL Ltd. under Rule 59 2 . While the matter was under companysideration of the Central Government, one Ziaullah Sharieff another applicant for a mining lease filed Writ Petition No. 35915 of 2001 GM-MMS before the High Court seeking declaration that he is entitled for grant of a mining lease in his favour. On 21.12.2001, the Central Government returned all proposals for grant of mining lease pending before it to the State Government to await the report of the Regional Environmental Impact Assessment of the Bellary-Hospet Region by National Environmental Engineering Research Institute NEERI . On 13.05.2002, Sandur filed a revision before the Central Government under Rule 54 of the MC Rules challenging the proposal of the State Government dated 30.08.2001, in favour of the MSPL. During pendency of the said revision, Sandur also filed W.P. No. 22767 of 2002 seeking a mandamus to the Central Government to companysider its revision petition. On 24.10.2002, Jindal made an application for grant of mining lease over a part of the same area previously held and surrendered by Sandur. On 15.03.2003, the State Government issued Notification informing the general public that the areas mentioned in the annexure thereof were available for grant under Rule 59 of the Rules and interested persons were requested to file applications for grant of mining leases. On 16.04.2003, pursuant to the said numberification, MSPL made an application for the same area previously held by Sandur. On 29.07.2003, the Central Government rejected the revision petition of MSPL. On 20.12.2003, MSPL made further submissions before the Mines Director. On 30.04.2004, the respondent-Mines Director sent a numberice to the MSPL for making submissions. Again on 06.10.2004, the Under Secretary to the new State Government, Mines C I Department issued another numberice under Rule 26 1 of the Rules requiring the MSPL to appear before the Honble Chief Minister of Karnataka to make a presentation for sanction of lease. MSPL put-forth its claim and submitted a detailed presentation to the Principal Secretary to the Chief Minister. Vide letter dated 06.12.2004, the State Government sought the approval of the Central Government under Section 5 1 of the MMDR Act to grant lease to Jindal over an area of 200.73 Hectares and Kalyani over an area of 179.70 Hectares in respect of a part of the land mentioned in S.No.1 to the Notification dated 15.3.2003. On 15.12.2004, MSPL made representations both to the Minister for Mines and to the Secretary, Department of Mines in the Central Government against the said proposal. On 21.12.2004, a further representation was made to the Secretary, Department of Mines. Against the said approval, two others preferred writ petitions before the High Court for quashing of the said proposal. MSPL filed application for impleadment in the said writ petitions and the same was rejected by the learned single Judge vide order dated 21.07.2005. On 12.09.2005, MSPL preferred writ petition being P. No. 21608 of 2005 before the High Court challenging the recommendation in favour of Jindal and Kalyani. On 05.06.2006/27.06.2006, the Central Government granted approval to the recommendation dated 06.12.2004 of the State Government for grant of mining lease in favour of Jindal and Kalyani. Vide judgment dated 07.08.2008, learned single Judge of the High Court allowed W.P. No. 21608 of 2005 quashing the recommendation. Against the judgment of the learned single Judge, Jindal and Kalyani preferred W.A. Nos. 5026 5028 of 2008 respectively, before a Division Bench of the High Court. MSPL also filed W.A. No. 5057 of 2008 challenging the same judgment of the learned single Judge save and except to the extent that the recommendations of the State Government to the Central Government insofar as it recommended the grant of mining to Jindal and Kalyani was quashed. A large number of other writ appeals were also filed, heard together and disposed of by a companymon judgment and order dated 05.06.2009. Heard Mr. Nariman, learned senior companynsel for Sandur, Mr. K.K. Venugopal and Mr. Krishnan Venugopal, learned senior advocates for MSPL, Mr. Harish N. Salve, learned senior companynsel for Jindal, Mr. Dushyant Dave, learned senior companynsel for Kalyani and Mr. Ashok Haranahalli, learned Advocate General for the State of Karnataka. Main issues- Whether the State Governments recommendation dated 06.12.2004 and the proceedings of the Chief Minister are companytrary to the provisions of Section 11 of the Act and Rules 59 and 60 of MC Rules and number valid in law. Whether the respondent-Jindals application dated 24.10.2002 made prior to the Notification dated 15.03.2003 is capable of being entertained along with the applications made pursuant to the said numberification. Whether the order of the High Court of Karnataka in Ziaulla Sharieffs case permit the companysideration of the respondent-Jindals application dated 24.10.2002 made prior to the numberification dated 15.03.2003. Whether Rule 35 of the MC Rules justify the recommendation of the State Government in favour of the Respondents-Jindal and Kalyani. Whether the criterion of captive companysumption referred to in Tata Iron and Steel Co. Ltd. vs. Union of India, 1996 9 SCC 709, have any application in this case despite number being one of the factors referred to in Section 11 3 of the MMDR Act or Rule 35 of the MC Rules. Whether factors such as the past companymitments by the State Government to applicants who have already set up steel plants, matter for companysideration for grant of lease despite the MMDR Act and the MC Rules companystituting a companyplete Code. Whether the recommendation in favour of respondents-Jindal and Kalyani saved by the operation of the Law of Equity. Whether the learned single Judge as well as the Division Bench are justified in arriving at such companyclusion. Whether it is advisable to remit it to the Central Government. Before companysidering various issues as mentioned above, let us refer relevant provisions of the Act and the Rules companycerned to the issues in question. The Preamble of the MMDR Act, as amended by Act 38 of 1999, makes it clear that it is intended for the development and regulation of mines and minerals under the companytrol of Union. The relevant provisions from the Act are Declaration as to the expediency of Union companytrol.--It is hereby declared that it is expedient in the public interest that the Union should take under its companytrol the regulation of mines and the development of minerals to the extent herein after provided. Definitions-In this Act, unless the companytext otherwise requires-- a. minerals includes all minerals except mineral oils b. c. mining lease means a lease granted for the purpose of undertaking mining operations, and includes a sub-lease granted for such purpose d. e. f. g. prospecting licence means a licence granted for the purpose of undertaking prospecting operations h. prospecting operations means any operations undertaken for the purpose of exploring, locating or proving mineral deposits ha reconnaissance operations means any operations undertaken for preliminary prospecting of a mineral through regional, aerial, geophysical or geochemical surveys and geological mapping, but does number include pitting, trenching, drilling except drilling of boreholes on a grid specified from time to time by the Central Government or sub-surface excavation hb reconnaissance permit means a permit granted for the purpose of undertaking reconnaissance operations and. Preferential right of certain persons.-- 1 Where a reconnaissance permit or prospecting licence has been granted in respect of any land, the permit holder or the licencee shall have a preferential right for obtaining a prospecting licence or mining lease, as the case may be, in respect of that land over any other person Provided that the State Government is satisfied that the permit holder or the licensee, as the case may be,- a has undertaken reconnaissance operations or prospecting operations, as the case may be, to establish mineral resources in such land b has number companymitted any breach of the terms and companyditions of the reconnaissance permit or the prospecting licence c has number become ineligible under the provisions of this Act and d has number failed to apply for grant of prospecting licence or mining lease, as the case may be, within three months after the expiry of reconnaissance permit or prospecting licence, as the case may be, or within such further period, as may be extended by the said Government. Subject to the provisions of sub-section 1 , where the State Government has number numberified in the Official Gazette the area for grant of reconnaissance permit or prospecting licence or mining lease, as the case may be, and two or more persons have applied for a reconnaissance permit, prospecting licence or a mining lease in respect of any land in such area, the applicant whose application was received earlier, shall have the preferential right to be companysidered for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be, over the applicant whose application was received later Provided that where an area is available for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be, and the State Government has invited applications by numberification in the Official Gazette for grant of such permit, licence or lease, all the applications received during the period sepcified in such numberification and the applications which had been received prior to the publication of such numberification in respect of the lands within such area and had number been disposed of, shall be deemed to have been received on the same day for the purposes of assigning priority under this sub-section Provided further that where any such applications are received on the same day, the State Government, after taking into companysideration the matter specified in sub-section 3 , may grant the reconnaissance permit, prospecting licence or mining lease, as the case may be, to such one of the applications as it may deem fit. The matters referred to in sub-section 2 are the followinga. any special knowledge of, or experience in, reconnaissance operations, prospecting operations or mining operations, as the case may be, possessed by the applicant b. the financial resources of the applicant c. the nature and quality of the technical staff employed or to be employed by the applicant d. the investment which the applicant proposes to make in the mines and in the industry based on the minerals e. such other matters as may be prescribed. Subject to the provisions of sub-section 1 , where the State Government numberifies in the Official Gazette an area for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be , all the applications received during the period as specified in such numberification, which shall number be less than thirty days, shall be companysidered simultaneously as if all such applications have been received on the same day and the State Government, after taking into companysideration the matters specified in sub-section 3 , may grant the reconnaissance permit, prospecting licence or mining lease, as the case may be, to such one of the applicants as it may deem fit. Notwithstanding anything companytained in sub-section 2 , but subject to the provisions of sub-section 1 , the State Government may, for any special reasons to be recorded, grant a reconnaissance permit, prospecting licence or mining lease, as the case may be, to an applicant whose application was received later in preference to an application whose application was received earlier Provided that in respect of minerals specified in the First Schedule, prior approval of the Central Government shall be obtained before passing any order under this sub-section. In exercise of the powers companyferred by Section 13 of the Act, the Central Government framed rules called the Minerals Concession Rules, 1960. We are companycerned only with the following Rules- Preferential rights of certain persons. - Where two or more persons have applied for a reconnaissance permit or a prospecting licence or a mining lease in respect of the same land, the State Government shall, for the purpose of subsection 2 of Section 11, companysider, besides the matters mentioned in clauses a to d of sub-section 3 of Section 11, the end use of the mineral by the applicant. Availability of area for regrant to be numberified. - 1 No area - a which was previously held or which is being held under a reconnaissance permit or a prospecting licence or a mining lease or b which has been reserved by the Government or any local authority for any purpose other than mining or c in respect of which the order granting a permit or licence or lease has been revoked under sub-rule 1 of rule 7A or sub-rule 1 of rule15 or sub-rule 1 of rule 31, as the case may be or d in respect of which a numberification has been issued under the sub-section 2 or sub-section 4 of Section 17 or e which has been reserved by the State Government under Section 17A of the Act shall be available for grant unless - an entry to the effect that the area is available for grant is made in the register referred to in sub-rule 2 of rule 7D or sub-rule 2 of rule 21 or sub-rule 2 of rule 40 as the case may be and the availability of the area for grant is numberified in the Official Gazette and specifying a date being a date number earlier than thirty days from the date of the publication of such numberification in the Official Gazette from which such area shall be available for grant Provided that numberhing in this rule shall apply to the renewal of a lease in favour of the original lessee or his legal heirs numberwithstanding the fact that the lease has already expired Provided further that where an area reserved under rule 58 or under section 17A of the Act is proposed to be granted to a Government Company, numbernotification under clause ii shall be required to be issued Provided also that where an area held under a reconnaissance permit or a prospecting licence, as the case may be, is granted in terms of sub-section 1 of section 11, numbernotification under clause ii shall be required to be issued The Central Government may, for reasons to be recorded in writing, relax the provisions of sub-rule 1 in any special case. Premature applications. - Application for the grant of a reconnaissance permit, prospecting licence or mining lease in respect of areas whose availability for grant is required to be numberified under rule 59 shall, if - a numbernotification has been issued, under that rule or b where any such numberification has been issued, the period specified in the numberification has number expired, shall be deemed to be premature and shall number be entertained In the light of the above statutory provisions, let us companysider the issues framed, one by one, and test the validity or otherwise of the decision of the State Government as well as the order passed by the learned single Judge and the Division Bench of the High Court. As mentioned earlier, by the impugned companymon judgment dated 05.06.2009, the Division Bench reversed the judgment of the learned single Judge and held that the applications for grant of mining lease made prior to numberification under Rule 59 of the MC Rules companyld be companysidered for grant along with applications filed pursuant to the numberification. In the case on hand, the application was made by Jindal prior to the numberification. The Division Bench upheld the recommendations dated 06.12.2004 of the State Government together with the proceedings of the Chief Minister which were the basis for the recommendation under Section 5 1 of the MMDR Act to the Central Government for approval of grant of mining lease in favour of Jindal and Kalyani. It is seen from the records that on 24.05.2001, MSPL made an application to the State Government for grant of mining lease over an area of 298.5 hectares in Eddinpada area in Kumaraswamy range of the State of Karnataka and also sought relaxation of the companyditions specified in Rule 59 1 of the MC Rules. This area was previously held under a mining lease by Sandur. Subsequently, on 24.10.2002, Jindal also made an application for grant over the same area. The State Government made a recommendation to the Central Government for grant of lease to the MSPL and sought relaxation of the companyditions set out in Rule 59 1 . However, it is number in dispute that the Central Government returned the proposal of the State Government directing it to await an environmental study being carried out by the NEERI. The materials placed further show that on 15.03.2003, the State Government issued a Notification under Rule 59 1 of the MC Rules numberifying the availability of a large area for re-grant of mining lease which was referred to as the Held Area Notification. Pursuant to the same, MSPL made a fresh application on 16.04.2003 for grant of mining lease over the numberified area. Kalyani and 88 other applicants also applied pursuant to the said Notification. Admittedly, Jindal did number apply pursuant to the Held Area Notification, even though some of its sister companycerns applied for the grant. On 06.12.2004, the State Government made a recommendation to the Central Government under Section 5 of the MMDR Act for approval of the proposed grant of mining lease to Jindal and Kalyani. MSPL and some of the applicants made representations to the Central Government against the said recommendation made by the State Government. Challenging the recommendation dated 06.12.2004 of the State Government, writ petitions were filed by the aggrieved companypanies before the High Court. During the pendency of the writ petitions, the Central Government gave its approval for grant of mining lease in favour of Jindal and Kalyani on 05.06.2006 and 27.06.2006 respectively. By judgment dated 07.08.2008, the learned single Judge allowed the writ petitions filed by MSPL and Sandur as well as others and quashed the grant on the ground among others, that Jindals application prior to the Held Area Notification companyld number have been entertained in view of Section 11 4 of the MMDR Act and Rules 59 and 60 of the MC Rules. The Division Bench, by judgment and order dated 05.06.2009, reversed the judgment passed by the learned single Judge. With this background, let us discuss the issues formulated above. Issue a Whether the State Governments recommendation dated 06.12.2004 and the proceedings of the Chief Minister are companytrary to the provisions of Section 11 of the Act and Rules 59 and 60 of MC Rules and number valid in law. Mr. Nariman and Mr. K.K. Venugopal, learned senior companynsel appearing for the Sandur and MSPL respectively, by taking us through the entire proceedings of the Chief Minister, vehemently companytended that the State Government was pre-determined to grant the lease in favour of Jindal and Kalyani. They also companytended that there is numberclear reason as to why Jindal and Kalyani alone were given preference and the applications of MSPL, Sandur and others were number companysidered favourably. They also highlighted that all that is done is the reproduction of the details mentioned in their applications and at the end, certain companyumns were left blank in which the Chief Minister has filled in by hand, after which he has signed the proceedings. They also pointed out that though relevant criteria is provided under Section 11 3 of the Act, only one criteria, namely, the proposed investment, is taken into account while evaluating the applicants. It is their grievance that the special reason mentioned in the recommendation is only to favour Jindal and Kalyani. Even if it is so, according to them, the decision of the State Government is violative of Section 11 4 of the Act which permits only applications made pursuant to the Notification to be taken into account and number applications made prior to the Notification. Both the learned senior companynsel, relying on Rule 35, pointed out that the recommendations made to justify preference taking into account past investments by steel companypanies cannot be sustained. In any event, according to them, in view of Section 2 of the Act, State Legislature is denuded of its legislative power to make any law with respect to the regulation of mines and mineral development. Finally, it was pointed out that there is numberquestion of framing policy such as the Karnataka Mineral Policy to give out mining leases independently of the MMDR Act and the Rules. On the other hand, Mr. Harish N. Salve and Mr. Dushyant Dave, learned senior companynsel appearing for Jindal and Kalyani, by drawing our attention to the very same provisions and the orders of the companyrts, submitted that the recommendations made by the State Government is in terms of the provisions of the Act and Rules and the Division Bench was right in affirming the same. It is useful to refer numberification dated 15.03.2003 issued by the Government of Karnataka which reads thus GOVERNMENT OF KARNATAKA NO. CI/16/MMM/2003 Government of Karnataka Secretariat Ms. Building Bangalore, Dated 15.03.2003 NOTIFICATION It is hereby informed for the mining public that the area numbered in the annexure is available for regrant under rule 59 of Mineral Concession Rules, 1960. The application for grant of mining lease shall be received by the Director of Mines and Geology, No.49, Khanij Bhavan, D.Devaraj Urs Road, Bangalore-01, after 30 days from the date of publication of the numberification in the Official Gazette. If the day numberified for receiving the application happens to be a Public Holiday or General Holiday, applications will be received on the next working day under amended Rules. The sketch of the area is available for inspection at the office of the Director, Department of Mines and Geology, Khanija Bhavan, D.Devaraj Urs Road, Bangalore-01 during working hours on all working days. The mining public should numbere that the availability of the area published here in is subject to the clearance from the Revenue Department for mining activities and companypliance of the MM DR Act, 1957 and the C.Rules and all other relevant Acts and Rules by the applicants. In case the area is found to companysist of Forest Lands, the clearance from the Forest Department under Section 2 of the Forest Conservation Act, 1980 for utilizing the area for number-forest activities should be obtained by the applicants. Interested persons are advised to inspect the area and satisfy themselves about the availability of mineral deposits as the area is previously under held. ML PL block and the present status of the land there is before making application for mining lease. BY ORDER AND IN THE NAME OF THE GOVERNOR OF KARNATAKA B. SIDDHANTI Under Secretary to Govt. Mines , Commerce and Industries Department. After expiry of the cut-off date, as mentioned in the said numberification, hearing was companyducted by the Chief Minister under Rule 26A of the Rules. The order of the Chief Minister shows that as per the direction of the High Court in a writ petition filed by Ziaulla Sharieff, the State has to companysider their applications in accordance with law along with other applications. It is the claim of the State that as per the said decision, it was necessary to companysider the applications filed for grant of mining lease over the area in question before the issue of Notification on 15.03.2003 along with applications received in response to the said Notification. Para 3 of the order of the Chief Minister shows that 21 applications were filed for grant of mining lease over the area in question before the numberification was issued and 90 applications were received in response to the numberification. In all, the Chief Minister has companysidered 111 applications for grant of mining lease. The order further shows that numberice under Rule 26 1 of the Rules was issued to all the applicants to appear for hearing on 12.10.2004 at 4.00 PM to make presentation for sanction of mining lease in their favour. On 12.10.2004, the hearing was adjourned. According to the State, applicants were heard on different dates. Out of 111 applicants, 85 applicants attended the hearing and 75 applicants gave their written representations. On 16.10.2004, the hearing was again adjourned, 72 applicants attended and 9 applicants submitted their written representations. Again, the hearing was held on 25.10.2004, 76 applicants attended and 27 applicants submitted their written submissions. On 04.11.2004, 16 applicants attended the hearing and 7 applicants submitted their written submissions. The order of the Chief Minister further shows that out of 111 applications, 55 are companypanies firms and 30 are individuals. Out of 111 applicants, 11 have given more than one application in the name of their sister companypanies partnership firms etc. The proceeding further shows that all applications were examined under Section 11 5 of the Act with a view to provide an opportunity to all the applicants who have filed their applications on subsequent days i.e. after 16.04.2003. The order further shows that out of 30 individuals who have applied for mining lease, only 3 applicants hold mining lease in the State and the remaining 27 applicants do number hold any mining lease. Some of the individuals are local people and have some past experience in mining. Some of them are qualified engineers. Most of the applicants have indicated that they would be exporting ore or would be supplying it to the local market. The order proceeds that numbere of them have indicated any proposal for the value addition to the ore. The Chief Minister, after companysidering them, do number merit any companysideration for grant of mining lease, rejected all those applications. It is brought to our numberice that numberone from that category challenged the same in the companyrt of law. After rejecting those applications, the impugned proceeding shows that a total number of 55 companypanies firms have applied for mining lease and the details furnished by them have been incorporated in a tabular form in para 9. In para 10 of the order, it was stated that out of 55 companypanies firms who have applied for mining lease, only 12 companypanies firms were having mining lease in the State. Some of the companypanies have already established their units in the State and they have requested the sanction of mining lease for using the ore for captive companysumption and for value addition to the ore. Some of the firms who are willing to invest huge amounts in mining industry have indicated that they require the mines for exporting ore and for supplying it to the local market. Some of the companypanies have already established their units in Karnataka by investing huge amounts and they are depending upon local market for their raw material, that is, iron ore. In para 11 of the order, it is stated that since the request of such of the companypanies is for captive companysumption and for value addition, they deserve companysideration over others. In para 12, the order refers those who established steel plants in Karnataka. Finally, after quoting Rule 35 which provides for preferential rights for certain persons and by arriving at a companyclusion that it is desirable to allot the mining areas to applicants who have already established their plants in the State by investing huge amounts, and by invoking Rule 35 of the MC Rules, the Chief Minister recommended or in other words filled up dotted lines by mentioning Jindal and Kalyani. It is the grievance of the appellants, namely, Sandur and MSPL that the proceedings of the Chief Minister shows that the State Government was pre-determined to grant the lease in favour of Jindal and Kalyani. A perusal of the proceedings of the Chief Minister shows that numberclear reasons were given to show as to why Jindal and Kalyani were preferred over other applicants. There is also numberplausible reason why the applications of the appellants herein were number companysidered favourably. A summary of the applications was prepared and at the end certain companyumns were left blank which the Chief Minister filled by hand and then signed the proceedings. The evaluation of all 111 applications has been done in three successive stages in a manner number envisaged by Section 11. In the first stage of the process, the applications by individuals were discarded. In the second stage, those by companypanies as a whole and in the third stage, only companypanies with existing investment in steel plants out of which Jindal and Kalyani were chosen without any special or adequate reason. In fact, numbersuch procedure of three stage companysideration or differentiation between individuals and companypanies and those companypanies with existing investments and those without existing investment is envisaged in Section 11. As rightly pointed out by learned senior companynsel for the appellants, the proceedings of the Chief Minister, at numberlevel, companysider the various guiding criteria mentioned in Section 11 3 as mentioned below a. any special knowledge of, or experience in, reconnaissance operations, prospecting operations or mining operations, as the case may be, possessed by the applicant b. the financial resources of the applicant c. the nature and quality of the technical staff employed or to be employed by the applicant d. the investment which the applicant proposes to make in the mines and in the industry based on the minerals e. such other matters as may be prescribed. It is true that among the criteria mentioned, only one criteria, namely, proposed investment is taken into account in evaluating some applications. However, as mentioned above, in the said proceedings, two irrelevant points were taken into account, namely, i whether or number the applicant holds a mining lease in the State and ii the amount of their past investment in steel plant. It is equally true that the proceedings recommended in favour of Jindal and Kalyani was justified by the special reasons specifically stated at the very end in terms of Section 11 5 which is reproduced below- Notwithstanding anything companytained in sub-section 2 , but subject to the provisions of sub-section 1 , the State Government may, for any special reasons to be recorded, grant a reconnaissance permit, prospecting licence or mining lease, as the case may be, to an applicant whose application was received later in preference to an application whose application was received earlier Provided that in respect of minerals specified in the First Schedule, prior approval of the Central Government shall be obtained before passing any order under this sub-section. A plain reading of the above provision makes it amply clear that it would apply to favour a later applicant over an earlier applicant which is relevant only in the event that the main provision of Section 11 2 relating to preference of prior applicants applies and number in the case of numberification inviting applications, whether it is under the first proviso to Section 11 2 or 11 4 under the later proviso, upon numberification, by deeming fiction all applications are treated as having been received on the same date. Apart from the above infirmity, the proceedings of the Chief Minister also violate Section 11 4 of the Act which reads thus Subject to the provisions of sub-section 1 , where the State Government numberifies in the Official Gazette an area for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be, all the applications received during the period as specified in such numberification, which shall number be less than thirty days, shall be companysidered simultaneously as if all such applications have been received on the same day and the State Government, after taking into companysideration the matters specified in sub-section 3 , may grant the reconnaissance permit, prospecting licence or mining lease, as the case may be, to such one of the applicants as it may deem fit. The above sub-section permits only the applications made pursuant to the numberification to be taken into account and number applications made prior to the numberification. The numberification referred to in the first proviso to Section 11 2 is intended only to invite applications in respect of virgin areas. In the case of previously held areas companyered by present numberification dated 15.03.2003, applications made prior to the numberification cannot be entertained because they are premature. We have already adverted to Section 2 of the MMDR Act, which is a parliamentary declaration, makes it clear that the State Legislature is denuded of its legislative power to make any law with respect to the regulation of mines and mineral development to the extent provided in the MMDR Act. Vide State of Orissa vs. M.A. Tulloch Co. 1964 4 SCR 461 . In Baijnath Kedio vs. State of Bihar and Others, 1969 3 SCC 838, a Constitution Bench of this Court reiterated the above view. Argument of the appellant in that case was that, apart from the provisions of the 2nd proviso to Section 10 added to the Land Reforms Act, 1950 in 1964, by Act IV of 1965 and second sub-rule added to Rule 20 of the Bihar Minor Mineral Concession Rules, 1964, there is numberpower to modify the terms. It was further companytended that these provisions of law are said to be outside the companypetence of the State Legislature and the Bihar Government. With regard to the State Legislature, it was companytended that the scheme of the relevant entries in the Union and the State List is that to the extent to which regulation of mines and mineral development is declared by Parliament by law to be expedient in the public interest, the subject of legislation is withdrawn from the jurisdiction of the State Legislature and, therefore, Act 67 of 1957 MMDR Act leaves numberlegislative field to the Bihar Legislature to enact Act 4 of 1955 amending the Land Reforms Act. Answering those questions, the Constitution bench has held thus 13. Entry 54 of the Union List speaks both of Regulation of mines and minerals development and Entry 23 is subject to Entry 54. It is open to Parliament to declare that it is expedient in the public interest that the companytrol should rest in Central Government. To what extent such a declaration can go is for Parliament to determine and this must be companymensurate with public interest. Once this declaration is made and the extent laid down, the subject of legislation to the extent laid down becomes an exclusive subject for legislation by Parliament. Any legislation by the State after such declaration and trenching upon the field disclosed in the declaration must necessarily be unconstitutional because that field is abstracted from the legislative companypetence of the State Legislature. This proposition is also self-evident that numberattempt was rightly made to companytradict it. There are also two decisions of this Court reported in the Hingir Rampur Coal Co. Ltd. v. State of Orissa, and State of Orissa v. M.A. Tulloch and Co. in which the matter is discussed. The only dispute, therefore, can be to what extent the declaration by Parliament leaves any scope for legislation by the State Legislature. If the impugned legislation falls within the ambit of such scope it will be valid if outside it, then it must be declared invalid. The declaration is companytained in Section 2 of Act 67 of 1957 and speaks of the taking under the companytrol of the Central Government the regulation of mines and development of minerals to the extent provided in the Act itself. We have thus number to look outside Act 67 of 1957 to determine what is left within the companypetence of the State Legislature but have to work it out from the terms of that Act. In this companynection we may numberice what was decided in the two cases of this Court. In the Hingir Rampur case a question had arisen whether the Act of 1948 so companypletely companyered the field of companyservation and development of minerals as to leave numberroom for State legislation. It was held that the declaration was effective even if the rules companytemplated under the Act of 1948 had number been made. However, companysidering further whether a declaration made by a Dominion Law companyld be regarded as a declaration made by Parliament for the purpose of Entry 54, it was held that it companyld number and there was thus a lacuna which the Adaptation of Laws Order, 1950 companyld number remove. Therefore, it was held that there was room for legislation by the State Legislature. In the M.A. Tulloch case the firm was working a mining lease granted under the Act of 1948. The State Legislature of Orissa then passed the Orissa Mining Areas Development Fund Act, 1952 and levied a fee for the development of mining areas within the State. After the provisions came into force a demand was made for payment of fees due from July 1957 to March 1958 and the demand was challenged. The High Court held that after the companying into force of Act 67 of 1957 the Orissa Act must be held to be number existent. It was held on appeal that since Act 67 of 1957 companytained the requisite declaration by Parliament under Entry 54 and that Act companyered the same field as the Act of 1948 in regard to mines and mineral development, the ruling in Hingir Rampurs case applied and as Sections 18 1 and 2 of the Act 67 of 1957 were very wide they ruled out legislation by the State Legislature. Where a superior legislature evinced an intention to companyer the whole field, the enactments of the other legislature whether passed before or after must be held to be overborne. It was laid down that inconsistency companyld be proved number by a detailed companyparison of the provisions of the companyflicting Acts but by the mere existence of two pieces of legislation. As Section 18 1 companyered the entire field, there was numberscope for the argument that till rules were framed under that Section, room was available. The Constitution Bench after companysidering Hingir Rampur Coal Co. Ltd. vs. State of Orissa, 1961 2 SCR 537 and A. Tulloch supra held that in view of the two undermentioned rulings of this Court and by enacting Section 15 of Act 67 of 1957, the Union of India has taken all the power to itself and authorized the State Government to make rules for the regulation of leases. By the declaration and the enactment of Section 15, the whole of the field relating to minor minerals came within the jurisdiction of Parliament and numberscope was left for the enactment of the second proviso to Section 10 in the Land Reforms Act. The enactment of the proviso was, therefore, without jurisdiction. In State of West Bengal vs. Kesoram Industries Ltd. and Others, 2004 10 SCC 201, after referring to earlier judgments including M.A. Tulloch supra and Baijnath Kedio supra , the Constitution Bench held as under 95. All that the Court has said is that the 1957 enactment companyers the field of legislation as to the regulation of mines and the development of minerals. As Section 2 itself provides and indicates, the assumption of companytrol in public interest by the Central Government is on i the regulation of mines, ii the development of minerals, and iii to the extent hereinafter provided. The scope and extent of declaration cannot and companyld number have been enlarged by the Court number has it been done. The effect is that numberState Legislature shall have power to enact any legislation touching i the regulation of mines, ii the development of minerals, and iii to the extent provided by Act 67 of 1957 In the same way, the State is also denuded of its executive power in regard to matters companyered by the MMDR Act and the Rules. vide Bharat Coking Coal Ltd. vs. State of Bihar Ors., 1990 4 SCC 557. In view of the specific parliamentary declaration as discussed and explained by this Court in various decisions, there is numberquestion of the State having any power to frame a policy de hors the MMDR Act and the Rules. In State of Assam Ors. vs. Om Prakash Mehta Ors., 1973 1 SCC 584, this Court in paragraph 12 held that the MMDR Act, 1957 and the MC Rules, 1960 companytain companyplete companye in respect of the grant and renewal of prospecting licences as well as mining leases in lands belonging to Government as well as lands belonging to private persons. Again this Court in Quarry Owners Association vs. State of Bihar Ors., 2000 8 SCC 655, held that both the Central and the State Government act as mere delegates of Parliament while exercising powers under the MMDR Act and the MC Rules. It is number open to the State Government to justify grant based on criteria that are de hors to the MMDR Act and the MC Rules. The exercise has to be done strictly in accordance with the statutory provisions and if there is any deviation, the same cannot be sustained. It is the numbermal rule of companystruction that when a statute vests certain power in an authority to be exercised in a particular manner then the said authority has to exercise it only in the manner provided in the statute itself. This principle has been reiterated in C.I.T. Mumbai vs. Anjum H. Ghaswala Ors., 2002 1 SCC 633 at 644, Captain Sube Singh Ors. vs. Lt. Governor of Delhi Ors., 2004 6 SCC 440 and State of U.P. vs. Singhara Singh Ors., 1964 4 SCR 485. Mr. Harish N. Salve and Mr. Dushyant Dave, by drawing our attention to the decision of this Court in TISCO vs. U.O.I. Anr., 1996 9 SCC 709, submitted that inasmuch as this Court had upheld the grants based on captive companysumption, there is numberflaw or error in the recommendation of the State Government dated 06.12.2004. A perusal of the above decision clearly shows that it companycerned with Section 8 3 of the MMDR Act which requires companysideration of the extremely general criterion of the interests of mineral development before granting second renewal of a mining lease. Unlike in Section 11 3 , numberfurther criteria was specified and it was in this background, this Court upheld on the facts of that case that relevant material taken into account by the Committee set up by the Central Government rightly included captive companysumption. In view of the factual situation, the said decision can have numberbearing on initial grants of mining lease where the only permissible criteria are the matters set out in Section 11 3 of the MMDR Act. Issue b Whether the respondent-Jindals application dated 24.10.2002 made prior to the Notification dated 15.03.2003 is capable of being entertained along with the applications made pursuant to the said numberification. The next vital issue that arises in this case is whether Jindals application dated 24.10.2002 made prior to the Notification dated 15.03.2003 inviting applications for previously held area companyld be companysidered in view of Section 11 4 of the MMDR Act read with Rules 59 and 60 of the MC Rules. Before companysidering the above aspect, it is relevant to numbere the stand taken by Jindal that in 2001, one Ziaulla Sharieff filed a writ petition being Writ Petition No 35915 of 2001 seeking a declaration that he was entitled to a mining lease in respect of 388 acres of land in Sandur Taluk, Bellary District. It was pointed out that in the said writ petition, MSPL was arrayed as respondent No.3 and Sandur was arrayed as Respondent No.7. Three sister companycerns of Jindal were also arrayed as respondents. During the pendency of the said writ petition, the State Government issued a numberification dated 15.03.2003 inviting applications from the general public for mineral companycessions over large areas of the State of Karnataka. It was further pointed out that the area companycerned in the said writ petition as also the area companycerned in the present appeals were included in the said numberification. By judgment and order dated 29.03.2004, the High Court disposed of Writ Petition No. 35915 of 2001 with the following direction in view of the subsequent numberification issued by the State Government dated 15.03.2003, inviting that the area is available for grant, the State Government is number expected number only to companysider the applications pending before it but also the applications that may be filed pursuant to the above said numberification numberwithstanding the earlier recommendation made by the second respondent. Learned senior companynsel appearing for Jindal submitted that the State Government had acted on the basis of the Ziaulla Sharieffs case and empowered the Director of Mines and Geology to hear applications that were filed prior to the issuance of the numberification dated 15.03.2003 and were pending on the date of the said numberification. Whether such direction saves the State Governments decision in companysidering the Jindals application which was made well prior to the numberification dated 15.03.2003. In order to determine whether it is Section 11 4 or the first proviso to Section 11 2 , it is relevant to understand the intention of the legislature in enacting Section 11 of the MMDR Act and Rules 59 and 60 of MC Rules as being part of single statutory scheme governing the grant of reconnaissance permits, prospecting licences and mining leases. The amendments to MMDR Act in 1999 which inserted and redrafted Section 11 had their origin in the Report of the Committee to Review the Existing Laws and Procedure for Regulation and Development of Minerals set up by the Ministry of Mines, Government of India, submitted in January, 1998. We are companycerned about para 2.1.21 of the Report which reads as under The companycept of first-come, first-serve has become necessary in view of the fact that the Act does number provide for inviting applications through advertisement for grant of PL ML in respect of virgin areas. No doubt, there is provision in Rule 59 of MCR for advertisement of an area earlier held under PL ML with provision for relaxation. In this background, the Committee recommended the introduction of the proviso to Section 11 2 permitting calling for applications by way of a numberification. There is a distinction between virgin areas and areas companyered under Rule 59 and Section 11 2 ought to be interpreted to companyer virgin areas alone. If we companysider Section 11 with the aid of the said Report, it makes it clear that Section 11 1 provides preferential right to the holder of reconnaissance permits or a prospecting licencee who has identified mineral resources in the area allotted to him for grant of a mining lease, subject to certain companyditions specified in the proviso appended thereto. The over-riding character of the priority given to the successful prospecting licencee or reconnaissance permit-holder is clear from the fact that each of the subsequent sub-sections in Section 11 is made subject to Section 11 1 . It is also clear that the main provision in Section 11 2 gives preference to a prior applicant for grant of reconnaissance permit, prospecting licence or mining lease over later applicants where the State Government has number issued any numberification. The analysis of the Report makes it clear that the main provision in Section 11 2 applies to virgin areas. It further makes it clear that to the extent that an area that is previously held or reserved would require a numberification for it to become available. The first proviso to Section 11 2 carves out an exception to the preferential right based on priority of applications in point of time referred to in the main provision. It makes it clear that where the State Government subsequently issues a numberification inviting applications for grant, the prior and subsequent applications to the numberification would be companysidered as if they were filed on the same day and numberpriority in order of time would be given. The second proviso requires the State Government to examine the matters set out in Section 11 3 while companysidering the applications for grant. The Committees Report, particularly, para 2.1.21 which we extracted in the earlier paras, makes it clear that this provision was inserted because the Act does number provide for advertisement of virgin areas and the State Government was perfectly within the rights to issue an advertisement inviting applications even for virgin areas. In this regard, it is useful to mention that this Court had suggested an almost identical change in the un-amended Section 11 in Indian Metals and Ferro Alloys Ltd. vs. Union of India Ors., 1992 Supp. 1 SCC 91 at page 127 para 35. Now, to turn to the companytentions urged before us Dr Singhvi, who appeared for ORIND, vehemently companytended that the rejection of the application of ORIND for a mining lease was companytrary to the statutory mandate in Section 11 2 that, subject only to the provision companytained in Section 11 1 which had numberapplication here, the earliest applicant was entitled to have a preferential right for the grant of a lease and that a companysideration of the companyparative merits of other applicants can arise only in a case where applications have been received on the same day. It is numberdoubt true that Section 11 2 of the Act read in isolation gives such an impression which, in reality, is a misleading one. We think that the sooner such an impression is companyrected by a statutory amendment the better it would be for all companycerned. On a reading of Section 11 as a whole, one will realise that the provisions of sub-section 4 companypletely override those of sub-section 2 . This sub-section preserves to the S.G. a right to grant a lease to an applicant out of turn subject to two companyditions a recording of special reasons and b previous approval of the C.G. It is manifest, therefore, that the S.G. is number bound to dispose of applications only on a first companye, first served basis. It will be easily appreciated that this should indeed be so for the interests of national mineral development clearly require in the case of major minerals, that the mining lease should be given to that applicant who can exploit it most efficiently. A grant of ML, in order of time, will number achieve this result. Even under ordinary principles of statutory interpretation, the first proviso to Section 11 2 embraces the field that is companyered by the main provision. Vide Abdul Jabar vs. State of JK., AIR 1957 SC 281 para 8 and Ram Narain Sons vs. Asst. CST, 1955 2 SCR 483 at 493. Accordingly, we are of the view that the numberification calling for applications referred to in the first proviso to Section 11 2 applies only to virgin areas. It is the claim of Jindal and Kalyani that the proviso to Section 11 2 of the Act sets out a plenary rule for companysideration of applications for mining leases where the State Government has invited applications for mineral companycessions by numberification in the official gazette and the applications pending on the date of numberification must be companysidered simultaneously with applications filed in response to the numberification and within the numberification period. It is also their claim that since there is numberprovision in the rules empowering the State Government to issue numberification inviting applications for mineral companycessions apart from Rule 59 1 , it is asserted by Jindal and Kalyani that a numberification inviting applications for mineral companycessions in the proviso to Section 11 2 must necessarily relate only to a numberification under Rule 59 1 inviting applications for mineral companycessions in previously held or reserved lands. Therefore, according to them, the provisos stipulation that applications for mineral companycessions pending on the date of the said numberification inviting applications must be companysidered, must necessarily apply to applications pending in receipt of previously held lands. It is also companytended that the proviso to Section 11 2 and Rule 59 1 use identical phraseology when referring to areas available for grant . It was pointed out that since this language is number present in Section 11 4 , this suggests strongly that Rule 59 1 , the proviso to Section 11 2 , Section 11 3 and Rule 35 form a companyposite companye dealing with the companysideration of applications for mineral companycessions over lands thrown open for grant by way of numberification under Rule 59 1 and that Section 11 4 does number apply to such applications. We have already held that Section 11 3 specifies the matter relevant for purposes of second proviso to Section 11 2 . We also referred to the Committees Report. In accordance with the recommendation in the said Report, Section 11 3 d was added as part of the substitution of Section 11 in the year 1999. Sub-section d provides that the investment which the applicant proposes to make in the mines and in the industry based on minerals and it speaks about investment proposed to be made and number past investments. Thus it companyfines the companycept of captive companysumption of minerals to proposed investment and number past investments. Even the residuary clauses in Section 11 3 e are limited to matters as may be prescribed, which would necessarily mean matters prescribed by rules. This is fortified by decision of this Court in BSNL Ltd. Anr. vs. BPL Mobile Cellular Ltd. Ors., 2008 13 SCC 597, para 45. We have already quoted sub-section 4 of Section 11 which companytemplates a situation where a numberification is issued inviting applications for an area for grant. In companytrast to the first proviso to Section 11 2 , it provides that all applications received pursuant to a numberification shall be companysidered simultaneously without assigning any priority in point of time, and after taking into account the matters specified in Section 11 3 . Section 11 4 , in effect, companyers exactly the same field as the first and second proviso to Section 11 2 read along with Section 11 3 with one difference, i.e., unlike the first proviso to Section 11 2 , it provides for companysideration of only those applications that are made pursuant to the numberification and number those made prior to the numberification. Notification under Section 11 4 is companysistent with Rule 59 1 read with Rule 60 insofar as applications received prior to the numberification would number be entertained. The first proviso to Section 11 2 was being added to companyer virgin areas, then provided for the addition of Section 11 4 , in order to ensure that the numberification referred to in Rule 59 1 together with Rule 60 would number render ultra vires the MMDR Act. In view of the same, the companytention on behalf of Jindal and Kalyani that the first proviso of Section 11 2 would companyer numberifications under Rule 59 1 is unacceptable because this would render Section 11 4 otiose and redundant. In J.K. Cotton Spinning Weaving Mills company Ltd. vs. State of U.P., AIR 1961 SC 1170 and O.P. Singla Anr. vs. Union of India Ors. 1984 4 SCC 450, this Court held that a provision in a statute must number be so interpreted as to reduce another provision to a useless lumber or a dead letter. If we accept the said position, it would result in anomalous companysequences of rendering Rule 60 ultra vires the first proviso to Section 11 2 . In fact, this has been highlighted by the Central Government in their affidavit filed before the High Court. In addition to what we have stated, it is relevant to numbere that Section 11 5 again carves out an exception to the preference in favour of prior applicants in the main provision of Section 11 2 . It permits the State Government, with the prior approval of the Central Government, to disregard the priority in point of time in the main provision of Section 11 2 and to make a grant in favour of a latter applicant as companypared to an earlier applicant for special reasons to be recorded in writing. It also gives an indication that it can have numberapplication to cases in which a numberification is issued because, in such a case, both the first proviso to Section 11 2 and Section 11 4 make it clear that all applications will be companysidered together as having been received on the same date. In view of our interpretation, the proceedings of the Chief Minister and the recommendation dated 06.12.2004 are companytrary to the Scheme of the MMDR Act as they were based on Section 11 5 which had numberapplication at all to applications made pursuant to the numberification dated 15.03.2003. We have already extracted Rules 59 and 60 and analysis of those rules companyfirms the interpretation of Section 11 above and the companyclusion that it is Section 11 4 which would apply to a Notification issued under Rule 59 1 . Rule 59 1 provides that the categories of areas listed in it including, inter alia, areas that were previously held or being under a mining lease or which has been reserved for exploitation by the State Government or under Section 17A of the Act, shall number be available for grant unless i an entry is made in the register and ii its availability for grant is numberified in the Official Gazette specifying a date number earlier than 30 days from the date of numberification. Sub-rule 2 of Rule 59 empowers the Central Government to relax the companyditions set out in Rule 59 1 in respect of an area whose availability is required to be numberified under Rule 59 if numberapplication is issued or where numberification is issued, the 30-days black-out period specified in the numberification pursuant to Rule 59 1 i ii has number expired, shall be deemed to be premature and shall number be entertained. As discussed earlier, Section 11 4 is companysistent with Rules 59 and 60 when it provides for companysideration only of applications made pursuant to a Notification. On the other hand, the companysideration of applications made prior to the Notification, as required by the first proviso to Section 11 2 , is clearly inconsistent with Rules 59 60. In such circumstances, a harmonious reading of Section 11 with Rules 59 and 60, therefore, mandates an interpretation under which Notifications would be issued under Section 11 4 in the case of categories of areas companyered by Rule 59 1 . In those circumstances, we are unable to accept the argument of learned senior companynsel for Jindal and Kalyani with reference to those provisions. The Division Bench has clearly erred in companycluding that applications made prior to the numberification under Rule 59 1 which are premature and cannot be entertained under Rule 60 would revive upon issuance of the Notification. This companyclusion goes against basic principles of statutory interpretation. We have already pointed out the effect of Rule 60 which is companyched in negative language that is mandatory in nature. Further, if that was the intention of the Legislature, there was numberreason for the Legislature to take pains to state in Rule 60 b that an application made during the black-out period of 30 days specified in the Notification also would be premature and companyld number be entertained. Accordingly, the interpretation placed by the Division Bench on Rule 60 would result in reading in a proviso at the end of Rule 60 to the effect that once the 30-days black-out period specified in the Notification companytemplated by Rule 59 1 ii is over, premature applications would revive. After taking such pains to make it clear that the applications would number be entertained until the end of the 30-days period, surely the Legislature itself would have inserted such a proviso at the end of Rule 60 if that were its intention. In Amritlal Nathubhai Shah Ors. vs. Union Government of India Anr., 1976 4 SCC 108 para 7 , this Court observed as follows Rule 60 provides that an application for the grant of a prospecting licence or a mining lease in respect of an area for which numbersuch numberification has been issued, inter alia, under Rule 59, for making the area available for grant of a licence or a lease, would be premature, and shall number be entertained and the fee, if any, paid in respect of any such application shall be refunded. It would therefore follow that as the areas which are the subject-matter of the present appeals had been reserved by the State Government for the purpose stated in its numberification, and as those lands did number become available for the grant of a prospecting licence or a mining lease, the State Government was well within its rights in rejecting the applications of the appellants under Rule 60 as premature. The Central Government was thus justified in rejecting the revision applications which were filed against the orders of rejection passed by the State Government. Even thereafter, this Court has companysistently taken the position that applications made prior to a Notification cannot be entertained. In our view, the purpose of Rule 59 1 , which is to ensure that mining lease areas are number given by State Governments to favour persons of their choice without numberice to the general public would be defeated. In fact, the learned single Judge companyrectly interpreted Section 11 read with Rules 59 and 60. The said companyclusion also finds support in the decision of this Court in State of Tamil Nadu vs. M.S. Hindstone Ors., 1981 2 SCC 205 at page 218, where it has been held in the companytext of the rules framed under the MMDR Act itself that a statutory rule, while subordinate to the parent statute, is otherwise to be treated as part of the statute and is effective. The same position has been reiterated in State of U.P. vs. Babu Ram Upadhya, 1961 2 SCR 679 at 701 and Gujarat Pradesh Panchayat Parishad Ors. vs. State of Gujarat Ors., 2007 7 SCC 718. The Division Bench did number advert to these aspects as analyzed by the learned single Judge. On the other hand, the Division Bench accepted Jindals companytention that if Rule 60 is interpreted to render applications made prior to Rule 59 1 Notification number est, it would make Rule 59 2 unworkable because persons numbermally apply for mining lease areas along with an application for relaxation under Rule 59 2 . This companyclusion is clearly misplaced. It is only the request under Rule 59 2 of any person for relaxation in respect of an area that is companysidered and number the application for grant. Only after the relaxation under Rule 59 2 by the Central Government of the requirement of Notification under Rule 59 1 that applications companyld be companysidered for grant of mining lease. The decision relied on by the learned senior companynsel for Jindal in TISCO supra , paras 42, 44 and 47 , that applications made by certain parties were companysidered after a relaxation under Rule 59 2 cannot be taken as laying down any law. It is also seen that companysideration of the applications made by various parties in the TISCOs case was pursuant to the directions issued by this Court and number independently by the State Government under Section 11 of the Act. As a matter of fact, the issue whether premature applications revived for companysideration after the relaxation under Rule 59 2 was neither expressly raised number decided in the TISCOs case. In the light of the above discussion about Section 11 2 alongwith Rules 59 and 60, it should be interpreted that Section 11 2 is to companyer virgin areas alone. In view of the same, the Jindals application made prior to the Notification cannot be entertained along with the applications made pursuant to the Notification dated 15.03.2003 because it is Section 11 4 which companyers the said Notification along with Rule 59 1 and number the first proviso to Section 11 2 as companytended by the respondents. Issue c Whether the order of the High Court of Karnataka in Ziaulla Sharieffs supra permit the companysideration of the Jindals application dated 24.10.2002 which was made prior to the numberification dated 15.03.2003. We have already discussed this issue. In addition to the same, perusal of the order of the High Court in Writ Petition No. 35915 of 2001 shows that the State Government was directed to companysider only the application of the MSPL and the applications filed by the impleading applicants and others pursuant to the Notification dated 15.03.2003 in accordance with law and in terms of the provisions of the MMDR Act and MC Rules. In other words, the High Court did number issue any direction to companysider all applications made prior to the numberification. To put it clear, there was numbermandamus from the High Court to companysider prior applications. The word others qualify the phrase pursuant to and number the class of applicants who had applied even prior to the Held Area Notification dated 15.03.2003. As a matter of fact, the High Court had merely directed the State Government to companysider the applications in accordance with the provisions of the MMDR Act and MC Rules. Even otherwise, the said order was passed without going into the specific provisions in the Act or Rules. Further, the order does number deal with the interpretation of Section 11 or Rules 59 and 60. Hence, the order of the High Court of Karnataka in Ziaulla Sharieffs case does number permit the companysideration of Jindals application dated 24.10.2002 which was made prior to the numberification dated 15.03.2003. Issue d Whether Rule 35 of the MC Rules justify the recommendation of the State Government and the proceedings of the Chief Minister in favour of the Respondents - Jindal Kalyani? Rule 35. Preferential rights of certain persons - Where two or more persons have applied for a reconnaissance permit or a prospecting licence or a mining lease in respect of the same land, the State Government shall, for the purpose of sub-section 2 of section 11, companysider besides the matters mentioned in clauses a to d of sub-section 3 of section 11, the end use of the mineral by the applicant. We have already adverted to the proceedings of the Chief Minister which heavily relied on Rule 35 to justify the recommendation in favour of the respondents - Jindal and Kalyani on the premise that it is intended to give preference to those who have made existing investments in industries based on iron ore and both of them qualify on this companysideration. From a plain reading of Rule 35, it is clear that the rule permits the State Government to differentiate between the end use of the minerals for the purpose of sub-section 2 of Section 11 in addition to the matters in Section 11 3 . In the case on hand, all the parties, namely, MSPL, Sandur, Jindal and Kalyani expressed their intention to use iron ore from the mines for producing steel and, therefore, the same end use requirement is satisfied. Rule 35, at best, permits the State Government to differentiate between different end uses, for example, the use of iron ore to produce sponge iron instead of steel, or the use of gold in jewellery as companypared to medicines. Further, Rule 35 does number differentiate between proposed and existing end use. Therefore, it companyld have enabled the State Government to take into account the claim of the respondents - Jindal and Kalyani, whose past investments would number have qualified on the proposed investment criterion under Section 11 3 d , in addition to MSPL and Sandur. This companyld have been a basis to exclude those with proposed investments in steel plants from companysideration. It is also relevant to point out that Rule 35 specifies one additional factor apart from the factors set out in Section 11 3 . The plain language of Rule 35 requires its application only in cases companyered by Section 11 2 and number by Section 11 4 . Therefore, to the extent that it is Section 11 4 that companyers Notification under Rule 59 1 and number Section 11 2 , in this way also, the State Government companymitted an error in relying on Rule 35 to exclude the appellants, i.e., MSPL and Sandur. To justify the recommendation in favour of the respondents-Jindal and Kalyani, in the proceedings of the Chief Minister, State heavily relied on Rule 35 on the premise that it is intended to give preference to those who have made existing investments in industries based on iron ore and that the respondents - Jindal and Kalyani, qualify on this companysideration. However, as discussed above, Rule 35 only permits the State Government to take additional factor of the end use of the minerals and number the existing investments made by the applicants. Moreover, relying on the existing investments made, the respondents also does number satisfy the requirements under Section 11 3 d which talks solely about proposed investments to be made and number the existing ones. Issue e Whether the criterion of captive companysumption referred to in the TISCOs case has numberapplication to the present case because it is number one of the factors referred to in Section 11 3 or even in Rule 35. The criterion of captive companysumption referred to in TISCOs case supra does number have any application in this case, which we will refer in the later part of this paragraph. Section 11 4 and even the second proviso to Section 11 2 provide that the State Government may grant, inter alia, a mining lease after taking into companysideration the matters specified in Section 11 3 . Section 11 3 d specifies the investment which the applicant proposes to make in the mines and in the industry based on the minerals as one of such matters and on a plain interpretation, it is clear that only the proposed investment is a relevant factor. If the Legislature had intended that it should include past investments also, the use of the word proposed is superfluous, which companyld never be the case. Learned senior companynsel appearing for the respondents have number pointed out any other provision in the MMDR Act or the MC Rules permitting grant of mining lease based on past companymitments or for captive purposes in existing industries. As observed in the earlier paragraphs, the strong reliance placed by the respondent-Jindal on the decision of this Court in TISCOs case supra Paras 9,15,20,25,27,34,54,56 57 is misplaced. This case companycerned solely on the interpretation of Section 8 3 of the MMDR Act in the companytext of a second renewal of a mining lease in favour of TISCO, and number a fresh grant. It is, in this companytext the phrase interest on mineral development in Section 8 3 was interpreted to include captive requirements. On the other hand, the case of fresh grant is companyered by Section 11 of the MMDR Act. Paragraph 54 of the TISCOs case supra makes it clear that the case companycerned is chromite whose known reserves were number abundant, whereas iron ore is in abundance. Even otherwise, this judgment is of numberassistance even on Rule 59 1 of the MC Rules since it was a case of relaxation by the Central Government under Rule 59 2 , as is clear from paragraph 15 of the judgment. It is useful to mention that subsequent to the decision in TISCO supra , this Court in Indian Charge Chrome Ltd. Anr. vs. Union of India Ors., 2006 12 SCC 331 Paras 20 26 held that companysiderations of captive mining cannot be the companytrolling factor for grant of lease. Issue f Whether factors such as past companymitments made by the State Government to applicants who have already set up steel plants is number a relevant matter for companysideration for grant of lease. As discussed earlier, the State Government is denuded of all legislative and executive power under Entry 23 of List-II read with Article 162 after passing of the MMDR Act which are as under- Entry 23, List II Regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the companytrol of the Union. Article 162. Extent of executive power of State.- Subject to the provisions of this Constitution, the executive power of a State shall extend to the matters with respect to which the Legislature of the State has power to make laws. Provided that in any matter with respect to which the Legislature of a State and Parliament have power to make laws, the executive power of the State shall be subject to, and limited by, the executive power expressly companyferred by this Constitution or by any law made by Parliament upon the Union or authorities thereof. It is clear that the State Government is purely a delegate of Parliament and a statutory functionary, for the purposes of Section 11 3 of the Act, hence it cannot act in a manner that is inconsistent with the provisions of Section 11 1 of the MMDR Act in the grant of mining leases. Furthermore, Section 2 of the Act clearly states that the regulation of mines and mineral development companyes within the purview of the Union Government and number the State Government. As a matter of fact, the respondents have number been able to point out any other provision in the MMDR Act or MC Rules permitting grant of mining lease based on past companymitments. As rightly pointed out, the State Government has numberauthority under the MMDR Act to make companymitments to any person that it will, in future, grant a mining lease in the event that the person makes investment in any project. Assuming that the State Government had made any such companymitment, it companyld number be possible for it to take an inconsistent position and proceed to numberify a particular area. Further, having numberified the area, the State Government certainly companyld number thereafter to honour an alleged companymitment by ousting other applicants even if they are more deserving on the merit criteria as provided in Section 11 3 . In the case of State of Assam Ors. vs. Om Prakash Mehta Ors., AIR 1973 SC 678, this Court observed that the MMDR Act and MC Rules companytain the companyplete companye in respect of the grant and renewal of prospecting licences as well as mining leases in lands belonging to Government. In Quarry Owners Association supra , this Court again reaffirmed the numberion that both the Central as well as the State Government act as a mere delegates of Parliament while exercising the powers under the Act and Rules. Vide M.A. Tulloch supra , Baijnath Kedio supra , Kesorams case supra , and Bharat Cooking Coal Ltd. supra . From this, it becomes amply clear that the State Government has divested of legislative and executive powers with respect to mines and minerals development. In addition to the same, Anjum M.H. Gaswala supra , Captain Sube Singh supra , Singhara Singhs case supra , this Court repeatedly held that the field of granting mining leases is companyered by express statute and rules and the grants must be made in accordance with the provisions of the Act and Rules and numberother companysideration. From a perusal of the above settled legal position, it becomes clear that the State Government cannot grant mining leases keeping in mind any companysiderations apart from the ones mentioned in the MMDR Act and MC Rules. In those circumstances, numberextraneous companysiderations such as past companymitments made by the State Government to Jindal and Kalyani who have already set up steel plants can be entertained by the State Government while granting mining leases and must abide by the Act and Rules. Issue g Whether the recommendation in favour of Jindal and Kalyani saved by operation of law of equity? The Law of Equity cannot save the recommendation in favour of Jindal and Kalyani because it is a well settled principle that equity stands excluded when a matter is governed by statute. This principle was clearly stated by this Court in the cases of Kedar Lal vs. Hari Lal Sea, 1952 SCR 179 at 186 and Raja Ram vs. Aba Maruti Mali 1962 Supp. 1 SCR 739 at 745. It is clear that where the field is companyered expressly by Section 11 of the MMDR Act, equitable companysiderations cannot be taken into account to assess Jindal and Kalyani, when the recommendation in their favour is in violation of statute. It was pointed out that Kalyani does number have a companymitment from the State Government regarding its iron ore needs. In the proceedings of the State Government, there is only a statement that it may apply for a lease. No doubt, Jindal has emphasized that it has already set up its steel plant based on the companymitments made by the State Government to grant a mining lease and it is in need of iron ore for these steel plants. As observed earlier, companymitments made by the State Government cannot be a relevant factor for grant of lease in the teeth of the companysideration set out in Section 11 3 . If that was to be the sole criterion, the State Government ought number to have numberified the area vide Held Area Notification dated 15.03.2003. It was also pointed out that Jindal has been mining a lease area of 85.50 hectares of Mysore Minerals Limited, a Public Sector Undertaking through a joint venture in terms of the companymitment made by the State Government. In addition, the State Government has made a recommendation for grant of mining lease in favour of Jindal and its sister companycerns in the following areas 188.128 hectares in favour of M s JSW Steel Limited in Donimalai Range, Sandur Taluk, Bellary District. 181.70 hectares in favour of M s. Vijaynagara Minerals Pvt. Ltd. In Donimalai Range, Sandur Taluk, Bellary District. 184.14 hectares in favour of M s. South West Mining Ltd. In Donimalai Range, Sandur Taluk, Bellary District. 200.73 hectares in favour of M s JVSL in Kumaraswamy range of Sandur Taluk, Bellary District, which si the subject matter of the present SLP. As a matter of fact, MSPL had filed an affidavit in this regard before the Division Bench. It is number clear whether Jindal has specifically denied the specific grants. By drawing our attention to certain factual details, it was companytended that Jindal has so much iron ore and it actually exported iron ore for which reliance was made to its annual reports during the years 2002-03 to 2005-06. On the other hand, it is the claim of the MSPL that in accordance with Section 11 3 d it had proposed to set up a steel plant for which it required iron ore. It was also brought to our numberice that it had received permission from the State Government in this regard. With reference to the allegation that MSPL has a mining lease over an area of 722.94 hectares, it was pointed out that in actual it has a lease over an area of 347.22 hectares only. On 05.06.2009, MSPL filed an affidavit before the Division Bench stating that it holds only a single mining lease granted over five decades ago and the major proportion of which has been afforestated. It is also their grievance that the iron ore reserves in this lease have almost been exhausted over a period of 58 years, since 1952. The remaining iron ore cannot support a steel plant of the size that is being set up by MSPL. Since the entire field of granting mining lease is companyered by MMDR Act and MC Rules, the State Government cannot use any companysideration apart from the ones mentioned in the Act and Rules. Issue h About the impugned judgments of the single Judge and Division Bench In view of our companyclusion, the Division Bench has erred in companycluding that the Jindals application made prior to the Notification can be entertained along with the applications made pursuant to the said Notification because it is number Section 11 4 which companyers the said Notification under Rule 59 1 but the first proviso to Section 11 2 . As a matter of fact, the Division Bench did number even mention Section 11 4 in its reasoning apart from stray references even though the companyclusion of the learned single Judge hinged on how Section 11 4 would be rendered otiose and redundant if the first proviso to Section 11 2 was taken as governing the companysideration of applications under a Notification pursuant to Rule 59 1 . The Division Bench has also faulted in arriving at the companyclusion that the applications made prior to Notification under Rule 59 1 which are premature and cannot be entertained under Rule 60 would revive upon issuance of the Notification which is clearly number the case. As pointed out earlier, had that been the intention of the Legislature, there was numberreason for the Legislature to take pains under Rule 60 b that an application made during the period of 30 days specified in the Notification also would be premature and companyld number be entertained. If the decision of the Division Bench is taken to its logical companyclusion, then it would result in reading in a proviso at the end of Rule 60 to the effect that once the 30 days period specified in the Notification companytemplated by Rule 59 1 sub-clause ii is over, premature applications would revive. After taking such pains to make it clear that the application would number be entertained until the end of 30 days period, surely the Legislature itself would number have inserted such proviso in Rule 60 if that were its intention. If such premature applications are allowed to be entertained, it would result in the State Government giving out mining leases to favoured persons without numberice to the general public. The Division Bench has also accepted Jindals companytention that if Rule 60 is interpreted to render applications made prior to Rule 59 1 Notification number est, in that event, it would make Rule 59 2 unworkable because persons will numbermally apply mining lease areas along with an application for relaxation under Rule 59 2 . In view of our earlier reasons, this companyclusion is clearly misplaced. It is only the request under Rule 59 2 for relaxation in respect of an area that is companysidered and number the application for grant. It is only after the relaxation under Rule 59 2 by the Central Government of the requirement of the Notification under Rule 59 1 that the applications companyld be companysidered for grant of mining lease. Though the learned single Judge in his order dated 07.08.2008 quashed the companymunication recommendation of the State Government dated 06.12.2004 proposing to grant mining lease to Jindal and Kalyani, however, the learned single Judge traveled much beyond the reliefs sought for in the writ petition and quashed the entire Notification No. CI.16MMM.2003 dated 15.03.2003. In our view, while approving earlier part of his order and quashing the companymunication recommendation of the State Government dated 06.12.2004, the other observations directions are number warranted in the light of the provisions of the Act and the Rules. The said observations directions are deleted. Issue i Whether it is advisable to remit it to the Central Government Learned senior companynsel appearing for Jindal and Kalyani requested that inasmuch as the Central Government has already given its approval under Section 5 of the MMDR Act in their favour during the pendency of the writ petition, if this Court feels that fresh decision is to be arrived, the same may be remitted to the Central Government. In the earlier part of our judgment, we have pointed out that the Central Government companysiders only the materials forwarded by the State Government along with its recommendation. As rightly pointed out, if the recommendation of the State Government cannot be upheld in law, all companysequential orders including the subsequent approval by the Central Government are also liable to be quashed. It is useful to refer Barnard vs. National Dock Labour Board 1953 1 All E.R. 1113 at 1120 para 1, McFoy vs. United Africa Co. 1961 All E.R. 1169, Pavani Sridhara Rao vs. Govt. of A.P Ors. 1996 8 SCC 298 para 5 and State of Kerala vs. Puthenkavu N.S.S. Karayogam Anr., 2001 10 SCC 191 para 9 . If the very same recommendation of the State Government is sent back to the Central Government on the administrative side in its role as an approving authority under Section 5 1 without setting aside the impugned judgment, it is more likely that the Central Government would simply follow its previous order. In that event, the Central Government would be influenced by the judgment passed by the Division Bench upholding the grant made in favour of Jindal and Kalyani. Such an exercise would be in the nature of post-decisional hearing which would be impermissible. Vide H.L. Trehan Ors. vs. Union of India Ors., 1989 1 SCC 764 paras 12 K.I. Shephard Ors. vs. Union of India Ors., 1987 4 SCC 431 para 16 and Shekhar Ghosh vs. Union of India Anr., 2007 1 SCC 331. It is also brought to our numberice that as on date the Central Government hears revision petitions through an Executive Officer and without participation of a Judicial Member. It is also pointed out that the exact procedure of the revisional Tribunal has kept changing over the last few months. It is clear that it would number be an independent and efficacious alternative forum in terms of the guidelines laid down by the Constitution Bench in Union of India vs. R. Gandhi, President, Madras Bar Association, JT 2010 5 SC 553. As observed by three Judge Bench of this Court in Indian Charge Chrome Ltd. supra , when there was numbervalid recommendation by the State Government for the grant of lease, there cannot be any valid approval of the Central Government relying on the defective recommendation. We have already companycluded that the recommendation of the State Government dated 06.12.2004 is number valid with reference to the provisions of MMDR Act and the Rules, hence the invalid recommendation cannot be looked into by the Central Government. Further, proviso to Section 5 1 itself provides only for the Central Government either to grant or reject its approval to the State Governments recommendation in the case of mining lease for a mineral such as iron ore in the First Schedule. In our view, such companysideration on the administrative side does number involve companysideration of all the applicants based on their mining lease applications and after giving an opportunity of hearing. Inasmuch as the Central Government does number have all relevant materials before it, it may number be in a position to substitute itself for the State Government and, if number, it would be proper, in fact, it would be inconsistent with the provisions of the MMDR Act and the Rules to frame the issue on the administrative side of the Central Government. Even otherwise, inasmuch as we have heard the matter at length and we satisfy that there is a flaw in the recommendation of the State Government which requires reconsideration, we reject the request for remitting the matter to the Central Government for its decision. Conclusion In the light of the above discussion, the impugned order of the Division Bench of the High Court dated 05.06.2009 in Writ Appeal No. 5084 of 2008 and allied matters as well as the decision of the State Government dated 26/27.02.2002 and the subsequent decision of the Central Government dated 29.07.2003 are quashed.

A. Desai, J. These two appeals by Special Leave arise from the decision rendered by the High Court of Andhra Pradesh dismissing the appeals preferred by the present appellants. A few facts leading to the present appeals may be briefly stated. There was a Zamindari Estate styled as Kottam Tuni Estate situated in Andhra Pradesh. The Zamindar inducted the Rani of Tuni, wife of the Zamindar as tenant of the lands which are the subject matter of these two appeals, in the year 1951 Appellants are described as sub-tenants inducted on the land by the head tenant and are personally cultivating the same 2nd for long have been in undisturbed possession of the same. On the introduction of the Madras Estates Abolition and Conversion into Ryotwari Act XXVI of 1948, later styled as Andhra Pradesh Andhra Area Estates Abolition and Conversion into Ryotwarl Act 1948 1948 Act for short , the estate vested in the State and the question arose as to who between the appellant and the respondent is the lawful ryot in respect of the holding. It may be mentioned that respondents are transferees from the Rani of Tuni, tie wife of Zamindar. The area companyered by the deed of companyveyance in favour of respondents admeasured 133 acres which included 54 acres of land involved in the present appeals. The respondents filed three separate suits being O.S. Nos. 249, 251 and 253 of 1951 on April 14, 1955 against the appellants for recovering actual possession of the land in the Court of the District Munsiff-Kakinada. It may be mentioned that O.S. No. 249 of 1951 was disposed of by a. companypromise between the parties and it is numbermore the subject matter of dispute in these two appeals. The respondents sought actual possession from the appellants alleging that they were the sub-tenant, the head tenant being Rani of Tuni wife of the erstwhile Zamindar and as transferees front the head tenant they were entitled to recover actual possession from sub-tenants who had numberright to companytinue in possession as against the respondent. The suits were companytested by the appellants on diverse grounds but only one companytention survives for our companysideration. The appellants companytended that in view of the provision companytained in Section 56 1 iii of the 1948 Act Civil Court had numberjurisdiction to decide inter alia the question as to who is the lawful ryot in respect of the holding because jurisdiction to decide this dispute is companyferred on the Settlement Officer and Sub-section 2 of the Section 56 provides that the decision of the Settlement Officer on the questions set out in sub-section the of Section 56 shall be final and number liable to be questioned at any rate in any Court of law which would imply that the jurisdiction of the Civil Court to decide these questions is ousted. The trial Court decreed the suits to favour of plaintiff-respondents. It may at once be mentioned that the companytention as to want of jurisdiction was number raised in the written statement filed in the trial Court. In the first appeals A. S. Nos. 96, 97 and 98 of 1957 preferred by the present appellant an application for amendment of the written statements was moved seeking to raise a companytention that the Civil Court had numberjurisdiction to entertain the suits for the reasons hereinabove mentioned. Applications for amendment were granted. The companytention as to want of jurisdiction found favour with the appellate Court. The appellate Court held that as the estate has vested in the State a question arose under the 1948 Act as to who is the lawful ryot in respect of the holding and the Civil Court had numberjurisdiction to decide the companytention. Accordingly appeals preferred by the appellants were allowed and the plaints in the suits filed by the respondents were ordered to be returned for presentation to the proper Court. The respondents preferred appeals to the High Court of Andhra Pradesh. The view of the Andhra Pradesh High Court at that time was that the Civil Court had jurisdiction to entertain the suits more particularly where the prayers in the suits were for a decree for possession and mesne profits and accordingly the appeals were allowed and the judgment of the first appellate Court was set aside and the matter was remitted to the first appellate Court for disposal of appeals on merits. On remand the appeals of the appellants were dismissed and after unsuccessful appeals in the High Court they approached this Court under Article 136 of the Constitution. Hence these appeals by special leave. The only companytention Mr. Vepa P. Sarthi. learned Counsel for the appellants canvassed for our companysideration is that in view of the provision companytained in Section 56 of 1948 Act the Civil Court had numberjurisdiction to entertain the suits in which one of the questions required to be examined was as to who was the lawful ryot in respect of the holding because jurisdiction to decide that issue was companyferred on the Settlement Officer and his decision so fat as the Court was companycerned was to be final We are spared a detailed enquiry into the merits of this companytention in view of the decision of this Court in Muddada Chayana v. Karnam Narayana in which this Court after taking numbere of the two larger bench later decisions of the Andhra Pradesh High Court categorically held that the Civil Court had numberjurisdiction to entertain a suit in which on the advent of the 1948 Act and vesting of estate in the State one of the questions to be companysidered is as to who is the lawful ryot in respect of the holding. A Pull Bench of three Judges of the High Court took the view that Civil Court had jurisdiction to decide that issue but a later five Judge bench overruled the same and took a companytrary view. In Munuswami Naidu dead v. R. Venkata Reddy AIR 1978 Andh Pra 200 FB a larger bench taking a companytrary view reversed the earlier decision of the Full Bench in Cherukhuru Muthayya v. Gadde Gopalakrishnayya AIR 1974 Andh Pra 85 FB . this Court affirmed and approved the view taken in Munuswami Naidus case which in terms lays down that the Civil Court had numberjurisdiction to decide the question as to who is the lawful ryot in respect of the holding.

Wednesday, 14th March 2001 LADY JUSTICE ARDEN: This is an application by Mrs Josephine Margaret Clarke for permission to appeal against the order of District Judge Davies dated 29th February 2000. This application was lodged on 24th November 2000, and as that date was after 2nd May 2000 Civil Procedure Rule 52 applies. There are also applications for extension of time, for permission to file new evidence and for a stay of execution. By virtue of the order of District Judge Davies the application made by Mrs Clarke under the Inheritance (Provision for Family and Dependants) Act 1975 section 2 was dismissed. That section enables the court to make orders for reasonable financial provision for a child or certain other persons out of the estate of a deceased person. The estate in question in this case was the estate of Mrs Clarke's mother, Mrs Margaret Murray. Mrs Clarke is one of three daughters of Mrs Murray. The other two are called Caroline and Virginia. The deceased died on 2nd October 1995. Probate of her will was granted on 4th June 1996. Mrs Murray's will provided for the residue of the estate to be held on discretionary trust for the benefit of the three sisters and their families, and that there was a letter of wishes executed by Mrs Murray on the same date as the will (12th April 1994) which in essence provided that the principal trust asset (the deceased's half share in a block of flats) should not be sold against the wishes of Jane and Victoria, and that the net income should be paid to Mrs Clarke in her life time unless she should become bankrupt or unable to deal with her affairs. The letter of wishes also states that the Trustees should exercise their powers so that Mrs Clarke is able to live in reasonable comfort for the rest of her life and that they should not feel obliged to preserve the capital for the sake of those entitled on her death. Mrs Clarke says that her resources and income are now negligible and that she has debts of some £14,000; and she has submitted that the will treats her sisters more favourably. As at September 2000 the Trustees have paid to Mrs Clarke some £29,366.30. The letter of wishes authorises the Trustees to have recourse to the capital so that Mrs Clarke can live in reasonable comfort for the rest of her life. I have seen a valuation of the block of flats as at September 2000 which states that the then current open market value of the freehold interest subject to existing tenancies is £700,000, which places a value of £350,000 on the Trust's half share if the whole interest were being sold. Mrs Clarke is approximately 63 years of age and she has a life expectancy, according to the judge's judgment, of some 21 years. The applicant, Mrs Clarke, also says that she looked after her mother in her final years. The applicant, Mrs Clarke, gave evidence before the district judge. In his judgment the district judge said that the assets of the Trust consists of a half share in a block of sixteen flats, and that the capital value of the Trust is approximately £280,000. He also referred to letters from Mrs Murray which showed that she had paid a great deal of money to Mrs Clarke in her lifetime and that the applicant had not managed her personal or business affairs prudently and had spent the money which she had been given. For example, and I am now quoting from the judge's judgment, she decided to start a horse business and took a stable yard at a high rent with no resources behind her, and she had spent a legacy of £40,000 that she had received. The district judge observed that the income of the Trust consisted of the rent received for the flats, and that the Trustees had paid out approximately £6,000 per annum. On the basis that the applicant had that income from the Trust and her own pension, she now has an annual income of some £10,000 per annum. The district judge said that the bequests which had been made to Mrs Clarke's other sisters were irrelevant and that since the other sisters were comfortably off there was likewise no need to consider their financial position. The judge held that section 3(5)(e) of the 1975 Act was not relevant because the applicant was in an earlier category because she was a child of the deceased. The judge identified the correct question which was whether the provision for the applicant was reasonable. It was not a question of whether the mother had treated all the sisters fairly. The district judge also heard evidence from one of the Trustees, Mr Peterkin. Mr Peterkin had also been one of the deceased's professional advisers for many years. The district judge noted that the applicant, in his judgment, wrongly believed that her mother had some obligation to pay her bills; and there was reference to Mrs Clarke having been bankrolled by her parents in her lifetime. He regarded her assertion that there was a surplus of £81,000 since her mother's death as absurd, and he reached that conclusion on the basis of draft accounts which are in the bundle. In her grounds of appeal Mrs Clarke contends that the Trustees have not made reasonable provision for the applicant since the deceased died. She makes allegations, including an allegation that her mother tried to force her out of her business. She contends that her income is not sufficient for her to live on; and there is a reference to collusion between the judge and the defendants, but I must say forthwith that there is no evidence whatsoever to back that argument up. Mrs Clarke also says that she did not have time to meet the arguments produced at the trial, for instance that she did not see the defendants' skeleton arguments before the trial. As to this I do not think those arguments can assist because Mrs Clarke was legally represented at that trial. Mrs Clarke seeks to put in on this appeal new evidence consisting of correspondence that she has had with the Trustees requesting further distributions since December 2000 to which she has had no reply. I must now turn to my conclusions on this application. Section 2(2) of the 1975 Act provides that reasonable financial provision means such financial provision as it would be reasonable in all the circumstances for the applicant to receive for his or her maintenance. As I see it the judge clearly asked the right question and in that regard there can be no error of law; he clearly applied the correct principle. The net income from the property seems to be about £16,000 after tax. This sum is, as I see it, being received by the Trustees each year subject to the flats continuing to be occupied. The Trustees have, however, to keep some money back for emergencies and also for expenses connected with the flats such as insurance repairs, and in addition they have to make reserves for their legal costs. Subject to that, as I understand it, the income is available for Mrs Clarke. The district judge clearly had to form a view as to whether there was reasonable provision for the applicant, taking into account her resources and the amount which was available as it appeared from the estate. The judge came to the conclusion that reasonable provision was made. As far as that point is concerned, for an appeal to succeed it would have to be shown that the judge considered the question whether the provision was reasonable and reached an answer which was contrary to the weight of the evidence, and irrational taking into account matters which he ought not to have taken into account or failing to take into account some relevant factor. As I see it the finding which the judge made was not against the weight of the evidence. There is no reasonable prospect of success on appeal on that point. The new evidence goes really to another point which is that Mrs Clarke asserts that the Trustees have not been paying out to her all that could be paid, and indeed she has told me that they have not provided her with the information about the assets of the Trust and its income and so on to which she says she is entitled as a beneficiary. But those are not points which could be made on an appeal. It would involve an inquiry into the conduct of the Trustees of the management of the Trust which is an entirely separate issue. That is outside the proceedings and would not afford a reasonable prospect of success on this appeal. As I see it, the learned judge did not exercise his discretion under section 2 in a way which could be said to be susceptible to review by this court, and I do not consider that there is any real prospect of success on an appeal. Therefore this is a case in which I decline permission to appeal. Accordingly, the order that I make is that I extend time for hearing this application, but I dismiss the application. I dismiss also the application for a stay and for the admission of new evidence. (Applications dismissed; no order for costs).

THE THE DEPUTY JUDGE: The Claimant has been in immigration detention for 4 years and 11 months. I propose to state what my conclusion is now on one issue. That issue is whether any further detention of the Claimant would be lawful. I am satisfied that it is very much more likely than not that, if released from detention, the Claimant will reoffend and abscond. Nonetheless, in my judgment, any further detention of the Claimant would no longer be lawful in all the circumstances, given in particular the length of time which he has already spent in detention. This does not mean that I have concluded that the Secretary of State has in fact had power to detain the Claimant until today. I reserve my judgment on that and on other issues on which I have yet to hear submissions in full. I will provide my reasons for my conclusion on the issue which I have decided today later when I give my judgment on all the issues. The question then arises about what the correct approach now is. If the Secretary of State wants to give temporary admission, she may do so on conditions. I am not sure whether the position is that I now have power to give bail. MS HARRISON: I think in circumstances where you said the detention is not lawful, it is a question of the Secretary of State imposing conditions. I know that in other cases the court has assisted in terms of the appropriate conditions, but in principle it is not going to be bail, it is going to be either release on temporary admission or on CIO bail. My Lord, I am told that the conditions that the Secretary of State seeks would have been those that they would have suggested to the court had Mr Justice Kenneth Parker heard the bail application. I can hand your Lordship up a copy of those, we are content with them, for your Lordship's records as to what those conditions would be. (Handed). THE DEPUTY JUDGE: Mr Thomann, I have the conditions. I am not sure whether I have any function in relation to the conditions. It appears to me that, if the Secretary of State wants to impose these conditions on temporary admission, that will be a matter for the Secretary of State, unless I have misunderstood the position. MR THOMANN: I am grateful. MS HARRISON: My Lord, the only observation that we would make about them is that they are conditions that are clearly substantially less than what was within the Secretary of State's armoury to impose. So, for example, they do not include electronic tagging. It is the decision the Secretary of State has made, and obviously we are content with that. THE THE DEPUTY JUDGE: Can I say that I am due to sit in the week beginning 4 July and the week beginning 11 July. So what would obviously be sensible, given that at the moment you are giving a estimate of half a day for the remainder, is to find a day when both of you are going to be available. MS HARRISON: Yes. MR THOMANN: My Lord, I already know that both those weeks I am going to be potentially in court every day. MS HARRISON: I would have to just double check, but I do not think that I would have that difficulty for the entirety of that period. But I would need to double check. THE THE DEPUTY JUDGE: I wonder whether the sensible thing to do would be for your clerks to liaise with my clerk in chambers to find when we can find a date. Plainly I would like to finish this hearing sooner rather than later. I know I cannot do it next week, even if I am coming back for a day, which the Administrative Court has not planned for me to be here. It may be possible the following week, but I would be very reluctant to see this go off towards the end of July, because plainly I have to do a judgment and the longer it goes the more difficult it is to remember everything. MR THOMANN: My Lord, I am only junior counsel in the case I am on, so if there were a date that would suit everyone -- THE THE DEPUTY JUDGE: What, in those two weeks in June? MR THOMANN: It is more likely to be in the first of those weeks. THE THE DEPUTY JUDGE: Well, can I suggest what you do is you liaise with my clerk. If and when we can find a date which meets your availability and a date which I have available then my clerk will speak to the Administrative Court to see whether that can be done. MS HARRISON: My Lord, can I say in terms of practicalities. The order for release will only take place once it has been properly sealed by the court, so if there is a means for how we can facilitate that speedily today, it may be we will just have to draft an order for your Lordship and then for your Lordship to sign it, because I know that the detainors will want to see the actual document. THE THE DEPUTY JUDGE: Possibly if you draft a declaration and then give it to the associate. MS HARRISON: Depending on what my position is now we could agree a handwritten draft for your Lordship to sign and then that can be given (Inaudible). THE THE DEPUTY JUDGE: Why don't you do that. If you can do that, I will initial it. That is probably the easiest thing to do, if you do can do that sooner rather than later.

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 467 of 1988. From the Judgment and Order dated 20th July, 1987 of the Gujarat High Court in Crl. Appeal No. 260/87 with Crl. Appeal No. 105/87 and Crl. Appeal No. 444/87. Soli J. Sorabji, Mukul Mudgal, E.K. Jose and P.H. Parekh for the Appellant. PG NO 749 A. Shah, M.N. Shroff, B. Datta, A.K. Srivastava, P. Pramesh and Mrs. Sushma Suri for the Respondents. The Judgment of the Court was delivered by JAGANNATHA SHETTY, J. We grant Special leave and proceed to dispose of the appeal. The appeal arises from a Judgment of the Gujarat High Court dated 20th July 1987in Criminal Appeal Nos. 260/1987, 105/1987 and 444/1987. It raises a short but number very easy point for determination. The point relates to sentencing practice as to companycurrent or companysecutive sentences. The essential facts can be stated in summary form as follows Appellant-Mohd. Akhtar Hussain alias Ibrahim Ahmad Bhatti is a Pakistani national. On 15 April 1982, the gold 7 NN tolas of foreign mark of the value of Rs. 1.4 crores was seized from his possession at Ahmedabad. Later he was arrested. On 23 September, a case was filed in the Court of Chief Metropolitan Magistrate, Ahmedabad in CC No. 1674 of 1982. He was charged under s. 85 I ii of the Gold Control Act, 1968. He pleaded guilty to the charge. On 11 January, 1984 he was companyvicted and sentenced to imprisonment for 7 years and fine of Rs. 10 lakhs. It is the maximum punishment prescribed under the Gold Control Act. Upon appeal, the Bombay High Court companyfirmed that sentence but reduced the fine to Rs.5 lakhs. The special leave petition filed by the appellant was dismissed by this Court. That companyviction and sentence became final. When the appellant was under judicial custody in the aforesaid case, there was further investigation with regard to his smuggling activities. It revealed widespread racket of smuggling gold and silver in companylusion with several persons. On 6 January, 1983 he was again prosecuted along with 18 others under s. 335 of the Customs Act, 1962. The companyplaint in this case was filed before the Additional Chief Metropolitan Magistrate, Ahmedabad. It was registered as CC No. 129/1986. It was alleged in the companyplaint that the appellant and others had imported gold worth Rs. 12.5 crores and smuggled out of India silver worth Rs. 11.5 crores during December 1981 to February 1982. In this case also the appellant did number wait for the trial of the case. He pleaded guilty to the charge. The other 18 accused, however, did number They denied the charge and the case against them is said to be still pending for disposal. PG NO 750 On January, 1987, the trial Magistrate companyvicted the appellant, in the following terms Accused No. 1 in this case is proved guilty under Section 235 of Customs Act and it is ordered that accused No. 1 is sentenced for 4 years for four years R.I. and a fine of Rupees two lakhs Rupees two lakhs only and if fine number paid, further sentence of R.I. for six months more. This sentence is to be undergone on expiration of sentence in Crl. case No. 1674/82. Accused is found guilty under section 120 B of Indian Penal Code, but numberseparate sentence is ordered, for the same. The reasons given in support of the above companyclusion are It is number proper to pass order only by taking the circumstances and difficulties of the accused. Simultaneously, midway should be found looking to the circumstances of the nation and personal circumstances of the accused. It is number possible to order sentence of both the cases of the accused, to run companycurrently. When the accused in previous case, was ordered to undergo sentence of seven years R.I. then, in this case it does number seem reasonable to order sentence for similar period i.e. detain in jail for 12 to 14 years and fine and if fine number paid, to undergo further more sentence. The accused had pleaded guilty and requested for mercy. It is in the interest of justice to show slight mercy in the order of sentence by the Court. Against this order of companyviction and sentence there were appeals and companynter appeals before the High Court. The appellant appealed against the sentence on the ground that the sentences should have been made companycurrent. The State, on the other hand, demanded the maximum sentence again. The maximum sentence prescribed under s. 135 of the Customs Act is also 7 years. The State companytended that in view of the enormity of the economic crime companymitted by the appellant, he should be given the maximum and companysecutive. The High Court accepted the State appeal, enhanced the sentence from 4 years to 7 years and made it companysecutive. Consequently, the High Court dismissed the appeal of the appellant. The result is that he has to serve in all 14 years imprisonment which he has challenged in this appeal. Section 427 Cr.P.C. incorporates the principles of sentencing an PG NO 751 offender who is already undergoing a sentence of imprisonment. The relevant portion of the Section reads 427. 1 When a person already undergoing a sentence of imprisonment is sentenced on a subsequent companyviction to imprisonment or imprisonment for life, such imprisonment or imprisonment for life shall companymence at the expiration of the imprisonment to which he has been previously sentenced, unless the Court directs that the subsequent sentence shall run companycurrently with such previous sentence. xxxxx xxxxx xxxxx The Section relates to administration of criminal justice and provides procedure for sentencing. The sentencing companyrt is, therefore,required to companysider and make an appropriate order as to how the sentence passed in the subsequent case is to run. Whether it should be companycurrent or companysecutive ? The basic rule of thumb over the years has been the so called single transation rule for companycurrent sentences. If a given transaction companystitutes two offences under two enactments generally, it is wrong to have companysecutive sentences. It is proper and legitimate to have companycurrent sentences. But this rule has numberapplication if the transaction relating to offences is number the same or the facts companystituting the two offences are quite different. In this appeal, the primary challenge to the sentence is based on assumption that the two cases against the appellant, under the Gold Control Act, and the Customs Act pertain to the same subject matter. It is alleged that the appellant was prosecuted under the two enactments in respect of seizure of 7,000 tolas of gold. On this basis, reference is also made to Section 428 Cr. P.C. claiming set off in regard to the period of imprisonment already undergone by the appellant. The submission, in our opinion, appears to be misconceived. The material produced by the State unmistakably indicates that the two offences for which the appellant was prosecuted are quite distinct and different. The case under the Customs Act may, to some extent, overlap the case under the Gold Control Act, but it is evidently on different transactions. The companyplaint under the Gold Control Act relates to possession of 7,000 tolas of PG NO 752 primary gold prohibited under s. 8 of the said Act. The companyplaint under the Customs Act is with regard to smuggling of Gold Worth Rs. 12.5 crores and export of silver worth Rs. 11. 5 crores. On these facts, the Courts are number unjustified in directing that the sentences companyld be companysecutive and number companycurrent. The question, however, remains to be companysidered is whether the maximum sentence under the Customs Act is warranted? Whether, in the circumstances, it is wrong in principle to sentence the same offender the another maximum imprisonment? It is argued that the High Court has failed to take into companysideration the total period of sentence which the appellant has to undergo. It is also argued that since the companyviction was based on the plea of guilty the appellant should have been given a credit in the sentence. The personal problems of appellant are also highlighted for reduction in the sentence. The High Court has refused to take into companysideration the merciful plea of the appellant and much less the plea of guilty. The enormity of the crime companymitted by the appellant, according to the High Court, warranted numberhing less than the maximum sentence. The High Court had this to say The individual hardships of the appellant and his family would be of numberconsequence at all. If offence was such that the maximum sentence should have been awarded, then the learned Metropolitan Magistrate should number have made an illconceived attempt to find out a via media. We, therefore, feel that the appeal filed by the State requires to be allowed. The fact that the accused had pleaded guilty is of numberconsequence. It is number the case of plea-bargaining because the accused had pleaded guilty and yet he was given numerous opportunities to reconsider his decision. If the accused even thereafter had pleaded guilty, the fact that he was awarded a seven years Rigorous imprisonment sentence in the previous case would be numberground for the learned Metropolitan Magistrate to award less than the maximum sentence if the facts of the case warranted such a maximum sentence. The enormity of the crime called for numberhing less than the maximum sentence. We have carefully perused the entire material on record. It may be recalled that the appellant was given the maximum PG NO 753 sentence of 7 years in the previous case under Gold Control Act. The companyviction thereunder was also based on the plea of guilty. The latter sentence under the Customs Act was also on the plea of guilty. Generally, it is both proper and customery for Courts to give credit to an accused for pleading guilty to the charge. But numbercredit need be given if the plea of guilty in the circumstance is inevitable or the accused has numberalternative but to plead guilty. The accused being caught red handed is one such instance. The first case under the Gold Control Act against the appellant falls into the latter category. 7,000 tolas of Gold of foreign mark of the value of Rs. 1.4 crores were seized from the possession of appellant. The plea of guilty in that case was inevitable. The Court was, therefore, justified in awarding the maximum sentence. But the second case under the Customs Act was number of that type. Here the prosecution has to prove many things. There are 18 other accused facing the trial in the same case. The appellant, however, pleaded guilty perhaps on legal advise. He must have been told that some credit for such plea would be given by the companyrt and if the credit is number given and the maximum sentence is awarded the appellant is surely entitled to companyplain for giving the maximum sentence. It is numberdoubt that the enormity of the crime companymitted by the accused is relevant for measuring the sentence. But the maximum sentence awarded in one case against the same accused is number irrelevant for companysideration while giving the companysecutive sentence in the second case although it is grave. The Court has to companysider the totality of the sentences which the accused has to undergo if the sentences are to be companysecutive. The totality principle has been accepted as companyrect principle for guidance. In R. v. Edward Charles French, 1982 Cr. App. R. S p. 1 at 6 , Lord Lane, C.J., observed We would emphasize that in the end, whether the sentences are made companysecutive or companycurrent the sentencing judge should try to ensure that the totality of the sentences is companyrect in the light of all the circumstances of the case. The trial Magistrate in this case has properly companysidered all aspects including the plea of guilty and given good reasons for awarding 4 years R.I. That means in all, the appellant has to undergo 11 years of imprisonment. That by itself is quite long enough in a mans life. But the High Court took a narrow view of the whole matter with the enormity of the crime on the forefront. The broad expanse of PG NO 754 discretion left by legislation to sentencing Courts should number be narrowed only to the seriousness of the offence. No single companysideration can definitively determine the proper sentence. In arriving at an appropriate sentence, the companyrt must companysider, and some times reject,many factors. The companyrt must. recognise, learn to companytrol and exlcude many diverse data. It is a balancing act and tortuous process to ensure reasoned sentence.

OPINION OF MR ADVOCATE GENERAL MANCINI DELIVERED ON 6 JULY 1983 ( ) Mr President, Members of the Court, 1. This reference for a preliminary ruling concerns Community customs provisions. The point at issue is whether, under those provisions, the fact that goods subject to customs duty are removed by a third party, through no fault of the taxable person, extinguishes the fiscal obligation on the ground that the impossibility of fulfilling that obligation is attributable to a case of force majeure. The facts may be summarized as follows. In November 1978, alcohol and foreign manufactured tobacco belonging to Mellina Agosta Srl were removed by unknown persons from a warehouse situated within the customs zone of the port of Catania and managed by Esercizio Magazzini Generali SpA. The police authorities ascertained that the thieves had entered by forcing a metal sliding door fitted with two locks. One of the keys to the locks was kept by the company which managed the warehouse and the other by the customs authorities of the port. Subsequently, in January 1979, the Catania customs authorities requested Magazzini Generali and Mellina Agosta to pay approximately LIT 78000000 in respect of duty and value-added tax on the stolen goods, in addition, of course, to the legally prescribed interest and costs. Magazzini Generali lodged an administrative appeal through official channels against that request. It was however rejected and, in June 1979, the customs authorities served an order on that company and Mellina Agosta for payment of the above-mentioned sum. At that point, the two companies brought separate actions before the Tribunale di Catania [Catania District Court]. By judgments delivered in 1981, that court held that the sum was not payable and ordered the administration to pay the costs incurred by the plaintiffs. The administration lodged an appeal and in the course of those proceedings, by two separate orders dated 18 June 1982, the court of second instance stayed the proceedings in the two prallel cases and, under Article 177 of the EEC Treaty, requested the Court of Justice to give a preliminary ruling on the question: “Whether the removal of goods subject to customs duties, carried out in the manner indicated above or, in more general and abstract terms, by methods which assimilate such removal to a case of force majeure by virtue of ordinary legal principles, may fall within the concept of force majeure as formulated in the Community customs provisions”. By order of 19 January 1983 this Court decided to join the two cases for the purposes of the oral procedure and judgment, on the ground that the parties thereto and the subject-matter thereof were connected. 2. For a better understanding of the question, I think it is appropriate to refer to the Italian customs provisions which were considered in the main action. It was the compatibility of those provisions with the Community legislation which seemed doubtful to the national court. According to Article 36 of the Consolidated Customs Laws, approved by Decree No 43 of the President of the Republic of 23 January 1973 (Gazzetta Ufficiale [Italian official Gazette] 1973, No 80), “In the case of goods on which customs duty is payable, the event giving rise to the fiscal obligation is constituted ... by their release for consumption in the customs territory”. The same text also provides that “ goods ... shall be regarded as having been definitively released for consumption [if they have been] unlawfully removed without compliance with customs obligations of [if] in any event they have not been presented within the prescribed periods for customs inspection and control or ... not ... recovered for the purposes of the above-mentioned operations ...”. However — and this is the aspect which is of significance in these proceedings — according to Article 37 of the Consolidated Customs Laws, the event giving rise to the fiscal obligation is deemed not to have occurred “when the taxable person establishes that the failure to fulfil his customs obligations or the failure to present all or part of the good; for customs clearance or for customs inspection or control ... is due to the loss or destruction of the goods through unforeseeable circumstances or through force majeure or as a result of events attributable to the minor negligence of a third party or the taxable person himself”. The latter provision has given rise to difficulties of interpretation, in particular as regards the meaning of the word “loss”. The financial administration claims that it refers to the “dispersion” (dispersione) of the goods so that they cannot be usefully recovered by anyone. On the other hand, the respondents maintain that the word has a wider scope and covers the non-availability of the goods as a result of the fact that they are lost and are no longer in the possession of the taxable person. The difference between the two views has important practical implications. Suffice it to say that if the second view is accepted, the theft of goods by a third party without negligence on the part of the taxable person represents a “loss” within the meaning of Article 37 and therfore entails the extinguishment of the fiscal debt. Moreover that view was expressed by the Corte di Cassazione [Court of Cassation] in judgments Nos 6148 of 22 December 1978 and 431 of 18 January 1980. The problem was definitively resolved by Law No 891 of 22 December 1980, (Gazzetta Ufficiale No 355 of 30 December 1980). That Law provides that “the word ‘loss’ ... in Article 37 of the Consolidated Customs Laws ... must be interpreted as meaning ‘dispersion’ (dispersione) and not ‘removal’ (sottrazione della disponibilità) of a product”. It adds that the above clarification does not amend Article 37 but merely provides an authentic interpretation (which is therefore effective ex tunc rather than ex nunc). Naturally, the Corte di Cassazione adapted its view in conformity with the intervention of the legislature. Thus in its judgment No 5769 of 31 October 1981 it recognized that “by express wish [of the legislature] theft has never been included in the concept of ‘loss’ in the said Article 37”. 3. Let us now consider the Community provisions on customs duties which define the cases in which the customs debt is extinguished for reasons not attributable to the taxable person. Indeed, the Italian legislation must be viewed in the light of those provisions in order to determine whether it is compatible. In that context, Council Directive 69/74/EEC of 4 March 1969 on the harmonization of provisions laid down by law, regulation or administrative action relating to customs warehousing procedure (Official Journal, English Special Edition 1969 (I), p. 82) should be considered first of all. Article 11 provides that “The depositor and warehouse keeper must be able to enjoy complete exemption from customs duties, charges having equivalent effect and agricultural levies in respect of losses occurring during the storage period and attributable to fortuitous events, force majeure or causes inherent in the nature of the goods”. That provision, therefore, links the exemption (or rather the extinguishment of the customs debt) to only two categories of cause: on the one hand the vis or the casus and, on the other, the nature of the goods (as in the case of perishable foodstuffs or products which as a result of their dispersion may no longer be used — an example would be fuel oil spilt onto the road when the tank containing it bursts). That does not, however, deal with the case of theft. The formula employed by the Community legislature does not make it clear whether the “loss” as a result of force majeure relates solely to the destruction of the goods or whether it includes their removal from the importer's possession. It therefore seems to recognize both possibilities. However the fact that Article 11 (3) excludes from the concept of loss “unauthorized removal of goods” would seem to suggest a more restrictive interpretation inasmuch as it provides that for such cases customs duties are to be levied on the basis of the rates applicable on the date of removal. The Italian Government in its defence, correctly, does not suggest that by adopting that line the directive ultimately equates unauthorized removal to release for consumption. It is clear that unauthorized removal is not necessarily equivalent to removal by a third party. Nevertheless the wide scope of the formula and in particular the choice of the adjective (“unauthorized” [irregolare] means essentially an action which is contrary to the rules) suggests that such equivalence was contemplated by the legislature. However any doubt which might remain is removed by examination of Council Regulation (EEC) No 222/77 of 13 December 1976 on Community transit (Official Journal 1977, L 38, p. 1). Article 34 thereof provides that “... the principal shall be exempted by the competent authorities of the Member States from payment of duties and other charges in the case of: (a) goods which have been destroyed as a result of force majeure or unavoidable accident duly proven; or (b) (officially recognized shortages) arising from the nature of the goods”. Clearly theft is not covered by either (a) or (b). Thus it gives rise to no exemption from liability. That did not happen by chance. The rule is evidently founded on the principle that the customs debt is conditional on the entry of the goods into the economic circuit. If they are destroyed or deteriorate totally they cannot be marketed and are therefore exempted from the debt. That does not apply to theft, which renders the goods unusable only for the owner and, for that reason, the debt subsists. 4. Moreover, Council Directive 79/623/EEC of 25 June 1979 on the harmonization of provisions laid down by law, regulation or administrative action relating to customs debt (Official Journal 1979, L 179, p. 31) adopts the same approach. Article 4 thereof provides that “... no customs debt on importation shall be deemed to be incurred in respect of specific goods: (a) where the person concerned proves ... that the non-fulfilment of the obligations ... results from the total destruction or irretrievable loss of the said goods by reason of the nature of the goods themselves or because of unforeseeable circumstances or force majeure ...”. It is in my view clear that in this case also only events which are capable of rendering the goods unusable not only for the owner but for anyone may be regarded as extinguishing the debt. Moreover the preamble to the directive shows that that interpretative approach is correct. The ninth recital thereof states that “the reasons for this extinction must be based on the recorded fact that the goods have not been used for the economic purpose which justified the application of import or export duties”. Further confirmation of that interpretation is provided by the Kyoto Convention on the Simplification and Harmonization of Customs Procedures of 18 March 1975, to which the Community is a party by virtue of Council Decision 75/199/EEC of 18 March 1975 (Official Journal 1975, L 100, p. 1). With reference to the present proceedings Article 22 of Annex E 3 is significant inasmuch as it provides that: “Warehoused goods destroyed or irrevocably lost by accident or force majeure shall not be subjected to import duties and taxes ...”. Within the Community system, the extinction of the customs debt is ultimately attributed to the loss of the goods which is seen as a purely objective fact. The important consideration is that the goods have become unusable for the economic purpose for which they are intended; what happens to the relationship between the goods and the person possessing them is of no significance whatsoever. In other words, theft — the event to which the national court refers in its orders — is not one of the events which extinguishes the customs debt according to Community law. 5. In the light of that conclusion, I do not think that any useful purpose would be served by examining the Community concept of force majeure as requested by the Catania court. If there is no possibility of the “subjective” loss of the goods liable to customs duty being regarded as equivalent to the destruction or dispersion thereof as far as extinguishment of the customs debt is concerned, there is no reason to go on to examine the causes of such events or, in that context, to consider whether the concept of force majeure includes theft. It follows that the answer to be given to the question submitted by the Italian court should be worded accordingly. On the basis set out above, the answer should concentrate solely on the causes of extinguishment of the customs debt connected with the “objective” loss of the goods. To go any further would be inappropriate. 6. In view of al the above-mentioned considerations, I propose that the Court reply to the question submitted by the Corte d'Appello [Appeal Court], Catania, in the proceedings between the finance administration of the Italian Republic and Meilina Agosta Sri and Esercizio Magazzini Generali SpA, by two orders dated 18 June 1982, as follows: “According to the existing Community customs provisions, the removal, by a third party and through no fault of the taxable person, of goods subject to customs duties does not extinguish the obligation to pay duty on them ” ( ) Translated from the Italian.

CRIMINAL APPELLATE JURISDICTION Criminal Appeals Nos. 213 and 214 of 1968. Appeals by special leave from the judgment and orders dated December 7, 1967 of the Calcutta High Court in Criminal Revisions Nos. 304 and 291 of 1967. C. Chagla, K. K. Jain and H. K. Puri, for the appellant in both the appeals . K. Chatterjee, S. Joseph and D. N. Gupta, for respondent No. 2 in Cr. A. No. 213 of 1968 and for respondents Nos. 2 and 3 in Cr. A. No. 21th of 1968 . Debabroto Mookherjee, G. S. Chatterjee, for respondent No. 1 tin Cr. A. No. 213 of 1968 . Debabroto Mookherjee, P. K. Chakravarty, Prodyot Kumar Chakravarty, for respondent No. 1 in Cr. A. No. 214 of 1968. . The Judgment of J.M. SHELAT 1. D. DUA, JJ. was delivered by SHELAT, J., H. R. KHANNA, J., gave a dissenting opinion. SHELAT, J. These two appeals, by special leave, arise out of two companyplaints, both of which were filed in respect of the same transaction and are therefore disposed of by a companymon judgment. Appeal No. 214 of 1968 is against the judgment of the High Court of Calcutta dismissing, the companyplaint filed by the appellant on January 5, 1966 under secs. 120B, 406 and 420 of the Penal Code against respondents 2 to 5, who are the directors and the secretary of M s Turner, Morrison Co. Ltd. hereinafter referred to as the companypany . The case of the appellant in the said companyplaint may be stated as follows At the material time, the appellant, one S. Varma and Frank Goldstein were the liquidators of Hungarian Investment Trust Ltd. in voluntary liquidation hereinafter referred to as Hungerford . At all material times Hungerford was the registered owner of 51 of the shares of the companypany and as much was ordinarily entitled to have the companytrol and management of that companypany. These 51 shares numbered 2295 shares of the face value of Rs. 1.000 each. Out of these, 707 shares were in possession of the companypany. Respondent 5, Haridas Mundra, owned the balance of 49 shares. In or about 1961, Hungerford agreed to sell and Mundra agreed to purchase the said 51 shares. Mundra filed a suit being Suit No. 600 of 1961 against Hungerford in the High Court of Calcutta for specific performance of the said agreement. 7 1 The High Court decreed the suit directing Hungerford to deliver the said 2295 shares against payment of Rs. 86 lacs and odd and issued until delivery of the said shares was made to Mundra, aninjunction restraining Hungerford from exercising its rights as holder of those 51 shares. The curious result of the said induction was that Mundra companyld get companytrol and management of the companypany with the 49 shares held by him without having to pay the price of the said 51 shares, until Hungerford gave delivery of all those 2295 shares, out of which, as aforesaid, 707 shares were in the custody of the companypany. The problem for Hunger-ford was how to get back those 707 shares from the companypany so as to be able to deliver all those 2295 shares and obtain payment against such delivery of Rs. 86 lacs and odd from Mundra. The said S. Varma, who was then residing in England, came to India in or about May 1965. According to the companyplaint,Varma, accompanied by one N. K. Majumdar, went to the office of the companypany on May 27, 1965, and upon his request for the said 707 share certificates, obtained from respondent 2 D.M.Jaffray thesaid share certificates. Varma thereupon issued areceipt for those share certificates and also executed an indemnity bond in favour of the companypany against any possible claims which Mundra might make in respect of those 707 share certificates. By the said bond the liquidators of Hungerford indemnified the, companypany to the extent of Rs. 53 lacs said to have been paid by that companypany by way of taxes for the Turner family, undertook to assist that companypany to recover that sum from the estates of that family and furthermore to produce the said 707 share certificates whenever required for delivery to Mundra in terms of the said decree and to indemnify any claim which might arise as a result of delivery thereof to Varma. It is clear that once those 707 share certificates, were handed over to Verma, Hungerford would, in terms of the said decree, be able to deliver to Mundra all the said 2295 shares and Mundra would have to take delivery of them against payment of Rs. 86 lacs and odd. The receipt document 2 which Varma executed at the time recorded the fact of the said 707 share certificates having been received by him from Jaffray, and their particulars and numbers. The prosecution case was that as Varma had, then a luncheon engagement he did number wish to carry those scripts together with the companyresponding bank transfer forms endorsed by the companypany, and therefore, gave them back to Jaffray to hold them on his behalf until called for them later in the day. He thereupon took Jaffrays endorsement, viz., shares with me under which Jaffray affixed his signature. There was numberdispute that the said endorsement and the signature underneath it were in the handwriting of Jaffray. In order to clarify how the said share certificates remained with Jaffray, Verma also wrote over the said endorsement the following Dear Mr. Jaffray, I do number want to carry these with me, hence leaving meantime with you personally for delivery to me later. Were this writing to be genuine, the word personally therein would mean safe custoday of Jaffray in his personal capacity as distinguished from that of the companypany. Later that day, on the instructions of Varma, M s Sanderson Morgan, the Solictors of Hungerford, sent their assistant, one Chaudhry, with their own letter as also a letter addressed by Varma to Jaffray with a request to hand over to Chaudhary those 707 share certificates. Jaffray declined to do so stating that he would send them to M s Sanderson Morgan through M s Orr Dignam Co., the Companys solicitors. Since the said share certificates were number sent to them, M s Sanderson Morgan, by their letter, dated August 31, 1965 to the appellant, recorded the fact of their having sent the said Chaudhary to Jaffray, the refusal of Jaffray to deliver the said share certificates to Chaudhary and his assurance to hand them over through the Companys solicitors, and lastly, of their having number received so far the said share certificates either from Jaffray, or the Companys solicitors. In the meantime Jaffray went to England and the rest of the directors of the companypany, when demands for the said shares were made, replied that they would wait for Jaffrays instructions on his return to India. This position appears to emerge from Varmas letter dated November 29, 1965 to the appellant. In that letter Varma, repeated that Jaffray had the said shares for safe custody on his behalf, that Jaffrar was withholding delivery thereof at the instance of Mundra and the other directors, that Jaffray thereby companymitted breach of trust and that the appellant should adopt criminal proceedings against Jaffray and t he other directors. The appellants case was that it was at the instance of Mundra that Jaffray withheld delivery of those share certificates with a view to prevent Hungerford from delivering all the said 2295 shares and companypelling Mundra to pay Rs. 86 lacs and odd against such delivery. It is clear that so long as the liquidators companyld number deliver all the 2295 shares, Mundra companyld number be called upon to pay the said price, and Mundra in the meantime companyld companytinue to have the companytrol of the Company, although he had only the minority holding of 49 shares and thus keep Hungerford at bay preventing it by virtue of the said injunction from exercising its rights in respect of its 51 shares as against 49 held by Mundra. It was in this background that on January 5, 1966 the appellant filed a companyplaint before the Chief Presidency Magistrate against Jaffray, C.N. Rodewald and Mundra, the directors of the Company and A.J. Hormusji, its secretary. Para 3 of the said companyplaint set out the delivery of the said 707 share certificates with the companyresponding blank transfer deeds therefore by Jaffray to Varma, his having executed the receipt in favour of the Company, Jaffray having made the said endorsement and Varma thereafter having written the said numbere partly by the side of and partly over the said endorsement. Para 9 of the companyplaint read as follows That your petitioner has companye to know that accused No. 1 Jaffray has parted custody of the said 707 shares illegally and wrongfully to Turner Morrison Co., Calcutta in companyspiracy with the other three accused companynected with Turner Morrison Co. to deprive your petitioner from the physical custody of the said 707 share certificates and the blank transfer deeds with the sole object of defeating your petitioners right to recover Rs. 86,60,000 from accused No. 4, Haridas Mundhra against physical delivery of 2,295 shares of Turner Morrison Co., Calcutta. The Chief Presidency Magistrate directed, under sec. 156 3 of the Code of Criminal Procedure, the police to make an inquiry. In the companyrse of that inquiry the police seized the said 707 share certificates from Hormusji. It would appear that although the appellant requested the investigating officer to examine the said Majumdar and Varma, who, it was said, was prepared to companye to India for that purpose, that officer declined to do so. The police thereafter made their report recommending discharge of the accused on the ground that the companyplaint filed by the appellant was false, that the said receipt was a forged document and sought permission of the Magistrate to take action against the appellant. On May 7, 1966, the appellant filed a protest application requesting the Chief Presidency Magistrate to take the matter out of the hands of the police and to order a judicial inquiry. Thereupon the Chief Presidency Magistrate directed the Presidency Magistrate, 3rd Court, Calcutta to hold such an inquiry. The proceedings thereupon went to that magistrate before whom the appellant and his witnesses P. R. Chaudhary and Majumdar gave their depositions. Varma was number examined as he was in England, but an affidavit by him was produced before the Magistrate. In his deposition before the Magistrate the appellant produced the said receipt marked document 2 and the said 7 4 indemnity bond marked document 5 and stated on oath that the receipt was in the handwriting of Varma, that the words shares with me marked 2 and the signature thereunder were in the handwriting of Jaffray, and that the indemnity bond was in Varmas handwriting and which he had given to the witness for his signature He also deposed that he had gone to Jaffray on that very day, that is, May 27, 1965, with the receipt, the said bondand a letter from Varma to Jaffray and had demanded from himthe said 707 share certificates and had said at the time that he was agreeable to sign the said bond as the other liquidator of Hungerford, that Jaffray thereupon showed the said sharecertificates to him and assured him that he would hand them overto M s Sanderson Morgan, and that on that assurance he affixed his signature on the indemnity bond and told Jaffray that he would send his solicitors to take delivery of the said share certificates His evidence further was that thereafter, he returned back to his hotel where Mundra was waiting. Mundra inquired of him as to why he wanted those share certificates to which he replied that he wanted them together with the rest of the share certificates to be delivered to him, against payment of Rs. 86 lacs, whereupon Mundra threatened that he would see that the said 707 share certificates were number handed over to him. Faced with this threat, he called on his solicitors and instructed them to call for those share certificates immediately. M s Sanderson and Morgan sent their assistant with their own letter and the letter written by Varma, with whom he, the appellant also went. The assistant handed over those letters to Jaffray and asked for the delivery of the share certificates. Jaffray pleaded that it was late in the day, that the office was closed and its key was number with him, but promised that he would send them to his solicitors M s Orr, Dignam Co. The share certificates were, however, number sent and were later seized by the police from the custody, number of Jaffray, but of Hormusji to, whom Jaffray must have handed them over in his capacity as the secretary of the Company. To the same effect was the deposition of P. R. Chaudhry, the assist-ant of M s Sanderson Morgan with Whom the appellant had on that day approached Jaffray. Wit. N. M. Majumdar, who was said to have accompanied Varma earlier in the day, deposed that both Jaffray and Rodewald were, present when they went to the office of Turner Morrison Co., that on Varma asking for the shares, the two directors wanted him to execute the indemnity bond, that Varma signed the bond, that as the two directors wanted the signature of Hoon also, Varma kept the bond with him so as to secure Hoons signature, that Varma then left, leaving the said certificates with Jaffray to be sent later to M s Sanderson Morgan. He also deposed to the fact of Varma having written out the receipt in his presence and Jaffray making the said endorsement and then Varma writing on the receipt the reason why he left the said shares with Jaffray. Varma did number companye to India to give his deposition, but sent in affidavit giving his version as to the delivery of the said share certificates to him by Jaffray, his having been accompanied by Majumdar at that time, his having executed the said receipt and he indemnity bond, his having then entrusted the said shares to Jaffray, and Jaffray having assured him to keep them in his personal custody and to hand them over later to M s Sanderson, Morgan, his having given a numbere addressed to Jaffray to deliver he said share certificates to the appellant, and lastly, Jaffray having told him on telephone that as the representative of M s Sanderson Morgan had arrived late he had number been able to hand over the said. share certificates and once again assuring him that he would deliver them to M s Sanderson Morgan. At that stage of the inquiry, when numberprocess bad yet been issued, Jaffray companyld number give his version. But his version as to what took place on May 27, 1965 is avail-able from his deposition in the companynter-complaint he lodged against Hoon. That companyplaint is the subject matter of Criminal Appeal No,. 213 of 1968 heard along with this appeal. His case in that deposition, was that the said 707 share certificates were lying with the companypany as the companypany claimed a lien over them in respect of a sub of Rs. 53 lacs having been paid by it to the Income Tax authorities in India for and on behalf of Hungerford and for which the companypany had filed a suit and had a receiver appointed to obtain possession of them. There is, however, numberdoubt that ,these share certificates were with the companypany on May 27, 1965, for, even according to affray, when Varma saw him on that day companyplaining that the companypany had parted with those share certificates to Mundra, he produced them before Varma for his inspection. According to him, Varma at that stage brought out a typed receipt to show that be had inspected the shares. His case was that he objected to the word received in that receipt and wanted instead the word inspected, but. Varma declined to alter the receipt and thereupon be wrote out the words shares with me with a view to clarify that the shard certificates were still in his custody and number with Mundra. He denied his having delivered them to Varma, or Varma having entrusted them to him, or his having promised to hand them over to M s Sanderson Morgan, and alleged that Hoon later on made an interpolation marked 3 in the said receipt to give a false twist to hi said endorsement and to show that the said certificates were entrusted to him by Varma. Since the share certificates remained all along in the possession of the companypany, the police. seized them, 7 6 Later on from Hormusji. We may numbere that Jaffray in his deposition did number mention the indemnity bond though it had been ,executed at the same time when the said receipt was executed. The Presidency Magistrate, 3rd Court, held by his order ,dated January 5, 1967 that the appellant had failed to make out a prima facie case, and he companyld number, therefore, recommend ,the issue of process. His order records two main reasons why he thought that numberprima facie case was made out. The first was that though, according to him, the receipt, if believed, would establish entrustment, it companyld number be given even its face value, since Varma, the central figure, had failed to give evidence. Though in England at that time, he companyld have flown to India for the purpose of giving evidence. He discarded his affidavit as acceptance of such evidence was number permissible either under sec. 60 or sec. 32 of the Evidence Act. He also discarded the evidence of Majumdar on the ground that sec. 60 required the ,best evidence and such best evidence would have been that of Varma, had he been examined. Besides, Majumdars evidence, according to him, companytained some points of obvious absurdities, in that Jaffrays insistence that an indemnity bond should be Signed by both Varma and Hoon indicated that he companyld number have parted with the share certificates before Hoon had signed that bond. The case together with the report went back to the- Chief Presidency Magistrate. By his order dated February 15, 1967, the Chief Presidency Magistrate held that it cannot be said that the share scripts in question were entrusted to accused No. and accordingly therefore the suggested charges Cannot be brought against any of the accused persons. The reasons he gave for his order were 1 that though entrustment of share certificates, was stated in para 5 of the companyplaint, it was numberwhere stated that it was done on the strength of the receipt, 2 that the receipt was introduced in the case in a curious way, in that, it was brought on record by Hoon, who was number present either at the time when Varma wrote out the portion marked 3 in the receipt, or when he entrusted the said share certificates to Jaffray, and that he Hoon had very carefully avoided that issue in his statement, and 4 that though Hoon had the ,,opportunity to examine Varma, he failed to do so. Reason No. I was actually incorrect. Para 3 of the companyplaint, dated January 5, 1966 clearly asserts that Varma entrusted the said share certificates to Jaffray and to record that entrustment wrote the numbere portion marked 3 in the receipt and that Jaffray also for that purpose made his endorsement that the said share certificates were with him. Reason No. 2 is understandable. It is difficult to appreciate how the Magistrate companyld remark that Hoon either introduced the receipt in a curious way or that he avoided the issue carefully Ad mittedly, Hoon was number present at the time of the execution of the receipt or the alleged entrustment of the share certificates to affray. Obviously, he companyld number depose to those two facts from his personal knowledge. There was accordingly numberquestion of his avoiding the issue. These observations, therefore, companyld number have been justifiably made. As for the third reason, Varma was, numberdoubt number examined. The question is whether at that preliminary stage when the only companysideration was whether a prima facie case of entrustment was made out or number, it was necessary for Varma to be called from England to give evidence ? Besides examining himself, the appellant had examined Majumdar, who claimed to be an eye-witness to the delivery of the said share certificates to Varma and Varmas entrustment of them to, Jaffray, the execution of the receipt and the bond by Varma, and finally, Jaffrays assurance to hand them over later when called for. Strangely, the learned Magistrate did number discuss Majumdars evidence, number the two documents number the evidence of Chaudhary, number the letter written by M s Sanderson Morgan on that very day to Hoon of their number having been given the share certificates by Jaffray. The revision application filed by the appellant against the order of dismissal was rejected by the High Court. The High companyrt gave two grounds for dismissing that application firstly, the failure of the companyplainant to explain how the said 707 share certificates got into possession of the Company, which failure made the story of Varma about delivery to him and entrustment by him to Jaffray of the said share certificates open to criticism secondly, his failure to explain the reasons for furnishing, the indemnity bond on behalf of Hungerford. The High Court was of the view that these two circumstances were the most unusual cercuinstances which companyld be inconsistent with the prosecution story of entrustment and of criminal misappropriation and cheating. It numbered the omission to examine Varma and also the refusal by the Magistrate to companysider Vermas affidavit. According to the High Court, however, this was number an important aspect of the case. The really important aspect are sic provided by the two most unusual circumstances that I have referred to above. Unless those circumstances companyld be sufficiently explained to the satisfaction of the companyrt, numberprocess companyld be issued. And those circumstances were number explained. It is clear from these remarks that unlike the Magistrate, the High Court did number attach much importance to the omission to examine Verma although he was said to be the author of the entrustment. what appears to have mainly weighed with the High Court were the two most unusual circumstances, namely the omission to explain the, initial possess-ion of the said share ,certificates by the Company and the omission to explain why the indemnity bond had to be executed. With respect to the High Court, the fact that the said 70 ,share certificates were initially with the Company was never in ,issue between the parties. The issue between them was whether on May 27, 1965 Jaffray and Rodewald had delivered them to Varma, and whether Varma, in his turn had handed them over to Jaffrays personal custody to be returned to him later on that day. Therefore, the question as to, bow and in what circum,stances the said share certificates were in possession of the Company was totally irrelevant. Equally irrelevant were the reason why the indemnity bond was executed first by Varma and the by the appellant. In any case, the reasons for executing it were number. Par to seek. The Company claimed a lien on those share ,.Certificates on account of its having satisfied the tax liabilities of Turner family as recited in the bond itself. As further recited in the bond, Mundra also claimed those shares by virtue of the ,said decree in his favour. According to the appellant, Jaffray and Rodewald, therefore, insisted that, the liquidators of Hunger ford should execute the said bond to companyer the companypany against any risk arising from the said claims. Besides, there was numberquestion of the appellant having to explain how the said share, certificates were in possession of. the companypany, for, on that aspect the. parties were never at variance. So far as the bond was companycerned, both the appellant and wit. Majumdar had deposed that it had been executed at the insistence of Jaffray and Rode wald. Therefore, these two circumstances, the failure to explain ,which the High Court characterised as the most unusual circumstances, were on record and since the parties were number at issue ,on the first and the bond itself recited the reasons for its execution, there was numberquestion of the appellant and his witnesses having failed to explain them. Under sec. 190 of the Code of Criminal Procedure, a magis- Irate can take companynizance of an offence, either on receiving a ,complaint or on a police report or on information otherwise received. Where a companyplaint is presented before him, he can under sec. 200 take companynizance of the offence made out therein and has then to examine the companyplainant and his witnesses. The object of such examination is to ascertain whether there is prima facie case against the person accused of the offence in the companyptaint and to prevent the issue of process on a companyplaint which is either false or vexatious or intended only to harass such a person. Such examination is provided therefore to find ouwhether there is or number sufficient ground for proceeding. Under sec. 202, a magistrate, on receipt of a companyplaint, may postpone the issue of process and either inquire into the case himself or direct an inquiry lo be made by a magistrate subordinate to him or by a police officer for ascertaining its truth or falsehood. Under sec. 203, he may dismiss the companyplaint if, after taking the statement of the companyplainant and his witnesses and the result of the investigation, if any, under sec. 202, there is in his judgment numbersufficient ground for proceeding. The words sufficient ground used also in sec. 209 have been companystrued to mean ,the satisfaction that a prima faice case is made out against the person accused by the evidence of witnesses entitled to a reasonable degree of credit, and number sufficient ground for the purpose of companyviction. see R. G. Ruia v. Bombay 1 . In Vadilal Panchal v. Ghadigaonkar 2 this Court companysidered the scheme of sees. 200 to 203 and held that ,he inquiry envisaged there is for ascertaining the truth or falsehood of the companyplaint, that is, for ascertaining whether there is evidence in support of the companyplaint so as to justify the issue of process. The section does number say that a regular trial of adjudging the truth or otherwise of the person companyplained against should take place at that stage, for, such a person can be called upon to answer the accusation made against him only when a process has been issued and he is on trial. Sec. 203 companysists of two parts. The first part lays down the materials which the magistrate must companysider, and the second part says that if after companysidering those materials there is in-his judgment numbersufficient ground for proceeding, he may dismiss the companyplaint. In Chandra Deo Singh v. Piokash Chandra Bose, 1 where dismissal of a companyplaint by the Magistrate at the stage of sec. 202 inquiry was set aside, this Court laid down that the test was whether there was sufficient ground for proceeding and number whether there was sufficient ground for companyviction, and observed p. 653 that where there was prima facie evidence, even though the person charged of an offence in the companyplaint might have a defence, the matter had to be left to be decided by the appropriate form at the appropriate stage and issue of a process companyld number be refused. Unless, therefore, the Magistrate finds that the evidence led before him is selfcontradictory, or intrinsically untrustworthy, process cannot be refused if that evidence makes out a prima facie case. In a revision against such a refusal, the High Court also has to apply the same test. The question, therefore, is whether while applying this test the Chief Presidency Magistrate was right in refusing process and the High Court in revision companyld companyfirm such a refusal. 1 1958 S.C.R. 618. 3 1964 1 S.C.R. 639. 2 1961 1 S.C.R. 1. 8 0 As earlier stated, there were before the Magistrate, besides the evidence of the appellant and wit. Majumdar, who claimed to be an eye-witness, the receipt and the indemnity bond. Over and above this, there was the evidence of Chaudhary, who had gone to Jaffray to obtain the share certificates armed with Varmas letter and the letter of M s Sanderson Morgan which prima facie supported the case of entrustment. The receipt prima facie showed that Varma at first received the share certificates from Jaffray and the endorsement thereunder admittedly written by Jaffray, namely, shares with me, seemed to indicate that Varma, as the companyplaint alleged, had left them with Jaffray to be subsequently handed over to M s Sanderson Morgan on behalf of Hungerford. The evidence of Majumdar and Hoon was that Jaffray had demanded an indemnity bond, that the bond was signed first by Varma and later at his instance by Hoon. Prima facie, such a bond companytaining both indemnity and undertakings companyld number have been executed unless the share certificates had been delivered to Varma as stated in the receipt. Once It was shown through these two documents that the share certificates were delivered, the endorsement of Jaffray below the receipt, namely, shares with me was capable of being companystrued as Varma having, left the share certificates with Jaffray lo be handed over to him or on his behalf when called for. As against the case of entrustment, Jaffrays case, as set out earlier, was that the word receive in the receipt was wrongly used by Varma and that he had insisted that Varma should use the word inspected, for, he had allowed Varma the inspection of the share certificates only and had number delivered them to him and made the said endorsement to make that position clear. That undoubtedly was his defence. But reading the two documents one is bound to ask himself whether Varma and Hoon were likely to execute the bond if Varma had merely inspected and number received the share certificates. It would also prima facie appear that if faffray had only given their inspection, he would number have allowed Varma to prepare the receipt in the words in which it was companyched. In any event, with the word received in it, he would number have written out the endorsement which was capable of showing that the shares were with him because after executing the receipt Varma had left them in his personal custody. In support of the High Courts order companynsel for the respondents argued that there was numberreference of the receipt in the protest application, dated May 7, 1966, that likewise, there was numberreference therein of the indemnity bond, that there were companytradictions in the versions of Varma and Hoon as to when the appellant signed that bond, that the said share certificates were tinder attachment, and therefore, Jaffray, was number likely to deliver them to Varma, that Majumdar did number mention entrustment in his evidence, that the letter of Varma to Jaffray said to have been carried by Chaudhry when he went to take delivery of the said share certificates was number produced, and lastly, that though Hoon had companyplained that the police had number given him an opportunity to examine Varma, he failed to produce him before the Magistrate, though he had both time and opportunity to do so. In addition, Mr. Chatterjee, appearing for Jaffray, Rodewald and Horniusji argued that so far as Hormusji was companycerned, there was numberevidence against him except the bare allegation of companyspiracy, that the,indemnity bond intrinsically companytradicted the case of delivery of the shares to Varma and their entrustment to Jaffray inasmuch as according to that document delivery was to be made to M s. Sanderson Morgan and number to, Varma, and finally, that the evidence at best showed that it was a case of promise to deliver and its breach and number one of entrustment and breach of trust. We refrain at this stage to express our views on these companytentions lest such views might later on affect one party or the other. Nevertheless, we are bound to say that both the receipt and the indemnity bond, whether referred to in the protest application or number, were before the Magistrate and were marked by him as documents 2 and 5. They were also before the High Court. Over and above these two documents, there was the evidence of Majumdar, Hoon and Chaudhary, according to which the two documentswere executed on May 27, 1965 when Varma went to the Companys office to obtain delivery of the said shares. It is true that Varma was number examined though, if examined, he would have been the principal witness. It is also true that his affidavit in his absence companyld number companystitute admissible evidence. Despite that omission, there was evidence, both oral and documentary, supported by companytemporaneous letters of M s Sanderson Morgan, demanding the said share certificates from Jaffray personally. It may be that much companyld be said on both the sides. But it was certainly number a case of there being numberprima facie case or the evidence being so selfcompanytradictory or intrinsically untrustworthy that process companyld properly be refused. This follows from the fact that neither the Chief Presidency Magistrate number the High Court expressed the view that the evidence, either of the appellant or of Majumdar or, of Chaudhary, was false or intrinsically unbelievable. Indeed, both the Chief Presidency Magistrate and the High Court founded their orders of dismissal mainly on the ground of omission to examine Varma without companysidering whether despite that omission there was other evidence on record which made out a sufficient ground for proceeding with the case. At the stage of sec. 202 7-L348Sup.C.I./73 inquiry what a companyplainant has to make out is such a sufficient ground. He need number necessarily produce at that stage all the evidence available to him. Merely because the appellant did number examine Varma, however important he was because that would have meant bringing him to India from England at companysiderable companyt, companyld number be a ground for throwing out his companyplaint,, even though such of the other evidence he led was capable of making out a prima facie case. There is numbergainsaying that although respondent Mundra held only minority shares, he was and companytinues to be in a position to companytrol the management of Turner Morrison Co. without having to pay the price of the rest of the shares by reason only of the said 707 share certificates being in possession of that companypany and therefore unavailable to Hungerford to deliver them to him. He had, therefore, sufficient interest, to say the least, to bring about such a position that Hungerford would number be in a position to deliver the said shares and he companyld companytinue to have companytrol if the companypany without owning the majority shares and without paying for them. It was, therefore, number totally improbable that jaffray had at first thought that the indemnity bond sufficiently safeguarded the interests of the companypany even against a possible plaint who Mundra might make in respect of the said 707 shares, and therefore, delivered them to Varma. The evidence on record and the circumstances of the case would suggest that he probably changed his mind later on possibly at the instance of Mundra, who, as aforesaid, was interested in withholding the deliver of the said 707 share certificates, and handed them over to Hormusji instead of to Varma. We mention these circumstances as possibilities only which might have to be companysidered at a later stage and number as our companyclusions in these proceedings. As regards respondent Rodewald, Mr. Chatterjee drew our attention to an order dated April 10, 1967 by which the Court discharged the rule against him. Mr. Chatterjee argued that numberseparate special leave petition having been filed against that order, the appeal so far as Rodewal is companycerned has to be dismissed. We find, however, that the appeal was against all the four accused, including Rodewald. The special leave granted on September 16, 1968 was also against all of them. The special leave Was against the judgment and order of the High Court dated December 7, 1967 by which the revision filed by the appellant against all the four accused was rejected. That being so, and the special leave petition being against all the four accused, it must include the order dated April 10, 1967. There was, therefore, numbernecessity of a separate application for special leave against that order. In our view. there was sufficient evidence before the Chief Presidency Magistrate which made out a prima facie case, and even if much companyld be said on both the sides, it was number a case of refusal of process. For the reasons aforesaid the order of dismissal passed by the Chief Presidency Magistrate and its companyfirmation by the High Court cannot be sustained. Consequently, the High Courts judgment and order has to be set aside and the appeal allowed. We direct the Chief Presidency Magistrate to issue the process and proceed with the case. SHELAT, J., This appeal arises out of the companyntercompanyplaint, dated June 18, 1966, filedby Jaffray charging offences under secs. 467, 471, 193, 474 and 109, Penal Code against appellant Hoon, Varma and Majumdar. Though the companyplaint gives the impression as if the whole of the said receipt dated May 27, 1965 was alleged to be a fabricated document, Jaffrays de-position before the Magistrate makes clear that according to him, the body of the receipt and his own endorsement thereon were genuine and that only the portion said to be falsely fabricated was the writing on it marked 3 purporting to be in Varmas handwriting but written out subsequently by Hoon with a view to give a false twist to the said endorsement. Jaffrays case was that on May 27, 1965, when Varma came to the office of Turner Morrison Co. he brought out 707 shares in question for Varmas inspection, that those shares were never handed over by him or received by Varma, that he made the said endorsement only to show that they were in his possession but that with a view to make out a false case of entrustment to him by Varma, Hoon subsequently wrote out the said portion marked 3. Jaffray prayed in the companyplaint that the Chief Presidency Magistrate should direct police investigation under S. 156 3 of the Code of Criminal Procedure. However, on January 25, 1966, the Chief Presidency Magistrate directed judicial inquiry by the Presidency Magistrate, 3rd Court, Calcutta. The Magistrate accordingly held an inquiry in which Jaffray gave, as aforesaid, his deposition. On January 5, 1967 the Magistrate reported that a prima facie case was made out and process should issue. The case together with the said report went back to the Chief Presidency Magistrate, who on the record of evidence before him accepted the said report and ordered issue of process but only against Hoon. He also held that s. 195 1 c of the Code did number companye in the way of Jaffray filing a private companyplaint as the said receipt alleged to be a false document was produced before the police during their investigation into the other companyplaint filed by Hoon against Jaffray and others, which investigation was number a proceeding before any Magistrate. Hoon thereupon filed a revision application before the High Court for quashing the said order. The only argument urged in the High Court on behalf of Hoon was that the companyplaint by Jaffray was barred under s. 195 1 c of the Code, as the alleged forged document, i.e., the receipt, had been produced in a judicial inquiry. The High Court turned down the companytention holding that the receipt was produced by Hoon in the companyrse of inquiry by the police ordered in his companyplaint under s. 156 3 of the Code and was then seized by them. There was thus, according to the Hi Court numberproduction of a fabricated document in a judicial proceeding, the document having been long ago produced before and seized by the police before a judicial inquiry was held in that case. The companytention urged on behalf of Hoon having thus been rejected. the High Court dismissed the revision. It is this order which has been challenged in this appeal. Mr. Chagla for the appellant wanted to go into the merits of the case, but we prevented him from doing so, as the arguments before the High Court were companyfined only to the question of the applicability of s. 195 1 c of the Code. Mr. Chagla thereupon urged two companytentions 1 that though it was true that Hoon had produced the said receipt document 2 before the police in the companyrse of investigation by them ordered by the Chief Presidency Magistrate under s. 156 3 of the Code in the matter of Hoons companyplaint, those proceedings before the police were part and parcel of the proceedings before the Chief Presidency Magistrate and therefore production of the receipt there was production before the Magistrate 2 that even before that, the receipt had been produced before the High Court and that having been done, it was the High Court alone who companyld cause a companyplaint to be filed under s. 195 1 c of the Code and number Jaffray. According to Mr. Chagla, after the decree in Mundras suit No. 600 of 1961 was passed, Hungerford took out execution proceedings claiming therein that Turner Morrison Co. should be made to hand over to the liquidators of Hungerford the said 707 share certificates to enable them to satisfy the said decree by delivering all the 2,295 shares including the 707 shares in dispute to Mundra against payment of price thereof by Mundra. Those proceedings were opposed by Turner Morrison Co. on the ground that they did number lie against it as it was number a party to that suit. As against that companytention, Hoon, as one of the liquidators of Hungerford, filed a companynter-affidavit claimingentrustment of the said shares to Jaffray by Varma and annexed to that affidavit companyies of the said receipt and the indemnity bond. It was during the hearing of that matterthat Hoon showed the original of the receipt to companynsel for Turner Morrison Co. to satisfy him that the companyy annexed to his affidavit was genuine. Counsel for the companypany thereupon inspected it and found the companyy to be a companyrect companyy. It would thus appear that what was produced before the High Court was a companyy of the said receipt, the original number having been produced before, the Court, but was shown to companynsel to prevent any companytention that the companyy was number a companyrect or genuine one. The question, therefore is whether on either of the two grounds urged by Mr. ChagJa, Jaffrays companyplaint can be said to be barred by s. 195 1 c of the Code. The relevant part of sec. 195 1 provides numbercourt shall shall take companynizance c of any offence described in section 463 or punishableunder section 471, section 475 or section 476 of thesame Code, when such offence is alleged to have, beencommitted by a party to any proceeding in any Court in respect of a document produced or given in evidence in such proceeding, except on the companyplaint in writing of such Court, or of some other Court to which such Court is subordinate. Cl. c falls into two parts. The first part provides that the offence in respect of which the companyplaint in question is filed must be one under s. 463 or 471 or 475 or 476 of the Penal Code. The second part provides that such an offence must be alleged to have been companymitted by a party to any proceeding in any companyrt in respect of a document produced or given in evidence in such proceeding. If both those requirements are there, then numbercourt is to take companynizance of such an offence except on a companyplaint filed by such companyrt or a companyrt subordinate to it. On the first limb, of Mr. Chaglas argument, the question arises whether Hoon can be said to have produced or tendered in evidence the said receipt before, the Chief Presidency Magistrate ? there is numberquestion that the receipt was ever tendered in evidence by Hoon. It was produced by him before the police in the companyrse of the investigation by them ordered by the Magistrate under s. 156 3 of the Code and was then seized by them. The receipt formed part of the record of The case which went to the Chief Presidency Magistrate together with the report of the police recommending discharge of Jaffray and others who were accused in that case of criminal breach of trust and cheating. But the companytention of Mr. Chagla was that though the receipt was number tendered in evidence, it was nevertheless produced, an expression which has a wide companynotation. There Mr. Chagla is right, for, a document can be said to have been produced in a companyrt when it is number only produced, for the purpose of being tendered in evidence, but also for some other purpose. cf. In re, Gopal Sidheshwar 1 on the footing, therefore, that Hoon produced the receipt, the question still would be whether he produced it in a proceeding before a companyrt. Mr. Chaglas argument was that it was produced in a proceeding before the Court of the Chief Presidency Magistrate because the investigation by the police was one ordered by him under s. 156 3 of the Code and therefore that investigation was part of the proceedings in his Court. Such a proposition does number appear to be companyrect. Firstly, the police authorities have under ss. 154 and 156 of the, Code a statutory right to investigate into a companynizable offence without requiring any sanction from a judicial authority, cf. King Emperor v. Khwaja Nazir Ahmad 2 and even the High Court has numberinherent power under s. 561A of the Code to interfere with the exercise of that statutory power. It is true that the Chief Presidency Magistrate had under s. 156 3 ordered in the present case an investigation by the police. But once that was done, the inquiry by the polic e was of the same nature and character as the one which the police had the power to companyduct under sub-secs. 1 and 2 of that section. Indeed sub sec. 3 expressly states that an investigation ordered by a Magistrate would be an investigation as above-mentioned, i.e., an investigation made by a police officer in his statutory right under sub-sections 1 and 2 . That being so, once an investigation by the police isordered by a magistrate, the magistrate cannot place any limitations on or direct the officer companyducting it as to how to companyduct it. Secondly, it is well settled that before a Magistrate can be said to have taken companynizance of an offences under s. 190 1 a of the Code, he must have number only applied his mind to the companytents of the companyplaint presented before him, but must have done so for the purpose of proceeding under s. 200 and the provisions following that section. But where he has applied his mind only for ordering an investigation under s. 156 3 or issuing a warrant for purposes of investigation. he, cannot be said to have taken companynizance of the offence. See R. Chari v. U.P. 8 also Jamuna Singh v. Bhadai Sah 4 The Chief Presidency Magistrate having number even taken companynizance of the offence but having applied his mind for the purpose only of directing a police investigation under s. 156 3 , numberproceeding companyld be said to have companymenced before him, of which the inquiry by the police companyld be said to be part and parcel. Further, it cannot be said that the police officeracting under s. 156 3 was a delegate of the Chief Presidency Magistrate or that the 1 1907 9 Bom. L.R. 735. 2 71 I.A. 203. 3 1951 C.R. 312, 320-21 4 1964 5 S.C.R. 37. investigation by him was an investigation by or on behalf of the, Magistrate. Production of the receipt by Hoon in the companyrse of such an investigation was therefore number production in a proceeding before the Chief Presidency Magistrate so as to attract the ban under s. 195 1 c . The first limb of Mr. Chaglas argument, therefore cannot be accepted. In support of the second limb of his argument, Mr. Chagla relied on the affidavit of S. K. Ganguli, the solicitor of Hungerford, dated March 26, 1969, according to which during the companyrse of the said execution proceedings taken out by Hungertord he had produced in the High Court the receipt and the said indemnity bond for inspection by companynsel of Mundra and Turner Morrison Co. in the presence of Rodewald who also, along with companynsel, inspected the two documents. Obviously, the originals of the receipt and the bond were produced in the Court to satisfy companynsel that companyies of these documents annexed to the affidavit of Hungerford tallied with the originals and were companyrect. Since the companyies were used as annexures to the affidavit, they certainly can be said to have been produced in the proceedings before the Court. But it cannot be said that their originals were produced in those proceedings, since they were only shown to companynsel for the limited purpose of satisfying them that the companyies were companyrect companyies. It was numberodys case that those companyies were fabricated documents. Jaffrays case was that it was part of the original receipt which was fabricated rendering the whole of it a false document. Apart from this difficulty, the offence charged against Hoon in Jaffrays companyplaint was number the user of the receipt in the proceedings before the High Court, but its production and user by Hoon during the investigation of Hoons companyplaint by the police. To that Mr. Chaglas argument was that once a document alleged to be forged is used in any proceeding before any companyrt at any time, s. 195 1 c would at once be attracted and would be a bar against a companyplaint by a party companyplaining of its fraudulent user in any later proceeding. Such a proposition, in the first place, is number warranted by the language of cl. c of s. 195 1 . That clause in clear terms says that in respect of any of the offences enumerated there, numbercognizance can be taken of a private companyplaint when such offence is said to have been companymitted by a party to a proceeding in a companyrt in respect of a document produced or tendered in evidence in that proceeding extent on a companyplaint by such companyrt. The words such companyrt mean the very companyrt before which a party to a proceeding in that companyrt has produced or tendered in evidence a document in respect of which the offence is alleged to have been companymitted. Cl. c , in other words, means that it is that companyrt before which there is a proceeding and a party to such a proceeding is said to have companymitted an offence in respect of a document produced or tendered in evidence by him, on whose companyplaint the offence can be taken companynizance of. The object and purpose of s. 195 1 c is that it is the companyrt before which an offence is alleged to have been companymitted in respect of a document produced in a proceeding before it by., a party to such proceeding, which should file or cause to be filed a companyplaint and number a private party. Assuming, however, that Hoon had produced-,the receipt, alleged to be a forged document, in the proceeding before the High Court, a companyplaint in respect of that offence by or at the instance of the High Court companyld be taken companynizance, of by the Magistrate. But numberone moved the High Court to do so in those proceedings and so such companyplaint was ever filed. In the second place, if we were to accept Mr., Chaglas proposition, it would have far reaching companysequences which the legislature while enacting clause c companyld never have companytemplated. if the High ,Court alone companyld have filed or caused to be filed a companyplaint be-cause the document was at one time produced before, it, then numberother companyrt where it is produced subsequently can file a companyplaint even if the forged document is produced or tendered in evidence in a proceeding before it. If the High Court, in the case stated above, were to companysider it inexpedient to file a companyplaint, a party to a proceeding before the High Court can go on producing ad seriatim that document in several subsequent proceedings in several different companyrts with companyplete impunity because the High Court has in respect of the proceeding before it refrained from causing a companyplaint to be filed against that party. Surely, such a companysequence companyld never have been companytemplated when cl. c was enacted. The proper companystruction of that clause, therefore, is that when a party to a proceeding before any companyrt produces or tenders in evidence a document in respect of which an offence, e.g., s. 471 read with s. 467, is alleged to have been companymitted, it is that companyrt before which the document is produced or tendered in evidence which can file a companyplaint regarding such an offence and a magistrate cannot take companynizance of such an offence except upon a companyplaint by such companyrt or a companyrt subordinate to it. On this companystruction ,the companytention urged by Mr. Chagla must fail. In the result, the appeal fails and is dismissed. KHANNA, J.-I agree so far as criminal appeal No. 213 of 1968 is companycerned. 1, however, express my inability to agree with the proposed judgment in criminal appeal No. 214 of 1968. In my. opinion, both the appeals should be dismissed. Nirmaljit Singh Hoon appellant is a companyliquidator along with Varma and Frank Goldstein of Hungerford Investment Trust Limited in voluntary liquidation . On January 5, 1966 the appellant filed a companyplaint under sections 120B, 406 and 420 Indian Penal Code in the companyrt of Chief Presidency Magistrate Calcutta against four persons. Out of them the first two accused, D. M. Jaffray and C. H. Rodewald, were the directors of Turner Morrison Co. Ltd., while A. J. Hormusji was the secretary of that companypany. The fourth accused was Haridas Mundhra. According to the appellants allegation Hungerford Investment Trust Limited was the registered holder of 51 per cent of shares of Turner Morrison Co. Ltd. Haridas Mundhra accused had option to purchase those shares for Rs. 86,60.000. On May 27, 1965 S. Varma, one of the liquidators of Hungerford Investment Trust Limited, was stated to have received 707 ordinary share scrips, the details of which were given, of Turner Morrison Co. Ltd. from the directors of Turner Morrison Co. Ltd. According to the, appellant, Varma preferred number to carry those share scrips with him and entrusted them with. blank transfer deeds to Jaffray accused for safe custody. Varma thereafter asked the solicitors of his Company, M s. Sanderson Morgan, to take delivery of the share scrips from Jaffray, but JaffTay accused on one pretext or the other declined to give the shares. Jaffray accused was further stated to have in violation of his trust and in companyspiracy with the other accused disposed of 707 shares by delivering them illegally to Turner Morrison Co. Ltd. with the object of dishonestly companyverting them to the use and benefit of the accused persons and also with a view to defeat the appellants right to recover Rs. 86,60,000 from Haridas Mundhra accused. The above companyplaint was sent by the Chief Presidency Magistrate to the police for investigation under sub-section 3 of section 156 of the Code of Criminal Procedure. The police registered a case and after investigation submitted a report that it was a false case. The companyplainant thereafter filed objections against the police report before the Chief Presidency Magistrate on May 7, 1966. The companyplaint was thereafter sent on June 18, 1966 to a Presidency Magistrate for judicial enquiry. In the companyrse of that enquiry the appellant examined four witnesses. Sachindra Mohan PW 1 , N. Chowdhry PW 2 , Hoon appellant PW 3 and N. K. Majumdar PW 4 . Affidavit of Varma, who was in the United Kingdom, was also filed. Reliance was also placed upon receipt dated May 27, 1965 which readsas follows Document-2 Document 2/1. Recived from Turner Morrison Co. Ltd., Calcutta the following Shares Certificates companyering 707 Ordinary Shares of Turner Morrison Co. Ltd., Share Certificate No. 19 fir 3 ordinary shares Nos. 1452, 1593 1594. Share Certificate No. 28 for 695 ordinary shares Nos. 1601-2295. 3 Share Certificate No. 29 for 3 ordinary shares Nos. 1455. 1597 1598. Share Certificate No. 75 for 3 ordinary shares Nos. 1453, 1595 1596 Share Certificate ND. 76 for 3 ordinary share Nos. 1454, 1599 1600 Sd - S. Varma VARMA Liquidator Hungerford Investment Trust Ltd. Shares with me. Sd - D. N. Jaffray. It may be stated that the above receipt also companytains the following words Dear Mr. Jaffray, I do number want to carry these with me. Hence leaving meantime with you personally for delivering to me later. These words, according to a companyplaint filed by Jaffray were inserted subsequently and a criminal case under section 474 Indian Penal Code is pending against Hoon appellant on that account. Criminal appeal No. 213 filed by Hoon in respect of that prosecution has been disposed of separately today. Reliance by Hoon was also placed upon the following indemnity bond Indemnity Warranty Bond dated 27-5 65 INDEMNITY WARRANTY In companysideration of handing over the 707 shares of Turner Morrison Co. Ltd. with blank transfers to Sanderson Morgan, as per original letter of Hopwood, Hilbery Co., dated the 9th December 1964 the Liquidators hereby indemnify Turner Morrison Co. Ltd., Calcutta that they will have numberobjection to be enjoined with the old Liquidators and the Executors of the deceased Turners for the claim of approximately Rs. 53,00,000/- Rupees fifty three lakhs , which has been paid by Turner Morrison Co. Ltd., Calcutta by way of taxes for the Turner family, and furthermore the new Liquidators undertake that they will assist Turner Morrison Co. Ltd., Calcutta in every way in the recovery of these amounts from the Estates of the Turner family and the old Liquidators of Hungerford Investment Trust Ltd. The new Liquidators further guarantee that they will cause these shares to be produced whenever required in terms of Suit 600 and without jeopardising the rights of Mr. Haridas Mundhra arising out of that decree. Lastly, the Liquidators indemnify the Directors of Turner Morrison Co. Ltd., Calcutta against any claims of tax authorities or any Government body and others should it arise by virtue of the delivery of these shares by them. Sd. ILLEGIBLE Liquidators. Hungerford Investment Trust Ltd. Calcutta, 27th July, 1965 According to the companyplainant-appellant, the above indemnity bond also companytains the following endorsement of Jaffray Accepted For On Behalf of Turner Morrison Co. Ltd. Sd - D. M. Jaffray Directors 27-5-65 The Presidency Magistrate in his report dated January 5, 1966 observed that numberprima facie case of entrustment had been made out, Reference was made to the fact that Varma, who was the central figure, had number made any statement during the companyrse of enquiry. Varmas affidavit was held to be number admissible. The Chief Presidency Magistrate agreed with the Presidency Magistrate and dismissed the companyplaint. In revision the High Court declined to interfere with the order of the Chief Presidency Magistrate. Reference was made by the High Court also to the number-examination of Varma during the judicial enquiry. Mr. Chagla has companytended in this Court on behalf of the appellant, that there is prima faice case to show that 707 ,hare scripts were handed over to Varma on May 27, 1965 and thereafter were entrusted by Varma to Jaffray. The refusal of Jaffray to make over those shares to the liquidators of Hungerford Investment Trust Limited or their Solicitors, according to Mr. Chagla, amounts to criminal breach of trust. The said offence, it is staated, has been companymitted by Jaffray in companyspiracy with the other accused. The above stand has been companytroverted by Mr. Mukherjee on behalf of the State of West Bengal as well as by Mr. Chatterjee on behalf of Jaffray, Rodewald and Hormasji respondents. After giving the matter my companysideration, I am of the view that numberprima facie case for entrustment of the share scripts in question to Jaffray accused has been proved. It is companymon case of the parties that the 707 share scripts question were before May 27, 1965 in the custody of Turner Morrison Co. Ltd. The case of the appellant is that on morning of May 27, 1965 Varma accompanied by Majumdar PW 4 met Jaffray and Rodewald and asked for the delivery of 707 share scrips. Those 707 share scrips were then handed ,over to, Varma by Rodewald accused. Varma thereupon signed typed receipt reproduced above. As Varma had some luncheon appointment he did number want to carry the share scrips with himself. Share scrips were thereupon left with Jaffray. Jaffray then wrote on the receipt the words Shares with me and put his signature underneath. It is further the case of the appellant that the, indemnity bond dated May 27, 1965 was also executed by Varma and Hoon petitioner and the same was accepted by Jaffray accused. In order to show the entrustment of shares to Jaffray, Mr. Chagla has relied upon the affidavit of Varma. Varma, as stated earlier, did number appear in the companyrse of the judicial enquiry which was held by the Presidency Magistrate. He, however, chose to send his affidavit from United Kingdom. The companyrts below declined to take that affidavit into companysideration and. in my opinion, they were justified in doing so. According to section 510A of the Code of Criminal Procedure, the evidence ,of any person whose evidence is of a formal character may be given by affidavit and may, subject to all just exceptions, be read in evidence in any inquiry, trial or other proceeding under this ,Code. This section was inserted by the Code of Criminal Procedure Amendment Act 26 of 1955 and its object is to accelerate the disposal of cases. Provision is accordingly made for the filing of an affidavit of a witness whose evidence is of a formal character. If, however, the evidence of a person is number of a formal character, but goes to the very root of the matter as in the present case, numberresort can be made to the provisions of the above section. It would appear from the resume of facts given above that the case of the petitioner is that the share,, scrips in question were before May 27, 1965 in the custody of Turner Morrison Co. and were on the morning of May 27, 1965 handed over by Rodewald to Varma when Varma met Jaffray and Rodewald in the office of Turner Morrison Co. It is further stated that Verma because of a luncheon appointment left those shares with Jaffray. Varma, in the circumstances, would have been the most important witness to depose, about the handing over of the share scrips to him by Rodewald and the entrustment of those share scrips immediately thereafter to Jaffray. Verma was number examined during the companyrse of enquiry and this fact resulted in serious infirmity in the evidence adduced by the petitioner. Resort was accordingly had to the filing of the affidavit of Verma. As the evidence of Varma was number of a formal character, his affidavit companyld plainly be number admitted in evidence. Reliance has then been placed by Mr. Chagla on the statement of Majumdar PW who is alleged to have accompanied Varma when the latter number Jaffray and Rodewald in the office of Turner- Morrison Co. on the morning of May 27, 1965. The statement of Majumdar reads as under I know Mr. Hoon and Mr. Varma, and also Mr. Jaffray and also other accused persons. On 27-5-65 I went to the office of Mr. Turner Morrison with Mr. Varma. Varma wanted delivery of 707 shares from accused Nos. 1 and 2. Accused No. 1 agreed to deliver them back if an indemnity bond was signed. He signed a bond. He wanted also Mr. Hoons signature on that bond. Document No. 5 is the companyy of that bond. Varma also signed document 2/ 1. He did number take them. He left them with accused No. I to be sent through Sanderson Morgan. Accused No. I wrote document 2/2. Mr. Varma writes document No. 2/3. Mr. Hoon also signed the document No. 5 as we informed him of accused No. 1s request. The above statement of Majumdar, in my opinion, belies the stand taken by the appellant that the share scrips were delivered to Varma and he thereafter entrusted them to Jaffray. According to the statement of Majumdar, Jaffray agreed to deliver the share scrips to Varma if an indemnity bond was executed. Varma then signed a bond but Jaffray wanted the signature of Hoon also on the bond. As Hoon was, admittedly number present with Verma at that time, the companydition imposed by Jaffray for handing over of the share scrips to Varma was obviously number satisfied at that time. Majumdar has accordingly deposed that Varma did number take the share scrips and left them with Jaffray accused. It may be that the evidence of Majumdar may show that Jaffray was guilty of number honouring his assurance in so far as he declined to send share scrips to Sanderson Morgan after the indemnity bond had been signed by Hoon, but it is difficult to hold on tile basis of statement of Majumdar that the share scrips in question were first delivered by Jaffray and Rodewald accused to Varma and were thereafter entrusted by Varma to Jaffray. So far as P. R. Chowdhry PW 2 is companycerned., his statement ,does number reveal entrustment of share scrips. According to this witness, he asked for 707 share scrips from affray but the latter declined to hand over those share scrips to the witness and stated ,that he would send them through the Solicitor. The demand of share scrips by the witness and the promise of Jaffray to send the share scrips to the Solicitor would number show that there had been earlier entrustment of the share scrips to Jaffray. On the companytrary, the demand companyld have been made even without the alleged entrustment of the share scrips. The same remarks also apply to letter dated May 27, 1965 sent by M s. Sanderson Morgan to Jaffray. In that letter a demand was made for 707 share scrips and it was mentioned that indemnity bond had been executed on that account. What is significant, however, is that there was numberreference in that letter to, any entrustment of the share scrips. Reference has been made by, Mr. Chagla to civil litigation in respect of the share scrips. The said litigation had admittedly numberhing to do with the alleged entrustment of share scrips in ,question with which we are companycerned in the present case. No help can companysequently be derived from the decision in the civil case. Our attention was also invited to the statement dated November 14, 1966 made by Jaffray in his case against Hoon and others under section 474 Indian Penal Code. It is, however, open to question whether the said statement of Jaffray can be utilised in this case when that statement is number a part of the record of this case. No process has so far been issued to Jaffray and his statement has number been recorded in this case. Assuming, for the sake of argument, that the statement of Jaffray in the other case can be referred to in the present case, the statement can be of numberavail to the appellant because there is numberindication in the statement of any entrustment of the share scrips. The next piece of evidence relied upon by Mr. Chagla is receipt dated May 27, 1965 which has been reproduced above. According to this document, Varma issued the receipt about his having received the 707 share scrips in question. The document also bears the writing of Jaffray that the shares were with him. If shares remained with Jaffray, the occasion of Varma issuing a receipt in respect of those shares companyld number arise. The receipt in question is of an ambiguous character and, in the absence of any oral evidence, it is difficult to infer from the receipt that the shares in question were first received by Varma and thereafter were entrusted by Varma to Jaffray. The best person to explain what seems to be an inconsistency in the receipt between the writing of Varma and the endorsement of Jaffray was Varma himself. Varma, as stated above, was number examined as a witness. The other person who was present at that time was Majumdar and the statement of Majumdar goes against the stand taken by the appellant about the delivery of share scrips to Varma and the entrustment of those share scrips thereafter to Jaffray. Lastly, reliance has been placed upon indemnity bond dated May 27, 1965 which has been reproduced above. There is numberhing in the indemnity bond to show that the share scrips were handed over to Varma. On the companytrary, the indemnity bond according to its plain language was executed because of the. companytemplated handing over of the share scrips to Sanderson Morgan. It seems that it was because of the number-mention of the handing over of the share scrips to Varma in the indemnity bond that there was numberreference to the said bond in the companyplaint filed by the appellant. An enquiry or investigation is ordered under section 202 of the Code of Criminal Procedure by a magistrate on receipt of a companyplaint for the purpose of ascertaining the truth or falsehood of the companyplaint. If the magistrate before whom the companyplaint is made or to whom it has been transferred, after companysidering the statement on oath of. the companyplainant and his witnesses and the result of enquiry or investigation under section 202 is of the opinion that there is numbersufficient cause for proceeding, he may for reasons to be recorded briefly, dismiss the companyplaint. If, on the companytrary, the magistrate taking companynizance of the offence is of the. opinion that there is sufficient cause for proceeding, he should issue process against the accused in accordance with section 204 of the Code. It may be that the evidence which is required to be adduced by the companyplainant at that stage may number be sufficient for recording a finding of companyviction, but that fact would number absolve the companyplainant who wants the magistrate to issue a process against the accused person from leading some credible evidence as may prima facie show the companymission of the offence. In the present case the Presidency Magistrate, the Chief Presidency Magistrate and the, High Court took the view that there was numbersufficient cause for proceeding on the companyplaint filed by the appellant.

Judgment of the Court of First Instance (First Chamber, extended composition) of 15 June 1999. - Regione autonoma Friuli Venezia Giulia v Commission of the European Communities. - Action for annulment - Commission decision - State aid - Action brought by a sub-State body - Admissible. - Case T-288/97. European Court reports 1999 Page II-01871 Summary Parties Grounds Decision on costs Operative part Keywords Actions for annulment - Natural or legal persons - Measures of direct and individual concern to them - Commission decision, addressed to a Member State, finding that a particular grant of aid is incompatible with the common market - Action brought by the regional authority which had granted the aid - Whether admissible (EC Treaty, Art. 173, fourth para. (now, after amendment, Art. 230, fourth para., EC) Summary $$The purpose of the fourth paragraph of Article 173 of the Treaty (now, after amendment, Article 230 EC) is to provide appropriate judicial protection for all persons, natural or legal, who are directly and individually concerned by acts of the Community institutions. Standing to bring an action must accordingly be recognised in the light of that purpose alone and the action for annulment must therefore be available to all those who fulfil the objective conditions prescribed, that is to say, those who possess the requisite legal personality and are directly and individually concerned by the contested act. This must also be the approach where the applicant is a public entity which satisfies those criteria. A regional authority is individually concerned by a Commission decision, addressed to the Member State, finding that an aid programme set up by that authority is incompatible with the common market. This is because such a decision not only affects measures adopted by the authority in question, but also prevents the authority from exercising its own powers as it sees fit. It prevents the authority from continuing to apply the associated legislation, nullifies the effects of that legislation and requires the authority to initiate the administrative procedure for recovery of the aid. The regional authority is directly concerned by such a decision where the national authorities to whom it was addressed did not act in the exercise of a discretion when communicating it to the regional authority. Furthermore, a regional authority has a separate interest in challenging the decision, distinct from that of the Member State addressed, where it possesses rights and interests of its own and the aid in question constitutes a set of measures taken in the exercise of legislative and financial autonomy vested in the authority directly under the constitution of the Member State concerned. Parties In Case T-288/97, Regione autonoma Friuli-Venezia Giulia, represented by R. Fusco and M. Maresca, avocats, with an address for service in Luxembourg, applicant, v Commission of the European Communities, represented by P.F. Nemitz and P. Stancanelli, acting as Agents, assisted by M. Moretto, avocat, with an address for service in Luxembourg, defendant, APPLICATION for the annulment of Commission Decision 98/182/EC of 30 July 1997 concerning aid granted by the Friuli-Venezia Giulia Region (Italy) to road haulage companies in the Region (OJ 1998 L 66, p. 18), THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Fourth Chamber, Extended Composition), composed of: P. Mengozzi, President, R. García-Valdecasas, V. Tiili, R.M. Moura Ramos and J.D. Cooke, Judges, Registrar: G. Herzig, Administrator, having regard to the written procedure and further to the hearing on 13 December 2000, gives the following Judgment Grounds Legal framework and facts 1 In its Decision 98/182/EC of 30 July 1997 concerning aid granted by the Friuli-Venezia Giulia Region (Italy) to road haulage companies in the Region (OJ 1998 L 66, p. 18, hereinafter `the contested decision') the Commission declared part of that aid to be incompatible with the common market and ordered the recovery of the aid, together with interest. That aid was granted, under a regional system of aid not notified to the Commission, to small road haulage contractors established in the Friuli-Venezia Giulia Region (hereinafter `the Region'), most of which are engaged solely in local or regional transport with a single vehicle. Legal framework 2 The general provisions on State aid set out in Articles 92 of the EC Treaty (now, after amendment, Article 87 EC) and 93 and 94 of the EC Treaty (now Articles 88 EC and 89 EC) apply within the field of transport, subject to the special provisions of Article 77 of the EC Treaty (now Article 73 EC), which provide that aids meeting the needs of coordination of transport or representing reimbursement for the discharge of certain obligations inherent in the concept of a public service are compatible with the Treaty. 3 Article 2 of Council Regulation (EEC) No 1107/70 of 4 June 1970 on the granting of aids for transport by rail, road and inland waterway (OJ, English Special Edition 1970 (II), p. 360), as last amended by Council Regulation (EC) No 543/97 of 17 March 1997 (OJ 1997 L 84, p. 6), which is based on Article 75 of the EC Treaty (now, after amendment, Article 71 EC) and Articles 77 and 94 of the Treaty, confirms that Articles 92 to 94 of the Treaty are to apply in the field concerned. The regulation also lays down certain special rules on the aid in question in so far as they relate specifically to activities in that sector. It thus sets out the cases in and conditions on which Member States are entitled to adopt coordination measures or impose obligations inherent in the concept of a public service which involve the granting of State aid pursuant to Article 77 of the Treaty. 4 Regarding the coordination of transport, Article 3(1)(d) of Regulation No 1107/70 authorises, under certain conditions, aid granted in order to eliminate, as part of a reorganisation plan, excess capacity causing serious structural problems, and thus to contribute towards meeting the needs of the transport market more effectively. Article 3(1)(e) also authorises, under certain conditions, aid designed to facilitate the development of combined transport. 5 As a measure towards establishing a common transport policy, the international road haulage market was partially liberalised within the Community by Council Regulation (EEC) No 1018/68 of 19 July 1968 on the establishment of a Community quota for the carriage of goods by road between Member States (JO 1968 L 175, p. 13), which introduced a quota system in 1969. Within that quota, Community authorisations entitled their holders to engage in the carriage of goods between Member States for a period of one year. That system was kept in force until 1 January 1993, the date on which this activity was fully liberalised by Council Regulation (EEC) No 881/92 of 26 March 1992 on access to the market in the carriage of goods by road within the Community to or from the territory of a Member State or passing across the territory of one or more Member States (OJ 1992 L 95, p. 1). 6 Regarding the market for the carriage of goods within a Member State, Council Regulation (EEC) No 4059/89 of 21 December 1989 laying down conditions under which non-resident carriers may operate national road haulage services within a Member State (OJ 1989 L 390, p. 3) made cabotage, that is to say, the carriage of goods within one Member State by a carrier established in another Member State, subject, with effect from 1 July 1990, to a transitional system in the form of a progressively increasing Community quota. Council Regulation (EEC) No 3118/93 of 25 October 1993 laying down conditions under which non-resident carriers may operate national road haulage services within a Member State (OJ 1993 L 279, p. 1) provided for the continuance of that transitional system until the definitive introduction of the full liberalisation of cabotage activities with effect from 1 July 1998. The aid in dispute 7 Articles 4, 7 and 8 of Friuli-Venezia Giulia Regional Law No 28 of 18 May 1981 on action to promote and develop transport of concern to the Friuli-Venezia Giulia Region and the carriage of goods by road for hire or reward (hereinafter `Law No 28/1981') provided for certain aid for road haulage contractors established within the region. 8 The system introduced by Law No 28/1981 was replaced by Regional Law No 4 of 7 January 1985 on action to promote and develop transport of concern to the Friuli-Venezia Giulia Region and the carriage of goods by road for hire or reward (hereinafter `Law No 4/1985'). Articles 4 to 6 of Law No 4/1985 introduced a system of regional aid that was essentially identical to the system set up by Law No 28/1981. 9 Those laws provided for three measures in favour of road haulage contractors established in the Friuli-Venezia Giulia Region: (a) annual financing, over a maximum period of ten years, of up to 60% (for individual contractors) and 70% (for cooperatives and groups) of the reference rate laid down by Ministerial Decree, of interest on loans contracted for the purpose (Articles 4 of Laws No 28/1981 and 4/1985) of: - developing the contractor's infrastructure (construction, purchase, expansion, completion and modernisation of premises required for its operations, including those to be used for the warehousing, storage and handling of goods); - purchasing, developing and renewing fixed and movable equipment, together with internal and road transport vehicles; (b) financing the cost of leasing, for a period of three or five years, new vehicles, trailers and semi-trailers and their swap-bodies, suitable for the operation of road haulage, together with the installations, machinery and equipment for the use, maintenance and repair of vehicles and for the handling of goods, up to the level of 25% (for individual contractors) and 30% (for cooperatives and groups) of the purchase price of the assets. This aid, laid down in Article 7 of Law No 28/1981 and Article 5 of Law No 4/1985, was reduced, for all recipients, to 20% and then to 15% of the purchase price by subsequent regional laws; (c) annual financing, for groups and other forms of association, of up to 50% of investment to be used for the construction or purchase of installations and equipment required in pursuing the aims of the group or association, or contributing to the operation and development of service centres for housing, maintenance and repair of vehicles or related facilities and equipment (Article 8 of Law No 28/1981 and Article 6 of Law No 4/1985). 10 According to information sent to the Commission by the Italian authorities on 18 November 1996, the appropriations earmarked for the aid referred to in Article 4 of Law No 4/1985, for the period from 1985 to 1995, amounted to ITL 13 000 million (EUR 6.7 million), and 155 applications were granted. On average, the level of aid disbursed ranged from 13% to 26% of the cost of the loans and interest. The amount budgeted for the period from 1981 to 1985 was ITL 930 million (EUR 0.4 million), and 14 applications were granted during that period (section II of the contested decision). 11 According to the same information, the budget allocated for the aid covered by Article 5 of Law No 4/1985 amounted to ITL 23 300 million (EUR 11.8 million) for the period from 1985 to 1995, and 1 691 applications were granted, with an average financing rate of around 19%, over that period. In 1993, 83 applications were granted and the level of aid was 10%. From 1981 to 1985, 305 applications were granted and aid amounting to ITL 5 790 million (EUR 2.9 million) was disbursed (contested decision, section II). 12 According to the information sent by the Italian Government to the Commission after the initiation of the administrative procedure, aid granted under Article 6 of Law No 4/1985 was for investment in the combined transport sector, namely the purchase of swap-bodies and corresponding attachment devices for intermodal vehicles and semi-trailers. According to that information, that aid accounted for between 10% to 15% of the total amount of aid granted (section II and section VIII, seventh and eighth paragraphs, of the contested decision). 13 According to the contested decision (section II, ninth paragraph), the Italian authorities on several occasions stressed in their observations to the Commission that the granting of the aid was suspended in 1995 following the Commission's comments on the systems of aid in question. Administrative procedure and content of the contested decision 14 Having learned of the existence of Law No 4/1985 when examining another case pertaining to State aid provided for by a later regional law, the Commission, by letter of 29 September 1995, asked the Italian authorities to forward all the legislation, documents, information and data needed to assess the compatibility with the common market of the system of aid established by Law No 4/1985. In that letter, the Commission reminded the Italian authorities that Member States are required to communicate in advance any plans to grant or alter aid and that they must not put the proposed measures into effect until that procedure has resulted in a final decision. 15 Following an exchange of correspondence with the Italian authorities, the text of Law No 4/1985 was communicated to the Commission during a meeting on 18 July 1996, and further information was provided on 18 November 1996. 16 By letter of 14 February 1997, the Commission informed the Italian Government of its decision to initiate the procedure provided for in Article 93(2) of the Treaty in respect of the system of aid for commercial road hauliers laid down by Law No 4/1985 and Law No 28/1981 (OJ 1997 C 98, p. 16). It asked the Italian authorities and interested third parties to submit their observations and furnish all documents, information and data required in order to examine the compatibility of the aid in question with the common market. The Commission received the Italian Government's observations on 3 April 1997 (supplementary report by the Friuli-Venezia Giulia Region annexed to the letter of 27 March 1997 from the Italian Republic's Permanent Representation, hereinafter `the supplementary report'). 17 On 30 July 1997 the Commission closed the procedure by adopting the contested decision. The operative part of that decision is worded as follows: `Article 1 Subsidies granted under Laws No 28/1981 and No 4/1985 ... up to 1 July 1990 to companies exclusively engaged in transport operations at local, regional or national level do not constitute State aid within the meaning of Article 92(1) of the Treaty. Article 2 The subsidies not covered by Article 1 of this Decision constitute aid within the meaning of Article 92(1) of the Treaty and are illegal since they were introduced in breach of Article 93(3). Article 3 The subsidies for financing equipment specifically adapted for, and used solely for, combined transport constitute aid within the meaning of Article 92(1) of the Treaty but are compatible with the common market by virtue of Article 3(1)(e) of Regulation (EEC) No 1107/70. Article 4 The subsidies granted from 1 July 1990 onwards to companies engaged in transport operations at a local, regional or national level and to companies engaged in transport operations at an international level are incompatible with the common market since they do not fulfil any of the conditions for derogation provided for in Article 92(2) and (3) of the Treaty, or the conditions provided for in Regulation (EEC) No 1107/70. Article 5 Italy shall abolish and recover the aid referred to in Article 4. The aid shall be reimbursed in accordance with the provisions of domestic law, together with interest, calculated by applying the reference rates used for assessment of regional aid, as from the date on which the aid was granted and ending on the date on which it is actually repaid. ...' 18 In the statement of reasons for the contested decision, the Commission makes a distinction between the market for the national, regional and local carriage of goods by road, on the one hand, and the market for the international carriage of goods by road, on the other (section VII, third to eleventh paragraphs, of the contested decision). 19 Since the former market was closed to competition until the entry into force on 1 July 1990 of Regulation No 4059/89, which introduced cabotage quotas, the Commission argues that aid granted before that date to haulage firms operating solely at national, regional or local level could not affect intra-Community trade and therefore did not constitute State aid within the meaning of Article 92(1) of the Treaty. On the other hand, aid granted after that date was State aid within the meaning of that provision in that it might have affected trade between Member States. 20 As regards the market for international carriage, the Commission observes that it was opened up to intra-Community competition from 1969, when Regulation No 1018/68 came into force. On that basis it argues that `the aid provided for under Laws No 4/85 and No 28/81 strengthens the financial position and hence the scope of commercial haulage companies in the Friuli-Venezia Giulia Region vis-à-vis their competitors since ... 1969 for [undertakings] engaged in international transport and may accordingly affect trade between Member States' (section VII, final paragraph, of the contested decision). 21 Turning to the question whether the aid thus classified as State aid might be the subject of a derogation, the Commission considers that aid for the funding of equipment to be used for combined transport may benefit from the exemption provided by Article 3(1)(e) of Regulation No 1107/70 regarding aid designed to facilitate the development of combined means of transport. As to the other aid in question (hereinafter `the aid in question' or `the aid in dispute'), it could not benefit from the derogation provided by Article 3(1)(d) of Regulation No 1107/70, because there was no situation of excess capacity and no reorganisation plan for the sector. In the same way, the derogations referred to in Article 92(3)(a) and (c) of the Treaty, for aid to promote the economic development of certain areas, are not applicable because there is no regional development plan covering all sectors of the region's economy, and the territory of the Friuli-Venezia Giulia Region as a whole is not one of the areas qualifying for the exemptions. The derogations provided by Article 92(3)(c) of the Treaty in favour of sectoral aid do not apply to the aid in question in that it is not accompanied by any action aimed at an objective of common interest such as a restructuring plan for the sector. Furthermore, aid for leasing operations associated with the acquisition of new vehicles is operating aid (section VIII, 13th paragraph, of the contested decision). 22 The Commission concludes that `the aid granted under Laws No 28/81 and No 4/85 to commercial road haulage companies in the Friuli-Venezia Giulia Region engaged in national transport operations from 1 July 1990 onwards, as well as for those engaged in international transport operations, is incompatible with the common market within the meaning of Article 92 of the Treaty' (section VIII, final paragraph, of the contested decision). Related cases 23 By application lodged at the Registry of the Court of Justice on 28 October 1997, the Italian Republic brought an action for the annulment of the contested decision and, in the alternative, the annulment of that decision in that it requires, in Article 5, the recovery of the aid granted from 1 July 1990 onwards (Case C-372/97). 24 By documents lodged at the Registry of the Court of First Instance between 12 December 1997 and 26 January 1998, 151 undertakings, which had benefited from aid granted by the Friuli-Venezia Giulia Region, also brought actions for the annulment of the contested decision. Those cases were joined, by order of the President of the First Chamber, Extended Composition, of 16 June 1998. The oral procedure took place on 15 September 1999. By judgment of 15 June 2000, the Court annulled Article 2 of the decision in so far as it declared illegal aid granted after 1 July 1990 to undertakings engaged exclusively in local, regional or national transport, and Article 5 thereof in so far as it required the Italian Republic to recover that aid. It dismissed the remainder of the application (Joined Cases T-298/97, T-312/97, T-313/97, T-315/97, T-600/97 to T-607/97, T-1/98, T-3/98 to T-6/98 and T-23/98 Alzetta v Commission [2000] ECR II-2319). That judgment is the subject of an appeal pending before the Court of Justice (Case C-298/00 P). Procedure and forms of order sought 25 By application lodged at the Court Registry on 10 November 1997, the applicant brought these proceedings. 26 By document lodged at the Court Registry on 19 February 1998, the Commission raised an objection of inadmissibility in accordance with Article 114(1) of the Rules of Procedure of the Court of First Instance. On 14 July 1998 the Court decided, pursuant to Article 114(3) of the Rules of Procedure, to open the oral procedure but only with regard to that objection. The objection was dismissed by judgment of the Court in Case T-288/97 Regione autonoma Friuli-Venezia Giulia v Commission [1999] ECR II-1871. 27 Following that judgment, the applicant failed to lodge a reply within the prescribed period, and the written procedure was closed on 10 February 2000. At the Court's request, the applicant submitted, on 4 September 2000, its written observations on the conclusions to be drawn in the present case from the judgment in Alzetta v Commission. Upon hearing the report of the Judge-Rapporteur, the Court of First Instance (Fourth Chamber, Extended Composition) decided to open the oral procedure. 28 The parties presented oral argument and replied to the Court's questions at the hearing on 13 December 2000. 29 The applicant claims that the Court of First Instance should: - annul the contested decision; - in the alternative, annul Article 5 of that decision, which requires the recovery of aid granted after 1 July 1990, together with interest; - order the Commission to pay the costs. 30 The defendant contends that the Court should: - dismiss the action in its entirety; - order the applicant to pay the costs. 31 At the hearing, the defendant presented its observations on the conclusions to be drawn in the present case from the judgment in Alzetta v Commission. It withdrew its claims for dismissal of the action to the extent that the action seeks the annulment of Article 2 of the contested decision in so far as that article declares illegal the aid granted after 1 July 1990 to companies engaged exclusively in transport operations at local, regional or national level, and of Article 5 of that decision in so far as it requires the Italian Republic to recover that aid. Law 32 In support of its application for annulment, the applicant relies on several main pleas in law. They will be grouped and considered as follows: first, infringement of Article 92(1) of the Treaty, of the principle of legal certainty and of the obligation to state reasons; second, infringement of Article 92(3)(c) of the Treaty, infringement of Article 3(1)(d) and (e) of Regulation No 1107/70, failure to state reasons, and the plea that it is impossible to distinguish the aid considered in the contested decision to be compatible with the common market from the aid which is not and, consequently, to implement that decision; third, misclassification of the aid in dispute as new aid; and fourth, infringement of the principles of the protection of legitimate expectations and proportionality, as well as failure to state reasons for the recovery of the aid. Infringement of Article 92(1) of the Treaty, of the principle of legal certainty and of the obligation to state reasons Arguments of the parties 33 The applicant submits that the aid in dispute is trivial in amount and intended for small and medium-sized undertakings. It is therefore not such as to affect trade between Member States. In its observations on the judgment in Alzetta v Commission, the Region argues that the judgment in question (paragraph 84 et seq.) contains a contradiction in this respect. On the one hand, the Court states that the trivial amount of the aid in dispute and the relatively small size of the recipient undertakings do not mean that the aid can be regarded as having no effect on competition and trade between Member States and, on the other hand, it cites the judgment in Case T-214/95 Vlaams Gewest v Commission [1998] ECR II-717, paragraph 49) in which it held that `[e]ven aid of a relatively small amount is liable to affect trade between Member States where, as here, there is strong competition in the sector in which the recipient operates'. However, a sector in which, as in the case of international road haulage until 1992 and cabotage until 1998, access to the market was subject to a system of quotas cannot, in the applicant's view, be regarded as a sector in which `there is strong competition'. 34 In support of that argument, the applicant relied at the hearing, in reply to a question put by the Court, on the fact that the number of road haulage companies established in the region is extremely large, whereas the number of haulage authorisations allocated to the Italian Republic is relatively limited. In particular, the majority of contractors in the region, of which there are several thousand, carry on their business with a single vehicle and are not equipped to engage in international haulage operations. The biggest companies operate 100 to 150 vehicles, which is the equivalent of a small haulage firm in other Member States. However, under the system of quotas applicable in the international haulage sector, the maximum number of authorisations allocated to the Italian Republic was 7 770 in 1992. The number allocated was appreciably lower in previous years. In the cabotage sector, 3 520 authorisations were granted in 1993, that figure increasing by 30% per year until the market was fully liberalised on 1 January 1998. In those circumstances, the amount of competition was extremely limited, even virtually non-existent, under the quota systems. 35 Moreover, the aid in dispute should logically be treated in the same way as `de minimis' aid, which is exempted from the obligation of notification, referred to in point 3.2 of the Community guidelines on State aid for small and medium-sized enterprises adopted by the Commission on 20 May 1992 (OJ 1992 C 213, p. 2), amended and replaced by the notice of 6 March 1996 on the de minimis rule for State aid (OJ 1996 C 68, p. 9) and by the Community guidelines on State aid for small and medium-sized undertakings of 23 July 1996 (OJ 1996 C 213, p. 4). By merely recalling, in the contested decision (section VII, second paragraph), the general tenor of the abovementioned texts, which exclude aid granted in the transport sector from the scope of the de minimis rule, on the ground that such aid is subject to specific rules, the Commission failed to comply with its obligation to state reasons and infringed the principle of legal certainty. In the sphere of State aid, the Commission must be guided, regardless of the sector of activity concerned, and in any case where no specific rules exist, by the general criteria on which the policy and rules governing competition are based. 36 Furthermore, virtually all the recipients of the aid in question operate within the Region. In that context, the Commission merely mentioned the existence of a risk that the aid would affect trade between Member States and competition, finding that since 1 July 1990 undertakings in the Friuli-Venezia Giulia Region have, in principle, been competing against any other Italian or Community haulage contractor engaged in cabotage in Italy. In particular, it failed to establish that certain Community undertakings holding a cabotage authorisation had been adversely affected by the aid in dispute. 37 The Commission should also have adduced evidence that the aid in question strengthened the position of undertakings operating in the international transport market up to the end of the quota system on 31 December 1992. Friuli-Venezia Giulia Region road hauliers hold only a marginal share of that market, so that the effect of the aid in question on that market was insignificant. 38 For all those reasons, the conditions laid down for the application of Article 92(1) of the Treaty are not satisfied in the present case. 39 The Commission contends that it sets out explicitly and precisely in the contested decision the grounds on which the aid in question is considered likely to affect trade between Member States and to distort competition. In that decision (section VII), the Commission states in particular the reasons for which the de minimis rule is not applicable in this case. Moreover, the Commission is not required to prove that the aid in dispute actually had an effect. 40 During the oral procedure, the Commission challenged the applicant's argument that the quota systems in question had almost eliminated any competition. In particular, it observed that the international transport sector was very competitive, since the number of authorisations granted was considerable and those authorisations entitled their holders to engage, without limitation, in international transport operations for one year. Findings of the Court 41 The Court points out, first, that, in matters relating to State aid, the two conditions for the application of Article 92(1) of the Treaty, namely that trade between Member States must be affected and competition distorted, are as a general rule inextricably linked. In particular, where State financial aid strengthens the position of an undertaking as compared with other undertakings competing in intra-Community trade, the latter must be regarded as affected by that aid (Alzetta v Commission, paragraph 81, and the case-law cited therein). 42 In the present case, the Commission set out a similar line of reasoning in the contested decision. First of all it found that the aid in question reduced the normal costs of undertakings in a specific sector (commercial road haulage) in a specific region (the Friuli-Venezia Giulia Region), a state of affairs which might engender a distortion of competition (section VI, final paragraph, of the contested decision). It concluded that `where the position of companies in a particular sector involved in trade between Member States is strengthened, this trade must be considered to be affected within the meaning of Article 92(1) of the Treaty' (section VII, final paragraph, of the contested decision). 43 It is therefore necessary to examine whether those assessments are well founded in the light of the circumstances of the case and the arguments put forward by the applicant. 44 As regards, first, the applicant's argument based on the modest amount of the aid in dispute, it is settled case-law that even aid of a relatively small amount is liable to affect trade between Member States where there is strong competition in the sector in which the recipient operates (Vlaams Geweest v Commission, cited above, paragraph 49). 45 In this particular case, contrary to what the applicants allege, the quota systems in force on the international road haulage market from 1969 to 1993 and on the cabotage market from 1990 to 1998 enable a situation to be established in which there was actual competition within the limit of the quotas laid down, which was capable of being affected by the grant of the aid in question, as the Court has already pointed out in Alzettav Commission (paragraph 92). By virtue of the relevant provisions of Regulations Nos 1018/68, 4059/89 and 3118/93, Community authorisations issued in the carrier's name and usable only for one vehicle, were granted under national quotas for a period of one year in the case of international transport and two months for cabotage. During those periods of validity, holders of an international transport authorisation or a cabotage authorisation were entitled to transport goods without limitation, with one vehicle, between Member States of their choice or within any Member State. 46 Moreover, because of the structure of the market, a feature of which is the presence of a large number of small-scale undertakings in the road haulage sector, even relatively modest aid is liable to strengthen the position of the recipient undertaking as compared with its competitors in intra-Community trade. In that context, the effects on competition and trade of a relatively small amount of aid may not therefore be negligible. It follows that such aid cannot be regarded as of little importance. 47 Since the aid in dispute was liable to have an appreciable effect on trade between Member States and on competition, the Commission was fully entitled to take the view that the conditions laid down by Article 92(1) of the Treaty were satisfied in the present case. From that point of view, the contested decision does not infringe the principle of legal certainty. The Community guidelines on State aid for small and medium-sized enterprises adopted on 20 May 1992, which introduced the de minimis rule with regard to State aid for small and medium-sized undertakings, and the notice of 6 March 1996 on the de minimis rule for State aid expressly exclude the transport sector from the scope of that rule. 48 Finally, the Commission gave a sufficient statement of reasons for the contested decision on this point by stating, concisely but clearly, the reasons why the aid in question is such as to affect trade between Member States and distort competition. It also refuted the objections raised by the Italian Government during the administrative procedure. In this connection, it explained in the contested decision (section VII, second paragraph), first, that the Community guidelines on aid to small and medium-sized enterprises and the de minimis rule were not adopted until 1992 and, second, `in accordance with point 2.2 of those guidelines, those rules are not applicable to the transport sector since there are specific rules on competition in that sector'. 49 As regards, secondly, the complaint concerning the alleged absence of proof of any actual effect on intra-Community trade and competition attributable to the aid in dispute, it must be pointed out that State aid fulfils the conditions for the application of Article 92(1) of the Treaty if it threatens to distort competition and is capable of affecting trade between Member States (Alzetta v Commission, paragraph 80, and the case-law cited therein). 50 Contrary to the applicant's allegations, the onus was therefore not on the Commission to establish that the aid in question had affected the competitive position of certain haulage undertakings. 51 Moreover, as regards the applicant's argument that most of the undertakings receiving the aid in question operate solely at local level, it should be borne in mind that according to well-established case-law, an aid may be of such a nature as to affect trade between Member States and to distort competition even if the recipient undertaking that is competing with producers from other Member States does not itself export. A situation of this kind may also arise when there is no excess capacity in the particular sector. Where a Member State grants aid to an undertaking, domestic production may for that reason be maintained or increased, with the result that undertakings established in other Member States have less chance of exporting their products to the market in that Member State. 52 In those circumstances, in the contested decision (section VII) the Commission could therefore rightly reject the argument put forward by the Italian Government during the administrative procedure, namely that over 80% of the recipients are very small undertakings engaged solely in local transport, by pointing out that the local nature of an activity is not a criterion that necessarily ruled out an effect on intra-Community trade as from the partial opening up of the cabotage market to competition on 1 July 1990. 53 Likewise, as regards international transport, which was partially opened up to Community competition from 1969 and fully liberalised from 1 January 1993, in the contested decision (section VII, 10th and 11th paragraphs) the Commission rejected the Italian Government's objection that hauliers from the Friuli-Venezia Giulia Region play only a small part in international transport, and can therefore be regarded as having little significant effect on competition. Having pointed out that the limited nature of the competition cannot preclude the application of Article 92(1) of the Treaty in the road haulage sector, it rightly stated that the aid in question strengthens the financial position and hence the scope of commercial road haulage companies in the Friuli-Venezia Giulia Region vis-à-vis their competitors and may accordingly affect trade between Member States. 54 In consequence, the essentially local activity of most recipients of the aid in question and the existence of quota schemes were not such as to prevent the aid from having an effect on trade between Member States and on competition, as the Court has already held in Alzetta v Commission (paragraphs 91 to 97). 55 On all those grounds, the pleas alleging infringement of Article 92(1) of the Treaty, infringement of the principle of legal certainty and failure to state reasons must be dismissed as unfounded. Infringement of Article 3(1)(d) and (e) of Regulation No 1107/70, of Article 92(3)(c) of the Treaty and of the obligation to state reasons, and the plea that it is impossible to distinguish the aid which the contested decision considers compatible with the common market from that which it does not and, consequently, to implement the contested decision Arguments of the parties 56 The applicant submits that, by finding that the aid in question was not, in the majority of instances, covered by the derogations provided for in Article 3(1)(d) and (e) of Regulation No 1107/70 and by Article 92(3)(c) of the Treaty, the Commission infringed those provisions and failed to give adequate reasons for the contested decision in that regard. 57 It challenges the contested decision, first, in respect of its finding that the aid in question is not covered by the exemption provided for by Article 3(1)(d) of Regulation No 1107/70 in so far as it was not part of any reorganisation plan for the sector concerned, within the meaning of that article, and was not intended to eliminate excess capacity in that sector. Contrary to the Commission's claims, all the aid is part of an effective restructuring project for the road haulage sector which complies with Community rules and was notified to the Commission. Moreover, the leasing aid for the purchase of new vehicles was not intended to increase capacity - which was frozen by the licence system - but to bring about a qualitative restructuring in order, in particular, to put an end to the placing of an excessive workload on resources and personnel, with negative repercussions in terms of safety. 58 Second, as regards aid intended to finance equipment for combined transport, which is exempt under Article 3(1)(e) of Regulation No 1107/70, the Region states, in its observations on the consequences of the judgment in Alzetta v Commission, that the Court was not called on to consider this question in that case. It submits that the Commission committed an arror of assessment in taking the view that only 10 to 15% of the aid in question was covered by that exemption. Article 3(1)(e) of Regulation No 1107/70 refers, in general terms, to aid relating to `investment in fixed and movable facilities necessary for transhipment'. All the disputed aid fulfils that condition. The Italian authorities had explained that the percentage of 10 to 15% of the disputed aid, which they had indicated as aid intended to finance combined transport equipment, represented an average rate and that it would be impossible to verify the actual use of equipment financed and suitable for a use in both wheeled and intermodal transport of containers, swap-bodies and semi-trailers for combined use. 59 The applicant also maintains that the national and regional authorities are unable to identify the aid to be recovered. Because the contested decision contains no detail whatsoever with regard to the aid falling within the category referred to in Article 3 of the operative part of that decision, which declares that the aid for financing equipment to be used in combined transport is compatible with the common market, those authorities are not in a position to implement the contested decision. 60 Third, the disputed aid fulfils the conditions for exemption laid down by Article 92(3)(c) of the Treaty. It is intended to facilitate development of the economic activity of transport in a manner which respects the environment and takes account of specific regional characteristics. Because of its particular geographical position, the Friuli-Venezia Giulia Region needs to be `defended' - on account of the modest share of the international road haulage market held by undertakings established in that region - against competition from countries outside the European Community, such as Austria (until 1994), Croatia and Slovenia. Moreover, the aid in question forms part of a project for the qualitative restructuring of the undertakings concerned, which is evident from the very nature of that aid which is intended to achieve objectives clearly defined by law. It is being introduced in a sector which is not characterised by excess capacity, as the Commission itself has conceded. No legal significance whatsoever can be attributed to the mere technical fact that no measure specifically described as a `restructuring plan' has been adopted by the national or regional Italian authorities. On the contrary, the actual and practical significance of the aid measures must be assessed in their economic context. The aid in question here, which is degressive, trivial in amount and for the most part intended for very small undertakings, was not likely to have an adverse effect on trading conditions to an extent contrary to the common interest. Moreover, the Region did not grant the applications for aid submitted in 1994 and 1995. 61 In its observations on the judgment in Alzetta v Commission and during the hearing, in reply to a question put by the Court, the Region suggested that in the Draft Regulation on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises (OJ 2000 C 89, p. 15) the Commission had itself acknowledged that aid granted to small enterprises in the transport sector must be considered to be compatible with the common market within the meaning of Article 87(3) EC. That draft group exemption regulation, which was adopted under the powers conferred on the Commission by Council Regulation (EC) No 994/98 of 7 May 1998 on the application of Articles 92 and 93 of the Treaty establishing the European Community to certain categories of horizontal State aid (OJ 1998 L 142, p. 1), does not mention the transport sector among the sectors excluded from the scope of the exemption. 62 In the first place, the defendant maintains that the conditions for the application of Article 3(1)(d) of Regulation No 1107/70, namely the existence of excess capacity causing serious structural difficulties in the transport sector and with the existence of a reorganisation plan, are not satisfied in this case. 63 In the second place, it challenges the applicant's interpretation according to which the derogation referred to in Article 3(1)(e) of Regulation No 1107/70 should have been extended to cover all aid granted under the disputed laws, including the aid for renewal of the vehicle fleet. 64 In the third place, Article 92(3)(c) of the Treaty should be interpreted as meaning that sectoral aid may be considered to be compatible only if its adverse effects on trade and competition are offset by real advantages for the common interest, and provided that the offsetting is done in the context of the Community and not from the standpoint of a single Member State (Joined Cases T-126/96 and T-127/96 Breda Fucine Meridionali v Commission [1998] ECR II-3437, paragraph 97 et seq., and Case 730/79 Philip Morris v Commission [1980] ECR 2671, paragraph 26). On that view, the preparation of a restructuring plan specifying in detail the advantages for the common interest in granting the disputed aid could, in principle, constitute action in the common interest capable of offsetting the distorting effects of that aid on competition and trade. Findings of the Court 65 First, as regards the application of Article 3(1)(d) of Regulation No 1107/70, that provision authorises only and subject to certain conditions aid granted with a view to eliminating, as part of a reorganisation plan, excess capacity causing serious structural problems. 66 In this case, there is no evidence in the file to show that such excess capacity exists. On the contrary, according to the contested decision (section VIII, third paragraph), in their observations on the decision to initiate the procedure the Italian authorities stated that in the Friuli-Venezia Giulia Region there was `no problem of excess capacity in the sector ... but, rather an undercapacity in vehicle fleet of about 20% as compared to real needs - in other words, an excessive workload is being placed on existing equipment and personnel in the Region'. That statement is corroborated by the applicant's argument that the disputed aid aims to remedy structural difficulties arising from over-use of equipment and personnel. 67 Furthermore, it must be observed that the aid systems in question in no way refer to the need to avoid increasing the capacity of the sector and impose no condition in order to avoid such an increase. In addition, the applicant's statement that the disputed aid was part of a `project' for restructuring the road haulage sector is very general and does not prove that the aid formed part of a reorganisation plan which preceded it and accompanied its introduction, as required by Article 3(1)(d) of Regulation No 1107/70. 68 Second, the applicant's submission that the defendant failed to have regard to Article 3(1)(e) of Regulation No 1107/70 by finding, in the contested decision, that only 10 to 15% of the disputed aid was intended for combined transport and therefore eligible for a derogation under that provision, is likewise not well founded. The applicant merely suggests that all equipment, even non-specific, used in combined transport is covered by that provision. Such an interpretation is incompatible with the wording of Article 3(1)(e) of Regulation No 1107/70, which exempts aid `designed to facilitate the development of combined transport' provided that it relates in particular to `investment in fixed and movable facilities necessary for transhipment' or `investment in transport equipment specifically designed for combined transport and used exclusively in combined transport'. The applicant's submission is also incompatible with the objectives pursued by that provision, as set out in the fourth, fifth and sixth recitals in the preamble to Council Regulation (EEC) No 3578/92 of 7 December 1992 amending Regulation (EEC) No 1107/70 on the granting of aids for transport by rail, road and inland waterway (OJ 1992 L 364, p. 11), namely to achieve economic and social cohesion rapidly in the Community by putting the emphasis on `combined transport', in particular where it presents an alternative to infrastructure work that cannot be completed in the short term, to encourage small and medium-sized undertakings to avail themselves of that type of transport and to develop new bimodal and transhipment technology. 69 Moreover, the Commission's finding that 10 to 15% of the total amount of the disputed aid was for financing combined transport equipment is based on the information provided by the Italian Government during the administrative procedure. 70 In this regard, the Commission clearly stated in the contested decision (sections II and VIII, seventh paragraph) that under the aid systems in question, the aid for combined transport, which was declared compatible with Article 92(1) of the Treaty by virtue of Article 3(1)(e) of Regulation No 1107/70, was for the purchase of swap-bodies and corresponding attachment devices for intermodal vehicles and semi-trailers. 71 In those circumstances, the applicant's claim that it is impossible to distinguish, in the contested decision, the aid earmarked for combined transport - and exempted on that basis - from the aid declared incompatible with the common market is also without any foundation. Contrary to the applicant's claim, therefore, the national or regional authorities are not unable to implement the contested decision. 72 Third, with regard to derogations for sectoral aid covered by Article 92(3)(c) of the Treaty, it must be pointed out that the disputed aid in this case does not come within the scope of any of the Community guidelines laying down, according to the objective pursued, rules which the Commission follows when applying that provision. Aid not covered by any of those guidelines may none the less enjoy a derogation, if its purpose is to facilitate the development of certain activities and it does not adversely affect trading conditions to an extent contrary to the common interest, in accordance with Article 92(3)(c) of the Treaty. 73 The Community judicature has interpreted that provision as meaning that economic assessments made when applying it must be conducted in a Community context, which means that the Commission is under an obligation to examine the impact of an aid on competition and intra-Community trade. It is for the Commission, during that examination, to weigh the beneficial effects of the aid against its adverse effects on trading conditions and the maintenance of undistorted competition (Philip Morris v Commission, paragraphs 24 and 26; Joined Cases C-278/92 to C-280/92 Spain v Commission [1994] ECR I-4103, paragraph 51; and Joined Cases T-371/94 and T-394/94 British Airways and Others v Commission [1998] ECR II-2405, paragraphs 282 and 283). 74 It should be borne in mind that Article 92(3) of the Treaty confers on the Commission a wide discretion to allow aid by way of derogation from the principle in Article 92(1) that State aid is incompatible with the common market. The Commission's examination entails consideration and appreciation of complex economic facts and conditions. Since the Community judicature cannot substitute its own assessment of the facts, especially in the economic field, for that of the originator of such a decision, the Court must confine itself to checking that the rules on procedure and the statement of reasons have been complied with, that the facts are materially accurate and that there has been no manifest error of assessment or misuse of powers (see, for example, Philip Morris, paragraphs 17 and 24; Case C-142/87 Belgium v Commission, `Tubemeuse' [1990] ECR I-959, paragraph 56; Case C-303/88 Italy v Commission [1991] ECR I-1433, paragraph 34, and Case T-149/95 Ducros v Commission [1997] ECR II-2031, paragraph 63). 75 In this instance it is apparent from the file that, contrary to the applicant's assertions, in the course of the administrative procedure the Italian authorities did not provide any definite evidence of a specific, detailed plan for the restructuring of the road haulage sector. On the contrary, the authorities stated that no restructuring plan was necessary for the immediate future and, moreover, merely alluded to possible measures to rationalise the sector, in particular through measures designed to encourage mergers and incentives for combined and intermodal transport, soon to be adopted by the regional authority (supplementary report, point 2-4, second paragraph). 76 In those circumstances the Commission, without exceeding the limits of its power of assessment, was able in section VIII, 14th paragraph, of the contested decision to take the view that it did not have information at its disposal enabling it to establish that the aid in question supported an action in the common interest, such as a restructuring plan. 77 Furthermore, the Commission rightly observed in section VIII, 13th paragraph, of the contested decision, that some of the aid in dispute, such as leasing aid for the acquisition of rolling stock in order to renew the existing fleet, described as old in the supplementary report, was operating aid, to which the derogation set out in Article 92(3)(c) of the Treaty does not apply (Case T-459/93 Siemens v Commission [1995] ECR II-1675, paragraphs 77 and 78). Since the replacement of old vehicles is a cost that all road hauliers normally have to bear if they are to continue offering services on the market on competitive conditions, that aid artificially strengthened the financial position of the recipient undertakings to the detriment of their competitors. 78 On all those grounds, the pleas alleging infringement of Article 3(1)(d) and (e) of Regulation No 1107/70 and Article 92(3)(c) of the Treaty and failure to state reasons, as well as the plea that it is impossible to identify the aid declared compatible in the contested decision, and consequently to comply with that decision, must be dismissed. Misclassification of the disputed aid as new aid Arguments of the parties 79 The applicant argues that the aid in question should be treated as existing aid because it was provided for by laws of 1981 and 1985, which preceded the liberalisation of the sectors concerned. By classifying it as new aid in the contested decision, the Commission committed a serious breach of the procedural rules laid down in Article 93 of the Treaty. 80 It was only from the time when the international road haulage market and the cabotage market were opened up fully to competition, on 1 January 1993 and 1 July 1998 respectively, that subsidies granted in those two sectors were capable of affecting trade and could therefore be classified as `aid' within the meaning of Article 92(1) of the Treaty. However, it is clear from the wording and rationale of Article 93(3) of the Treaty that that provision is centred around an obligation to notify `planned aid' in advance and on an obligation not to implement such a plan until the Commission has terminated the review procedure. When therefore a sector undergoes complete liberalisation, any aids instituted previously are not covered by that provision, to the extent that they have already been implemented. 81 In its written observations on the consequences of the judgment in Alzetta v Commission, the Region points out that, in that judgment (paragraph 149), the Court held that the aid granted from 1 July 1990 onwards to undertakings engaged solely in local, regional or national transport had been misclassified as new aid. 82 As far as the aid granted to undertakings engaged in international transport is concerned, the Region disputes the classification - confirmed by the Court in the abovementioned case - of that aid as new aid, on the ground that it was introduced after the liberalisation of the international haulage market in 1969 by Regulation No 1018/68 establishing a system of quotas. 83 It maintains that the international haulage sector could be considered subject to the free play of competition only from the time when it was fully liberalised by the introduction, by Regulation No 881/92 which entered into force on 1 January 1993, of a system of `Community authorisations' making access to the market subject to purely qualitative criteria. 84 The argument that the transition from a system of market regulation based on quantitative criteria to one based on qualitative criteria constitutes the test of whether a sector can be regarded as liberalised is confirmed, by analogy, by the analysis of the Community system of public procurement in the public utility sectors, established by Council Directive 93/38/EEC of 14 June 1993 coordinating the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors (OJ 1993 L 199, p. 84). It is clear from the 11th, 13th and 19th recitals in the preamble to that directive that markets opened up to competition are excluded from its scope. In its Communication pursuant to Article 8 of Directive 93/38 (OJ 1999 C 129, p. 11), the Commission took the view that, pursuant to that article, a number of telecommunications services were excluded from the scope of the directive as a consequence of the liberalisation of the telecommunications markets in question. That liberalisation was characterised by the transition from a system of special or exclusive rights (and therefore quantitative restrictions) to a system of authorisations (and therefore qualitative selection). 85 The Commission, for its part, stated at the hearing that it was no longer challenging the classification as existing aid adopted by the Court in Alzetta v Commission as regards the aid granted with effect from 1 July 1990 to undertakings engaged solely in local, regional or national transport (see paragraph 31 above). 86 However, it explained that that aid had been classified as new aid in the contested decision as it was to be expected, in the case of the Member State concerned, that such measures would become State aid for the purposes of Article 92(1) of the Treaty when the market was liberalised. In those circumstances, the principles of legal certainty and protection of legitimate expectations did not require the classification of that aid as existing aid. Moreover, it is also in accordance with those principles that Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty (OJ 1999 L 83, p. 1), which is not applicable in this case, provides - by way of exception to the principle that measures which have become aid following developments in the market should be considered as existing aid - that, `[w]here certain measures become aid following the liberalisation of an activity by Community law, such measures shall not be considered as existing aid after the date fixed for liberalisation'. In this instance, the Commission has pointed out that, in the transport sector, there was no cabotage before the liberalisation of that sector by Regulation No 4059/89. 87 The Commission also rejects the Region's argument that subsidies constitute State aid for the purposes of Article 92(1) of the Treaty only from the time of the full liberalisation of the market concerned. 88 In the present case, the laws providing for the aid in question should therefore have been notified to the Commission, on their adoption in 1981 and 1985 respectively, as provisions instituting new aid, since the international road haulage market had been partly opened up to intra-Community competition since 1969. Findings of the Court 89 The Commission does not challenge the classification of the aid granted, after the liberalisation of the cabotage market, to undertakings engaged solely in local, regional or national transport, which was upheld in the judgment in Alzetta v Commission, as existing aid. It is therefore sufficient to observe that a system of aid established in a market that was initially closed to competition must, when that market is liberalised, be regarded as an existing aid system, in so far as at the time of its establishment it did not come within the scope of Article 92(1) of the Treaty, which applies only to sectors open to competition, as the Court has already held in the abovementioned judgment (paragraphs 142 to 144, 146 and 147). In the present case, the Commission acknowledged at the hearing that the cabotage sector was closed to Community competition before it was liberalised by Regulation No 4059/89. 90 Moreover, contrary to the explanations furnished by the defendant during the hearing, the application, at the time of the liberalisation of the cabotage sector, of the system of new aid established by Article 93(3) of the Treaty with regard to aid granted in that sector prior to its liberalisation was not foreseeable by the Member State concerned solely on the basis of the provisions of the Treaty. In so far as that aid had been granted when the market was still closed to Community competition, the parties concerned could not but assume, in the absence of detailed provisions implementing Article 93 of the Treaty and ruling out the classification of such aid as existing aid after the date fixed for liberalisation, that it was subject to the system of existing aid. Article 93(3) of the Treaty imposes, in express terms, only an obligation of notification in respect of `plans to grant or alter aid', so that they can be submitted to the Commission for scrutiny before they are implemented. 91 It follows that aid granted to undertakings engaged solely in local, regional or national transport must be classified as existing aid and can be the subject, if at all, only of a decision finding it incompatible as to the future, as the Court has held in its judgment in Alzetta v Commission (paragraphs 147 and 148). 92 Conversely, since the international road haulage sector was opened up to competition by Regulation No 1018/68 from 1969 onwards, the systems of aid in question, which were established in 1981 and 1985, clearly fell within the scope of Article 92(1) of the Treaty when they were introduced and should, therefore, have been regarded as new systems of aid which were subject, as such, to the obligation of notification laid down by Article 93(3) of the Treaty. 93 In this regard, the Court cannot uphold the applicant's argument that only aid granted after the market was opened up fully to competition can be classified as new aid. 94 As has already been held (see paragraph 45 above), the establishment of a system of quotas in the international transport sector from 1969 onwards introduced a situation of actual competition liable to be distorted by the granting of the disputed aid, which therefore fell, from that date, within the scope of Article 92(1) of the Treaty. 95 In those circumstances, the analogy drawn by the applicant with the Community system of public procurement in the water, energy, transport and telecommunications sectors, established by Directive 93/38, is without any foundation. In those sectors, the criterion of full liberalisation of the market is applied in order to determine the field of application of the system established by that directive in comparison with other rules applicable in regard to public procurement. On the other hand, in matters relating to State aid, it is sufficient that the market concerned be open, even partly, to competition, for aid to be capable of affecting trade between Member States. 96 For all those reasons, the plea alleging misclassification of the aid in question as new aid can be upheld only in so far as it relates to aid granted from 1 July 1990 onwards to undertakings engaged solely in local, regional or national transport. 97 As the Court has already held in Alzetta v Commission (paragraph 150), the contested decision must therefore be annulled in so far as Article 2 thereof declares aid granted with effect from 1 July 1990 to undertakings engaged solely in local, regional or national transport to be illegal, and in so far as Article 5 requires recovery of that aid. Infringement of the principles of protection of legitimate expectations and proportionality and failure to state reasons for the recovery of the aid in question, together with interest Arguments of the parties 98 According to the applicant, the obligation to recover the disputed aid, which is imposed by Article 5 of the contested decision, is contrary to the principles of the protection of legitimate expectations and proportionality. The Region and the recipients of the aid were not in a position, in 1985, to foresee that the aid, which was granted lawfully, would be held to be unlawful 12 years later `solely with reference to aid disbursed with effect from 1 July 1990'. The Region's good faith is demonstrated by the fact that it immediately suspended disbursement of the aid in question when it was informed of the Commission's complaints regarding its compatibility with the Treaty. 99 In its observations on the conclusions to be drawn from the judgment in Alzetta v Commission, the applicant states that, in that judgment (paragraph 158), the Court observed that `exceptional circumstances' may allow the recipients of aid to plead legitimate expectations as to the lawfulness of that aid, even if it was not notified in accordance with Article 93(3) of the Treaty. According to case-law, a long interval which has elapsed prior to the adoption of the contested decision can constitute such `exceptional circumstances' (Case 223/85 RSV v Commission [1987] ECR 4617). 100 The Commission states that the obligation to recover aid, imposed in the contested decision, applies to aid paid to undertakings engaged in international transport since 1981. 101 It observes that undertakings receiving aid cannot, save in exceptional circumstances, plead legitimate expectations as to the lawfulness of that aid unless it has been granted in compliance with the procedure laid down by Article 93(3) of the Treaty. Findings of the Court 102 The Court has already held, in Alzetta v Commission (paragraphs 162 to 166), that Article 5 of the operative part of the contested decision, which refers to aid declared by Article 4 to be incompatible with the common market, must be understood as requiring the recovery of aid granted with effect from 1 July 1990 to undertakings engaged in local, regional or national transport, and of aid granted to undertakings engaged in international transport since the introduction of the aid systems in question. 103 It should also be pointed out that aid granted to undertakings engaged in local, regional or national transport is not required to be repaid, because, as has already been held (see paragraphs 89 to 91 above), it is existing aid, which may only be held incompatible ex nunc. 104 The Court must therefore verify whether the contested decision, in requiring the recovery of aid granted to undertakings engaged in international transport, together with interest, is compatible with the principles of proportionality and protection of legitimate expectations relied on by the applicant. 105 As regards, first, the alleged breach of the principle of proportionality, it should be observed that, since the elimination of an illegal aid through recovery of the amount of aid disbursed plus interest is the logical consequence of a finding that the aid is incompatible with the common market and is aimed solely at restoring the previously existing competitive situation, that obligation cannot in principle be disproportionate to the objectives of Articles 92, 93 and 94 of the Treaty (Alzetta v Commission, paragraph 169, and the judgments cited therein). 106 In the present case, the applicant has not put forward any specific evidence to show that the obligation to reimburse individual aids granted to undertakings engaged in international transport is, in view of the effect of such aids on competition, manifestly disproportionate to the objectives of the Treaty. 107 As for the complaint of breach of the principle of protection of legitimate expectations, only exceptional circumstances can validly be the foundation for recipients' expectations as to the lawfulness of that aid. Furthermore, recognition of such legitimate expectations presupposes in principle that the aid has been granted in compliance with the procedure laid down by Article 93 of the Treaty. A diligent economic operator should normally be able to determine whether that procedure has been complied with (Alzetta v Commission, paragraph 171, and the judgments cited therein). 108 In the present case, the systems of aid in question were not notified. Moreover, the applicant does not plead any exceptional circumstance which could be the foundation for legitimate expectations as to the lawfulness of the aid granted to undertakings engaged in international transport. In particular, the adoption of a decision declaring the aid incompatible many years after it was granted can in fact be explained by the failure of the Member State concerned to notify the aid scheme in question. In the present case, the applicant does not claim any delay attributable to the Commission, unlike the situation examined in the judgment in RSV v Commission (paragraphs 13 to 17), which it cites. 109 It has not therefore been established that the obligation to return that aid is in breach of the principle of protection of legitimate expectations. 110 Moreover, as regards the obligation to recover the aid incompatible with the common market, the Court has already held in Alzetta v Commission (paragraph 176) that the contested decision contains an adequate statement of reasons: having established that the aid in question distorts competition within the Community between commercial road haulage undertakings established in the Friuli-Venezia Giulia Region and those established outside that region (section VI, eighth paragraph), the Commission finds that action to recover that aid is necessary in order to restore the `fair conditions of competition' which existed before the aid was granted (section IX, second paragraph). 111 In consequence, the pleas alleging infringement of the principles of protection of legitimate expectations and proportionality and failure to state reasons for the recovery of the aid in question must be dismissed. 112 The present claim must therefore be upheld but only to the extent that it seeks the annulment of Article 2 of the contested decision for declaring illegal aid granted after 1 July 1990 to undertakings engaged in local, regional or national transport, and the annulment of Article 5 of the decision in so far as it orders reimbursement of that aid. Decision on costs Costs 113 Under Article 87(3) of the Rules of Procedure, the Court may order that costs be shared or that each party is to bear its own costs if each party succeeds on some and fails on other heads. As the applicant has succeeded on some and failed on other heads it must be ordered to bear its own costs. The Commission must be ordered to bear its own costs. Operative part On those grounds, THE COURT OF FIRST INSTANCE (Fourth Chamber, Extended Composition) hereby: 1. Annuls Article 2 of Commission Decision 98/182/EC of 30 July 1997 concerning aid granted by the Friuli-Venezia Giulia Region (Italy) to road haulage companies in the Region in so far as it declares illegal aid granted after 1 July 1990 to undertakings engaged exclusively in local, regional or national transport; 2. Annuls Article 5 of Decision 98/182 in so far as it requires the Italian Republic to recover that aid; 3. Dismisses the remainder of the application; 4. Orders each party to bear its own costs.

Judgment of the General Court (Seventh Chamber) of 7 July 2010 – Commission v Antiche Terre (Case T-51/09) Arbitration clause – Programme concerning the promotion of energy technologies for Europe (Thermie) – Contract concerning the project for the building in Umbertide (Italy) of an electricity generating plant using an innovative agro-forestry biomass combustion technology – Substantial amendment to the conditions for performance of the contract – Termination – Reimbursement of sums paid – Interest Procedure – Referral to the General Court under an arbitration clause (Art. 238 EC) (see paras 46, 50-60, 79-82, 85) Re: ACTION brought by the Commission under Article 238 EC seeking an order that Antiche Terre reimburse the sums paid by the Community in performance of contract no BM/188/96 of 23 December 1996, concluded with three companies, including Antiche Terre, under the Thermie programme. Operative part The Court: 1. Orders Antiche Terre Soc. Coop. rl Società Agricola to pay the European Commission the sum of EUR 479 332.40, together with late-payment interest at the Italian statutory rate, calculated in accordance with the rates applicable from 4 January 2004 until payment in full of the debt, after deduction of the sum of EUR 461 979 recovered by the Commission following the implementation on 25 January 2005 of the bank guarantee of which it was beneficiary; 2. Dismisses the remainder of the action; 3. Orders Antiche Terre to pay the costs.

Lord Justice Rimer : Introduction This appeal, brought with the permission of Mummery LJ, is against an order dated 4 December 2009 made by Mr Edward Bartley Jones QC sitting as a Deputy High Court Judge in the Chancery Division. The appellants (defendants to the claim) are BOH Limited ('BOH') and Layhawk Consultants Limited ('Layhawk'). The respondent (the claimant) is Eastern Power Networks Plc, the public utility supplier. It was formerly known, and sued, as EDF Energy Networks (EPN) Plc and, like counsel in argument, I will call it EDF. Mr Warwick represented the appellants before us but not before the judge. Mr Stoner QC represented EDF both before us and below. The neutral citation number for the judge's judgment is [2009] EWHC 3193 (Ch) and it is reported at [2010] L & TR 14. The case concerns an approximately rectangular area of land bounded on the south by Fourth Way, a public highway, on the Wembley Stadium Trading Estate. Each party owns the freehold of part of the land. EDF owns plot 2, upon which it operates an electricity sub-station. Plot 26 (owned by Layhawk) and plot 20 (by BOH) lie between plot 2 and Fourth Way. The issue in the claim was whether EDF has (i) rights of access and egress between plot 2 and Fourth Way over plots 20 and 26; and (ii) a right to maintain in position in plot 20 various underground cables that pass through plot 26 to the plot 2 sub-station. BOH and Layhawk deny that EDF has any such rights and claim, by virtue of their ownership of plots 20 and 26 respectively, to be entitled to prevent EDF's claim to exercise such rights. The reality is that they wish to exploit their plots as ransom strips. If EDF does have such rights, it is only by virtue of its title as the tenant of plot 2 under a 1953 lease that created a 42-year tenancy of plots 2, 26 and 31. The critical question before the judge was whether EDF's tenancy of plot 2 was continuing in existence under the provisions of Part II of the Landlord and Tenant Act 1954. That depended on whether or not, as BOH and Layhawk asserted, EDF's plot 2 tenancy had merged in the freehold of plot 2 that EDF acquired in 1993 and had so become extinguished. The judge accepted EDF's submission that it had not and that, as tenant of plot 2, it continued to enjoy the appurtenant rights over plot 20 conferred by the 1953 lease, as well as its rights as tenant of plot 26. He granted a declaration accordingly. By their first ground of appeal, BOH and Layhawk challenge that conclusion. By their second ground of appeal, BOH and Layhawk (which have changed their solicitors and counsel since the trial) have raised a new fallback argument not argued below. It arises under the Convention for the Protection of Human Rights and Fundamental Freedoms ('the Convention'). It is said that, if there has been no merger resulting in the extinguishment of EDF's plot 2 tenancy, the effect of the ordinary interpretation of section 44(1A) of the Landlord and Tenant Act 1954 is potentially to disadvantage the appellants in a manner likely to impair their right to the peaceful enjoyment of their possessions under Article 1 of the First Protocol to the Convention. By this ground of appeal the appellants assert that section 3 of the Human Rights Act 1998 requires section 44(1A) so to be read as to avoid any such impairment. The facts A fuller account of the facts is as follows. An understanding of them requires the reader to imagine an approximately rectangular area of land comprising four approximately horizontal plots each extending its full width. The northernmost plot is plot 31, a thin strip of just a few feet in depth. Plot 31 abuts plot 2, by far the largest plot and to its immediate south. Plot 2 abuts plot 26 (a strip of about 13 feet in depth), which is to its south and which in turn abuts plot 20, a strip of rhomboid shape. Plot 20 abuts Fourth Way. By a lease dated 20 February 1953 ('the lease') the British Transport Commission ('the BTC') leased plots 31, 2 and 26 (not plot 20) to the Eastern Electricity Board ('the EEB', the predecessor of EDF) for a term of 42 years from 24 June 1952 and thus expiring on 23 June 1994. The rent was £25 a year, payable quarterly on the usual quarter days. Clause 2(7) restricted the use of the demised premises to that of an electricity sub-station in connection with the EEB's undertaking. Clause 2(6) prohibited the erection of anything other than an electricity sub-station on the demised premises and required the EEB to fence off the demised premises from the adjoining land. The EEB built an electricity sub-station on plot 2. Once built, the sub-station was enclosed by fencing around plot 2, with plots 31 and 26 remaining outside it (this is not what clause 2(6) required but nothing turns on it). The demised premises were separated from the public highway by plot 20. The lease, however, conferred rights of way over plot 20 and also to lay cables etc under the highway and plot 20 (as they were), such cables passing under plot 26 to the plot 2 sub-station. The cables remain in position to this day. The BTC was the freehold owner of a substantial area of land, including Plot 20 and what is now Fourth Way, and so was able to grant such rights. The sub-station is an important one. Without it there would be no power for a radius of about three miles. It serves as a back-up supplier to Wembley Stadium, but EDF's future plans are that the Stadium should be fully supplied from it, a proposal which will involve the installation of more cables to the sub-station and a need for EDF to have a right of immediate access to it. The title to the lease is and has been since 1953 a registered one (MX 269363). Subject to the exclusion from it in 2003 of a small, approximately square section in the north-eastern corner of plot 2 (referred to in the judgment below and in this one as 'the "X" land'), EDF has been at all material times, and remains, the registered proprietor with a good leasehold title. The story relating to the "X" land is immaterial to the issues before us. In March 1984 Fastiron Limited acquired from the British Railways Board (the BTC's successor) (i) the freehold reversion expectant upon the determination of the lease; and (ii) the freehold of plot 20. Fastiron thus became EDF's landlord, although it did not remain so for long. In November 1985 Fastiron transferred its freehold estate in plot 2 to Racal Properties Limited, and Racal became registered as proprietor with title absolute (NGL 541578). On 11 August 1987 Racal transferred that estate to Leonard Dormer, who became the registered proprietor. Also in November 1985 Fastiron transferred to Racal its freehold estate in plot 26, and Racal became the registered proprietor with title absolute (NGL 541577). In March 1988, following two further transactions, Electrical Distributing Company Limited ('EDC') became the registered proprietor. The position by the spring of 1988 was therefore that the title to the freehold reversion expectant upon the determination of the lease was as follows: (i) Fastiron owned plot 31 (and plot 20, which was not demised by the lease but was subject to the appurtenant rights it created); (ii) Mr Dormer owned plot 2; and (iii) EDC owned plot 26. EDF remained the tenant. The property comprised in the tenancy created by the lease was or included premises occupied by EDF for the purposes of a business carried on by it. The tenancy was therefore one to which Part II of the Landlord and Tenant Act 1954 Act applied (section 23). Although the tenancy was, by its terms, due to expire by effluxion of time on 23 June 1994, the effect of section 24(1) was that (subject to section 24(2)) it would not then come to an end but would only do so if terminated in accordance with Part II. In 1992 EDF commenced negotiations with Mr Dormer for a consensual renewal of the tenancy (or perhaps of just that part of it comprising plot 2: the explanatory material is not before us and the position was not explained). On 27 August 1993 he served a notice on EDF purportedly under section 25 of the Act. It related to 'BEE Primary Substation and land' (the judge perhaps regarded it as uncertain whether it purported to relate just to plot 2 or also to plots 31 and 26: see paragraph [50] of his judgment) and it purported to terminate the tenancy on 24 June 1994. It notified EDF that any application by it to the court for the grant of a new tenancy would be opposed on the grounds specified in section 30(1)(f) and (g) of the Act. EDF gave Mr Dormer a counter-notice on 3 September 1993 that, upon the termination of the tenancy, it was not willing to give up possession of the premises referred to in the section 25 notice. The negotiations between EDF and Mr Dormer continued, resulting on 23 December 1993 in the purchase by EDF for £237,500, and the transfer to it by Mr Dormer, of his freehold estate in plot 2. EDF became, and has since remained, the registered proprietor of that estate (save, since 2003, for the "X" land). Thus, as from 23 December 1993, the freehold reversion immediately expectant upon the determination of the tenancy created by the lease was split between: (i) Fastiron, which owned plot 31 (and also plot 20); (ii) EDF, which owned plot 2; and (iii) EDC, which owned plot 26. EDF was therefore in the relatively unusual position of having become the freehold owner of part of the land – plot 2 – of which it was also the tenant under the lease. 23 June 1994 – the date specified in the lease for the termination of the tenancy – came and went. EDF had in the meantime made no application to the court for the grant of a new tenancy. Further dealings with the freehold title followed. In March 1999 Containerised Storage Company Limited ('Containerised Storage') acquired plots 20 and 31 from Fastiron and became registered as proprietor of both plots (NGL 770835). On 30 June 2002 it transferred that interest to BOH, which on 24 December 2002 became the registered proprietor under a new title number, NGL 816821), having paid £750 for its acquisition. As for plot 26, in March 2002 EDC transferred it to Commercial Rental Limited ('Commercial Rentals'), which became registered as proprietor on 24 March 2002 (NGL 514577). Plot 26 was then transferred to Layhawk, which on 19 January 2005 became its registered proprietor. In paragraph [29] of his judgment, the judge described how trouble started for EDF with the March 1999 sale, with a Mr Todd engaging in increasingly aggressive correspondence. He was the sole witness at the trial for BOH and Layhawk. As I explain in paragraph [52] below, he is said to have been an agent for Containerised Storage and Commercial Rentals; and they, BOH and Layhawk were or are apparently all connected in one way or another. In paragraph [30] the judge explained the plot 31 story, which resulted in Mr Avanzato also being joined as a defendant. He is not concerned with the issues before this court and was not represented before us. In paragraph [31] the judge explained the position with regard to the "X" land. The issues before the judge The judge had before him more issues than we do. It was common ground at the trial that none of the rights of access or of cabling that EDF requires over and in respect of plots 26 and 20 is appurtenant to its freehold estate in plot 2. The only case that EDF sought to make was that, despite its acquisition in 1993 of the freehold of plot 2, its tenancy of (at least) plots 2 and 26 created by the lease was still continuing under section 24 in Part II of the 1954 Act: that was because it had never been terminated in accordance with Part II. If that was correct, EDF would continue to enjoy the like appurtenant rights in respect of plot 2 as it had always done. As the judge explained, it did not matter to EDF whether its tenancy also continued in respect of plot 31; and leading counsel who appeared at the trial for BOH and Layhawk concentrated in particular on his submission that the tenancy in respect of plot 2 had terminated, to which end he argued that the section 25 notice that Mr Dormer had served in August 1993 had brought the tenancy of plot 2 to an end on 24 June 1994. That was the date specified in it for the termination of the tenancy and EDF had made no application to the court for the grant of a new tenancy. If the argument was right, it would hole EDF's case below the waterline. The judge, however, rejected it. He explained that the severance into three separate ownerships of the reversion did not create three separate tenancies: despite such severance, there remained but one tenancy (Jelly v. Buckman [1974] 1 QB 488; Nevill Long & Co (Boards) Ltd v. Firmenich & Co (1984) 47 P & CR 59). He explained further that, in order to be valid, a section 25 notice had to be given in respect of the whole of the property comprised in the tenancy (Dodson Bull Carpet Co Ltd v. City of London Corporation [1975] 1 WLR 781; Southport Old Link Ltd v. Naylor [1985] 1 EGLR 66). Yet further, he pointed out that the conventional view had always been that, in the case of a split reversion, all the reversioners must join in the giving of a section 25 notice if it is to be valid, a principle now expressly affirmed with effect from 1 June 2004 by section 44(1A) of the 1954 Act. In this case, however, the notice had been given by Mr Dormer alone. The judge's conclusion, in paragraph [47], was that the section 25 notice he had served was invalid because (i) it related only to plot 2, and not also to plots 31 and 26; and (ii) it was given by only one of the three separate reversioners. There is no appeal against those conclusions. (They were alternative conclusions, each fatal, and I have mentioned that in paragraph [50] the judge perhaps evinced some uncertainty as to the extent of the land to which the notice purported to relate). It was next argued that, as EDF had served a counter-notice in response to the section 25 notice indicating that it was not willing to give up possession of the premises referred to in the notice, it became estopped, by representation or convention, from denying the validity of the section 25 notice. The judge dealt with that submission between paragraphs [48] and [61] and rejected it. There is no appeal against his decision in that respect either. The next issue argued before the judge was that upon EDF's acquisition in 1993 of the freehold estate in plot 2, its tenancy in respect of plot 2 (although not in respect of plots 31 and 26) must be regarded as having merged in the freehold estate and so have come to an end. If so, even though its leasehold estate in plot 26 may have continued, EDF would not, as the freehold owner of plot 2, have continued to enjoy the rights over plot 20 that were formerly appurtenant to its tenancy interest in plot 2; nor could it use its rights as a tenant in respect of plot 26 to gain access to plot 2. As to that argument, the judge rejected EDF's submission that a merger as to merely a part of a leasehold estate was not possible as a matter of law, and held that it was possible, including in a case where, as here, the reversion had become severed. As to the merits of the argument, he explained that at common law a merger occurred automatically, reflecting the principle that one person cannot be both landlord and tenant of the same premises, whereas in equity (which, by section 185 of the Law of Property Act 1925, now prevails) the position was different. In equity regard must be had to the intention of the parties. The judge referred to Cozens-Hardy LJ's observations in Capital and Counties Bank Ltd v. Rhodes [1903] 1 Ch 631, at 652, that the courts of equity mitigated the rigours of the common law and: '… had regard to the intention of the parties, and, in the absence of any direct evidence of intention, they presumed that merger was not intended, if it was to the interest of the party, or only consistent with the duty of the party that merger should not take place.' The judge's conclusion was that there had been no merger. As that conclusion is challenged by the first ground of appeal, I will set out his reasoning. Having held that there was in principle no reason why there could not be a merger in respect of part of the premises comprised in a lease, he continued: '66. Out of this submission developed, however, a more sophisticated argument. Is it possible to merge as to part where the reversion is severed? The Lease might contain covenants which benefit ("touch and concern") other parts of the land comprised within the Lease. A lease may be granted of Plots 1, 2 and 3 (all of which are dwellinghouses) and contain a covenant, say, against keeping pigs on any part of the demised premises. The reversion then becomes severed so that there are individual reversions to Plots 1, 2 and 3. Following acquisition of the freehold reversion on Plot 1 by the tenant of Plot 1, the freehold reversioners to Plots 2 and 3 might well be concerned by merger on Plot 1 for, thereby, Plot 1 would be freed from the restraint against keeping pigs (to the detriment of the reversions on Plots 2 and 3). Equally the right to distrain for rent might be adversely affected. Thus, and taking the above example, if there be merger as to part in respect of Plot 1 the right of the severed reversioners of Plots 2 and 3 to distrain over Plot 1 would appear to be lost on merger in respect of Plot 1. And rent, (absent formal apportionment on severance of the reversion) issues out of each and every part of the demised land. Ultimately, however, I could detect no rule of law or rule of equity that the existence of a severed reversion of itself prevents merger as to part. Rather it seems to me that if the other severed reversioners do have a genuine interest in the issue of merger then their interest has to be taken into account in ascertaining whether the equitable presumption against merger is rebutted. It may, perhaps, be that in an appropriate case the absence of the actual consent of the other severed reversioners to the merger as to part will be sufficient so as to conclusively prevent rebuttal of the presumption against merger. In other cases, perhaps, the absence of such consent may (because the interest of the other severed reversioners in opposing merger is, effectively, de minimis) not inform at all the issue as to whether the presumption against merger is rebutted. That there should be no absolute rule of law or equity that absence of the express or implied consent of the other severed reversioners prevents merger as to part seems to me to be in accord with the equitable principles which apply to merger (namely that the same is a matter of intent). 67. I must at this stage comment on surrender as to part where there is [a] severed reversion. Can surrender as to part occur without the consent (express or implied) of all the severed reversioners? And does the answer to this question inform the issues which arise on merger as to part where there is a severed reversion? If, as EDF contend, the Lease has continued under Part II there has been a surrender of the "X" land without the consent of the severed reversioners. By such surrender the severed reversioners lost the right to distrain upon the "X" land and, perhaps more importantly, to enforce as to the "X" land the user restriction contained in clause 2(7) of the Lease. Although this issue was raised in submissions, no authority was cited to me which would assist on this question. As far as I am aware it is not considered in any textbook, indeed it may never have been considered at all. It may have no practical relevance on the facts of this case. Masterdent Ltd has the benefit of being registered under Title Number NGL 8273728 as Proprietor with Title Absolute of the freehold estate in the "X" land (entirely free of the Lease). It is difficult to see how the user covenant in clause 2(7) of the Lease confers any meaningful benefit on either Plot 31 or 26. The annual rent due under the Lease which should be apportionable to Plots 31 and 26 cannot be a matter of, at the most, a few pence or pounds and, in any event, the sub-station offers the ideal subject matter for distraint. But I do incline to the view that where there is a severed reversion a surrender as to part requires the consent (express or implied) of all the severed reversioners (save, perhaps, in a case where there has both been a formal apportionment of the rent and none of the covenants in the lease "touch and concern" the reversion of the other severed reversioners). To this extent, therefore, there may be a subtle difference between the principles applying on merger (as I have analysed them above) and surrender. 68. Against this background I turn to consider whether, in respect of Plot 2, the presumption against merger is rebutted. I do not intend to deal with this matter simply on the basis of the location of the burden of proof but it does seem to me that the burden of proof on this point is borne by [leading counsel for BOH and Layhawk]. Were it relevant I would have held that BOH and Layhawk had failed to discharge that burden (since, quite understandably, they were unable to advance any evidence whatsoever of any positive intent on the part of EDF to effect merger). 69. There is no direct evidence (either way) of the intent of EDF (or of the other two severed reversioners) in respect of merger following the acquisition of the freehold of Plot 2 by EDF on 23 December 1993. The reality, on the balance of probabilities, is that neither EDF (nor the other two severed reversioners who in all probability knew nothing whatsoever about the acquisition of the freehold of Plot 2) ever directed their minds to the question of merger. Whilst it is true that following the acquisition of the freehold of Plot 2 EDF stopped paying any of the rent due under the Lease I do not think that this evidences any intent to merge. On the contrary, it seems to me to be entirely neutral since EDF (absent any formal apportionment of the rent due under the Lease following initial severance of the reversion) could have paid the whole £25 rent as reserved by the Lease to itself (a pointless circular transaction). But if any evidence of intent to merge could be derived from the non-payment of rent this is more than balanced out by the fact that no application to merge was made by EDF when it became registered as proprietor of the freehold land comprised in Title Number NGL 541578. Thus Title Number MX 269363 continued in existence (without Plot 2 being taken out). This could not have occurred if there had been an express application for merger to HM Land Registry. On 6 November 2000 HM Land Registry wrote to EDF's solicitors indicating that, having inspected their files, HM Land Registry could not find any clear evidence as to merger one way or the other. This would clearly indicate that these files do not disclose any express application by EDF for merger. Over and above this, there is no further evidence on the issue of merger but merger was clearly to EDF's detriment granted the fact that the freehold carried no easements over Plot 20 whatsoever and that merger in respect of Plot 2 would give rise to the Harris v. Flower problem over Plot 26 (so far as use of Plot 26 for access to Plot 2 was concerned). That of itself, on the authorities, is sufficient to support the presumption against merger. Indeed it seems astounding, objectively analysed, that EDF should have paid £237,500 to Mr Dormer to acquire the freehold of Plot 2 if, thereby, it was going to lose its access and cabling rights over Plot 26 and Plot 20. To impute such an intention (absent direct evidence of intention) to EDF is absurd. When there is added into the equation the fact that the other severed reversioners in all probability knew nothing about what had occurred and, most certainly, did not give express or implied consent to merger the presumption against merger is only strengthened. 70. I can, therefore, find nothing which rebuts the presumption against merger and, so, merger did not occur.' Given that conclusion, the judge held that the tenancy created by the lease was statutorily continued by Part II of the 1954 Act after the termination date of 23 June 1994 provided by the lease, which continuation applied equally to that part of the demised premises comprising plot 2. He rejected an argument that the lease had been forfeited so far as it related to plots 26 or 31. He also rejected an argument that the lease in respect of plot 26 had been surrendered, although he accepted that it had been surrendered in respect of plot 31. The result of that holding was that the lease was continuing solely in respect of plots 2 and 26. That conclusion was and is sufficient for EDF's purposes. The first ground of appeal The judge held that in a case in which the reversion becomes split between more than one reversioner, with the tenant becoming one such reversioner in respect of part of the premises, there can in principle be a merger (and consequential extinguishment) in his reversionary estate of his tenancy in that part. There is no cross-appeal by EDF against that conclusion. Mr Warwick's submission for the appellants was that where the judge fell into error was in finding on the facts that there had been no merger. For the purposes of this argument, Mr Warwick accepted, indeed asserted, that in the case of a split reversion of a business tenancy protected by Part II of the 1954 Act it will be necessary for all the reversioners to join in the giving of a section 25 notice directed at terminating the business tenancy in respect of the entirety of the tenanted premises; and that the refusal of any of the reversioners to co-operate in giving such a notice will prevent its being given. The need for all reversioners to join in the giving of a section 25 notice is apparent from section 44(1A) of the 1954 Act, which has been in force since 1 June 2004 and which further explains the definition of 'the landlord' in section 44(1). Section 44(1A) provides: 'The reference in subsection (1) above to a person who is the owner of an interest such as is mentioned in that subsection is to be construed, where different persons own such interests in different parts of the property, as a reference to all those persons collectively.' In a case, however, in which there are, say, three reversioners of different parts of the demised premises, say R, S and T, with T also being the tenant of the whole, it is obvious that R's and S's commercial interests in giving a notice under section 25 may not be shared by T. The tenancy may, for example, be continuing under section 24 at a rent below the market rent, with the only prospect of the achieving of an increased rent being by the giving of a section 25 notice terminating the tenancy. If T then wishes to preserve his security of tenure, he will have to apply to the court for the grant of a new tenancy at a market rent. T will or may, however, have no incentive to join in the giving of a section 25 notice that will bring his advantageous status to an end. He will, in practice, be able to block its giving and thereby protect himself from ordinary market forces. Whilst it is the purpose of Part II to confer security of tenure on business tenants, it is not its purpose to provide them with protection of that nature. The issue raised by this first ground of appeal turns, therefore, on whether the potential for tension between the respective interests of, in my example, R and S on the one hand and T on the other provides a basis for a conclusion that (i) upon the acquisition by T of his separate reversionary estate in respect of part of the demised premises, and (ii) in the absence of any evidence of an intention on T's part to effect a merger, there is (iii) a presumption of a merger in T's reversionary estate of his tenancy in the relevant part. If yes, it would follow that the tenancy of that part would determine and that R and S would become the sole remaining landlords in respect of T's tenancy of the other two parts and could alone combine in giving a section 25 notice in respect of such parts. They might of course then find that the market rent for such parts was no more, or less, than it had been for the whole. They might also wish to avoid the grant of a new tenancy of those parts by relying on one or more of the grounds in section 30(1). They may of course anyway have divergent views as to the steps to be taken with regard to the tenancy: the possibility of conflict is not exclusively the preserve of situations in which one of the reversioners is also the tenant. In order to assess this issue it is necessary to consider the principles as to when a merger of a lesser interest in a greater one will take place. Where the lesser interest is a tenancy, the greater interest is the reversion immediately expectant upon its determination and both estates become vested in the same person, the judge observed that at common law a merger would be regarded as occurring automatically. That is, I consider, correct, at any rate in cases in which the two estates become vested in the same person in the same right. The approach of the common law does not, however, provide a solution to the present case because a different principle applies in equity and the equitable rule now prevails. The rule in equity was that there would only be a merger if the party in whom the two estates vested intended a merger. Section 185 of the Law of Property Act 1925, headed 'Merger', (and substantially re-enacting section 25(4) of the Judicature Act 1873) provides that: 'There is no merger by operation of law only of any estate the beneficial interest in which would not be deemed to be merged or extinguished in equity.' It is, therefore, upon the equitable principles relating to merger that attention must be focussed. Mr Warwick's submissions raised an issue as to the equitable solution that the court should apply to the facts of the present case in circumstances in which there was (as the judge found) no evidence as to EDF's intention in relation to merger when the two estates became vested in it. We were referred to just two authorities on merger. The first was Ingle v. Vaughan Jenkins [1900] 2 Ch 368, a decision of Farwell J. The point there was whether an equitable lease created by an uncompleted agreement for the grant of a lease became merged in the legal estate in the land that the equitable lessee later acquired; or whether it remained unmerged so as to be enforceable by his executor. Farwell J held that there was no merger. He described the applicable principles thus, at 370: 'Whatever might have been the case at common law, as to which it is unnecessary that I should express an opinion, it is, in my opinion, clear that it was not merged or extinguished in equity. I think the proposition in Lewin on Trusts, 10th ed. P.889, is correct – namely, that "The principle by which the Court is guided is the intention; and in the absence of express intention, either in the instrument or by parol, the Court looks to the benefit of the person in whom the two estates become vested." The author goes on to point out that the chief importance of the doctrine of merger is with reference to charges, and the cases he cites are confined to charges. The defendants contended that a different principle applied in the case of a lease, but I am unable to follow that distinction. The principle being that the Court looks to the benefit of the person in whom the interests coalesce, I cannot see why there should be any distinction in this respect between a beneficial lease and a term to secure a charge. In either case the term is taken as an equivalent for money expended. Nor do I think it makes any difference whether the coalescence of the interests is brought about by operation of law or the acts of the parties. The principle of Grice v. Shaw 10 Hare 76 is applicable to the present case. The head-note is as follows: "Where the tenant in fee or in tail of an estate becomes entitled to a charge upon the same estate, the general rule is, that the charge merges, unless it be kept alive by the party entitled to it; and where the merger of the charge would have let in other charges in priority, thereby rendering it the interest of the owner of the estate to keep alive his charge, the Court presumed that such was his intention, notwithstanding the absence of any other indication of such intention.' (Emphasis as in the original) Farwell J cited from Turner VC's judgment in Grice. That showed that, in that case, there was no evidence of any express intention to keep the charge alive and that the question was what intention should be presumed with regard to it. As it was in the chargee's interest to keep it alive, the court presumed that that was his intention. Farwell J applied that principle to the case before him. The second authority was Capital and Counties Bank, Limited v. Rhodes [1903] 1 Ch 631, a decision of this court. It is necessary to understand the material facts. In 1871 L granted T a 99-year lease of Whiteacre at an annual rent of £100. By May 1897 the first defendant, Rhodes, had acquired the lease. In that month, by way of mortgage to secure the payment of £16,700, he granted Flower & Sons (the third defendant) a sub-lease of Whiteacre for the residue of the lease less one day, such sub-lease not reserving any rent. The mortgage empowered Flower to dispose of the residue of the 1871 lease if it became necessary to enforce the security. In June 1899 Rhodes agreed to buy the freehold of Whiteacre for £3,650, the sale particulars describing it as a freehold ground rent of £100 and making clear that the sale was subject to and with the benefit of the 1871 lease. In seeking to obtain, as he did, a mortgage loan of £3,000 from the plaintiff bank in order to assist his purchase, Rhodes presented the sale particulars to the bank. Rhodes's purchase and subsequent mortgage to the bank were completed by successive instruments executed on the same day in July 1899: first, a conveyance of the freehold to Rhodes subject to and with the benefit of the 1871 lease; second, an instrument (by way of mortgage) conveying the freehold to the bank and also demising to it the unexpired residue of the 1871 lease less the last day. Those instruments made no reference to the prior 1897 mortgage to Flower although the bank had actual knowledge of it. In April 1901 Rhodes executed a deed of arrangement transferring all his property to Mason (the second defendant) in trust for his creditors. The bank, to which the whole £3,000 was due, was not a party to the deed. By June 1901 Flower had taken possession of Whiteacre and contended that the 1871 lease had merged in the freehold upon Rhodes's acquisition of it in 1899 so that it was entitled to remain in possession under its mortgage security without paying any rent. By its claim, the bank challenged that there had been a merger and claimed to be entitled to take possession of Whiteacre under the proviso for re-entry in the 1871 lease following the non-payment of rent. Kekewich J doubted, without deciding, that there had been a merger but held that, if there had, the bank's mortgage interest would not take priority over Flower's and dismissed the claim against Flower. The bank appealed. Sir Richard Henn Collins MR summarised the issue succinctly, at 646: 'The principal question is whether on the purchase by Rhodes of the fee his term was merged in the reversion, the result of which would be that [Flower] would hold directly under the owner of the fee … without any obligation to pay rent, while, the term held by Rhodes being extinguished, the rent of £100 a year would be no longer payable, and the security held by the bank would be land subject to a term not expiring until 1968, during which no rent could be received.' Collins MR observed, at 647, that it seemed to him 'quite clear that, if the intention of the parties is that which determines this question, they certainly did not intend that a merger should take place.' He regarded 'the parties' as being Rhodes and the bank, his point being that it was the essence of Rhodes's wish to borrow from the bank on mortgage that he should be able to offer it the security of a freehold yielding a ground rent of £100 a year. He referred to that as supported by the July 1899 documents and said, at 648, that: '… the transaction could not have been carried out at all unless the term was kept alive, and it was clearly for the benefit of both parties to the transaction that it should be kept alive.' He rejected the argument that 'the rule of equity that the question of merger must be decided by the intention of the parties was limited to the question of the merger of charges only, and did not apply to the merger of estates', and referred to Farwell J's decision in Ingle as deciding the contrary. He then held that there had been no merger, saying at 651: 'It remains to consider whether the evidence of intention, as well as of benefit to Rhodes and the bank if the term were kept in existence, is not such as to prevent a merger as the law now stands. The law to be deduced from the previous authorities was summed up by Lord Macnaghten in the well-known passage in Thorne v. Cann [1895] AC 18, 19, and was applied to the case of leases by Fry J and Farwell J in the cases which I have already mentioned. I think those authorities clearly establish that in the present case, neither on the sale to Rhodes or on the mortgage by him to the bank, would "the beneficial interest in" the term have been "deemed to be merged or extinguished in equity," and that therefore the transaction falls within [what is now section 185 of the Law of Property Act 1925], and there is no merger at law.' Romer LJ agreed both with Collins MR's judgment and that of Cozens-Hardy LJ, and did not add a substantive judgment of his own. Cozens-Hardy LJ explained that the first issue in the appeal was whether the 1871 lease had merged in the freehold. He said, at 652, that the rigid rule at common law was that if a term and its freehold reversion vested in the same person in his own right, the term merged in the freehold 'whatever may have been the intention of the parties to the transaction which resulted in the union'. He continued: 'The Courts of Equity, on the other hand, in many cases treated the interest which merged at law as being still subsisting in equity. They had regard to the intention of the parties, and, in the absence of any direct evidence of intention, they presumed that merger was not intended, if it was to the interest of the party, or only consistent with the duty of the party, that the merger should not take place.' He explained that the commonest application of the principle had been in relation to cases where a life tenant paid off a charge upon the inheritance, but said that the principles applied equally to the merger of estates in land as to merger of charges on land. He said, at 653: 'It was well established that, according to the strict rules of the common law, there would be merger, notwithstanding that one of the two estates might be held in trust, and the other beneficially, by the same person, or one might be held on one set of trusts and the other on another set of trusts. But it was equally well established that equity would interfere, and would, if necessary, decree the execution of such deeds as would replace the parties in their proper position: see Saunders v. Bournford (1679) Finchm 424, where Lord Nottingham LC decreed that, notwithstanding the merger of a term, the plaintiff should hold possession of the premises during the remainder of the term, and that the defendant should make a further assurance of the remainder of the term. The merger was treated as an accident prejudicial to the real beneficial interests of the parties: see also Attorney-General v. Kerr (1840) 2 Beav. 420, a remarkable instance of the application of the equitable doctrine. I think the decision of Farwell J, or rather his dictum to this effect, in Ingle v. Vaughan Jenkins [1900] 2 Ch 368 is consistent with principle and is supported by authority. A Court of Equity had regard to the intention of the parties, to the duty of the parties, and to the contract of the parties, in determining whether a term was to be treated as merged in the freehold.' He explained, at 654, that it was obvious that it was the parties' intention that the bank should have a security on the freehold ground rent of Whiteacre so that no merger which would destroy that ground rent ought to be allowed. 'The intention of the parties was clear that there should not be a merger.' He too plainly regarded 'the parties' as being Rhodes and the bank. Mr Warwick, in his submissions in opening and reply, adopted a perhaps slightly inconsistent stance in relation to Rhodes. I understood him in his opening to disavow the suggestion that it established a principle providing direct support for the appellants' argument that there was a merger in the present case. His point was rather that Rhodes was not a case in which the court was concerned to take into account any third party interests comparable to those of EDF's co-reversioners in the present case and so it was not directly in point by way of guidance for its disposition. He said that EDF's claim that there had been no merger was one that was aimed at putting itself in a position to be able to abuse the legislative scheme of Part II of the 1954 Act, a position directly injurious to the interests of the co-reversioners. He said it would be contrary to the latters' interests that EDF should maintain an unmerged interest in a tenancy interest of plot 2 because that would prevent the co-reversioners from serving a section 25 notice in respect of the demised premises without the co-operation of EDF, whereas in all likelihood EDF's interests would be against giving such a notice. The possible consequence of that would or might be that the tenancy could continue indefinitely. It followed that it could not therefore have been the intention of the co-reversioners that EDF's tenancy interest in plot 2 should survive unmerged. Had they been consulted as to whether there should or should not be a merger upon EDF's acquisition of the freehold of plot 2, they would have responded with a resounding yes, since that would enable them to bypass any reference to EDF when considering their interests as landlords. Mr Warwick's further submission was that a court of equity faced with this type of situation ought, therefore, to invoke its traditional flexibility and meet the potential for injustice by finding that the competing 'pro-merger' interests of the co-reversioners must trump (his word) the different 'no-merger' interest of EDF. The essence of his submission was that the present case involved circumstances quite different from any that had arisen in the reported authorities and that the court should therefore not feel constrained in developing the 'merger' principles so as to meet such circumstances. In his reply, Mr Warwick focussed on the last sentence of the passage from Cozens-Hardy LJ's judgment cited in paragraph [35] above, which he described as the ratio of the decision, and said that it supported the approach he was urging. He sought to apply it to this case by submitting that here 'the contract' is the 1953 lease; and that by 1993, when EDF acquired the freehold reversion in respect of plot 2, it had an obligation to consider the interests of its two co-reversioners as to the other two parts of such premises, plots 26 and 31. Mr Warwick submitted that in paragraph [66] of his judgment, the judge had directed himself correctly as to the need, in considering the merger argument, to take account of the interests of the co-reversioners. By paragraph [69], however, the judge had, he said, forgotten such self-direction and had decided the question by applying the principle that, absent any evidence pointing to a different intention, it should be presumed that EDF intended no merger if, as he found, it was contrary to its interest that there should be a merger. With respect to Mr Warwick's careful submissions, both in opening and reply, I regard them as mistaken at every point and would not accept them. The starting point is that whereas the ordinary rule at law was that the coalescence of a lease and its reversion in the same person ('A') in the same right would result in a merger and extinguishment of the lease, in equity it was open to A to form an intention, and declare accordingly, that there should be no such merger and extinguishment. Equity further developed the principle that in any case in which A did not expressly evince such an intention, or in which there was no other evidence of such an intention on his part, there was a presumption against any intention for a merger if such would be against his interest. In a case in which there was no express declaration or other evidence as to A's intentions, the focus of equity's inquiry was therefore exclusively on his interests: and if a merger would be against his interests, he is presumed to have intended against any merger. That is the principle that was applied in Ingle and this court in Rhodes made it clear that it regarded Ingle as having been correctly decided. The equitable principles now prevail over the principles applicable at law. This court in Rhodes explained the principles but I would not regard it as having developed them. Rhodes differed in kind from Ingle in that it was not a case in which the court had to consider whether there was any presumption that Rhodes did not intend a merger. On the contrary, it was one in which the court considered that there was clear evidence as to what Rhodes (and the bank) intended as regards a merger or otherwise; and the evidence showed that neither of them can have intended a merger. Both Rhodes and the bank were closely bound up in Rhodes's acquisition of the freehold. Rhodes needed the bank's loan in order to finance the acquisition, and the documents showed that his deal with the bank was that its security was intended to be the freehold with the benefit of the rent yielded by the 1871 lease. It is those considerations that explain the references by Collins MR and Cozens-Hardy LJ to 'the intention of the parties' and they pointed solidly against there having been any intention on the part of Rhodes to merge and extinguish the lease. It is perhaps worth citing the passage from the speech of Lord Macnaghten in Thorne v. Cann [1895] AC 11, at 18/19, to which Collins MR referred ([1903] 1 Ch 631, at 651: see paragraph [34] above) as summing up the applicable law. Lord Macnaghten said: 'Nothing, I think, is better settled than this, that when the owner of an estate pays charges on the estate which he is not personally liable to pay, the question whether those charges are to be considered as extinguished or as kept alive for his benefit is simply a question of intention. You may find the intention in the deed, or you may find it in the circumstances attending the transaction, or you may presume an intention from considering whether it is or not for his benefit that the charge should be kept on foot. Here, I think, the intention appears plainly on the face of the deed by which Miss Arnold purported to transfer her mortgage.' Ingle was a case in which the court presumed an intention that there should be no merger because that would have been against interest. Rhodes was a case in which the court found positive evidence of an intention that there should be no merger. I disagree with Mr Warwick that the 1953 lease can or should be regarded as an example of the type of 'contract' to which Cozens-Hardy LJ was referring in the last sentence of the passage quoted in paragraph [35] above. It is not. In making that reference, I presume that Cozens-Hardy LJ had in mind the mortgage contract between Rhodes and the bank, a transaction which made it self-evident that no merger was intended since otherwise the security that Rhodes purported to give would have been substantially worthless. The present case is miles away from Rhodes. The 1953 lease did not constitute a contract between the three co-reversioners who were in existence by December 1993. It imposed no contractual obligations or other duties upon any reversioner towards his co-reversioners. When EDF acquired the freehold reversion in plot 2 it was under no obligation to do other than consider its own interests. Mr Warwick's submission amounted ultimately to the proposition that, because a merger is said to have been in the interests of the co-reversioners, EDF should be presumed to have intended a merger even though its own interest would be directly against it. That way of putting the case is not to invite a development of the principles that have so far been established by the courts of equity. It is to invite a departure from them and the adoption of quite contrary principles: namely, that in the absence of evidence proving an intention one way or the other (and the judge found there was none, as to which there is no challenge), the court should presume an intention by EDF to merge when to do so would be directly adverse to its interests but would or may be of advantage to third parties with whom it is in no commercial relationship and to whom it owes no duties. For the court so to presume in such circumstances appears to me to be contrary to the principles explained in the authorities and wrong. Mr Warwick did not go the further distance of submitting that, had EDF (as it might have done) made an express declaration of merger, the co-reversioners could have asked the court to set it aside, and any such submission would, I consider, have been hopeless. It is only, apparently, in the circumstance in which there is no evidence as to EDF's intention that the interests of the co-reversioners must be held to prevail. The argument appears to me to be an unprincipled one. In my judgment the task for the judge in relation to this issue was to consider whether there was any evidence of any intention on the part of EDF as to whether there should be a merger. He found, in paragraph [69], that there was none. Having so found, he had next to consider whether it was or was not in EDF's interests that there should be a merger. He found that it was not and that finding led him, correctly in my judgment, to the conclusion that he should presume that no merger was intended. That was the approach that Ingle (endorsed by Rhodes) required him to adopt and he was correct to do so. That it may perhaps have been, or might turn out to be, contrary to the interests of the co-reversioners that there should be no merger is irrelevant. I would dismiss the appellant's first ground of appeal. The second ground of appeal This is a new ground of appeal that was not advanced to the judge. It is a fallback argument that arises only if the 'merger' ground of appeal were to fail, as in my view it should. The essence of the point as originally advanced in the grounds of appeal was that, on the footing (i) that plot 2 remains part of the premises demised by the 1953 lease and that the tenancy thereby created is continuing in respect of (inter alia) plot 2, and (ii) that EDF is a necessary party, together with BOH and Layhawk, to (for example) the giving of a section 25 notice in respect of the demised premises, then (iii) 'the 1954 Act must be read so that the "tenancy" held by EDF to which the 1954 Act applies does not include Plot 2.' The claim that the 1954 Act should be so read was said to be required by section 3 of the Human Rights Act 1998, namely that: 'So far as it is possible to do so primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights.' The need for a compatible reading of the 1954 Act was advanced on the basis that otherwise BOH's and Layhawk's enjoyment of their freehold interests in plots 31 and 26 respectively would be interfered with in a manner contrary to their rights under Article 1 of the First Protocol to the Convention, which provides: 'Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.' In his written and oral argument Mr Warwick materially qualified and refined this ground of appeal by confining the focus of his argument to the proposition that section 44(1A) of the 1954 Act should be read as excluding from such definition any person who is also the tenant of the relevant tenancy. Thus, applied to this case, a section 25 notice in respect of plots 2, 26 and 31 (and ignoring the judge's finding that the tenancy of plot 31 had been surrendered) could validly be given by the freehold owners of just plots 26 and 31. Such notice would, however, have to be given not just in respect of plots 26 and 31, but also in respect of plot 2. Mr Warwick fully developed this argument at the hearing but the court did not at that stage call upon Mr Stoner to answer it. That was because it was provisionally unconvinced that it ought to entertain this ground of appeal at all. In forming that view, the court had not overlooked that Mummery LJ had given permission for this ground of appeal to be argued as well as the merger ground. He expressed the view, when giving permission, that the 'proposed appeal against [the judge's order] has a real prospect of success on the basis of the grounds of appeal and the skeleton argument …'. Mummery LJ may, however, have overlooked that success on this ground of appeal could not justify any reversal or variation of the judge's order, as EDF pointed out in its skeleton argument and as Mr Warwick expressly conceded. The reason for that is simple. The statements of case before the judge put in issue the validity of the section 25 notice purportedly given by Mr Dormer in August 1993. That was apparently the only such notice in issue at the trial. At the time it was given, there were three separate co-reversioners, none of whom or which was also the tenant of the demised premises. The judge held the notice to be invalid and the appellants do not challenge that decision. The point that they now want to make is not merely a point that was not advanced before the judge; it was one in respect of which no factual case was or, so far as I am aware, could have been made. It is a point that comes before this court entirely afresh and unsupported by any factual basis. Mr Warwick accepted that no section 25 notice had been served that purported to raise the issue. The court is therefore being asked to answer a question, and presumably to make some form of declaration, based on a hypothetical set of circumstances. In my judgment, this court should not do that. The point raised by this ground of appeal is potentially of some general importance. If it is ever to be considered by this court it should only be after a concrete set of facts raising it as a real issue has first been considered by a trial judge who has then made findings on the facts and on the law applicable to them. The court reserved its judgment at the conclusion of the hearing. The following day it received an email purporting to have been composed by BOH and Layhawk. The identity of the human agent who was in fact its author was not disclosed but the inference is that he was present in court at the hearing. He referred to the court's expressed unwillingness to deal with this ground of appeal in default of any section 25 notice having been served that could be said to have raised the issue. He continued: 'The Respondents [i.e. EDF] failed to bring the attention of the Court the fact that they had indeed been served with Section 25 Notices. The Section 25 Notices were served by the appellants predecessors to the title, the appellants were given vacant possession and accepted the same in reliance on the said Section 25 notices and there was no requirement to provide the Respondents with a further opportunity as regards the Section 25 Notices. We do feel that the three Lord Justices would have wanted to have their attention drawn to the three Section 25 Notices in order to provide clarity. The Judgment has yet to be delivered and we would therefore ask that you put the three attached notices before their lordships and Lady Black to enable them to address the issues. The Respondent has been notified of our concerns regarding their decision to permit those representing the appellants, and the Court, to proceed without reference to these matters where the Court has decided there is a Human Rights element to the same. It remains open to the appellants to serve further Section 25 Notices but given these facts and matters the Court would wish to consider the same. The three notices were acknowledged by the Respondent.' The first attached notice was one on which the typed date of 2 April 2002 was changed in manuscript to 29 April 2002. It was from Commercial Rentals Limited, as landlord, to the EEB, as tenant (see paragraph [17] above). Paul Todd was described in it as the landlord's agent. The notice purported to terminate the tenancy on 11 November 2002. It was expressed as relating to: 'Any part of the land included in freehold title NGL541577 in respect of which the Tenant asserts the registered title MX269363 should be included excluding any part of MX269363 where the Tenant has given up the protection of the Act and the landlord relied upon. [sic] of which you the tenant.' The second notice had the same manuscript date change and was from The Containerised Storage Company Limited, as landlord, to the EEB (see paragraph [16] above). Mr Todd was again described as the landlord's agent. That notice was also expressed to terminate on 11 November 2002. It was expressed as relating to: 'Any part of the land included in freehold title NGL770835 in respect of which the Tenant asserts the registered title MX269363 should be included excluding any part of MX269363 where the Tenant has given up the protection of the Act and the Landlord relied upon. [sic] of which you are the tenant.' The third notice was dated 29 April 2002. It was given jointly by Commercial Rentals and Containerised Storage as landlords, with Mr Todd being again named as the agent. It was addressed to the EEB and purported to terminate its tenancy on 11 November 2002. It was expressed as relating to: 'Any parts of the land included in freehold title NGL541577 and NGL770835 in respect of which the Tenant asserts the registered leasehold title MX269363 should be included excluding that part of MX269363 in respect of which the Tenant is estopped by conduct and or merger and or the failure to commence proceedings after the service of a Section 25 notice dated 27th August 1993 and acceptance of the validity thereof by a Counternotice dated 3rd September 1993 which exchange and correspondence the Landlord has acted upon to its prejudice. [sic] of which you are the tenant.' I interpret the notice separately given by Commercial Rentals as directed exclusively to (at most) plot 26 (the title to which was registered under Title No NGL 541577); and the notice separately given by Containerised Storage as directed exclusively to (at most) plot 31 (Title No NGL 770835 comprising plots 20 and 31). As neither notice appears to be directed to Plot 2, I do not understand how they can severally or collectively satisfy the interpretation of section 44(1A) for which Mr Warwick argued. The notice served jointly by Commercial Rentals and Containerised Storage suffers from the same flaw. My view is, therefore, that these notices are irrelevant. They do not satisfy Mr Warwick's submission as to what section 44(1A) requires if read in the way he suggests would be compatible with the appellants' Convention rights. Even if my interpretation of them in this respect is incorrect, they were not pleaded in the statements of case before the judge, nor were they apparently the subject of any argument before him, let alone any findings by him. Had they been the subject of argument, it is inconceivable that he would not have dealt with them in the course of what was, if I may say so, a judgment of conspicuous meticulousness. It is not surprising that Mr Warwick did not refer us to them; and the suggestion by the email's author that it was Mr Stoner's duty to do so is astonishing. It is BOH and Layhawk who are the appellants and it was up to them to consider whether they wished to draw the court's attention to any new evidence that might be thought to assist their appeal and, if so, to seek (as would be necessary) permission to rely on it, explaining why permission ought to be given. Since the author was apparently present in court during Mr Warwick's submissions, it is surprising that he did not adopt the conventional course of instructing Mr Warwick about the notices at a convenient moment during the hearing. As it is, and having decided to assume the mantle of advocate on the appellants' behalf, he has provided no explanation as to why this court – whose function is to sit as a court of appeal, not as a court of first instance – should have regard to material which appears to have played no part at the trial, whereas had the appellants chosen to deploy it there they could have done so. I would disregard the representations made by the email. Disposition For reasons given, I would decline to express any view on the correctness or otherwise of the point argued under the second ground of appeal. As I would dismiss the first ground of appeal, it follows that I would dismiss the appeal. Lady Justice Black : I agree. Lord Justice Sedley : I also agree.

Mr Justice Munby : These are applications for judicial review. Both raise questions as to the meaning and application of section 115 of the Police Act 1997. The two cases were heard separately but since they both raise essentially the same question of principle, and since the arguments in both cases traversed very much the same kind of ground, it is convenient to give a single judgment embracing both cases. The legal framework Under the heading "Enhanced criminal record certificates" section 115 of the Police Act 1997 provides, so far as material for present purposes, as follows: "(1) The Secretary of State shall issue an enhanced criminal record certificate to any individual who – (a) makes an application under this section in the prescribed manner and form countersigned by a registered person, … (2) An application under this section must be accompanied by a statement by the registered person that the certificate is required for the purposes of an exempted question asked – (a) in the course of considering the applicant's suitability for a position (whether paid or unpaid) within subsection (3) … (3) A position is within this subsection if it involves regularly caring for, training, supervising or being in sole charge of persons aged under 18." Section 113(5) defines an "exempted question" as follows: ""exempted question" means a question in relation to which section 4(2)(a) or (b) of the Rehabilitation of Offenders Act 1974 (effect of rehabilitation) has been excluded by an order of the Secretary of State under section 4(4)." Section 4(2) of the Rehabilitation of Offenders Act 1974 provides that: "Subject to the provisions of any order made under subsection (4) below, where a question seeking information with respect to a person's previous convictions, offences, conduct or circumstances is put to him or to any other person otherwise than in proceedings before a judicial authority – (a) the question shall be treated as not relating to spent convictions or to any circumstances ancillary to spent convictions, and the answer thereto may be framed accordingly; and (b) the person questioned shall not be subjected to any liability or otherwise prejudiced in law by reason of any failure to acknowledge or disclose a spent conviction or any circumstances ancillary to a spent conviction in his answer to the question." It is common ground that the relevant order has been made by the Secretary of State under section 4(4) of the 1974 Act. Section 115(6) of the Police Act 1997 provides that: "An enhanced criminal record certificate is a certificate which – (a) gives – (i) the prescribed details of every relevant matter relating to the applicant which is recorded in central records, and (ii) any information provided in accordance with subsection (7), or (b) states that there is no such matter or information." Section 115(7) provides that: "Before issuing an enhanced criminal record certificate the Secretary of State shall request the chief officer of every relevant police force to provide any information which, in the chief officer's opinion – (a) might be relevant for the purpose described in the statement under subsection (2), and (b) ought to be included in the certificate." The authoritative decision on the meaning and effect of section 115(7) is that of the Court of Appeal in R (X) v Chief Constable of the West Midlands Police [2004] EWCA Civ 1968, [2005] 1 WLR 65. In the course of argument I was referred to the decisions in the two earlier cases of R v Chief Constable of the North Wales Police ex p Thorpe [1999] QB 397 and R v Local Authority and Police Authority in the Midlands ex p LM [2000] 1 FLR 612. I propose to say little about them because, as Lord Woolf CJ put it in R (X) v Chief Constable of the West Midlands Police [2004] EWCA Civ 1968, [2005] 1 WLR 65, at para [36], "to apply them … , except with the utmost of caution, can be misleading." The general scheme of the legislation was described by Lord Woolf CJ in R (X) v Chief Constable of the West Midlands Police [2004] EWCA Civ 1968, [2005] 1 WLR 65, at para [18] as follows: " … it is useful to note the following significant aspects of the statutory scheme involving ECRCs. (i) The whole process of obtaining an ECRC is initiated by the person to whom the certificate will relate. The certificate is for his purposes to enable him to obtain employment which, at least in practical terms, will not be available to him unless he obtains a certificate. (ii) The certificate will only be seen by the applicant and his prospective employer. (iii) The applicant has the opportunity to persuade the Secretary of State to correct the certificate. (iv) The Chief Constable is under a duty to provide the information referred to in section 115(7). This is subject to the requirement that the information might be relevant and ought to be included in the certificate. What might be relevant and what ought to be included is a matter for the opinion of the Chief Constable. (v) The applicant is in a position to provide additional information if he wishes, whether in conflict with the certificate or not, to the prospective employer and it is the prospective employer who will make the decision as to whether he should or should not be employed." The heart of the decision in R (X) v Chief Constable of the West Midlands Police [2004] EWCA Civ 1968, [2005] 1 WLR 65, is to be found in Lord Woolf CJ's judgment at paras [36]-[37]: "[36] … Having regard to the language of section 115, the Chief Constable was under a duty to disclose if the information might be relevant, unless there was some good reason for not making such a disclosure. [37] This was obviously required by Parliament because it was important (for the protection of children and vulnerable adults) that the information should be disclosed even if it only might be true. If it might be true, the person who was proposing to employ the claimant should be entitled to take it into account before the decision was made as to whether or not to employ the claimant. This was the policy of the legislation in order to serve a pressing social need." The claimants rely on Article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms. I am quite content to assume that the disclosure of information such as was disclosed in these two cases engages Article 8. As Dyson J said in R v Local Authority and Police Authority in the Midlands ex p LM [2000] 1 FLR 612 at pages 620 and 625: "The disclosure, if made, would obviously interfere with his right to a private life … Disclosure of allegations of child sex abuse is on the face of it a substantial interference with a person's right to a private life: see R v Chief Constable of North Wales Police ex p Thorpe per Buxton J at 416B–C, approved by the Court of Appeal at 429B". Moreover, it may well be, notwithstanding Mummery LJ's reservation of the point in R (X) v Chief Constable of the West Midlands Police [2004] EWCA Civ 1968, [2005] 1 WLR 65, at para [57], that Article 8 is also engaged inasmuch as disclosure in cases such as this can impact very damagingly on someone's employment prospects: see the later decision of the Strasbourg court in Sidabras v Lithuania (2004) 42 EHRR 104 at para [47]. I am prepared to assume as much, though without deciding the point. But this does not necessarily take the claimants very far. In the first place, it is clear that section 115 itself is Convention compliant. As Lord Woolf CJ said in R (X) v Chief Constable of the West Midlands Police [2004] EWCA Civ 1968, [2005] 1 WLR 65, at para [20]: "It is helpful to note that while it is accepted by both parties that the information which is included in the ECRC might offend against article 8(1), it is not suggested that the legislation itself contravenes article 8. No doubt this is because disclosure of the information contained in the certificate would be "in accordance with the law" and "necessary in a democratic society", in the interests of public safety and for the prevention of crime and for the protection of the rights and freedoms of others. This country must, through its legislature, be entitled to enable information to be available to prospective employers, where the nature of the employment means that particular care should be taken to ensure that those who are working with the appropriate categories of persons can be relied on to do so, without those in their care coming to harm if they are under the age of 18 or vulnerable adults." Moreover, the role that Article 8 will play in the individual case is limited. As Lord Woolf CJ said at para [41]: " … how can the Chief Constable's decision to disclose be challenged under article 8? As already indicated, the Chief Constable starts off with the advantage that his statutory role is not in conflict with article 8, because the statute meets the requirements of article 8(2). It follows also, that as long as the Chief Constable was entitled to form the opinion that the information disclosed might be relevant, then absent any untoward circumstance which is not present here, it is difficult to see that there can be any reason why the information that "might be relevant", ought not to be included in the certificate. I accept that it is possible that there could be cases where the information should not be included in the certificate because it is disproportionate to do so; the information might be as to some trifling matter; it may be that the evidence made it so unlikely that the information was correct, that it again would be disproportionate to disclose it. These were not, in my judgment, the situations on the facts before the Chief Constable." He added at para [45]: "The information which was disclosed, was information which a responsible employer in this field would want to know before making a decision as to whether to employ the claimant. The claimant is seeking to prevent that information being available. In my judgment, the making available of that information in accordance with the law, as occurred here, could not be contrary to article 8(2)." He went on at paras [46]-[47] to explain why in that particular case the Court of Appeal was reversing the decision of the judge at first instance, Wall J: "[46] … Wall J was not required, either on the grounds of fairness or because of article 8(2), to, in effect, form his own opinion as to what might be the relevance of the disclosed information. [47] The statute properly conferred the responsibility of forming an opinion on the Chief Constable and, having formed that opinion perfectly properly that certain information might be relevant, it is not for the courts to interfere." So much for the legal framework. I turn to the facts. The facts – L's case The claimant, L, is the mother of a boy, X, who was born on 21 April 1989. He has a much older sister, Y. Unhappily the family has come to the attention of both the police and social services. Because of concerns about X, the local authority arranged an initial Child Protection Conference which took place on 29 January 2002. The social worker reported concerns that X "may be exposed to drugs" and that L was not prepared to work with social services. She expressed the view that X "has no clear boundaries at home or at school" and reported that: "The general view of all the professionals is that [X] is at risk within his family because [L] has very little control of his behaviour and knowledge of his whereabouts for the large part of the day." The Conference received detailed and particularised reports of the numerous occasions between August 1999 and December 2001 when X had been reported missing. It also received a detailed report from his school of his poor attendance and poor behaviour at school. The Conference was told that X was currently excluded from school for having assaulted his teacher. The teacher is quoted in the minutes of the Conference as reporting: "He goes off site regularly. His attendance is an ongoing issue. He has been involved in offending behaviour ie shoplifting … [X] is constantly being linked with incidents around school. He is bullied and bullies other students." The minutes also record him describing X "as out of control". The police officer from the local Child Protection Team is recorded in the minutes as saying: "there has been a lot of involvement with [X] and his offending and being reported missing by [L]. It is felt that a lot of the issues stem from his sister [Y], around drugs and prostitution. [X] is a frequent visitor to his sister's home." Recording L's contribution to the discussion the minutes include this: "[L] refuses to accept that [X's] behaviour is a concern. [L] targeted [the social worker] as the cause of all her problems … [L] said the root of the problem is the family being harassed by neighbours … [L] feels that she is not being listened to and everyone else is the cause of the problems and she is not to blame." The decision of the Conference was that X's name should be placed on the Child Protection Register under the category of neglect. The minutes record fourteen specific recommendations, ten of them requiring action to be taken by the local authority. It is apparent that many of these were not implemented. The first review Child Protection Conference took place on 26 April 2002. By then X had been living with his father for about three months – he had moved to live with him shortly before the Child Protection Conference on 29 January 2002. The Conference decided that X's name should remain on the Child Protection Register. It made seven specific recommendations, all requiring action on the part of the local authority. It is apparent that only one of these recommendations had been implemented by the date of the next meeting, some seven months later. The second review Child Protection Conference took place on 22 November 2002. The picture remained bleak. L was reported as having no control over X. The position was summarised in the minutes: "Risks to [X] are still accumulating. [X's] impulsive behaviour is very dangerous and will get him into serious trouble. His emotional situation is also a huge problem". The Conference decided that X's name should remain on the Child Protection Register. It made five specific recommendations, all requiring action on the part of the local authority. No dates were identified for implementation of these recommendations and it is not apparent whether any of them were in fact ever implemented. By then X had been arrested, on 27 September 2002, for a robbery allegedly committed by him on 12 September 2002. Two days earlier, on 25 September 2002, he had been assaulted by his father, seemingly provoked by X's behaviour in allowing unknown adults into their flat and running up a telephone bill of £490. X was charged on 2 October 2002. He was convicted and sentenced on 31 March 2003 to three years' detention in a Young Offender Institution. He was released exactly one year later on 28 February 2004. In the meantime the third review Child Protection Conference had been due to take place on 10 April 2003. It was cancelled by the local authority for what were described as "internal departmental reasons." Because of X's conviction and detention no further Child Protection Conference was held and in June 2003 his name was removed from the Child Protection Register. I appreciate that I am sitting in the Administrative Court, not in the Family Division, and that the local authority is not a party to the present proceedings, but I cannot forebear to comment on what would seem, on the face of it, to have been the almost complete futility, so far as X was concerned, of the entire series of Child Protection Conferences. Time after time specific recommendations were not implemented. One glaring failure on the part of the local authority was its failure to complete the Core Assessment required to comply with the second recommendation at the Conference on 29 January 2002. Working Together to Safeguard Children (guidance issued in 1999 by the Department of Health, the Home Office and the Department for Education and Employment) requires a Core Assessment to be completed in 35 working days. Here the Core Assessment called for on 29 January 2002 was still incomplete on 22 November 2002, well over 35 weeks later. The picture is deeply depressing. If the picture presented by the Child Protection Conference minutes is accurate, the local authority's failures would appear to be utterly lamentable. From February to December 2004 L was employed by an agency which provides staff to schools. From March to July 2004 she worked as a midday assistant at a secondary school, her job involving supervising children in the lunchtime break both in the canteen and in the playground. Whilst on duty in the playground her responsibility was to ensure that the children did not go out of the school gate and that they behaved themselves properly. There were four other assistants in what was described as a big play area. Because of the nature of L's job, the agency applied for an enhanced criminal record certificate in accordance with section 115 of the Police Act 1997. The position applied for by L was described as a "casual midday assistant." The certificate was issued on 16 December 2004. It recorded that L had no criminal convictions and that no information on her was recorded either on the list held under section 142 of the Education Act 2002 or on the Protection of Children Act list. But under the heading "Other relevant information disclosed at the Chief Police Officer(s) discretion" it set out the following as having been supplied by the Metropolitan Police Service: "[L], born [date], came to police notice in January 2002 when her son, age 13, was put on the Child Protection Register under the category of neglect. It was alleged that the applicant had failed to exercise the required degree of care and supervision in that her son was constantly engaged in activities including shoplifting, failing to attend school, going missing from home, assaulting a teacher at school and was excluded from school. Additionally, it was alleged that during this period the applicant had refused to co-operate with the social services. Her son was removed from the Child Protection Register in June 2003 – after he had been found guilty of robbery and receiving a custodial sentence." Shortly afterwards, on 21 December 2004, L was informed by the agency that her services were no longer required. L issued her application for judicial review on 21 March 2005, seeking to challenge what was described as the decision of the defendant, the Commissioner of the Metropolitan Police, to disclose information relating to her on the enhanced criminal record certificate. No acknowledgement of service was served within the prescribed period. On 29 April 2005 I granted permission on the papers, observing that "the application raises an important point of potentially wide concern." An acknowledgement of service was subsequently filed on 3 June 2005. The matter came on for hearing before me on 13 February 2006. L was represented by Ms Charlotte Kilroy; the Commissioner by Ms Fiona Barton. The evidence consisted of two short statements by L and two more substantial statements filed on behalf of the Commissioner: one by Detective Chief Inspector Stuart Gibson, the other by Chief Superintendent (previously Detective Superintendent) Graham Morris. The exhibits to DCI Gibson's statement included a print-out of the electronic record of the decision-making process taken from the Character Enquiry Centre Case Management System (CEC-CMS) and copies of the relevant data on the Crime Reporting System (CRIS), running to 168 pages, and the relevant police child protection records running to no fewer than 489 pages. CS Morris supervises the Metropolitan Police Disclosure Service, which is part of CO4 at New Scotland Yard. His statement described how CO4 receives approximately 11,000 requests from the Criminal Records Bureau each week, of which approximately 50% result in a 'hit' producing some form of information. This information is then considered for disclosure. On average information is disclosed in only 20 to 25 cases each week. The disclosure unit consists of approximately 80 civilian case workers supervised by 10 civilian team leaders, each of whom has approximately 8 case workers in their team. In addition there are three Detective Sergeants, a Detective Inspector, a Detective Chief Inspector and, at the top, Detective Superintendent or, as he now is, Chief Superintendent Morris. An application is considered in turn by a case worker, by a team leader and then, if there is thought to be potentially disclosable material, by either a DS or a DI. If at that stage the recommendation is for disclosure the matter is next considered by the DCI and then by the CS. In his statement CS Morris also described the decision-making process and the criteria by which decisions are made. The basic decision-making process is set out in flow-chart form in a booklet provided in both paper and electronic format to all case workers. There are five alternative flow charts, numbered MP2 to MP6. Where, as in the present case, both the name and the date of birth of the applicant are known, the relevant flow chart is MP2. If the team leader forms the view that there is potentially disclosable information the application is then passed to a police officer, either a DS or a DI. If that officer is of the same view – ie, that the information is potentially disclosable – then the officer goes on to consider whether it should be disclosed. For this purpose the officer has regard to the criteria set out in two further flow charts: MP7 (Additional Information – Disclosure Rationale for Applications where only Applicant Information is being considered) and, where appropriate, MP8 (Additional Information – Disclosure Rationale for Applications where Third Party Information is being considered). Guidance on how to follow and apply the flow charts is contained in MP7A and MP8A. The officer will also have regard to the Human Rights Guidelines contained in MP9. The two crucial stages in the decision-making process in this case were undertaken by DCI Gibson and CS (at that time DSupt) Morris. I think it is convenient to set out the CEC-CMS record in full. For ease of reference I have added paragraph numbers in square brackets. On 30 November 2004 DCI Gibson wrote as follows to DSupt Morris: "[1] There is a mountain of information contained within the docket, a large proportion of which is rumour, conjecture, and uncorroborated allegations. The only information that I consider to be safe to disclose is that which surrounds the applicants son being subject of inclusion on the Child Protection Register under the category of neglect. Given that she has applied for a position involving regular contact with children, I consider this to be highly relevant; the applicant has consistently displayed a lack of ability to adequately care for and supervise her own child and the registered body should be made aware of her history when considering her employment application. [2] [L] born [date] came to Police notice on 29.1.02 when her son, then aged 13 years , was put on the Child Protection Register under the category of neglect. It was alleged that the applicant failed to exercise the required degree of care and supervision in that her son was constantly engaged in activities including shoplifting, failing to attend school, going missing from home, assaulting a teacher at school and was excluded from school. Additionally, during this period, it was alleged that the applicant refused to work or co-operate with the Social Services. Her son was removed from the Child Protection Register in June 2003 having been sentenced at Court to a custodial period for an offence of robbery." On 2 December 2004 DSupt Morris wrote the following minute: "[3] I agree with DCI Gibson – the evidence is factual and relevant. In considering the disclosure we do identify her son by default and that does affect his rights. In this case the fact that the information is in the public domain and that the applicant seeks a post with children, and their rights need to be considered does on balance justify disclosure. [4] Information should be more than speculation, it should have some basis in fact. It should be more likely to be true than not and one would need to consider whether on the balance of probabilities test it was true. Age: HO Circular Para 28 "The older the information the less likely it is to be relevant" (2003). [5] The incident has been admitted or is otherwise considered to be accurate and verifiable. [6] The source can be relied upon. [7] The investigation has concluded and there is evidence to support the allegation. [8] 115(7) of the Police Act 1997 allows a Chief Officer of Police to disclose information that, in his opinion, might be relevant and ought to be brought to the attention of a registered body. Information might be relevant if a reasonable employer would find it material to a decision regarding employment, where the question of whether the applicant would pose a risk to the vulnerable was appropriate. [9] The information relates to information that shows the applicant may be a risk to the physical, mental or moral welfare of the vulnerable. [10] The incident was not connected with sex, drugs or violence but a lack of care. [11] The incident is of concern and there is a specific reason to believe there is a risk to the vulnerable – lack of care. [12] The HRA requires a balance to be struck between the right to private life and protecting the vulnerable from moral harm, mental or physical abuse. While individuals should not be at risk of being forever hounded, if a person chooses to seek this type of employment then they put themselves forward into public life and by that choice accept that information may be released. The impact of disclosure may result in his not being employed. While it would not be in society's interest to exclude an application from employment, social outlets, etc. as this may be a moderating factor on behaviour, the welfare of the vulnerable in respect of whom the risk may exist is of paramount importance, as it is their rights that legislation seeks to protect. The decision is one for police and there is no presumption against disclosure, the position is more in favour of disclosure unless there is a good reason for not doing so. (X v WM) [13] Disclosure would cause little disruption to the applicants private life as the information will be known to most people to whom disclosure is made. [14] A failure to disclose would result in the vulnerable being placed in some risk of harm through neglect. [15] If information is such that it passes all other tests then it should be disclosed irrespective of DPA implications. [16] Having considered these points and the information held I consider that disclosure is proportionate, in view of the nature of the information and the applicant's proposed role and necessary to protect vulnerable members of society." The actual decision to make the disclosure was made on 3 December 2004. The facts – G's case G was head-teacher of a school providing year-long accommodation and education for young people aged between 16 and 19 with severe learning and other difficulties. Z, who was born on 12 March 1982, was a pupil at the school. As described by G in her evidence to me, Z had severe learning difficulties with associated autistic features and significant behavioural difficulties, significant receptive and expressive language and communication difficulties. He had no sense of danger and needed one to one support. On 28 January 2000 he was killed by a passing lorry and car when, unsupervised, he wandered out of the school premises and on to the main road. This was at least the fourth occasion when he had wandered out unsupervised: there had been earlier incidents on 19 November 1998, 21 September 1999 and 13 November 1999. G was prosecuted for the 'gross negligence' manslaughter of Z. At her trial in the Crown Court Hughes J withdrew the case from the jury, having accepted a submission after the close of the Crown's case that there was no evidence on which the jury could properly convict. In the course of his ruling, Hughes J directed himself by reference to R v Adomako [1995] 1 AC 171 that there were four ingredients of the offence which the Crown had to prove: (i) a duty of care; (ii) a breach of that duty; (iii) that the breach of duty was a substantial cause of Z's death; and (iv) gross negligence – in the sense of a gross disregard for human life. Hughes J held that there was a prima facie case of breach of duty. Stressing that it was not for him to say whether G had in fact been negligent – that, of course, being a matter for the jury (or for the judge in any subsequent civil proceedings) – Hughes J said: "I am satisfied that there is a prima facie case for saying that she fell below the standard of a reasonable headmistress … there is a prima facie case that [G] fell below the standards reasonably to be expected of a headmistress in her position with the danger which clearly existed in this case … there is a prima facie case she may well have done … There is, as I hope I have made it clear, a prima facie case that in assessing that balance [scil, the balance between security on the one hand and restraint on the other] she got it wrong … there is certainly a prima facie case that … she failed to exercise reasonable care." He also said that there was "evidence" of what he called "lack of care" by G. Hughes J went on, however, to say that the Crown had failed to establish a prima facie case in relation to either causation or gross negligence. Essentially this was because the Fire Service had directed that there were to be no locks on the doors and there was much evidence that G was a dedicated and conscientious headmistress who took her responsibilities in relation to child protection very seriously: "that she was indifferent, showing disregard for life and safety, grossly negligent, the evidence does not begin to establish." Because of Hughes J's ruling, G did not have to give evidence. In fairness to her I should point out that, according to her evidence to me, which I assume she would have laid before the jury at the Crown Court if her trial had proceeded that far, the senior member of staff who was in charge of Z on the fatal night had left him for some minutes without notifying any other member of staff; moreover, the school gates had been left open by a contractor, contrary to a notice at the gates. G's acquittal was in November 2002. Subsequently G applied for a position requiring an application for an enhanced criminal record certificate in accordance with section 115 of the Police Act 1997. The certificate was issued on 10 March 2004. It described the position applied for by G as "supply teacher." The certificate recorded that G had no criminal convictions and that no information on her was recorded either by the Department for Education and Skills or by the Department of Health. But under the heading "Other relevant information" it set out the following as having been supplied by Staffordshire Police: "[G] is a woman of no convictions. However, we have access to intelligence information relating to [G] having been charged with manslaughter through negligence in January 2002. Whilst in the position of head teacher at a special needs school a pupil wandered off of the premises onto the main road with fatal consequences. The pupil was able to leave the premises due to inadequate security arrangements, which were [G's] responsibility. At Stafford Crown Court in November 2002, the judge presiding decided that there was no case to answer. We have obtained a copy of the judge's ruling and from that we have taken the following two quotes: "Nevertheless, I am satisfied that there is a prima facie case for saying that she fell below the standard of a reasonable headmistress", and "there is as I hope I have made clear, a prima facie case that in assessing that balance she got it wrong. Whether she did or not is not for me to say, but there is certainly a prima facie case that she did, that she failed to exercise reasonable care and that the consequence was a tragic one. But that she was indifferent, showing disregard for life and safety, grossly negligent, the evidence does not begin to establish." The judge made it clear that [G] did fall below the standard of a reasonable headmistress but the gross negligence required for manslaughter could never be established. My decision to disclose is based upon fact that it is reasonably believed that this information is relevant to the assessment of the person's suitability to work with children or vulnerable adults and that a reasonable potential employer of the applicant for a particular job or position might find the information to be material to his or her decision as to whether or not to employ that individual having regard to the question of whether that individual would pose a risk to children or vulnerable adults. I consider that the information is both credible and current. I think that it is appropriate to restate that it is for the employer and/or the professional body to decide whether the information herein is or is not relevant to the issue of the applicant's suitability for the position outlined in your correspondence." The statement that "The judge made it clear that [G] did fall below the standard of a reasonable headmistress" was incorrect. Hughes J had said no such thing. The most he had said, as we have seen, was that "there is a prima facie case she may well have done" and that there was evidence of lack of care. On 20 May 2004 G applied to the Criminal Records Bureau in accordance with section 117 of the Police Act 1997, inviting the Secretary of State to remove all the information supplied by the police from the certificate. This was refused, but on 12 September 2004 the Criminal Records Bureau wrote to G accepting that there had been a mistake, some of the information shown on the certificate being incorrect. A new certificate was issued on 16 September 2004, setting out the following information: "[G] is a woman of no convictions. However, we have access to intelligence information relating to [G] having been charged with manslaughter through negligence in January 2002. Whilst in the position of head teacher at a special needs school a pupil wandered off of the premises and onto the main road with fatal consequences. Following a police investigation [G] was charged with the offence of manslaughter. She later appeared at court where, on the direction of the judge, she was found not guilty. My decision to disclose is based upon fact that it is reasonably believed that this information is relevant to the assessment of the person's suitability to work with children or vulnerable adults and that a reasonable potential employer of the applicant for a particular job or position might find the information to be material to his or her decision as to whether or not to employ that individual having regard to the question of whether that individual would pose a risk to children or vulnerable adults. I consider that the information is both credible and current. I think that it is appropriate to restate that it is for the employer and/or the professional body to decide whether the information herein is or is not relevant to the issue of the applicant's suitability for the position outlined in your correspondence." G issued her application for judicial review on 14 December 2004, seeking to challenge both decisions of the defendant, the Chief Constable of Staffordshire Police, and the decision of the Criminal Records Bureau. On 10 February 2005 Mitting J stayed G's application for permission pending determination by the House of Lords of the petition for leave to appeal against the decision of the Court of Appeal in R (X) v Chief Constable of the West Midlands Police [2004] EWCA Civ 1968, [2005] 1 WLR 65. That petition having been dismissed, G's application for permission was considered by Bean J on 23 August 2005. Bean J gave permission against the Chief Constable, but on one ground only, namely "the question of whether evidence of negligence by a teacher not amounting to a criminal offence may be relevant information for the purposes of section 115(7) of the Police Act 1997." Permission to apply for judicial review against the Criminal Records Bureau was refused. There has been no challenge to Bean J's order and the matter has accordingly proceeded only against the Chief Constable and only on that one ground. Before me it was made clear that the challenge now is only in relation to the second certificate. The matter came on for hearing before me on 17 February 2006. G was represented by Ms Beverley Lang QC; the Chief Constable by Mr Peter Oldham. The evidence consisted of a statement by G and a statement by Assistant Chief Constable Adrian Lee, the officer who had taken the relevant decisions. Unsurprisingly, the Staffordshire Police have far fewer section 115 applications than does the Metropolitan Police. And they are handled by a far smaller staff. Initially the application in this case was considered by Ms Marshall the Staffordshire Police's Criminal Records Bureau disclosure supervisor. But it was ACC Lee who took the final decisions in this case. He obtained a transcript of Hughes J's ruling. Having studied the transcript he decided to make the disclosure as set out in the first certificate. I think I should set out his reasoning in full as he explained it in his witness statement: "In my opinion the records held by the Defendant showed that the claimant has been connected with, and to a material degree culpable for, the failure in supervision or management at [the school] which lead to the death of a vulnerable pupil. I know that [G's] behaviour was not criminal, but a review of the Judge's comments made it clear to me that he was not saying she was blameless. On the contrary, he states that, "there is certainly a prima facie case that she … failed to exercise reasonable care and that the consequence was a tragic one." He had, of course, addressed himself solely and properly to the question of criminal law before him. On reviewing the record, I was sympathetic to the fact that [G] had evidently appreciated that the fire doors installed at the school created a risk that a pupil might be able to leave the premises undetected. I understood that she had indeed taken some steps to resolve the risk, albeit that she decided not to alter the fastenings of the doors in question. However, I also considered that this very risk which [G] had identified subsequently came to pass, with the most serious consequences. Whatever word one chooses to describe [G's] approach to that risk, whether it is "mistake," (as [G] contends), or error of judgement, or negligence, or some other word, it seemed to me, and it still does seem to me, that these facts might be relevant to an employer, at least where the employment in question involved the custody of children. Moral culpability did not seem to me to be the main issue. The main issue was that a child in her care had died from a risk of which she was aware and which she had, self evidently, not managed successfully. However, I tried to be fair and balanced in the disclosure. In addition to quoting the words above ("there is certainly a prima facie case that she … failed to exercise reasonable care and that the consequence was a tragic one.") I went on, and also quoted the judge's comment that "that she was indifferent, showing disregard to life and safety, grossly negligent, the evidence does not begin to establish". I also made it clear that it was for the employer or professional body to decide whether the information disclosed actually was or was not relevant to the issue of her suitability for the post in question, my opinion being only that it might be. Against disclosure, I considered that the fact that [G] had been acquitted, and so was entitled to be treated as wholly innocent of the charge that had been brought against her. I decided this did not outweigh the need to disclose the information, as the incident which had taken place under her stewardship had had very serious consequences, she was applying for a post which would once again put her in charge of children, and it was possible to make clear in the disclosure that she had been found not guilty. I felt that a professional employer would be able to make sensible and proper use of that information, rather than being prejudiced simply because [G] had been charged with a criminal offence. Moreover, much of the information regarding the trial and the acquittal was already in the public domain and, therefore, I did not feel that disclosing it in her ECRC would affect the Claimant as much as if it had been confidential information known only to the Police. This was however a secondary consideration and I was aware that disclosure would have some effect." He went on to explain his decision in relation to the second certificate: "I took the view, following further consultation with officers within the Defendant, that it was possible that any summary of the facts of the case, or any quotation from the judgement, ran the inevitable risk of being inadvertently partial or misleading. Whilst I believed, and believe, that I had tried to present the substance of the records held accurately and fairly, (and certainly I had quoted the judge accurately) on review I and those advising me felt that the complaint made by [G] that the disclosure inaccurately presented the detailed outcome of the case was at least arguable. I did not want even a risk that the disclosure might be inaccurate or misunderstood, and so I decided to remove a substantial part of the original disclosure. As part of the dispute I did reconsider whether to make the disclosure at all. However, I saw no reason to change my earlier decision, and decided to make the revised disclosure on the same grounds as set out above." The point of principle Insofar as there is any point of principle raised in either of these cases, it is the one identified by Bean J: Can evidence of neglect not amounting to a criminal offence (as in L's case) or evidence of negligence not amounting to a criminal offence (as in G's case) be relevant information within the meaning and for the purposes of section 115(7) of the Police Act 1997? In my judgment, the answer in each case is that it can. Both cases raise the same generic issue: How does section 115(7) apply where there has been, or may have been, neglect of a child of a kind falling short of that which constitutes a criminal offence? The point of principle: contrasts between the criminal, civil and family law As is shown both by R v Adomako [1995] 1 AC 171 and, indeed, by G's albeit unsuccessful prosecution, reckless neglect of a child which results in the child's death can constitute 'gross negligence' manslaughter where there has been what Hughes J called a gross disregard for human life. More generally, section 1(1) of the Children and Young Persons Act 1933 provides that: "If any person who has attained the age of sixteen years and has responsibility for any child or young person under that age, wilfully assaults, ill-treats, neglects, abandons, or exposes him, or causes or procures him to be assaulted, ill-treated, neglected, abandoned, or exposed, in a manner likely to cause him unnecessary suffering or injury to health (including injury to or loss of sight, or hearing, or limb, or organ of the body, and any mental derangement), that person shall be guilty of an offence". As Ms Kilroy pointed out, there are two limiting features of this provision. In the first place, no offence is committed unless the carer has behaved wilfully, and where the allegation is of neglect – an omission to act rather than the commission of a positive act – no offence is committed unless the carer has been reckless: R v Sheppard [1981] AC 394 at pages 403, 404-405, 412, 418. Secondly, the statute focuses primarily on physical harm. As Lord Diplock observed in R v Sheppard [1981] AC 394 at page 404 (and Lord Keith of Kinkel said much the same thing at page 417): "To "neglect" a child is to omit to act, to fail to provide adequately for its needs; and, in the context of section 1 of the Children and Young Persons Act 1933, its physical needs rather than its spiritual, educational, moral or emotional needs. These are dealt with by other legislation." But as Ms Kilroy also pointed out, both family law and the law relating to civil liability adopt less stringent tests. I need say nothing of civil liability save to observe that the test of liability in tort is negligence, not gross negligence. So far as family law is concerned, there are two significant differences from the criminal law. In the first place, family law concerns itself with much more than merely physical neglect. As Ms Kilroy pointed out, the definition of "harm" to be found in section 31(9) of the Children Act 1989 embraces a wider class of case than is necessarily included in section 1 of the Children and Young Persons Act 1933. "Harm" is defined in section 31(9) as including not only "ill-treatment" but also "the impairment of health or development" – including not merely "physical" but also "intellectual, emotional, social or behavioural" development – and "ill-treatment" includes not only sexual abuse but also "forms of ill-treatment which are not physical." She made a similar point in relation to the definitions or descriptions of "neglect" which are to be found in paragraphs 2.7 and 2.15 of Working Together to Safeguard Children. Secondly, family law assesses neglect by reference to an objective standard. Thus section 31(10) of the Children Act 1989 provides that "Where the question of whether harm suffered by a child is significant turns on the child's health or development, his health or development shall be compared with that which could reasonably be expected of a similar child". More importantly for present purposes, section 31(2)(b)(i) provides that the court may only make a care order or supervision order if it is satisfied that "the care given to the child, or likely to be given to him if the order were not made, [is] not … what it would be reasonable to expect a parent to give to him." Another important difference between criminal law and family law is in matters of evidence and procedure. Family courts are not bound by the same strict rules of evidence as is the Crown Court – hearsay evidence is admissible – and they work to a different and lower standard of proof. Proceedings at a Child Protection Conference are even more informal. Child Protection Conferences are described in paragraphs 5.52-5.70 of Working Together to Safeguard Children. Paragraph 5.52 defines the "aim of the conference" as being "to enable those professionals most involved with the child and family, and the family themselves, to assess all relevant information, and plan how to safeguard the child and promote his or her welfare." Ms Kilroy referred me to well-known authorities containing judicial descriptions of the Child Protection Register system: R v Norfolk County Council Social Services Department ex p M [1989] QB 619, R v Harrow London Borough Council ex p D [1990] Fam 133 and R v Hampshire County Council ex p H [1999] 2 FLR 359. I need not go through them in any detail. It suffices to quote two brief extracts from the judgment of Butler-Sloss LJ (as she then was) in R v Harrow London Borough Council ex p D [1990] Fam 133. At page 138 she said this: "The case conference has a duty to make an assessment as to abuse and the abuser, if sufficient information is available. Of its nature, the mechanism of the case conference leading to the decision to place names on the register and the decision-making process, is unstructured and informal. It is accepted by Mr Scrivener that it is not a judicial process. It is part of a protection package for a child believed to have been the victim of abuse. Unlike other areas of judicial review, the considerations are not limited to the individual who may have been prejudiced and the tribunal or organisation being criticised. In this field, unusually, there is a third component of enormous importance – the welfare of the child which is the purpose of the entry in the register. In proceedings in which the child is the subject, his or her welfare is paramount. In balancing adequate protection for the child and fairness to an adult, the interest of an adult may have to be placed second to the needs of the child. All concerned in this difficult and delicate area should be allowed to perform their task without looking over their shoulder all the time for the possible intervention of the court." She added at page 139: "The nature of the information recorded, the machinery by which it has been inserted and the limited purpose for which it is included must be recognised. Having said that, I do not consider such an entry is in any way a finding of fact, even less a finding of guilt, nor should it be seen as such." Working Together to Safeguard Children recognises that a Child Protection Conference may have to consider a case where the child has been or may have been the victim of a crime. It advises in paragraph 5.8 that the local authority and the police should "consider jointly how to proceed in the best interests of the child". It goes on to recognise that "There will be less serious cases where, after discussion, it is agreed that the best interests of the child are served by social services led intervention rather than a full police investigation." The point of principle: submissions It was against this general background that both Ms Kilroy and Ms Lang sought to draw a distinction for the purposes of section 115(7) between conduct of the type that, if proved, would amount to a criminal offence and conduct that, even if proved, would not amount to a criminal offence – albeit that it might (as in the kind of situation exemplified by G's case) give rise to civil liability or (as in the kind of situation exemplified by L's case) lead to the convening by a local authority of a Child Protection Conference or the commencement by a local authority of care proceedings in accordance with Part IV of the Children Act 1989. In my judgment there is no such distinction. There were in essence four strands to their arguments. First, Ms Kilroy and Ms Lang referred to me to various phrases used in the Police Act 1997: the reference in the long title to the purpose of the Act being, inter alia, "to provide for the issue of certificates about criminal records"; the heading to Part V ("Certificates of Criminal Records, &c"); the headings to sections 112, 113 and 114 (respectively "Criminal conviction certificates", "Criminal record certificates" and "Criminal record certificates"); and most important of all the heading to section 115 itself ("Enhanced criminal record certificates"). All these, they suggested, showed that the Act was confined to records or certificates of criminal behaviour. A similar point was made by Ms Kilroy in reliance upon the fact that section 115(7) refers back, via section 115(2), to the provisions of section 4(2) of the Rehabilitation of Offenders Act 1974. The short answer to all this was provided by Mr Oldham, who pointed out that section 115(6A) provides for the inclusion in certain circumstances in an enhanced criminal record certificate ("the enhanced criminal record certificate shall also state") of various matters, identified in sections 115(6A)(a)-(d), which are not on any view confined to criminal behaviour. I observe that the same point can also be made by reference to certain other subsections of section 115. But there is no need for me to go any further. The provisions of section 115(6A) would suffice, even if they stood alone, to make good Mr Oldham's point. Secondly, Miss Lang placed some reliance upon the comments of Lord Woolf CJ in R (X) v Chief Constable of the West Midlands Police [2004] EWCA Civ 1968, [2005] 1 WLR 65, at para [2]: "An ECRC contains information, in addition to that which is recorded in central records, about the person to whom the certificate relates, provided by the Chief Constable. The additional information may concern offences of which the person to whom the ECRC relates is suspected of committing even though his responsibility has not been and cannot be proved (emphasis added)." This passage, in my judgment, simply cannot bear the weight that Ms Lang would seek to give it. Lord Woolf CJ was not concerned at all in R (X) v Chief Constable of the West Midlands Police [2004] EWCA Civ 1968, [2005] 1 WLR 65, with the present point. He did not say that an ECRC is confined to information of the kind he was referring to. All he said was that the additional information "may" concern suspected offences. So indeed it may, but there is nothing in what Lord Woolf CJ said to show that it may not equally concern other matters. On the contrary, his words in the passage immediately following that relied on by Ms Lang are framed in more general terms and point in a direction precisely the opposite of that contended for by Ms Lang: "The information must, however, be information which the Chief Constable is of the opinion might be relevant to a position which involves regularly caring for, training, supervising or being in sole charge of persons under 18 or vulnerable persons aged 18 or over. The ECRC is, therefore, a form of protection for the young and/or vulnerable: the additional information contained therein is required so as to avoid unsuitable individuals being employed for looking after such persons." Thirdly, Ms Kilroy and Ms Lang referred me to a wide range of official sources: the Home Office Consultation Paper, Disclosure of Criminal Records for Employment Vetting Purposes (September 1993), the Home Office White Paper, On the Record: The Government's Proposals for Access to Criminal Records for Employment and Related Purposes in England and Wales (Cm 3308, June 1996), the speech of the Minister of State, Home Office, Baroness Blatch, introducing the second reading of the Bill in the House of Lords on 11 November 1996 (Hansard, HL Vol 575, cols 789-795), Criminal Records Bureau: Police Service Manual of Guidance (issued by the Criminal Records Bureau in February 2002), Child Protection: Preventing Unsuitable people from Working with Children and Young Persons in the Education Service (guidance issued by the Department for Education and Skills in May 2002, DfES/0278/2002), Revised Arrangements for Police Checks (issued by the Home Office in September 2003, Circular 047/2003), Criminal Records Bureau: Local Checks by Police Forces for the Purpose of Enhanced Disclosures (issued by the Home Office in February 2005, Circular 5/2005) and Criminal Records Bureau: Code of Practice and Explanatory Guide for Registered Persons and other recipients of Disclosure Information (published under section 122 of the Police Act 1997 in April 2005). Their purpose in doing so was to demonstrate a general 'official' assumption that section 115(7) applies only to conduct that is in principle criminal: see, for example, paragraph 41 of the DfES guidance and paragraph 10 of the Home Office circular: "The key purpose of disclosure is not a general "character assessment" of the individual, but to consider the risk or likelihood of an offence being committed against the vulnerable." In particular they relied upon paragraph 3.8.4 of the Criminal Records Bureau guidance which refers to the legislation as "frustrating the perpetrators of offences against the vulnerable." For the same reason they also referred me to The Bichard Inquiry Report (June 2004, HC 653), paragraph 4.105.2 of which "recognise[s] that the purpose of vetting is crime prevention". I do not think that any of this material will bear the weight which Ms Kilroy and Ms Lang seek to give it. In the first place, there are phrases which provide much less support for such a reading. Thus, although paragraph 10 of the Home Office circular refers, as we have seen, to the "risk or likelihood of an offence being committed", there are, as Mr Oldham pointed out, other more equivocal passages. Thus paragraph 9 refers to "a risk to children (or vulnerable adults)" and paragraph 31 says that: "the issue of relevancy should be considered solely in terms of whether information suggests that the applicant poses a risk of physical or mental abuse to children." And paragraph 39 says: "But, in the final analysis, the main consideration must be the protection of the vulnerable. Therefore, if the information is cogent and relevant, and indicates a risk, it is appropriate and proportionate that it should be revealed." Moreover, as Mr Oldham pointed out, paragraph 26 specifically refers to the fact that, depending upon the circumstances of the case and the reasons for the action taken, the revocation of a shotgun licence – not something that necessarily connotes anything criminal – could be very relevant. Moreover, as Mr Oldham pointed out, none of this material – or at least none of the parts I was shown – even glosses, let alone attempts to explain the meaning of, the key words in section 115(7) – "any information". Furthermore, as both Ms Barton and Mr Oldham correctly point out, even if it did, no amount of 'official' explanation can affect the meaning of the statute. Ms Lang also referred me to the Association of Chief Police Officers: Code of Practice for Data Protection (issued October 2002) and Guidance on the Management of Police Information (published as a final draft v3.4 by the Association of Chief Police Officers in February 2006). I have to say, with all respect to her, that none of this seemed to me to throw any light at all upon anything I have to decide. Fourthly, and finally, it was suggested that whereas the police have expertise in the investigation and prevention of crime they do not necessarily have the same expertise in relation to child protection or other analogous issues. I can only say that, although this may be the perception of those whose experience is confined to the Crown Court or the Administrative Court, it is simply contrary to the everyday experience of those familiar with the workings of the family justice system. Police officers are routinely and intimately involved in the entire child protection system, just as police officers are routinely and intimately involved in many areas of work relating to the protection of vulnerable and exploited adults. L's case, indeed, is a good and entirely typical example. A police officer from the local police Child Protection Team attended and, as we have seen, actively participated in the Child Protection Conferences about X. Indeed, it is a striking fact that the police child protection records in relation to X ran to 489 pages, far in excess of the 168 pages which sufficed to record the relevant data on CRIS. The point of principle: conclusions As was correctly pointed out by Ms Barton and Mr Oldham, the short and simple answer to all this is to be found in the statutory language, which in my judgment is perfectly clear. Section 115(7) refers to "any information". If Parliament had intended to limit the relevant types of information, for example, by confining it to information of criminal or potentially criminal activity, it would have been the easiest thing in the world for it to do. But it chose not to. It made the statutory scheme apply to "any" information. In my judgment, "any" means "any". The point in fact goes a little further. As we have seen, the only statutory limitation on the "information" which is to be included in an enhanced criminal record certificate is that it must be information which in the chief officer's opinion (section 115(7)(a)) "might be relevant" for the purpose of (section 115(2)) an exempted question asked by a prospective employer "in the course of considering the applicant's suitability for a position" which (section 115(3)) "involves regularly caring for, training supervising or being in sole care of" children. As a matter of common sense, information is not "relevant" for this purpose only if it relates to criminal or potentially criminal activity. On the contrary, there may be information which is highly "relevant" for this purpose even though it relates to activity – or inactivity – which is not on any view criminal. Children and vulnerable adults can suffer harm – including very grave and even fatal harm – just as much at the hands of the incompetent as the negligent, the feckless as the reckless. After all, Z died whilst at school, even though there was, as Hughes J ruled, no criminal misconduct. I remind myself that, as Lord Woolf CJ put it in R (X) v Chief Constable of the West Midlands Police [2004] EWCA Civ 1968, [2005] 1 WLR 65, at para [20], the purpose of the legislation is: "to enable information to be available to prospective employers, where the nature of the employment means that particular care should be taken to ensure that those who are working with the appropriate categories of persons can be relied on to do so, without those in their care coming to harm if they are under the age of 18 or vulnerable adults." As he said at para [2]: "The ECRC is … a form of protection for the young and/or vulnerable: the additional information contained therein is required so as to avoid unsuitable individuals being employed for looking after such persons" The fact is that the criminal law, taken in isolation, may be no safe or even very useful guide to whether a potential carer of children or vulnerable adults is, to use Lord Woolf's words, "suitable" or someone who can be "relied on". A much wider range of information may be highly relevant in assessing such difficult matters. Parliament surely recognised this when it deliberately extended the net to embrace "any" information so long only as it is "relevant". Discussion – L's case Ms Kilroy attacks the certificate on five different grounds. I shall take them in turn. First, Ms Kilroy asserts that the information in the certificate is not "relevant" because it does not disclose or relate to any criminal offence. For reasons I have already given there is no substance in this point. Information is capable of being relevant even if it does not relate to any criminal or potentially criminal activity. Secondly, Ms Kilroy asserts more generally that the information in the certificate is not relevant because there is no necessary or relevant connection between lack of care or neglect within the family and unsuitability to be employed as a midday assistant to supervise children in a school playground during lunch breaks. According to Ms Kilroy, DCI Gibson and CS Morris were superficially and wrongly equiparating two different types of supervision or control in what she says were two quite different contexts. With all respect to Ms Kilroy I simply cannot agree. It seems to me obvious as a matter of first impression, indeed as a matter of common sense, that it would be highly relevant for the potential employer of a school playground supervisor, whose duties would seemingly include ensuring that the children in her charge do not hurt themselves or each other and do not absent themselves from the school premises during school hours, to know that the supervisor has had her own twelve year old son put on the Child Protection Register under the category of neglect and, moreover, on the basis that she has been unable to control his behaviour in circumstances where he has frequently gone missing from home, truanted from school and gone shoplifting. In fact, of course, the Commissioner does not have to go that far. The question is not what I think. The question is whether "in the chief officer's opinion" the information "might" be relevant and, if so, whether "in the chief officer's opinion" it "ought" to be disclosed. To that there can, in my judgment, be only one answer. DCI Gibson and CS Morris were entitled to conclude that the information they were proposing to disclose was, as DCI Gibson put it (decision paragraph [1]) "highly relevant". As Ms Barton puts it, and I can only agree, L's alleged lack of control and supervision of her own child, X, which had led to X's name being included in the Child Protection Register was directly relevant to the post she sought; the very role which L was being employed to carry out at the school – controlling and supervising children – was the very role which the local authority had had concerns about her carrying out in respect of her own child. As Ms Barton puts it, lack of supervision puts vulnerable pupils at risk, risk to themselves and risk to other pupils. L had seemingly demonstrated an inability to control X, and that was a fact that DCI Gibson and CS Morris were entitled to conclude was relevant – indeed highly relevant – to L's employment in a supervisory role. Thirdly, Ms Kilroy complains that DCI Gibson and CS Morris failed to appreciate the limited scope and purpose of a Child Protection Conference and wrongly failed, in particular, to appreciate that it makes no 'findings'. I do not agree. In the first place it is to be noted that DCI Gibson correctly recognised (decision paragraph [1]) that much of what was contained in the child protection records was "rumour, conjecture, and uncorroborated allegations." He was careful when drafting what afterwards became with only minor alterations the information disclosed in the certificate (decision paragraph [2]) to discriminate between this kind of un-particularised and largely un-sourced material, which he rightly excluded, and the detailed, particularised and securely sourced material which he chose to include. Thus he excluded the concerns about drugs and prostitution (see paragraphs [17] and [19] above) and confined himself to those matters which, as we have seen, had been the subject of specific and detailed reports by various professionals to the Child Protection Conference on 29 January 2002 (see paragraph [18] above). Moreover, he was careful to say (decision paragraph [2]) that this was merely what had been "alleged". But DCI Gibson and CS Morris were in my judgment entitled to conclude, not least from the detailed minutes of the Child Protection Conference on 29 January 2002, that there had been a full and careful assessment of the facts by a number of professionals and that there was a proper objective basis for the decision to include X's name on the Child Protection Register. After all, there was nothing in the minutes of the Child Protection Conferences to suggest that L had ever denied the primary facts about X's behaviour. Her response (see paragraph [20] above) had been to deny that it was a cause for concern and to assert that it was other people's fault. In my judgment DCI Gibson was fully entitled to conclude, as he did (decision paragraph [1]), that L "has consistently displayed a lack of ability to adequately care for and supervise her own child". Likewise, in my judgment, DCI Gibson was fully entitled to say (decision paragraph [1]) that "I consider this to be highly relevant … the [employer] should be made aware of her history when considering her employment application." Ms Kilroy understandably concentrates her fire on CS Morris, who, after all, was effectively the final decision-maker. She criticises his references to the evidence as being "factual" (decision paragraph [3]), to the "incident" as having been "admitted" (decision paragraph [5]), to the "source" as one that "can be relied upon" (decision paragraph [6]) and to there being "evidence to support the allegation" (decision paragraph [7]). In my judgment these criticisms are unfair and depend upon an over-literal reading of CS Morris's words and an over-analytical approach to his reasoning. DCI Gibson had been careful to separate out the detailed facts, which could be sourced and in large part substantiated, from the un-sourced and unsubstantiated rumour, conjecture and allegations. X's convictions were a matter of record and the primary facts relied upon by the local authority and, in turn, by DCI Gibson had seemingly not been challenged by L. There was evidence – detailed evidence – to support the allegations, for example, the evidence deployed at the Child Protection Conference on 29 January 2002 by the police and by the school. And those were "sources" that could properly be relied upon. Fourthly, Ms Kilroy submits that CS Morris carried out the balancing exercise required by Article 8(2) on the basis of a wholly false premise, namely that the information was "in the public domain" (decision paragraph [3]) and that its disclosure (decision paragraph [13]) would cause "little disruption" to L's private life "as the information will be known to most people to whom disclosure is made." Ms Barton frankly accepts that this was wrong, though pointing out that X's conviction was in the public domain, but submits that this error does not invalidate CS Morris's decision. I agree. As Ms Barton pointed out, CS Morris had it very much in mind (decision paragraph [12]) that the effect of making the disclosure might be to exclude L from employment. Fifthly, and finally, Ms Kilroy submits that CS Morris gave no consideration to the risks to L, and consequently to X, if L, as a result of what was included in the certificate, was, as she put it, excluded from employment. Those risks, she says, had to be balanced against the potential risks to the children in the playground if L kept her job. This submission, with all respect to Ms Kilroy, is misconceived. In the first place, CS Morris did have regard not merely to L's rights but also to X's rights (decision paragraph [3]). More importantly, the primary task of DCI Gibson and CS Morris was to decide whether, in their opinion, the information "might be relevant" to L's employer. If it was – as they were plainly entitled to conclude it was – then they were equally plainly entitled to conclude that the information should be disclosed, absent what Lord Woolf CJ in R (X) v Chief Constable of the West Midlands Police [2004] EWCA Civ 1968, [2005] 1 WLR 65, at para [41], had called "any untoward circumstance". The task of the chief officer is to determine whether the information "might be relevant" to an employer. If not, cadit questio. But if it is, then it is for the employer, rather than for the chief officer, to evaluate its weight and significance and the chief officer will therefore ordinarily conclude that it ought to be disclosed. The fundamental policy adopted by Parliament, as Lord Woolf CJ put it "in order to serve a pressing social need", and a policy which, as we have seen, is entirely Convention compliant, is that (see what Lord Woolf CJ said in R (X) v Chief Constable of the West Midlands Police [2004] EWCA Civ 1968, [2005] 1 WLR 65, at para [37]): "the information should be disclosed even if it only might be true. If it might be true, the person who was proposing to employ the claimant should be entitled to take it into account before the decision was made as to whether or not to employ the claimant." Ms Kilroy submits that, for all these reasons, the decision to disclose was fatally flawed and that it cannot be justified under Article 8(2). I do not agree. On the contrary, and as Ms Barton correctly points out, DCI Gibson and CS Morris were not making any assessment at all of L's suitability for the post she sought. They were simply putting her employer in possession of certain information – information that was "relevant" within the meaning of section 115(7) – to enable the employer to ask appropriate questions of L, make an assessment of the risk and, if they chose to employ her, manage that risk. In other words, DCI Gibson and CS Morris were doing precisely what the statute required of them. I can see no flaw or error either in their approach or in their decision, a decision which in my judgment was quite manifestly compliant both with the statutory regime and with the Convention. L's claim for judicial review fails and must be dismissed. Discussion – G's case Ms Lang attacks the certificate – that is, the second certificate – on the ground that the defendant erred in law and exercised his power irrationally (and/or without taking all relevant considerations into account and/or without conducting a proper risk assessment) in making disclosure when: i) the purpose of the disclosure of information under section 115(7) is to identify a potential risk of criminal offences against children, not other concerns about incompetence or civil negligence; ii) G had been acquitted of the criminal charge; iii) there was no rational basis for a belief that G had committed or might in future commit a criminal offence against children in her care; iv) information regarding acquittals should not be disclosed under section 115(7) unless the circumstances of the acquittal raise legitimate concern as to whether an offence may have been committed although not proved; v) only limited weight could be given to Hughes J's observation that there was a prima facie case of civil negligence against G when he had not heard any evidence from G, was not determining a civil claim and in fact made no finding of negligence. I should point out that ACC Lee did not proceed on the basis suggested in (iii). He expressly acknowledged that G's conduct was not criminal and that she was entitled to be treated as wholly innocent of the charge. His reasoning was quite different. It was (I extract the key passages from his explanation as set out in paragraph [54] above) that: "the records held by the Defendant showed that the claimant has been connected with, and to a material degree culpable for, the failure in supervision or management at [the school] which lead to the death of a vulnerable pupil. I know that [G's] behaviour was not criminal, but a review of the Judge's comments made it clear to me that he was not saying she was blameless … Whatever word one chooses to describe [G's] approach to that risk, whether it is "mistake," (as [G] contends), or error of judgement, or negligence, or some other word, it seemed to me, and it still does seem to me, that these facts might be relevant to an employer, at least where the employment in question involved the custody of children. Moral culpability did not seem to me to be the main issue. The main issue was that a child in her care had died from a risk of which she was aware and which she had, self evidently, not managed successfully." Mr Oldham's submission is simple and, in my judgment, unanswerable. He says that the claim must fail however it is formulated: i) As to vires, Mr Oldham submits that section 115(7) permits, indeed obliges, the inclusion in a certificate of (to quote Bean J's words) "evidence of negligence by a teacher not amounting to a criminal offence" where the chief officer reasonably considers that the information "might be relevant" for the statutory purposes. I agree. ii) As to any irrationality or 'factors' challenge, Mr Oldham submits that on the facts of this case it simply cannot be said that ACC Lee's decision that the information might be relevant for these purposes is Wednesbury unreasonable or that he failed to take any relevant factors into account. Again, I agree. I have already set out my conclusion that the "information" referred to in section 115(7) is not confined to information of criminal or potentially criminal activity. On the contrary, section 115(7) extends in principle to "any" information which in the chief officer's opinion "might be relevant" for the purpose of a question asked by a prospective employer "in the course of considering the applicant's suitability for a position" which "involves regularly caring for, training supervising or being in sole care of" children. This conclusion provides the short answer to the greater bulk of Ms Lang's case. I should one further observation in relation to limb (iv) of Ms Lang's submissions. I have no quarrel at all with this proposition – which, after all, is to be found in some of the 'official' guidance to which I have already referred – so long as its true significance is appreciated. It applies, as it seems to me, in a case where the only possibly relevant information is that someone has committed a criminal offence, for example, where there is no doubt that a criminal offence has been committed and the only issue is whether the offence was committed by A or B and where, the criminal offence apart, there is nothing else to report about A. But the present cases are very different. The question in both cases is not Did L do it? or Did G do it? – in the sense of Was it done by A or by B? In the present cases what L and G did (or failed to do) is clear – or at least clear enough. The question is not so much whether or not they did (or failed to do) what they are said to have done (or failed to do), but rather whether what they are said to have done (or failed to do) is, of its nature, something that falls within section 115(7), always bearing in mind that section 115(7) is not confined to information of criminal or potentially criminal activity. If there is information which, quite independent of any criminal character it may have, "might be relevant" within the meaning of section 115(7), then it will retain that character, and be disclosable as such, whether or not the relevant activity is criminal, whether or not there has been a criminal prosecution and whether or not the defendant (if prosecuted) has been acquitted (and, if so, whatever the reason). So this point does not help Ms Lang. The only remaining question is whether ACC Lee could reasonably and lawfully have concluded that the information contained in the certificate was information which "might be relevant" for the purpose of a question asked by a prospective employer "in the course of considering [G's] suitability for a position" which "involves regularly caring for, training supervising or being in sole care of" children. To that question, in my judgment, there can be only one answer. ACC Lee's decision was not irrational. Nor did he fail to take into account and given appropriate weight to relevant matters. I can do no better than to summarise the way in which Mr Oldham put his case, for I agree entirely with what he says. He submits that the attempt to challenge the exercise of ACC Lee's discretion involves attempting to establish that it was perverse of him to believe that the information disclosed might be relevant to a person considering employing G in a post teaching and/or supervising children and to believe that he ought therefore to disclose it. Mr Oldham submits, and I agree, that it quite impossible for G to establish this. Mr Oldham says, and I agree, that it might well be relevant for a school or LEA or other person considering employing G that (and I quote the certificate) "Whilst [G was] in the position of head teacher at a special needs school a pupil wandered off of the premises onto the main road with fatal consequences." It had not been established that G was without responsibility for this occurrence, albeit that there was no arguable case that she was criminally responsible. Furthermore, says Mr Oldham, and again I agree, ACC Lee could legitimately believe that this might be of relevance to a potential employer in the education sector. It cannot be said, submits Mr Oldham, that the information would be of legitimate concern to no reasonable employer. Indeed, he says, and I agree, it can easily be imagined that some employers would be concerned for good reason to be aware of such information. Nor is there any basis, in my judgment, for any assertion that ACC Lee failed to take any relevant consideration into account or that he failed (insofar as he was required to) to conduct a proper risk assessment. I have set out ACC Lee's reasoning in extenso. It shows that he considered the case very carefully, took all the relevant factors into account, including the important fact that G had been acquitted, and carefully considered whether, on balance and having weighed all the relevant factors, there ought to be disclosure. He gave compelling reasons to justify his decision. I cannot fault his reasons. Moreover, at the end of the day he was careful to point out in the certificate "that it is for the employer and/or the professional body to decide whether the information herein is or is not relevant to the issue of the applicant's suitability for the position". G's claim for judicial review fails and must be dismissed. I should add one final observation. Among the other papers very properly disclosed by the Chief Constable in defence of this claim there is an internal memorandum dated 17 February 2004 addressed to ACC Lee and written by an Acting Detective Inspector. It contains these observations: "The police were extremely critical of the presentation of the case at court, and a report highlighting our concerns was forwarded to the CPS. The CPS did not (would not) reply to that report in writing but in a subsequent meeting with their representatives, our criticism of counsel was accepted, but it was agreed that it was not possible in the circumstances to take the case further." I should make it clear that there is nothing which even begins to suggest that ACC Lee's decision in relation to G was in any way affected by his force's disappointment at the outcome of the criminal proceedings. Nor, as I should also make clear, is there anything in this which throws the slightest doubt on the propriety of G's acquittal. ACC Lee, to repeat, was quite clear in his evidence that G had been acquitted and is "entitled to be treated as wholly innocent of the charge". Conclusions For these reasons both these claims for judicial review fail and must be dismissed. Endnote For the avoidance of doubt I should make it clear that the only issue I have been asked to consider in these two cases is as to the legality and propriety of the disclosure of certain information for the purposes of and pursuant to section 115(7) of the Police Act 1997. I have not been invited to consider any restraints there might be preventing disclosure in accordance with section 115(7) of, for example, confidential child protection information obtained by the police in circumstances preventing its further dissemination. That is an issue which may arise at an earlier stage in the process than that which I have here been engaged with, particularly if the police are in possession of documents or information derived from private proceedings in a family court. It is an issue which Sumner J has very recently had to consider. It is not an issue I have had to consider in these two cases, just as Sumner J did not have to consider in his case the issues that I have been considering here.

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. Hall, 2014 ONCA 348 DATE: 20140501 DOCKET: C53038 Goudge, Cronk and Strathy JJ.A. BETWEEN Her Majesty the Queen Respondent and Robert Edward Hall Applicant/Appellant Robert Sheppard, for the appellant Dena Bonnet, for the respondent Heard and released orally: April 16, 2014 On appeal from the sentence imposed on January 4, 2011 by Justice Kelly A. Gorman of the Superior Court of Justice, sitting without a jury. ENDORSEMENT [1] In our view, the trial judge was fully aware of the sentence recently imposed on the appellant for the G.S. offences and properly took it into account in addressing the predicate offences that were before her.  Equally she considered the appellant’s lack of insight into his crimes but did not over-emphasize it. [2] In the end, the offences on which the trial judge imposed sentence involved a number of innocent children.  They were seriously scarred as a consequence of the appellant’s wrongful conduct.  While the offences are historical, they involve a sexual predator abusing young innocent victims, the prototype described in R. v. D. (D.) (2002), 58 O.R. (3d) 788 (C.A.) . In these circumstances, we view as fit the six-year global sentence for all the predicate offences, taken together. [3] The parties agree that in allocating this sentence to the various offences, the convictions for gross indecency and assault with intent should be allocated five years each in recognition of the maximum sentence provided by the Code .  The allocation to the indecent assault convictions remains at six years each.  All sentences to be concurrent.  The parties also agree that the global sentence of six years be reduced by 42 days to reflect credit for pre-trial custody which was overlooked at trial.  Otherwise the sentence appeal must be dismissed. “S.T. Goudge J.A.” “E.A. Cronk J.A.” “G.R. Strathy J.A.”

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1658 of 1966. Appeal by special leave from the judgment and order. dated November 19, 1965 of the Calcutta High Court in Matter No. 213 of 1964. N. Mukherjee, for the appellant. N. Sinha and B.P. Jha, for the respondent. The Judgment of the Court was delivered by Grover, J. This is an appeal by special leave from a judgment of the Calcutta High Court dismissing a petition filed under s. 33 of the Indian Arbitration Act, hereinafter called the Act. A companytract was entered into between appellant and the respondent on January 28, 1964 for sale of 200 bags of Cone yarn. The companytract inter alia companytained the following terms and companyditions In case of any dispute arising out of this companytract the matter in dispute shall be referred to the arbitration of the Indian Chamber of Commerce whose decision shall be binding on both the parties. The Court at Calcutta alone and numberother companyrt whatsoever shall have jurisdiction to entertain and try suits in respect of any claim or disputes arising out of or under this companytract or in any way relating to the same. Certain disputes arose between the parties relating to the supply of goods and the respondent demanded a payment of Rs. 25,658.90 as price of the goods alleged to have been supplied. The appellant maintained that the said goods were number according to the companytract and had been rightly rejected. The appellant did number happen to be a member of the Indian Chamber of Commerce, Calcutta, whereas the respondent was a member. The dispute having been referred to the Chamber the appellant wrote to the Registrar of the Tribunal of Arbitration of the Chamber of Commerce to intimate the names of the persons companystituting the companyrt to enable the appellant to ascertain whether they were independent and disinterested persons. The Registrar sent a reply saying that the names of the arbitrators companystituting the companyrt companyld number be disclosed to the appellant as it was a numbermember. Later on a list of the office-bearers and companymittee members was sent but according to the appellant the names of the arbitrators were number disclosed. In September 1964 the Registrar intimated that the meeting of the companyrt of the arbitrators would be held on September 24, 1964. There was further companyrespondence The appellants. attorney again sought information regarding the names and particulars of the arbitrators but without success. Ultimately the appellant filed an application under s. 33 of the Act. The case of the appellant was that the arbitration agreement companytained in the companytract was void and ineffective as clauses a and b reproduced above were in companyflict with each other and that the Rules of the Tribunal of Arbitration of the Indian Chamber of Commerce were illegal and void. The High Court repelled all the companytentions raised before it and dismissed the application. The main emphasis before us has been laid by learned companynsel for the appellant on R. III of the Rules of Arbitration of the Indian Chamber of Commerce which, according to him, companyes into companyflict with the provisions of the Act. That Rule provides that the Tribunal shall companysist of such persons as may be selected by the Committee of the Chamber from time to time. Sub-Rule 3 reads The Committee may, at any time if they think proper so to do, add to the said list the names of other persons qualified as aforesaid. A list of the members of the Tribunal companyplete for the time being shall be kept by the Registrar, and shall always be open for inspection by members on application and at the discretion of the Registrar, also by persons other than members. It is urged that the number-disclosure of the names of the arbitrators by the Registrar is violative number only of the rules of natural justice but also infringes the provisions of the Act. Before the High Court and before us reliance has been placed on an unreported judgment of the Calcutta High Court in Matter No. 95 of 1963 Suraj Ratan Binany v. Hindustan Motors Ltd. 1 . In that Decided on C--4-964. case a similar companytention had been raised and it was held that if the names of the arbitrators were number known to the parties until the award was filed the parties would number be in a position to know whether the arbitrators had misconducted themselves entailing removal under s. 11 of the Act or a case had arisen for moving the companyrt under s. 5 of the Act for leave to revoke the ,authority of an appointed arbitrator. In the judgment under appeal, however, that view was number followed and it has been held that the Arbitration Rules of the Chamber of Commerce did number offend any of the sections of the Act as the powers of the companyrt under ss. 5 and 11 remained unaffected by the aforesaid Rules. In our judgment there is numbermerit in the challenge to the validity of the arbitration agreement on the ground that the Rules of the Indian Chamber of Commerce which is to be the arbitrator, enable the Registrar of that Chamber to withhold disclosure of the names of the Arbitration Court to a party which does number happen to be a member of the Chamber. The power given to the Registrar is discretionary and he is number bound in every case to refuse to disclose the names. At any rate, as soon as proceedings before the arbitrators companymence both parties are in a position to know the names and particulars of the arbitrators and if there is any objection on well known grounds to their companyducting the arbitration the same can be taken at that stage. Under s. 5 it is number essential that the authority of an appointed arbitrator should be got revoked before the companymencement of the arbitration proceedings. Section 11 companytemplates a stage subsequent to the arbitrators entering on the reference. We can see numberconflict between Rule III 3 of the Rules of Arbitration of Chamber of Commerce and ss. 5 and 11 or s. 30 of the Act. These Rules do number interfere with or take away the powers and the jurisdiction of the companyrt under the aforesaid provisions. It must be remembered that the appellant agreed to submit to the arbitration of Indian Chamber of Commerce which meant that it was bound by all the Rules of Arbitration of the said body. No illegality or invalidity can be projected into the agreement by the presence of Rule III 3 . Our attention has been drawn to a statement in Russell on Arbitration, 17th Edn., at page 207 that the appointment of an arbitrator by a party is number companyplete without companymunication thereof to the other party. This Rule can be of numberavail to the appellant because in the present case the arbitrator was known, the arbitrator being the Chamber of Commerce. Under its Rules the Chamber is authorised to delegate its power to a smaller body. As the Rules were expressly or by necessary implication incorporated into the companytract the Chamber would have the power to appoint a companyrt, by its Registrar, to decide the dispute. The appointment of the arbitrator was thus companyplete in every sense in the present case. It companyld number be said that it would become companyplete only when the names of persons companystituting the companyrt of arbitration were companymunicated. Those persons only discharge the duty which lay on the Chamber in the matter of arbitration. It is numbereworthy that the Rules of Chamber of Commerce in various parts of the companyntry companytain provisions similar to the one the validity of which has been impugned. For instance Rule V 4 of the Rules of Bengal Chamber of Commerce provides that the names or name of the persons or person companystituting the companyrt shall number ordinarily be disclosed to the parties number shall the parties be entitled to such in,formation as of right. A similar rule is to be found in bye-law 8 of the Bombay Chamber of Commerce and Rule V 5 of Arbitration Rules of Madras Chamber of Commerce. It appears that the aforesaid Rule which has been framed by all these bodies of long standing and experience in the field of business is based on the elimination of all possibility or chance of a party trying to influence the members of the Arbitration Court before they enter upon or proceed with the reference. It is axiomatic that as soon as a party appears before them or the arbitration proceedings companymence the names of the arbitrators can numberlonger remain a secret and it is always open to a party to initiate proceedings on the ground of bias or prejudicial interest even at that stage or after the award is made. The appeal fails and it is dismissed.

COURT OF APPEAL FOR ONTARIO CITATION: R. v. Peltier, 2013 ONCA 141 DATE: 20130308 DOCKET: C55065 MacPherson, Cronk and Pepall JJ.A. BETWEEN Her Majesty the Queen Respondent and Adam Peltier Appellant Daniel Santoro, for the appellant Peter M. Campbell, for the respondent Heard: January 17, 2013 On appeal from the sentence imposed by Justice Joseph G. Quinn of the Superior Court of Justice on July 29, 2011. MacPherson J.A.: [1] The appellant, Adam Peltier, was convicted of three criminal offences following a six-day trial before J.G. Quinn J. of the Superior Court of Justice – possession of crack cocaine for the purpose of trafficking, producing crack cocaine, and possession of marijuana. [2] The trial judge imposed a sentence of six years imprisonment less 18 months credit for pre-trial custody for possession of crack cocaine for the purpose of trafficking for a net sentence of 54 months.  He also imposed 54 months concurrent for producing crack cocaine and three months concurrent for possession of marijuana. [3] The appellant appeals his sentence. [4] The facts giving rise to the convictions can be briefly stated. In the early morning hours of April 3, 2009, Windsor Police Services received a telephone tip from a confidential informant that the informant had purchased a quantity of cocaine from the appellant in room 12 of the Bestway Motel. The informant also advised that he had observed a Cadillac parked in front of room 12 and that the appellant had used that vehicle in the past. After confirming the appellant’s registration at the hotel and the presence of a grey Cadillac parked outside room 12, Windsor police continued surveillance outside room 12 and began to prepare a warrant application for the room. In the meantime, officers of the Emergency Services Unit were instructed to stop the Cadillac if it left the motel before a warrant was signed. [5] At 11:20 a.m., the appellant was arrested while driving the Cadillac approximately five minutes after leaving the Bestway Motel. On his person, the police found cocaine and $930 cash. In a subsequent search of the motel room, police seized more cocaine, as well as 28 grams of marijuana and $1075 cash. The total amount of crack cocaine seized, according to the trial judge, was 421.5 grams. Expert evidence established that the crack cocaine was worth about $21,000 when purchased at the kilogram level and $42,000 when sold at the gram level. [6] The appellant’s trial was limited to an application to exclude evidence under s. 24(2) of the Charter of Rights and Freedoms as a result of alleged breaches of ss. 7 and 8. Crown and defence counsel agreed that admissible evidence adduced during the Charter application would form the trial evidence. After a five-day hearing, the Charter application was dismissed. The Crown filed an expert report on consent, and the appellant elected to call no evidence. The trial judge convicted the appellant of the three offences set out above. [7] The appellant makes three submissions in support of his position that the six-year sentence was too high. [8] First, the appellant submits that the trial judge did not take proper account of his youthfulness as an indicator of his potential rehabilitation. This failure, says the appellant, puts the judge offside of what this court said in R. v. Borde (2003), 63 O.R. (3d) 417, at para. 36: The length of a first penitentiary sentence for a youthful offender should rarely be determined solely by the objectives of denunciation and general deterrence.  Where, as here, the offender has not previously been to penitentiary or served a long adult sentence, the courts ought to proceed on the basis that the shortest possible sentence will achieve the relevant objectives. [9] The appellant couples this submission with the submission that since his longest period of incarceration for his previous offences was two months in custody, a six-year sentence for these offences is too much of an increase. [10] I do not accept these submissions. The trial judge recognized that the sentence imposed had to take account of denunciation, deterrence and rehabilitation, and he found that these objectives would not be met by a shorter penitentiary sentence. In a case involving the production and sale of crack cocaine, he was entitled to emphasize, as he did, the need to “express the community’s denunciation of the sale of crack cocaine to its citizens.” He also stated the obvious on the issue of deterrence: The sale of drugs is a for profit crime. The deterrence must be such that it would cause a potential drug seller to think seriously about the penalty. [11] The trial judge also specifically addressed rehabilitation and considered the principles described in Borde . The appellant was 25 years old when he committed this set of crimes, whereas the appellant in Borde was 18 when he committed his crimes. The appellant has a long (ten years stretching back to 1999), fairly extensive (13 other convictions), and related (two previous convictions for drug offences) criminal record. He was charged with and pled guilty to another drug-related crime while facing these charges. Taking these factors together, it is hard to quarrel with the trial judge’s observations that “[t]hese facts do not demonstrate that Mr. Peltier has changed his ways.... Mr. Peltier’s prospects for rehabilitation are not good.” [12] Second, the appellant contends that the trial judge failed to consider the mitigating fact that the appellant kept his trial limited to the Charter application and, through counsel, invited the trial judge to enter convictions once the application was dismissed. [13] I would reject this submission. The appellant did not plead guilty to the charges. The voir dire on the Charter application involved 11 witnesses testifying over four days. This was not a mitigating factor. Moreover, when the Charter application was dismissed, the convictions that followed were inevitable, as defence counsel properly recognized. [14] Third, the appellant submits that a six-year sentence was outside the range of sentences imposed for similar offences and similar offenders. [15] I disagree. The appellant produced crack cocaine, a very dangerous substance. He had a substantial amount for sale to the public. In R. v. Bajada (2003), 169 O.A.C. 226, at para. 13, this court noted that sentences of five to five and one-half years imprisonment are not uncommon for possession of a substantial amount of cocaine for the purpose of trafficking following an accused’s plea of guilty or where the accused has no prior record. Here, the appellant had a previous record for drug offences. He committed another drug offence while facing these charges. The appellant was 25 years old – an adult, not a youthful offender. The six-year sentence was within the appropriate range of sentences and, in these circumstances, was fit. [16] I note that the trial judge made one small error in his reasons for sentence. He said that “[t]he defence position is that Mr. Peltier should receive a sentence of four years and a pre-trial custody credit of 18 months.” In fact, the defence position was that a three and one-half year sentence and pre-trial custody credit of 18 months would be appropriate. In my view, nothing turns on this minor error. [17] In summary, the trial judge made no error in principle nor did he fail to consider, or give inappropriate weight to, any relevant factor. The sentence he imposed was fit. [18] I would dismiss the appeal. Released: March 8, 2013 (“J.C.M.”) “J.C. MacPherson J.A.” “I agree. E.A. Cronk J.A.” “I agree. S.E. Pepall J.A.”

Mr Justice Warren Introduction On 9 April 2003, the appellant company, Baines & Ernst Limited ("B&E") submitted a voluntary disclosure to the Commissioners of Customs and Excise ("the Commissioners") seeking repayment of £5,969,399 (later reduced to £5,851,579) which it had paid as VAT which was not due. The claim related to the excess of output tax declared over input tax for the 3 years January 2000 to December 2002 not, it is to be noted, the entirety of the output tax. The disclosure was submitted following the Commissioners' acceptance (following the decision of the Tribunal in Debt Management Associated Ltd v C&E Tribunal Decision 17880) that the debt management services provided by B&E, which had previously been standard-rated, were exempt. The Commissioners rejected the disclosure on 21 August 2003, and confirmed the rejection on 15 October 2003, on the basis that B&E would be unjustly enriched were they to act on it. On 23 September 2004, the Value Added Tax and Duties Tribunal ("the Tribunal") dismissed B&E's appeal against that rejection. B&E now appeals against the decision of the Tribunal. B&E's debt management service was available to individuals who found themselves unable to repay debts on their creditors' agreed terms. The service consisted, first, in an initial service of negotiating with the creditors an agreed plan of repayments which the client could afford, and, secondly, in a management service of collecting monthly payments from the client for distribution among his creditors. Payment to B&E consisted of two components: (i) an initial flat-rate fee equal to the amount of the monthly payment which it was established the client could afford and (ii) a further monthly management fee calculated as a percentage of the monthly payment to creditors. Initially, the Commissioners rejected the voluntary disclosure in its entirety. Shortly before the Tribunal hearing, they accepted (for reasons which I will come to later) liability in relation to the VAT paid in respect of the initial fee. Before turning to the facts of the case and the criticisms of the Tribunal's decision, I propose to consider the statutory provision at the centre of the debate and the relevant case law (both of the ECJ and the domestic courts) in relation to the key elements viz (i) the concept of "passing on" of the tax burden (ii) establishing that enrichment would occur (iii) that it would be unjust and (iv) the burden of proof in relation to those elements. The last of these has taken on great significance because, according to B&E, the Tribunal had no evidence before it on which it could reach the conclusion that B&E had suffered no economic loss even if it is accepted that the VAT had been passed on to its clients. In particular, it is said that, even if it proved to the satisfaction of the Tribunal that there has been passing on of the charge, that is not sufficient prima facie evidence to establish unjust enrichment even in the absence of any claim and evidence of damage caused to the taxpayer. In order to examine that proposition properly, I will need to set out some fairly extensive citation of authority. Section 80 Value Added Tax Act 1994 and "unjust enrichment" It is not disputed that VAT was paid which was not due. The Commissioners reject the claim for payment under section 80(3): "It shall be a defence, in relation to a claim under this section, that repayment of an amount would unjustly enrich the claimant" The concept of "unjust enrichment" is not defined in the legislation. It is a concept which is informed by the jurisprudence of the ECJ as well as by decisions of our own courts concerning section 80(3). It is a different concept from that of "unjust enrichment" as that phrase is used by restitutionary lawyers in the context of our own domestic law under which a person could never be said to be unjustly enriched by return to him of money paid away in error, in particular by repayment of tax which was not due. I note in passing that there is nothing in the EU VAT legislation which requires or expressly authorises a defence such as that contained in section 80(3). Nonetheless, the defence is clearly recognised by the ECJ. It is said on behalf of B&E that "unjust enrichment" as used in section 80(3) is a domestic law concept and one which is only "tolerated" by the ECJ. I do not gain assistance from that. Of course, I have to determine the scope of the defence by reference to the words used in the sub-section, but in doing so I take account of the jurisprudence of the ECJ and interpret the phrase in a way which is consistent with that jurisprudence. As to the ECJ simply "tolerating" the defence, I prefer to say that the ECJ recognises that in certain circumstances it is appropriate that the State should not need to repay tax wrongfully collected and to avoid labels intended as signposts designed to lead one along a particular path. In the case of San Giorgio (Amministrazione della Finanze della Stato v SpA San Giorgio) (Case 61/79) [1980] ECR 1205, the Plaintiff SpA San Giorgio, was required to pay health inspection charges which were levied contrary to Community law on the importation of dairy products from other Member States. In reviewing some early decisions, the Court said this at pp 3612-3: "13. However, as the Court has also recognised in previous decisions….. Community law does not prevent a national legal system from disallowing the repayment of charges which have been unduly levied where to do so would entail unjust enrichment of the recipients. There is nothing in Community law therefore to prevent courts from taking account, under their national law, of the fact that the unduly levied charges have been incorporated in the price of the goods and thus passed on to the purchasers. Thus national legislative provisions which prevent the reimbursement of taxes, charges and duties levied in breach of Community law cannot be regarded as contrary to Community law where it is established that the person required to pay such charges has actually passed them on to other persons. 14. On the other hand, any requirement of proof which has the effect of making it virtually impossible or excessively difficult to secure the repayment of charges levied contrary to Community law would be incompatible with Community law. That is so particularly in the case of presumptions or rules of evidence intended to place on the taxpayer the burden of establishing that the charges unduly paid have not been passed on to other persons or of special limitations concerning the form of evidence to be adduced, such as the exclusion of any find of evidence other than documentary evidence. Once it is established that the levying of the charge is incompatible with Community law, the court must be free to decide whether or not the burden of the charge has been passed on, wholly or in part, to other persons. 15. In a market economy based on freedom of competition, the question whether, and if so to what extent, a fiscal charge imposed on an importer has actually been passed on in subsequent transactions involves a degree of uncertainty for which the person obliged to pay a charge contrary to Community law cannot be systematically held responsible." It is to be noted that these observations were made in the context of a case where the national legislation created a presumption that a charge had been passed on in the absence of documentary proof to the contrary, a requirement which had led to one of the questions asked of the ECJ namely "Whether the requirement of negative documentary proof, the sole condition to which the aforesaid national law subjects the repayment of charges unduly levied, renders 'the exercise of rights which national courts are under a duty to protect virtually impossible'." Michailidis (Kapniki Mikhailidis AE v Idrima Kinonikon Asphaliseon (IKA)) concerned the imposition by Greece of a charge on tobacco products exported to other Members States which was not levied on tobacco for domestic consumption or on imports from other Member States. The charge was held (in answer to the first question raised) to be contrary to Community law. The second question as formulated by the national court is not, to my mind, entirely easy to understand. It was, however, reformulated in substance by the Court as follows (see para 27 of the Judgment): (i) whether Community law allows a Member State to refuse to refund charges levied in breach of Community law when it has been established that the refund would involve unjust enrichment and (ii) how proof of unjust enrichment may be established. There has, through the cases, perhaps been some confusion about how the words "passing on" of a charge to tax are being used. In Michailidis, however, the Court appears to use "passing on" as the first step in a two-stage process. First, it has to be established that the charge has been passed on; secondly, it has to be established that the taxpayer has thereby been unjustly enriched which would not be the case if, for instance, there had been a reduction in the volume of sales (and thereby of profits) as a result of the wrongful levying of the charge. Since the judgment contains a helpful (and reasonably recent) summary of the Community law approach, I set out paragraphs 28 to 42 in full: "28. Mikhailidis submits that it should not have to bear the burden of proof. The Commission, which supports Mikhailidis on this point, observes that, according to the case-law of the Court, there is no presumption that taxes have been passed on to third parties and that it is not for the taxable person to prove the contrary. 29. By contrast, the IKA and the Greek Government contend (i) that a Member State is entitled to refuse to refund a charge levied in breach of Community law if it is established that that would give rise to unjust enrichment and (ii) that inasmuch as Mikhailidis has failed to show that the levying of the disputed charge caused an increase in the price of the products and a reduction in the volume of sales, it must be inferred that refunding the charge entails unjust enrichment. Therefore, the IKA and the Greek Government maintain that the competent authorities are not obliged to refund the disputed charge to the plaintiff in the main proceedings. 30. As a preliminary point, it is apparent from well-established case-law that the right to a refund of charges levied in a Member State in breach of rules of Community law is the consequence of, and complement to, the rights conferred on individuals by the Community provisions prohibiting charges having an effect equivalent to customs duties. The Member State is therefore obliged in principle to repay charges levied in breach of Community law (Case 199/82 Amministrazione delle Finanze dello Stato v San Giorgio [1983] ECR 3595, paragraph 12; and, most recently, Case C-343/96 Dilexport v Amministrazione delle Finanze dello Stato [1999] ECR I-579, paragraph 23). 31. As regards the first part of the second question, it is settled case-law that the protection of rights guaranteed in the matter by Community law does not require an order for the recovery of charges improperly levied to be granted in conditions which would involve the unjust enrichment of those entitled (see, in particular, Case 68/79 Just v Danish Ministry for Fiscal Affairs [1980] ECR 501, paragraph 26). 32. It is therefore for the national courts to determine, in the light of the facts of each case, whether the burden of the charge has been transferred in whole or in part by the trader to other persons and, if so, whether reimbursement to the trader would amount to unjust enrichment (see, inter alia, Joined Cases C-192/95 to C-218/95 Comateb and Others v Directeur Général des Douanes et Droits Indirects [1997] ECR I-165, paragraph 23). 33. However, a Member State may resist repayment to the trader of a charge levied in breach of Community law only where it is established that the charge has been borne in its entirety by someone other than the trader and that reimbursement of the latter would constitute unjust enrichment. It follows that if the burden of the charge has been passed on only in part, it is for the national authorities to repay the trader the amount not passed on (Comateb, paragraphs 27 and 28). 34. Furthermore, even where it is established that the burden of the charge has been passed on in whole or in part to third parties, repayment to the trader of the amount thus passed on does not necessarily entail his unjust enrichment (Comateb, paragraph 29). 35. The Court has already observed on several occasions that it would be compatible with the principles of Community law for courts before which claims for repayment were brought to take into consideration the damage which the trader concerned might have suffered because measures such as the disputed charge had the effect of restricting the volume of exports (Just, paragraph 26; and Comateb, paragraph 30). 36. As regards the second part of the second question, it should be borne in mind that any rules of evidence which have the effect of making it virtually impossible or excessively difficult to secure repayment of charges levied in breach of Community law are incompatible with Community law. That is so particularly in the case of presumptions or rules of evidence intended to place upon the taxpayer the burden of establishing that the charges unduly paid have not been passed on to other persons or of special limitations concerning the form of the evidence to be adduced, such as the exclusion of any kind of evidence other than documentary evidence (San Giorgio, cited at paragraph 14 above). 37. In that regard, Community law precludes a Member State from making repayment of customs duties and taxes contrary to Community law subject to a condition, such as the requirement that such duties or taxes have not been passed on to third parties, which the plaintiff must show he has satisfied (Dilexport, paragraph 54). 38. Therefore, if under national law it were for Mikhailidis to show, as the IKA and the Greek Government maintain should be the case, that the disputed charge caused an increase in the price of the products and a reduction in the volume of exports, the provisions in question would have to be considered contrary to Community law (see, to that effect, Dilexport, paragraph 52). 39. As regards proof as to whether the disputed charge has been passed on to third parties, Mikhailidis asserts that the question at issue in the main proceedings is whether the national court should base its findings solely on the documents provided by the competent authorities, which Mikhailidis had been obliged to submit to them for the purposes of paying the disputed charge, or whether it should also take into account the documents exchanged with the undertakings with which Mikhailidis entered into contracts. 40. Although the question of whether a tax has been passed on is a question of fact falling within the jurisdiction of the national court and although it is for that court alone to evaluate the evidence to that effect, the rules of evidence must not have the effect of making it virtually impossible or excessively difficult to secure repayment of a charge levied in breach of Community law. 41. It follows that, if the national court were confined to evaluating the evidence adduced by the competent authorities and were not able to take account of evidence submitted to it by the trader concerned in order to show that, notwithstanding the authorities' allegations to the contrary, the charge has not actually been passed on, or at least not entirely, the provisions in question would have to be considered contrary to Community law, given that the taxpayer must always be in a position to enforce the rights conferred on him by Community law. 42. Therefore the answer to the second question must be that, although Community law does not preclude a Member State from refusing repayment of charges levied in breach of its provisions where it is established that repayment would entail unjust enrichment, it does preclude any presumption or rule of evidence intended to shift to the trader concerned the burden of proving that the charges unduly paid have not been passed on to other persons and to prevent him from adducing evidence in order to refute any allegation that the charges have been passed on." Since reliance is placed on it by B&E, I should refer also to the Opinion of the Advocate General (Fennelly), in particular paragraphs 39 and 40. These paragraphs are in terms directed at evidence in relation to passing on and in that context have this to say: Paragraph 39 repeats that rules of evidence which have the effect of making it virtually impossible or excessively difficult to secure repayment are in breach of Community law so that a presumption that the charge has been passed on so that the trader is required to rebut that presumption to recover the charge is prohibited; but, quoting the Court in Dilexport "If on the other hand,…..it is for the administration to show, by any form of evidence generally accepted by national law, that the charge was passed on to other persons, the provisions in question are not to be considered contrary to Community law." Paragraph 40 includes the following: "However, since the question whether a charge has been passed on constitutes a question of fact, it is for the national court to determine the documentary evidence which may be relied to establish if it has occurred. The application of national rules of evidence remains subject, of course, to the overriding Community-law requirement that vindication by the taxpayer of rights derived from Community law must always remain possible. To my mind, the fundamental principle of Community law requiring effective protection of Community rights requires that the evidence, documentary or otherwise, adduced by a national fiscal administration seeking to resist reimbursement must be cogent and probative and may not be based on mere presumptions….." I note at this point that, in Comateb too, the Court recognised that, even where passing on had been established, the trader may have suffered damage as a result of the very fact that he has passed on the charge because the increase in price thereby brought about has led to a decrease in sales. The Court went on to say at paragraphs 32 and 33 ([1997] ECR I-165 at 191) as follows: "32. In such circumstances, the trader may justly claim that, although the charge has been passed on to the purchaser, the inclusion of that charge in the cost price has, by increasing the price of the goods and reducing sales, caused him damage which excludes, in whole or in part, any unjust enrichment which would otherwise be caused by reimbursement. 33. It follows that where domestic law permits the trader to plead such damage in the main proceedings, it is for the national court to give such effect to the claim as may be appropriate." It seems to me that the Court was, again, there envisaging that it is national law which controls the procedure and rules of evidence for establishing the claim, although of course those rules would have to comply with the principle of effectiveness in order adequately to protect the trader in relation to the enforcement of his rights under Community law. The last (and most recent) decision in the ECJ which I mention is Weber's Wine World (Weber's Wine World Handels GmbH v Abgabenberufungskommission Wien) (Case C-147/01). This case concerned a duty on alcoholic beverages imposed in breach of Community law. In paragraphs 93 to 102, the Court dealt with the "relationship between the passing-on of the duty on alcoholic beverages and unjust enrichment", in summary: The general principle and its exception is identified (ie obligation to make repayment; defence that charge borne by someone other than taxable person and reimbursement would constitute unjust enrichment). That exception, being a restriction on a subjective right derived from the Community legal order, is to be interpreted restrictively "taking account in particular of the fact that passing on a charge to the consumer does not necessarily neutralise the economic effects of the tax on the taxable person". The question whether there has been actual passing on, even in the case of an indirect tax which is intended to be passed on to the final consumer, is a question of fact to be determined by the national court. It may be quite probable that the charge has been passed on, but the numerous factors which determine commercial strategy vary from one case to another so that it is virtually impossible to determine how they each affect the passing on of the charge. Even where the charge is passed on, repayment to the trader does not necessarily entail his unjust enrichment. Even where the charge is wholly incorporated in the price, the taxable person may suffer as the result of a fall in the volume of his sales (see paragraph 35 of Michailidis for example). Accordingly, "the existence and the degree of unjust enrichment……can be established only following an economic analysis in which all the relevant circumstances are taken into account" so that consequently "Community law precludes a Member State from refusing to repay to a trader a charge levied in breach of Community law on the sole ground that the charge was included in that trader's retail selling price and then passed on to third parties, which necessarily means that repayment of the charge would entail unjust enrichment of the trader. The conclusion (paragraph 102) on this point is that the rules of Community law "preclude national rules which refuse – a point which falls to be determined by the national court – repayment of a charge incompatible with Community law on the sole ground that the charge was passed on to third parties, without requiring that the degree of unjust enrichment that repayment of the charge would entail for the trader be established". I add that the establishment of that unjust enrichment is a matter for national law and its rules of evidence, which rules, for this purpose, must themselves be compatible with the requirements of Community law and in particular, the principle of effectiveness (ie the national rules must not render virtually impossible or excessively difficult the exercise of Community law rights). Moses J dealt with unjust enrichment in part of his decision in Marks and Spencer plc v CEC [1999] STC 205 starting at p236f. He restates (see p237h) one established proposition in this way: "The defence of unjust enrichment requires consideration not only of the question whether the taxpayer has passed on the overpaid tax to a customer but also whether by passing on the charge it has suffered damage, for example by reducing sales in consequence of the increase in price or maintaining sales by having to reduce the price, or losing profits which it would otherwise have received had the overcharged tax not been imposed……." He then went on to deal with the burden of proof. The Commissioners accepted before Moses J, as they accept before me, that the legal burden of proving unjust enrichment lies on them. After making some observations (to which I will return) to the effect that it is unlikely that the Commissioners would usually experience any difficulty in showing that VAT had been passed on (see at p238a-c), Moses J considered at some length the burden of proving that, as a consequence of passing on, the trader has suffered damage. The opposing arguments were: a. Those of Marks and Spencer to the effect that the burden is at all times on the Commissioners so that, unless the Tribunal is satisfied that no damage occurred, in cannot establish the defence of unjust enrichment. If the evidence is such that the Tribunal cannot decide one way or the other whether damage has been suffered, the taxpayer should succeed. b. Those of the Commissioners to the effect that, once they establish that tax has been passed on, it is for the trader to establish that, in doing so, it has suffered damage. Although the legal burden remains with them, the evidential burden passes to the trader once passing on has been established. In dealing with the arguments, Moses J referred to the opinion of the Advocate-General (Sir Gordon Slynn) in Les Fils de Jules Bianco SA and J Girard Fils SA v Directeur general de duoanes et droits indirects (Joined cases 331/85, 376/85 [1988] ECR 1099 (and other cases) to the effect that the evidentiary burden may shift during a case ("[The administration] may, however, produce evidence which points to there being a passing-on or unjust enrichment sufficient to call for rebuttal by the claimant. The evidentiary burden may thus, as is commonplace, shift during the case") and refers paragraph 32 of the judgment in Comateb emphasising the reference to the trader claiming that the passing on of the charge has caused him damage. He then states (at p 239b) the position as he saw it in this way: "It seems to me obvious that in cases where the commissioners have established that a wrongly-charged tax was passed on and that is all the evidence in the case then the commissioners will succeed. But if the taxpayer asserts that it has suffered damage in passing on the excessive charge and produces material on which that assertion is based then the tribunal will have to consider that material and decide whether, in the light of that material, the commissioners have made good the defence of unjust enrichment. I am not sure it assists to speak of an evidential 'burden of proof'. It is no more than a, possibly, convenient shorthand designed to indicate that unless the trader asserts that it has been damaged and provides some material for the tribunal of fact to consider, the commissioners will succeed merely by proving that the tax was passed on. There is, perhaps, a danger in referring to shifts in the burden of proof. A reference to that shift may obscure the proposition that it is for the commissioners to prove unjust enrichment if they can and that burden never shifts. In raising the issue of damage in consequence of having passed on the burden of a wrongly-charged tax and producing material to support that assertion, in my judgment, the trader does not take upon itself any burden of proving that it was not unjustly enriched. The reason such a trader must assert damage and provide some material on which to base the assertion is because, absent any such material, there would be no evidence to rebut the defence of unjust enrichment established, prima facie, by the evidence of the commissioners that the tax was passed on. In my judgment the tribunal correctly stated the proper approach to the burden of proof ([1997] V&DR 85 at 91, para 10): 'We start by reviewing the evidence adduced by the Commissioners to determine whether they have raised a prima facie case of unjust enrichment ie, a case which, in the absence of any evidence to the contrary, would satisfy us that repayment would unjustly enrich Marks & Spencer. If the Commissioners have failed to satisfy us of that, we can dismiss the defence. But if the Commissioners have satisfied us that there is a prima facie case of unjust enrichment, we go on and examine the evidence presented by Marks & Spencer who will necessarily have the detailed facts and figures. With all the facts and figures placed before us we revisit the issue and once again ask whether "on the evidence as a whole" the Commissioners have satisfied us of their defence.'" In endorsing the tribunal's approach to the burden of proof Moses J raises one caveat in the passage just cited which he deals with in a later passage of his judgment set out below. That endorsement is unsurprising given Moses J's analysis of the burden of proof. It is to be noted that his view is, that in the absence of any assertion of damage by the trader, there would be no evidence to rebut the defence of unjust enrichment established prima facie by the evidence that tax was passed on. The tribunal did not, however, go quite that far: what it said was that a prima facie case of unjust enrichment was necessary (the burden being on the Commissioners) but it did not say (at least expressly) that evidence of passing on would of itself be sufficient prima facie evidence of unjust enrichment. In dealing with Marks and Spencer's submission that it is very difficult if not impossible for the Commissioners ever to prove unjust enrichment once the issue as to whether damage has been suffered is raised and after considering a number of statements by the ECJ and the Advocate General (Mancini), Moses J said this (at p241b): "In my judgment the Court of Justice has never endorsed a rule that it is impossible to prove unjust enrichment. Were that so s 80 would have misfired. However, I do think that importance should be attached to the observation of the court in San Giorgio ([1983] ECR 3595 at 3613, para 15) which I have cited above. A trader seeking repayment who accepts that it did pass on the charge, or is faced with evidence that that was so, must assert that passing on the tax caused damage and must provide material on which to base that assertion. But the tribunal of fact must bear in mind that in making that assertion the trader may, at least until the three-year cap was introduced, be forced into the position providing material relevant to a time when it did not suspect and had no reason to suspect that it might be overpaying tax and, thus, have any need to prepare a claim for repayment. Any difficulty that a trader has in providing such material either because of lapse of time or because of the complexity of determining whether, in fact, the passing on of a charge affected profits or sales and caused damage should be viewed sympathetically. Lacunae in the evidence should not be considered to the detriment of the trader. It was, after all, the taxing authority which caused the problem in the first place. Thus, it seems to me, if, after considering all the evidence, there is uncertainty or absence of detail, that should not be held against the trader. It seems to me that it is those considerations which led to the comment made by the court in San Giorgio. For those reasons I am concerned at the reference by the tribunal ([1997] V&DR 85 at 91, para 10) to 'Marks & Spencer who will necessarily have the detailed facts and figures [emphasis added].' I shall go on, when considering the decision in more detail, to see whether that led the tribunal into error in consideration of all the evidence. But I observe, at this stage, that the tribunal ought not to place reliance upon any failure to produce detailed facts and figures when that failure will normally be the fault of the taxing authority which levied a charge to which it was not entitled. A tribunal should only conclude that the defence of unjust enrichment is made out where the evidence satisfies it that a repayment will cause unjust enrichment." Moses J's decision was, of course, before the ECJ gave its judgment in Michailidis. B&E submit that his approach is, in the light of Michailidis, flawed and that the Commissioners must produce proof of unjust enrichment over and above the mere fact of passing on. In CEC v National Westminster Bank plc [2003] STC 1072, a decision of Jacob J, the question of onus of proof arose again and was discussed by the Judge. He referred to Moses J's consideration of the question, citing, however, not the whole of the passage I have set out in paragraph 16 above but only what the quote within Moses J's judgment of what the tribunal had said. Jacob J then cited some passages from the Opinion of the Advocate General (Jacobs) in Weber's Wine World (a summary which he records as being essentially the same as the view of Moses J). Jacob J concluded this way (see para [27]): One starts with no presumption of unjust enrichment, assembles the evidence and reaches a fair decision taking into account reasonable inferences from the known facts. Since B&E rely in particular on paragraph 60 and 61 of the Opinion of the Advocate General in Weber's Wine World, (paragraph 60 being quoted in Jacob J's judgment too) I set them out in full: "60. In that context, it is in my view desirable to clarify the case-law by pointing out that, whilst Community law precludes any presumption of unjust enrichment to be refuted by the claimant, it does not preclude the possibility of drawing reasonable inferences from existing evidence. Without such a possibility, the balance might be tilted so far in favour of the claimant as to render the justified aim of preventing unjust enrichment in practice impossible to achieve. It must be possible for the deciding body to take all available relevant evidence into consideration and reach a fair decision taking full account of whatever likelihood there may be that the claimant bore any part of the burden of the tax or suffered any economic loss as a result of its imposition. 61. To conclude on this aspect, the national court must examine whether, in the context of the national procedural system viewed as a whole, the disputed amendment has the effect in practice of establishing a presumption that the economic burden of the beverage tax was passed on to customers unless the trader can prove otherwise. Such a situation would be contrary to Community law, and could be cured only by disapplying the disputed rule or by interpreting it in such a way that it did not have that effect." CEC v National Westminster Bank plc was heard well after the judgment in Michailidis had been delivered. It is not clear from the case report whether Michailidis was cited to the judge. It was, however referred to in the Opinion of the Advocate General in Weber's Wine World (which Opinion, in turn, was referred to by Jacob J): it must be taken that the Advocate General, at least, considered that everything he said in his Opinion was consistent with Michailidis. In particular, he regarded it as correct that reasonable inferences could be drawn from existing evidence. Moses J, in the passage which I have set out at paragraph 16 gives effect to that principle when he says that proof of passing on is prima facie evidence of unjust enrichment which, in the absence of any evidence in rebuttal, affords the Commissioners a defence. There is nothing in the judgment in Michailidis or in the Opinion of the Advocate General which leads me to doubt the correctness of the approach of Moses J in Marks and Spencer even although it may go further than that of the tribunal in that case and further than it was strictly necessary for him to decide (since, in that case, there was evidence which went to the damages issue and was not restricted solely to the passing on issue). But Michailidis does no more than state established principle to the effect that presumptions or rules of evidence must not be allowed to operate which would pass the burden of proving unjust enrichment to the taxpayer. It is something very different, and recognised as permissible, for a court to draw inferences from established facts. It may often, perhaps usually, be the case that the evidence which establishes passing on is of itself enough, in the absence of any contrary evidence, to enable the Tribunal to infer that there has been unjust enrichment because there has been no economic loss. I say often or usually rather than always because I do not dismiss the possibility of a factual situation in which such an inference could not properly be drawn, although it is not easy to see why a Tribunal would fail to draw the inference in the absence of any countervailing material. An inference of fact leading to the conclusion that there is unjust enrichment is not, in my judgment, equivalent to a presumption of undue enrichment. The taxpayer, to succeed in defeating the defence of unjust enrichment has then, in my judgment, to do something to resist the inference which arises once passing on has been established. I do not consider that it is enough simply for the trader simply to say "Although passing on is established, I do not accept that I have not suffered any loss and you must prove it." Faced with nothing more than that, the evidential position is no different from that where the trader says nothing. He has to do more, in my view. There are at least two things he could do. First, he could produce some material which gives rise to a doubt whether there has been unjust enrichment; that would have to be sufficient – and not much may be needed - to displace the inference which would otherwise be drawn so that the Commissioners would then have to prove that there was no economic loss (but bearing in mind the possibility drawing of reasonable inferences from established facts thus preventing the tilting of the balance too far in favour of the trader: see again the Opinion of the Advocate General in Weber's Wine World at paragraph 60 (see paragraph 19) which I adopt). Secondly, he could produce a justification of his inability to produce facts and figures which would establish his case. In those circumstances, the Tribunal may consider that the inference which could otherwise be drawn should not be drawn. It is, after all, the taxing authority which has been at fault in levying tax when it should not have done. If the taxpayer is unable to assert his right because he no longer has the evidence, or did not take steps to record information which would have enabled him to establish economic loss, then to disentitle him from obtaining recovery of the tax because he is thereby unable to rebut the inference of unjust enrichment could very well breach the principle of effectiveness. In this context, see Marks and Spencer at p241 quoted in paragraph 17 above. This is also consistent with the approach of Jacob J in CEC v National Westminster Bank plc. The Judge held (see paragraph [38]) that the Tribunal had failed to address the key question – what in the light of all the known facts would have been the financial position of Lombard if the undue tax had not been imposed? The reasoning of the Tribunal was so flawed as to amount to an error of law. Even so, the Judge decided that he should not remit the matter for rehearing. He stated that Lombard had every opportunity to advance a case of real economic loss notwithstanding that it had passed on the extra cost, or that it had not managed to pass on that cost because it actually made a true loss on the transaction. Lombard knew, he said, that there was enough evidence of passing on to shift the evidential burden back to show it had failed to pass on the cost or had suffered economic damage. Lombard, he said "have already had one fair crack of the whip". In my judgment, there is nothing in the decision in Weber's Wine World, any more than in the decision in Michailidis, which leads to different conclusions from those expressed by Moses J and Jacob J. I should, however, in that context deal with two passages from the judgment of the ECJ in Weber's Wine World which could not, of course, have been taken into account by Jacob J since the ECJ had not given that judgment before Jacob J's decision. First, at paragraphs 100 and 101, the Court says that "…the existence and the degree of unjust enrichment which repayment of a charge….entails....can be established only following an economic analysis in which the relevant circumstances are taken into account" and "Consequently, Community law precludes a Member State from refusing to repay to a trader….on the sole ground that the charge was included in that trader's retail selling price and thus passed on to third parties, without requiring that the degree of unjust enrichment that the repayment of the charge would entail for the trader be established". Secondly, at paragraph 114 the Court says "It is for the national court to determine whether, in the absence of a statutory presumption, the tax authority's practice has the effect of establishing such a presumption of unjust enrichment. These passages do not, I consider, require an economic analysis to be carried out in all cases, either to establish passing on or to establish that there is no economic loss. What clearly is prohibited is (i) a statutory presumption or rule of evidence which is either irrebuttable or which can be rebutted only in certain ways or (ii) a rule of evidence which prescribes what is and what is not admissible in determining whether there has been unjust enrichment: the parties must be entitled to carry out an economic analysis and bring evidence of its results. In my judgment, the drawing of inferences from the proved or admitted facts is not a presumption or rule of evidence which falls foul of Community law. However, the inference – that there has been unjust enrichment - which might be drawn from the fact of passing on and the evidence which establishes that there has been passing on may be easily displaced. If, for instance, a trader (a) asserts that he has suffered economic loss of a particular sort and (b) produces some evidence which supports that assertion, the Commissioner must then produce evidence of their own which is sufficient to persuade the Tribunal that there has been unjust enrichment (eg by showing that there has been no economic loss on that ground); that is something which may require a full economic analysis, at least of some parts of the trader's business. Nor do I consider that it is incumbent on the Commissioners to address, without prompting from the trader, each and every aspect of the business which might conceivably result in economic loss to the trader and to show that, on the facts, no such loss has arisen, no doubt requiring a full economic analysis of the entire business and its place in the market. In the absence of such a prompt, and some, albeit slight, evidence to support the assertion of loss, the Tribunal should be entitled to draw inferences from the fact of passing on that repayment would give rise to unjust enrichment. In my judgment (a matter for me in accordance with paragraph 114 of Weber's Wine World), an inference of this sort does not have the effect of establishing a presumption of unjust enrichment or amount to a rule of evidence equivalent to a presumption in breach of Community law. Similar considerations apply, I think, even at the earlier stage of passing on. The Commissioners might be able to establish a prima facie case of passing on without the need to conduct a full economic analysis; the taxpayer would then, in my view, need to assert that, nonetheless, identified economic factors indicate that that conclusion is wrong and to produce some evidence in support of the assertion and thus to force the Commissioners into a fuller investigation of those identified factors. I return, then, to the observation of Moses J mentioned in paragraph 15 above to the effect that it is unlikely that the Commissioners would usually experience any difficulty in showing that VAT had been passed on. In saying that, he expressly acknowledged that there is no presumption that VAT had been passed on. Indeed, the jurisprudence of the ECJ shows that the mere fact that a charge is included in the price which the customer pays is not, by itself, sufficient to establish passing on. Mr Cordara, on behalf of B&E, says it is a heresy to suggest that the mere fact that VAT is expressly included in the price which a customer pays is sufficient to establish passing on. He gives, as an example, the change in the VAT regime when the rules relating to duty-free goods in airport altered. A retailer might decide to absorb some or all of the VAT which became chargeable and, had he put up a sign saying "Prices now include VAT but the total price is held at the pre-VAT level for 6 months", then passing on would not have occurred. However, the fact that a presumption of passing on is not permitted by Community law does not mean that it is not possible to draw inferences about passing on from the available evidence. In that context, the contracts between B&E and its clients, and the terms of those contracts, are not simply to be ignored; they are material factors to be taken into account as part of the factual matrix relevant to the question whether VAT has been passed on. Indeed, just as the fact of passing on may lead to an inference that there has been unjust enrichment if the taxpayer produces no evidence at all to challenge that conclusion, so too, the existence of a contract which states the cost of a supply of services to a customer is £X plus VAT at standard rate may justify an inference that VAT is passed on if the taxpayer produces no evidence at all to suggest that it has not been passed on. I do not consider that the ECJ had in mind an inference of this sort when it was considering the nature of presumptions and rules of evidence which were incompatible with Community law in the context of establishing unjust enrichment. At this stage, I wish to make one observation about the concept of passing on in a VAT case. The leading ECJ authorities are not to do with VAT, a tax which has two special features not present in all of the other taxes under consideration. Those two features are first that it is part of the design of the tax, as Moses J notes, that its burden is to be borne by the supplier's customer; and secondly that the trader can set input tax against output tax in assessing what he actually pays to the Commissioners. Accordingly, when it later transpires that a trader who has been accounting for VAT on his outputs (after deducting tax on his inputs) should have been exempt, his overpayment in respect of which he can claim repayment under section 80 will reflect (as it does in the present case) his net position; he cannot claim repayment of the whole of his output tax without giving credit for that which he has already deducted ie his input tax. In the context of an unjust enrichment defence, it must be remembered that the two-stage approach (passing on/economic loss) is really only a technique for arriving at an answer to the single question: Would the trader be unjustly enriched? One must not, therefore, blindly apply that approach as it has been developed in non-VAT cases without remembering the two special features of VAT which I have mentioned. The Case before the Tribunal and its Decision The Tribunal's findings of fact are contained in paragraphs 4 to 33 of the Decision. The evidence consisted of witness statements and oral evidence from Mr Cochrane, a director of B&E and Mr Kirkland, a senior Customs officer and two bundles of documents. I annex, for completeness and so that later references to them can be easily understood, a copy of those paragraphs as a Schedule to this Judgment. Its summary of the law is found at paragraphs 34 to 37. It is for the Tribunal to draw inferences of fact from its primary findings. It is not the function of an appellate court, generally speaking, to substitute its own inferences from those primary findings; it should not do so unless the inferences actually drawn by the Tribunal could not properly be drawn: see Furniss v Dawson [1984] STC 153 at p167 b-e. This is especially so in a case such as the present where significant aspects of the evidence of Mr Cochrane, a director of B&E, were rejected by the Tribunal. Further, it must be borne in mind that the appeal to me is permitted only on points of law including, of course, an appeal based on the familiar and oft cited Edwards v Bairstow test in relation to findings of fact which no tribunal properly directed could have reached. Moreover, in addressing the findings and decision of the Tribunal, it must be borne in mind that it was concerned to address the arguments put before it by Mr Milne QC on behalf of B&E; it had to make findings of fact relevant to those submissions. B&E's case on this appeal is put somewhat differently from how it was put to the Tribunal. To the extent that criticisms are made of its findings (or rather lack of findings) of fact it is important to consider those criticisms in the light of the issues as presented to the Tribunal. If and to the extent the Tribunal's findings of fact are inadequate to deal with any new points of law raised on behalf of B&E, I will need, later in this judgment, to decide whether I should allow those new points to be raised on this appeal and if so whether the matter should be remitted to the Tribunal to make further findings. I therefore propose to examine what the issues before the Tribunal were. B&E's skeleton before the Tribunal set out what it was anticipated that the evidence would establish, an anticipation which was not, in significant respects, fulfilled. a. B&E fixed its on-going monthly management fee at 17.625% on commencing business because that was the gross fee being charged at the time by Gregory Pennington, then the dominant company in the market. [Comment: 17.625% being, it should be noted, 15% plus VAT at 17.5%. And see the findings of fact in paragraph 8 of the Decision and the comment on (e) below] b. B&E never contemplated charging less than 17.5% [the figure in the skeleton: but probably an error for 17.625%] and has in fact continued charging 17.625% until the date of the Tribunal hearing some 18 months after it was established that the fees were exempt from VAT as Mr Cochrane (the leading light in B&E and as to whom more later) had always believed. [Comment: It is clear from the discussion at paragraphs 25 to 29 of the Decision that the Tribunal rejected the contention that B&E never contemplated charging less than 17.625%] c. The market is not at all sensitive to the rates of fees, and customers were content to pay 17.625% regardless of the VAT position (being more interested in the quality of service and ease of access). [Comment: As I understand it, apart from d. below, the only "evidence" for that was Mr Cochrane's assertion to that effect. The Tribunal made no express finding on the point.] d. This is demonstrated by the fact that B&E increased its market share while charging 17.625% during a period when Gregory Pennington were only charging 15%. [Comment: This submission is not recorded in the Decision. There is not any record of the length of the period referred to. Nor is there any record of evidence (if there was any) which would have shown whether, at that stage and for that limited period, persons in the market at which B&E aimed (for instance by its advertising) would have known of Gregory Pennington's lower fees.] e. No mention of VAT was made to a customer when B&E first started trading (ie customers were just told that the rate of monthly management fee was 17.625%) and it was only in 2001 when the OFT asked B&E to clarify its terms and conditions that the words "including VAT" were inserted. [Comment: This was an error which Mr Milne corrected at the outset of the hearing: see paragraph 10 of the Decision. The relevant finding of the Tribunal is at paragraph 8.] f. B&E has by far the largest share of the market despite the fact that certain smaller competitors have slightly reduced their rates. The skeleton then, at paragraph 6, asserted B&E's primary conclusion: that if B&E had never been required to pay VAT, it would have continued to charge 17.625% as its monthly management fee (as indeed it had done to the date of the hearing) and would thus have made extra profits exactly equal to the amount it had to pay to the Commissioners. This appears to me to be an assertion that VAT was not passed on rather than an allegation of economic loss assuming VAT was passed on. Whether that is right or wrong, it is clear is that B&E's case was (i) that its net position was worse by the amount of VAT it had to pay (ie after allowing for input tax) and (ii) that such net position would established on the basis of its expected outcome on factual issues. Reliance was placed in the Tribunal decision in Mr and Mrs King (Case 17822). But in that case there was a clear finding of fact that the appellants (who ran a riding school) were charging amounts which they would have charged even if they had realised that some of their supplies were exempt. In fact, B&E failed to persuade the Tribunal that that was the position in the present case. The Tribunal recorded Mr Milne's submissions which, no doubt, he adjusted slightly to reflect the way in which the evidence had come out. But they were essentially the same as those in his skeleton. Although economic loss did then feature, it did so as the "flip side" of the passing on coin ie B&E suffered loss of profits equal to the amount of VAT wrongly paid because it would have charged the total amount it in fact charged regardless of the VAT position. Thus the submissions, recorded in paragraph 38 to 43, were as follows: a. B&E had charged the same rate for management throughout the period and contended that its gross sales would not have differed had its supplies been exempt from VAT. The most cogent evidence for that being what had happened since B&E's supplies were accepted as exempt, the fee being maintained at 17.625%. If the exempt ruling had been received in 1999, B&E's subsequent profits would have been exactly the same except enhanced by VAT. b. Mr Milne explained the main part of B&E's case as one of loss of profits, submitting that it should be held against it that important decisions had been taken informally; nor should any lack of evidence (see Marks and Spencer at p241 which I have quoted at paragraph 17 above). In consumer protection terms, the price of a product was what the consumer had to pay. Throughout its existence, B&E had charged management fees at the rate of 17.625%. c. Mr Milne submitted that it was important to look at B&E's input tax situation (a matter I will return to later), for the figures showed that it would have had to continue charging 17.625% (or thereabouts) in 2002 when input tax more or less equalled output tax, otherwise it would have been losing profits and possibly gone into loss. d. Mr Milne submitted that the charging provision introduced in 2001 (17.625 per cent including VAT) meant 17.625 per cent "including VAT if any", the phrasing being totally irrelevant to the clients. The last thing that B&E would have done with an exempt ruling would have been to reduce its fees to 17.625% e. Finally Mr Milne submitted that it was unnecessary for the Tribunal to indulge in conjecture as to what B&E might have charged: in the real world it would have continued to charge 17.625%. If B&E had been exempt it would have made extra profits of £5.9m. What the Tribunal does not record is any submission in relation to economic loss. However, this is touched on in paragraph 32 to 34 of Mr Cochrane's witness statement before the Tribunal. Whilst VAT was being charged, clients had to have a minimum monthly sum of £140 available in order to be taken on B&E. Similarly, the minimum monthly payment (including VAT) had been £29; the removal of VAT allowed B&E to reduce its minimum fee to £25. These two factors allowed B&E to take on clients who, previously, they would have turned away. He assessed the potential increase in gross revenue at 20%. Mr Cochrane was cross-examined on these paragraphs; the Tribunal's Note records "Now have loss of profits case – para 33". No reference is made in the Decision to that aspect; but nor can I see any reference to it in the Tribunal's Notes of Mr Milne's submissions. The Commissioners, in their skeleton argument, identified the key issues before the Tribunal as being whether B&E had passed on the burden of VAT associated with monthly fees to its customers, their position being that it had been passed on. Initially, the Commissioners had maintained that the initial fee, too, had been passed on but, by the time of the hearing, had conceded that it had not been. B&E submit before me that there is no difference in principle between in the initial fee and the monthly management fee, thus lending support to their contentions on this appeal. I shall return to that argument later. B&E's primary case was, it can be seen, identified (correctly in my view at that stage) by the Commissioners as being that the VAT was not passed on to customers. It was expressly noted in the Commissioner's skeleton that B&E was not advancing an alternative (but contradictory) case that it did pass on the VAT to its customers, rather than absorb it itself, but that it had suffered damage as a result. It does not appear from the record of Mr Milne's submissions that B&E disagreed with the Commissioners' understanding of its case. So the position before the Tribunal was that the Commissioners did not understand that any allegations of loss were being made let alone that there was any evidence from B&E which they would have to meet on the point): B&E's case was that there was no passing on and the issue was whether or not that was so. To the extent that B&E was alleging that it had suffered loss, that was only because it would have continued to charge 17.625% as its management fee and its profits would thereby have been increased if the VAT exempt status of its supplies had been recognised. If B&E now chose to call that economic loss rather than passing on, so be it: but the Tribunal's findings would then be equally relevant to the new way of putting it as they are to its findings on passing on. The submissions on behalf of the Commissioners at the hearing are recorded by the Tribunal in paragraphs 44 to 50 of the Decision. The submissions, as recorded, proceed on the same basis as the skeleton, viz that the issue is whether VAT was passed on or not. I should record, in summary form, the gist of the important submissions: a. The burden of proving unjust enrichment lay, it was accepted, on the Commissioners which required them to show, on balance, that VAT had been passed on: it could not be presumed. It did not follow from the fact that no mention was made to clients of VAT that it had not been passed on. [paragraph 44] b. The documentary evidence clearly indicated that throughout the disclosure period, B&E charged 15% plus VAT. Even when fees were set at 17.625% that was mathematically the same a 15% plus VAT. [paragraph 45] c. The Tribunal should deal with the appeal on the hypothesis that B&E did not, and never intended, to charge 17.625% for its management services; the Tribunal should look forward from 1996 rather than backwards from 2003 to see the true picture of what had happened to B&E and to discern its pricing policy. Doing so, Mr Mantle, for the Commissioners, submitted that in a free market B&E's charges would never have reached 17.625%. It simply copied Gregory Pennington in its charging so that in a VAT free world it would probably have charged 15% or 15% plus irrecoverable input tax. B&E continued to charge and account for VAT on the basis of charges of 17.625% inclusive of VAT and that remained the case until its charges were accepted as exempt. [paragraph 48] d. Mr Mantle said that Mr Milne's best point was that B&E continued to charge management fees at 17.625% once its supplies had been accepted as exempt. But he observed that, by then, clients of both Gregory Pennington and B&E had been paying a total of 17.625% and were used to it and it could be inferred that they were prepared to bear it. In any event, B&E was a different company in 2003 from what it was in 2000: it was bigger, had more market share and more employees. That might have enabled it to do things which it could not have done in 2000 when it was smaller. e. Mr Mantle invited the Tribunal to find that B&E would not have charged 17.625% for its management services in the disclosure period had those services been exempt; and to determine that the case was not one of loss of profits. [Comment: The Note of the Tribunal records that Mr Mantle asked for a negative conclusion that the fee would not have been 17.625%; and that he also submitted that the fee would have been 15% or 15% plus a figure to compensate for input tax. It is a criticism now made by B&E that the Tribunal did not expressly deal with that submission.] It is not entirely clear from this record of the parties' submissions whether the case was being dealt with solely as one concerned with passing on, or whether, assuming passing on, there was an issue about economic loss. The Tribunal's conclusions, which I come to in a moment, do not draw that distinction clearly. Ultimately, it may make no difference since the single question is: Have the Commissioners established unjust enrichment? And its division into issues of passing on and economic loss represents, as I have said, a technique for arriving at an answer. But what is clear from the Decision (and the skeleton arguments prepared for the Tribunal hearing) is this. First, the argument which all concerned considered was determinative of the issue of unjust enrichment was whether B&E would have charged a management fee of 17.625% if it had been exempt; and secondly, that all concerned appear to have treating this as an all or nothing question ie the choice was between 17.625% and either 15% or 15% plus an additional percentage to cover input tax, it not being suggested on behalf of B&E that it might have charge something between those two figures. Jumping ahead, I note here that, although I can see the force in the argument that an allowanced should be made for input tax, in practice B&E has in fact set its actual input tax against its output tax. It is not suggested that the Commissioners will seek to recover the input tax which should not have been deducted. This point was not debated in front of me, but it would seem to me that, if the Commissioners sought to do so, then the defence to B&E's claim based on unjust enrichment would, to the extent of that input tax, be defeated. The Decision The Tribunal's conclusions are to be found in paragraphs 51 to 60 of the Decision. In paragraph 54, the Tribunal states that it is clear from the findings of fact that the VAT charged under the terms and conditions of the contract in use from 1996 to 1999 was passed on to its clients; likewise in the contract in use from 2001 to 2003. B&E's voluntary disclosure is not relevant to the first of those periods; but it is perhaps instructive to consider why the Tribunal might have reached that conclusion in relation to that period as it may throw light on its approach to the period in dispute (January 2000 to December 2002) part of which is covered by the contract in use from 2001 to 2003. I return to that later. But before doing so, I look at what the Tribunal said expressly about the period covered by the contract in use from late 1999 to early 2001. The Tribunal says this (in paragraph 55): "Although I earlier found that the charging clause relating to management fees was simply an alternative way of B&E expressing the fact that it charged 15 per cent plus VAT, it does not necessarily mean that the VAT was passed on to its clients. However, as I have also found that introduction of the new clause meant that B&E continued to charge its client tax, it appears to me logically to follow that it did pass on the tax." Up to that stage, the Tribunal appears to be looking solely at the question of passing on, accepting the two stage approach that it is necessary to show both passing on and no economic loss. But then the Tribunal moved on to consider the economic position and, since it had already decided that there was passing on – apparently for the reasons already given in paragraphs 51 to 54 in the light of its findings of fact - to consider loss of profits. Accordingly, we find the Tribunal, at paragraph 56 as it were in an aside, referring to the Opinion of the Advocate General (Jacobs) where it is pointed out that, whilst it is not for the taxpayer to prove that there has not been passing on, the tax authorities cannot be expected to prove that the burden has been passed on without the taxable person's co-operation and access to such relevant records as he may have kept. By extension, the Tribunal considered, those observations must also apply to a claim for loss of profits. I am not clear why this point is being made by the Tribunal since it does not appear to have been relied on in any way by the Tribunal (although I note from the documents in the appeal bundle that it had been necessary for the Commissioners to make a disclosure application). The Tribunal [see paragraph 57] then rejected Mr Milne's argument that this was simply a case where B&E's profits would have been £5.9m more had it not had to pay VAT, and effectively accepted the argument of Mr Mantle for the Commissioners. It expressed the judgment that "in a free market B&E's management charges would not have reached 17.625%. At the outset it simply copied GP's operation. In 1999, it rephrased its contracts but, as I earlier found, that did not represent a change in price, nor did it mean that its clients did not pay VAT." There is a finding that B&E represented to its clients and their creditors that its charges were 15% plus VAT; they were not 17.625%. This is, I think, important because the management fee charged by B&E was a matter of significance not only to the client but also to his creditors. The fee impacts not only on the debtor but also on the creditors. This is because the debtor was to pay each month a total payment (including VAT) which he could afford, a figure which the creditors agreed to be appropriate. If the fee properly should not have included VAT, it is not immediately apparent that, as between B&E and the creditors, the fee should remain at 17.625%, the entire VAT element remaining with B&E rather than the whole or part of it increasing the amount available to creditors. In paragraph 60, the Tribunal says this: "In my judgment, B&E passed on the whole burden of VAT to its clients and itself suffered no concomitant loss; it would not have charged management fees of 17.625 per cent in the disclosure period had its services been exempt from VAT. It follows that it would be unjustly enriched if I were to allow its appeal." That, I think, is a clear finding of fact, and not just a restatement of what has gone before. There has been some dispute about what the Tribunal meant when it said that B&E had passed on the whole burden of VAT. Did the Tribunal mean (as Mr Cordara contends) the entirety of the VAT which B&E's customers had to pay had been passed on, in effect putting the emphasis on "whole"? Or did it mean (as Mr Mantle contends) the net amount which B&E for which B&E had to account to the Commissioners after deducting input tax? I will need to return to this in addressing B&E's criticisms of the Decision. B&E's criticisms of the Tribunal In his skeleton argument, Mr Cordara identified six suggested errors (he calls them "the First Error" etc) on the part of the Tribunal: a. The Tribunal thought that if B&E stated that its prices were "15% plus VAT" or "17.625% including VAT", it followed that it had passed on the tax. B&E say this is incorrect both in fact and law ["the First Error"] b. The Tribunal was wrong to conclude that B&E stated that B&E "charged" its customers "15% plus VAT". It was irrelevant (the First Error) and also inaccurate because i. It ignored the fact that for many customers the relevant monthly charge was " the minimum charge" ie a flat sum of £29 and ii. The charge was rounded to the nearest pound – and was not therefore 17.625% but a round number ["the Second Error"] c. The Tribunal failed to take proper account of the fact that the VAT on the initial charge was not passed on though its contractual origin was materially indistinguishable from the subsequent payments ["the Third Error"] d. The Tribunal, in its analysis, used the concept of a "free market" to describe the hypothetical environment in which no VAT had been charged by B&E. As part of that, assumptions were made about the VAT affairs and conduct of at least one of B&E's competitors. These were unproven and untested. They were also irrelevant. This was the wrong comparator. B&E's position should be compared with what it would have been had the unlawful tax not been levied in the period in question and not had the Commissioners never levied VAT on some or all of B&E's competitors before and during that period. ["the Fourth Error"] e. In any case, the Tribunal failed to make any adequate findings as to what B&E's charges would have been in its supposed "free market" beyond saying that they would not have reached 17.625%. The Tribunal seems to have decided that there would be some unjust enrichment and therefore the claim failed in toto. This was a fundamental non sequitur. To sustain its conclusions, the Tribunal would have needed to decide what B&E's charges would have been but for the unlawful imposition of VAT, then calculate the effect on turnover of the change in price and finally calculate from those two numbers by what extent, if any, B&E had gained from being forced to account for VAT. It should only have embarked on such a reconstruction of the history of the business if it were confident on the balance of probabilities that it could work out reliably what would have happened. The burden in relation to all these matters rested with the Commissioners who had adduced no evidence in relation to them. If the Tribunal was left in doubt as to this figure, it had no option but to allow the appeal. The evidence which the Tribunal accepted did not support any such finding. ["the Fifth Error"]. f. The Tribunal's conclusion that B&E passed on the whole of the burden but suffered no concomitant loss: iii. Was inconsistent with its finding that B&E would have reduced its charges to win market share (because that suggests a price sensitive market, but if that is so, it is inconceivable that B&E suffered no loss by reason of the imposition of VAT) iv. Was unsupported by any evidence v. Was inconsistent with B&E's having sought from 2000 onwards exempt status. ["the Sixth Error"] In relation to the six errors, Mr Cordara's arguments are in essence to be found in his skeleton argument and were, of course, enlarged on in oral submissions. Although dealt with separately in the skeleton, the suggested errors overlap and it is not possible to consider them in isolation. I therefore set out the arguments on all of them before turning to deal with them. The First Error It is said, correctly, by Mr Cordara that passing on is a very different concept from "informing the customer that VAT is being charged/paid/accounted for". He also says that the exercise with which the court must grapple with is an assessment of the economic impact of the tax. The presence of the VAT references in the contracts did not absolve the Tribunal from doing so. The necessary enquiry is complex if it is to be done properly. It can be seen, he says, that the passing on of the economic impact of the tax is separate from representations as to whether the supplier is "charging" VAT or "accounting to C&E for VAT". In particular, Mr Cordara describes as a fundamental error the attempt by the Tribunal in paragraph 16 of the Decision to draw a distinction between "charging VAT" and "accounting for VAT". He says that ECJ jurisprudence involves no such distinction: rather it mandates an assessment of economic impact. He describes it as strange that the Tribunal should have thought (as appears from paragraph 16 of the Decision) that the fact that B&E continued to account for VAT reflects a recognition on its part that it was still charging 15% plus VAT even if it was not explicitly informing its clients of that, this argument tending to circularity. He submits that it is for the Commissioners to prove that the economic burden of the tax has been passed on to customers; it would make a nonsense of that to say that accounting for an unlawful tax was a recognition by the taxpayer that it was "charging" its customers the tax. He submits that any test as to what the customer might have understood to be going on would be an undesirable and impracticable test (as well as contrary to Community law). In particular, it was to be noted that it makes no difference to a non-VAT registered customer (as all of B&E's customers were) whether B&E were accounting for VAT or not. The key matter for the customer is what he has to pay: so far as he is concerned, VAT is simply another overhead of the supplier which is reflected in the price. Finally, in relation to the First Error, he submits that the Tribunal was wrong to hold against B&E (as it did in paragraph 59 of the Decision) that B&E "represented" that its charges were subject to VAT. If anything, a taxpayer who is absorbing the economic burden of VAT is particularly likely to advertise the fact. The Second Error Four points are made: a. During the fist half of the period for which the claim is made (start 2000 to late 2001) B&E used a contract which did not mention VAT at all. Accordingly, in this period, there was no "representation" that VAT was being accounted for so that the Tribunal's approach collapses b. During the entire period, there was a minimum fee of £29 which many customers paid. The Tribunal's representation based approach can have no application here. c. The charge was always rounded to the nearest pound – it was therefore not 17.625% exactly. Again, the Tribunal's representation based approach can have no application here. d. The fact that there is, as is now acknowledged by the Commissioners, no unjust enrichment in relation to the refund of VAT paid on the initial fee undermined the Tribunal's representation based approach (see under the Third Error below). The Third Error No unjust enrichment was present in connection with the refund by the Commissioners of the VAT wrongly charged and accounted for on the initial monthly payments to B&E. Save as to amount, Mr Cordara says that these were contractually indistinguishable in substance from the later monthly payments. It is therefore hard, he says, to see how the Tribunal could be satisfied that the Commissioners had discharged their burden of proof. The two fees were not capable of being split: the customer signed up for both. The conclusion of the Tribunal that B&E passed on all of the burden of VAT on the later monthly charged cannot easily be explained in the context of the Commissioners' admission that B&E absorbed all of the burden of VAT on the first monthly charge. The Tribunal did not even attempt to do so. This, it is said, is not only the basis of a very significant internal inconsistency, it is also a piece of hard evidence which flatly contradicts the conclusions reached by the Tribunal rendering it erroneous as a matter of law. The Fourth Error This relates to the "free market" comparator. It was, it is said, incumbent on the Tribunal to decide whether B&E would have charged different prices for its services for all or any part of the period 2000 to 2003 and further whether it had suffered or would suffer any loss. To decide that question, it should have asked what B&E would have charged in the period 2000- 2002 if the Commissioners had not demanded VAT. It did not so do. Instead (referring to paragraph 48 and 57 of the Decision) Mr Cordara says that the Tribunal compared B&E's position with what its position would have been in an (unspecified) free market but which seems to refer back to Mr Mantle's submissions as recorded in paragraph 48. This, submits Mr Cordara, appears to have been a hypothetical world in which the Commissioners had never imposed VAT on any competitors in the market: that in principle is wrong because (i) one should only look at the period in question and (ii) one should only look at the taxpayer in question. Further, there was no systematic investigation of the competitors' tax affairs, or the precise working of the market. In any event, the argument is circular. It amounts to no more than saying "A and B are competitors; if B had never been charged VAT, its prices would have been lower and so A's prices would have been lower since it would have been competing with B". But B would be met with exactly the same argument (substituting A for B and vice versa) if it were to bring a section 80 claim. It is said that there was no evidential basis for the argument. No-one from any of the alleged competitors gave evidence nor was any credible evidence given of their affairs Nonetheless, the Tribunal concluded that "in a free market, B&E's management charged would not have reached 17.625%". To the Tribunal is then attributed the following reasoning: a. (the first point): Had the Commissioners not charge VAT on Gregory Pennington (a competitor) that firm would have "charged" less than 17.625% in 1996; b. (the second point): but for the Commissioners wrongly making Gregory Penning charge VAT, B&E would not have charged 17.625% but would have charged whatever Gregory Penning were charging. As to the first, point, Mr Cordara goes on to say that there was no evidence to support the point, the burden being on the Commissioners to show what Gregory Pennington would have done. And some more detailed points were made about what Gregory Penning might or might not have charged. The point is also made that B&E's customers were not VAT registered and it would have made no a jot of difference to them what percentage of the fee was made up of tax, utility bills, advertising, VAT or profit. As to the second point, it is said that it is wrong to take account of the benefits to B&E of a decision by the Commissioners in 1996, outside the period 2000 to 2003. Further, it should not be assumed, in the hypothetical model, that B&E would have known what its competitors were doing or that it would simply do the same thing, particularly as its market share grew. For instance, when exemption was finally granted, it did not reduce its prices. Finally, it should not be assumed that it is safe simply to treat the hypothetical period as starting with a clean exempt ruling. The later in the story that VAT status was clarified, the more the market will have got used to higher prices and so the less likelihood of lower prices in a subsequent VAT free environment. The hypothetical exercise, we are reminded, is being carried out to discover a fact namely whether there will be unjust enrichment if the tax is refunded; cross-checks of the sort discussed are necessary to ensure that the refusal to restore can be reached with complete confidence that no injustice is being done. The Fifth Error This relates to the alleged failure by the Tribunal to establish what B&E's charges would have been in a free market, a point which arises only if the Fourth Error is not accepted as a complete answer to the Tribunal's determination. The principal argument is that the Tribunal did not decide what B&E's charges would have been, only that they would not have reached 17.625%. It had to make a decision on the point in order to determine that all of the benefit of reduced taxation was passed on to customers. The Tribunal never made the factual finding needed in order to justify its overall conclusion. In any event, there was no evidence before the Tribunal to justify the conclusion. It is true that the Tribunal did not make such a factual finding, but it did not, in my judgment need to go as far as Mr Cordara now says even if an economic analysis were necessary. It would be enough for the Tribunal to decide that B&E's charges would not have exceeded the Equilibrium Fee next described. It is submitted that the Commissioners, in order to answer the question What would B&E have charged?, had to establish (i) an Equilibrium Fee (percentage and fixed minimum) at which loss of recovery of input tax is balanced by an increase in price and (ii) that B&E would have been compelled by the market to charge a lower monthly fee than the Equilibrium Fee and/or that it would not have been willing or able to charge a higher fee. The Commissioners did not even attempt to calculate the first and abandoned its efforts to establish what the norm charge for the market might be. Reliance is also placed on the following facts: a. There was no evidence, from which inferences might be drawn, of B&E having initially raised its prices on the imposition of VAT: this is so because it was treated as taxable from the start of its business. b. There was no basis for assuming anything as to B&E's margin from references to VAT in its contractual material. c. Following acceptance of its exempt status by the Commissioners, B&E did not reduce its prices. It did not appear to have suffered commercially. d. B&E's growth continued unchecked through the period 1999 to 2002, which suggests that B&E had chosen its price levels keenly. e. B&E enjoyed such growth even though Gregory Penning reduced their fees for a period in 1999 (when it the Commissioners had treated it as exempt). f. Accordingly, there is no basis on which any reasonable conclusion could be reached that there had been passing on, either at all or of anything approaching the full 17.5%. g. Nor was there any basis for concluding that, had B&E's price been lower for any reason, that it would not have had even greater turnover and a resultant in crease in profits. The Sixth Error A number of suggested difficulties are identified: a. If the Tribunal was correct that B&E would have reduced its charges to win market share from Gregory Pennington then, unless that attempt were wholly unsuccessful, it would have increased its turnover even more than it did. The Tribunal did not make any findings. But given its conclusions that there was no economic loss, the Tribunal would have needed to reach the conclusion that the attempt would have been entirely unsuccessful. There was no evidence on this point and the conclusion is contrary to reason. [Comment: what the Tribunal said was that there was no concomitant loss; it had in mind, I consider, what has been called the "flip side" of passing on (ie there is a loss which simply reflects the fact that output tax or some of it has not been passed on and not the other economic consequences (if any) resulting from the wrongful imposition of VAT eg reduced turnover and therefore reduced profit.] b. If the attempt to gain market share were unsuccessful, would not B&E, it is asked, have abandoned the attempt and increased its charge back to where they were? If the attempt was successful, the Tribunal needed to evaluate what additional profits B&E would have generated. [Comment: this is speculation. Another view might be that competitors too would have reduced their charges so that a reduction in price by B&E would have been needed to preserve its existing market share.] c. The conclusion of the Tribunal that B&E passed on the whole burden and suffered no concomitant loss does not explain why it sought (continually) to obtain VAT exempt status for itself. The only point in seeking to obtain exempt status would be (a) to maintain charges at the same gross level, reduce the effective tax rate and increase margin; or (b) reduce charges, maintain the same effective tax rate and keep margins the same in pursuit of volume. If the market were price insensitive, B&E would make money following (a); if the market were price sensitive, as the Tribunal appeared to think, B&E would make money following option (b). Either way, the imposition of VAT would have caused a loss and unjust enrichment would not be made out. The Tribunal wholly failed to attempt to calculate, and the Commissioners had adduced no evidence as to, what effect growing the market would have had. Rather, the Tribunal's decision is in effect that B&E was spending money on professional advisers in 2000 in order to seek to persuade the Commissioners to grant it exempt status, for no commercial gain whatever. There was no evidence to support such an inherently improbable finding. There is one further matter on which B&E rely to attack the Tribunal's decision. It is said that section 80 requires not only enrichment but that the enrichment should be unjust – and there is nothing unjust, it is said, in B&E receiving a repayment of the VAT which it has been charged. This amounts to saying that there is nothing unjust in receiving a windfall. This was not, so far as I can detect, an argument even hinted at before the Tribunal. It is said that the unjust enrichment defence, although not prohibited by Community law, is introduced by each Member State in its own way and is a matter of domestic law. It is said that there is no separate finding by the Tribunal that there would have been anything per se unjust about the restoration of funds to B&E – and that no such finding could have been made. I shall deal with this matter at once. I reject the submission. It is clear, and has not been contested, that the defence in section 80(2) should be interpreted in the light of the jurisprudence of the ECJ. It is, in my judgment, designed to allow the Commissioners to resist recovery of tax where the taxpayer has been enriched but where it would not be unfair to require him to make good what might be described as a windfall profit. Any other interpretation would render the defence almost without substance since it is hard to think of many cases where there would otherwise be injustice in allowing the taxpayer to retain his windfall. I turn now to the six Errors, but not in the order in which they are listed. I start with the Third Error. I do not accept Mr Cordara's submissions on this. B&E's service had two principal components: firstly, the ascertainment of what the customer could afford to pay each month and the negotiation of that amount with the customer's creditors and secondly the management of the debt repayments out of the monthly amount. The initial charge was an amount equal to the monthly payment so ascertained. Since B&E had to account for VAT on the initial charge, its charge was expressed as a smaller amount plus VAT which totalled the amount of the monthly charge. There is no reason to think that B&E would have charged anything other than the full monthly payment even if the supply had been treated as exempt: it was not a matter of concern to creditors (who saw not a penny of that initial payment) and there is no reason to think that the formula for ascertaining the initial payment would have been any different if the supply had been treated as exempt. B&E's own position (see for instance the letter dated 22 April 2004 from Horwarth Clark Whitehill on behalf of B&E to HM Customs & Excise) draws a clear distinction between the initial payment and subsequent monthly payments. I do not need to decide whether the Commissioners were correct in accepting that no case of unjust enrichment arose (although I think that they were correct). But what I am clear about is that their acceptance of that position is in no way inconsistent with, or even helpful in determining, the correct treatment of the later monthly payments. The First, Second and Fourth to Sixth Errors raise a number of issues which were not raised before the Tribunal. In particular, there was not before the Tribunal, as there is now, a case of economic loss other than (i) what is described as the flip side of the passing on (ie there is a loss which simply reflects the fact that output tax or some of it has not been passed on) and (ii) a possible loss of turnover as a result of the minimum figure of disposable income below which B&E would not take on an individual as a client. I note again that B&E's case before the Tribunal was presented as essentially an "all or nothing" case in the light of a price insensitive market: it was said that the market was willing to pay a fee of 17.625% and was not concerned whether that price included VAT any more than whether it reflected B&E's general overheads. The arguments, both of fact and law, addressed to the Tribunal which I have recorded above, were of much narrower scope than B&E now seek to raise. I propose therefore to address first the question whether the Tribunal could properly have reached the conclusion which it did on the material and arguments before it. The Tribunal has spent a considerable part of the Decision looking at the contracts with clients and their effects. There is no doubt that, at all relevant times, B&E accounted for VAT on its fees. The contracts in use from 1996 to late 1999 and from 2001 onwards (until VAT ceased to be chargeable) expressly referred to VAT, the latter referring to a percentage (or flat rate sum) "including VAT". The contracts for the intervening period made no reference to VAT. The Tribunal, in all cases, decided that B&E "charged" VAT on its fees and did not simply "account" for its fees. This distinction could be relevant as between B&E and its client. On the one hand, a fee of "£X plus VAT" shows clearly that B&E is charging VAT and, if (as happened) VAT is shown to have been incorrectly levied, the client might well (subject to possible defences such as change of position) have a claim to recover the VAT element of the fee which he had paid. On the other hand, if the fee had been "£X (including VAT if any)" perhaps with additional wording making it clear that B&E would retain the full £X if VAT turned out not to be leviable, then B&E would not be liable to make any refund. The Tribunal has held, and could not be challenged in its decision, that all of the contracts fall into the first category. It is an entirely different question whether the burden of the VAT has been borne by B&E or by the client. If it were the case, as B&E alleged before the Tribunal, that the fee would have been 17.625% (or £29) even if the supplies had been treated as exempt from the beginning, then B&E would have borne the charge or, to put it another way, the charge would not have been passed on. This is so even though it can be said that VAT has been both "charged" and "accounted for". The bald fact, standing by itself, that VAT has been charged could at most give rise to an inference that the charge had been passed on; but it would, as I have said in considering the judgment of Moses J in Marks and Spencer, be one which it would be easy to rebut if the principle of effectiveness and the jurisprudence of the ECJ in relation to the burden of proof on passing on are to be observed. There is a clear finding of fact (and one which there is no ground to challenge) that B&E fixed its initial charges in 1996 by copying Gregory Pennington. There was no evidence before the Tribunal of any sophisticated economic analysis on the part of B&E in fixing those fees, although it would not be surprising to find that B&E had satisfied itself that, at that level of fee, it would have a viable business. There was no evidence before the Tribunal of any such analysis being carried out by B&E at any time. If the Commissioners are able, on the evidence actually presented to the Tribunal, to establish facts from which the Tribunal could properly infer that there was passing on, then the absence of a detailed financial analysis is not, for reasons I have already given, sufficient to defeat the Commissioners. Until late 1999, B&E continued to use a form of contract with clients which provided for a fee of 17.625% (subject to rounding in some case, an aspect which I do not consider affects the matter) with a minimum fee of £25 which was expressed not to include VAT. The fee (in cases other than those where the minimum fee was charged) was a percentage of the monthly payment which B&E agreed with the debtor and creditors, being the monthly amount which the client could realistically afford to pay. The fee (including VAT) was deducted from the monthly payment before the balance was paid over to creditors. In 1999, for a period, some at least of Gregory Pennington's services were treated as exempt; it charged clients 15%. That is some evidence that Gregory Pennington had been passing on the VAT to its clients prior to the period just referred to. Certainly, in the absence of any other evidence, the Tribunal would have been entitled to draw an inference to that effect. Mr Mantle submits that this is sufficient material which would have entitled the Tribunal to reach the conclusion that B&E was passing on the charge too. I agree with that so far as concerns the period in 1999 during which Gregory Pennington charged 15% without the addition of VAT. Up to that time, Gregory Pennington remained a considerably larger player in the market than B&E. B&E had set its charges by reference to Gregory Pennington's charges and, it might properly be inferred, Gregory Pennington was passing on the charge. The inference could properly be drawn that B&E too was passing on the charge or, if this is something different, that it, too, would have charged 15% (or possibly 15% plus an amount to recoup irrecoverable input tax) and not 17.625% in cases not subject to the flat rate charge of £25 plus VAT. This analysis could account for the conclusion drawn in paragraph 54 of the Decision that it was "quite plain from my findings of fact" that VAT was passed on by B&E from 1996 to late 1999. It is also consistent with the conclusion in the first two sentences of paragraph 58 of the Decision: "It is quite plain from the evidence, and I find, that by 1999 B&E was intent of expanding at as rapid a rate as possible, and determined to replace GP as market leader. Against that background, I agree with Mr Mantle that it is inconceivable that B&E would not have completed on price with GP had it known that GP was charging exempt management fees of 15%." Nonetheless, it is my reading of paragraph 54, in the light of other parts of the Decision, that the Tribunal was relying very heavily indeed, in reaching its conclusion, on the fact that the contracts and communication with clients and creditors, showed a fee being charged at 15% with VAT added to it. That reading is supported by what the Tribunal has to say (again in paragraph 54 and before making the observations which I have just quoted from paragraph 58)) about the period from 2001 to 2003: "Likewise, in the contract in use from 2001 to 2003, the VAT was passed on". The Tribunal is, there, focussing on the terms of the contract which expressly described the fee as including VAT. This contrasts with paragraph 55 of the Decision where the Tribunal addresses the contract in use from late 1999 to early 2001 which did not refer to VAT. In paragraph 55, the Tribunal refers to its earlier finding that the contract provision was simply an alternative way of B&E expressing the fact that it charged 15% plus VAT "it does not necessarily mean that the VAT was passed on to its clients. However, as I have also found that the introduction of the new clause meant that B&E continued to charge its clients tax, it appears to me logically to follow that it did pass on the tax." With respect, it does not follow logically at all. It is a question of fact in all cases. If VAT was being passed on in the period from 1996 to late 1999, then the factors which led to that conclusion may have continued to subsist after 1999 and might lead to the same conclusion thereafter; in the absence of evidence of any change of circumstance, then those factors might be assumed to continue. The mere change in the form of the contract might well be regarded as an irrelevance. Turning then to the period 2001 to 2003, it is difficult, if not impossible, to apply the analysis which I have identified in relation to the period from 1996 to late 1999 as offering possible support for the conclusion that there was passing on in this later period. This is because there is no evidence to support an inference that Gregory Pennington was itself passing on VAT in that period still less a finding of fact that it actually did so. The Tribunal has not drawn the inference that, because it charged only 15% in 1999, that it would have done so in 2001 and for my part I doubt that it could properly have done so. Even if one accepts without question the final sentence in paragraph 58 of the Decision ("All the evidence points to B&E having kept the rate of its management charges under continual review in the disclosure period, if necessary with a view to their being reduced to complete with GP and other debt management agencies.") there is nothing to establish what Gregory Pennington would in fact have charged if the exempt nature of its supplies had been established too. The Tribunal seems as though it is confusing what happened to Gregory Pennington in 1999 with what might have happened in 2001 to 2003. Further, by 2001, there is no reason to think that B&E would simply be blindly following Gregory Pennington's pricing structure. By that time, B&E had become the market leader with a far greater share of the market than Gregory Pennington. It may well be the case, as the Tribunal finds in paragraph 58 of the Decision as just quoted, that B&E kept their charges under constant review in the disclosure period, but I have serious doubts whether the Tribunal could properly have reached the conclusion, on the evidence, that B&E would have reduced its prices in order to compete (in contrast with doing so for other reasons). I do not need to decide that in the light of lack of evidence about what Gregory Pennington might itself have done in a VAT free environment. What might be said in support of the Tribunal's decision is that, since it can be inferred that B&E would have charged only 15% in 1999 had its supplies been treated as exempt, that such inference can be made in relation to later periods unless and until the evidence demonstrates that such an inference should not be made. The Tribunal records Mr Milne's submission that the best evidence of what B&E would have done is what it actually did: that is to say to continue charging at 17.625% when its supplies were accepted by the Commissioners as exempt, a submission which Mr Mantle regarded as Mr Milne's best submission. It is, to my mind, a powerful submission. Mr Mantle's response is recorded at paragraph 43d above. The Tribunal does not deal expressly with that submission or Mr Mantle's response (unless it is to be regarded as subsumed in the general acceptance of his arguments in paragraph 57 of the Decision). It was an important and significant argument which it would have been better for the Tribunal to have dealt with expressly. It can be seen that Mr Milne and Mr Mantle had entirely different approaches. Mr Milne started with what actually happened in 2003 and projected backwards; Mr Mantle started with 1996 and looked forward but did so in order to see what would have happened in an environment where B&E's supplies had always been treated as exempt. Thus: a. On Mr Mantle's approach, it is to be supposed that VAT had not been imposed on B&E (and presumably its competitors) at all. He starts with the proposition (which for reasons already considered, it one which the Tribunal could properly have reached) that B&E's fee in 1996 to late 1999 would have been 15% (or possibly 15% plus and amount to recoup for irrecoverable input tax). That enables him to argue that there was nothing thereafter which, in that continuing environment of exempt supplies by B&E, would have led B&E to start charging more than 15% (or 15% plus irrecoverable input tax). He would, I think, have to accept that his argument leads to the conclusion that where VAT had never been charged on B&E's fees, there would have been no reason to think that those fees would have increased above the 15% (or 15% plus) level even in 2003 when, in fact, a VAT-free fee of 17.625% started to be paid. His approach, therefore, is to assume, contrary to the facts, for the whole of the disclosure period (and before) that B&E's services were exempt. b. Mr Milne's approach is to start with what actually happened in 2003 ie that a VAT-free fee of 17.625% was charged on its being established that B&E's services were exempt supplies. That enables him (and now Mr Cordara) to argue that, in an earlier period, the same approach would have been taken. Take as a concrete example the second VAT period for B&E in mid of 2002, when its supplies were still wrongly being treated by the Commissioners as subject to VAT. If the incorrectness of that treatment had been established in early 2002, then a VAT-free fee of 17.625% could have been charged for that second VAT period and all later periods. Accordingly, it can be argued that B&E has in fact borne the VAT for that second period (and later periods prior to the establishment of the correct treatment). In principle, the approach of Mr Milne and Mr Cordara is, in my judgment to be preferred. It must be remembered that the underlying question which needs to be answered is whether B&E would be unjustly enriched if it were to recover the tax for which it has accounted and which it is otherwise entitled to recover. Thus, looking at the example given in the preceding paragraph, if B&E had made a voluntary disclosure in respect of that second VAT period only, and if it establishes that it would have charged a VAT-free fee of 17.625%, then, prima facie, there is nothing unjust in its being able to recover the VAT for which it has actually accounted (ie after allowing for input tax). It seems to me that it right to say that B&E would have borne the tax and had not passed it on. But suppose that the evidence establishes that B&E would have charged only 15% had its supplies always been treated as exempt from 1996 onwards and that it would not have increased its charges at any time up to and including the second VAT period in 2002 mentioned in the example. Does that entitle the Commissioners to say, in relation to the example, that B&E would be unjustly enriched if the tax for which it has accounted were repaid? In my judgment it does not. I consider that B&E is entitled to rely on the facts as they were and not as they might have been had the correct VAT treatment been applied all along. Of course, there has to be an element of hypothesis in order to see what might have happened if the tax which is reclaimed had not been charged in the first place; but it would not be right, I consider, to extend the hypothesis further than is necessary. It could not, I think, be said that, once B&E actually commenced charging 17.625% without having to account for VAT that it was somehow being enriched on the basis that, if the correct VAT treatment had been applied all along, its fees would have remained at some lower level. Similarly, I do not think that B&E can be said to be obtaining unjust enrichment when it seeks to recover the tax which it has paid in respect of an accounting period when, taking the facts as they actually were at the beginning of that period, it is established on the evidence that it would have charged a VAT-free fee of 17.625%. The position is more complicated in the present case than in the example because the disclosure period covers a number of VAT periods. It might be said that, by making a claim for repayment in respect of early 2000, B&E must proceed on the hypothesis that, for the whole of the disclosure period, its supplies had been treated as exempt. Since (on Mr Mantle's approach) B&E's fees would have been 15% (or 15% plus an allowance for irrecoverable input tax) at the beginning of 2000, it is not then permissible, on this approach, to judge what would have happened in say mid-2002 (as in the example) by reference to what B&E would have done if (as was the actual fact) its supplies were being treated as chargeable up to an including early 2002. In my judgment, however, this factor does not affect the position. The question whether B&E has suffered the burden of tax in a later period should be assessed by reference to the comparison between what actually happened in fact and what would have happened if tax had not been wrongly charged in respect of that period. This important difference of approach is reflected in Mr Mantle's argument in response to Mr Milne's submission that what B&E did when its supplies were accepted as exempt is a good indicator of what it would have done if it had not been wrongly charged to tax in the disclosure period in the first place. It has two strands: clients were used to paying 17.625%; and B&E was a different company. I consider them in turn: 1. It is true that clients of B&E and Gregory Pennington had been paying 17.625% for some time by the time that B&E began to charge a fee of 17.625% which did not include VAT. It is said that they were used to it and it could be inferred that they were prepared to bear it. So far as existing clients were concerned, I accept that that might be correct. But new clients, if they had any idea at all of what had been charged in the past, would surely look at the fee being demanded without consideration of what had happened in the past. I think that very little weight indeed could properly have been given to this strand of the argument. 2. It may be that, at the beginning of the disclosure period (ie early 2000) B&E was a materially different company from what it was in 2003 when for the first time, it was charging fees of 17.625% which were free of VAT. But from the turnover figures, it can be seen that the huge growth in business occurred during 2000 and 2001 - a turnover of £21.5m being achieved in 2001, getting on for three time as much as Gregory Pennington in the same period. B&E, at latest by the beginning of 2002, was, I consider, far closer to being the company it was when it first started charging a VAT-free fee of 17.625% than to the company it was at the beginning of the disclosure period. Bearing in mind the burden of proof on the Commissioners to show passing on, it seems to me that it was incumbent on them to satisfy the Tribunal on the totality of the evidence that Mr Milne's argument should be rejected for the entirety of the disclosure period; and that if they could show that Mr Milne's argument should be rejected only in relation to an earlier, but not a later, part of the disclosure period, then the Commissioner's should fail in respect of that later part. 3. In relation to this last point, there is also the question which Mr Cordara asks: If there was no economic advantage to B&E in achieving exempt status for its supplies, why did it put energy into persuading the Commissioners that that was the correct treatment? The Tribunal did not answer that question because the argument was not, as far as I can see, put to it. One answer might be that it did so because it considered that it could continue charging 17.625% and thus increase its profits by the amount of VAT less irrecoverable input tax (and in relation to input tax, it might be able to modify its business methods to reduce its taxable inputs). But another reason might be that it thought it could reduce its charges and increase its market share even further. This is all speculation: no relevant findings of fact were made and no argument was addressed. The Tribunal's reasoning in its conclusions (paragraphs 51 to 61 of the Decision) is sparse. It is not easy to see precisely what submissions it accepted. However, it seems reasonably clear from paragraphs 57 and 58 that the Tribunal adopted the approach which Mr Mantle had advocated and which I have considered above ie it took the position in 1996 and moved forward to what would have happened if B&E's supplies had always been treated as exempt. For the reasons given, I consider that that is a wrong approach. It should also be noted that, even adopting that approach, the Tribunal does not make an express determination that B&E's fees would have been only 15% or even 15% plus an allowance for irrecoverable input tax (which Mr Mantle had submitted would have been the position and which he asked the Tribunal to determine). It simply states (both in paragraphs 57 and 60) that management charges would not have reached, or that B&E would not have charged, 17.625%. I appreciate that B&E's case was really an all-or-nothing case (ie that B&E's profits were reduced by the amount of the VAT which it had actually paid after allowing for input tax); in saying what it did, the Tribunal was, as I see it, simply rejecting that case. However, having rejected B&E's arguments, I do consider that it would have been far better if the Tribunal had made some finding as to the level of B&E's hypothetical charges even if only that they would not have exceeded 15% plus an allowance in respect of irrecoverable input tax. In the absence of such a finding, the Commissioners rely on what is said in paragraph 60 of the Decisions "In my judgment, B&E passed on the whole of the burden of VAT to its clients and itself suffered no concomitant loss". Even that statement has caused controversy. Mr Cordara says that the reference is to the whole of the VAT levied on B&E's supplies whilst Mr Mantle says it is a reference to the net amount after allowance for input tax. I have already discussed (see paragraph 33) whether, generally speaking, the concept of passing on in a VAT context is concerned with output tax alone or with the net position after allowance for input tax. It seems to me, however, that the Tribunal considered that the whole of the burden of output tax was passed on in the sense that B&E did not bear any of that tax (and that was so whatever the level of input tax). That is consistent with the treatment afforded by the Tribunal in paragraph 31 of the Decision (to which I will come in a moment) concerning input tax and the emphasis (in paragraph 59) again on the representation to clients by B&E that this charges were 15% plus VAT. In other words, the Tribunal was not using the concept of passing on in relation only to the net position after deduction of input tax. As to input tax, B&E made the point (both in Mr Cochrane's evidence and in submissions (see paragraph 39c)) that, if its supplies had been treated as exempt, it would have been unable to recover input tax. This would have been a charge on profits and may have resulted in a loss during part of the disclosure period. Accordingly, it would be obvious that B&E would not simply charge 15%. The Tribunal accepted that losses might have been incurred and recognised that, in the first year of the disclosure period, output tax and input tax were little different. However, the Tribunal considered it relevant that B&E's services were in fact treated as taxable "so that different considerations apply" (see paragraph 31 of the Decision). During the first part of the disclosure period, input tax and output tax were little different. In the later part of the disclosure period, output tax exceeded input tax, the Tribunal inferring that this was because B&E continued to obtain advantage from earlier expenditure on advertising etc and thus had to spend little, if anything, on expansion in the latter part of the period. Mr Mantle's submission was that VAT status had an impact on what inputs a taxpayer purchased: had B&E's supplies been exempt, B&E would probably have used less advertising. It is not possible to tell whether the Tribunal accepted that submission or not: the nearest one gets is "I believe the submissions of Mr Mantle to have considerable force". However, even if one were to accept that some reduction in input tax would have been achieved, it does not follow that B&E's fees would have been as low as 15% or 15% plus some allowance for irrecoverable input tax. But equally, it does not follow from the fact that B&E would have wanted, taking one year with another, to recover its input tax (as any other overhead) through the level of its charges, that those charges would have been as high as 17.625%. One difficulty, in terms of the impact of input tax in the context of this appeal, is that Mr Milne's argument on input tax was being used to bolster his main submission that B&E would have charged 17.625% - it was being used to show that fees would not simply have been reduced to 15%. He was not arguing – at least there is no record of such an argument in his skeleton or in the Decision itself – that considerations of input tax alone would have led B&E to set a level of charging, which, during the disclosure period, would have resulted in an increased profit. For example, suppose that input tax considerations would have led to a fee level of 16.5% rather than 15% (ie attributing 1.5% to irrecoverable input tax) but that actual input tax in the disclosure period was less than that amount (suppose it amounted to only 1% of the 16.5%) then the difference (ie 0.5%) would represent additional profit and it could be said that the VAT actually (and wrongly) charged as output tax was not passed on to that extent. Since that was not argued, there is no finding of fact in relation to it, although as I have already mentioned, Mr Mantle had, on the basis of other arguments, submitted that the fee would have been 15% or 15% plus a figure to compensate for input tax (see paragraph 44e above). In the light of the above discussion, my conclusion is that the Tribunal's decision that the whole VAT (whether it intended to mean the gross amount or the net amount) was passed on cannot stand. The Tribunal applied, in my judgment, an incorrect approach to the questions it had to answer as I have explained in paragraphs 94 to 99 above. In particular, the result of adopting that wrong approach was that it failed to give any, or any proper, weight to the fact that B&E adopted a fee of 17.625% when the exempt status of its supplies was established. That was a very powerful piece of evidence. The reasons which the Tribunal gave, insofar as they can be ascertained from the Decision, for rejecting that evidence as a conclusive indicator of what B&E would have done earlier in the disclosure period do not, in my view, stand up to scrutiny for the later parts of the disclosure period at least from the beginning of 2002. However, in relation to the earlier parts of the disclosure period, to late 1999, the evidence of what B&E did when VAT ceased to be chargeable on its supplies is not of such great significance. Indeed, as I have said (see paragraph 86 above) I consider that the Tribunal could reasonably have inferred that B&E would have charged only 15% in 1999 if its supplies had then been treated as exempt. I am nonetheless left with the uncomfortable impression that the Tribunal did not reach its conclusion on the basis of such inference but because it considered that the terms of the contracts with clients, expressly stating that VAT was charged on the fee of 15%, necessarily led to the conclusion that the VAT was passed on. While it may be the case that, in the absence of any other factors, it is correct to infer from such a contract that VAT is passed on, there was sufficient material before the Tribunal, in my judgment, to throw the evidential burden back onto the Commissioners to show that there was passing on; but that means that the Tribunal would have needed to rely on the inference to which I have just referred. In relation to the period between late 1999 and the beginning of 2002, the position is unclear. It is for the Tribunal to judge, as a matter of fact, whether the inference (assuming that such an inference is, in fact, drawn) that B&E would have charged only 15% (so that VAT was passed on in 1999) is one which should continue to be drawn and, if so, for how long bearing in mind in particular (a) that by 2002 it would, in my judgment, be impossible properly to find (on the evidence at present recorded in the Decision or available from the documents before the Tribunal) that B&E would not have charged 17.625% if its supplies had been treated as exempt and (b) that B&E was attempting to obtain exempt status for its supplies, something it must have had an economic reason for doing (although it is for the Tribunal to decide what weight to give to that). The Tribunal will need also to determine, if it is satisfied that there was passing on at all, whether the fee which B&E would have charged in the disclosure period (or different parts of the disclosure period) if its supplies had been treated as exempt would have resulted in only part of the VAT being passed on (eg if the hypothetical charge included an amount in respect of input tax which exceeded the actual input tax for the relevant part of the period). That, of course, is not an end of the matter because Mr Cordara effectively seeks to raise a raft of new arguments which were not put to the Tribunal. In relation to the First Error, he says that an economic analysis is necessary: the Tribunal must grapple with an assessment of the economic impact of the tax. I have already discussed at length the need, or lack of need, for such economic analysis. In the absence of one, the Tribunal is entitled to draw inferences from the evidence in fact before it. Neither party saw fit to produce any economic analysis. It would not be appropriate now to allow B&E to reopen the case to the extent of admitting a whole mass of evidence from each side which it was not thought appropriate to commission for the Tribunal. Similar considerations apply in relation to Mr Cordara's submissions in relation to the First Error. Mr Cordara also seeks to raise in relation to the Sixth Error a new economic loss case which is not simply the "flip side" of the passing on argument, but is an allegation of loss of profit as a result of reduced market share. Further, he criticised the Tribunal for failing to take any account of the impact of VAT on the minimum monthly disposable sum of £140 which a client had to be able to show before B&E would take him on. The argument is now raised that, in the VAT-free environment, the entry level has been reduced from £140 and a minimum charge of £25 rather than £29 has been introduced, enabling B&E to service persons who would not previously have been eligible, and thus to increase its profits, Mr Cochrane's evidence being that a gross turnover increase of 20% would have been achieved. The loss of that profit is an economic loss which flows from the wrong tax treatment of B&E's supplies. In my judgment, it is too late to run any new points when the Commissioners were not alerted to them in time to adduce the necessary economic evidence before the Tribunal. It is not appropriate now to reopen the case to the extent of permitting such a case to be run and new evidence admitted. However, the issue of the entry level and minimum charge gives rise to more problems. Although this aspect was raised by Mr Cochrane in his evidence (and the Tribunal's notes record that an economic loss case was therefore being raised), Mr Cochrane did not, in his witness statement, go on to assert a loss of profit let alone to put a figure on it. Nor does it appear that Mr Milne made anything of it in his submissions. The burden is, however, on the Commissioners to establish unjust enrichment. The Tribunal therefore needed to be satisfied that B&E in fact suffered no loss as a result of minimum entry level/minimum charge point or, that if it did suffer some loss, a maximum figure could be put on that loss (with the unjust enrichment allegation being rejected to the extent of that loss); otherwise, the Commissioners will not have fulfilled the burden on them. In all the circumstances, the appeal is allowed. I will hear Counsel further on the precise relief which I should order and in particular whether or not the case should be remitted to the Tribunal. The SCHEDULE Paragraphs 4 to 33 of the Decision I make the following findings of fact from the parol evidence of Mr R B Cochrane, a director of B&E, Mr C J Kirkland, a senior Customs officer, and the contents of two bundles of copy documents provided by the parties. (Unless otherwise stated, all page references to documents relate to the main bundle). B&E was formed in 1996 as a debt collection agency. As such, it made standard-rated supplies and registered for VAT. But not long after beginning trading, on its share capital being acquired by Mr J O'Neill, it changed to providing the debt management services referred to at para 2 above. When the change took place it contacted its local VAT office for advice as to its future liability to tax. It was informed that all aspects of debt management services were standard-rated supplies. The company acted on that advice, and continued to charge VAT on its services. Mr O'Neill knew nothing about debt management services and therefore initially decided to follow the practices of the then leader in the industry, Gregory Pennington Ltd ("GP"). GP operated, and continues to operate, a service seemingly identical in all material respects to that of B&E. Mr O'Neill obtained a copy of the terms and conditions on which GP dealt with its clients, and instructed solicitors to plagiarise them for B&E's own use. In particular, as Mr O'Neill had no idea what to charge for B&E's new services, it followed GP's example in charging 15 per cent plus VAT (i.e. 17.625% in total) of clients' disposable incomes for "on-going management services," and a flat rate negotiation fee (including VAT) equal to a client's first monthly payment. The plagiarised form of GP's charging clause for management fees, used by B&E from 1996 until late 1999, took the following form: "6.1. Unless we agree otherwise with you we will take from each monthly payment under the Monthly Payment Plan a fee equal to 15% of the periodic payment under the Monthly Payment Plan. This figure is subject to a minimum fee of £25 per month and does not include VAT, which we have to charge by law. (At present this total sum amounts to 17.625%)." The terms and conditions of B&E's contract defined Monthly Payment Plan as one produced by it in consultation with the client "by which you can pay off your creditors out of your disposable income at rates you can afford. The Monthly Payment Plan will let you make monthly payments to us and will take account of your creditors and our Fees. It will not take account of any matters you have not told us about… It will also take account of the differing requirements of your different Creditors, if there is more than one". (Until the hearing, B&E had not produced to the Commissioners a copy of the contract it used in its early years of trading, and had maintained that until 1999 its charging clause for management fees was in terms indicating that clients were simply charged 17.625 per cent, and ignored all reference to VAT. Mr Milne QC, for B&E, apologised for its having misled the Commissioners). When Mr Cochrane became a co-director of B&E with Mr O'Neill in 1997, he assumed particular responsibility for finance and administrative matters. He acquired 40 per cent of its ordinary share capital, Mr O'Neill continuing to hold the remaining 60 per cent. Mr Cochrane also claimed that in 1998 or 1999 he identified as a "specific problem" the possibility either that B&E's VAT status, or the standard rate of tax, might change during the course of a repayment plan, increasing or, less likely, decreasing its liability to tax, with a resultant impact on profits. He maintained that since all clients were individuals, and thus not VAT registered, "their only interest was in the gross cost to them of the service provided, so we worded the contract in such a way that the fee payable to the company would remain the same no matter what the applicable VAT rate". Further, Mr Cochrane added, the company, or perhaps I should say Mr O'Neill as principal shareholder, decided that its management fees should not then, or in the future, fall below 17.625 per cent, whether liable to VAT or not, and irrespective of any price reductions its competitors might make in the event of fees being found to be exempt from VAT: it had determined not to compete with its competitors on price, but rather on service. I shall deal with that decision shortly. At some time very late in 1999, B&E introduced a new form of contract containing the following sub clause relating to management charges: "6. How you pay us. 6a. Unless we agree otherwise, we will deduct, from payments we issue to your creditors, a fee equal to 17.625% of the monthly payment you make to us under the monthly payment plan. However, we have a minimum fee of £29. The actual amount of our fee is shown in the monthly payment plan." Following introduction of the new contract, Mr Cochrane maintained that, on a client entering into it, B&E dispatched his "Credit Commitment and Financial Statement Details" to him and to his creditors (pp 47-48), but, he contended, the details sent to creditors differed from those sent to the client in one, very important, respect. In the section dealing with credit commitments in the creditor's copy, B&E's management fee was shown as "15% + VAT", whereas in the client's copy it was simply shown as 17.625 per cent. Mr Cochrane's evidence on the point was less than convincing, so that I am not satisfied on the balance of probabilities that both forms were in use, or, if they were, they were dispatched as Mr Cochrane claimed. When Mr Kirkland paid a control visit to B&E in January 2000 the sample Monthly Payment Plan with which he was provided (p.72) showed the management fee to be 15 per cent plus VAT. Mr Kirkland's Visit Report (pp. 88-89) confirmed that B&E was charging its clients 15 per cent plus VAT for management services. Reading the clause set out in para 13 above in the context of the whole of the evidence, but particularly in the light of that in the penultimate and last preceding paragraphs, in my judgment it was simply an alternative way of expressing the fact that B&E continued to charge 15 per cent plus VAT for its management services. It did not represent a change in price: nor did it represent a change whereby B&E, although accounting for VAT on supplies, did not charge its clients tax. The very fact that B&E continued to account for VAT reflects a recognition on its part that it was still charging 15 per cent plus VAT, even if it was not explicitly informing its clients of the fact. Also in 1999 B&E sought further advice from the Commissioners as to the VAT liability of its services, maintaining that they were exempt. With its correspondence B&E submitted a form of contract intended for use by a new subsidiary company. The contract included a charging clause for management services identical to that at para 13 above except that the rate of charge was 17.5 per cent. As the new subsidiary never traded, B&E did not introduce the 17.5 per cent charge rate. It was not until 25 August the following year that the Commissioners rejected its claim for exemption (letter p.35). However, when they eventually did so, they admitted that there was an argument for exempting B&E's collection and money handling services which might have been persuasive had not those services been but an element in a "larger administrative service". B&E could have appealed the Commissioners' decision to the tribunal, but did not do so. Unknown to B&E, at sometime in 1999 for a limited, undisclosed period the Commissioners accepted that at least some of GP's services were exempt. During that period GP charged its clients 15 per cent for management services. Mr Cochrane maintained that the market was not at all sensitive to the rates of fees, claiming that that was demonstrated by B&E having increased its market share whilst charging 17.625 per cent during the period GP was making exempt supplies and charging 15 per cent management fees. He explained that from having no market share in 1996 when GP had 80 per cent of the market, B&E had overtaken it by 2001. He added, "Indeed, the only price resistance we have experienced is from those who believed that a service such as ours should always be provided free of charge to the consumer". Whilst accepting that B&E increased its market share as claimed, I am unable to accept Mr Cochrane's statement for early in 2001 the Office of Fair Trading ("the OFT") wrote to B&E following complaints about the manner in which it presented its charges (see p.160 of the main bundle and pp.32-33 of the supplemental bundle) and pointed out that under the Unfair Terms in Consumer Contracts Regulations 1999 "unfair terms are not binding on consumers". The OFT indicated that it would not take court action against B&E if it were to withdraw or amend its terms and conditions to include, inter alia, in a prominent position on the front page of its contract a statement of its fees and show how they were made up. In evidence, Mr Cochrane said, and I accept, that the OFT would not accept terms which included no reference to VAT; the OFT required all references to fees to have added "plus VAT". But in the event, in a contract introduced early in 2001, B&E answered the question, "How much do our services cost?", as follows: "You will pay us an initial fee and then a monthly management fee. The initial fee is an amount equal to a single payment under your monthly payment plan as at the time you sign these terms of business. This payment includes VAT … The monthly management fee is equal to 17.625% (including VAT), rounded to the nearest pound, of each monthly payment plan. However, you will have to pay us at least our minimum monthly fee of £29 (including VAT). We collect the monthly fee when we pay your creditors." In my judgment, both those clauses, whether read separately or together, would quite clearly have indicated to a client of B&E that he was paying fees for its services which included VAT. And when read in conjunction with Mr Cochrane's admission that the OFT required all reference to fees to be "plus VAT", notwithstanding that the terms introduced were not strictly those so required, I also find that such clients were charged VAT: it was not merely being accounted for by B&E. I am unwilling to read the term "including VAT" as "including VAT (if any)", as Mr Milne submitted I should. (see para 42 below). Further I am unable to accept that the words "including VAT" were inserted solely to indicate to clients that they would not be expected to bear the burden of any change in the VAT position, as B&E claimed. (Even as late as 8 April 2003, in what appeared to be a standard letter addressed to a Mr Saxby, a client of B&E, (p.128), and which Mr Cochrane was unable to explain either in terms of origin or content, B&E specifically stated that it charged its clients VAT on management fees). There matters rested until, in Debt Management Associates Ltd v CEC (2002) Decision No 17880, the tribunal decided that negotiation and management services in all respects identical to those of B&E were two discrete exempt services. The Commissioners then accepted that B&E's services were also exempt and de-registered it for tax. That resulted in B&E making the voluntary disclosure out of which its appeal arises, and increasing its charging terms for management to 17.625 per cent. Having dealt with the charging terms B&E used between 1996 and 2003, I must now deal with other aspects of its business that may impact on its claim. First, I should explain that B&E's business expanded at a phenomenal rate in the period in question. In the year to 30 June 1997 turnover was a mere £16,095; by 2002 it had increased to £24,277,434. The turnover comparison between B&E and GP in the years between 1996 and 2002 was as follows:                   1996   1997   1998   1999   2000   2001   2002   B&E   0   16,095   388,937   1,727,923   6,148,240   21,512,740   24,277,434   G|P   2,800,000   2,800,000   2,800,000   2,800,000   6,270,809   7,945, 545   9,558,671   It will be recalled that in 1998 or 1999 B&E claimed to have decided under no circumstances in future to reduce its management fees below 17.625 per cent, whether exclusive or inclusive of VAT (see para 12 above). But in a discussion paper produced in December 2002 (pp 118-122), in proposals which incidentally were never effected, B&E invited creditors to consider the following "alternative approach" to dealing with debtors: "Our proposal is that creditors should commit to write off any balance of a client's debt if that client makes 72 payments or repays at least 90% of his total debt, whichever occurs first. We believe that this arrangement would have a dramatic effect on client longevity since it offers the client a far greater potential benefit than just having the fee paid. We believe that the result of this concession would be to reduce the current decay rate by at least 2/3. We recognise that this concession by creditors would be of benefit to Baines & Ernst, so we would be willing to reduce the management fee retained on debts to creditors accepting this arrangement to 10% rather than the existing 15%, thus increasing the actual amounts paid to participating creditors." (emphasis added) (I understand the phrase "decay rate" to be used to describe the rate at which contracts are terminated. Apparently, after about 2 years, most clients of B&E's choose to make their own arrangements for repayment with creditors, or continue repayment direct on the terms arranged by B&E). The creditors addressed in the discussion paper were not local traders but major organisations and companies such as Barclaycard and Co-op Bank. Since each would be concerned to recover its own debt as quickly as possible, it would undoubtedly consider most carefully the whole of any proposed repayment package put to it, having the power to reject the whole package. It is against that background that I turn to consider B&E's conditional proposal to reduce its management fees from 15 per cent to 10 per cent. I am quite sure that the reference to existing management fees of 15 per cent in the discussion paper was deliberate, and no mere error on the part of B&E. The paper was addressed to a group with the ability effectively to determine its level of fees, and it was essential that B&E presented a case showing those fees to be reasonable. (Indeed, in evidence, Mr Cochrane admitted that creditors were consulted about B&E's level of charges). I find that it represented to creditors that its management fees in December 2002 were 15 per cent, albeit subject to VAT. The proposal to reduce fees from 15 per cent to 10 per cent clearly indicated a willingness substantially to reduce its management fee level if creditors were prepared to create conditions likely to increase the length of the term clients would remain committed to B&E (estimated to increase from 22 months to 43 months). I find that, after B&E changed its contract terms in 1999, it continued to charge its clients 15 per cent plus VAT for management services until it de-registered for VAT. I do, however, accept that B&E charged new clients management fees of 17.625 per cent after the Commissioners accepted that its services were VAT exempt, and continues to charge at that rate. But I am unable to accept that B&E necessarily would have continued to charge at 17.625 per cent irrespective of an adverse effect on its business of a change in rate by a major competitor, being told by creditors that its charges were too high and had to be reduced, or being faced either with the possible consequences of the OFT re-opening its case on the presentation of its charges, or with a client claiming its contract terms to be unfair. (Those consequences, I remind myself, include unfair terms not binding on consumers). I find that B&E now has by far the largest share of the debt management market and maintains its dominant position despite the fact that certain of its smaller competitors have reduced their rates slightly below the 17.625 per cent rate. I should also add that B&E produced a discussion document dated 17 October 2002 (p. 111) entitled, "Subject: reduce our management fee" which was on the agenda for a board meeting on 21 November 2002 (minutes pp. 114-115) as was an agreement between Debt Management Associates and Barclaycard offering free management services to clients which would have been of obvious concern to the B&E board. No evidence was adduced to indicate that the proposals in the document at p. 111 were acted upon. Mr Cochrane gave as another reason B&E would never have reduced its management fees from 17.625 per cent to 15 per cent the fact that it would have found itself making losses. I accept that it was most unlikely that it would have done so had its fees in the disclosure period been exempt from VAT, for its irrecoverable input tax would then have been a charge on profits and may well have resulted in losses. But in the period with which I am concerned, its services were throughout treated as fully taxable, so that different considerations apply. As B&E's voluntary disclosure shows, during the first year of the disclosure period, input tax and output tax were little different, due mainly, I infer from the whole of the evidence, to B&E having spent very large sums in advertising its services, and on other items that contributed to its very rapid expansion. In the year to 30 June 2001 B&E increased its turnover from approximately £6 million to over £21 million, and overtook GP as market leader. In the last two years of the disclosure period output tax was considerably in excess of input tax, again I infer from the whole of the evidence, because B&E continued to obtain advantage from earlier expenditure on advertising etc and thus had to spend little, if anything, on further expansion in the latter part of the disclosure period. Mr Cochrane freely admitted that, were I to allow the appeal, B&E intended to return to its clients none of the moneys to be repaid. Referring to contracts entered into up to and including 1999, he maintained that the company could not refund moneys estimated at £1.7 million to persons on those contracts in the voluntary disclosure period as it did not know where they were. I am unable to accept that, without making any attempt to contact them, it is unaware of the whereabouts of all such persons; a single standard letter to former clients would produce some responses on which B&E could act. And, Mr Cochrane added, B&E would not be refunding moneys to those who contracted with it from 1999 onwards as they had not been charged VAT. In my judgment, all of B&E's clients, whether pre- or post 1999 would be entitled to the return of moneys it charged as VAT which was not due were I to allow the appeal, they, as I have already found, having been charged the tax in question. I might also observe that the instant case differs from those cases involving retailers for B&E entered into individual contracts with clients and must necessarily have known their names and addresses, whereas retailers were unlikely to be able to identify individual customers.

Order of the Court of 16 December 1987. - Italian Republic v Commission of the European Communities. - Removal from the register. - Case 289/85. European Court reports 1987 Page 05321 Parties Grounds Operative part Parties ++++ IN CASE 289/85 ITALIAN REPUBLIC, REPRESENTED BY LUIGI FERRARI BRAVO, HEAD OF THE DEPARTMENT FOR CONTENTIOUS DIPLOMATIC AFFAIRS, ACTING AS AGENT, ASSISTED BY OSCAR FIUMARA, AVVOCATO DELLO STATO, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE ITALIAN EMBASSY, 5 RUE MARIE-ADELAIDE, APPLICANT, V COMMISSION OF THE EUROPEAN COMMUNITIES, REPRESENTED BY ITS LEGAL ADVISER, ALBERTO PROZZILLO, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF G . KREMLIS, A MEMBER OF ITS LEGAL DEPARTMENT, JEAN MONNET BUILDING, KIRCHBERG, DEFENDANT, APPLICATION FOR A DECLARATION THAT COMMISSION DECISION 85/403/EEC OF 19 JULY 1985 AMENDING DECISION 85/341/EEC CONCERNING CERTAIN PROTECTIVE MEASURES AGAINST AFRICAN SWINE FEVER IN BELGIUM IS VOID TO THE EXTENT THAT ARTICLE 1 ( 4 ) THEREOF AMENDS ARTICLE 3 OF COMMISSION DECISION 85/341 OF 21 JUNE 1985 BY PROVIDING, IN THE NEW VERSION OF ARTICLE 3 ( 2 ) ( B ) ( II ), THAT THE PROVISIONS OF ARTICLE 3 ( 1 ) PROHIBITING THE INTRODUCTION INTO THE TERRITORY OF A MEMBER STATE OF PIGMEAT PRODUCTS ARE NOT TO APPLY TO PRODUCTS PREPARED WITH MEAT AS SPECIFIED THEREIN AND SATISFYING THE CONDITIONS SPECIFIED THEREIN, THE COURT COMPOSED OF : LORD MACKENZIE STUART, PRESIDENT, G . BOSCO, O . DUE, J.C . MOITINHO DE ALMEIDA AND G.C . RODRIGUEZ IGLESIAS ( PRESIDENTS OF CHAMBERS ), T . KOOPMANS, U . EVERLING, K . BAHLMANN, Y . GALMOT, C . KAKOURIS, R . JOLIET, T.F . O' HIGGINS AND F . SCHOCKWEILER, JUDGES, ADVOCATE GENERAL : C.O . LENZ REGISTRAR : P . HEIM AFTER HEARING THE VIEWS OF THE ADVOCATE GENERAL, MAKES THE FOLLOWING ORDER Grounds BY A MEMORANDUM LODGED AT THE COURT REGISTRY ON 9 NOVEMBER 1987, THE APPLICANT INFORMED THE COURT IN ACCORDANCE WITH ARTICLE 78 OF THE RULES OF PROCEDURE THAT IT WISHED TO DISCONTINUE THE PROCEEDINGS AND ASKED THE COURT TO ORDER THAT EACH PARTY SHOULD BEAR ITS OWN COSTS . BY TELEX MESSAGE LODGED AT THE COURT REGISTRY ON 20 NOVEMBER 1987, THE COMMISSION TOOK NOTE OF THE DISCONTINUANCE AND, REFERRING TO ITS CONCLUSIONS REGARDING COSTS IN CASE 11/86, ASKED THE COURT TO ORDER THAT THE PARTIES SHOULD BEAR THEIR OWN COSTS . Operative part ON THOSE GROUNDS, THE COURT HEREBY ORDERS AS FOLLOWS : ( 1 ) CASE 289/85 IS REMOVED FROM THE REGISTER OF THE COURT; ( 2 ) THE PARTIES SHALL BEAR THEIR OWN COSTS . LUXEMBOURG, 16 DECEMBER 1987 .

Judgment of the General Court (Sixth Chamber) of 9 December 2010 – Fédération internationale des logis v OHIM (Shade of brown) (Case T-329/09) Community trade mark – Application for a Community trade mark consisting of a shade of brown – Absolute ground for refusal – Lack of distinctive character – 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 any distinctive character (Council Regulation No 207/2009, Art. 7(1)(b)) (see paras 22, 27-33) Re: ACTION brought against the decision of the First Board of Appeal of OHIM of 11 June 2009 (Case R 202/2009-1) concerning an application for registration of a shade of brown as a Community trade mark. Information relating to the case Applicant for the Community trade mark: Fédération internationale des logis Community trade mark sought: Mark representing a brown convex square for goods and services in Classes 3, 18, 24, 43 and 44 – Application No 6468722 Decision of the examiner: Registration refused Decision of the Board of Appeal: Appeal dismissed Operative part The Court: 1. Dismisses the action; 2. Orders the Fédération internationale des logis to pay the costs.

FOURTH SECTION CASE OF MARTINS SOUSA AND OTHERS v. PORTUGAL (Applications nos. 23741/13, 45190/13, 63611/13, 3157/14 and 28637/14) JUDGMENT STRASBOURG 10 May 2016 This judgment is final but it may be subject to editorial revision. In the case of Martins Sousa and Others v. Portugal, The European Court of Human Rights (Fourth Section), sitting as a Committee composed of: Boštjan M. Zupančič, President,Paulo Pinto de Albuquerque,Iulia Antoanella Motoc, judges, and Fatoş Aracı, Deputy Section Registrar, Having deliberated in private on 19 April 2016, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in five applications against Portugal lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on the various dates indicated in the appended table. 2. The Portuguese Government (“the Government”) were represented by their Agent, Mrs M. F. da Graça Carvalho, Deputy-Attorney General. 3. The applications were communicated to the Portuguese Government (“the Government”). THE FACTS THE CIRCUMSTANCES OF THE CASE 4. The list of applicants and the relevant details of the applications are set out in the appended table. 5. The applicants complained of the excessive length of civil proceedings and of the lack of any effective remedy with regard to it. THE LAW I. JOINDER OF THE APPLICATIONS 6. Having regard to the similar subject matter of the applications, the Court finds it appropriate to examine them jointly in a single judgment. II. ALLEGED VIOLATION OF ARTICLE 6 § 1 AND ARTICLE 13 OF THE CONVENTION 7. The applicants complained that the length of the civil proceedings in question had been incompatible with the “reasonable time” requirement and that they had no effective remedy in this connection. They relied on Articles 6 § 1 and 13 of the Convention, which read as follows: Article 6 § 1 “In the determination of his civil rights and obligations ... everyone is entitled to a ... hearing within a reasonable time by [a] ... tribunal ...” Article 13 “Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.” A. Admissibility 8. The Government argued that the applications were inadmissible on non-exhaustion grounds. 9. The Court notes that prior to 27 May 2014, Portuguese practice did not provide for an effective legal remedy allowing a claimant to obtain compensation in a situation concerning length of proceedings (Martins Castro and Alves Correia de Castro v. Portugal, no. 33729/06, § 50, 10 June 2008; and Valada Matos das Neves v. Portugal, no. 73798/13, § 106, 29 October 2015). It further notes that the five applications were lodged before the Court between 28 October and 30 December 2013. 10. It follows that the applications are neither manifestly ill-founded within the meaning of Article 35 § 3 of the Convention nor inadmissible on any other grounds. It must therefore be declared admissible. B. Merits 1. Alleged violation of Article 6 § 1 of the Convention 11. 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 Frydlender v. France [GC], no. 30979/96, § 43, ECHR 2000-VII). 12. 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). 13. Having examined all the material submitted to it, the Court has not found any fact or argument capable of persuading it to reach a different conclusion on the admissibility and merits of these complaints. Having regard to its case-law on the subject (Martins Castro and Alves Correia de Castro v. Portugal, cited above), the Court considers that in the instant cases the length of the proceedings was excessive and failed to meet the “reasonable time” requirement. 14. Accordingly, the complaints disclose a breach of Article 6 § 1 of the Convention. 2. Alleged violation of Article 13 of the Convention 15. The Court recalls that Article 13 guarantees an effective remedy before a national authority for an alleged breach of the requirement under Article 6 § 1 for a case to be heard within a reasonable time (Kudła v. Poland [GC], no. 30210/96, § 156, ECHR 2000‑XI). 16. The Court notes that prior to 27 May 2014 the applicants did not have at their disposal an effective remedy by which to submit their length-of-proceedings complaints (see paragraph 9 above). 17. Having regard to its case-law on the subject applicable to the present cases (Martins Casto and Alves Correia de Castro, cited above; Garcia Franco and Others v. Portugal, no. 9273/07, § 50, 22 June 2010), the Court considers that the applicant had had no effective remedy against the excessive length of proceedings. III. APPLICATION OF ARTICLE 41 OF THE CONVENTION 18. 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.” 19. Regard being had to the documents in its possession and to its case‑law, the Court considers it reasonable to award the sums indicated in the appended table. 20. 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. Decides to join the applications; 2. Declares the applications admissible; 3. Holds that these applications disclose a breach of Article 6 § 1 and Article 13 of the Convention concerning the excessive length of civil proceedings and the lack of an effective remedy with regard to it; 4. Holds (a) that the respondent State is to pay the applicants, within three months, the amounts indicated in the appended table; (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. Done in English, and notified in writing on 10 May 2016, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Fatoş AracıBoštjan M. ZupančičDeputy RegistrarPresident APPENDIX No. Application no. Date of introduction Applicant name Date of birth Representative name and location Start of proceedings End of proceedings Total length Levels of jurisdiction Amount awarded for non-pecuniary damage per applicant / household (in euros)[1] Amount awarded for costs and expenses per application (in euros)[2] 23741/13 28/03/2013 Fernando Jorge Martins Sousa 27/04/1954 Jorge J. F. Alves Matosinhos 28/03/1996 21/02/2013 16 years, 10 months, 29 days 1 level of jurisdiction EUR 12,740 (twelve thousand seven hundred and forty euros) Jointly awarded EUR 1,000 (one thousand euros) Jointly awarded 45190/13 01/07/2013 Clarisse Hermínia Abreu e Sousa 30/12/1948 63611/13 02/10/2013 João Henriques Lopes de Carvalho 30/08/1948 Jorge J. F. Alves Matosinhos 28/04/2004 Still pending (according to information received by the Court on 15/04/2015 11 years, 10 months, 14 days 1 level of jurisdiction EUR 11,700 (eleven thousand seven hundred euros) EUR 1,000 (one thousand euros) 3157/14 13/12/2013 Maria Luísa Henriques Costa 10/10/1941 Jorge J. F. Alves Matosinhos 01/09/2002 13/11/2014 12 years, 2 months, 15 days 1 level of jurisdiction EUR 8,190 (eight thousand one hundred and ninety euros) EUR 1,000 (one thousand euros) 28637/14 07/04/2014 Maria das Dores Silva de Azevedo 28/09/1969 Micaela Palhares Porto 14/09/2006 07/10/2013 7 years, 25 days 2 levels of jurisdiction EUR 2,730 (two thousand seven hundred and thirty euros) EUR 1,000 (one thousand euros) [1] Plus any tax that may be chargeable to the applicants. [2] Plus any tax that may be chargeable to the applicants.

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 940 and 941 of 1966. Appeals by special leave from the judgments and orders, dated August 31, 1965 of the Madhya Pradesh High Court in Misc. Civil Cases Nos. 321 and 331 of 1964. C. Chagla, B. L. Neema, Anjali K. Varma and J. B. Dadachanji, for the appellant in both the appeals . N. Shroff, for the respondent in both the appeals . The Judgment of the Court was delivered by Shah, J. In respect of assessment to sales-tax for two accounting periods April 1, 1961 to June 30, 1961 and July 1, 1961 10 September 30, 1961, the Board of Revenue, Madhya Pradesh, referred the following questions to the High Court of Madhya,,. Pradesh for opinion Whether in the facts and circumstances of the case the numberice in Form XVI that was served on the applicant was invalid and therefore the assessment of the applicant on the basis of that numberice was bad in law ? Whether in the facts and circumstances of the case the applicant was a dealer during the assessment period under the Act and the imposition of purchase tax on him under s. 7 of the Act was in order The High Court answered the first question in the negative, and the second in the affirmative. These appeals are preferred with special leave granted by this Court. The appellants are a firm of building companytractors and are registered as dealers under the Madhya Pradesh General Sale Tax Act 2 of 1959. The appellants purchased building materials in the two account periods and used the materials in the, ,course of their business. The Sales Tax Officer, Jabalpur Circle, served numberices under s. 18 5 of the Act calling upon the appellants to show cause why best judgment assessments should number be made, and by order dated November 30, 1961, he assessed the appellants to tax in respect of goods purchased by the appellants for use in their companystruction business and imposed a penalty of Rs. 200/- in each case. Appeals against the orders imposing tax and penalty were dismissed by the Assistant Commissioner of Sales Tax and the Board of Revenue. Rule 33 of the Madhya Pradesh General Sales Tax Rules, 1959, provides that a numberice of assessment under s. 18 5 shall be in Form XVI, and ordinarily it shall give number less than 15 days from the date of the service to the assessee to show cause why he should number be assessed or reassessed to tax and or to pay penalty. The numberices served upon the appellants did number give them a clear period of 15 days to show cause. But we are unable to hold on that account that the numberices and the assessments were invalid. We agree with the High Court that the rule is number intended to be either invariable or rigid, and unless prejudice has resulted to the tax-payer the proceedings are number liable to be set aside. It is number even suggested that because of the insufficiency of time the appellants were unable to submit their explanation for failure to make their returns of turnover. Two cases on which reliance was placed by companynsel for the appellants in support of the plea that the numberices were invalid have, in our judgment, numberbearing. In Messrs. Kajorimal Kalyanmal v. The Commissioner of Income-tax, P., 1 it was held that a numberice under s. 22 2 of the Income-tax Act, 1922, giving the assessee 20 days for filing the return was entirely illegal. In Jamna Dhar Potdar and Co. Lyallpur v. Commissioner of Income-tax, Punjab 2 it was held, following the judgment in Kajorimal Kalyanmals case 1 that a numberice which does number give to a tax-payer under s. 22 2 of the Income-tax Act, 1922, clear numberice for furnishing a return, of thirty days from the date of service is illegal. But these cases were decided under s. 22 2 of the Income-tax Act, 1922, before it was amended by the Income-tax Amendment Act 7 of 1939. Under the section as it then stood, it was enacted that the 1 3 I.T.C. 451. 2 3 I.T.R. 112. Income-tax Officer shall serve a numberice upon any person whose total income is in the opinion of the Income-tax Officer of such an amount as to render that person liable to pay income-tax. The section was held to be mandatory. But the terms of r. 33 of the Madhya Pradesh General Sales Tax Rules are plainly number mandatory. The answer given by the High Court on the first question must be accepted. TO appreciate the scope of the enquiry under the, second question, the relevant provisions of the Act may be summarised. By s. 2 d of the Act, insofar as it is relevant, the expression dealer is defined as meaning, amongst others, any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise. By s. 4 2 every dealer is liable to tax in respect of sales or supplies of goods effected in Madhya Pradesh with effect from the date on which his turnover calculated during a period of twelve months immediately preceding such date first exceeds the Emits specified in sub-s. 5 . Section 6 provides that the tax payable by a dealer under the Act shall be levied on his taxable turnover relating to the goods specified in Sch. H. Section 7 provides Every dealer who in the companyrse of his business purchases any taxable goods, in circumstances in which numbertax under section 6 is payable on the sale price of such goods and either companysumes such goods in the manufacture of other goods for sale or otherwise or disposes of such goods in any manner other than by way of sale in the State or despatches them to a place outside the State except as a direct result of sale or purchase in the companyrse of inter-State trade or companymerce, shall be liable to pay tax on the purchase price of such goods at the same rate at which it would have been leviable on the sale price of such goods under section 6 Provided Counsel for the appellants submitted that the appellants were number dealers within the meaning of the Act because they did number carry on the business of buying goods, and that in any event, the goods purchased by them for use in their companystruction business were number liable to tax under s. 7. The appellants are registered dealers under the Madhya Pradesh General Sales Tax Act, 1958 Act 2 of 1959 . It is true that in respect of the periods their, turnover in respect of sales was assessed as nil. But on that account they did number cease to be registered dealers within the meaning of the Act. A person to be a dealer within the meaning of the Act need number Sup. CI-69-13 both, purchase and. sell goods a person who carries on the business of buying is, by the express, definition of the term in s. 2 d a dealer. This Court held in. The State of Andhra Pradesh v. M. Abdul Bakshi and Bros, 1 that it is, number predicted of a dealer that he must carry on the business of buying and selling the same goods. A person who buys goods for companysumption in the, process of manufacture of articles to be sold by him is a dealer within the meaning of the Hyderabad General Sales Tax Act 14 of 1950. In H. Abdul Bakshi and Bross case 1 the assessees sold skins, after tanning hides and skins purchased by them. In the process of tanning, they had to use tanning bark purchased. by them. This Court held that the turnover arising out of the tanning bark purchased by the assessees for companysumption in the proces of tanning was liable to tax on the footing that the assessees were carrying on the business of buying goods, even though the goods bought were companysumed in the process of tanning. In dealing with the question whether an activity of purchase of goods required for companysumption in a manufacturing process may be regarded as a business, the Court observed at p. 647 A person to be a dealer must be engaged in the business of buying or selling or supplying goods. The expression business though extensively used is a word of indefinite import. In taxing statutes it is used in the sense of an occupation, or profession which occupies the. time, attention and labour of a person, numbermally with the object of making profit. To regard an activity as business there must be a companyrse of dealings, either actually companytinued or companytemplated to be companytinued with a profit motive, and number for sport or pleasure. But to be a dealer a person need number follow the activity of buying, selling. and supplying the same companymodity. Mere buying for personal companysumption, i.e. without a profit motive, will number make a person I dealer within, the meaning of the Act, but a person who companysumes, a company modify bought by him in the companyrse of his trade, oruse in manufacturing another companymodity for sale would be regarded as a dealer. The Legislature has number made sale the very article bought by a person a companydition for treating in as a dealer the definition merely requires that the buying, of the. companymodity mentioned in rule 5 2 must be in the companyrse of business. i.e. must be for sale or, use with a view. to make profit, out of. the integrated activity ofbuying and, disposal. The companymodity may itself be companyverted into another 1 15 S.T.C. 644. saleable companymodity, or it may be used as an ingredient or in aid of a manufacturing process leading to the production of such saleable companymodity. This Court agreed with the view expressed in L. M. S. Sadak Thamby Co. v. The State of Madras 1 in which a similar question was decided by the High Court of Madras. In that case the assessee had purchased tanning bark and had companysumed it in tanning raw hides. The Madras High Court held that the buying of goods was in the companyrse of business since it was associated with the business of tanning of hides carried on with a profit-making motive., These decisions support the companytention of the State that price paid for goods bought for companysumption in manufacturing an article for sale is exigible to purchase-tax even if the goods purchased are either destroyed or transformed into another species of goods. Counsel for the appellants urged that in the cases of H. Abdul Bakshi and Bros. 1 and L. M. S. Sadak Thamby Company 2 the assessees were carrying on the business of selling goods manufactured by them and for the purpose of manufacturing those goods certain other goods were purchased and companysumed in the process of manufacture, but here the goods are number companysumed in producing another companymodity for sale, and on that account the two cases are distinguishable. The answer to that argument must be sought in the terms of s. 7. The phraseology used in that section is somewhat involved, but the meaning of the on the sale price of the goods, purchase-tax is payable by a dealer who buys taxable goods in the companyrse of his business, and 1 either companysumes such goods in the manufacture of other goods for sale, or 2. companysumes such goods otherwise or 3 disposes of such goods in any manner other, than by way of sale in the State or 4 despatches them to a place outside the State except as a direct result of sale or purchase in the companyrse of interState trade or companymerce. The assessees are registered as dealers and they have purchased building materials in the companyrse of their business the building materials are taxable under the Act, and the appellants have companysumed the materials otherwise than in the manufacture of goods, for sale and for a profit-motive. On the plain words of s. 7 the purchase price is taxable. Mr. Chagla for the appellants urged that the expression or otherwise is intended to denote a companyjunctive introducing a specific alternative to the words for sale immediately preceding. The clause in which it occurs means, says Mr. Chagla, that by s. 7 the price paid for buying goods companysumed in the manufacture of other goods, intended to be sold or otherwise disposed of, 1 14 S.T.C. 753. 2 15 S.T.C.644. alone is taxable. We do number think that that is a reasonable interpretation of the expression either companysumes such goods in the manufacture of other goods for sale or otherwise. It is intended by the Legislature that companysumption of goods renders the price paid for their purchase taxable, if the goods are used in the manufacture of other goods for sale or if the goods are companysumed otherwise. The decision in Versova Koli Sahakari Vahatuk Sangh Ltd. v. The State of Maharashtra 1 on which reliance was placed by Mr. Chagla has, in our judgment, numberapplication. In that case a society registered under the Bombay Co-operative Societies Act, 1925, carried on the business of transporting fish belonging to its members from fishing centres to the markets and vice versa. For preserving fish in the companyrse of transport, the society used to purchase ice, and the members, whose fish was transported, were charged for the quantity of ice required in respect of their baskets of fish. The difference between the price paid by the society for ice purchased and the charge made by the society for ice supplied was brought to tax by the Sales Tax Officer under the Bombay Sales Tax Act, 1959. The High Court of Bombay held that the society was number supplying ice with the intention of carrying on business in ice, and on that account the society was number a dealer within the definition of that term in s. 2 11 of the Act in regard to the supply. of ice by it to its members. In that case the taxing authority did number seek to impose purchase-tax he sought to bring to tax the difference between the price paid by the society for purchasing ice and the charges which it made from its members for supplying ice, and the High Court held that in supplying ice the society was number carrying on business in ice, and on that account was number a dealer. Whether in a particular set of circumstances a person may be said to be carrying on business in a companymodity must depend upon the facts of that case and.,to general test may be applied for determining that question. The appeals fail and are dismissed with companyts.

JUDGMENT OF THE CIVIL SERVICE TRIBUNAL (Third Chamber) 8 October 2008 Case/07 Florence Barbin v European Parliament (Civil service – Officials – Promotion – Procedure for the allocation of merit points in the European Parliament – Illegality of the instructions governing that procedure – Examination of comparative merits) Application: brought under Articles 236 EC and 152 EA, in which Ms Barbin seeks annulment of the European Parliament’s decision of 16 October 2006 allocating her one merit point under the 2005 promotion procedure. Held: The application is dismissed. The parties are to bear their own costs. Summary 1. Officials – Promotion – Consideration of comparative merits (Staff Regulations, Arts 43 and 45) 2. Plea of illegality – Scope – Measures the illegality of which may be pleaded (Art. 241 EC) 1. The consideration of comparative merits for the purpose of awarding merit points to an official may be conducted only within the directorate-general to which he is assigned, in view of the limited number of merit points available for each directorate-general, and given that each official in a directorate or department who is eligible for promotion is competing with all the other officials in his directorate or department for a limited number of merit points. The directorate-general designated to award merit points is that in which the official has spent the longest period of assignment during the reference year. (see paras 44-45) See: T-289/04 Lantzoni v Court of Justice [2006] ECR-SC I‑A‑2‑39 and II‑A‑2‑171, paras 68 and 69; T-156/05 Lantzoni v Court of Justice [2006] ECR-SC I‑A‑2‑189 and II‑A‑2‑969, paras 52 and 53 2. The scope of a plea of illegality must be confined to what is essential for resolving the dispute. The general measure the illegality of which is pleaded must be applicable, directly or indirectly, to the circumstances which are the subject of the action, and there must be a direct legal connection between the individual decision contested and the general measure in question. (see para. 61) See: 21/64 Macchiorlati Dalmas v High Authority [1965] ECR 175, 187; 32/65 Italy v Council and Commission [1966] ECR 389, 409 T-6/92 and T-52/92 Reinarz v Commission [1993] ECR II‑1047, para. 57; T-60/99 Townsend v Commission [2000] ECR-SC I‑A‑11 and II‑45, para. 53 /05 Sanchez Ferriz v Commission [2006] ECR-SC I‑A‑1‑41 and II‑A‑1‑135, para. 57

RANJAN GOGOI, J. Suit No. 3413 of 1991 filed by one Ashish Kumar Mazumdar hereinafter referred to as the plaintiff was decreed by a learned Single Judge of the High Court of Delhi awarding a sum of Rs. 7 lakhs with interest 12 per annum on account of damages for injuries suffered by the plaintiff while undergoing treatment in the Batra Hospital, Delhi. The aforesaid judgment and decree passed on 02.12.2008 was challenged in appeal before the Division Bench of the High Court by the defendant in the suit i.e. the trust managing the hospital hereinafter referred to as the defendant . The plaintiff had also filed a separate appeal challenging the quantum of damages awarded and seeking enhancement thereof. The Division Bench of the High Court by a companymon order dated 23.12.2009 dismissed the appeal filed by the defendant trust and allowed the appeal filed by the plaintiff enhancing the amount of damages awarded from Rs. 7 lakhs to Rs. 11 lakhs alongwith interest 12 per annum. Not satisfied, the plaintiff has filed Civil Appeal No.4010 of 2010, whereas aggrieved by the dismissal of its appeal, the defendant trust has filed the companynected appeals Civil Appeal Nos. 4011- 4012 of 2010 . We have heard Mr. S.B. Upadhyay, learned senior companynsel for the plaintiff and Mr. S.S. Khanjuda, learned companynsel for the defendant. According to the plaintiff, he was admitted as an indoor patient in the Batra Hospital on 27.10.1988 and was lodged in Room No.305 on the third floor of the hospital. He was running high fever and was in a delirious state. In the night intervening 31.10.1988 and 01.11.1988, at about 2.20 a.m., the plaintiffs sister, one Kajal, who was staying with him in the room had numbericed the absence of the plaintiff from the room. She promptly informed the staff nurse on duty and a search was companyducted to trace out the plaintiff in the companyrse of which a security guard, Hans Raj, found the plaintiff lying on the ground floor in the oncology gallery of the hospital and at a distance of 50 yards from a point immediately below the window of room No. 305. The plaintiff suffered multiple fracture of lumbar vertebrae with companyplete dislocation of the spinal companyd and despite treatment he became a paraplegic i.e. 100 disabled below the waist. Though the plaint is silent on the circumstances in which the injuries were caused or the manner in which the same were sustained, according to the plaintiff, as at the time of the incident he was an indoor patient in the hospital it was the duty and responsibility of the hospital authorities to take care of the plaintiff who was suffering from high fever and was in a delirious state. The plaintiff had alleged that it is on account of the absence of due and reasonable care on the part of the hospital authorities that the incident companyld occur disabling the plaintiff for the rest of his life. According to the plaintiff though the injuries suffered by him had number immediately affected his employment as a Junior Assistant in Punjab National Bank the same had severely affected his service prospects. Accordingly, the suit in question was filed seeking damages to the extent of Rs. 58 lakhs the claim, however, was restricted to Rs. 25 lakhs on account of the plaintiffs inability to pay the requisite companyrt fee on the rest of the amount. The defendant trust, in its written statement, took the stand that the hospital had permitted the plaintiffs sister to stay in the room as an attendant and that the plaintiff had himself jumped out of the window of his room despite the presence of his sister leading to the injuries suffered. On the said broad facts the defendant denied the allegation of negligence and absence of due care on its part as claimed by the plaintiff in the suit. On the basis of the pleadings of the parties, the learned Trial Judge framed four issues for trial in the suit. Five witnesses including the plaintiff himself PW-1 , his sister PW-2 and his brother PW-3 were examined. One Dr. R.K. Srivastava PW-5 was also examined to prove the disability certificate showing the extent of the disability of the plaintiff. To companytrovert the case of the plaintiff, the defendant had examined one Dr. Arun Dewan DW-1 who had treated the plaintiff and the security guard Hans Raj DW-2 who had found the plaintiff in an injured state. The learned Trial Judge came to the companyclusion that, having regard to the layout of the room and the location of the window and also having regard to the precarious health companydition of the plaintiff on the day of the incident he was running high fever , it was number possible to accept the companytention of the defendant that the plaintiff had himself jumped out of the window resulting in the injuries sustained. On the companytrary the learned Trial Judge came to the companyclusion that the facts established by the evidence on record attracted the principle of res ipsa loquitur and, therefore, it was for the defendant to prove the absence of any negligence and due care and attention on its part. Proceeding, the learned Trial Judge was also of the view that duty of a hospital is number limited to diagnosis and treatment but extends to looking after the safety and security of the patients, particularly, those who are sick or under medication and therefore can become delirious and incoherent. Adverting to the facts before him, the learned Judge took the view that it is evident that in the present case the plaintiff, who was suffering from high fever, had gone out for a stroll in the middle of the night being unable to sleep. His absence from the room on being numbericed by his sister PW-2 a search was organized and the plaintiff was found lying on the ground floor in the oncology gallery of the hospital with the injuries in question. On the said basis, the learned Trial Judge companycluded that, in the present case, the hospital should be held liable for number maintaining the necessary vigil in the hospital premises to ensure the safety of its patients and it is on account of the absence of such vigil that the plaintiff, despite his poor health, was able to walk around and in the process had sustained the injuries in question. So far as the quantum of damages is companycerned, the learned Trial Judge quantified the same at Rs.7 lakhs along with interest at 12 per annum thereon. In appeal, the Division Bench reiterated the findings recorded by the learned Trial Judge holding the same to be justified in the totality of the facts proved in the case. Additionally, the Division Bench was of the view that the plaintiff was entitled to a total amount of Rs.11 lakhs by way of damages which was quantified in the following manner For loss of future prospects in Rs. 4,00,000.00 employment For keeping an attendant Rs. 4,00,000.00 For number-pecuniary loss including Rs. 3,00,000.00 pain and suffering, loss of limb etc. The aforesaid amount of damages was directed to carry interest 12 from the date of filing of the suit i.e. 29.10.1991. The maxim res ipsa loquitur in its classic form has been stated by Erle C.J. 1 where the thing is shown to be under the management of the defendant or his servants, and the accident is such as in the ordinary companyrse of things does number happen if those who have the management use proper care, it affords reasonable evidence, in the absence of explanation by the defendants, that the accident arose from want of care.1 The maxim applies to a case in which certain facts proved by the plaintiff, by itself, would call for an explanation from the defendant without the plaintiff having to allege and prove any specific act or omission of the defendant. In Shyam Sunder and Others vs. The State of Rajasthan2 it has been explained that the principal function of the maxim is to prevent injustice which would result if the plaintiff was invariably required to prove the precise cause of the accident when the relevant facts are unknown to him but are within the knowledge of the defendant. It was also explained that the doctrine would apply to a situation when the mere happening of the accident is more companysistent with the negligence of the defendant than with other causes. We have companysidered the case of the respective parties and the evidence adduced in support thereof the judgment under appeal as well as the view taken by the learned Trial Judge besides the arguments and companytentions advanced before us. The learned companyrts have applied the principle of res ipsa loquitur to the present case to cast the burden of proving that there was numbernegligence on the defendant. Thereafter, the learned Trial Judge as well as the Division Bench of the High Court has held the defendant liable for negligence and failure to take due care of the plaintiff who was an indoor patient in the hospital. The aforesaid companyclusions reached is on an elaborate companysideration of the evidence and materials on record and after a detailed discussion of the stand of the rival parties. On a companysideration of the facts of the present case we do number find any error in the application of the principle of res ipsa loquitur to the present case. In so far as the findings of negligence and absence of due care of the defendant is companycerned, we are of the view that such findings being companycurrent findings of fact the same ought number to be reopened by us in the appeal filed by the defendant-hospital under Article 136 of the Constitution. Any such exercise would be wholly inappropriate to the extraordinary and highly discretionary jurisdiction vested in this Court by the Constitution. Even otherwise, we do number find anything inherently improbable or outrageously illogical in the companyclusions reached by the learned Trial Judge as affirmed in appeal. The appeals filed by the defendant-hospital are, therefore, dismissed. Insofar as the quantum of companypensation is companycerned, we are of the view that the three broad heads companysidered by the Division Bench for award of damages are sufficiently representative of the claim of the plaintiff.

Judgment of the Court of 15 September 1982. - Denkavit Futtermittel GmbH v Federal Republic of Germany. - Reference for a preliminary ruling: Verwaltungsgericht Frankfurt am Main - Germany. - Aid for skimmed-milk - Inspection charges. - Case 233/81. European Court reports 1982 Page 02933 Summary Parties Subject of the case Grounds Decision on costs Operative part Keywords AGRICULTURE - COMMON ORGANIZATION OF THE MARKETS - MILK AND MILK PRODUCTS - AID FOR SKIMMED MILK - COST OF THE NECESSARY INSPECTIONS - CHARGING TO THE UNDERTAKING CONCERNED - PERMISSIBILITY - CONDITIONS ( COMMISSION REGULATION NO 1725/79 , ART . 10 ) Summary ARTICLE 10 OF REGULATION NO 1725/79 DOES NOT PROHIBIT MEMBER STATES FROM CHARGING , UNDER NATIONAL LEGISLATION , THE COST OF CARRYING OUT INSPECTIONS PURSUANT TO THAT ARTICLE TO THE UNDERTAKING CONCERNED PROVIDED THAT THE CHARGES WHICH THE UNDERTAKING IS ASKED TO PAY REPRESENT THE NORMAL COST OF INSPECTIONS OF THAT NATURE AND ARE NOT SO GREAT AS TO BE LIABLE TO DETER UNDERTAKINGS FROM CARRYING ON THE ACTIVITIES WHICH THE AID FOR SKIMMED MILK IS INTENDED TO ENCOURAGE . Parties IN CASE 233/81 REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE VERWALTUNGSGERICHT ( ADMINISTRATIVE COURT ) FRANKFURT AM MAIN FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN DENKAVIT FUTTERMITTEL GMBH , WARENDORF , AND FEDERAL REPUBLIC OF GERMANY , REPRESENTED BY THE BUNDESAMT FUR ERNAHRUNG UND FORSTWIRTSCHAFT ( FEDERAL OFFICE FOR FOOD AND FORESTRY ), FRANKFURT AM MAIN , Subject of the case ON THE INTERPRETATION OF ARTICLE 10 OF COMMISSION REGULATION ( EEC ) NO 1725/79 OF 26 JULY 1979 ON THE RULES FOR GRANTING AID TO SKIMMED MILK PROCESSED INTO COMPOUND FEEDINGSTUFFS AND SKIMMED-MILK POWDER INTENDED FOR FEED FOR CALVES ( OFFICIAL JOURNAL L 199 , P . 1 ), Grounds 1 BY AN ORDER OF 8 JULY 1981 WHICH WAS RECEIVED BY THE COURT ON 17 AUGUST 1981 THE VERWALTUNGSGERICHT ( ADMINISTRATIVE COURT ) FRANKFURT AM MAIN REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY A QUESTION CONCERNING THE INTERPRETATION OF ARTICLE 10 OF COMMISSION REGULATION ( EEC ) NO 1725/79 OF 26 JULY 1979 ON THE RULES FOR GRANTING AID TO SKIMMED MILK PROCESSED INTO COMPOUND FEEDINGSTUFFS AND SKIMMED-MILK POWDER INTENDED FOR FEED FOR CALVES ( OFFICIAL JOURNAL L 199 , P . 1 ). 2 THE QUESTION AROSE IN THE COURSE OF AN ACTION BY A MANUFACTURER OF CALF FEED MADE FROM SKIMMED-MILK POWDER CHALLENGING A DECISION OF THE BUNDESAMT FUR ERNAHRUNG UND FORSTWIRTSCHAFT ( FEDERAL OFFICE FOR FOOD AND FORESTRY ), THE GERMAN INTERVENTION AGENCY , WHICH CHARGED IT DM 329.90 FOR EXPENSES CONNECTED WITH THE INSPECTION OF PRODUCTS ELIGIBLE FOR COMMUNITY AID . THE DECISION WAS BASED ON ARTICLE 12 OF THE GERMAN REGULATION OF 1977 ON THE GRANT OF AID FOR SKIMMED MILK ( BEIHILFENVERORDNUNG-MAGERMILCH ( SKIMMED MILK AID REGULATION ) BUNDESGESETZBLATT 1977 I , P . 792 ) WHICH PROVIDES THAT THE EXPENDITURE INCURRED IN TAKING SAMPLES AND MAKING ANALYSES OF GOODS IS TO BE CHARGED TO THE PERSONS APPLYING FOR AID . 3 THE UNDERTAKING IN QUESTION MAINTAINED THAT THE COMMUNITY REGULATIONS GOVERNING AID FOR THE USE OF SKIMMED-MILK POWDER FOR ANIMAL FEED LEFT THE MEMBER STATES NO DISCRETION TO REGULATE THE MANNER IN WHICH THE NECESSARY INSPECTIONS CONNECTED WITH THE GRANT OF AID IN THAT SECTOR WERE TO BE EXERCISED , AND THE VERWALTUNGSGERICHT THEREFORE ASKED THE COURT WHETHER IT WAS COMPATIBLE WITH COMMUNITY LAW FOR THE FEDERAL REPUBLIC OF GERMANY TO IMPOSE A CHARGE FOR THE COST OF INSPECTING PRODUCTS PURSUANT TO ARTICLE 10 OF REGULATION NO 1725/79 . 4 THE POINT RAISED BY THE NATIONAL COURT IN THE QUESTION IS WHETHER ARTICLE 10 IS TO BE INTERPRETED AS PREVENTING A MEMBER STATE FROM CHARGING UNDERTAKINGS , UNDER NATIONAL LAW , FOR THE COST OF THE INSPECTIONS CARRIED OUT IN PURSUANCE OF THAT PROVISION . 5 IT SHOULD BE NOTED THAT ARTICLE 10 OF REGULATION ( EEC ) NO 804/68 OF THE COUNCIL OF 27 JUNE 1968 ON THE COMMON ORGANIZATION OF THE MARKET IN MILK AND MILK PRODUCTS ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1968 ( I ), P . 176 ) PROVIDES THAT AID IS TO BE GRANTED FOR SKIMMED-MILK POWDER WHICH IS PRODUCED IN THE COMMUNITY AND IS FOR USE AS FEEDINGSTUFFS IF THE PRODUCT REACHES CERTAIN STANDARDS . REGULATION ( EEC ) NO 986/68 OF THE COUNCIL OF 15 JULY 1968 LAYING DOWN GENERAL RULES FOR GRANTING AID FOR SKIMMED MILK AND SKIMMED-MILK POWDER FOR USE AS FEED ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1968 ( I ), P . 260 ) PROVIDES , IN ARTICLE 3 , THAT AID SHALL BE PAID ONLY WHEN PROOF HAS BEEN GIVEN THAT THE SKIMMED-MILK POWDER HAS BEEN DENATURED OR USED IN THE MANUFACTURE OF COMPOUND FEEDINGSTUFFS AND IN ARTICLE 4 , AS AMENDED BY REGULATION NO 1038/72 OF THE COUNCIL OF 18 MAY 1972 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1972 ( II ), P . 456 ), THAT MEMBER STATES ARE TO TAKE THE MEASURES NECESSARY TO ENSURE THE APPLICATION OF THOSE PROVISIONS . 6 THAT IS THE CONTEXT IN WHICH ARTICLE 10 OF REGULATION NO 1725/79 MUST BE PLACED . IT DESCRIBES THE INSPECTION MEASURES WHICH ARE TO BE TAKEN BY THE MEMBER STATES AS REGARDS , IN PARTICULAR , THE MAXIMUM MOISTURE CONTENT OF SKIMMED-MILK POWDER AND THE USE OF THE PRODUCT , WHETHER AS SUCH OR IN THE FORM OF A MIXTURE , IN THE MANUFACTURE OF COMPOUND FEEDINGSTUFFS WITHIN THE MEANING OF THE REGULATION . AS TO THAT LAST POINT , ARTICLE 10 ( 2 ) PROVIDES THAT THE CONTROL MEASURES TO BE DETERMINED BY THE MEMBER STATE CONCERNED ARE TO FULFIL AT LEAST THE CONDITIONS LAID DOWN THEREIN . ARTICLE 10 ( 3 ) PROVIDES THAT THE RESULTS OF THE INSPECTIONS ARE TO BE RECORDED BY THE AGENCY RESPONSIBLE FOR INSPECTION IN THE ANALYSIS REPORT AND THE INSPECTION REPORT THE FORM OF WHICH IS LAID DOWN IN THE REGULATION ; COPIES OF THE DOCUMENTS ARE TO BE FORWARDED TO THE UNDERTAKING CONCERNED . 7 ARTICLE 10 OF REGULATION NO 1725/79 REVEALS ON EXAMINATION THAT NO PROVISION IS MADE AS TO THE COSTS OF THE INSPECTIONS WHICH ARE TO BE CARRIED OUT . HOWEVER , INASMUCH AS ARTICLE 10 STATES THAT THE CONTROL MEASURES ARE TO FULFIL ' ' AT LEAST ' ' THE CONDITIONS LAID DOWN THEREIN , AND PROVIDES THAT THEY ARE TO BE DETERMINED BY THE MEMBER STATES , IT INDICATES THAT THE COMMUNITY RULES CONCERNING SUCH INSPECTIONS ARE NOT EXHAUSTIVE . 8 THE WORDING OF THE REGULATION DOES NOT , THEREFORE , PREVENT MEMBER STATES EITHER FROM CARRYING OUT SUCH INSPECTIONS FREE OF CHARGE OR FROM REQUIRING THE UNDERTAKINGS IN QUESTION TO REIMBURSE THE EXPENDITURE WHICH SUCH INSPECTIONS ENTAIL . 9 IT MUST THEREFORE BE CONCLUDED , AS THE COURT HAS HELD WITH REGARD TO THE COMMON ORGANIZATION OF THE MARKET IN EGGS ( JUDGMENT OF 13 NOVEMBER 1978 IN BUSSONE , CASE 31/78 ( 1978 ) ECR 2429 ), THAT THE COMMUNITY RULES LEAVE MEMBER STATES FREE TO RESOLVE THE PROBLEM OF FINANCING THE CONTROLS . 10 WHILE MEMBER STATES ' FREEDOM IN THAT RESPECT MAY NOT BE USED IN SUCH A WAY AS TO JEOPARDIZE THE OBJECTIVES OF THE RULES UNDER WHICH IT IS GRANTED THOSE OBJECTIVES WILL NOT BE JEOPARDIZED IF THE CHARGES WHICH THE UNDERTAKING IS ASKED TO PAY REPRESENT THE NORMAL COST OF INSPECTIONS OF THAT NATURE AND ARE NOT SO GREAT AS TO BE LIABLE TO DETER UNDERTAKINGS FROM CARRYING ON THE ACTIVITIES WHICH THE AID IS INTENDED TO ENCOURAGE . 11 IN THE ORDER MAKING THE REFERENCE THE COURT ' S ATTENTION IS ALSO DRAWN TO ARTICLE 9 ( 4 ) OF REGULATION NO 1725/79 WHICH PROVIDES THAT , IF THE APPLICANT SO REQUESTS , A SPECIAL INVESTIGATION MAY BE CARRIED OUT , THE COSTS OF WHICH SHALL BE BORNE BY THE APPLICANT . SINCE THERE IS NO EXPRESS PROVISION AS TO COSTS IN ARTICLE 10 IT MAY BE INFERRED , ACCORDING TO THE ORDER , THAT COSTS CONNECTED WITH INSPECTIONS CARRIED OUT PURSUANT TO ARTICLE 10 MAY NOT BE RECOVERED FROM THE UNDERTAKINGS CONCERNED . 12 IT SHOULD BE NOTED , HOWEVER , AS THE COMMISSION HAS RIGHTLY EMPHASIZED , THAT ARTICLE 9 ( 4 ) REFERS TO A SPECIFIC CASE , NAMELY THAT WHEN RECOVERY IS SOUGHT OF AID UNDULY PAID THE UNDERTAKING IN QUESTION MAY FURNISH PROOF THAT THE RELEVANT COMMUNITY PROVISIONS HAVE BEEN DISREGARDED IN RESPECT OF ONLY SOME OF THE SKIMMED MILK OR SKIMMED-MILK POWDER WHICH WAS USED BETWEEN TWO DATES ON WHICH INSPECTIONS WERE CARRIED OUT . THE FACT THAT ARTICLE 9 ( 4 ) REQUIRES THE COSTS OF FURNISHING SUCH PROOF TO BE BORNE BY THE UNDERTAKING CONCERNED HAS THEREFORE NO BEARING ON THE INTERPRETATION TO BE GIVEN TO ARTICLE 10 . 13 FOR ALL THOSE REASONS THE INTERPRETATION TO BE GIVEN IN REPLY TO THE QUESTION WHICH HAS BEEN RAISED MUST BE THAT ARTICLE 10 OF REGULATION NO 1725/79 DOES NOT PROHIBIT MEMBER STATES FROM CHARGING , UNDER NATIONAL LEGISLATION , THE COST OF CARRYING OUT INSPECTIONS PURSUANT TO THAT ARTICLE TO THE UNDERTAKING CONCERNED PROVIDED THAT THE CHARGES WHICH THE UNDERTAKING IS ASKED TO PAY REPRESENT THE NORMAL COST OF INSPECTIONS OF THAT NATURE AND ARE NOT SO GREAT AS TO BE LIABLE TO DETER UNDERTAKINGS FROM CARRYING OUT THE ACTIVITIES WHICH THE AID IS INTENDED TO ENCOURAGE . Decision on costs COSTS 14 THE COSTS INCURRED BY THE GOVERNMENT OF THE FEDERAL REPUBLIC OF GERMANY 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 DISPUTE ARE CONCERNED , IN THE NATURE OF A STEP IN THE ACTION BEFORE THE NATIONAL COURT , THE DECISION AS TO COSTS IS A MATTER FOR THAT COURT . Operative part ON THOSE GROUNDS , THE COURT , IN ANSWER TO THE QUESTION REFERRED TO IT BY THE VERWALTUNGSGERICHT FRANKFURT AM MAIN BY AN ORDER DATED 8 JULY 1981 , HEREBY RULES : ARTICLE 10 OF REGULATION NO 1725/79 DOES NOT PROHIBIT MEMBER STATES FROM CHARGING , UNDER NATIONAL LEGISLATION , THE COST OF CARRYING OUT INSPECTIONS PURSUANT TO THAT ARTICLE TO THE UNDERTAKING CONCERNED PROVIDED THAT THE CHARGES WHICH THE UNDERTAKING IS ASKED TO PAY REPRESENT THE NORMAL COST OF INSPECTIONS OF THAT NATURE AND ARE NOT SO GREAT AS TO BE LIABLE TO DETER UNDERTAKINGS FROM CARRYING ON THE ACTIVITIES WHICH THE AID IS INTENDED TO ENCOURAGE .

R. SHAH, J. Feeling aggrieved and dissatisfied with the impugned Order dated 31.01.2019 passed by the National Company Law Appellate Tribunal, New Delhi in Company Appeal AT No. 29 of 2019 by which the learned Appellate Tribunal has dismissed the said appeal preferred by the appellant herein ExDirector of respondent No. 2 Infrastructure Leasing Financial Services Limited hereinafter referred to as the ILFS and has companyfirmed the order passed by the National Company Law Tribunal, Mumbai Bench hereinafter referred to as the learned Tribunal dated 01.01.2019 by which the learned Tribunal allowed the said application preferred by the Central Government under Section 130 1 2 of the Companies Act, 2013 hereinafter referred to as the Companies Act and has permitted recasting and re opening of the accounts of ILFS, ILFS Financial Services Limited hereinafter referred to as the IFIN and ILFS Transportation Networks Limited hereinafter referred as the ITNL for the last five years, the original appellant has preferred the present appeal. The facts leading to the present appeal in nutshell are as under That respondent No. 2 ILFS is a companypany incorporated under the provisions of the Companies Act, 1956. That the said companypany ILFS has 348 group companypanies, including IFIN and ITNL. That the said ILFS is a companye investment companypany and systemically important NonBanking Finance Company duly approved under the Reserve Bank of India Act, 1931. The said companypany was promoted by the Central Bank of India, HDFC Ltd., the Union Trust of India. That the said companypany is holding prominent infrastructure development and finance companypanies. Over the years, it had inducted institutional shareholders. That the said ILFS, during the financial year 201718 had 169 companypanies, out of which, 24 companypanies are direct subsidiaries, 135 companypanies are indirect subsidiaries, 6 companypanies are joint ventures and 4 companypanies are associate companypanies. That the appellant herein claims to be the VicePresident Director of ILFS who has been suspended as the Director of ILFS and its group companypanies. 2.1 That on 01.10.2018, the Central Government through the Ministry of Corporate Affairs filed a petition before the learned Appellate Tribunal under Sections 241 and 242 of the Companies Act alleging inter alia, mismanagement by the Board of ILFS and that the affairs of ILFS were being companyducted in a manner prejudicial to public interest. That the Central Government prayed for the following reliefs That the existing Board of Directors of Respondent No. 1 companypany, companyprising of R2 to R8, be suspended with immediate effect and 10 Ten persons be appointed as directors in terms of provisions of Section 242 2 k of the Act, to manage the affairs of R1 companypany and its group companypanies through their numberinees, and such directors any report and function under the Honble Tribunal on such matters as it may direct That the Board of Directors appointed by the Honble Tribunal in terms of 242 2 k of the Act be authorized to replace such number of directors of subsidiaries, joint ventures and associate companypanies as may be required to make the R1 and its group companypanies as going companycern. 2.2 That it was found that the management of ILFS and other group companypany companypanies were responsible for negligence and incompetence, and had falsely presented a rosy financial statement. To unearth the irregularities companymitted by ILFS and its companypanies, the provisions of Section 212 1 c of the Companies Act were invoked for investigation into the affairs of the companypany. The investigation was to be carried out by the Serious Fraud Investigation Office hereinafter referred to as the SFIO in exercise of powers under Section 212 of the Companies Act. The SFIO submitted an interim report dated 30.11.2018 to the Central Government placing on record that the affairs in respect of ILFS group Companies were mismanaged, and that the manner in which the affairs of the companypany were being companyducted was against the public interest. The said report shall be referred to hereinbelow. It appears that the Registrar of Companies also companyducted an enquiry under Section 206 of the Companies Act, and prima facie companycluded that mismanagement and companypromise in companyporate governance numberms and risk management has been perpetuated on ILFS and its group companypanies by indiscriminately raising long term and short terms loans borrowings through Public Sector Banks and financial institutions. It was also observed that ILFS companypany has been presenting a rosy picture by camouflaging its financial statements, and companycealing and suppressing severe mismatch between its cash flows and payment obligations, total lack of liquidity and adverse financial ratios. It was also found that ILFS companypany has first defaulted on companymercial paper and then on short term borrowings i.e. inter companyporate deposits, negative cash flows in operating activities etc. It was further observed that the companysolidated balancesheet of ILFS companypany indicated the extremely precarious financial position, and was virtually in deep red. It was found that intangible assets of approximately Rs.18,540 crores as on 31.03.2017, has increased to approximately Rs.20,004 crores as on 31.03.2018, thus creating a serious doubt about the companyrectness of the financial statements. A Report dated 03.12.2018 was submitted by the Institute of Chartered Accountants of India ICAI which has been placed on the record of the Tribunal. 2.3 In this background, the Union of India approached the learned Tribunal for reliefs under Sections 241 and 242 of the Companies Act. 2.4 Thereafter, by a detailed and reasoned order, the learned Tribunal vide Order dated 01.10.2018 allowed the said prayers and suspended the Board of Directors of ILFS, and appointed the newly companystituted Board to companyduct the business as per the Memorandum and Articles of the companypanies. That the learned Tribunal issued the following directions On the basis of the foregoing discussions and after companysidering the facts of the case, a narrated in the Petition filed by the Union of India, this Bench is of the companysidered view that it is judicious to invoke the jurisdiction prescribed under Section 241 2 of the Companies Act, 2013 and the Tribunal is of the opinion that as per Section 242 1 of the Companies Act, 2013, the affairs of the ILFS were being companyducted in a manner prejudicial to public interest. The Interim prayer of suspending the present Board of Directors and reconstitution of the new Board of Directors is hereby allowed. At present, by an additional affidavit only 6 names supra of Board members have proposed by the Union of India. Further directed that the present Board of Directors be suspended with immediate effect. The six Directors as reproduced supra shall take over the R1 companypany immediately. Newly companystituted Board shall hold a meeting on or before 8th October, 2018 and companyduct business as per the Memorandum and Articles of Association of the companypany and the provisions of the Companies Act, 2013. Liberty is granted to the Board of Directors to select a Chairman among themselves. Thereafter, report the roadmap to NCLT, Mumbai Bench at the earliest possible number later than the next date of hearing. The suspended directors hence forth shall number represent the R1 companypany as a Director and shall also number exercise any powers as a director in any manner before any authority as well. As a companysequence of Admission of the Petition, issue numberice to intimate next date of hearing. The Petition is to serve companyy of this order along with Petition to all the Respondents. The Respondents in turn may file their reply by 15th October, 2018, only after serving companyy to the petitioner. The Petitioner can file rejoinder, if deem fit, by 30 th October, 2018. 2.5 That thereafter the Union of India through the Ministry of Corporate Affairs approached the learned Tribunal under Section 130 1 of the Companies Act seeking permission for reopening of the books of accounts and recasting thereof, including the financial statements of ILFS, ILFS Financial Services Limited and ILFS Transportation Networks Limited for the last five years viz. from Financial Year 20122013 to Financial Year 20172018. The learned Tribunal issued numberices to the Income Tax Authorities, SEBI, and any other statutory regulatory body or authority, or other persons companycerned. The learned Tribunal directed the Central Government to serve the numberices upon the said parties. At this stage, it is required to be numbered that the aforesaid three companypanies through their new board of directors appeared through their companynsel before the learned Tribunal at the time of hearing of the aforesaid application under Section 130 of the Companies Act. That, thereafter, after hearing the companynsel appearing on behalf of the respective parties, including the learned companynsel appearing on behalf of the erstwhile directors, who opposed the application filed under Section 130 of the Companies Act, the learned Tribunal vide its Order dated 01.01.2019 allowed the application filed under Section 130 of the Companies Act, and permitted the said application for reopening the books of accounts, and recasting the financial statements of the aforesaid three companypanies for the last five years viz. from Financial Year 20122013 to Financial Year 20172018. 2.6 Feeling aggrieved and dissatisfied with the order passed on the application under Section 130 of the Companies Act by the learned Tribunal dated 01.01.2019, permitting the reopening and recasting of the financial statements of the aforesaid three companypanies for the last five years viz. from Financial Year 2012 2013 to Financial Year 20172018, the appellant herein who is a suspended Director of ILFS alone preferred an appeal before the learned Appellate Tribunal. That by the impugned judgment and order, the learned Appellate Tribunal has dismissed the said appeal. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Appellate Tribunal dismissing the said appeal, and companyfirming the order passed by the learned Tribunal dated 01.01.2019 allowing the application under Section 130 of the Companies Act, the original appellant i.e. the suspended Director erstwhile Director of ILFS has preferred the present appeal. With the companysent of the learned Senior Counsel appearing on behalf of the respective parties, and in the facts and circumstances of the case, we have heard the application for vacating the interim Order along with the main Appeal finally. Shri Dhruv Mehta, learned senior companynsel has appeared on behalf of the appellant and Shri Maninder Singh, learned Senior Counsel has appeared on behalf of the Union of India as well as the other companytesting respondents. Shri Dhruv Mehta, learned Senior Counsel appearing on behalf of the appellant has vehemently submitted that the impugned order passed by the learned Appellate Tribunal dismissing the said appeal and companyfirming the order passed by the learned Tribunal allowing the application under Section 130 of the Companies Act is absolutely illegal and bad in law. 6.1 Mr. Dhruv Mehta, learned Senior Counsel appearing on behalf of the appellant has submitted that the order passed by the learned Tribunal allowing the application under Section 130 of the Companies Act is absolutely illegal and as such companytrary to the provisions of Section 130 of the Companies Act. It is further submitted by Mr. Dhruv Mehta that as such the preconditions before passing the order under Section 130 of the Companies Act for reopening and recasting the statements of account of the companypany, namely i the relevant earlier accounts were prepared in a fraudulent manner or ii the affairs of the companypany were mismanaged during the relevant period, casting a doubt on the reliability of financial statements, have number been satisfied. 6.2 Mr. Dhruv Mehta, learned Senior Counsel appearing on behalf of the appellant has submitted that as such there is numberspecific finding given by the learned Tribunal while allowing the application under Section 130 of the Companies Act that either the relevant earlier accounts were prepared in a fraudulent manner, or the affairs of the companypany were mismanaged, during the relevant period casting a doubt on the reliability of financial statements. It is submitted that in the absence of any specific finding by the learned Tribunal on the aforesaid, it was number permissible for the learned Tribunal to pass the order under Section 130 of the Companies Act permitting reopening of the books of accounts and recasting of financial statements of the companypany companypanies. 6.3 It is further submitted that, on the companytrary, there is a specific finding observation by the learned Tribunal in the order under Section 130 of the Companies Act itself that the accounts were number prepared in a fraudulent manner. It is submitted that the companyditions precedent for invoking the powers under Section 130 of the Companies Act were number satisfied, and the learned Tribunal was number justified in passing the impugned order under Section 130 of the Companies Act. It is further submitted that therefore the learned Appellate Tribunal ought to have quashed and set aside the order passed by the learned Tribunal. 6.4 It is further submitted by Shri Dhruv Mehta learned Senior Counsel that, even otherwise, the order passed by the learned Tribunal is in breach of natural justice inasmuch as sufficient opportunity was number given to the appellant by the learned Tribunal before passing the order under Section 130 of the Companies Act. It is submitted that the numberice on the application under Section 130 of the Companies Act was issued on 27.12.2018 and the impugned order came to be passed on 01.01.2019. It is submitted that even though the appellant sought time to file the reply, the Tribunal without granting any further time to the appellant to file the reply, passed the impugned order. It is submitted that as per the amended Section 130 of the Companies Act, before passing the order under Section 130 of the Companies Act, number only the Income Tax Authorities and other authorities were required to be heard, even the other persons companycerned, including the Directors ExDirectors of the companypany were required to be heard. It is submitted that the order passed by the learned Tribunal was in violation of the principles of natural justice, therefore the same was required to be quashed and set aside by the learned Appellate Tribunal. It is further submitted that though the aforesaid submission was made before the learned Appellate Tribunal, and the learned Appellate Tribunal accepted that the order passed by the learned Tribunal is in breach of the principles of natural justice, the learned Appellate Tribunal dismissed the appeal. It is submitted that, therefore, in the facts and circumstances of the case, the learned Appellate Tribunal ought to have set aside the order passed by the learned Tribunal and ought to have remanded the matter to the learned Tribunal for fresh decision after giving opportunity of hearing to the appellant. In support of the above submissions and request, Shri Dhruv Mehta, learned senior companynsel appearing on behalf of the appellant has heavily relied upon the decisions of this Court in the case of Mannalal Khetan Kedar Nath Khetan 1977 2 SCC 424 and in the case of Swadeshi Cotton Mills v. Union of India 1981 1 SCC 664. Relying upon the above decisions of this Court, it is submitted that when the Statute provides that things are required to be done in a particular manner, it ought to have been done in the same manner as provided under the Statute. It is submitted that in the present case as the Statute specifically provides that before passing the order under Section 130 of the Companies Act, an opportunity is to be given to all companycerned and that two companyditions, as referred to hereinabove, are to be satisfied, the same are required to be followed and companyplied with. 6.5 It is further submitted by Shri Dhruv Mehta, learned Senior Counsel appearing on behalf of the appellant that, even otherwise, there is numberspecific finding by the learned Tribunal with respect to the mismanagement by the erstwhile Directors. So far as the reliance placed upon the observations made in the earlier order dated 01.10.2018 is companycerned, it is submitted that the order dated 01.10.2018 passed under Sections 241/242 of the Companies Act cannot be said to be the final order. It is submitted that it is an interim order report to which the appellant has already submitted the objections, which are yet to be companysidered. It is submitted that, therefore, companydition No. ii of Section 130 1 of the Companies Act is number satisfied. 6.6 It is submitted that therefore, as the companydition precedent while invoking the powers under Section 130 of the Companies Act are number being met, the learned Tribunal ought number to have and companyld number have invoked and applied Section 130 of the Companies Act. In support of his above submission, Shri Dhruv Mehta, learned Senior Counsel appearing on behalf of the appellant has relied upon the decision of this Court in the case of Calcutta Discount Company v. Income Tax Officer AIR 1961 SC 372. 6.7 It is further submitted by the learned Senior Counsel appearing on behalf of the appellant that all the three different provisions, namely Section 130, Sections 211/212 and Sections 241/242 of the Companies Act, operate in the different fields and in different situations and as such they are in different chapters and therefore the observations made while passing the order under one provision cannot be made applicable to while passing the order under different provisions. 6.8 Shri Dhruv Mehta, learned Senior Counsel appearing on behalf of the appellant has further submitted that what is required to be companysidered is the relevant material at the time when the learned Tribunal passed the order under Section 130 of the Companies Act. It is submitted that the respondents cannot support the order passed by the learned Tribunal under Section 130 of the Companies Act relying upon the subsequent developments events. In support of his above submission, he has heavily relied upon the decisions of this Court in the cases of Mohinder Singh Gill v. Chief Election Commissioner, New Delhi 1978 1 SCC 405 and T.P. Senkumar v. Union of India 2017 6 SCC 801. It is submitted that the decision of this Court in the case of Chairman, All India Railway Recruitment Board v. K. Shyam Kumar 2010 6 SCC 614 relied upon by the learned Counsel appearing on behalf of the Union of India shall number be applicable to the facts of the case on hand. It is submitted that in the case of K. Shyam Kumar supra , this Court was companysidering the administrative decision order and while companysidering such administrative order decision, this Court observed that the subsequent events reports can be companysidered while companysidering the legality and validity of the original action order in the public interest. 6.9 Shri Dhruv Mehta, learned Senior Counsel appearing on behalf of the appellant has further submitted that, therefore, neither the companydition precedent provided in Section 130 1 of the Companies Act has been companyplied with satisfied, number even Section 130 2 of the Companies Act has been companyplied with, and it is in violation of the provisions of Section 130 1 of the Companies Act, and as sufficient opportunity was number given to the appellant, therefore, is in violation of the principles of natural justice. It is prayed that the present appeal be allowed and the order passed by the learned Tribunal allowing the application under Section 130 of the Act be set aside. 6.10 It is further submitted by Shri Dhruv Mehta, learned Senior Counsel appearing on behalf of the appellant that so far as the impugned order passed by the learned Appellate Tribunal is companycerned, it is submitted that numbere of the submissions ground raised on behalf of the appellant have been dealt with and or companysidered by the Appellate Tribunal. It is submitted that the learned Appellate Tribunal was companysidering deciding the statutory appeal and therefore the learned Appellate Tribunal was supposed to deal with the grounds raised on behalf of the appellant. It is submitted that though the plea of violation of principles of natural justice was specifically pleaded and even the learned Appellate Tribunal also observed that there may be violation of principles of natural justice, in that case, the learned Appellate Tribunal ought to have remanded the matter to the learned Tribunal. It is submitted that the learned Appellate Tribunal ought to have appreciated that in view of the violation of principles of natural justice, it has caused great prejudice to the appellant. It is submitted that as observed and held by this Court in the case of Swadeshi Cotton Mills supra , when the principles of natural justice are prescribed by the statutory provision, numberprejudice is required to be shown for invoking the ground of violation of principles of natural justice. 6.11 it is further submitted by learned Counsel appearing on behalf of the appellant that the impugned orders have far reaching companysequences. It is submitted that the books of accounts once reopened and recasted are deemed to be final under the provisions of Section 130 2 of the Companies Act. 6.12 Making the above submissions and relying upon the above decisions, it is prayed to quash and set aside the impugned order passed by the learned Tribunal, companyfirmed by the learned Appellate Tribunal. The present appeal is vehemently opposed by Shri Maninder Singh, learned Senior Counsel appearing on behalf of the Union of India. 7.1 It is vehemently submitted by the learned Senior Counsel appearing on behalf of the Union of India that the impugned order passed by the learned Tribunal, companyfirmed by the learned Appellate Tribunal do number suffer from any vice of illegality. It is submitted that the order passed by the learned Tribunal under Section 130 of the Companies Act is absolutely in the larger public interest and absolutely in companysonance with the provisions of Section 130 of the Companies Act. 7.2 It is further submitted by the learned senior Counsel appearing on behalf of the Union of India that there are very serious allegations of preparing the earlier accounts in a fraudulent manner, and also with respect to the mis management of the affairs of the companypany during the relevant period. It is submitted that, in the present case, after having satisfied that there are serious allegations against ILFS group of companypanies, the Department of Economic Affairs took a companyscious decision to approach the NCLT under Section 242 of the Companies Act to order reconstitution of the Board of Directors. It is submitted that by a detailed order and companysidering the material on record, and having been prima facie satisfied with respect to the allegations of mismanagement and relating to the affairs of ILFS group of companypanies, the learned Tribunal passed an order dated 01.10.2018 suspending the earlier Directors Board of Directors of the companypanies and appointed a new Board of Directors. It is submitted that even the Ministry of Corporate Affairs, Government of India in exercise of powers under Section 212 of the Companies Act had issued an order directing to companyduct investigation into the affairs of ILFS group of companypanies. It is submitted that SFIO companystituted under Section 212 of the Act has already companymenced a specialized investigation into the affairs of ILFS group of companypanies. It is submitted that the appellant has been arrested on 02.04.2019, and is presently in judicial custody. It is submitted that thereafter when the Union of India through the Ministry of Corporate Affairs submitted an application before the learned Tribunal to reopen the books of accounts and to recast the financial statements of the three main companypanies for the last five years and thereafter companysidering the investigation reports and having been satisfied that the companyditions precedent for invoking the powers exercised under Section 130 of the Companies Act are satisfied companyplied with, thereafter when the learned Tribunal has passed the order, the same cannot be said to be illegal. It is submitted that all the requirements under Section 130 of the Companies Act have been companyplied with satisfied. 7.3 It is further submitted that the order dated 01.10.2018 passed under Sections 241/242 of the Companies Act has attained finality inasmuch as the same is number challenged till date. It is submitted that therefore the same can be companysidered by passing an order under Section 130 of the Companies Act also. 7.4 It is further submitted by the learned Senior Counsel appearing on behalf of the Union of India that all the three provisions, namely Sections 211/212, Sections 241/242 and Section 130 of the Companies Act are required to be companysidered and read companyjointly. It is submitted that while companysidering the one provision and or while passing the order under one provision, it is required to be seen that the effect of the order orders passed in other provisions do number become nugatory and or ineffective. It is submitted that therefore if all the aforesaid three provisions are companysidered and read companyjointly, in that case, it can be said that the order passed under Section 130 of the Companies Act would be in the aid of the investigation going on by the SFIO under Section 212 of the Companies Act and the same shall be in the larger public interest. It is submitted that, in the present case, Justice D. K. Jain, a former Judge of this Court, has been appointed to supervise the resolution process of ILFS group of companypanies. It is submitted that the reopening of the books of accounts and recasting the financial statements of the aforesaid three companypanies is very much required and necessary, since the same shall be in the larger public interest, to find out the real truth. 7.5 It is further submitted by the learned Senior Counsel appearing on behalf of the Union of India that the powers companyferred under Section 130 of the Companies Act are less stringent than the powers companyferred under Sections 241/242 and or Sections 211/212 of the Companies Act. It is submitted that while exercising powers under Section 130 of the Companies Act, there may number be any final companyclusion opinion that the relevant earlier accounts are prepared in a fraudulent manner or the affairs of the companypany were mismanaged during the relevant period. It is submitted that if, on the basis of the material on record, the learned Tribunal is satisfied on either of the aforesaid two eventualities, it is always open to the Tribunal to pass the order to reopen the books of accounts and to recast the financial statements of the companypany. It is further submitted that, in the present case, before passing the order under Section 130 of the Companies Act numberices were issued under the first proviso to Section 130 of the Companies Act. It is submitted that SEBI appeared and submitted that it had numberobjection to the accounts and financial statement of respondent Nos. 2 to 4, which are listed companypanies, being reopened and recasted. It is submitted that, as observed by the Tribunal in the impugned order, the erstwhile directors had opposed the application under Section 130 of the Companies Act, that after hearing all parties, the impugned order has been passed by the learned Tribunal. It is submitted that therefore the impugned order passed by the learned Tribunal cannot be said to be in violation of the principles of natural justice as alleged. 7.6 Relying upon the subsequent interim investigation reports by the RBI, it is submitted that the impugned order passed by the learned Tribunal under Section 130 of the Companies Act is number required to be interfered with. It is submitted that mere perusal of the report of the RBI dated 22.3.2019 demonstrates and establishes beyond any doubt about the companyplete companyrectness, validity and legality of the order under Section 130 of the Act. In support of his submission, the learned companynsel has relied upon and requested to companysider the subsequent event also, more particularly the report of the RIB dated 22.03.2019. The learned companynsel appearing on behalf of the Union of India has heavily relied upon the decision of this Court in the case of Shyam Kumar supra in support of the prayer to companysider the subsequent Report of RBI also. 7.7 Making the above submissions, it is prayed to dismiss the present appeal, more particularly, companysidering the larger public interest as, in the present case, thousands of crores of the public money is involved. We have heard the learned companynsel for the respective parties at length and perused the written submissions filed by them. At the outset, it is required to be numbered that by the impugned order and in exercise of powers under Section 130 of the Companies Act, the learned Tribunal has allowed the said application preferred by the Central Government and has directed permitted reopening of the books of accounts and re casting the financial statements of ILFS and other two companypanies for the last 5 years, viz., F.Y 20122013 to 20172018. The order passed by the learned Tribunal has been affirmed by the learned Appellate Tribunal. Therefore, the short question which is posed for companysideration before this Court, whether in the facts and circumstances of the case, can it be said that the order passed by the learned Tribunal is illegal and or companytrary to Section 130 of the Companies Act? 8.1 While companysidering the aforesaid question issue, few facts and the relevant provisions of the Companies Act which are relevant for determining companysidering the legality and validity of the order passed by the learned Tribunal are required to be referred to and companysidered, which are as under Section 211 of the Companies Act provides for establishment of Serious Fraud Investigation Office to investigate frauds relating to a companypany. Section 212 of the Companies Act provides for investigation into affairs of companypany by SFIO. Section 212 of the Companies Act provides that if the Central Government is of the opinion that it is necessary to investigate into the affairs of a companypany by SFIOin the public interest or on a request made by any department of the Central Government or a State Government. In the present case, the Central Government has already companystituted SFIO and has also ordered investigation into the affairs of ILFS and other group of companypanies and the investigation by the SFIO is under progress. It is also required to be numbered that SFIO had also submitted its preliminary report. In the preliminary SFIO report, there are specific findings with respect to mismanagement of the affairs of the aforesaid companypanies, and also with respect to preparing fraudulent accounts. At this stage, it is also required to be numbered that ICAI had also companyducted an enquiry into the accounts for the past five years, and in the preliminary report, the ICAI has mentioned that accounts for the post five years have been prepared in a fraudulent and negligent manner by the erstwhile auditors. That the Registrar of Companies had also companyducted an enquiry under Section 206 of the Companies Act and prima facie companycluded that mismanagement and companypromise in companyporate governance numberms and risk management has been perpetuated on ILFS and its group companypanies by indiscriminately raising long term and short term loans borrowings through public sector banks and financial institutions. Considering the fact that thousands of crores of public money is involved, and in the public interest, the Central Government has thought it fit to handover the investigation with respect to the affairs of ILFS and other group companypanies to SFIO. 8.1.1 Subsection 2 of Section 241 of the Companies Act provides that if the Central Government is of the opinion that the affairs of the companypany are being companyducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an appropriate order under Chapter XVI, more particularly the order under Section 242 of the Companies Act. In the present case, the Central Government had approached the learned Tribunal under Section 241 of the Companies Act and for an appropriate order to suspend the existing Board of Directors of the Companies and to appoint new Directors in terms of the provisions of Section 242 2 k of the Companies Act, to manage the affairs of ILFS and group companypanies. That by an order dated 01.10.2018, the learned Tribunal, in exercise of powers under Section 242 2 of the Companies Act, has suspended the Board of Directors of ILFS and has further passed an order for reconstitution of the new Board of Directors. Six persons are appointed as Directors as Board members. While issuing such directions, the learned Tribunal has specifically observed that the learned Tribunal is satisfied that the affairs of the ILFS were being companyducted in a manner prejudicial to public interest. Thus, pursuant to the said order dated 01.10.2018, the erstwhile Board Members Directors of the ILFS are suspended, and new Directors are appointed as Board Members and the new Board of Directors are companyducting the affairs of the ILFS and group companypanies. It is further ordered that the suspended Directors henceforth shall number represent the ILFS companypany as Directors, and shall also number exercise any power as Directors in any manner before any authority as well. The appellant herein is the Vice President and suspended Director of the companypany, who alone has challenged the impugned order passed by the learned Tribunal passed under Section 130 of the Companies Act. 8.2 In between there is one another development. Pursuant to the order passed by the NCLAT, a former Judge of this Court Honble Justice Retd. D.K. Jain has been appointed to supervise the operation of the Resolution Process of the ILFS group companypanies. Considering the aforesaid facts and circumstances and in the larger public interest and having found on the basis of the reports preliminary reports of SFIO, ICAI and ROC and having observed and found that the relevant earlier accounts of ILFS and other group companypanies, named hereinabove, were prepared in a fraudulent manner and the affairs of the companypany were mismanaged during the relevant period, casting a doubt on the reliability of the financial statements, the Union of India Central Government companysidered it fit to submit an application before the learned Tribunal under Section 130 of the Companies Act. After issuing numberice to all companycerned including the Central Government, Income Tax Authorities, SEBI, other Statutory Regulatory Body and even to the erstwhile Directors of ILFS and other two companypanies, by the impugned order, the learned Tribunal has permitted directed the Central Government to reopen the books of accounts and to recast the financial statements of ILFS and other two companypanies, named hereinabove, of last 5 years. 8.3 Considering the aforesaid facts and circumstances, the legality and validity of the impugned order passed by the learned Tribunal passed under Section 130 of the Act, companyfirmed by the learned Appellate Tribunal is required to be companysidered. On going through the order passed by the learned Tribunal passed under Section 130 of the Act, it appears that the learned Tribunal is companyscious of the relevant provisions of the Act, more particularly Section 130 of the Companies Act and more particularly the companyditions precedent to be companyplied with satisfied while directing permitting reopening of the books of accounts and recasting of the financial statements of the companypany. From the order passed by the learned Tribunal under Section 130 of the Companies Act, it appears that the learned Tribunal has companysidered the preliminary report submitted by the ICAI and SFIO and the observations made in the aforesaid reports preliminary reports. That thereafter having satisfied that the companyditions precedent for invoking powers under Section 130 of the Companies Act, stated in Section 130 i OR ii of the Companies Act are satisfied, thereafter the learned Tribunal has passed an order allowing the application under Section 130 of the Companies Act for reopening the books of accounts and re casting the financial statements of ILFS and other two companypanies, viz, for the last 5 years. While assailing the order passed by the Tribunal under Section 130 of the Act, it is vehemently submitted on behalf of the appellant, who as such is a suspended director of the companypany that there is numberspecific finding recorded by the learned Tribunal that i the relevant earlier accounts were prepared in a fraudulent manner and ii the affairs of the companypany were mismanaged during the relevant period casting a doubt on the reliability of the financial statements. It is the case on behalf of the appellant that in the order dated 01.01.2019 passed under Section 130 of the Companies Act, learned Tribunal has specifically given a finding that the alleged accounts of the companypanies cannot be said to have been prepared in a fraudulent manner. However, it is required to be numbered that the aforesaid observations by the Tribunal are required to be companysidered in the companytext for which the observations are made. It appears that the said observations are made with respect to role of the auditors. It is to be numbered that in the same para, the learned Tribunal has specifically observed that in the earlier order dated 01.10.2018, it is observed that the affairs of the companypany were mismanaged during the relevant period and that the affairs of the companypany and subsidiary companypanies were being mismanaged during the relevant period, as companytemplated under SubSection 1 and 2 . At this stage, it is required to be numbered that as per Section 130 of the Act, the Tribunal may pass an order of reopening of accounts if the Tribunal is of the opinion that i the relevant earlier accounts were prepared in a fraudulent manner OR ii the affairs of the companypany were mismanaged during the relevant period casting a doubt on the reliability of the financial statements. Therefore, the word used is OR. Therefore, if either of the companyditions precedent is satisfied, the Tribunal would be justified in passing the order under Section 130 of the Act. Considering the order passed by the Tribunal passed under Section 130 of the Companies Act, it appears that the learned Tribunal has passed the order on being satisfied with respect to the second part of Section 130 of the Companies Act. It is also required to be numbered that the learned Tribunal has also taken numbere of the preliminary report submitted by the ICAI with respect to the earlier accounts were being prepared in a fraudulent manner. On a fair reading of Section 130 of the Companies Act, if the Tribunal is satisfied that either of the companyditions precedent is satisfied, the Tribunal would be justified in passing the order under Section 130 of the Companies Act. Considering the facts narrated hereinabove and the preliminary reports of SFIO and ICAI which came to be companysidered by the learned Tribunal and companysidering the specific observations made by the learned Tribunal while passing the order under Section 241/242 of the Companies Act and companysidering the fact that the Central Government has entrusted the investigation of the affairs of the companypany to SFIO in exercise of powers under Section 242 of the Companies Act, it cannot be said that the companyditions precedent while invoking the powers under Section 130 of the Act are number satisfied. We are more than satisfied that in the facts and circumstances of the case, narrated hereinabove, and also in the larger public interest and when thousands of crores of public money is involved, the Tribunal is justified in allowing the application under Section 130 of the Companies Act, which was submitted by the Central Government as provided under Section 130 of the Companies Act. Now so far as the submission on behalf of the appellant that all the three provisions, viz., Section 130, Sections 211/212 and Sections 241/242 operate in different fields and in different circumstances and they are in the different Chapters and therefore any observation made while passing the order orders with respect to a particular provision may number be companysidered while passing the order under relevant provisions is companycerned, it is required to be numbered that all the three provisions are required to be companysidered companyjointly. While passing an order in a particular provision, the endeavour should be to see that the order orders passed under other provisions of the Companies Act are given effect to, and or in furtherance of the order orders passed under other Sections. Therefore, the observations made while passing order under Section 241/242 of the Companies Act can be said to be relevant observations for passing the order under Section 130 of the Companies Act. At this stage, it is required to be numbered that even otherwise in the order passed by the Tribunal under Section 130 of the Companies Act, there is a specific observation made by the learned Tribunal with respect to mismanagement of the affairs of the companypany, and even with respect to the relevant earlier accounts prepared in a fraudulent manner. It is next companytended on behalf of the appellant that proviso to Section 130 of the Act has number been companyplied with and that the order passed by the learned Tribunal passed under Section 130 of the Act is in violation of the principle of natural justice. At the outset, it is required to be numbered that while passing he order under Section 130 of the Companies Act, the learned companynsel appearing on behalf of the erstwhile directors appeared and opposed the application under Section 130 of the Companies Act. Therefore, the learned companynsel appearing on behalf of the erstwhile directors was heard before passing he order under Section 130 of the Companies Act. Therefore, it can be said that there is a companypliance substantial companypliance of the principle of natural justice to be followed. It is required to be numbered that as per proviso to Section 130 of the Companies Act before passing the order under Section 130 of the Act, the Tribunal is required to issue numberice to the Central Government, Income Tax Authorities, SEBI or any other statutory regulatory body or authorities companycerned or any other person companycerned and is required to take into companysideration the representation, if any made. The other person companycerned is as such number defined. Who can be said to be other person companycerned, that question is kept open. At this stage, it is required to be numbered that while passing the order under Section 130 of the Act, there shall be reopening of the books of accounts and recasting of the financial statements of the companypany and therefore the Board of Directors of the companypany may make a grievance. The erstwhile directors cannot represent the companypany as they are suspended pursuant to the earlier order passed under Section 242 of the Companies Act. Be that as it may, even otherwise in the present case and as observed hereinabove the erstwhile directors of the companypany represented before the Tribunal and they opposed the application under Section 130 of the Act. Therefore, in the facts and circumstances of the case, it cannot be said that the order passed by the learned Tribunal is per se in violation of the principle of natural justice as alleged. The submission by learned Counsel appearing on behalf of the appellant that in the impugned order passed by the learned Appellate Tribunal, the learned Appellate Tribunal has specifically observed that there is a violation of principle of natural justice and therefore the learned Appellate Tribunal ought to have remanded the matter to the Tribunal is companycerned, on companysidering fair reading of the impugned order passed by the learned Appellate Tribunal, as such, there is numberspecific finding by the learned Appellate Tribunal that there is a violation of principle of natural justice. What is observed by the learned Appellate Tribunal is that even if it is accepted that the appellant on receipt of numberice wanted to file reply cannot be companysidered as a specific finding given that the order passed by the Tribunal was in violation of principle of natural justice. Now insofar as the submission on behalf of the appellant that the order dated 01.10.2018 passed under Section 241/242 of the Companies Act is an interim order and the same is number a final order suspending the directors and the erstwhile board of directors of the companypany, and therefore the observations made in the order dated 01.10.2018 cannot be companysidered, has numbersubstance. It is required to be numbered that as on today the order dated 01.10.2018 suspending the erstwhile directors of the companypany including the appellant stands and remains in operation. The same is number challenged by way of an appeal before an appropriate appellate Tribunal Court. Now so far as the submission on behalf of the appellant that the impugned order passed by the learned Appellate Tribunal is a numberspeaking and numberreasoned order and the grounds urged before the learned Appellate Tribunal have number been dealt with by the learned Appellate Tribunal and therefore the prayer to set aside the order is companycerned, in view of our specific findings recorded hereinabove on the legality and validity of the order passed by the learned Tribunal under Section 130 of the Companies Act, we do number propose to remand the matter to the learned Appellate Tribunal. It is true that the learned Appellate Tribunal companyld have passed a reasoned speaking order. But in the facts and circumstances of the case and our findings recorded hereinabove and as observed hereinabove, the order passed by the Tribunal under Section 130 of the Companies Act does number suffer from any illegality and the same is passed in the larger public interest, we have companysidered the order passed by the learned Tribunal under Section 130 of the Companies Act on merits. In view of the aforesaid findings recorded by us, the decisions relied upon by the learned companynsel appearing on behalf of the appellant shall number be applicable to the facts of the case on hand. There cannot be any dispute to the proposition of law laid down by this Court in the aforesaid decisions relied upon by the learned companynsel appearing on behalf of the appellant. However, in the light of the aforesaid findings recorded by us, numbere of the decisions relied upon by the learned companynsel appearing on behalf of the appellant shall be applicable to the facts of the case on hand. Now so far as reliance placed upon the subsequent report of the RBI and the objection by the learned companynsel appearing on behalf of the appellant to rely upon the subsequent report and the reliance placed upon the decision of this Court in the case of Mohinder Singh supra is companycerned, as the impugned order passed by the learned Tribunal is in the larger public interest, this Court can take numbere of the subsequent development report. However, at the same time, the same shall be in support of the order under challenge. Even otherwise, it is required to be numbered and as observed hereinabove, independent to the subsequent report of the RBI, there is a specific finding with respect to the mismanagement and the fraudulent accounts. Therefore subsequent Report of the RBI Report can be taken numbere of, while upholding the order passed by the learned Tribunal under Section 130 of the Companies Act.

FIFTH SECTION CASE OF VEREIN GEGEN TIERFABRIKEN SCHWEIZ (VgT) v. SWITZERLAND (Application no. 32772/02) JUDGMENT STRASBOURG 4 October 2007 THIS CASE WAS REFERRED TO THE GRAND CHAMBER WHICH DELIVERED JUDGMENT IN THE CASE ON 30/06/2009 This judgment may be subject to editorial revision. In the case of Verein gegen Tierfabriken Schweiz (VgT) v. Switzerland, The European Court of Human Rights (Fifth Section), sitting as a Chamber composed of: MrsS. Botoucharova, President,MrL. Wildhaber, MrK. Jungwiert,MrV. Butkevych,MrsM. Tsatsa-Nikolovska, MrJ. Borrego Borrego, MrsR. Jaeger, judges,and Mrs C. Westerdiek, Section Registrar, Having deliberated in private on 11 September 2007, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 32772/02) against the Swiss Confederation lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by an association registered in Switzerland, Verein gegen Tierfabriken Schweiz (VgT) (“the applicant association”), on 25 July 2002. 2. The applicant association was represented by Mr R.W. Rempfler, a lawyer practising in St Gall. The Swiss Government (“the Government”) were represented by their Agent, Mr P. Boillat, Deputy Director of the Federal Office of Justice, and subsequently by Mr F. Schürmann, head of the Human Rights and Council of Europe Section of the Federal Office of Justice. 3. On 18 January 2005 the Court decided to give notice of the application to the Government. It also decided to examine the merits of the application at the same time as its admissibility (Article 29 § 3 of the Convention). THE FACTS I. THE CIRCUMSTANCES OF THE CASE A. Application no. 24699/94 and the Court’s judgment of 28 June 2001 4. The applicant association is dedicated to animal protection, campaigning in particular against animal experiments and battery farming. 5. In response to various advertisements produced by the meat industry, the applicant association made a television commercial lasting fifty-five seconds, consisting of two scenes. The first scene showed a sow building a shelter for her piglets in the forest. With soft music playing in the background, the voiceover referred, among other things, to the pigs’ sense of family. The second scene showed a noisy hall with pigs in small pens, gnawing nervously at the iron bars. The voiceover compared the conditions in which pigs were reared to concentration camps, and added that the animals were pumped full of medicines. The film concluded with the exhortation: “Eat less meat, for the sake of your health, the animals and the environment!” 6. Permission to broadcast the commercial on the channels of the Swiss Radio and Television Company (Schweizerische Radio- und Fernsehgesellschaft) was refused on 24 January 1994 by the company responsible for television advertising (the Commercial Television Company (AG für das Werbefernsehen), now called Publisuisse SA) and, at final instance, by the Federal Court, which dismissed an administrative-law appeal by the applicant association on 20 August 1997. In respect of the applicant association’s complaint under Article 10 of the Convention, the Federal Court found that the prohibition of political advertising laid down in section 18(5) of the Federal Radio and Television Act pursued various aims; in particular, it was designed to prevent financially powerful groups from obtaining a competitive political advantage, to protect the formation of public opinion from undue commercial influence, to bring about a certain equality of opportunity among the different forces of society, and to contribute towards the independence of radio and television broadcasters in editorial matters. 7. On 13 July 1994 the applicant association lodged an application with the European Commission of Human Rights under former Article 25 of the Convention. 8. The application was transmitted to the Court on 1 November 1998, when Protocol No. 11 to the Convention came into force (Article 5 § 2 of Protocol No. 11). 9. In a decision of 6 April 2000 the Court declared the application partly admissible. 10. In a judgment of 28 June 2001 the Court held that the refusal by the relevant Swiss authorities to broadcast the commercial in question infringed the right to freedom of expression guaranteed by Article 10 of the Convention (see VgT Verein gegen Tierfabriken v. Switzerland, no. 24699/94, ECHR 2001‑VI). The Court found that the measure taken had been “prescribed by law” and had pursued a legitimate aim for the purposes of Article 10 § 2. As to whether the measure had been “necessary in a democratic society” within the meaning of that provision, the Court noted, in particular, that it had not been established that the applicant association itself constituted a powerful financial group pursuing the aim of restricting the broadcaster’s independence, unduly influencing public opinion or endangering equality of opportunity among the different forces of society. On the contrary, it had simply intended to participate in an ongoing general debate on the protection and rearing of animals. Accordingly, in the Court’s opinion, the authorities had not demonstrated in a “relevant and sufficient” manner why the grounds generally advanced in support of the prohibition of political advertising could also serve to justify the interference in the particular circumstances of the case (ibid., § 75). The Court also found that there had been no violation of Articles 13 and 14 of the Convention. As to the application of Article 41, it ordered Switzerland to pay 20,000 Swiss francs (CHF – approximately 12,160 euros (EUR) today) for costs and expenses. However, it made no award to the applicant association for non-pecuniary damage. B. Subsequent proceedings before the Swiss authorities 11. Subsequently, the applicant association again applied to Publisuisse SA for permission to broadcast an amended version of the commercial. In a letter of 30 November 2001 Publisuisse SA refused the application. 12. On 1 December 2001, on the basis of the Court’s judgment, the applicant association applied to the Federal Court for the final judgment given at domestic level to be reviewed, in accordance with section 139a of the former Federal Judicature Act (see “Relevant domestic law and practice”, paragraph 19 below). 13. In their respective observations of 10 January and 15 February 2002, which were duly transmitted to the applicant association, the Federal Department of Environment, Transport, Energy and Communication and the Swiss Radio and Television Company submitted that the application to reopen the proceedings should be dismissed. 14. In a judgment of 29 April 2002 the Federal Court dismissed the application to reopen the proceedings. It held that the applicant association had not provided a sufficient explanation of the nature of “the amendment of the judgment and the redress being sought”, a formal requirement imposed by section 140 of the former Federal Judicature Act (see “Relevant domestic law and practice”, paragraph 20 below). It observed, in particular, that the applicant association had been unable to show how redress was possible only through the reopening of the proceedings. It further noted that the association had not sufficiently shown that it still had an interest in broadcasting the original commercial, which now appeared out of date almost eight years after it was initially intended to have been broadcast. Lastly, the Federal Court considered that the fact that Publisuisse SA, the competent authority in such matters, had again refused to sign an agreement to broadcast an amended version of the commercial should have formed the subject of separate proceedings. 15. On 3 March 2003 the Federal Office of Communication dismissed an appeal by the applicant association against Publisuisse SA’s decision of 30 November 2001 refusing permission to broadcast the amended version of the commercial. C. Resolution of the Committee of Ministers of the Council of Europe of 22 July 2003 16. The Committee of Ministers of the Council of Europe, which had not been informed either by the applicant association or by the Swiss Government that the Federal Court had dismissed the application for review, concluded its examination of application no. 24699/94 on 22 July 2003 by adopting Resolution ResDH(2003)125, the relevant parts of which read: “... Having regard to the Rules adopted by the Committee of Ministers concerning the application of Article 46, paragraph 2, of the Convention; ... Whereas during the examination of the case by the Committee of Ministers, the government of the respondent state gave the Committee information about the measures taken preventing new violations of the same kind as that found in the present judgment; this information appears in the appendix to this resolution; ... Declares, after having taken note of the information supplied by the Government of Switzerland, that it has exercised its functions under Article 46, paragraph 2, of the Convention in this case. Appendix to Resolution ResDH(2003)125: Information provided by the Government of Switzerland during the examination of the VGT Verein gegen Tierfabriken case by the Committee of Ministers As regards individual measures, the judgment was transmitted to the applicant, who was entitled to request the revision of the Federal Court’s judgment of 20 August 1997. Concerning general measures, the judgment has been sent out to the Federal Office of Communication, the Federal Department for Environment, Transport, Energy, and Communication and to the Federal Court. In addition, the Court’s judgment has been published in the journal Jurisprudence des autorités administratives de la Confédération n.65/IV(2001), and can be consulted on the following website: ... The judgment has also been mentioned in the Federal Council Annual report on the Swiss activities at the Council of Europe in 2001, which has been published in the Feuille fédérale n.8/2002. The Government of Switzerland considers that, given the information mentioned above, there will no longer exist a risk of a repetition of the violation found in the present case and, consequently, Switzerland has satisfied its obligations under Article 46 § 1 of the Convention.” 17. In a letter of 12 December 2003 the applicant association informed the Council of Europe’s Directorate General of Human Rights of the Federal Court’s refusal to review the judgment of 20 August 1997 following the Court’s finding of a violation of Article 10. 18. On 12 January 2005 the Council of Europe’s Directorate General of Human Rights informed the applicant association that it did not consider it advisable to conduct a fresh examination of the matter alongside the Court’s consideration of the application lodged in July 2002 in the present case. II. RELEVANT DOMESTIC LAW AND PRACTICE 19. Sections 136 et seq. of the former Federal Judicature Act, which was in force until 31 January 2006, concerned, inter alia, the review of judgments of the Federal Court. Section 139a provided: “Breach of the European Convention on Human Rights 1. A decision of the Federal Court or of a lower court may be reviewed if the European Court of Human Rights or the Committee of Ministers of the Council of Europe has granted an individual application on account of a breach of the Convention of 4 November 1950 for the Protection of Human Rights and Fundamental Freedoms and its Protocols, and redress is possible only through such a review. 2. If the Federal Court determines that a review is called for, but a lower court has jurisdiction, it shall refer the case to the lower court to reopen proceedings in the matter. 3. The cantonal court shall then also decide on the request for a review if cantonal law does not envisage such a ground for the reopening of proceedings.” 20. Section 140 of the Act provided: “Application for review The application for review must indicate, with supporting evidence, the ground relied on for the reopening of proceedings and whether it has been raised in due time; it must also state the nature of the amendment of the judgment and the redress being sought.” 21. On 2 March 1999, on the basis of that provision, the Federal Court granted, at least in part, an application for review of one of its judgments, after the Court had found a violation in the case of Hertel v. Switzerland (judgment of 25 August 1998, Reports of Judgments and Decisions 1998‑VI). It held: “... The judgment of the European Court of Human Rights may afford the applicant satisfaction and, through the award of CHF 40,000, financial compensation for the cost of the proceedings. But it does not remove the restrictions imposed on the applicant by the Commercial Court and confirmed by the Federal Court in its judgment of 25 February 1994. These restrictions may be upheld only within the bounds of necessity as defined by the European Court. Since those restrictions may be lifted or limited only by means of an appeal to the Federal Court, the requirement of section 139a of the Federal Judicature Act is met ...” 22. Section 122 of the Federal Court Act of 17 June 2005, in force since 1 January 2007, reproduces section 139a of the former Federal Judicature Act. It provides: “Breach of the European Convention on Human Rights An application for review of a judgment of the Federal Court on account of a violation of the Convention of 4 November 1950 for the Protection of Human Rights and Fundamental Freedoms (ECHR) may be submitted if the following conditions are satisfied: (a) the European Court of Human Rights, in a final judgment, has found a violation of the ECHR or its Protocols; (b) compensation cannot remedy the effects of the violation; (c) the review is necessary to remedy the effects of the violation.” THE LAW I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION Admissibility 23. The applicant association submitted that, since it had not had the opportunity to comment on the observations of either the Federal Department of Environment, Transport, Energy and Communication or the Swiss Radio and Television Company, it had been denied the right to a fair hearing within the meaning of Article 6 § 1 of the Convention, the relevant parts of which provide: “In the determination of his civil rights and obligations ..., everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...” 24. The Court considers that this complaint raises the issue of the applicability ratione materiae of Article 6 to the proceedings complained of. It is clear from its case-law that this Article is not applicable to proceedings concerning an application for a retrial or for the reopening of civil proceedings (see Sablon v. Belgium, no. 36445/97, § 86, 10 April 2001). The Court sees no reason why this reasoning should not also be applied to an application to reopen proceedings after it has found a violation of the Convention (see, in relation to a criminal case, Franz Fischer v. Austria (dec.), no. 27569/02, ECHR 2003‑VI). It therefore considers that the complaint under Article 6 is incompatible ratione materiae with the provisions of the Convention. 25. It follows that this complaint is incompatible ratione materiae with the provisions of the Convention within the meaning of Article 35 § 3 and must be declared inadmissible in accordance with Article 35 § 4. II. ALLEGED VIOLATION OF ARTICLE 10 OF THE CONVENTION 26. The applicant association alleged that the continued prohibition on broadcasting the television commercial in issue, after the Court had found a violation of its freedom of expression, constituted interference infringing its freedom of expression under Article 10 of the Convention, which 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 and regardless of frontiers. This article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises. 2. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary.” A. Admissibility 1. Preliminary objection of failure to exhaust domestic remedies (a) The parties’ submissions 27. The Swiss Government submitted that if a broadcaster refused to broadcast a commercial on the ground that it constituted unlawful advertising, the party intending to sign the agreement with it could request the supervisory authority, namely the Federal Office of Communication, to give a decision clarifying the matter. An appeal against that decision could subsequently be lodged with the Federal Department of Environment, Transport, Energy and Communication and, in the final instance, the Federal Court. 28. The Government pointed out that in the present case the applicant association had applied to Publisuisse SA for permission to broadcast the commercial together with a commentary which referred to the Court’s judgment and contained remarks about the conduct of the Swiss Radio and Television Company and the Swiss authorities. After permission had been refused by Publisuisse SA, the applicant association had applied to the Federal Office of Communication, which had observed that it was not empowered to force Publisuisse SA to broadcast the commercial. The respondent Government were persuaded that an administrative-law appeal could have been lodged against the Federal Office of Communication’s decision of 3 March 2003. 29. In the event of a refusal by Publisuisse SA, the party intending to sign an agreement with it could also bring an action in the civil courts, even without first applying to the Federal Office of Communication, where, for example, it alleged a breach of the Cartels Act or of the general principles of private law, such as the protection of personality rights or the prohibition of immoral conduct. The Government submitted that, since the applicant association had not availed itself of those remedies, it had not exhausted domestic remedies for the purposes of Article 35 § 1 of the Convention. 30. The applicant association contested the Government’s argument that it had failed to exhaust domestic remedies. It pointed out that in its judgment of 29 April 2002 the Federal Court had stated that appeals against decisions of the Federal Office of Communication could be lodged with the Federal Department of Environment, Transport, Energy and Communication where the proceedings concerned cartels. In the applicant association’s submission, it followed by converse implication that no such appeal could have been lodged against the Office’s decision of 3 March 2003, since the proceedings had concerned a broadcasting licence. (b) The Court’s assessment 31. The Court considers it necessary to emphasise at the outset that the applicant association’s complaints before it relate solely to the prohibition on broadcasting the original version of the commercial in issue. No consideration should be given to the refusal by Publisuisse SA, the competent authority in such matters, to sign an agreement to broadcast an amended version of the commercial, an issue which, according to the Federal Court, should have been the subject of separate proceedings. 32. In so far as the complaint concerning the Federal Court’s judgment of 29 April 2002 may be construed as an allegation of fresh interference with the applicant association’s freedom of expression, the Court would reiterate the principle that a complaint to be submitted to it must first have been made to the appropriate national courts, at least in substance, in accordance with the formal requirements of domestic law and within the prescribed time-limits (see Ankerl v. Switzerland, judgment of 23 October 1996, Reports 1996-V, p. 1565, § 34). 33. In the present case the Court observes that the Federal Court found that the applicant association’s application to reopen the proceedings was insufficiently substantiated and that it had thus failed to comply with the formal requirements for using this legal remedy, in accordance with section 140 of the former Federal Judicature Act. The Federal Court held that in support of its application, the applicant association had not indicated any grounds for reopening the proceedings or the nature of the amendment of the judgment and the redress being sought. Accordingly, there might on the face of it be cause to doubt whether the association satisfied the exhaustion requirement. 34. The Court observes that the applicant association’s application to reopen the proceedings was worded in a very cursory fashion barely satisfying the requirements of section 140 of the former Federal Judicature Act. Nevertheless, since the Federal Court, after stating the grounds for declaring the request inadmissible, concluded that the applicant association had not sufficiently shown that it still had an interest in broadcasting the original version of the commercial, the Court considers, in the light of its case-law, that this complaint cannot be dismissed for failure to exhaust domestic remedies, seeing that the Federal Court ruled on the merits of the case, albeit briefly (see, mutatis mutandis, Huber v. Switzerland, no. 12794/87, Commission decision of 9 July 1988, Decisions and Reports 57, p. 259; Chammas v. Switzerland, no. 35438/97, Commission decision of 30 May 1997; Jamal‑Aldin v. Switzerland, no. 19959/92, Commission decision of 23 May 1996; Thaler v. Austria (dec.), no. 58141/00, 15 September 2003; Voggenreiter v. Germany (dec.), no. 47169/99, 28 November 2002; and Atik v. Germany (dec.), no. 67500/01, 13 May 2004), in finding it probable that the association no longer had any interest in having the original version of the commercial shown on television. 35. It follows that the complaint under Article 10 cannot be dismissed for failure to exhaust domestic remedies. 2. Preliminary objection of incompatibility ratione materiae of the complaint (a) The parties’ submissions 36. The Swiss Government submitted that the complaint under Article 10 should be dismissed as being incompatible ratione materiae with the Convention, within the meaning of Article 35 § 3. 37. They pointed out in that connection that the Court had held in its judgment of 28 June 2001 that the refusal to broadcast the commercial in issue had interfered with the applicant association’s right to freedom of expression and that such interference had not been necessary in a democratic society. It was not disputed that the Government had paid the applicant association the sum of CHF 20,000 by way of just satisfaction, under Article 41 of the Convention. 38. The respondent Government further noted that the applicant association had been able to apply to the Federal Court for a review of that court’s judgment of 20 August 1997. In their submission, it was clear from the actual wording of Resolution ResDH(2003)125 that the Committee of Ministers had not considered it essential to ascertain the outcome of the application to reopen the proceedings before adopting the resolution in which it had conclusively ended the examination of the case at international level. On that point, the Swiss Government emphasised that section 139a of the former Federal Judicature Act (see “Relevant domestic law and practice” above) conferred on applicants the right to apply for review of a judgment but on no account the right to have the judgment amended, still less in the manner they wished. It was for the Federal Court alone to rule on those two aspects. 39. The Government also noted that several general measures which had had a direct impact on the applicant association’s own situation had been taken. For example, the dissemination of the Court’s judgment among the federal authorities had led them to adopt a restrictive interpretation of the prohibition of all forms of “political” advertising in section 18(5) of the Federal Radio and Television Act. The Independent Complaints Authority for Radio and Television, for example, had held that an advertisement broadcast in January 2003 concerning asylum policy was compatible with that provision (they cited the Authority’s decision no. b.467 of 27 June 2003, ground 4). 40. In view of the foregoing, the Swiss Government contended that there was no link between the potential amendment of the Federal Court’s judgment of 20 August 1997 and the possibility of broadcasting the commercial today. It could not therefore be maintained that the Federal Court’s judgment of 22 April 2002 raised a new issue that had not been determined in the Court’s judgment of 28 June 2001. Since the Committee of Ministers had discharged its duty in adopting Resolution ResDH(2003)125, the application in the present case should, the Government submitted, be declared inadmissible as being incompatible ratione materiae with the provisions of the Convention. 41. The applicant association did not comment on the Government’s argument that the application was incompatible ratione materiae with the Convention. (b) The Court’s assessment 42. Relying on Article 10, the applicant association complained about the Federal Court’s judgment of 29 April 2002 refusing his application to reopen the proceedings and hence maintaining the prohibition on broadcasting the television commercial in issue. 43. In examining whether Article 10 is applicable to the present case, the Court must determine whether the case concerns a fresh interference with the rights protected by that Article or the execution of the Court’s judgment of 28 June 2001 for the purposes of Article 46 of the Convention. In the latter event, this complaint should be dismissed as being incompatible ratione materiae with the provisions of the Convention and its Protocols. 44. The Court considers that the complaint raises questions of law which are sufficiently complex and new that they should not be resolved at the admissibility stage (see, mutatis mutandis, Ferrazzini v. Italy [GC], no. 44759/98, §§ 18 et seq., ECHR 2001-VII). 45. Accordingly, this complaint cannot be declared inadmissible as being incompatible ratione materiae with the provisions of the Convention. The Court notes, moreover, that that no other ground for declaring it inadmissible has been established. It must therefore be declared admissible. B. The Court’s jurisdiction ratione materiae 1. Principles established by the Court in comparable cases 46. The Court reiterates at the outset that findings of a violation in its judgments are essentially declaratory (see Marckx v. Belgium, judgment of 13 June 1979, Series A no. 31, p. 25, § 58; Lyons and Others v. the United Kingdom (dec.), no. 15227/03, ECHR 2003‑IX; and Krčmář and Others v. the Czech Republic (dec.), no. 69190/01, 30 March 2004) and that, by Article 46 of the Convention, the High Contracting Parties undertook to abide by the final judgments of the Court in any case to which they are parties, execution being supervised by the Committee of Ministers (see, mutatis mutandis, Papamichalopoulos and Others v. Greece (Article 50), judgment of 31 October 1995, Series A no. 330-B, pp. 58-59, § 34). 47. It follows, inter alia, that a judgment in which the Court finds a breach of the Convention or its Protocols imposes on the respondent State a legal obligation not just to pay those concerned the sums awarded by way of just satisfaction, but also to choose, subject to supervision by the Committee of Ministers, the general and/or, if appropriate, individual measures to be adopted in its domestic legal order to put an end to the violation found by the Court and to redress as far as possible the effects (see Broniowski v. Poland [GC], no. 31443/96, §192, ECHR 2004-V; Pisano v. Italy (striking out) [GC], no. 36732/97, § 43, 24 October 2002); Scozzari and Giunta v. Italy [GC], nos. 39221/98 and 41963/98, § 249, ECHR 2000-VIII; and Sejdovic v. Italy [GC], no. 56581/00, § 119, ECHR 2006-II), the aim being to put the applicant, as far as possible, in the position he would have been in had the requirements of the Convention not been disregarded (see Giuseppina and Orestina Procaccini v. Italy [GC], no. 65075/01, § 123, 29 March 2006; Sejdovic, cited above, § 127; Assanidze v. Georgia [GC], no. 71503/01, § 198, ECHR 2004‑II, Ilaşcu and Others v. Moldova and Russia [GC], no. 48787/99, § 487, ECHR 2004‑VII; and Piersack v. Belgium (Article 50), judgment of 26 October 1984, Series A no. 85, p. 16, § 12). 48. However, the Court would also reiterate that, 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 Article 46 of the Convention, provided that such means are compatible with the conclusions set out in the Court’s judgment (see Scozzari and Giunta, cited above, § 249, and Lyons and Others, cited above). For its part, the Court cannot assume any role in this dialogue. It notes in particular that the Convention does not give it jurisdiction to direct a State to open a new trial or to quash a conviction (see Saïdi v. France, judgment of 20 September 1993, Series A no. 261-C, p. 57, § 47, and Pelladoah v. the Netherlands, judgment of 20 September 1994, Series A no. 297-B, p. 36, § 44). It follows that it cannot find a State to be in breach of the Convention on account of its failure to take either of these courses of action when faced with the execution of one of its judgments. 49. The specific remedial measures, if any, required of a respondent State in order for it to discharge its obligations under the Convention must depend on the particular circumstances of the individual case and be determined in the light of the Court’s judgment in that case, and with due regard to the Court’s case-law as cited above (see Öcalan v. Turkey [GC], no. 46221/99, § 210, ECHR 2005‑IV, and Sejdovic, cited above, § 126 in fine). The Court has held, for example, that where an individual has been convicted following proceedings that have entailed breaches of the requirements of Article 6 of the Convention, a retrial or the reopening of the case, if requested, represents in principle an appropriate way of redressing the violation (see Sejdovic, cited above, § 126). 50. However, this is not to say that measures taken by a respondent State in the post-judgment phase to afford redress to an applicant for the violation or violations found fall outside the jurisdiction of the Court (see Lyons and Others, cited above), seeing that there is nothing to prevent it from examining a subsequent application raising a new issue undecided by the judgment (see the following judgments: Mehemi v. France (no. 2), no. 53470/99, § 43, ECHR 2003‑IV; Pailot v. France, 22 April 1998, Reports 1998-II, p. 802, § 57; Leterme v. France, 29 April 1998, Reports 1998-III; and Rando v. Italy, no. 38498/97, § 17, 15 February 2000). In other words, the Court may entertain a complaint that a retrial at domestic level by way of implementation of one of its judgments gives rise to a new breach of the Convention (see Lyons and Others, cited above, and Hertel v. Switzerland (dec.), no. 53440/99, ECHR 2002-I). 2. Application of the above principles in the instant case 51. It must therefore be determined whether the Federal Court’s judgment of 29 April 2002 constitutes a fresh interference with the applicant association’s freedom of expression that may be examined on the merits by the Court. 52. The Court considers it useful to point out that the present case is not a “typical” one involving the reopening of criminal proceedings following a finding of a violation of Article 6 of the Convention (see, for example, the cases of Sejdovic, Lyons and Others and Krčmář and Others, all cited above), but relates to the refusal to reconsider the prohibition on broadcasting a television commercial, and hence to Article 10 of the Convention. In that respect it is comparable to the case of Hertel (dec.) cited above. It should be noted, however, that in the Hertel case the Federal Court granted the applicant’s application to reopen the proceedings, lifting to a significant extent the restrictions on his freedom of expression. The Committee of Ministers, moreover, concluded the procedure before it by means of a final resolution that took due account of the amendments to the Federal Court judgment held by the Court to have infringed Article 10. In view of these significant differences, the Court must consider whether its approach in the Hertel decision (cited above), which entailed examining whether the allegations of a fresh violation of Article 10 were well-founded rather than declaring them inadmissible as being incompatible ratione materiae with the Convention or its Protocols, is also feasible in the present case. 53. With regard to the measures taken by the Swiss Government in order to discharge their obligations under Article 46 § 2 of the Convention, it is not disputed that they paid the sums which the Court had awarded the applicant association for costs and expenses under Article 41 in its judgment. It is also clear from Resolution ResDH(2003)125 of 22 July 2002 that the Court’s judgment was disseminated among the appropriate authorities and published in the journal Jurisprudence des autorités administratives de la Confédération and on the Internet (see paragraph 16 above). 54. It should also be noted that the Committee of Ministers concluded its examination of application no. 24699/94 by noting the possibility of an application for review before the Federal Court, in other words without awaiting the outcome of that procedure, which was available under Swiss law (see the Appendix to the Resolution in paragraph 16 above). 55. The Court further reiterates that the Convention is intended to guarantee rights that are not theoretical or illusory but practical and effective (see, mutatis mutandis, Artico v. Italy, judgment of 13 May 1980, Series A no. 37, p. 16, § 33, and Bianchi v. Switzerland, no. 7548/04, § 84, 22 June 2006). It is true that the Convention does not require the States Parties to institute procedures for the fresh examination of a case following a finding of a violation by the Court (see Saïdi, cited above, p. 57, § 47, and Pelladoah, cited above, p. 36, § 44). The Court would nevertheless emphasise that the availability of such a procedure in Swiss law may be regarded as an important aspect of the execution of its judgments and demonstrates a Contracting State’s commitment to the Convention and the case-law to which it has given rise (see, mutatis mutandis, Barberà, Messegué and Jabardo v. Spain (Article 50), judgment of 13 June 1994, Series A no. 285‑C, p. 56, § 15, and Lyons and Others, cited above). However, its availability in domestic law is not sufficient in itself. The domestic court concerned, namely the Federal Court, must in addition apply the Convention and the Court’s case-law directly (see also, mutatis mutandis, regarding the right of access to a court and the effectiveness required of an ordinary appeal or an appeal on points of law, Delcourt v. Belgium, judgment of 17 January 1970, Series A no. 11, pp. 13-15, §§ 25 et seq.). This appears especially important in the present case since the Committee of Ministers closed the procedure for supervising execution of the Court’s judgment by simply referring to the availability of the remedy of an application for review, without awaiting its outcome. It is clear that a reference to a remedy which proves incapable of affording effective and practical redress where a Convention violation has been found will deprive applicants of their right to have the effects of the violation redressed as far as possible. 56. Lastly, it follows from a grammatical interpretation of section 139a of the former Federal Judicature Act (see “Relevant domestic law and practice”, paragraph 19 above) that an application to the Federal Court for reopening of the proceedings is a subsidiary means of redress, seeing that this provision states that such an application will be admissible where “... redress is possible only through such a review”. It has to be noted in the present case that in its judgment of 28 June 2001 the Court did not make any award to the applicant association in respect of non-pecuniary damage. In the absence of any claim by the association under that head, it did not even express the opinion that the finding of a violation of Article 10 could be regarded as constituting adequate and sufficient redress for the non-pecuniary damage it had sustained. Accordingly, reopening of the proceedings before the Federal Court with a view to obtaining restitutio in integrum – the ideal form of reparation in international law – would have enabled the effects of the violation found by the Court to be redressed as far as possible (see, to similar effect, Pisano, cited above, § 43; Scozzari and Giunta, cited above, § 249; and Sejdovic, cited above, § 119; see also, for a practical example of the application of the relevant Swiss law, Hertel (dec.), cited above, in which the applicant had the general prohibition on disseminating his views lifted following his application to the Federal Court for a review (see “Relevant domestic law and practice”, paragraph 21 above). 57. The Court is also mindful of the fact that the application to reopen the proceedings in the present case was worded in a very cursory fashion barely satisfying the requirements of section 140 (see “Relevant domestic law and practice”, paragraph 20 above). Nevertheless, the Federal Court’s findings as to the applicant association’s interest in broadcasting the commercial, while brief, were capable of giving rise to a fresh interference with the applicant association’s freedom of expression. 58. The Court therefore considers that the complaint under Article 10 concerning the Federal Court’s refusal to review its judgment of 20 August 1997 must be regarded as raising a new issue that was not determined in the Court’s judgment of 28 June 2001, and is accordingly compatible ratione materiae with the provisions of the Convention and its Protocols. It remains to be determined whether the refusal amounts to a fresh violation of Article 10. C. Merits 1. Whether there was interference 59. In view of the foregoing, the refusal to reconsider the prohibition on broadcasting the television commercial in issue constitutes, in the Court’s view, fresh interference by public authority with the exercise of rights protected by Article 10 § 1. Such interference will infringe Article 10 unless it satisfies the requirements of paragraph 2 of that provision. 2. Whether the interference was justified (a) Legal basis for the interference and legitimate aims pursued 60. As to whether the interference was justified under Article 10 § 2, the Court observes that in its previous judgment of 28 June 2001 it held that the interference had been “prescribed by law”, having been based on section 18(5) of the Federal Radio and Television Act, and had also pursued the legitimate aim of “protection of the ... rights of others”. The Court does not consider it necessary to determine whether those factors also justified the interference resulting from the Federal Court’s judgment of 29 April 2002, seeing that the fresh refusal to broadcast the commercial, as upheld in that judgment, was not “necessary in a democratic society” for the following reasons. (b) “Necessary in a democratic society” (i) General principles 61. The fundamental principles relating to this question are well established in the Court’s case-law and have been summarised as follows (see, for example, Hertel, cited above, pp. 2329-30, § 46; Jersild v. Denmark, judgment of 23 September 1994, Series A no. 298, pp. 23-24, § 31; and Steel and Morris v. the United Kingdom, no. 68416/01, § 87, ECHR 2005‑II): “(i) Freedom of expression constitutes one of the essential foundations of a democratic society and one of the basic conditions for its progress and each individual’s self-fulfilment. Subject to paragraph 2 of Article 10, it is applicable not only to ‘information’ or ‘ideas’ that are favourably received or regarded as inoffensive or as a matter of indifference, but also to those that offend, shock or disturb. Such are the demands of pluralism, tolerance and broadmindedness without which there is no ‘democratic society’. As set forth in Article 10, this freedom is subject to exceptions, which ... must, however, be construed strictly, and the need for any restrictions must be established convincingly ... (ii) The adjective ‘necessary’, within the meaning of Article 10 § 2, implies the existence of a ‘pressing social need’. The Contracting States have a certain margin of appreciation in assessing whether such a need exists, but it goes hand in hand with European supervision, embracing both the legislation and the decisions applying it, even those given by an independent court. The Court is therefore empowered to give the final ruling on whether a ‘restriction’ is reconcilable with freedom of expression as protected by Article 10. (iii) The Court’s task, in exercising its supervisory jurisdiction, is not to take the place of the competent national authorities but rather to review under Article 10 the decisions they delivered pursuant to their power of appreciation. This does not mean that the supervision is limited to ascertaining whether the respondent State exercised its discretion reasonably, carefully and in good faith; what the Court has to do is to look at the interference complained of in the light of the case as a whole and determine whether it was ‘proportionate to the legitimate aim pursued’ and whether the reasons adduced by the national authorities to justify it are ‘relevant and sufficient’ ... In doing so, the Court has to satisfy itself that the national authorities applied standards which were in conformity with the principles embodied in Article 10 and, moreover, that they relied on an acceptable assessment of the relevant facts ...” (ii) Application of the above principles in the instant case 62. In its judgment of 28 June 2001 the Court found that the measure in issue was not “necessary in a democratic society”, among other reasons because the authorities had not demonstrated in a “relevant and sufficient” manner why the grounds generally advanced in support of the prohibition of political advertising also served to justify the interference in the particular circumstances of the applicant association’s case (see VgT Verein gegen Tierfabriken, cited above, § 75). In the instant case the Federal Court refused the applicant association’s application to reopen the proceedings on the ground that the association had not provided a sufficient explanation of the nature of “the amendment of the judgment and the redress being sought”, as it was formally required to do by section 140 of the former Federal Judicature Act (see paragraph 20 above). However, the Court considers that that approach is overly formalistic, seeing that it followed from the circumstances of the case as a whole that the association’s application necessarily concerned the broadcasting of the commercial in question, which had been prohibited by the Federal Court itself on 20 August 1997. Furthermore, the Federal Court nevertheless added that the applicant association had not sufficiently shown that it still had an interest in broadcasting the original version of the commercial. In doing so, it effectively took the place of the applicant association in deciding whether there was still any purpose in broadcasting the commercial. However, it failed to give its own explanation of how the public debate on battery farming had changed or become less topical since 1994, when the commercial was initially meant to have been broadcast. 63. Accordingly, the Court, while conscious of the Swiss authorities’ margin of appreciation in the matter (see VgT Verein gegen Tierfabriken, cited above, § 67), is not satisfied that the Federal Court applied domestic law in conformity with the principles embodied in Article 10 of the Convention. That being so, the reasons given by the Swiss Federal Court, having regard to the case as a whole and to the interest of a democratic society in ensuring and maintaining freedom of expression in matters of indisputable public interest, were not “relevant and sufficient” to justify the interference in issue. 64. There has therefore been a violation of Article 10. III. APPLICATION OF ARTICLE 41 OF THE CONVENTION 65. 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.” 66. The applicant association did not submit a claim for just satisfaction. Accordingly, the Court considers that there is no call to make any award on that account. FOR THESE REASONS, THE COURT 1. Declares inadmissible, unanimously, the complaint under Article 6 § 1 of the Convention; 2. Dismisses unanimously the Government’s preliminary objection of failure to exhaust domestic remedies in respect of the complaint under Article 10 of the Convention; 3. Joins to the merits unanimously the Government’s argument as to the application of Article 10 of the Convention and, accordingly, declares admissible the complaint under that Article; 4. Holds by five votes to two that Article 10 of the Convention is applicable in the present case; 5. Holds by five votes to two that there has been a violation of Article 10 of the Convention. Done in French, and notified in writing on 4 October 2007, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Claudia WesterdiekSnejana BotoucharovaRegistrarPresident In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the dissenting opinion of Mrs Jaeger joined by Mr Borrego Borrego is annexed to this judgment. S.B.C.W. DISSENTING OPINION OF JUDGE JAEGER JOINED BY JUDGE BORREGO BORREGO 1. I voted against finding a violation in the present case. 2. The applicant association never claimed compensation for non-pecuniary damage, either in its previous application (no. 24699/94) or in the present one. It simply sought a finding of a violation and the reimbursement of its costs. In Resolution ResDH(2003)125 of 22 July 2003 the Committee of Ministers declared that it was satisfied by the measures taken by the respondent State, namely publication of the judgment and the reimbursement of costs and expenses, with the additional possibility of reopening the proceedings as provided by domestic law. 3. The applicant association achieved nothing in having the proceedings reopened in the Federal Court. However, the Convention does not require the States Parties to institute procedures for the fresh examination of a case following a finding of a violation by the Court, as the majority accept (see Saïdi v. France, judgment of 20 September 1993, Series A no. 261-C, p. 57, § 46, and Pelladoah v. the Netherlands, judgment of 20 September 1994, Series A no. 297-B, p. 36, § 44). The reopening of the proceedings in the Federal Court is merely a subsidiary means of redress, irrespective of the outcome of that procedure. An unfavourable outcome for the applicant cannot be regarded as any less compatible with the Convention than the absence of such a procedure (argumentum a maiore ad minus). Moreover, in the instant case it should be noted that the Committee of Ministers discharged the duty assigned to it by Article 46 § 2 of the Convention in adopting Resolution ResDH(2003)125. In such circumstances, the Court is not competent to consider the same case again. 4. Even assuming that the Court is competent in this respect, I cannot see how the Federal Court could have violated Article 10 through a somewhat formalistic interpretation of sections 139a and 140 of the former Federal Judicature Act. Provided that the conditions for reopening the proceedings are satisfied, the courts are only bound not to repeat the violation already found. Thus, the Swiss courts were required to refrain from using the political argument because the Court had found it not to be relevant and sufficient. However, Article 10 does not impose specific procedural obligations in the application of general provisions on procedure. In particular, the courts may at any time require there to be a continuing interest in legal protection. The presence of such an interest was in fact questionable because the applicant association had at the same time attempted to reach a new agreement with Publisuisse SA to broadcast an amended version of the commercial in issue, thereby accepting that the commercial now appeared out of date almost eight years after it was initially intended to have been broadcast. In my opinion, reopening of proceedings is not an ideal means of reparation in international law since it often does not allow the effects of a violation found by the Court to be redressed as far as possible (contrary to what the majority state in paragraph 56 of the judgment). While this might be true in the case of procedural defects, it is more or less inadequate in respect of the violation of Article 10. 5. In so far as the right of expression is used to take part in a political discussion – whether by means of writing, cartoons, films or speeches – the scope and effect of any initiative depend to a great extent on the actual circumstances, especially the receptiveness or sensitivity of the audience to which the message is addressed. As time goes by, the relevance of the message decreases, as do the awareness and receptiveness of the groups being targeted. After some eight years, the message may need updating in form and content or may even be totally outdated. Anyone who wishes to take part in a debate and is not allowed to raise his voice until eight years later will hardly be satisfied. For these reasons I disagree with the majority’s finding in paragraph 56 of the judgment that in cases of this kind, reopening of the proceedings may possibly result in restitutio in integrum. I consider this to be inconsistent with the temporal implications inherent in freedom of expression.

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 96 of 1959. Appeal by special leave from the judgment and order dated August 19, 1957, of the Calcutta High Court in Criminal Revision No. 1577 of 1956, arising out of the judgment and order dated August 3, 1956, of the Magistrate, First Class, at Krishnagar, Nadia, in G. R. Case No. 69 of 1954. K. Daphtary, Solicitor-General of India and K. Chatterjee, for the appellant. The respondent did number appear. 1960. May 5. The Judgment of the Court ,as delivered by GAJENDRAGADKAR, J.-This appeal by special leave raises a short question about the companystruction and effect of the provisions of s. 22 1 d of the Industrial Disputes Act, 14 of 1947, hereinafter called the Act . The appellant, Ramnagar Cane Sugar Co. Ltd., Calcutta, is a companypany incorporated under the Indian Companies Act and carries on the business of manufacturing sugar which is an essential companymodity in its factory at Plassev in the District of Nadia. The appellant was declared a public utility companycern or service by a numberification duly issued in that behalf on October 8, 1953. The appellant employs in its business about 545 permanent men and 703 seasonal men excluding casual labourers. A majority of the workmen employed by the appellant belong to the Ramnagar Cane Sugar Co. Employees Union hereinafter called the Employees Union , whereas a minority of workmen belong to the rival Union called Ramnagar Sugar Mill Workers Union hereinafter called the Workers Union . It appears that on December 9, 1953, the Workers Union presented a charter of demands to the appellant. This was followed by a similar charter of demands by the Employees Union on January 20,1954. On the same day the Workers Union served a numberice of strike on the appellant. On February 1, 1954, a meeting was held before the Conciliation Officer which was attended by the Employees Union and the appellant. A numberice of the said meeting had been served on the Workers Union as well. On February 2,1954, the appellant suggested to the companyciliation officer that it should discuss the matter separately with the representatives of the two Unions but to this suggestion the Workers Union took an objection. Thereupon the said Union informed the companyciliation officer that it assumed that the companyciliation had failed. Consequently on February 3, 1954, the companyciliation officer sent his report under s. 12, sub-s. 4 of the Act about the failure of companyciliation with the Workers Union only. On February 25, 1954, the appellant and the Employees Union arrived at a settlement, and it was recorded in the form of a memo of settlement which was duly signed by both the parties. Meanwhile, on February 13, 1954, the Workers Union companymenced a strike. As a result of this strike a criminal companyplaint was filed against the eleven respondents under s. 11 of the West Bengal Security Act, XIX of 1950, and a charge was subsequently framed against them. The case as formulated in the charge against the said respondents was that on or about February 13, 1954, at Plassey each one of them did companymit subversive acts which were intended or likely to impede, delay or restrict the work of Ramnagar Cane Sugar Co. Ltd., which was a public utility companycern for production of sugar, an essential companymodity. The respondents pleaded number guilty to the charge substantially on the ground that the strike in question was number illegal. It was number denied that they had gone on strike on February 13, 1954 it was, however, urged that since the strike was lawful the offence charged companyld number be said to be proved. The learned magistrate upheld the respondents plea and acquitted the respondents. The appellant challenged the companyrectness of the said order of acquittal by preferring a revisional application before the Calcutta High Court. Its revisional application, however, failed since the High Court held that the strike was number illegal and agreed with the companyclusion of the trial magistrate. The appellant then applied for a certificate before the said High Court but its application was dismissed. Then the appellant applied for and obtained special leave from this Court and the only point which is raised on its behalf before us is that in companying to the companyclusion that the strike in question was number illegal the Courts below have misconstrued the provisions of s. 22 1 d of the Act. Before we companysider this point it is relevant to refer to the relevant provisions of the West Bengal Security Act. Section 11 of this Act provides Chat if any person companymits any subversive act he shall be punish. able with imprisonment for a term which may extend to five years or with fine or with both. Section 2 9 e defines a subversive act as meaning any act which is intended or is likely to impede, delay or restrictany work or operation, or ii any means of transport or locomotion,-necessary for the production, procurement, supply or distribution of any essential companymodity, except in furtherance of an industrial dispute as defined in the Industrial Disputes Act, 1947. Explanation ii to this definition provides that an illegal strike or an illegal lock-out as defined in s. 24 of the Industrial Disputes Act, 1947, shall number be deemed to be an act in furtherance of an industrial dispute for the purposes of sub-el. e . It is thus clear that if the impugned strike is held to be illegal it would companystitute a subversive act as defined by s. 2 9 e of the West Bengal Security Act. This position has been accepted in the companyrts below. That is why the only question which arises for our decision is whether the strike in question is an illegal strike under s. 24 of the Act. Section 24 of tile Act provides, inter alia, that a strike shall be illegal if it is companymenced or declared in companytravention of s. 22 or s. 23. That takes us to the provisions of s. 22, and we have to find out whether in companymencing the strike on February 13, 1954, the respondents had companytravened the provisions of s. 22 1 d of the Act, Section 22 1 d lays down that numberperson employed in a public utility service shall go on strike in breach of companytract during the pendency of any companyciliation proceedings before a companyciliation officer and seven days after the companyclusion of such proceedings. The effect of this provision is clear. If a strike is declared in a public utility service during the pendency of a companyciliation proceeding it is illegal. Was any companyciliation proceeding pending between the appellant and the respondents at the relevant time ? That is the question which calls for an answer in the present appeal. The respondents companytend that the Workers Union to which they belonged had left the companyciliation proceedings on February 2,1954, and that in fact the companyciliation officer had submitted his failure report to that effect on February 3, 1954 and so, between the Workers Union and the appellant numberconciliation proceeding was pending after February 5, 1954, in any case when the Government received the failure report of the companyciliation officer. On the other hand, the appellant companytends that companyciliation proceedings with the Employees Union companytinued until February 25, 1954, and in fact settlement was arrived at between the parties on that date and duly signed by them. The appellants argument is that the pendency of the companyciliation proceedings between the appellant and the Employees Union makes illegal the strike in which the respondents joined on February 13, 1954. The High Court has held that since it is number shown that the respondents belong to the Employees Union it would number be possible to hold that any companyciliation proceedings was pending between them and the appellant. It is the companyrectness of this view that is challenged before us. In appreciating the merits of the rival companytentions thus raised in this appeal it is necessary to bear in mind the scheme of the Act. It is number well settled that an industrial dispute can be raised in regard to any matter only when it is sponsored by a body of workmen acting through a union or otherwise. When an industrial dispute is thus raised and is decided either by settlement or by an award the scope and effect of its operation is prescribed by s. 18 of the Act. Section 18 1 provides that a settlement arrived at by agreement between the employer and the workman otherwise than in the companyrse of companyciliation proceeding shall be binding on the parties to the agreement whereas s. 18 3 provides that a settlement arrived at in the companyrse of companyciliation proceedings which has become enforceable shall be binding on all the parties specified in cls. a , b , c and d of sub-s. 3 . Section 18 3 d makes it clear that, where a party referred to in cl. a or b is companyposed of workmen, all persons who were employed in the establishment or part of the establishment, as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part, would be bound by the settlement. In other words, there can be numberdoubt that the settlement arrived at between the appellant and the Employees Union during the companyrse of companyciliation proceedings on February 25, 1954, would bind number only the members of the said Union but all workmen employed in the establishment of the appellant at that date. That inevitably means that the respondents would be bound by the said settlement even though they may belong to the rival Union. In order to bind the workmen it is number necessary to show that the said workmen belong to the Union which was a party, to the dispute before the companyciliator. The whole policy of s. 18 appears to be to give an extended operation to the settlement arrived at in the companyrse of companyciliation proceedings, and that is the object with which the four categories of persons bound by such settlement are specified in s. 18, sub-s. 3 . In this companynection we may refer to two recent decisions of this Court where similar questions under s. 19 6 and s. 33 1 a of the Act have been companysidered. Vide The Associated Cement Companies Ltd., Porbandar v. Their Workmen 1 and Messrs. New India Motors P. Ltd. v. K. T. Morris 2 . This position has an important bearing on the companystruction of s. 22 1 d . When the said provision refers to the pendency of any companyciliation proceedings it must reasonably be companystrued to mean any companyciliation proceedings which may lead to a settlement before the companyciliation officer and which settlement may bind all the workmen companycerned in other words, if a companyciliation proceeding is pending between one union and the employer and it relates to matters companycerning all the employees of the employer, the pendency of the said companyciliation proceeding would be a bar against all the employees of the employer employed in a public utility service to go on a strike during the pendency of the said proceeding under s. 22 1 d . In our opinion, this companystruction would be companysistent with the specific provisions as to the effect of companyciliation settlements prescribed by s. 18 3 d and is harmonious with the general policy of the Act otherwise, it would unnecessarily disturb industrial peace, if one union employed in a public utility service is allowed to go on strike even though demands companymon to the members of the said union as well as the rest of the workmen are being companysidered in companyciliation proceedings between the said employer and his other employees 1 1960 2 S.C.R. 974. 2 1960 3 S.C.R. 350. represented by another union. It would be another matter if the companyciliation proceedings in question are companyfined to specific demands limited to a specified class of employees. In such a case it may be companytended that the other workmen who are number interested in the said demands may number be bound by the said proceedings. That, however, is another aspect of the matter with which we are number companycerned in the present appeal. We have seen the charter of demands submitted by both the Unions to the appellant, and it is clear that the said demands companyer all employees of the appellant and number only one section of them in other words, both the charters have made demands the benefit of which wasintended to accrue to all the workmen of the appellant they are number demands by one section of the workmen belonging to one separate part of the establishment run by the appellant. The demands made are numberdoubt by two Unions but they companyer the same ground and in effect they represent the demands made by the whole body of workmen. In fact the companyciliation settlement reached between the appellant and the Employees Union has benefited the members of the Workers Union as much as those of the Employees Union. That being so we think the companyrts below were in error in putting an unduly narrow and restricted companystruction on the provisions of s. 22 1 d of the Act. In our opinion, the pendency of the companyciliation proceedings between the appellant and the Employees Union attracts the, provisions of s. 22 1 d to the strike in question and makes the said strike illegal under s. 24 1 1 of the Act. If the strike is illegal it follows that the respondents have taken part in a subversive activity as defined by s. 2 9 e of the West Bengal Security Act and as such have companymitted an offence punishable under s. 11 of the said Act. We would accordingly set aside the order of acquittal passed by the High Court in favour of the respondents and companyvict them of the offence charged. The Solicitor-General hag fairly told us that the appellant has companye to this Court number so much for the purpose of pressing for the companyviction of, and a heavy sentence against, the respondents but for obtaining a decision on the important question of law in regard to the companystruction of s. 22 1 d of the Act.

MR JUSTICE COLLINS: The claimant, Roger Taylor, is now 51 years old. He was a patient at Ashen Hill Hospital. He was formally admitted to that hospital in October 2000 by the Crown Court following his conviction for offences of affray and common assault. He had been at Ashen Hill in the Regional Secure Unit since May 2000 for the purpose of assessment. The court, having received the necessary reports, ordered his detention at Ashen Hill pursuant to Section 37 of the Mental Health Act 1983 and further ordered that he be subject to a restriction order under section 41. This claim concerns whether he should receive treatment in the form of antipsychotic medication without his consent. Section 63 of the 1983 Act enables treatment to be given to a patient by or under the direction of the responsible medical officer ("RMO") without the need for the patient to consent, but that provision is subject to sections 57 and 58. Section 57 deals with particular forms of treatment of an especially invasive nature, and section 58 is the provision which is applicable in this case. It provides as follows: "(1) This section applies to the following forms of medical treatment for mental disorder -- (a) such forms of treatment as may be specified for the purposes of this section by regulations made by the Secretary of State; (b) the administration of medicine to a patient by any means (not being a form of treatment specified under paragraph (a) above or section 57 above) at any time during a period for which he is liable to be detained as a patient for whom this Part of the Act applies if three months or more have elapsed since the first occasion in that period when medicine was administered to him by any means for his mental disorder. (2) The Secretary of State may by order vary the length of the period mentioned in subsection (1)(b) above. (3) Subject to section 62 below, a patient shall not be given any form of treatment to which this section applies unless -- (a) he has consented to that treatment and either the responsible medical officer or a registered medical practitioner appointed for the purposes of this Part of the Act by the Secretary of State has certified in writing that the patient is capable of understanding its nature, purpose and likely effects and has consented to it; or (b) a registered medical practitioner appointed as aforesaid (not being the responsible medical officer) has certified in writing that the patient is not capable of understanding the nature, purpose and likely effects of that treatment or has not consented to it but that, having regard to the likelihood of its alleviating or preventing a deterioration of his condition, the treatment should be given. (4) Before giving a certificate under subsection (3)(b) above the registered medical practitioner concerned shall consult two other persons who have been professionally concerned with the patient's medical treatment, and of those persons one shall be a nurse and the other shall be neither a nurse nor a registered medical practitioner." Part 4 of the Act, in which these provisions relating to consent to treatment are to be found, applies to the claimant so long as he is liable to be detained. He is liable to be detained if suffering from mental disorder; that is to say mental illness, arrested or incomplete development of mind, psychopathic disorder or any disorder or disability of mind, or from severe mental impairment which make it necessary for him to be detained in hospital to receive treatment for the protection of other persons or for his own health and safety. (See sections 1(2), 3(2) and 37(2) of the 1983 Act). It is, I think, convenient, simply because I have recently set out the relevant statutory and other provisions in R (B) v Haddock and Others [2005] EWHC 921 Admin, to direct attention to that case. I do not think I need cite from it in this judgment. I simply refer to the code of practice which deals with how the SOAD (namely the medical practitioner appointed under section 58) should act. But it makes the point that the SOAD must satisfy himself that the treatment is indeed necessary, ensure that he thinks it desirable to carry it out, and consult with the two statutory consultees and others including, with the patient's consent, the patient's family, carers or advocate. The first defendant is the RMO, the second the SOAD. Each is satisfied that the claimant suffers from persistent delusional disorder and that the medication is needed to alleviate his condition. The second defendant, Dr Gallimore, so certified on 30th April of this year. An earlier certificate had been given by a different SOAD on 28th December 2004, a Dr Browne, and he reached the same conclusion. He was of the opinion that the claimant was suffering from mental illness in the form of a deep-seated paranoia. He was included in the original claim which was lodged on 17th January 2005 (following the obtaining of an injunction on 14th January, the duty judge prohibiting the administration of the treatment pending consideration of an application for judicial review which had to be lodged by Monday 17th) but Dr Browne's certificate lapsed. In due course, Dr Gallimore's certificate was obtained so he was joined in the place of Dr Browne. The claim is founded on evidence obtained from a Dr Azuonye, a consultant psychiatrist, who originally saw the claimant on 12th January of this year and expressed the view that he showed no signs of mental disorder and that no medication should be administered. There is little, if any, dispute about the approach the law requires me to adopt. Following Strasbourg jurisprudence, in particular Herczegfalvy v Austria 15 EHRR 437, the defendants have to satisfy me that the medical necessity for the treatment is has been convincingly shown to exist according to the psychiatric principles generally accepted. Since human rights are at stake, whether under Article 3 or, more probably, Article 8, the Court of Appeal has decided in Wilkinson v Broadmoor Special Hospital [2002] 1 WLR 419 that, albeit the challenge is through judicial review, the court must reach its own conclusion on the evidence. This could (and on one view the decision in Wilkinson is consistent with the conclusion that it should) involve the attendance and cross-examination of the doctors concerned. But in R(N) v M [2003] 1 WLR 562 the Court of Appeal indicated that it should not often be necessary to adduce oral evidence. In the case of R(B) v Haddock, which I have already referred to, I considered the authorities and expressed some doubts about the decision in Wilkinson and the approach that the court had to decide for itself on the merits. However, I need not go into those matters in this judgment. Suffice it to say that I accept, as I have to, that I am bound by the decisions of the Court of Appeal in Wilkinson and N. An application was made to have the doctors called and cross-examined. I refused that application. The various reports have been considered and commented on in detail. I am satisfied that I would not have been assisted by hearing the doctors cross-examined. I have all the information that I need to reach my decision. I only confirm, and perhaps put into more positive form, what the Court of Appeal said in N about the need to adduce oral evidence. In my view it will only be in rare cases that such a course will be appropriate. If the court has the relevant medical notes, the reasoned decisions by the doctors concerned, statements from the doctors and other professionals, and comments on any opposing views, it is difficult to see why oral evidence should be needed. I must start by setting out, although not in any more detail than necessary, the claimant's history. He was a singularly difficult child, terrorising his siblings and wreaking havoc in his home. At the age of 14 he was regarded as totally beyond his parents' control. He married a lady who was a prostitute -- indeed he had met her as her client -- in 1983. They separated after about a year. He returned to her but was angry at her because he felt that she was still pursuing her activities as a prostitute. His wife died following a quarrel, and for about a month he lived with her dead body. He was arrested because he raped a lady after he forced his way into her flat, threatened her with a knife and bound her hands. For these offences he was sentenced by the Crown Court judge to 11 years' imprisonment but that was reduced on appeal to 8 years. He was released from that sentence in April 1991. The Probation Service, recognising that there were substantial mental problems, having regard to his history and the nature of the offences, referred him to psychiatric services and he came under the general care of Dr Haydn-Smith and his team. He had counselling. Unfortunately, he became involved in a dispute with the Benefits Agency, largely concerning whether he should be provided with the means of obtaining a car since he said he was agoraphobic. He also got into debt and began to become obsessed with his litigation, which in the end was, as I understand it, substantially successful. But his mental state began to deteriorate. He refused to continue to see the psychiatric team because he believed that they were conspiring against him and he began to make threats against some of them because of his belief that they were guilty of criminal conduct against him. He involved his Member of Parliament but, when he did not get the assistance he thought should have been given, he turned against him. He developed what were clearly delusional ideas about what the Member of Parliament was doing: these included an allegation that he had placed a seagull down his toilet. The claimant was arrested in July 1999 following an incident when he visited a neighbour. The neighbour, a lady, was somewhat concerned with his attitude and, in particular, his comments to her which suggested a sexual interest. When she thought he was leaving he suddenly produced a knife after grabbing her shoulder. She screamed and he fled. Whilst on remand, he was seen with a view to a possible admission to Broadmoor, having been referred by Dr Haydn-Smith. In a report dated 1st November 1999, Dr Forrester, a psychiatrist at Broadmoor, reached these conclusions: "(1) Mr Taylor is a 45-year old man who presents with a range of abnormalities in his mental state, including widespread persecutionary delusions; for example, that his local MP and Dr Haydn-Smith are involved in a conspiracy against him . . . In recent months he has increasingly tended to present in a hostile and argumentative state and he has become so concerned with the circumstances of his court case that he spends hours every day in his prison cell writing material. I am of the opinion that he currently fulfils the required phenonological criteria to evaluate it as a delusional disorder which is a recognised mental illness appearing in the ICD-10 classification of mental and behavioural disorders, WHO 1992. (2) Mr Taylor has a history of conduct disorder in adolescence, developing into a personality disorder in adult life which clearly advocates the development of a psychotic illness . . . (3) In terms of the level of risk to other persons, Mr Taylor has a history of convictions which date from 1971 and he received his first conviction for carrying an offensive weapon. He also has previous convictions for manslaughter and rape. After leaving prison in 1991, he was followed up by the Ashen Hill Community Forensic Mental Health team but in 1998 he fell out with the team after he was unhappy that they did not feel able to support his appeal for a car. Since that time he has made an increasing number of complaints about various members of staff and has developed delusional ideas regarding his local MP and Dr Haydn-Smith. He has stated that he wishes to disclose them in public. When asked specifically what this means he refuses to say. On the basis of the available information, I am of the opinion that Mr Taylor currently presents a significant risk to the safety of other persons, principally the MP and Dr Haydn-Smith. Although it is not currently possible to decide the nature of that risk, I am nonetheless of the opinion that it is sufficient to say that he presents a grave and immediate danger to the safety of other persons. (4) Mr Taylor currently requires a period of assessment and treatment in a hospital setting and I am of the opinion that it would be appropriate for this to be undertaken in conditions of maximum security. Consequently, I would recommend his admission to the Panel." That was addressed to the Broadmoor Panel and is dated 1st November 1999, when the claimant was remanded in custody in Lewes Prison. Unfortunately, there was no vacancy available at Broadmoor, and so he remained in the prison until the Spring of 2000 when he was able to go to the secure unit at Ashen Hill. That was in May of 2000. In July, a report was prepared for the Crown Court by a Dr Sarkar, who was at the time a specialist registrar in forensic psychiatry working under the supervision of Dr Haydn-Smith. He noted that the report was prepared under Dr Haydn-Smith's direct supervision and guidance, but he made it plain that the views that he stated in it were his. He dealt with Mr Taylor's progress since his transfer to Ashen Hill in May and said this: "Mr Taylor believes that all of us are involved in the prosecution conspiracy to frame him for something he did not do, and he maintains his innocence. As time has gone by, more and more people have been involved in this so-called conspiracy which includes various members of the nursing team. He accused one of our senior charge nurses of being a paedophile. So far he has not been able to engage in any meaningful relationship with any member of the team. He does, however, have a reasonable social interaction with a few selected individuals. Some of these patients have the same firm of solicitors representing him and I am led to believe that most of his discussion with these patients is surrounding legal issues. Mr Taylor likes to think of himself as somebody who is quite knowledgeable in law and he quotes various Articles, most notably Article 6 of the European Convention on Human Rights. His writing is rich in pseudo-legal jargon." Then he goes on to say: "A second opinion was recently obtained from the Mental Health Act Commission and we were unsure about the true nature of Mr Taylor's consent [that is consent to treatment which was in the form of medication, particularly antipsychotic medication]. Mr Taylor became rather agitated prior to the visit by the second opinion doctor, although he superficially co-operated with the doctor when he visited. A second opinion has now been obtained to treat him with up to two antipsychotics . . . Mr Taylor is now on normal medication which he accepts, but each time under protest. Although it has been almost three months since Mr Taylor was admitted to Ashen Hill, his relationship with the treating team has not improved noticeably. He remains suspicious, guarded and accuses everybody of wanting to prejudice his defence by making various allegations. As he is reluctant to talk to any of the nursing team and doctors, the only opportunity we have to assess his mental state is through the brief conversations which we have with him . . . It is [the] letters that Mr Taylor has written so far which give us the best indication of his mental state. The ongoing assessment at Ashen Hill is also supplemented by observation of his behaviour, his interaction with staff and his general demeanour." He notes that it would appear that he had well systemised persecution delusions of a non-bizarre nature, predating the alleged index offence. He goes on: "In the absence of hallucinations and thought disorder, the substant array of plausible persecution or other beliefs would be the hallmark of a persistent delusional disorder. I am therefore confident that Mr Taylor meets the criteria of paranoid personality disorder with relevant paranoid delusional disorder. A delusional disorder is a mental illness within the meaning of the Mental Health Act. A paranoid personality disorder coupled with anti-social personality disorder would satisfy the criteria of a psychopathic disorder as defined in the Mental Health Act. I believe Mr Taylor's psychopathic disorder would be amenable to appropriate treatment in a hospital setting . . . I am of the belief that [Mr Taylor's] suspiciousness is a product of the mental illness known as delusional disorder and when that is treated successfully Mr Taylor will be in a position to engage in treatment which will alleviate his condition or at least prevent a deterioration as far as the psychopathic disorder is concerned." He went on to give the opinion that Mr Taylor remained a person who could be dangerous given the right situation. His finding was that he suffered from anti-social personality disorder and paranoid personality disorder which met the criteria of psychopathic disorder as defined in the Mental Health Act, and also that he suffered from delusional disorder of a paranoid type which was a mental illness within the meaning of the Act. So it was that the court order was made, as I have indicated, based upon the classification of mental illness. He has never shown hallucinatory or other bizarre signs, but questions established that the delusions existed and the definition of persistent delusional disorder has been stated in the guidance provided to the profession in this way: "Delusional disorder: This group of disorders is characterised by the presence either of a single delusion or of a set of related delusions which are usually persistent and sometimes life-long. The delusions are highly variable in content. Often they are persecutory, hypochondriacal or grandiose, but they may be concerned with litigation or jealousy or express a conviction that the individual's body is misshapen, or that others think that he or she smells or is homosexual. Other psychopathology is characteristically absent, but depressive symptoms may be present in many of them and olfactory and tactile hallucinations may be present in some cases. Those that consist of auditory hallucinations (voices), schizophrenic symptoms such as delusions of control and marked blunting of affect, and definite evidence of brain disease are all incompatible with this diagnosis. However, occasional or transitory auditory hallucinations do not rule out this diagnosis, provided that they are not typically schizophrenic and form only a small part of the overall clinical nature. Onset is commonly in middle age but sometimes, particularly in the case of beliefs about having a misshapen body, in early adult life. The content of the delusion and the timing of its emergence can often be related to the individual life situation; for example, the persecutory delusions of members of minorities. Apart from actions and attitudes directly related to the delusion or delusions existing, effect, speech and behaviour are normal." That last sentence is, in the context of this case, of some importance. Although the claimant did not accept the need for medication and objected to its administration (although not to the extent of resisting when it was to be administered), the medication was alleviating his condition. Accommodation was found for him and in November 2003 he was conditionally discharged. All seemed to be going well until April 2004. He began to complain to a greater extent about an allegedly noisy neighbour. A Dr Kirolous who worked with Dr Haydn-Smith and had known the claimant since 2000 when he came to Ashen Hill and saw him regularly and was one of the team that supervised his care, has provided a statement. She has noted that there was a case conference on 13th April 2004 following a meeting with Mr Taylor on 8th April. She comments: "That was the last meeting at which we were relatively content about his place in the community. During that meeting, Mr Taylor mentioned that he did now feel free of being trapped behind a door and surrounded by a powerful figure as he was at home; that is to say, in the past . . . I can confirm that I wrote to the Home Office on behalf of Dr Haydn-Smith." She refers to a letter of 15th July 2004 in which she notified the relevant person at the Mental Health Unit in the Home Office that there was a strong indication that the claimant's mental state had deteriorated and he was presented as increasingly paranoid and psychotic. She therefore recommended that he be put in hospital for his own health and safety and for the protection of others. She continues in her statement: "In the three months prior to that letter, it became apparent that Mr Taylor's mental state and presentation were deteriorating . . . He became increasingly suspicious about the motivations of several members of his care team as his delusions started to resurface because of his failure to take medication. He had started to miss attending the rehabilitation work placements at the nursery . . . He intended to spend most of his time at home in isolation. He talked about thinking of jumping from Beachy Head. He refers to a handwritten letter in which he made reference to killing himself." What in fact happened was that the claimant disappeared from his address in July 2004. That constituted a breach of the conditions under which he was to be at large. In due course, but not until October, he was discovered and was re-admitted to hospital. That re-admission was perfectly lawful as a result of the breach of condition and there was also the opinion of Dr Kirilous which is contained in the letter which she had written to Home Office. It seems that he had not been taking his medication. The re-admission was on 20th October 2004. Unfortunately, he refused to talk to his RMO, Dr Haydn-Smith. It was noted by a nurse who was concerned with him that that individual had not picked up any signs of mental illness (ie, psychosis), that he spent his time writing and that he was obsessed with exonerating himself. He still maintained a conspiracy existed against him. Dr Haydn-Smith and anyone who supported him was guilty of criminal conduct and would be punished for it. It was noted that he had lost weight and had not been caring for himself properly. There has also been produced a note from a Charge Nurse Carrington in which she said this: "Following ward round two weeks ago [this is dated 29th November 2004] S/N Gillen informed Roger that a SOAD was going to be requested before meds were prescribed. Roger was unhappy with this because he feels that he does not show any evidence of mental illness. This is evidenced by three months spent without medication or professional input." She then goes on to describe some problem that had arisen with another member of the staff at Ashen Hill. What Nurse Carrington requested was this: "Could we please clarify has a SOAD been requested and an idea on the timescale. The care team are of the opinion that Roger should not be prescribed any medication until further assessment can be made." His approved social worker, Dr Haydn-Smith, supported by Dr Browne, remained satisfied that he was suffering from persistent delusional disorder and that he needed medication which he had had in the past, because that medication had alleviated his condition. His deterioration which had led to his return to Ashen Hill, had resulted, they believed, from his failure to keep to that medication. In a statement which he has produced for the purpose of these proceedings, Dr Haydn-Smith has set out a number of entries from the nursing record which he has suggested were indicative of the disorder and consequently the need for treatment. Miss Burnham has not suggested that that record, which has been relied on by Dr Haydn-Smith, paints in any way a false picture or is taken out of context. It is not, I think, necessary to lengthen this judgment by going through it in great detail. One notes that there was general agitation from time to time. For example, on 15th November he had become hostile and abusive. He could not hold a two-way conversation. He felt staff, particularly one nurse was lying and had deliberately made things difficult. The next day he stated that the only way out was suicide but he could not do it. The next day he said that the RMO had denied him the right to voice his opinion. Some days later he said the RMO and the ASW were vindictive in trying to keep him there and that SOADs were usually "pissheads" and the RMO had been out to get him for many years. Into early 2005 we find him saying at the end of January that he felt like giving up completely but did not have the courage to kill himself; under intense stress; he did not intend to kill himself. Part of the stress then was undoubtedly that he was due to have a hearing before the Mental Health Review Tribunal which in due course took place in March. I will come to that in a moment. He had sacked his solicitors at the end of January. He told the nurse that the RMO had locked his children in a cupboard under the stairs. It was decided that he should be checked every 15 minutes, but he was not formally put on suicide watch. In February we have incidents where he accused staff of stealing possessions and taking items and hiding them, and that he was being fitted up by the legal team and being got at by the RMO and the ASW. There were continual incidents and complaints and assertions that he was the subject of deliberate conduct aimed at him and designed either to make it appear that he was suffering from mental illness or to ensure that he received the medication that the RMO considered was appropriate. He also tended, from time to time, to regard unrelated events as being aimed at him. For example, a visit by a police officer made him agitated even though it was totally unconnected with him and he insisted on making enquiries to make sure it was not connected with him. So the picture is not of someone who was maintaining, as it were, an even keel. The Mental Health Review Tribunal heard his appeal on 4th March. It found that he was suffering from mental illness and needed to be detained. However, it is accepted that I should not attach any weight to that finding. Indeed, I should and I do ignore it since it has been quashed because the Tribunal refused an adjournment and did not have before it the evidence of Dr Azuonye, who the claimant wished to call and who challenged the conclusions of the RMO and all the other professionals who had dealt with the claimant. I am afraid that I am clearly of the view that I must reject Dr Azuonye's evidence. His statements are badly reasoned and are based on often foolish attacks on detail in the statements made by the defendants. In his first statement of 14th January 2005, Dr Azuonye says that he saw the claimant for two hours and "he presented a completely normal mental state." His review of the medical records after re-admission on 26th October 2004 led him to say, following a somewhat selective quotation and ignoring the history, that they contrasted very much with the view that the claimant had to be recalled because of the deterioration in his mental state. What happened before his recall was important but appears to have been ignored. After referring to the possibility of a breach of human rights in the manner in which he had been recalled (a reference which shows that he must have been wholly unaware of the true position regarding the breach of condition and Dr Kirilous' letter) he concluded his report in these words: "In the course of my recent assessment of Mr Taylor, I review Dr Haydn-Smith's Psychiatric Report to the Mental Health Review Tribunal dated 29th November 2004, Ms Bea Gatrell's Social Circumstances Report dated 10th December 2004 [which incidentally supported everything said by the RMO] and Sarah Carrington's Nursing Report dated 10th December 2004. None of the these reports establishes that Mr Taylor has a mental illness within the meaning of the MHA 1983. Specifically, the Psychiatric and Social Circumstances Reports, which comprehensively review Mr Taylor's history do not present material that would support the view that Mr Taylor has a mental disorder classified under section 1(2) of the Mental Health Act 1983. This is not to say that Mr Taylor has never experienced symptoms of psychiatric illness -- he does have a long history of agoraphobia, has experienced obsessional symptoms, did have a drink-drive conviction (so alcohol could have been a problem in the past), and appears to have experienced a dissociative state around the time of his wife's death. He also told me that he took illicit drugs in the past. However, his neurotic and personality difficulties do not constitute a psychotic illness ['delusional disorder'] that Dr Hayden-Smith thinks that he suffers from, and do not amount to a mental disorder within the meaning of the Mental Health Act 1983. It is inappropriate to detain Mr Roger Taylor in hospital, and even more so to give him (antipsychotic) medication that he does not need. He is currently symptomless and does not pose a risk to himself or anyone else." I am bound to say that in my view, having regard to all the material that I have seen, that conclusion is simply wrong. These proceedings were launched on 17th January and the injunction had been obtained. Consideration of permission had not been dealt with and on 9th March the solicitors representing the first defendant, the RMO, wrote to the Administrative Court. The relevant paragraph of the letter reads as follows: "The RMO has informed us that the claimant is now considered to be a suicide risk and he is in great distress. He spends most of his time writing, he is sleeping very little, and neglecting himself. Furthermore, the claimant sacked his solicitors just before the hearing on 4th March. The RMO believed that had the current injunction not prevented the administration of medication, this position would never have been reached and reinstating the medication without leaving the patient's condition untreated. I appreciate that this information should in other circumstances be presented to the court in the form of a medical report or statement in support of an application to set aside an injunction. However, we have been informed in the last few weeks that this case is top of the permission list and is waiting to be looked at by a judge. If a decision on permission is indeed going to be made before the end of the week, that may make an application to set aside an injunction unnecessary. If a decision is not extended soon, I would be grateful if you would respond by return so that I can inform my clients and apply to set aside the current injunction." In fact, the case was put before a judge and the next day, on 10th March, Hodge J discharged the injunction, stating: "Matters have moved on since this application was issued [He refers there to a decision of Silber J which was referred to in the acknowledgment of service and said that in the circumstances he need not regard the claim as arguable]. In more pragmatic cases I know . . . the claimant's condition may become too serious to retrieve [I should add that that was indeed what the MHRT had said]. The lifting of the injunction would enable the claimant to be given such treatment as may be advised." In fact, of course, Hodge J refused permission and so the injunction would automatically have been discharged but it was formally done, no doubt sensibly, in the refusal of permission. Accordingly, the judge did not specifically have to have regard to the issues which went to whether the injunction might be continued when or if permission was in due course granted. Dr Azuonye produced a further report, having seen the claimant again on 15th March. He had seen the letter of 9th March, to which I have referred, and a further email to the Administrative Court in the same terms. He had also seen the order made by Hodge J. He stated, having spoken to Mr Taylor, that he had been engaged on activities in the ward, playing fool and acting with other patients. He said that he had problems with an noisy neighbour. He feared he would be in hospital for a very long time as he was in conflict with people more powerful than him who were in a position to pass on incorrect persuasive information about him to agencies such as the Mental Health Review Tribunal. He did not have any hallucinations, delusions, or any other phenomena of acute psychosis. There was no indication of the deterioration of his mental state and Dr Azuonye declared Mr Taylor as well as he had found him on two previous assessments of him in January and February of this year. That paragraph contains, in my view, its own indication that all is not well. There is material there which shows that Mr Taylor was persisting in his delusional beliefs of a conspiracy theory against him. The absence of hallucinations themselves is in no way inconsistent with a finding of persistent delusional disorder. Indeed, their existence would have been contrary indications to that condition. He goes on in his opinion to say this: "There is no evidence that Mr Taylor is a suicide risk. He has not complained about . . . suicidal thoughts or feelings. I have not seen evidence on the basis of which Dr Haydn-Smith arrived at the view that he is a suicide risk. Had Mr Taylor presented as a suicide risk, there would have been an expectation that the clinical team would have had him at least on some level of nursing observation, say every 15 or 20 minutes." That paragraph is inaccurate. First of all, he had been on a level of nursing observation every 30 minutes at least and earlier, as I have already indicated, every 15 minutes. Furthermore, he had complained about suicidal thoughts or feelings but he said that he was not going to carry them out. He then concluded that there was no evidence of self neglect. Again, that is not right because some of the nurses had noted that he was not looking after himself properly, and indeed that he smelled. There was perhaps an error about losing weight but that is singularly peripheral. Equally, it was plain that Mr Taylor did spend a lot of time writing but that was in the night which made it slightly more odd than if he had done it during normal waking hours. Dr Azuonye concludes: "My attitude in the matter of Mr Taylor is uncomplicated. If he is suffering from mental disorder for which he needs medicinal treatment then he should receive this treatment if necessary. But if he does not suffer from such an illness then the burden of medication . . . should not be imposed on him. It has always remained my professional opinion that Mr Roger Taylor does not suffer from a delusional disorder of the nature or degree that would make it necessary for him to be given psychotropic medication of this kind. I give my full support to the reinstatement or continuing or otherwise of the injunction to prevent the compulsory administration of psychotropic medication to Mr Taylor." Dr Haydn-Smith has dealt with that report in some detail in his reply and he makes the point that I have already referred to that indeed there were indications of the possibility of suicide; that so far as the writing was concerned it was appropriate for him to rely on the nurses' evidence in that he stayed up most of the night and there were indeed nursing reports of self neglect regarding his personal hygiene, sleeping in his clothes and not changing them. The major complaint against Dr Azuonye is that he appears to have taken what he was told by Mr Taylor at face value. He has not considered the history sufficiently and furthermore, and perhaps most importantly, he has at no stage had regard to the undoubted fact that the prior medication, when he first came to Ashen Hill before his conditional discharge in November 2003, did appear to have clearly alleviated his condition. Indeed, it was the improvement in his condition when he was on medication that led to the decision that he could safely be released on conditions, and it was the deterioration which equally and undoubtedly took place when he ceased to take his medication that led to the recall. Dr Azuonye, having seen the answer, returned to the fray with a further report of 9th May. This was when it was thought that the court hearing was to be the following day on the 10th. Again, I do not regard it as necessary to go into it in depth. He makes this comment: "A deluded person is so convinced of the truth of his belief that very rarely would such a person wish to withhold the fact that he held such a belief. In addition, a person who holds delusions that are so pervasive as Dr Haydn-Smith would like us to think that Mr Taylor does, would not pick and choose who to trust and who to distrust. Dr Haydn-Smith is wrong in his opinion that Mr Taylor is 'guarded' and that he speaks to me only because he sees me as being 'on his side'." It seems to me that it must surely be, as a matter of common sense, self-evident that if the delusion is that the powers that be in the institution, including Dr Haydn-Smith, are conspiring to ensure that he is to be kept in that institution, then someone who offers the way out will indeed be someone who the patient can trust and will not, provided he continues to assist, be one who the patient believes to be against him. That was the position so far as Dr Azuonye was concerned. He goes back to recalling the nurses' reports. He makes further comments on the various matters which I have already covered, but he does say this: "Staff Nurse Carrington's perception of Mr Taylor's needs is more accurate than that of Dr Haydn-Smith: 'If Roger is not discharged by the MHRT it is the view of the nursing team that he should be transferred to a specialist unit where he can work with a new clinical team and receive appropriate psychological treatment" (my italics). My professional opinion is that Mr Taylor, who had a history of conduct disorder in childhood and [previous] history of personality disorder in adulthood, suffers from a neurotic illness with obsessional personality traits and a tendency to depression, and would benefit from psychological treatment with, if assessed as potentially beneficial, antianxiety or antidepressive medication, all on an entirely voluntary basis. There is no argument whatsoever for antipsychotic medication." It is to be noted that there is a statement from Charge Nurse Carrington in which she says this: "I suggested that a new care team might be a help because the claimant would not feel the same animosity towards them. However, I accept that without treating his mental illness this animosity will be transferred and psychological intervention will not work. Further to the point that I have made . . . the claimant's mental illness has worsened as has his behaviour generally since my report in December 2004. Indeed, prior to the MHRT the claimant's condition worsened considerably and Dr Haydn-Smith's concerns are well-founded. Indeed, I assessed the patient as being moderate to high suicide risk in December and that position worsened with the approach of the MHRT. The claimant became very absorbed in the legal process, resulting in poor personal hygiene, staying up late every night and ignoring most attempts to speak to him." She goes on to deal with the question of weight and the issue whether or not he lost weight in hospital is clearly not material to the concerns that they had about him. She supported, as did the care team, the need for the medication. Accordingly, Dr Azuonye's attempt to rely upon her views was clearly misconceived. He then goes on to attack Dr Gallimore's views. Unfortunately, his comments are not helped by silly statements such as a comment that Dr Gallimore took at face value Dr Haydn-Smith's statement that he had index offences as a result of his mental disorder although there was one index offence. Actually there were two although they stem from the same incident. As I say, that was a silly sort of point and does not induce confidence in Dr Azuonye. His approach has been far too confrontational and unfortunately he has simply failed to give a balanced view based on all the material that existed; that is to say medical notes, history nursing notes and so on. Dr Gallimore saw the claimant and social worker and the nurse, as he was bound to do in accordance with the provisions of section 58, and he has produced a very detailed, very fully reasoned, report. He noted that Mr Taylor had said that he did not consider that he required medication, that he did not suffer from mental illness and the medication produced short-term memory loss. He went on: "He believed that there was a conspiracy against him to pervert the course of justice by illegally detaining and treating him in hospital against his will. Those involved in the conspiracy included his RMO, forensic social worker, three named nurses on the unit and a SOAD who had assessed him previously. Each of these people had deliberately fabricated damaging evidence against him. He considered and expected that each of these people would be arrested and jailed, with particularly long sentences for his RMO and social worker. 'I've been smeared up'." He went on that he believed because he had obtained Legal Aid for this claim, this meant that he was not paranoid and did not suffer from mental illness and that his success in the High Court meant that he was being wrongly detained. He threatened Dr Gallimore that he would put him behind bars if, as a result of Dr Gallimore's certificate, he was put on medication. That is hardly, on the face of it, a balanced approach to matters. I should have added that Dr Azuonye produced some letters from the former solicitors and from the legal unit which have indicated that there was believed to be substance in some of the complaints about the MP. Those seem to me to be unhelpful because there is no knowing what those letters were referring to. That again is indicative of the selective approach Dr Azuonye was adopting. All those who spoke to Dr Gallimore were satisfied that the claimant was suffering from a mental disorder and that the medication was necessary. Dr Gallimore's criticism of Dr Azuonye is in these terms: "Dr Obialo-Azuonye did not include in his reports a detailed background history, previous psychiatric history or forensic history. He provided no analysis of the psychiatric evidence that led to the Court placing this patient on a hospital order with the Home Office restriction or whether he was of the view that serious mental illness was never present at that time or that it had remitted. In determining the level of risk, he did not appear to take into account the patient's convictions for rape, manslaughter or the index offences of common assault and affray nor any implications related to personality disorder." I entirely agree with that criticism. As I have said, I have no hesitation whatever in rejecting Dr Azuonye's reports. I have no doubt that Mr Taylor is suffering from mental illness and that particularly having regard to the previous success of the medication, a matter which was ignored by Dr Azuonye until he was forced to shift his ground and to accept (albeit not to the extent to justify compulsory admission) that he had previously exhibited a serious disorder of personality which had not been evident for many years. This flies in the face of the observations of those professionally concerned with him. In all those circumstances, as I say, the suggestion that he is not suffering from mental illness at all, let alone mental disorder, is one which is, in my judgment, wholly unacceptable. That leads on to the other issue which is of relevance, namely capacity. Dr Gallimore believes that he has capacity in the sense that he is able to understand the nature and purpose and likely effects of the medication and treatment plan, even though he does not have insight into his mental illness. He can retain, says Dr Gallimore information about medication. His view is that because of the mental illness the claimant is not capable of understanding the nature and purpose and likely effects of the medication and does not have capacity. The question of capacity has been exhaustively considered recently by Silber J in another case of B v Secretary of State for Health and Others [2005] EWHC 86 Admin. In paragraph 87 of his judgment, Silber J says this: "The test for determining capacity in section 58 is whether the patient concerned is capable of understanding the nature, purpose and likely effects of the treatment, not whether the person actually understands the nature, purpose and likely effects of the treatment . . . This might mean that a patient might be regarded as having capacity even if he does not actually understand the nature, purpose and likely effects of the treatment." At paragraph 89 he continues: "Whilst a patient could be regarded as having capacity to decide if he wishes to have treatment even though, as Lord Easson pointed out in the Scottish case, he lacked insight or understanding of his problems which insight might have to be addressed by medication. He could similarly be considered to have capacity not because he was shown to have capacity but the evidence of, for example, his confused mind . . . . (90) All these facts will show why the threshold is low and explain why the patient who reaches the threshold of capacity should not . . . be regarded as being able to make a balanced and rational decision which should not be overridden by the . . . Mr Bowen did not persuade me that the Lady Justice erred when she referred to the low threshold for capacity. Indeed, it is this low threshold which explains why patients with capacity are not to be regarded as being . . . in the sense that there would be a reduced number of cases in which the views of the patient would be taken into account. The present low threshold of capacity . . . also means that the case for non-consensual treatment in those with capacity has increased." In this case the claimant believes that he is not mentally ill (a belief which incidentally and unfortunately has been supported by the report of Dr Azuonye) and so he does not need medication. That is irrational. The failure to accept, based upon an irrational objection, can mean that consent can be overridden. Whether that is to be analysed as a lack of capacity or a good reason to override capacity seems to me to be an academic argument. In either case, it is appropriate, because of the irrationality of the objection, to decide that, notwithstanding the absence of consent, the treatment ought to be administered. As I understood it, Miss Burnham accepted that that was indeed the position, and so the question as to whether there was capacity or not is not one that it was really necessary to answer directly. In all those circumstances and for the reasons that I have indicated, this claim must be dismissed. I mentioned the question of the likely further orders as far as costs were concerned. I think it was accepted that costs would follow the event if the first defendant were to make an application. If you were to make an application then subject to the usual order -- I mean frankly it is academic. MISS GREANEY: Yes. That is the position. The first defendant does make an application for costs subject to the usual order as the claimant is publicly funded. MR JUSTICE COLLINS: Yes. Of course, I make the order for a detailed assessment. I do not know whether you were asked, I have had no message from anyone else as to whether they wanted to consider any question of leave to appeal? MISS GREANEY: Yes. The claimant would ask for a date by which they can apply for leave to appeal. I know they are thinking into next term. MR JUSTICE COLLINS: How long do you want? You will need to consider the transcript. You have obviously taken a note. INSTRUCTING SOLICITOR: A week after the transcript. MR JUSTICE COLLINS: Shall we say seven days after you get a copy of the transcript. I do not guarantee you will get leave to appeal but it will be open to your side to make application. I suggest the sensible thing would be to make it in writing. The other side can respond, both of them if they wish, again in writing, and I will consider it on the papers. I think that is probably the sensible way. It obviously has to be done quickly. I will have the transcript for correction by next Tuesday so you should have it by the next day or the day after. Effectively, you will have probably until just over a fortnight. INSTRUCTING SOLICITOR: I am grateful, my Lord.

Lord Justice Sedley : This is the judgment of the court The Habib Bank in April 1999 obtained judgment against Mian Aftab Ahmed in the High Court of Sindh, in Karachi, for sums due under three guarantees amounting (in sterling) to several million pounds. In September 1999 it registered the judgment in the Queen's Bench Division of the High Court under the Foreign Judgments (Reciprocal Enforcement ) Act 1933. There followed some complex endeavours and negotiations aimed at setting aside the registration, but finally in October 2000 the bank issued an application for a charging order on a number of assets including the Watermead Hotel and Harper's Fitness Club, in Aylesbury, both registered at the Land Registry in Mr Ahmed's name. A charging order nisi was made by the court, with notice to show cause why it should not be made absolute. By then the hotel had become the subject of a declaration of trust recording that Mr Ahmed's wife had provided part of the purchase monies and that Mr Ahmed held it in trust for his wife. By then, too, the fitness club had been the subject of a transfer to Mr Ahmed's wife and two sons by way of gift. The dates on which these things happened are important. The hotel was purchased on a Holiday Inn franchise with money principally provided by the Bank of Scotland in June 1994. The claimant bank's High Court proceedings were initiated in Karachi in Sept 1995. The declaration of trust was made in April 1996 and supplemented in June 1999. The fitness club was acquired in April 1997 with a loan from the Bank of Scotland. Its premises were given to the wife and sons in March 1999 and its business in April 2002, together with a permitted assignment of the Holiday Inn franchise. Simon J in a judgment delivered in July 2003 concluded that the charging order on both properties should be made absolute. He had heard submissions from counsel for the wife and sons as interveners but rejected their claims on the ground that all of them arose out of transactions entered into substantially if not entirely for the purpose of putting the material assets beyond the reach of the bank. Pursuant to s.423 of the Insolvency Act 1986 the judge, in making the charging order absolute, made further orders restoring the position to what it would have been if the transactions had not been entered into. In the course of his judgment Simon J held that the burden lay on the debtor or intervener to secure the discharge of the order nisi, and on the creditor to prove that a transaction is caught by s.423; but he also made it clear that his decision did not depend upon the incidence of the burden of proof. He refused the interveners (who were also the s.423 defendants) permission to appeal, and on application to this court Peter Gibson LJ, on a consideration of the papers, also refused. He wrote: " The intended appeal is against findings of fact made by the trial judge who had disbelieved witnesses on crucial issues. The correct approach to such an appeal was restated in Assicurazioni Generali [2003] 1 WLR 577, and it is plain that the judge, who observed the witnesses give evidence, had a considerable advantage over this court. No transcript of evidence has been provided. On the material which the appellants have chosen to put before this court, it is not possible to accept that oral evidence has been misunderstood or that which is contained in a witness statement must be accepted as determining a factual issue. I do not accept that the judge made any error on burden of proof nor that the reasoning of the judge was inadequate. It has not been shown that the judge was not entitled to reach his conclusions and there is no real prospect of success on any of the grounds of appeal." However, on oral renewal before Brooke and Latham LJJ the view was taken that there might be an arguable point. Brooke LJ said: "2). …. In relation to the family matter in which Mr Ahmed is contending that his wife had a beneficial interest in these properties, although they were in his name, the judge did not believe any of the evidence that Mr Ahmed gave and did not find all Mrs Ahmed's evidence reliable but was less scathing about their son, although he thought that some of the evidence given by the son did not go to crucial issues. 3). It was only last night, when we received a skeleton argument by Mr Briggs, which cross referred to the transcript, that it appeared that he had a clear point that the judge may have overlooked evidence given by the son in relation to a conversation that he had about the origins of the money provided to buy the hotel some months before legal proceedings were started against his father for a large sum of money in Pakistan. A point has also been made that the judge got wrong the evidence given by a Mr Chui about the reason why certain documents were not available. It appears to me that it is inappropriate for this matter to be dealt with one way or the other on the basis of a skeleton argument of which the respondents have had no notice at all, and that the appropriate course is to adjourn this hearing to be heard on notice on the basis that if permission to appeal is granted the appeal will follow immediately. The hearing should last half a day." This therefore was the purpose of the hearing before us. For it, we have been furnished not only with the applicants' 11-page skeleton argument but with a 36-page skeleton argument for the bank, to which the applicants have put in a 19-page reply. There are four lever-arch files of documents, transcripts and authorities. The issue, however, is a relatively narrow one. This is how the judge summarised his findings about the three key witnesses on the applicants' side: "32. I found that I was unable to rely on the evidence of Mr Ahmed. It was clear that, if he was telling me the truth about the ownership of the Hotel, he must have told lies to a large number of other people to whom he had said he was the owner. The Immigration Authorities, the Bank of Scotland, Bass International and his solicitors were all told that he was the owner and acted on that basis. Having seen him give evidence I found much of his evidence on the source of the funds which were used to buy the hotel to be incapable of belief. Where I would have expected him to be clear and straightforward, I found him vague and evasive. Simply by way of example, I found his evidence that the dividends from Pioneer had been paid over to Mr Chui was not credible. This was said for the first time in the witness box and was inconsistent with Mr Chui's witness statement. Mr Ahmed was a director of Pioneer and said that he kept an eye on the company for his wife. 33. Although I regarded Mrs Ahmed as a more straightforward witness than her husband, I did not consider all her evidence to be reliable. Again, by way of example, she denied that the Supplemental Declaration of Trust was made in response to the Bank's registration of its Judgment in September 1999. Although dated June 1999, I am quite satisfied that the document was prepared in September and was in response to the commencement of the Registration Proceedings which, as she said, caused her such concern. Again, on the crucial issue of the source of the funds, I found Mrs Ahmed's evidence unsatisfactory. 34. Qamar Ahmed struck me as a much more straightforward witness, but he was also a witness who had little relevant evidence to give on the main issue." The appeal for which permission is now sought builds on the finding that the son Qamar was "more straightforward" as a witness than his parents. Mr Briggs says that within the evidence that Qamar gave, the judge has overlooked a crucial piece of testimony. In paragraph 13 of his witness staement he had said: "I wanted to help Aftab [his father] out at the hotel… I enjoyed the business and wanted to get a bit more involved. I was told by my parents that Nilofur [his mother] had provided Aftab with the funds to purchase the hotel. I did not ask how much or where the monies came from. As far as I was concerned it was not my place to ask." While no date is given for this conversation, it is recounted in a passage dealing with events in 1994. In paragraph 21 Qamar went on to say that in December 1995 his father told him about the bank's proceedings and said that he was holding the hotel on trust for his wife because she had provided the purchase money. The reference to the purchase money is more precisely a reference to the difference between the £472,500 loaned by the Bank of Scotland and the purchase price of £675,000, a sum of a little over £200,000. Mrs Ahmed's witness statement confirmed that when Qamar began to help her husband at the hotel - which was in 1994 - they had told him that she had provided the funds to buy it, and that he had been told of the trust later, in December 1995. Mr Ahmed's witness statement was to similar effect. In oral evidence Qamar and Mrs Ahmed reiterated their evidence about the 1994 conversation. What the judge found about the alleged source of Mrs Ahmed's funds was this: "5. From about 1962 until about 1989, Mr Ahmed ran a business manufacturing textiles, in conjunction with other members of his family, in Pakistan. His business took him to Hong Kong and it was here that he came into contact with Mr Jimmy Chui. In 1987 Mr Chui told Mr Ahmed and his wife that he wished to set up in business on his own and invited Mr and Mrs Ahmed to invest in a new company that he set up: Pioneer Century Ltd ("Pioneer"). About £100,000 was invested in this company and 2 million shares in the company were allotted as follows: ? in the name of Mr Chiu, ? in the name of Mrs Ahmed and ? in the name of Qamar Ahmed, who was then aged 14. ….. 8. On 22 February 1994 the sum of $300,000 was credited to Mr Ahmed's account at Lloyd's Bank, Hanover Square on the instructions of Pioneer. On 14 March 1994 Davis & Co (the solicitors instructed by Mr Ahmed) made an internal note: " Attending Mr Ahmed at these offices concerning his purchase of the Watermead Hotel, Aylesbury for £675,000… The Property is to be bought in the Client's sole name…" ….. 35. It is convenient to start with evidence about Pioneer. On the Ahmed's case the money originally invested in Pioneer in 1988 (US$175,000) came from Mrs Ahmed, whom they both described as a wealthy woman who took an interest in her own investments. It is their case that the investment in Pioneer was so successful that Mr Chui was able to remit a total of US$620,150 representing Mrs Ahmed's investment as follows: 21.3.94 US$300,000 28.6.94 US$ 50.000 28.3.95 US$170,000 13.12.95 US$ 30,000 8.3.95 US$ 70,150 36. Mr Ahmed's statement in relation to the first payment (§34) reads as follows: " My wife said to me that she would be arranging for these monies to be paid on her behalf through Pioneer by whom she was owed money through unpaid dividends in respect of shares she had acquired for herself and in Qamar's name in that company and interest income." Mrs Ahmed described what happened in 1994 at §20 of her statement: "I telephoned Jimmy Chui to ascertain the amount of dividends which I was due from Pioneer. He told me that sums due to me were in excess of US$300.000. This was made up of both dividends from profits and interest which had accrued on monies belonging to Pioneer." The statement of Mr Chui (who did not give evidence) is slightly more specific. At §5 he set out the profits made by Pioneer and (at§6) continued: "Although dividends became payable to the Company's shareholders at the end of each year neither (Mrs Ahmed) nor Qamar took their dividends. (Mrs Ahmed) told me to leave those monies in Pioneer to enable it to continue to trade as profitably as possible. Leaving the payable dividends in Pioneer gave Pioneer additional cash flow to use." 37. The Ahmed family's case was therefore that the dividends and interest earned by Pioneer had accumulated to such an extent that a ? share was $620,150. 38. The accounts of Pioneer show a total dividend distribution to shareholders in the period 1990 to 1995 to have been HK$1,458,240.74 (the equivalent of US$187,831). According to the Ahmed's evidence, the ? shareholding in Pioneer in the name of Mrs Ahmed and Qamar, was in fact Mrs Ahmed's shareholding. If that is correct the total dividend distribution to Mrs Ahmed in this period would have been US$125,221 very much less than the $620,150 which Mr Chui says he remitted to England. However, it is important to note that in the accounts of Pioneer these monies are described as dividends paid. In other words, distributed to shareholders. It is difficult to see how they could have been both distributed to shareholders and left in the company or in the hands of Mr Chui. Mr Ahmed's explanation was that the dividends had been paid out, but held by Mr Chui; but the evidence of Mr Chui and Mrs Ahmed was that they were left in Pioneer to assist the cash-flow. I am satisfied that the dividends from Pioneer were not used to fund payments sent to London as described by the Ahmeds. Even if they were, the dividend distribution would account for only a small proportion of the money remitted to London by Mr Chui. The question would then arise as to where the balance came from. 39. The Ahmed family's explanation is that the balance was interest income earned from monies deposited in banks. Pioneer would be paid by its customers immediately on sale of goods but did not need to pay its suppliers for 120 days. The customers' money was held on deposit for the 120 days in accounts in Mr Chui's own name. As Mr Chui says (§7 of his statement): " These monies were deposited in accounts in my personal name at various banks therefore such interest income was not shown on the Company's accounts. In Hong Kong, any interest earned by a company would be subject to taxation as it would be taken as the Company's profits and having interest accruing in an account in my name avoided such tax having to be paid, as in Hong Kong personal interest income was not taxable (emphasis added)." 40. The first point to note is that, if this was indeed how Mr Chui made money, the scheme appears to have been designed to evade the payment of tax. Furthermore, it would have needed to have been highly rewarding if the total sums remitted to London amounted US$620,150 (or even US$494,929). Although some documents have been produced showing the interest payments, these documents only account for US$183,199 of which a ? share would amount to US$122,133. It is suggested that the balance came from other accounts which Mr Chui is no longer prepared to disclose in view of the potential consequences. I am not prepared to accept that suggestions, which requires the court to accept that at least US$372,000 came from profits made in accounts hidden from Pioneer and not disclosed in this action. 41. In my view the Ahmed's explanation as to the source of the funds: that it came from Pioneer, as the proceeds of an underhand interest operation, is not credible. It is unclear where the money to fund the Hotel came from; but I am satisfied that it did not come from Mrs Ahmed's interest, such as it was, in Pioneer. 42. I make this qualification because I also formed the view that some of the financial operations carried out in Mrs Ahmed's name were in truth the operations of Mr Ahmed. I have little doubt that Mrs Ahmed had money of her own and used such money for the benefit of her husband and her children; but in my view there were assets lodged in Mrs Ahmed's name which were, in truth, the assets of Mr Ahmed. In such cases he retained a signing authority and dealt with assts as if they were his own. I suspect that the shareholding in Pioneer was such an asset, although such a finding is not necessary for the purposes of this judgment and I have not made such assumption. 43. In the light of these findings, I am satisfied that the Declarations of Trust dated the 29 April 1996 and 2 June 1999 did not formalise a pre-existing position, but were responses by the Ahmed family to the Bank's proceedings and made in the hope of salvaging some of Mr Ahmed's assets. The first Declaration of Trust was the consequence of the family conference about Mr Ahmed's assets in December 1995. Mr Briggs, accepting that the judge's reasoned scepticism about the ownership of the money available from Pioneer is not assailable without some new weapon, submits that Qamar's overlooked evidence about the 1994 conversation is such a weapon We put on one side the bank's submission that if there was a material lacuna in the judgment it should have been raised with the judge when his judgment was delivered. We will assume that the judge would have regarded it as coming too late, for it had not perceptibly featured in the submissions made to him before judgment. We will also set on one side the fact that it formed no part of the application made to the judge for permission to appeal. Was this evidence, had the judge taken it on board, capable of having led him to a different conclusion on the charging order? The bank says not. Its central reason is that the judge heard and disbelieved the evidence that was given to him about the supposed source of the wife's funds. It follows, the bank submits, that even assuming that the judge had accepted as accurate Qamar's recollection of what he had been told in 1994, that is before the bank had issued its proceedings against his father, it could not conceivably have led the judge to conclude that what Qamar had been told was true. The judge's findings about the source of the money are compelling. Moreover, the more reliance was placed on Mr Chui's abstraction of Mrs Ahmed's money from Pioneer for tax evasion and other purposes, the less feasible it became that the $350,000 sent over by Pioneer (not by Mr Chui) was hers. The submission that Mr Chui could not (rather than, as suggested in paragraph 40 of the judgment, that he would not) produce the relevant accounts could have made no difference to the conclusion reached by the judge in that paragraph. Further, if one is to add to the judge's powerful reasoning the evidence of Qamar about what he recalls being told in 1994, one must also add certain other facts. One is that Mr Ahmed's solicitors had been instructed in March 1994 to purchase the hotel in his sole name, with no indication whatever of a trust. Another is that Mr Ahmed's own evidence was that he knew well before 1994 that the bank was after him to make good his guarantees. Paragraph 26 of his witness statement recounted that "by late 1992/early 1993 Habib Bank were putting a lot of pressure on me in relation to the outstanding accounts of the family businesses." It was in mid-1993 that he moved to England in consequence of these pressures. Mr Briggs has re-marshalled his case, but absent some truly significant new element it remains the case evaluated and rejected by the judge. There is no doubt that Pioneer in early 1994 paid $300,000 to Mr Ahmed and that he used this in the hotel purchase, together with a further $50,000 also remitted by Pioneer. But on the judge's findings there was the gravest possible doubt whether this money was Mrs Ahmed's. So far as anything could be affirmatively established, the evidence indicated that it was not. To be believed, it was necessary to the Ahmeds' case to show, among other things, how the sums paid to Mrs Ahmed in respect of her two-thirds interest in un-drawn dividends and interest could amount, as they were alleged to have done, to more than twice Pioneer's total declared profits over the previous 6 years. In Mr Chui's absence, however explicable his absence might have been, there was no intelligible explanation, and if the judge's inferences were right (and they were certainly tenable) any explanation would have had to cover a great deal of apparent turpitude and a degree of mendacity in his witness statement. In this situation we are unable to accept the logic of Mr Briggs' submission that the (presumed) acceptability of Qamar's evidence of the 1994 conversation somehow alters the judge's general dubiety about Mr Ahmed's reliability as a witness. The one thing simply does not follow from the other. We do not therefore accept that there is any material impact which Qamar's evidence about the 1994 conversation could have had on the judge's reasoned rejection of the assertion that part of the funds for the purchase of the hotel had come from Mrs Ahmed's interest in Pioneer. It is fanciful to suppose that, had his attention been drawn to it with anything like the force with which ours has been, he might have been persuaded that the $350,000 was after all Mrs Ahmed's. The reasons for disbelieving that any of the money was hers were far too strong. No discrete grounds of appeal exist in relation to the health club. In these circumstances, and irrespective of the bank's other grounds of opposition, we hold that there is no arguable case and refuse permission to appeal. Costs The bank is entitled to its costs of opposing the application. It has duly put in a bill for summary assessment by this court. The total claimed for a half-day hearing is £54,487:50, a sum which would surprise most members of the public. Although Mr Briggs and those instructing him had been sent the draft bill on the morning of the hearing (which did not begin until mid-afternoon), it was not he but the court which queried some of the contents of the bill. Three elements in particular, even on a first look, caused us concern: the large allocation of solicitors' time to the perusal and preparation of documents; the attendance of solicitors at court; and the instruction of leading and junior counsel. We therefore stood over our decision on costs in order to allow both parties to make written submissions on the bill. These we now have, and they have been taken into account in what follows. We deal first with the items to which we drew attention in open court. First, under the head "Documents" a total of almost 58 hours' work is claimed, practically all of it done by qualified solicitors at rates of £275 and £175 a hour. The remainder, allocated to a trainee, is costed at £75 an hour. This work is described (omitting the profligate distribution of capital letters) as: "Consideration of the notice of appeal, appeal bundle, the appellant's skeleton argument and addendum thereto; liaising with counsel by telephone, e-mail and fax in relation to preparation of the respondent's notice, the skeleton argument (including review of notes of hearing before court below and providing these to counsel) the respondent's bundle, the authorities bundle and this costs summary." The resultant total is almost £12,000. To it are added a further £1,107 for over 4 hours' telephone and written attendances on the bank and its Karachi lawyers; £1,027:50 for almost 5 hours of solicitors' time spent telephoning and writing to counsel's clerks, the court and the transcribers; £1,035 for conferring with junior counsel and the bank's Karachi lawyers; and a relatively modest sum of £277:50 for something over an hour spent communicating with the other side. Secondly, for attendance at court (estimated at 3 hours, with 40 minutes travel and waiting), two solicitors were deemed necessary, costing respectively £1,045 and £665. Thirdly, leading and junior counsel were instructed. Compared with the solicitors' charges, their fees are perhaps not exorbitant - in particular because it is they who have done practically all the non-routine work of distilling the materials (the same as were perused at such length by the solicitors) into a coherent written argument. Even so, they amount to £37,365 for a half-day case. £12,500 of these fees are leading counsel's fees for perusal and preparation, and £8,000 junior counsel's fees for advising and drafting. Their separate brief fees for the hearing itself (though in the event they were not called upon) are respectively £10,500 and £6,750. At least the balance of the disbursements, £115 for the transcript writer, is modest. Whether a bill of this magnitude is to be presented by the solicitors to their client bank is not our concern. Our concern is whether it is just to require the unsuccessful applicants to pay these large sums as the price of losing. The first question in deciding this is whether the costs claimed are disproportionate: Home Office v Lownds [2002] EWCA Civ 365. We have no doubt that they are. The bank's solicitors, in responding to the court's queries, have offered to reduce their claimed profit costs by £5,000. This is some recognition that the bill as drawn was excessive, but it is not a sufficient substitute for the scrutiny which has to follow once a bill is found to be disproportionate. Any doubts arising in the course of such scrutiny are to be resolved in favour of the paying party: CPR 44.4(2). Documents Having had, by way of preparation for the hearing, to read into the case very much as the respondent's solicitors did, this court is reasonably well placed to judge what is a fair allocation of time under the head "Documents". In our view, and taking into account what is noted in paragraph 8 above, it is not more than 8 hours. We see no reason to allow for the multiplication of the work by its division among three professionals. The bank's solicitors have submitted a list of the kinds of preparatory work they had to do: preparation of transcripts of submissions on the final day of the trial, prior to the receipt of the official transcripts; revisiting, and further work on, the evidence at the trial below, particularly concerning the monies received from Pioneer and their potential derivation; preparation involved in the respondent's notice; liaising with counsel in respect of the skeleton argument, which had closely to address the facts; preparation of an extensive Respondent's bundle, with documentary materials from the trial and other hearings below; and assisting counsel in preparation of the authorities bundles. We consider much of this to be an inflated description of routine work. Some of it represents a pointless endeavour to re-canvass evidence. We propose to allow the sum of £1,400 under this head. This represents 8 hours of an assistant solicitor's time. Attendances We also consider the multiple attendances on the bank, its Karachi lawyers, counsel's clerks and counsel to be excessive. We propose to reduce the total amount allowed under these heads to £900. Solicitors' attendances at court We questioned whether the attendance of two solicitors at court, as claimed in the estimated item of the bill placed before the court, could be justified. The bank's solicitors have now submitted to us a revised bill showing that two solicitors did not attend the hearing. The second person present from the firm was a trainee. It is inexcusable that the court was not told this when the bill was placed before the court. Had the bill gone through on the nod, as frequently happens, the bank's solicitors would have been paid by the other side (and, failing that, by their own clients) for the attendance of a solicitor who was not there. We see no need for the partner who was there, and who is costed at £100 an hour more than the assistant solicitor, to have attended. We will allow the fees appropriate to the attendance of an assistant solicitor, £175 an hour, for the eventual total period of 4.3 hours: £752:50. Counsel Nor do we consider that this was a case necessitating two counsel for the respondent. This is not to say that the bank was ill-advised to instruct leading and junior counsel. It is simply to say that it was a form of insurance for which the other side should not be expected to pay. As Mr Briggs has amply demonstrated, the issues and evidence lay well within the grasp of a competent junior. Recognising the detailed work which has gone into the preparation of the respondents' skeleton argument (the only contribution of any novelty to the respondents' case), we will allow junior counsel's fees in the total sum of £12,750, but not those of leading counsel. Result In the result, the amount we allow as the bank's costs of resisting this application and of preparing to resist an appeal were permission to have been granted, is the following: Attendances on the appellant's solicitors 277:50 All other attendances 900:00 Documents 1400:00 Attendance at court 752:50 Disbursements: junior counsel 12,750:00 Transcription 115:00 _____________ 16,195:00

criminal appellate jurisdiction criminal appeal number 110 of 1961. appeal from the judgment and order dated january 25 1961 of the calcutta high companyrt in reference number 10 of 1960. n. mukherjee for the appellants. b. bagchi s. n. mukherjee for p. k. bose or the respondent. 1963. february 8. the judgment of the companyrt was delivered by shah j.-the first appellant-sekander sheikh-was charged in a trial held before the additional sessions judge murshidabad in the state of west bengal for the offences of forging a valuable security punishable under s. 467 1. p. code and of falsely personating anumberher in such assumed character and presenting a document for registration punishable under s. 82 c of indian registration act. the second appellant-hasibuddin sheikh was charged with abetment of these offences. the trial for the offences of forging a valuable security and abetment thereof was held by the sessions judge sitting with a jury and for the offences under the registration act without a jury. the jury brought in a verdict of guilty by a majority of 4 to 3 against the appellants for the offences of forging a valuable security and abetment thereof but the judge did number accept the verdict and made a reference under a. 307 of the companye of criminal procedure to the high companyrt of calcutta because in his view there was absolutely no reliable evidence against the two appellants in respect of the offence of forging a valuable security and that it was in the interests of justice to refer the case to the high court. the sessions judge acquitted the two appellants of offences under the indian registration act. the high companyrt declined to accept the reference and companyvicted the two appellants respectively of the offences punishable. under s. 467 and s. 467 read with s. 109 of the indian penal companye and sentenced each appellant to suffer rigorous imprisonment for two years. with certificate of fitness granted by the high companyrt under art. 134 1 c the appellants have appealed to this companyrt. the charges against the first appellant were- that on or about january 15 1958 he had in the town of berhampore forged a heba- nama in respect of certain property in favour of one ali hossain purporting to execute the same in the name of one kaimuddin of debkundu and that the execution of the document was made with intent to cause the said kaimuddin to part with his property and to companymit fraud and that on the same day he had falsely per- sonated kaimuddin sheikh and in that assumed character had presented for registration the heba-nama in the berhampore sub-registry and had affixed his thumb impressions claiming to be kaimuddin sheikh. the second appellant was charged with abetting the first appellant in the companymission of the two offences by identifying the first appellant as kaimuddin sheikh. at the trial the prosecution examined one swarana kumar dey who testified that he had engrossed the heba-nama in favour of ali hossain which was executed by the first appellant purporting to do so as kaimuddin sheikh that the first appellant had impressed his thumb mark on the document before him in token of execution of the heba-nama that the first appellant had represented himself to be kaimuddin sheikh and that the executant of the document was identified before him as kaimuddin sheikh by the second appellant hasibuddin sheikh. kaimuadin sheikh testified that he had number executed any heba-nama in favour of ali hossain and that he had number impressed his thumb-mark on any document in the presence of swarana kumar dey. a certified copy of the heba-nama was shown to the witness and he denied having executed and presented the original thereof before the sub-registrar. evidence was also tendered that the thumb impressions of the two appellants were taken by the investigating officer in the presence of magistrate and those specimen thumb impressions were companypared with the thump impressions in the register at the sub-registry at berhampore by a a hand-writing expert and that the thumb impressions of the first appellant tallied with the thumb impressions in the said registrar and number with the thumb impressions of kaimuddin sheikh. in the view of the high court sufficient to establish against the two offences of forging a valuable security and abetment thereof. it is number well settled that in a reference under s. 307 of the companye of criminal procedure if the evidence is such that it can properly support a verdict of guilty or number guilty according to the view taken of the evidence by the trial court and if the jury take one view of the evidence and the judge is of the opinion that they should have taken the other the view of the jury must prevail for they are the judges of fact. in such a case a reference under s. 307 of the companye of criminal procedure is number justified. but if the high companyrt holds that upon the evidence numberreasonable body of men companyld have reached the companyclusion arrived at by the jury the reference will be justified and the verdict of the jury will be disregarded. ramanugrah singh v. king emperor 1 . it appears that the companyrt of session was number impressed by the testimony of swarana kumar dey but it was for the jury to assess the value of the evidence. the jury had apparently accepted the evidence of swarana kumar dey and of kaimuddin sheikh and it companyld number be said that no reasonable body of men companyld have accepted that evidence. at the trial evidence about the specimen thumb impressions of the appellants taken during the companyrse of the investigation were relied upon in support of the prosecution case. this companyrt has held that there is numberinfringement of art. 20 3 of the companystitution merely by tendering evidence of this character in support of the case for the prosecution against a person accused of an offence the state of bombay v. kathi kalu oghad 2 . the companyrt in that case set out certain propositions of which the following are material- the words to be a witness in art. 20 3 do number include the giving of thumb impression or impression of palm foot or fingers or specimen writing or exposing a part of the body by an accused person for identification 1 1946 l.r. 73 i.a. 174. 2 1962 3 s c.r. 10. self-incrimination means companyveying in- formation based upon the personal knumberledge of the giver and does number include the mere mechanical process of producing documents in court which do number companytain any statement of the accused based on his personal knumberledge in order to companye within the prohibition of art. 20 3 the testimony must be of such a character that by itself it should have the tendency to incriminate the accused- in view of this decision companynsel for the appellants fairly conceded that he companyld number challenge the admissibility of evidence relating to the taking of thumb impressions of the first appellant and its use for companyparison with the thumb impressions in the sub-registry at berhampore made at the time of presentation of the document for registration. it was urged however that when the trial judge acquitted the two appellants of the offences punishable under s. 82 c and 82 d of the indian registration act-the offence of false personation and in such assumed character presenting a document and abetment thereof and that so long as the order of acquittal was number set aside in an appeal duly presented the high companyrt in a reference under s. 307 of the companye of criminal procedure was incompetent relying upon the evidence which was number regarded as reliable in respect of the offences under the registration act to companyvict the appellants of the offences of forging a valuable security and abetment thereof. it was submitted that as the offences under s. 467 i.p. companye and s. 82 c indian registration act formed part of the same transaction and the case for the prosecution for the former offence was substantially founded on the same evidence which was number accepted by the trial court when acquitting the appellants of the latter offence the high companyrt companyld number act upon .hat evidence to record an order of companyviction on the charge for the offence of forging a valuable security. se are unable to accept this argument. forging a valuable security and presentation of that valuable security for registration are two distinct offences. in support of the case that the appellants were guilty of forging a valuable security the material evidence is that relating to the making dishonestly or fraudulently of a false document of the nature of a valuable security. that evidence companysisted of the instructions given at the time of writing of the document the character of the document its execution and the intention of the accused in fabricating the document. the offence of false personation for presenting any document consisted in the presentation of a document before the registering authority by a person claiming to be some one else. an item of evidence may companyroborate charges for more offences than one but acquittal of the accused for one such offences will number render that item of evidence inadmissible in assessing the criminalityof the accused for anumberher offence companyroborated thereby. the question in such a case is number oneof admissibility but of weight to be given to that evidence. the decision of the judicial committee of the privy companyncil in malak khan v. king emperor 1 negatives the submission of the appellants. in malak khans case the accused was charged before the companyrt of session for offences of murder and robbery. he was acquitted by the trial judge of the offence of robbery and convicted of the offence of murder. the high companyrt in appeal against the order of companyviction relied upon the evidence which was material to both the charges of robbery and murder as companyroborative of the guilt of the accused for the offence of murder. it was held by the judicial committee that the high companyrt companyld properly accept the evidence as companyroborative of the guilt of the accused for the offence of murder even though that evidence was number accepted by the trial 1 1945 l.r. 72 i.a. 305. court on the charge of robbery. in companysidering the argument that the evidence companyld number be relied upon in support of the charge of murder the judicial companymittee observed the sessions judge it was said had acquitted the appellant of robbery he was therefore number guilty of that offence no appeal had been taken against that acquittal and therefore numbercourt was entitled to take into companysideration the allegation upon which the accusation of robbery was founded even as corroborative evidence in anumberher case. their lordships cannumber accept this companytention.

COURT OF APPEAL FOR ONTARIO CITATION: Santos v. Sangwan, 2015 ONCA 822 DATE: 20151127 DOCKET: C60541 Laskin, Pardu and Roberts JJ.A. BETWEEN John Louis Santos Applicant (Appellant) and Paramjit Sangwan and Print 911 Inc. Respondents (Respondents) Evan Moore, for the appellant Harinder Dhaliwal and Harpreet Makkar, for the respondents Heard and released orally: November 23, 2015 On appeal from the order of Justice David Price of the Superior Court of Justice, dated April 29, 2015. ENDORSEMENT [1] The appellant Santos appeals the dismissal of his application. Santos sold his print services business to the respondent Sangwan for $250,000. The purchase price was payable over time and secured by a promissory note. Sangwan made some of the payments but then refused to pay the balance owing of $94,600. Santos then brought an application under rule 14.05 for judgment on the promissory note. Both parties filed affidavits. Neither was cross-examined. [2] The documents filed on the application show that in an email Santos had misstated the value of the equipment he owned. The email said the equipment was worth $100,000. The $100,000 figure assumed Santos owned a particular Xerox machine, said in a separate document to be worth $25,000. The machine was actually owned by Xerox. [3] During the hearing of the application, the application judge commented that whether Santos had fraudulently misrepresented the value of the equipment was a “live issue”. Counsel for Santos then urged the application judge to hear evidence on whether there had been a fraudulent misrepresentation. The application judge declined to do so. Instead he found: I find that Mr. Santos made a fraudulent misrepresentation regarding the value of the equipment owned by the business and that this misrepresentation was material to Mr. Sangwan’s entering into the share purchase agreement. [4] On appeal Santos submits that the application judge misapplied the test for fraudulent misrepresentation and made palpable and overriding errors of fact that tainted his analysis. We generally agree with Santos’ submissions. Accepting that Santos misstated the value of the equipment, the evidence falls short of showing that the misstatement was made recklessly or that it induced Sangwan to enter into the agreement. Notably, the email containing the alleged fraudulent misrepresentation was sent a week after the parties agreed on a $250,000 purchase price. [5] For these reasons we think that the application judge erred in dismissing the application. On the other hand, it would be unfair simply to grant Santos judgment on his promissory note. In our view, the fair and just remedy is to make an order under rule 38.10 that the application proceed to trial. Santos should deliver a statement of claim and Sangwan may deliver a statement of defence and counterclaim. [6] For these brief reasons the appeal is allowed and a trial is ordered. In our view, this is a case for no costs either of the application or of the appeal. This was a matter that called out for a trial in the light of the numerous factual disputes between the parties. “John Laskin J.A.” “G. Pardu J.A.” “L.B. Roberts J.A.”

Ian Dove QC: Introduction This case has involved a considerable number of twists and turns over its history. Indeed, the battle grounds for the application for judicial review have changed substantially since it was issued. However, as agreed at the outset of the proceedings, there is now but one issue between the parties in respect of whether or not the Claimant is entitled to relief. That issue was agreed as follows: "Did the defendant correctly reject the claimant's application for re-recognition on the ground that it was contrary to Article 4(3) of Regulation 2988/95 or otherwise an abuse of law?" That application related to the status of the Claimant as a Producer Organisation (a "PO") for the purposes of Council Regulation 2200/96, which is a regulation dealing with the common organisation of the market in fruit and vegetables. The facts For the purposes of this Judgment it is only necessary to set out the facts which are pertinent to the consideration of the issue of abuse. As I have outlined above, the issues between the Claimant and the Rural Payments Agency ("the RPA") have, over the course of time, ranged over a large number of issues. This judgment is only addressing the identified issue remaining in these proceedings. The Claimant is an Industrial and Provident Society which was originally set up in 1998, in response to demand from growers of, in the first instance, salad produce. Originally, it comprised seven members but, over the course of time, the number of subscribing growers has increased. In 1998 the Claimant was granted recognition as a PO. An advantage of being a PO is that, under the terms of Regulation 2200/96, a PO is entitled to benefit from a system of match-funding in relation to monies expended on marketing its growers' produce. Initially, this approval was granted on the basis of a five-year plan commencing on 1 January 1999. The scheme concerning POs is administered by the RPA. From 1999 to 2003 the Claimant was regularly and repeatedly audited, and during that period retained its status as a PO and received the funding which was associated with that status. During that period of time its operations included a central marketing function. That central marketing function dealt in particular with the buyers from major food retailers, who sourced produce for their food stores from the Claimant. Documentation has been produced which I do not need to set out which provides evidence of this centralised marketing activity with the buyers of the main food retailers. By 2004 it had become clear that the market in relation to the goods that the Claimant was providing was changing. Major food retailers were moving towards a system of operating with category managers which it is important to describe in order to obtain an understanding of the issue which has underlain the dispute between the Claimant and the Defendant. The rationalisation of the market is a process which has perhaps been most clearly described in the Claimant's business plan prepared for the period 2003–2008. That document was prepared and submitted as part of their application for renewal of recognition as a PO at the end of the first five years of their recognition. What that business plan demonstrates is that in the late 1990s the bringing of fruit and vegetable produce to the market, which consisted principally of large food store chains, was undertaken through a complex supply web involving both wholesalers and the provision of produce to the retailers by growers direct. This complex web subsequently rationalised by 2000 to a far more limited number of co-ordinated suppliers providing fruit and vegetable produce to the retailers. Subsequently, in or around 2004, this rationalisation progressed further by the introduction of category managers. Category managers take over the procurement of an entire category of produce for the retailer, thereby further rationalising the channelling of goods through the market to the consumer. The Claimant had foreseen these changes in their market, and had changes planned in order to address these issues. Returning to their business plan, albeit the draft from which I propose to quote is from December 2005, I was assured that the essence of the plan was the same as that which was submitted to the RPA in 2003. The Claimant's approach is set out in the section of the business plan which deals with Marketing Agents, as follows: "Over a number of years the central sales function of Speciality Produce has been eroded as more and more retail customers nominated category managers as the only available channel for their business. The process was completed in 2004 when Sainsbury insisted their remaining business be handled through EVG (who subsequently lost it) and M&S politely but firmly suggested their business be transferred to Exotic Farm Produce from 2005 onwards. At this point it became clear that Speciality Produce no longer had the critical mass required to commercially justify maintaining a central sales function. The cost of this discipline is not, after a certain point, proportional to the volume of business. As a minimum this requires a dedicated office staffed 8 to 10 hours per day 364 days per year. The attendant complexity and costs of providing and maintaining 24 hour electronic data interchange systems, electronic sales order processing systems, and stock control systems requires round the clock availability of IT support. There would also be a requirement to retain the services of account managers/executives to service remaining account albeit on a part time basis. If it continued the sales desk would simply be duplicating the functions already being carried out by Marketing Agents. The decision was therefore taken in 2004 to spread any remaining business across existing Marketing Agents and close the central sales function. The Marketing Agents were asked to channel daily logistics directly through each provisional production hub. This allowed a whole stratum of costs to be removed and allowed the remaining commercial staff to concentrate on the development of long term business strategy. The money saved has effectively been used to offset the marketing costs/commissions levied by the Marketing Agents thus protecting members' returns." The application for renewal of recognition supported by the 2003 business plan containing, in essence, the text which I have quoted was approved by the Minister through the RPA on 8 December 2003. In the letter communicating that decision the RPA confirmed that the organisational strategy being pursued by the Claimant met with the requirements of the regulations in relation to POs. In March 2005 the central sales function of the Claimant was closed. As explained in the business plan the marketing activities were divided up amongst the members, particular members having been nominated to lead the marketing in respect of particular categories of produce. In 2005–6 the European Court of Auditors audited the operation of the PO scheme in the UK. This gave rise to a number of issues about which action was required. The Claimant was approached and its activities re-evaluated in the light of this auditing exercise in July 2006. As a result of that re-evaluation, they were de-recognised. The notes of the re-evaluation exercise provide a distillation of the conclusions of the panel who conducted that re-evaluation, as follows: "Due to the level of outsourcing and the setting up of separate functions for categories of product, this PO will be derecognised." The setting up of separate functions for categories of product was of course the exercise which was described in the business plan as being necessary to meet the challenge of the introduction of category managers. The status of the Claimant was withdrawn on 17 August 2006. This decision was followed by a meeting between the Claimant and the RPA on 30 August 2006, leading to an exchange of emails which has a bearing on the question of central marketing. The emails were exchanged between Mr Woods, the commercial manager of the Claimant, and Mr Lockwood, who was employed within the RPA inspectorate as a specialist in their policy and advice unit. Both had been present at the meeting on 30 August 2006. On 11 September 2006 Mr Woods emailed Mr Lockwood to confirm as follows: "Sales The company will reinstate a central Sales Order Processing Desk (as opposed to Divisional Desks) with a new Electronic Sales Order Processing System. The company will employ its own Sales and Sales Administration staff. This system will produce the raw data to generate customer invoices from the central Financial Administration Desk." The context of this was setting out a number of aspects of changes to the operational structure of the Claimant in order to meet what was perceived to be the requirements to secure recognition as a PO. In response to this email, Mr Lockwood replied on 12 September 2006 as follows: "Sales A central sales (and marketing function) is essential and its previous removal had been a step in the wrong direction. Hopefully the members will see that if a central unit is run properly, there is a saving for them as individuals, and in my opinion it gives the company better opportunities to expand further in the future." Mr Lockwood went on to note that the Claimant had an advantage as it already existed as a company and many of the requirements necessary to secure recognition were already in place. Following this exchange of emails, on 15 September 2006 the Claimant applied for re-recognition as a PO. That application was, however, refused on 14 December 2006. In the letter communicating that decision dated 14 December 2006, the RPA stated as follows in relation to part of the reasons why the application had been unsuccessful: "There is no evidence of central marketing. On the contrary, the use of nine marketing agents suggests that the opposite is in fact the case. 96% of SPL's produce is marketed by only five of the marketing agents. One marketing agent acts on behalf of only one member. This is inconsistent with article 11.1(b)(2) and article 11.1(c)(3) of the Regulation ... Noting the history of this matter, and in particular the fact that recognition was withdrawn from SPL in August 2006, it is not considered that it has demonstrated sufficient changes to correct the defects found in the original organisational structure." The Claimant then embarked upon an appeal procedure in respect of both the initial decision to de-recognise them and also the refusal to re-recognise them. That appeal process is undertaken in two stages. The stage one appeal was dismissed. This was a process conducted on paper and, in relation to sales, the decision records as follows: "...it is noteworthy that the introduction of a central marketing function has not been addressed. RPA also notes that whilst an assessment of the central sales administration arrangements has not been treated as dispositive of this appeal, it is unlikely that the company would be in a position to demonstrate the effectiveness of such arrangements until they had in fact been in place and working for some time." The decision also noted that, whilst in the original decision there had been an allegation of artificiality in relation to the arrangements with respect to one of the members of the Claimant, that allegation needed to be withdrawn since it was one which had been made inappropriately. The matter then proceeded to the stage two appeal, involving a hearing before a panel of experts. The panel recommended to the Minister, following the hearing, that the appeal should be allowed. However, after further exchanges of correspondence between the Minister and the Claimant's solicitors, the application was refused, partly at least on the basis that there was inadequate documentation to support the findings of the panel and the contentions of the Claimant. The application was refused on 18 July 2008. That decision initially founded this claim for judicial review. Whilst the claim was on foot, the Claimant sought to address the substance of the Minister's refusal by the provision of further documentation. The decision was reconsidered by the Defendant in the light of that material, but the reconsideration led to a refusal by email dated 19 March 2009. Whilst it is not clear from the terms of that decision, it was confirmed on behalf of the Defendant that the essence of the decision was the issue for determination in this case which I outlined at the start of this judgment, namely whether or not the Claimant's position gave rise to an abuse in European Community law. The basis of those contentions is the evidence provided in relation to the documentation by Mr Woods in a witness statement exhibiting that information dated 19 January 2009. Within that witness statement the following paragraphs are particularly germane to the issues before me and are those which are the foundation of the Defendant's contention that the re-establishment of the central marketing function by the Claimant is an abuse leading to the necessity to withhold status as a PO when measured against the legal principles which I shall set out below. "50 It was precisely to meet the RPA's objections and to follow the guidance given at the meeting, and in particular from Stephen Lockwood, that SPL, as part of its application for re-recognition as a PO on 15 September 2006, presented to the RPA a clear commitment that it would re-establish marketing arrangements by the reintroduction of a central sales desk. Such a change would have reinstated the direct contact with and marketing to customers that had been in place prior to the move to a divisional structure. ... 54 I am now aware that the RPA considers 'customer contact' encompasses the traditional marketing activity of creating customer contact and encouraging sales. SPL's view remains firmly that a key element of marketing is creating the product in an environmentally acceptable manner according to the Multiple's particular requirements and ensuring consistent supply and quality, but has always agreed on the necessity for customer contact. When it comes to records that the RPA expects to be created, it must be borne in mind that conventionally this is a business where a great deal is done by demonstration and in conversation. The RPA also expects evidence of an SPL brand, and this is what we had strongly before the divisional reorganisation. The proposed changes would have done exactly these things because the re-establishment of a sales desk would have meant that SPL's marketing activities were once again undertaken centrally by SPL rather than through the divisional structure of SPL. Invoicing has continued to be by SPL throughout the period up to 2003 to 2004 and during the subsequent divisional period. 55 In particular the reinstatement of the sales desk would have meant the recreation of the central sales force and of the sales administrative staff in customer contact roles. This change would have significantly altered SPL's business model but SPL was prepared to do it (along with the other changes) in order to achieve re-recognition as a PO ... 64 In my evidence to the appeal panel, both written and oral, I described the development of the procurement and purchasing procedures of the Multiples. This had been a very fast changing area in recent years reflecting the intense competition between the Multiples, not only on price but also in obtaining quality and traceability assurance, and in the identification of sourcing of product from identifiable and preferably local growers. This has all been undertaken at the time of the initial movement by Multiples from co-ordinating purchasing of fresh fruit and vegetables themselves to subcontracting that arrangement to category managers. In doing so they were following commercial practices originally developed for groceries. This sector is dominated by multinational companies such as Nestle, Unilever, PepsiCo and Cadbury, who own global brands supported by large marketing budgets. The products are characterised by long shelf life and consistency of supply, quality and packaging. Category management failed to produce the expected benefits in produce where the industry is much more fragmented, there is very little branding and consequently marketing budgets are small or non-existent. The product itself is characterised by short shelf life and, by comparison with grocery, much more variation in quality, packaging and crucially supply. The introduction of category management in this field has simply introduced a layer of cost (the category manager) without delivering the hoped for benefits to either Multiple or producer. Consequently there has been a move by the Multiples back to direct purchasing arrangements. … 67 In the changing market, with the almost wholesale reorganisation by the Multiples of the purchasing arrangements which I have referred to above at paragraph 64, it makes good commercial sense to reinstate the sales desk and sales staff to continue to develop our relationship with the Multiples (at present largely undertaken on a divisional basis), as we had always intended to do once the re-recognition procedure had completed; and so irrespective of the outcome of this application we are taking steps to reinstate the desk and to staff it as we had originally intended. It will undertake a wide marketing role in particular pursuing the activities that were current before the change in 2004–2005." The law It is against the background of these facts that the Defendant contends that the Claimant's application containing as part and parcel of it the re-establishment of the central sales function is an abuse in terms of the established principles of European law. In the recent case of Milk Supplies Limited v Department for Environment, Food and Rural Affairs [2009] EWHC 503, Plender J observed that the European law concept of "abuse of rights" is troublesome to a common lawyer since common lawyers are apt to define a right as being a legal entitlement requiring another person to perform the correlative duty. I understand and would with respect agree. However, to a practical person, the introduction of the concept of abuse of rights is a sensible and pragmatic response to the problem of unintended consequences, so as to avoid the creation and satisfaction of perverse incentives. It provides a safety valve recognising that the creation and application of rules do not always inevitably lead to the outcome which was desired and is desirable. The starting point for the consideration of the legal principles relevant to this case must be the regulations which lead to the establishment of producer organisations. Council Regulation 2200/96 provides in its recitals an insight into the reasons why the regulations were enacted. In particular, those recitals provide as follows: "(7) Whereas producer organisations are the basic elements in the common market organisation, the decentralised operation of which they ensure at their level; whereas, in the face of ever greater concentration of demand, the grouping of supply through these organisations is more than ever an economic necessity in order to strengthen the position of producers in the market; whereas such grouping must be effective on a voluntary basis and must prove its utility by the scope and efficiency of the services offered by producer organisations to their members; whereas the delivery of products to specialist producer organisations existing before the entry into force of this Regulation is not brought into question; ... (11) Whereas the establishment and proper functioning of operational funds requires that producer organisations should take charge of the whole of the relevant fruit and vegetable production of their members; (12) Whereas in order to control Community expenditure there should be a cap on assistance granted to producer organisations that establish operational funds." Having observed that Article 1 of the Regulation is to set up a common organisation of the market in fruit and vegetables, in Article 11 criteria are provided for the recognition of producer organisations as follows: "Article 11 1 For the purposes of this Regulation, 'producer organisation' means any legal entity: (a) Which is formed on the own initiative of growers of the following categories of product listed in article 1(2): (i) Fruit and vegetables (ii) Fruit (iii) Vegetables (iv) Products intended for processing (v) Citrus fruits (vi) Nuts (vi) Mushrooms; (b) Which has in particular the aim of: (i) Ensuring that production is planned and adjusted to demand, particularly in terms of quality and quantity; (ii) Promoting concentration of supply and the placing on the market of the products produced by its members; (iii) Reducing production costs and stabilising producer prices; (iv) Promoting the use of cultivation practices, production techniques and environmentally sound waste-management practices in particular to protect the quality of water, soil and landscape and preserve and/or encourage biodiversity;" Article 11 goes on to require at Article 11.1(3) that producer organisations should market their entire production through the producer organisation. Then, Article 11.2 provides as follows: "Article 11.2 Member States shall recognise as producer organisations for the purposes of this Regulation all producer groups applying for such recognition, on the condition that: (a) They meet the requirements laid down in paragraph 1 and provide the relevant evidence including proof that they have a minimum number of members and cover a minimum volume of marketable production, to be determined in accordance with the procedure laid down in Article 45; (b) There is sufficient evidence that they can carry out their activities properly, both over time and in terms of effectiveness; (c) They effectively enable their members to obtain technical assistance in using environmentally-sound cultivation practices; (d) They effectively provide their members with the technical means for storing, packaging and marketing their produce and ensure proper commercial and budgetary management of their activities." I heard various submissions about what, reading the Regulations as a whole, the purpose of the Regulations was. There is an obvious danger in paraphrasing what is an extensive piece of legislation. However, it is clear to me that in essence the purpose of the Regulations is to establish and promote as a recognised and beneficial market organisation the PO, provided that in so doing the administration of the scheme and the distribution of funding to facilitate PO's would not give rise to either distortion of the market or the inefficient use of Community funds. I shall deal with the purpose of the Regulation in relation to the facts of this case below. The importance of obtaining an understanding of the purpose of the Regulations is the role that plays in the consideration of whether or not, on the facts of this case, the Claimant's application amounts to an abuse. The principle of abuse is initially to be found within Council Regulation 2988/95 at Article 4.3, which provides as follows: "Acts which are established to have as their purpose the obtaining of an advantage contrary to the objectives of the Community law applicable in the case by artificially creating the conditions required for obtaining that advantage shall result, as the case shall be, either in failure to obtain the advantage or in its withdrawal." As that Article has been explained and understood in subsequent case law in essence, whilst it has to be read as a whole, it gives rise to two questions. Firstly whether, viewed objectively, the principal aim of an act was undertaken for the purpose of obtaining an advantage contrary to the purpose of the Regulations notwithstanding that it falls strictly within the parameters of the Regulations. Secondly, taking a subjective view, whether the act was one which sought to create the conditions for securing the advantage artificially or for no commercial purpose? The cases which found this formulation of the law are as follows: Firstly, in case C-110/99 Emsland Stärke v Hauptzollamt Hamburg-Jonas [2006] ECR I-1609, the Court of Justice set out the principles in their judgment at paragraphs 52 and 53: "52 A finding of an abuse requires, first, a combination of objective circumstances in which, despite formal observance of the conditions laid down by the Community rules, the purpose of those rules has not been achieved. 53 It requires, second, a subjective element consisting in the intention to obtain an advantage from the Community rules by creating artificially the conditions laid down for obtaining it. The existence of that subjective element can be established, inter alia, by evidence of collusion between the Community exporter receiving the refunds and the importer of the goods in the non-member country." Following that case, the question of abuse was further considered by the Court in case C-255/02 Halifax plc v Commissioners of Customs and Excise. In that case, the Court of Justice summarised the position again as follows: "74 In view of the foregoing considerations, it would appear that, in the sphere of VAT, an abusive practice can be found to exist only if, first, the transactions concerned, notwithstanding formal application of the conditions laid down by the relevant provisions of the Sixth Directive and the national legislation transposing it, result in the accrual of a tax advantage the grant of which would be contrary to the purpose of those provisions. 75 Second, it must also be apparent from a number of objective factors that the essential aim of the transactions concerned is to obtain a tax advantage. As the Advocate General observed in point 89 of his Opinion, the prohibition of abuse is not relevant where the economic activity carried out may have some explanation other than the mere attainment of tax advantages." Following the decision of Halifax, in the case of C-425/06 Ministero Dell'Economia E delle Finanze, the Part Service Sr [2008] ECR I-897l, the Court provided clarification of the first of the two limbs of the question posed in Emsland Stärke. It clarified in paragraphs 44 and 45 that, in relation to that first and objective question, the obtaining of the advantage must constitute the principal aim of the act in question. As set out above, these principles were recently considered by this court in the case of Milk Supplies Limited v Department for Environment, Food and Rural Affairs [2009] EWHC 503 (QB) where, having set out the text of Council Regulation 2988/95, Plender J observed as follows: "16 Thus an advantage envisaged by Community law will be foregone or withdrawn where the act meeting the formal conditions for the grant of the advantage is shown to have had as its purpose the obtaining of that advantage contrary to the objectives of the applicable Community law by artificially creating the conditions required for obtaining that advantage. Although it is true that Article 4(3) must be read as a whole, it is convenient to consider two aspects in sequence. Firstly there must be some act having as its purpose the obtaining of an advantage contrary to the objectives of the applicable Community law. Secondly that act must aspire to achieve its purpose by artificially creating the conditions required for obtaining that advantage. ... 22 In speaking of the artificial creation of conditions for obtaining an advantage, Article 4(3) of Council Regulation 2988/95 draws on the words of the Court of Justice in Case C-110/99, Emsland Stärke v Hauptzollamt Hamburg-Jonas. By using the word 'artificial' the Court must be taken to have meant engaging in transactions which have no commercial purpose other than the obtaining of the advantage in question." The final aspect of these principles which was debated in the course of argument was the situation presented when a business had a number of means of organising itself. It is clear to me from the decision of the Court of Justice in case C-108/99 Commissioners of Customs and Excise v Cantor Fitzgerald International [2001] ECR I-7257 that the existence of more than one business or transaction structure for a person to pursue does not justify the selection of a form of transaction which would amount to an abuse. In other words, it is obviously open to a person to choose as to how they propose to organise their business or transactions but it is not available to them to select a form which would amount to an abuse. They can choose between different structures or arrangements, but the existence of choice does not justify the selection of an action which amounts to an abuse. I turn now to pose the questions raised by the legal principles in relation to the facts of this case. Viewed objectively, was the principal aim of re-establishing the central sales function at SPL to obtain an advantage contrary to the purpose of the Regulations? As I have set out above, I am satisfied that the purpose of the Regulations is to encourage and fund the establishment of POs as an appropriate market structure to facilitate the operation of the market provided that this does not lead to Community funds being wasted or the market being distorted. The Defendant says that the provision of unnecessary services in the form of the central sales function, which had been reinstated principally to achieve a subsidy, would not achieve the purpose of the Regulations. In particular, it would involve the wasting of Community funds by their being provided to assist the provision of a service which is not necessary. It is clear and obvious that the obtaining of the match-funding by way of subsidy is an advantage which engages the consideration of the question of abuse. Furthermore it was not contended that the re-establishment of the central marketing function was not strictly within the ambit of the Regulations on the evidence now available. The first limb of the test raises an objective question. Viewed objectively, I can see no basis for concluding that the reinstatement of a central marketing function does not fulfil the purpose of actively marketing and promoting all of the produce produced by the members of the proposed PO. It is a form of organisation which would facilitate the marketing of all of the growers' produce and I can see nothing which would suggest that objectively viewed it is a form of organisation which is either wasteful or unnecessary. Tellingly it is clear to me that this central marketing function has been repeatedly regarded by the RPA, who undoubtedly seek to approach these issues as objectively as possible, as being an appropriate form of organisation to meet the requirements of the Regulations: I refer to the email from Mr Lockwood and the conclusions of the Stage 1 Appeal. This approach was more likely than not based upon the findings and advice from the investigations of the European Court of Auditors. Mr Hutton's submissions in this regard depend upon his reliance on parts of what Mr Woods describes as the reasons for the reorganisation of the Claimant to remove the central marketing function. These are subjective opinions and as stated the answer to the first question depends on an objective view of the matter. However, leaving aside the fact that these are subjective opinions and of course that Mr Woods states later in the witness statement that in current market conditions there would be commercial benefit in re-establishing the central sales function, it is clear that Mr Woods' view is not the only view of the matter. In fact, as set out above, it appears clear to me that the view of Mr Lockwood and the others who participated in the determination of the Claimant's stage one appeal was that a central marketing function was an essential prerequisite of securing the purpose of the Regulations. Leaving this difference of opinion which clearly existed several years ago to one side, to my mind it is clear that viewed objectively the establishment of a central marketing function for all of the goods produced by the members of the Claimant could not properly be said to be contrary to the purpose of the Regulations: indeed, it can be perceived as being provided directly in order to further the purposes of the Regulations. My conclusions in respect of the first limb of the question in relation to abuse will be sufficient to dispose of the Defendant's case. I propose, however, also to analyse the second limb. Did the proposal to re-establish the central marketing function, viewed subjectively, serve no commercial purpose? Whilst, again, the Defendant relies on certain passages from Mr Woods' witness statement, the case on this second limb is clear-cut. It is plain on the evidence that, viewed from the perspective of the Claimant and indeed from the perspective of the advisers of the Defendant, there are clear commercial purposes lying behind the re-establishment of the central marketing function. As Mr Woods makes plain in his witness statement at paragraph 67, he sees good commercial sense in re-establishing that central marketing function. Moreover, it is clear to me that Mr Lockwood's views in advising the Claimant in September 2006 were to similar effect. Although Mr Hutton in his submissions sought to rely upon the expert report provided by Professor Hughes in relation to the evolution of the market, as Mr Robertson rightly points out towards the end of that report there is evidence demonstrating that the use of category managers has not proved altogether successful, and that new marketing arrangements need to be evolved and established to secure the future of the Claimant's business. I accept the submission that this evidence clearly demonstrates the potential value of the reinstatement of the central marketing function. Thus, in relation to this second limb also, the Claimant's case is successful. It cannot in my view be properly contended that the re-establishment of the central marketing function would serve no commercial purpose. Relief In the circumstances of my findings, there can be no dispute but that the decisions taken by the Defendant on 18 July 2008 and 19 March 2009 must be quashed. Mr Robertson goes further, and submits that there should be an injunction granted requiring the Defendant to recognise the Claimant as a PO with effect from 1 January 2007. This is put on the basis that it was agreed by the Defendant before me that the only matter lying between the Claimant and recognition as a PO was the argument in respect of abuse, which I have disposed of. In those circumstances it is submitted, the Court could be satisfied that there could be no impediment to the recognition of the Claimant, and could properly award the injunction. I am unwilling to take that additional step for the following reasons. Firstly, this Court will always be reluctant to put itself in the shoes of the decision-maker. In doing so, it exceeds its supervisory public law role, which is necessarily limited to examining whether there are errors of law in relation to decisions which have been reached rather than providing a forum in which decisions can be re-made. I suspect it may be for this reason that Mr Robertson was unable to locate any authority to act as a direct precedent founding his suggestion. Secondly, I am not convinced that such a remedy is required in this case since, once in receipt of my judgment, the Defendant will be able rapidly to determine the appeal in the light of my conclusions, and no doubt bearing in mind that, as set out above, the only factor which precluded the resolution of this claim by the granting of status to the Claimant was the contention raised in relation to abuse. All other factors which had been of concern to the Defendant had been resolved to the Defendant's satisfaction by the time this matter was called on. Thus, to my mind, it would be unnecessary, let alone heavy-handed, for this Court to impose a decision where there is no evidence of the Defendant being reluctant to deal with the application speedily and appropriately once these proceedings had been resolved. Conclusion For the reasons given, I am not satisfied that the Claimant's application for re-recognition and appeal in respect of the initial refusal falls foul of the European law principles of abuse, and for that reason the Defendant's decisions must be quashed.

SECOND SECTION CASE OF ADAMOV v. SWITZERLAND (Application no. 3052/06) JUDGMENT STRASBOURG 21 June 2011 This judgment is final but it may be subject to editorial revision. In the case of Adamov v. Switzerland, The European Court of Human Rights (Second Section), sitting as a Chamber composed of: Françoise Tulkens, President,David Thór Björgvinsson,Dragoljub Popović,Giorgio Malinverni,András Sajó,Guido Raimondi,Paulo Pinto de Albuquerque, judges,and Stanley Naismith, Section Registrar, Having deliberated in private on 31 May 2011, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 3052/06) against the Swiss Confederation 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 Yevgeni Olegovich Adamov (“the applicant”), on 16 January 2006. 2. The applicant was represented by Mr M. Harari, a lawyer practising in Geneva. The Swiss Government (“the Government”) were represented by their Deputy Agent, Mr A. Scheidegger, European Law and International Human Rights Protection Division, Federal Office of Justice. 3. On 19 March 2008 the President of the First Section decided to give notice of the application to the Government. It was also decided that the Chamber would rule on the admissibility and merits of the application at the same time (Article 29 § 1 of the Convention). 4. The Government of the Russian Federation did not avail themselves of the right to intervene in the proceedings (Article 36 § 1). 5. On 1 February 2011 the Court’s Sections were reorganised. The application was assigned to the Second Section (Rules 25 § 1 and 52 § 1 of the Rules of Court). 6. On 31 May 2011 the Chamber decided, further to a request from the applicant, not to hold a hearing in the present case, finding that it did not need to do so in order to discharge its functions under Article 38 of the Convention (Rule 54 § 3). THE FACTS I. THE CIRCUMSTANCES OF THE CASE 7. The applicant was born in 1939 and lives in Moscow. 8. In 2004 criminal proceedings were brought against him in the United States of America. They concerned his alleged misappropriation of funds provided to Russia by the USA during his term as Russian Minister for Energy. 9. On 11 February 2005 he obtained a four-month Swiss visa issued by the Swiss Embassy in Moscow, valid until 10 June 2005. On the visa application form he had indicated, without being more specific, that the main purpose of his journey to Switzerland was to visit his daughter, who was living in Bern. 10. On 21 February 2002 criminal proceedings were opened against the applicant’s daughter, by the competent investigating judge for the Canton of Bern, on a charge of money laundering. The suspicions notably concerned sums of money she had allegedly received from her father. 11. On 5 April 2005, when consulting the case file concerning the criminal proceedings against the applicant’s daughter, her former lawyer informed the investigating judge that the applicant visited Switzerland from time to time and that he agreed to be questioned in connection with the case in question. The applicant then indicated to his daughter’s lawyer that he was prepared to come to Switzerland to be questioned by the investigating judge. He explained that it would suit him if the questioning took place between 20 April and 6 May 2005. 12. On 15 April 2005 the investigating judge thus suggested two possible dates to the new lawyer representing the applicant’s daughter, namely 1 and 2 May 2005. 13. After arriving in Switzerland on 20 April 2005 the applicant expressed, through his daughter’s lawyer, his preference for 2 May 2005 at 2 p.m. He asked the investigating judge to confirm that date. 14. On the same day the judge duly issued a summons using the appropriate form in accordance with practice in the Canton of Bern. The hearing was scheduled for 2 May 2005 and the summons indicated that any delay in appearance or unjustified absence from the hearing would entail a penalty, with the possibility of using force in the event of non-appearance. The summons, which was addressed to the applicant, was served at his daughter’s private address in Bern. A copy was also sent to her lawyer for information purposes. 15. On 28 April 2005 the investigating judge contacted a public prosecutor in Pennsylvania, USA, to find out any information that might be useful in the proceedings against the applicant’s daughter. During the conversation, the judge mentioned that he would be questioning the applicant on 2 May 2005 at 2 p.m. 16. On 29 April 2005 the US Department of Justice sent the Swiss Federal Office of Justice a request for the applicant’s provisional arrest in accordance with the extradition treaty of 14 November 1990 between Switzerland and the USA. 17. On the same day the Federal Office of Justice (mutual legal assistance division) issued an “urgent” order for the applicant’s arrest that was sent to the investigating judge for the Canton of Bern. 18. On 2 May 2005 at 2 p.m. the applicant appeared before the investigating judge for the Canton of Bern to give evidence in the proceedings against his daughter. When asked why he was in Switzerland he replied that he was visiting for private reasons but also for business. 19. After the interview, which lasted about four hours, the investigating judge notified the applicant that he was under arrest. Two police officers of the Canton of Bern, who had been waiting in a neighbouring room for the interview to finish, immediately took him to the regional prison of Bern. 20. On 3 May 2005 the Federal Office of Justice issued an order for the applicant’s provisional detention pending extradition and it was served on the applicant the next day. 21. On 17 May 2005 Russia also applied for his extradition. 22. On the same day, the applicant lodged an appeal with the Appellate Division of the Federal Criminal Court. 23. During his detention the applicant wrote an article, which was published on 6 June 2005 in the Moscow daily newspaper Izwestija. He explained that his trip was connected to two projects on which he was working at the time, concerning the export of energy by Russia and technological cooperation, in particular with an energy supplier based in Switzerland. 24. On 9 June 2005 the Federal Criminal Court upheld the applicant’s appeal and set aside the extradition arrest order against him. The court took the view that the applicant had been in Switzerland for questioning in the context of criminal proceedings against his daughter, that the summons for the interview of 2 May 2005 should have been served on him through mutual assistance channels and that the protection afforded by the safe-conduct clause, deriving from the requirement of good faith, was also valid for a person examined as a witness who had not been summoned through mutual assistance channels but who had appeared “spontaneously” in Switzerland to give evidence. 25. On 17 June 2005 the Federal Office of Justice appealed before the Federal Court against the Federal Criminal Court’s decision. 26. On 24 and 27 June 2005 the US authorities filed a formal request, dated 2 June 2005, for the applicant’s extradition to the USA. 27. On 14 July 2005 the First Public Law Division of the Federal Court upheld the appeal of the Federal Office of Justice. 28. The Federal Court basically took the view that the applicant had been visiting Switzerland for private purposes – to see his daughter – and for business. In its view, the Federal Criminal Court had clearly made an erroneous and incomplete assessment of the facts in finding that the applicant had come to Switzerland in order to give evidence as a witness in criminal proceedings. It was not therefore appropriate to apply Article 12 of the European Convention on Mutual Assistance in Criminal matters of 20 April 1959 or Article 73 of the Federal Law on International Mutual Assistance in Criminal Matters (see paragraphs 31-32 below). The case was referred back to the Federal Criminal Court for examination of the applicant’s other arguments (breach of the Russian Government’s immunity under international law, and the allegedly political nature of the criminal proceedings against him in the USA). 29. The applicant was held in custody until 30 December 2005 and then extradited to the Russian Federation pursuant to an administrative decision of the Federal Court of 22 December 2005. That court, unlike the administrative authority, the Federal Office of Justice, found that priority had to be given to the Russian extradition request, as the applicant was a Russian national and stood accused of committing criminal acts mainly in that country. 30. In a decision of 6 December 2007 the Federal Criminal Court dismissed, at last instance, a request by the applicant for compensation in respect of his detention pending extradition. The court found that his detention had not been unlawful. II. RELEVANT INTERNATIONAL AND DOMESTIC LAW AND PRACTICE 31. Article 12 of the European Convention on Mutual Assistance in Criminal matters of 20 April 1959, to which both Switzerland and the Russian Federation are parties, contains a safe-conduct clause. That Article reads as follows: “1. A witness or expert, whatever his nationality, appearing on a summons before the judicial authorities of the requesting Party shall not be prosecuted or detained or subjected to any other restriction of his personal liberty in the territory of that Party in respect of acts or convictions anterior to his departure from the territory of the requested Party. 2. A person, whatever his nationality, summoned before the judicial authorities of the requesting Party to answer for acts forming the subject of proceedings against him, shall not be prosecuted or detained or subjected to any other restriction of his personal liberty for acts or convictions anterior to his departure from the territory of the requested Party and not specified in the summons. 3. The immunity provided for in this article shall cease when the witness or expert or prosecuted person, having had for a period of fifteen consecutive days from the date when his presence is no longer required by the judicial authorities an opportunity of leaving, has nevertheless remained in the territory, or having left it, has returned.” 32. Section 73 of the Federal Law on international mutual assistance in criminal matters of 20 March 1981 contains a provision on safe conduct in Switzerland: Section 73: Safe conduct in Switzerland “1. A person habitually resident abroad and who appears in Switzerland in a criminal case pursuant to a summons may neither be prosecuted nor restricted in his personal freedom on the basis of reasons that pre-date his entry into Switzerland. 2. A person being prosecuted shall enjoy no safe conduct in respect of the offences specified in the summons. 3. The safe conduct provided for in paragraph 1 shall cease when the person leaves Switzerland and at the latest three days after he is permitted to leave by the summoning authorities.” 33. The object and purpose of the safe-conduct clause were explained as follows by a Federal Court judgment of 26 April 1978 (ATF 104 Ia 448): “5. ... The safe-conduct clause, of Swiss origin, was quite naturally inserted in the treaties in order to avoid disguised extraditions. In so far as the treaties laid down the conditions in which a country was obliged to consent to the extradition of criminals to another country, it was appropriate to preclude the situation where a witness, who was summoned to appear in another country, was detained there without heed for the substantive conditions or formalities required for extradition. Subsequently, the various States generally refrained from laying down, in their extradition or mutual assistance treaties, an obligation for witnesses to appear abroad, as was first the case in the Treaty of 1843 between Belgium and the Netherlands (see Von Martitz, op. cit., and vol. II, p. 722, and 725, no. 37). The same guarantees were nevertheless maintained for witnesses residing in one of the States parties who were summoned in the other and who appeared there voluntarily. The issue gave rise to difficult negotiations between Switzerland and Italy during discussion of the extradition treaty that was to replace one that had been concluded with Sardinia in 1843. On the proposal of the Swiss Government, it was finally decided that a witness could never be forced to appear before the foreign court. When the personal appearance of a witness was required, the Government of his country would advise him to comply with the request. If the witness agreed to leave, in no case could he be arrested or intercepted for an act pre-dating his appearance during his obligatory stay in the place where the judge examining him exercised his duties or while he was travelling (Article 14 of the Convention of 22 July 1868, applicable until the entry into force for Switzerland and Italy of the European Convention on mutual assistance in criminal matters, RS 12, p. 160, cf. FF 1868 III, pp. 444-445, 869-870). 8 (b) ... It is evident that the fact of travelling, in response to a summons, to another country, without having been requested to do so by the Government of the country of residence, does not render the safe-conduct requirement devoid of justification. In responding to a summons he received as witness and in travelling for that purpose to another country, the individual in question, if he were not guaranteed safe conduct, would be deprived of the benefit of the safeguards provided for in extradition treaties, and it would seem logical to consider that in complying with the summons he should be immune from arrest and prosecution, as the Federal Court previously decided, in respect of inter-cantonal relations, in its aforementioned judgment (ATF 3, p. 245). This is also the opinion that the Federal Council expressed in its dispatch on the interpretation, on this point, of the European Convention (‘According to the convention, the interested parties enjoy this immunity regardless of the channel through which the summons is served’, FF 1966 I 493.) ... (c) Some doubt may admittedly exist as to the exact meaning of Article XV, paragraph 2, of the convention between Switzerland and Spain. However, taking account of the terms of this provision and comparing this text with previous texts, it appears that it must indeed be considered that the immunity resulting therefrom applies to any witness who, having been duly summoned, has appeared voluntarily in the other country, without it being necessary to refer to the form of summons provided for in Article XIV or the intervention of the Government of the country of residence as provided for in Article XV, paragraph 1. (d) This is the solution which was accepted in a very general manner in the Bill on international mutual assistance in criminal matters, submitted to the Federal Assembly by dispatch of 8 March 1976 (FF 1976 II, p. 497). The Committee of Experts which prepared the draft law expressed the following view on this subject: ‘For a long time, treaties in such matters have regularly provided for safe-conducts to be issued to witnesses and experts who, coming from abroad, appear before the authorities of the requesting State in a criminal case in response to a summons served on them in their State of origin. Experience has shown that, unless a safe-conduct is issued, a summons is rarely complied with in such cases. It would not be understood if such protection were granted only pursuant to a treaty. Moreover, the traditional treaty clause does not appear totally sufficient. In principle it would concern witnesses and experts alone, and only when they appear freely. However, detainees may also be witnesses...’ (Report of the Committee of Experts, p. 61/62). ...” 34. In an unpublished judgment of 17 May 1995 (1P.289/1995), the Federal Court had occasion to develop its case-law on safe-conduct clauses as follows: “2 (a) The safe-conduct clause was inserted into international treaties in order to avoid disguised extradition: a witness required to appear in another country cannot be detained there without heed for the substantive conditions or formalities required for extradition (see, for the background to this clause, Federal Court judgment ATF 104 Ia 452ss., point 5). It will in any event be necessary, under Article 12 of the [European Convention on mutual assistance in criminal matters] and section 73 of the [Federal Law on international mutual assistance in criminal matters], for the authorities of the requesting State to have summoned this witness to appear by serving an order for that purpose. That is not the case here, since the investigating judge did not issue the appellant with an order to appear according to the formalities provided for in Article 17, paragraph 1, of the Geneva Code of Criminal Procedure, taken together with section 31 of the said Law. The appellant cannot therefore, in principle, rely on the immunity attached to an official order when it has not been issued, as in the present case. On this specific point, this case differs from the factual situation underlying the Federal Court judgment ATF 104 Ia 448 cited by the appellant. (b) The appellant relies on Article 170 of the Geneva Code of Criminal Procedure, under which any person summoned before the investigating judge must be served with a letter or order for that purpose (para. 1); exceptionally, a summons may be addressed by any other means that is necessary in order to reach the witness (para. 2). He submits in this connection that Mr Perret’s letter of 8 March 1995 is equivalent in substance to a summons within the meaning of Article 170, paragraph 2, of the Geneva Code of Criminal Procedure. (c) Article 170 of the Geneva Code of Criminal Procedure enshrines the rule that it is the judge who conducts the proceedings. While the parties have the right to request the examination of witnesses, in accordance with Article 174 of the said Code, the service of an order to appear is exclusively a matter for the judge. As to Article 170, paragraph 2, of the Code, it refers in particular to exceptional cases where, because of the urgency, the judge notifies an order to appear informally, by telephone or cable, for example. However, the wording of this provision does not prevent the judge, if need be, from requesting a lawyer to bring a witness to the hearing; on the other hand, it probably does not empower a lawyer to summon a witness of his own accord, without the judge authorising or being informed of the witness’ appearance. (d) On 7 March 1995 Mr Perret asked the investigating judge to examine I. as a witness, explaining that he would take care of the ‘summons’ himself. However, neither Mr Perret, nor I. insisted on the service of an order to appear in the form provided for by Article 174, paragraph 1, of the Geneva Code of Criminal Procedure, taken together with section 31 of the said Law. Nevertheless, the lack of reaction on the part of the investigating judge in this regard could be interpreted as an implicit acquiescence to Mr Perret’s proposal to call I. as a witness at the hearing of 13 March 1995, on the basis of an informal summons within the meaning of Article 170, paragraph 2, of the Geneva Code of Criminal Procedure. In addition, Mr Perret was entitled to assume that the investigating judge would have served an order to appear on the appellant if a formal request had been made to him, as was the case for the witness M. A diligent lawyer could well have been expected to make sure what the investigating judge had decided. In any event, the judge himself could not have relied on the absence of a formal order to consider that the appellant would have appeared ‘spontaneously’ at the hearing of 13 March 1995; he could not have been unaware of Mr Perret’s request for the appellant’s examination. The fact that Mr Perret did not address his letter of 8 March 1995 to the investigating judge, strange as this may seem, makes no difference. From the point when the investigating judge received a request for the appellant to be called to give evidence as a witness it was his duty to take a formal decision on this matter. By failing to do so, the investigating judge created some ambiguity as to his intentions, and the appellant, summoned through the intermediary of Mr Perret, should not have to assume the consequences thereof. The difference in treatment between the witness M. and the appellant in this regard would indeed appear excessive and therefore arbitrary. Thus, in failing to give a clear decision as to the means of summoning the appellant to the hearing of 13 March 1995, the investigating judge cast doubt in the mind of the appellant, who was entitled to consider, in good faith, that he had been duly summoned to the hearing of 13 March 1995, as a witness protected by the immunity referred to in Article 12 of the [European Convention on mutual assistance in criminal matters] and section 73 of the [Federal Law on international mutual assistance in criminal matters]. The appeal must therefore be upheld, the order appealed against set aside and the appellant immediately released. ...” THE LAW I. ALLEGED VIOLATION OF ARTICLE 5 § 1 OF THE CONVENTION 35. The applicant, relying on Article 5 § 1 of the Convention, alleged that his detention pending extradition had been “unlawful”. He took the view that the Swiss authorities had wrongly refused to apply the safe-conduct clause in his case. Even if the Court were to find that the clause was not applicable to his situation, the stratagem of the Swiss authorities in circumventing the requisite formalities had to be regarded, in his view, as incompatible with Article 5 § 1 of the Convention, the relevant part of which reads 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: ... (f) the lawful arrest or detention of a person to prevent his effecting an unauthorised entry into the country or of a person against whom action is being taken with a view to deportation or extradition. 36. The Government contested that argument. A. Admissibility 37. 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 I. The parties’ arguments (a) The applicant 38. The applicant argued that, in so far as the Government had claimed that his visit to Switzerland was for purely private and business reasons, they had completely disregarded the fact that negotiations had taken place between him and the investigating judge through the intermediary of his daughter and her lawyer in order to find a hearing date and that it had always been clear that he was going to be questioned in Switzerland as a witness. The fact that he had not sought a formal summons as required by the European Convention on mutual assistance in criminal matters and that he had accepted a more informal means of being called to give evidence, through the intermediary of his daughter and her lawyer, had been used by the Federal Court to deprive him of his rights under that convention. Moreover, the applicant argued that the investigating judge’s conduct had been particularly arbitrary and in clear breach of international law as he should have complied automatically with the rules of that convention. 39. The applicant further observed that the investigating judge had proposed two precise hearing dates and had then issued a summons according to the practice in the Canton of Bern. The judge’s decision to question him in the context of criminal proceedings was thus subject to the European Convention on mutual assistance in criminal matters and to the Federal Law on international mutual assistance in criminal matters. Accordingly, the applicant concluded that the summons addressed to him by the investigating judge on 20 April 2005 at his daughter’s address in Bremgarten clearly did not comply with the requirements of that convention. No provision thereof authorised a requesting State to serve notice to appear on an individual residing in another State otherwise than by sending the summons via the competent authorities of the foreign State in which the person concerned permanently resided (see, in particular, Articles 7, 10 and 15 of that convention). 40. The applicant further observed that the investigating judge had evidently been aware that it was advantageous for him to secure the applicant’s presence in his office for questioning without going through the complex formalities laid down in the European Convention on mutual assistance in criminal matters, particularly as compliance with the rules would have involved numerous steps related to his status as former minister, for example the lifting of his immunity. If the investigating judge had complied with the rules of the European Convention on mutual assistance in criminal matters, the applicant’s questioning could clearly not have taken place within a period of fifteen days from the time when it was first discussed between the judge and the defence. Moreover, it was even likely that the decision to question the applicant would have met with obstacles stemming from his status as former minister and that the hearing would quite simply not have taken place, because of a failure to obtain authorisation from the Russian authorities. 41. The applicant disputed the Government’s opinion that he could not rely on the safe-conduct clause because he was visiting Switzerland for private and commercial reasons. Such an interpretation of the situation was clearly erroneous because it would disregard the fact that, even assuming his visit was for those reasons, the applicant was also aware, from conversations and correspondence between himself, his daughter’s lawyers and the investigating judge, that the latter had decided, on 20 April 2005, to question him in order to obtain information in the proceedings against his daughter. On leaving Russia he had thus known that he would be questioned by the investigating judge on 1 or 2 May 2005 in connection with the proceedings against his daughter. Like anyone else in that situation, he was also aware that he was obliged to comply with the investigating judge’s decision to question him. 42. In addition, the applicant contended that the Swiss authorities had not acted in good faith in the method used against him. In his submission, it was obvious, as a matter of basic common sense, that he would never have agreed to the investigating judge’s decision to question him if he had known that the Swiss authorities did not intend to afford him the protection of safe conduct on his appearance. He observed that the principle of good faith required the application of safe-conduct protection from the beginning of his discussions with the investigating judge and his daughter’s lawyers on the subject of his questioning in Bern, absent the formalities laid down in the European Convention on mutual assistance in criminal matters. 43. In the applicant’s view, the lack of good faith on the part of the Swiss authorities did not stop there and the precise chronology of events showed that the investigating judge had triggered the request for urgent arrest with a view to his extradition to the USA. He alleged that, when it had become virtually certain for the judge that the applicant would be in his office on 2 May 2005, he had made contact with the competent US authority and had informed it that he would be questioning the applicant shortly afterwards. That telephone call, made on the afternoon of 28 April 2005, had left the competent US authorities time to draft and send to the Federal Office of Justice, on 29 April 2005, an “urgent” request for arrest with a view to extradition on the basis of which the Office, that same day, had sent an arrest order to the investigating judge for the Canton of Bern. 44. Having regard to the foregoing, the applicant argued that the chain of events, from 28 April 2005 onwards, revealed a stratagem that was intended to deprive him of liberty and to enable his extradition to the USA whereas it was known that extradition would not have been possible from his State of nationality, Russia. The applicant further pointed out that his only mistake was to have trusted the Swiss authorities in failing to envisage that they might use against him his willingness to cooperate in the criminal proceedings being conducted in the Canton of Bern. 45. For all these reasons, the applicant submitted that there had been a violation of Article 5 § 1 of the Convention. (b) The Government 46. The Government argued that the provisions on mutual assistance were applicable when the requested State was called upon to take measures at the request of the requesting State, or at least to tolerate activity by the latter on its territory, for example the service of a procedural document. They took the view that, in the present case, the applicant had himself made contact with the Swiss authorities from Russia, through the intermediary of his daughter’s representative. At the time when a date had been agreed for his questioning by the investigating judge, on 20 April 2005, namely twelve days before the scheduled date, he was already in Switzerland. For those reasons the present case, as far as the questioning was concerned, had not involved any inter-State cooperation in a context of mutual legal assistance. Consequently, the provisions on mutual assistance, and more specifically the safe-conduct clause, could not, in the Government’s view, be regarded as applicable in the present case. 47. The Government argued that, in so far as the applicant had claimed that the authorities had used a stratagem to secure his presence in Switzerland, the sequence of events showed clearly that his arrest had not been the result of any ruse or trickery on the part of the authorities. First, as it had already been established, the applicant had taken the decision to go to Switzerland of his own accord, regardless of his questioning by the investigating judge. In particular, his version of the events according to which he had already known, on leaving Russia, where and when the questioning would take place was not correct. The Government pointed out that at the time when the applicant had informed the investigating judge that he was prepared to be questioned in Switzerland and when the judge had suggested precise dates, the investigating judge had not yet had any contact with the US authorities. It was only on 28 April 2005 that the investigating judge had contacted the US authorities. That contact had been unrelated to the applicant’s scheduled questioning and had concerned the preparation of a request for mutual assistance to be sent by Switzerland to the USA in the proceedings against the applicant’s daughter. 48. The prompt reaction by the US authorities, which the next day had sent the Federal Office of Justice a provisional arrest request by e-mail, fax and express post, showed that the USA had not been informed before the telephone conversation in question that the applicant was in Switzerland. If the arrangement of a hearing with the applicant had been a stratagem to obtain his extradition to the United States, the investigating judge would most probably not have waited three weeks before informing that country of the applicant’s visit. 49. Moreover, the Government argued that, having received advice from his lawyers, especially those in the USA, and being a frequent traveller, the applicant must have been aware of the risks that he was taking when travelling abroad. He could not now attribute to the Swiss authorities the responsibility for a visit that he would have made anyway. 50. In view of the foregoing, the applicant’s detention had not been in breach of the principle of good faith. In compliance with the provisions of domestic and international law, it had been decided and executed in accordance with a procedure prescribed by law, within the meaning of Article 5 § 1. It did not therefore constitute a violation of that Article. 2. The Court’s assessment (a) General applicable principles 51. The Court reiterates that, in proclaiming the “right to liberty”, paragraph 1 of Article 5 contemplates the physical liberty of the person and its aim is to ensure that no one should be dispossessed of this liberty in an arbitrary fashion (see Saadi v. the United Kingdom [GC], no. 13229/03, § 67, ECHR 2008, and Amuur v. France, 25 June 1996, § 42, Reports of Judgments and Decisions 1996‑III). The list of exceptions to the right to liberty secured in Article 5 § 1 is an exhaustive one and only a narrow interpretation of those exceptions is consistent with the aim of that provision (see, mutatis mutandis, K.‑F. v. Germany, 27 November 1997, § 70, Reports 1997‑VII; Čonka v. Belgium, no. 51564/99, § 42, ECHR 2002‑I; and D.G. v. Ireland, no. 39474/98, § 74, ECHR 2002‑III). 52. 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. While it is normally in the first place for the national authorities, notably the courts, to interpret and apply domestic law, it is otherwise in relation to cases where, as under Article 5 § 1, failure to comply with that law entails a breach of the Convention. In such cases the Court should exercise a certain power to review whether national law – legislation or case-law – has been observed (see Baranowski v. Poland, no. 28358/95, §§ 50 and 54, ECHR 2000-III, and Minjat v. Switzerland, no. 38223/97, § 39, 28 October 2003). 53. It is essential that the conditions for deprivation of liberty under domestic law be clearly defined and that the law itself be foreseeable in its application, being sufficiently precise to allow the individual to foresee, to a degree that is reasonable in the circumstances, the consequences which a given action may entail (see Minjat, cited above, § 40). 54. Compliance with national law is not, however, sufficient: Article 5 § 1 requires in addition that any deprivation of liberty should be in keeping with the purpose of protecting the individual from arbitrariness (see, among other authorities, Winterwerp v. the Netherlands, 24 October 1979, § 37, Series A no. 33; Amuur, cited above, § 50; Chahal v. the United Kingdom, 15 November 1996, § 118, Reports 1996‑V; and Witold Litwa v. Poland, no. 26629/95, § 78, ECHR 2000‑III). It is a fundamental principle that no detention which is arbitrary can be compatible with Article 5 § 1 and the notion of “arbitrariness” in that provision extends beyond lack of conformity with national law, such that a deprivation of liberty may be lawful in terms of domestic law but still arbitrary and thus contrary to the Convention (see Saadi, cited above, § 67). 55. While the Court has not previously formulated a global definition as to what types of conduct on the part of the authorities might constitute “arbitrariness” for the purposes of Article 5 § 1, key principles have been developed on a case-by-case basis. It is moreover clear from the case-law that the notion of arbitrariness in the context of Article 5 varies to a certain extent depending on the type of detention involved (see Saadi, cited above, § 68). 56. One general principle established in the case-law is that detention will be “arbitrary” where, despite complying with the letter of national law, there has been an element of bad faith or deception on the part of the authorities (see, for example, Bozano v. France, 18 December 1986, Series A no. 111; Čonka, cited above; and Saadi, cited above, § 69). For arbitrariness to be excluded, conformity with the purpose of the restrictions permitted by the relevant sub-paragraph of Article 5 § 1 is required in respect of both the ordering and the execution of the measures involving deprivation of liberty (see Winterwerp, cited above, § 39; Bouamar v. Belgium, 29 February 1988, § 50, Series A no. 129; and O’Hara v. the United Kingdom, no. 37555/97, § 34, ECHR 2001-X). 57. The Court would further point out that the Convention does not prevent cooperation between member States, within the framework of extradition treaties or in matters of deportation, for the purpose of bringing fugitive offenders to justice, provided that it does not interfere with any specific rights recognised in the Convention (see Öcalan v. Turkey [GC], no. 46221/99, § 86, ECHR 2005‑IV, and the reference cited therein). Inherent in the whole of the Convention is the search for a fair balance between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights. As movement about the world becomes easier and crime takes on a larger international dimension, it is increasingly in the interest of all nations that suspected offenders who flee abroad should be brought to justice (see Soering v. the United Kingdom, 7 July 1989, § 89, Series A no. 161, and Öcalan, cited above, § 88). 58. The Convention contains no provisions concerning the circumstances in which extradition may be granted or any preliminary procedure to be followed. Subject to it being the result of cooperation between the States concerned and provided that the legal basis for the order for the fugitive’s arrest is an arrest warrant issued by the authorities of the fugitive’s State of origin, even an atypical or disguised extradition cannot as such be regarded as contrary to the Convention (see Öcalan, cited above, § 89, and the reference cited therein). 59. The Court’s case-law further shows that the Convention does not preclude the legitimate use by national authorities of certain stratagems in order, for example, to counter criminal activities more effectively (see Čonka, cited above, § 41). However, not every ruse can be justified, especially when it is implemented in such a way that the principles of legal certainty are tarnished (see Giorgi Nikolaishvili v. Georgia, no. 37048/04, § 58, 13 January 2009). Furthermore, the intention to deprive or otherwise affect an individual’s physical liberty should not, in the normal course of events, be consciously hidden by the authorities. In such a situation, the individual should be able to avail himself, if need be, of an available and effective remedy aimed at opposing the authorities’ interference and thus preserving his liberty (ibid., § 53). (b) Application of the general principles to the present case 60. The Court observes that the second part of Article 5 § 1 (f) applies to a person “against whom action is being taken with a view to deportation or extradition”. In the present case, the US authorities requested the applicant’s provisional arrest pursuant to the extradition treaty of 14 November 1990 between Switzerland and the USA. On the basis of that treaty, he was arrested and detained in order to be extradited to the United States. Accordingly, the Court takes the view that the applicant’s detention falls within the scope of Article 5 § 1 (f) of the Convention, a point that is not in dispute between the parties. 61. The Court would emphasise at the outset that, in its duly reasoned judgment of 14 July 2005, the Federal Court, ruling on an appeal from the Federal Office of Justice, found in substance that the applicant’s detention had been “in accordance with a procedure prescribed by law” within the meaning of Article 5 § 1 of the Convention. Moreover, the fact that the applicant was not ultimately extradited to the United States of America but to the Russian Federation was not the result of a finding that his detention had been unlawful, but can be explained by the priority given by the Federal Court, in its judgment of 22 December 2005, to the extradition request lodged by Russia, which was the applicant’s State of nationality. Lastly, it should be observed that the justified nature of the detention was confirmed by a decision dated 6 December 2007 of the Federal Criminal Court, which rejected a request for compensation by the applicant. 62. The Court is therefore called upon to determine whether the applicant’s detention was “in accordance with a procedure prescribed by law” within the meaning of Article 5 § 1. In this connection, it observes that the applicant’s allegations contained two main parts: first, he contended that the Swiss authorities had wrongly refused to grant him the benefit of the safe-conduct clause. Second, and regardless of the answer to the first question, he argued that the stratagem used by the national authorities, in circumventing the formal conditions for summoning witnesses to give evidence in Switzerland, was at odds with the principle of good faith and thus infringed Article 5 § 1 of the Convention. 63. The Court will therefore examine in turn these two aspects of the complaint. (i) Alleged breach of the safe-conduct clause 64. As to whether the applicant was entitled to rely on the safe-conduct clause, he regarded as improper the Government’s argument to the effect that he was in Switzerland for private and business purposes and that the European Convention on mutual assistance in criminal matters, and more specifically its safe-conduct clause, were not therefore applicable to his situation. 65. In this connection, the Court would point out that the aim of the safe-conduct clause is to avoid the situation where a witness who is required to give evidence in another country is then detained there without the substantive and procedural conditions for extradition being fulfilled. The witness thus enjoys immunity from arrest or prosecution in respect of any charges or convictions that pre-date his departure from the territory of the requested State (see the Federal Court judgment ATF 104 Ia 448, paragraph 33 above). 66. The Court observes that the applicant did not visit Switzerland specially to give evidence in the criminal proceedings against his daughter, but freely chose to go there, independently of the fact that he would be questioned by the investigating judge. The applicant indeed indicated clearly, in his testimony to the investigating judge of the Canton of Bern, on 2 May 2005, that he was visiting Switzerland of his own accord to see his daughter and for business. The professional purpose of his visit to Switzerland is also apparent from an article by the applicant that was published on 6 June 2005 in the newspaper Izwestija. 67. In addition, the Court finds that no “summons” to appear before the Swiss authorities had been served on the applicant in his State of residence, in accordance with Article 12 of the European Convention on mutual assistance in criminal matters and section 73 of the Federal Law on international mutual assistance in criminal matters (see paragraphs 31-32 above). It should also be noted that the applicant was already in Switzerland when the investigating judge issued him with a summons to appear for questioning on 2 May 2005, that summons being sent to his daughter’s private address in Bern. As no inter-State cooperation, in terms of mutual legal assistance, was involved in the present case, it follows that there was no need to protect the applicant from arrest or prosecution in respect of prior offences or convictions and that the safe-conduct clause was not therefore applicable in his case. The present case can be distinguished in this connection from those that led to the above-mentioned judgments of the Federal Court (see paragraphs 33-34 above), in which the individuals concerned had appeared in Switzerland in response to a summons issued by the prosecution authorities, albeit improperly. 68. Moreover, the Court shares the Government’s opinion that the applicant, who travelled frequently and had access to legal advice, must have been aware of the risks that he was taking by going abroad, especially in view of the criminal proceedings opened against him in the USA in 2004. There is no evidence that he ever raised the issue of safe-conduct protection himself when he agreed to be questioned by the investigating judge. By consenting to travel to Switzerland without availing himself of the safeguards in the relevant mutual legal assistance instruments, he knowingly waived the benefit of the immunity that the safe-conduct clause would have accorded. (ii) Alleged breach of the principle of good faith 69. Secondly, the applicant claimed that the Swiss authorities had used inadmissible stratagems in order to deprive him of his immunity against arrest or prosecution. In this connection the Court would reiterate the above-mentioned principle: whilst the use by the authorities of certain stratagems to counter criminal activities is not per se at odds with the principle of good faith, in the light of the Convention, not every ruse can be justified (see the case-law cited above in paragraph 59). 70. In the present case the Court observes that, on the basis of the information that the applicant would be going to Switzerland for private and business purposes and that he was prepared to give evidence in the case concerning his daughter, the investigating judge summoned him to appear on 2 May 2005, one of the dates proposed by the applicant himself. It can thus been seen that the judge did not use any ruse or trickery to secure the applicant’s presence in Switzerland. 71. Subsequently, as a result of a telephone conversation about the proceedings against the applicant’s daughter, the investigating judge informed a public prosecutor in Pennsylvania that he would be questioning the applicant on the agreed date. On the basis of that information, the US Department of Justice sent the Swiss authorities a request for the applicant’s provisional arrest pursuant to the extradition treaty of 14 November 1990 between Switzerland and the USA. Further to that request the Federal Office of Justice issued, in compliance with the formalities, an arrest order that was sent to the investigating judge, who ordered the applicant’s arrest. He was arrested as planned on 2 May 2005 after his questioning in the proceedings concerning his daughter. The next day, the applicant’s detention was confirmed by an order of provisional detention pending extradition issued by the Federal Office of Justice. In view of the foregoing, the Court finds that the Swiss authorities did not show any bad faith in dealing with the applicant and that, in informing the US authorities of his presence in Switzerland, they acted in compliance with their obligations of inter-State cooperation against cross-border crime. (iii) Conclusion 72. The Court, taking note of the duly reasoned decisions of the domestic authorities, finds that the applicant’s detention with a view to his extradition to the USA, being based on a valid arrest order and pursuing the purpose of inter-State cooperation in fighting cross-border crime, infringed neither the safe-conduct clause nor the principle of good faith. The detention was therefore ordered “in accordance with a procedure prescribed by law”, namely both Swiss law and international law. 73. Accordingly, in the present case there has been no violation of Article 5 § 1 of the Convention. II. ALLEGED VIOLATION OF ARTICLE 14 OF THE CONVENTION Admissibility 74. The applicant further claimed that the refusal to apply the safe-conduct clause in his case and the arbitrary treatment he had received could be explained by the fact that he was a former Minister for Energy of the Russian Federation. He relied in this connection on Article 14, taken together with Article 5 of Convention. Article 14 reads as follows: “The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.” 75. The Court finds that this complaint had not been raised before the domestic courts. It must therefore be dismissed for failure to exhaust domestic remedies, pursuant to Article 35 §§ 1 and 4 of the Convention. FOR THESE REASONS, THE COURT 1. Declares, unanimously, the complaint concerning Article 5 § 1 admissible and the remainder of the application inadmissible; 2. Holds, by four votes to three, that there has been no violation of Article 5 § 1 of the Convention. Done in French, and notified in writing on 21 June 2011, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Stanley NaismithFrançoise Tulkens Registrar President In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the joint separate opinion of Judges Tulkens, Sajó and Pinto de Albuquerque is annexed to this judgment F. T. S.H.N. JOINT DISSENTING OPINION OF JUDGES TULKENS, SAJÓ AND PINTO DE ALBUQUERQUE 1. This case concerns the detention in Switzerland, from 2 May to 30 December 2005, of the former Russian Minister for Energy, with a view to his extradition to the USA. He was ultimately extradited to the Russian Federation on account of the priority of the request. 2. The Swiss authorities secured the applicant’s presence in Bern so that he could give evidence as a witness in criminal proceedings against his daughter, and they allegedly took advantage of this summons to arrest him with a view to his extradition. Under Article 5 § 1 of the Convention, the main question that arises is that of the application of the safe-conduct clause, as provided for in Article 12 of the European Convention on mutual assistance in criminal matters of 20 April 1959, to which both Switzerland and the Russian Federation are parties. 3. We do not share the conclusion of the majority, who have concluded that the applicant’s detention for almost eight months with a view to his extradition was ordered “in accordance with a procedure prescribed by law”. We thus wish to explain the reasons for our dissent. 4. It should be noted at the outset that a difference of opinion can be seen between the Federal Criminal Court’s decision of 9 June 2005 and that of the Federal Court of 14 July 2005. The former took the view that the protection provided by the safe-conduct clause in Article 12 of the European Convention on mutual assistance in criminal matters was applicable to the applicant (see paragraph 24 of the judgment), whilst the latter found the opposite, considering that the Federal Criminal Court had given an erroneous and incomplete assessment of the facts (see paragraph 28 of the judgment). 5. In this context, the chronology of the events is important. On 5 April 2005 the applicant made it known that he was prepared to go to Switzerland to be questioned as a witness by the investigating judge in connection with criminal proceedings against his daughter for money laundering. On 15 April 2005, before he left Russia, the investigating judge suggested to her lawyer two possible dates for a hearing at the court in Bern. The applicant arrived in Switzerland on 20 April 2005. On the same day the investigating judge issued a summons in accordance with the practice in the Canton of Bern, scheduling the hearing for 2 May 2005. The summons was sent to the private address of the applicant’s daughter. After a conversation on 28 April 2005 between the investigating judge and a public prosecutor in Pennsylvania, who was thus informed of the applicant’s presence in Switzerland, the US Department of Justice, on 29 April 2005, sent a request for the applicant’s provisional arrest to the Federal Office of Justice, which ordered his urgent arrest that same day. At the end of the hearing of 2 May 2005, the investigating judge informed the applicant that he was under arrest. 6. It can clearly be seen from the case file that the summoning of the applicant by the investigating judge on 15 April 2005 did not constitute a formal notification in compliance with the requirements of the European Convention on mutual assistance in criminal matters, the provisions of which include the safe-conduct clause (Article 12). Neither did it comply with Recommendation R (83)12 of the Committee of Ministers of the Council of Europe of 23 September 1983, concerning safe conduct for witnesses under the European Convention on mutual assistance in criminal matters, which emphasises the importance of meeting all the requirements of the summons, in particular by expressly pointing out the scope of that guarantee in the requesting State. In the applicant’s submission, having regard to the negotiations that had taken place with the investigating judge prior to his departure, it was clear that he was going to be questioned as a witness, and this explained why he had accepted a more informal means of calling him for questioning on 2 May 2005 in the proceedings concerning his daughter. 7. The safe-conduct principle is clear: “A witness or expert, whatever his nationality, appearing on a summons before the judicial authorities of the requesting Party shall not be prosecuted or detained or subjected to any other restriction of his personal liberty in the territory of that Party in respect of acts or convictions anterior to his departure from the territory of the requested Party” (see paragraph 31 of the judgment). Admittedly, if the individual subsequently commits offences in the requesting State the immunity will not apply, just as it does not apply if he or she remains in the requesting State for a period exceeding that for which the immunity has been granted. 8. This is a principle of international law which has been recognised and enshrined in numerous multilateral treaties (see Article 7 § 18 of the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988; Article 18 § 27 of the United Nations Convention against Transnational Organized Crime, 2000; Article 46 § 27 of the United Nations Convention against Corruption, 2003) and bilateral treaties (for example: Article 27 § 1 of the mutual legal assistance treaty between the USA and Switzerland; Article 34 § 2 of the mutual legal assistance treaty between the USA and Turkey; Article 9 § 1 of the mutual legal assistance treaty between the USA and the Netherlands), and the headquarters agreements of international courts and tribunals (Article 26 of the Headquarters Agreement between the International Criminal Court and the Host State, 2007; Article 18 of the Agreement between the United Nations and the Kingdom of the Netherlands concerning the Headquarters of the International Criminal Tribunal for the former Yugoslavia, 1994; Article 18 of the Agreement between the United Nations and the United Republic of Tanzania concerning the Headquarters of the International Tribunal for Rwanda, 1995). 9. This principle has also been recognised by the international criminal tribunals. It was applied, for example, in the decision of the International Criminal Tribunal for the former Yugoslavia of 25 June 1996 on the defence motions to summon and protect defence witnesses, and on the giving of evidence by video-link, in which the Chamber observed that “[o]rders for safe conduct as provided for between countries protect a person from persecution and restriction of liberty in the requesting country in relation to acts which preceded his departure from the requested country for purposes of appearing and testifying in response to a request”. The Chamber further noted that safe conduct provisions had been included in nearly all mutual assistance treaties and several multilateral agreements[1]. More recently, the safe conduct principle has been reiterated, for example in the same Tribunal’s judgment of 12 June 2007 in the Martić[2] case and in the decisions of the International Criminal Tribunal for Rwanda in Nyiramasuhuko, 17 June 2005, and Joseph Nzirorera, 24 March 2009[3]. 10. International legal opinion has also pointed out that the safe conduct principle derives from the more general principle of good faith, which should protect the trust of a witness who voluntarily complies with a legal assistance request from another State[4]. 11. In the present case, one particular factor appears essential and decisive in our view: the judicial authorities’ actions seem to run counter to their own guidelines and national authorities in such matters. In recent guidelines the Federal Office of Justice has itself explained that safe conduct should be guaranteed to witnesses who have not been notified through the appropriate international legal assistance mechanism[5]. This position reflects the well-established opinion in international law that safe conduct must also apply to witnesses or experts who have been notified in an informal or illegal manner[6]. Furthermore, the Federal Court itself gave a ruling to this effect on 17 May 1995, rightly recognising the right to safe conduct even though the notification by the national authorities had been made known to the person concerned informally by counsel. 12. In those circumstances we believe that it is reasonable to argue, as the Federal Criminal Court did, that the applicant could have assumed in good faith that he would benefit from protection under Article 12 of the European Convention on mutual assistance in criminal matters. 13. The majority conclude that “[b]y consenting to travel to Switzerland without availing himself of the safeguards in the relevant mutual legal assistance instruments, he knowingly waived the benefit of the immunity that the safe-conduct clause would have provided” (see paragraph 68 of the judgment). We believe that such an allegation is ill-founded and speculative. Moreover, it is hardly compatible with the very raison d’être of Article 5 of the Convention, namely protection against arbitrariness. 14. Article 5 § 1 of the Convention requires that any deprivation of liberty must be “in accordance with a procedure prescribed by law”; moreover, the authorised cases of deprivation of liberty are limited to those listed in the text itself. It is well-established case-law that Article 5 must be interpreted strictly by the Court, as only a narrow interpretation of those exceptions is consistent with the aim of that provision (see, mutatis mutandis, K.-F. v. Germany, 27 November 1997, § 70, Reports of Judgments and Decisions 1997‑VII; Čonka v. Belgium, no. 51564/99, § 42, ECHR 2002‑I; and D.G. v. Ireland, no. 39474/98, § 74, ECHR 2002‑III). In addition, for arbitrariness to be excluded, conformity with the purpose of the restrictions permitted by the relevant sub-paragraph of Article 5 § 1 is required in respect of both the ordering and the execution of the measures involving deprivation of liberty (see Winterwerp v. the Netherlands, 24 October 1979, § 39, Series A no. 33; Bouamar v. Belgium, 29 February 1988, § 50, Series A no. 129; and O’Hara v. the United Kingdom, no. 37555/97, § 34, ECHR 2001-X). 15. In the present case, we therefore take the view that the applicant’s deprivation of liberty was not “in accordance with a procedure prescribed by law” within the meaning of Article 5 of the Convention, since he did not enjoy safe-conduct immunity. In the light of the raison d’être of Article 5, a person who is notified informally should be granted the same immunity as a person notified according to the applicable formalities. In any event, the errors committed by the requesting State in the application of the convention of 29 April 1959 could not deprive the applicant of his right to liberty under the Convention. 16. Lastly, the applicant could not be placed at a disadvantage on account of the fact that he had accepted the request for judicial assistance. His voluntary hearing as a witness on 2 May 2005 clearly facilitated the intergovernmental cooperation provided for by the 1959 European Convention on mutual assistance in criminal matters. The essence of safe conduct lies precisely in the link established between a witness who agrees to cooperate with the courts and the temporary immunity granted to that witness, regardless of the circumstances surrounding the notification. That link was broken when the respondent State failed to recognise the applicant’s immunity. 17. For all these reasons we cannot but conclude that there has been a violation of Article 5 § 1 of the Convention. [1] Case no. IT-94-1-T, Prosecutor v. Duško Tadić alias “Dule”, decision of 25 June1996, § 9. See also F.P. King and A.-M. La Rosa, “The Jurisprudence of the Yugoslavia Tribunal: 1994-1996”, European Journal of International Law, 1997, vol. 8, no. 1, p. 151; A.-M. La Rosa, Juridictions pénales internationales. La procédure et la preuve, Paris, Presses universitaires de France, 2003, pp. 279 et 280. [2] Affaire no. IT-95-11-T, Prosecutor v. Milan Martić, judgment of 12 June 2007, § 534. [3] See K. Margetts and P. Hayden, “Current Developments at the Ad Hoc International Criminal Tribunals”, Journal of International Criminal Justice, 2009, vol. 7, no. 5, p. 1178. [4] See, to this effect, R. Zimmermann, La coopération judiciaire internationale en matière pénale, Brussels, Bruylant, 2009, p. 199, and P. Popp, Grundzüge der internationalen Rechtshilfe in Strafsachen, Basel, Helbing & Lichtenhahn, 2001, p. 51, note 82. [5] L’entraide judiciaire internationale en matière pénale : directives, Bern, Office fédéral de la justice, 1998, p. 39; and this passage can also be found in the 2010 edition of the same guidelines, p. 83. [6] H. Grützner and P.-G. Pötz (dir.), Internationaler Rechtshilfeverkehr in Strafsachen, 2nd edition, Heidelberg, 1992, vol. III, “observations préliminaires”, no. 15 ; P. Popp, Grundzüge der internationalen Rechtshilfe in Strafsachen, op. cit.; and C. Markees, “Entraide internationale en matière pénale – Troisième partie : autres actes d’entraide”, Fiches Juridiques Suisses, no. 423c, ch. 125, “sauf-conduit”, no. 3.

MR JUSTICE NICOL: This is an application for judicial review of a decision by the Secretary of State on 10 May 2010 to certify as clearly unfounded the claimant's claim that his deportation to Jamaica would infringe his rights under Articles 3 and 8 of the European Convention on Human Rights. This had the effect of precluding an appeal by the claimant to the First-Tier tribunal. The Secretary of State in that letter also refused to revoke a deportation order in relation to the claimant. The claim for judicial review was issued on 14 May 2010. Permission to apply for judicial review and interim relief was refused by Mr Justice Ouseley on 17 May 2010 and the claimant was on that same day later deported to Jamaica. Somewhat unusually, his representatives in the United Kingdom have nonetheless continued with the application for judicial review and on 22 June 2010, Mr Justice Hickinbottom granted permission and ordered that the hearing of the substantive application should be expedited. The claimant came to the United Kingdom in 2000. He came as a visitor and was given six months leave to enter. He is from an area in Kingston Jamaica known as the Sunlight Street area. In December 2000, he was at a pub in Brixton with some friends. Three other Jamaicans, who were members of a Jamaican gang called the Gem Street or Gem Road gang, entered the pub and tried to shoot one of the claimant's friends. The claimant came to his friend's defence and was himself shot, although in the event not seriously harmed. Later that same evening, another of the claimant's friends, whom I shall refer to as RW, was also shot and this time killed. The perpetrators were also believed to be the same members of the Gem Road gang. In due course, the three Jamaicans who had entered the pub were prosecuted for the attempted murder of the claimant himself. The claimant and his nephew gave evidence for the prosecution at the trial. All three defendants were convicted of attempted murder and sentenced to imprisonment. While that criminal case was pending, the claimant was encouraged by the police to remain in the United Kingdom as a witness. In 2001, he was joined by his partner and their child. They have subsequently had two further children. In 2002, the claimant and his nephew, who had also given evidence at the trial, sought asylum in the United Kingdom. In due course, the nephew was granted humanitarian protection in recognition of a risk to his life if he returned to Jamaica. Whilst that asylum application was outstanding, the claimant was convicted in 2004 of possession of a class A drug with intent to supply. He was sentenced to 4 years' imprisonment. The claimant's asylum claim was rejected by the Secretary of State in 2005 and the claimant appealed. The appeal was dismissed by a decision of the Asylum and Immigration Tribunal on 21 March 2007. Then as now, the claimant alleged that his removal to Jamaica would be contrary to both Article 3 and Article 8 of the ECHR. In terms of the Article 3 application, the tribunal in 2007 properly directed itself in accordance with the country guidance case known as AB (Protection Criminal Gangs Internal Relocation Jamaica) CG (2007) UK AIT 00018. The tribunal considered the claimant's argument that if returned to Jamaica he would be at risk from reprisals from members of the same gang against whom he had given evidence. At paragraph 26, the tribunal said this: "We came to the clear conclusion that in relation to the asylum case, the appellant had not made out his case that he would currently be at risk upon return. We came to this conclusion for the following reasons and in the light of the very recent country guidance [that is a reference to the AB case]. (a) The appellant had not sought witness protection in this country despite having apparently been identified as an informer in 2002 in posters distributed in south London, the appellant has not been attacked or threatened, nor is it apparent that any attempt has been made on his life in this country. (b) The appellant has relatives in Jamaica who have not been attacked and who appear to have continued to live in Montego Bay in relative safety. (c) A COI service reply states that according to local resources the Gem Street gang has been inactive since the death of its former leader in November 2005 and the migration of other gang members. (d) The evidence of Mr Foster, who had also been identified as an informer, was that his own family had continued to live close to Gem Road without as far as he was aware any threats being made to him since 2002 when he gave evidence. (e) The appellant's claims that one of the Gem Street gang called Ren had managed to escape to Jamaica. We are unable to say whether this is reasonably likely to be true in the first place. Later in this determination there is a reference to the appellant having given a wholly implausible account of the circumstances in which he became a street dealer of cocaine. That affects his credibility adversely. Even if we were to accept it as true that this man had returned to Jamaica, we would have no information as to his whereabouts or to the likelihood that he would be aware of the appellant's return. (f) Having come to these conclusions, the questions of internal relocation and sufficiency of protection do not arise." The tribunal also refused the appeal on Article 8 grounds. For reasons which I will explain, it is not necessary for me to go into the detail of that part of the claim or the Tribunal's decision. The appellant through his solicitors made a number of representations preceding the Secretary of State's decision of 10 May 2010. In particular, the claimant was able to draw attention to the fact that, subsequent to the tribunal's decision, the three people against whom he had given evidence had been released from their sentences of imprisonment in the UK and had been deported to Jamaica. He argued that this in itself had created a greater risk for him than was apparent at the time of the tribunal's hearing in 2007 and, at the very least, itself justified the treatment of the representations as a fresh claim or, alternatively, meant that they could not be characterised as "clearly unfounded". The claimant also had submitted to the Secretary of State that there had been another person, who was the cousin of RW and who had been deported to Jamaica. Whilst there this person had been assaulted and shot nine times by members of the Gem Street gang. This person had returned to the United Kingdom, claimed asylum and won his case before the AIT very recently on the basis of a risk of persecution at the hands of the Gem Street gang. The claimant gave a name for this person which in the event turned out to be incorrect but he did give the details which I have just summarised. The Secretary of State's letter of 10 May did not really respond to the argument that the risk to the claimant had increased because of the two factors I have indicated. What the Secretary of State did do was to say and conclude that there would nonetheless be a sufficiency of protection in Jamaica for the claimant and it referred to a number of sources of country material which the Secretary of State believed enabled her to come to that conclusion. The Secretary of State did in addition note that the claimant had not asked to be admitted to a witness protection programme in the United Kingdom. He had not been the subject of any revenge attack while he was in the United Kingdom and his relatives in Jamaica had not been attacked. They have continued to live in Montego Bay in relative safety. In addition, the Secretary of State said that it would be open to the claimant to relocate within Jamaica, away from Kingston, and thereby avoid any risk of retaliation which he said he feared. As I have said, the claimant then applied for judicial review. He was refused permission and interim relief and he was removed to Jamaica on 17 May. His counsel today has told me he has lived in hiding ever since. Following the decision of Ouseley J to refuse permission, the Secretary of State lodged an acknowledgment of service disputing that the claimant had good grounds for seeking judicial review. The acknowledgment of service was lodged on 17 June 2010. Shortly before then, and Mr Poole tells me only the day before, the Secretary of State had been able to identify the other case to which the claimant had alluded in his representations. This had indeed led to a hearing before an immigration judge. I am not certain as to when the decision was promulgated but it was prepared on 20 February 2009 and it is to be referred to as HC (Jamaica). Mr Poole on the Secretary of State's behalf accepts realistically that, although the claimant had not been able to correctly identify the appellant and the decision in this case, it was nonetheless information available to the Secretary of State and the claimant is accordingly entitled to rely on it in his challenge to the lawfulness of the Secretary of State's certificate. The immigration judge in HC (Jamaica) allowed the appeal on humanitarian protection and human rights grounds. It is not however the ultimate outcome of the case which is of significance for the claimant. Rather, it is for the account which HC gave and which was accepted by the immigration judge indicating that the Gem Street or Gem Road gang, far from being defunct as the tribunal had considered in 2007, was very much alive and active at least in 2007. What is more, notwithstanding that seven years had passed since the incident in the pub in Brixton, the Gem Street gang was still, apparently, engaging in revenge attacks against HC because of his family's connection to the incident in the Brixton pub in 2000. HC had family who had been involved as witnesses in the very same trial where the claimant had given evidence for the prosecution. HC said to the tribunal, and the Immigration Judge accepted, that he had been shot a number of times by the Gem Street gang. HC believed the attack was due to the attackers being friends, with those who had been convicted and sent to prison in the UK due in part to HC's extended family's involvement as witnesses at the trial. Furthermore, it will be recalled that in 2007 the tribunal in the claimant's own case had been unable to reach a conclusion as to whether a Gem Street gang member called Ren was back in Jamaica and if so, whether he continued to be active. In his appeal hearing, HC gave evidence that Ren and another gang member called Jokey were indeed part of the Gem Street gang. They were active and possibly engaging in leadership roles. In HC, the tribunal found this evidence contradicted the information from the FCO which had been presented in the claimant's own tribunal hearing and which had also been relied upon by the Home Office before the tribunal in HC. The tribunal found HC to be an honest and credible witness. It accepted his account in its detail and, in particular, it accepted his account of the attack on him and the reasons why it had taken place. All of these are matters which the claimant now says add further force to his submissions that the Secretary of State was not justified in saying in May 2010 that his human rights claims were clearly unfounded. On the contrary, he submits, they are powerful reasons why a fresh tribunal would be likely to accept his account and to accept his claim that to return him to Jamaica would be contrary to Article 3 of the European Convention on Human Rights. Mr Poole says the Secretary of State was nonetheless entitled to conclude that the claimant would have a sufficiency of protection from the Jamaican authorities. The difficulty with that submission is that it does not engage with the AB country guidance case. In that decision, as summarised in the head note, the tribunal found that the authorities in Jamaica are in general willing and able to provide sufficient protection. However, unless reasonably likely to be admitted into the witness protection programme, a person targeted by a criminal gang will not normally receive effective protection in his home area. Mr Poole accepted the Secretary of State could not reasonably assume the claimant would be admitted to a witness protection programme. Put perhaps more accurately, he could not properly assume the claimant would be unable to persuade a tribunal at a further hearing that he would not be able to access a witness protection programme. He did not argue that the claimant would be unable to show he was at risk of being targeted by a criminal gang. That being so, the Secretary of State was faced with the conclusion of the tribunal in this country guidance case that such a person would not normally receive effective protection in his home area. The passages which the Secretary of State relied on from his objective evidence in my judgment did not really grapple with the conclusion of the country guidance case. That would not be of overwhelming significance if indeed it was plain the claimant would be able to relocate elsewhere in Jamaica. In the AB case, the tribunal said this: "Whether such a person, that is a person who is not admitted into a witness programme, is targeted by a criminal gang, would be able to achieve protection by relocating will depend on his particular circumstances. But the evidence does not support the view that internal relocation is an unsafe or unreasonable option in Jamaica in general. It is a matter for determination on the facts of each individual case." It will be recalled that the tribunal in 2007 did not need to reach a view about the possibility of the claimant avoiding a risk of harm by relocating within Jamaica. This is not therefore the type of fresh claim where the claimant has to demonstrate there are new developments or new facts which would justify a realistic prospect of a second appeal succeeding, despite failure on the critical issues at the first appeal. On this matter, the Secretary of State's letter of 10 May 2010 said merely this: "(51) Given that the objective evidence clearly states there are parts of Jamaica where gang violence is less prevalent, it is considered that the option of relocating to those areas would be open to your client should he encounter problems with gangs upon his return to Jamaica. (52) Regarding your fear of the individuals your client believes to be members of the Gem Street gang, it is considered reasonably unlikely that non-state agents would have the desire or indeed the resources to commence a search involving the entire Jamaican population. Given the evidence of freedom of movement, the size in population of 2,804,332 in Jamaica, it is concluded that your client could relocate to another part of Jamaica where he has no known previous convictions in order to escape the threat of those he purports to fear." As to that, Mr Buley comments as follows: "This is someone who fears those who have shown considerable zeal and tenacity in the past, witness the attack on HC, notwithstanding the number of years since the events in the pub in Brixton." Indeed, Mr Buley argues that HC was merely the relative of somebody who had given evidence against members of the Gem Street gang, whereas the claimant was more directly involved. He was a witness for the prosecution. Next Mr Buley comments that notwithstanding the general comments about Jamaica which the Secretary of State made in paragraph 52 of the letter, the tribunal in AB did not rule that internal relocation was always a possibility. Rather it said it was a matter for determination on the facts of each individual case. Because of the view which the tribunal reached in 2007 upon other matters, it has never been necessary for an immigration judge or tribunal to make such an assessment on the individual facts of the claimant's particular case. In AB, the tribunal did allude to the difficulties which people might have relocating in Jamaica, away from an area where they had employment and family support. While those would not inevitably mean that relocation was an unreasonable alterative, they could do so on the facts of particular cases. The Secretary of State is entitled to observe that this claimant apparently has relatives in Montego Bay (in other words, an area away from Kingston) and those relatives have not, so it seems, been targeted by the Gem Street gang. Those are matters which it was open to the Secretary of State to take but I must remember that her task in concluding that the claimant's submissions were clearly unfounded is a more exacting one. She must ask herself, "Is it clear there are no real prospects of success for an appeal if these matters were presented to a tribunal?" In my judgment, the Secretary of State could not lawfully so conclude. It follows that in my judgment, certainly when one takes into account the positive findings in HC, that the Secretary of State was not entitled to come to the view that the further submissions before him on 10 May constituted a clearly unfounded Article 3 claim. I should add by way of a coda that there were subsequent proceedings in the HC case. Reconsideration was ordered and the matter was ultimately appealed to the Court of Appeal. In the Court of Appeal, the case was settled. However, the statement of reasons included this acceptance by the Secretary of State: "Given the appellant's particular personal history, the tribunal was entitled to find that he could not relocate within Jamaica." I appreciate, as Mr Poole reminds me, that one must be very careful in extrapolating from the facts of one case to the facts of another. It may well be that on closer examination there are significant differences between the personal circumstances and personal history of HC and the current claimant but nonetheless in my view, Mr Buley is entitled to take some comfort from that comment. A person who has at least some overlapping features with those of the claimant was found or accepted by the Secretary of State not to be able to avoid the risk of ill-treatment by relocating within Jamaica. I am far from saying that the conclusion is in any way binding on either the Secretary of State or some future tribunal but it does add colour to the more general comment in AB that whether or not relocation within Jamaica is a viable alterative depends on an examination of all the circumstances. Because of the view I have taken in relation to Article 3, it is not in my judgment, and Mr Buley did not seek to dissuade with me from this view, necessary to dwell on whether the Secretary of State was entitled to say that the Article 8 submissions were also clearly unfounded. As and when this matter is reconsidered by the tribunal, that of course may well be a matter for them to reflect on. For all of these reasons, the application succeeds. The parties were agreed that if I was of that view, then notwithstanding the claimant has in the meantime been removed to Jamaica, I should quash the Secretary of State's certificate that the human rights claim was clearly unfounded. In my judgment, the Secretary of State could not rationally certify the claim. I will hear from the parties as to precisely what order ought to be made but it will include a provision that the Secretary of State take reasonable steps to bring the claimant back to the UK. I again emphasise this does not mean that the claimant will necessarily be entitled to remain in the UK. All I have decided is that the Secretary of State was obliged to reach a decision that gave him access to a fresh appeal before what is now the First-tier tribunal. MR BULEY: My Lord, I am very grateful. Can I mention two points for the transcript first. Your Lordship (Inaudible) particularly made a point that it is a fresh claim throughout the judgment. I am afraid it is actually a certification. MR JUSTICE NICOL: It is a certification. MR BULEY: I am sure your Lordship knows about BA (Nigeria), so it was an application to revoke (Inaudible). MR JUSTICE NICOL: I see. I am sorry about that, I had not picked that up. I suppose I ought to ask both of you whether you think it makes any difference. I am sure you will say no, but Mr Poole? MR POOLE: My Lord, no, it does not make any material difference. MR JUSTICE NICOL: I am grateful to Mr Buley for pointing that out. If anybody needs a transcript and if I am asked to correct a transcript, I will try to make sure it refers to a certificate rather than a fresh claim. The test for whether the Secretary of State can certify or whether he has to recognise something as a fresh claim is indistinguishable. MR BULEY: There has been a long running debate about whether there is any difference at all. YH is the (Inaudible) says there is not, so there it is. MR JUSTICE NICOL: Thank you very much. MR BULEY: My Lord, the second point on the transcript. This is a different kind of point and I am in your Lordship's hands about it. Your Lordship very carefully avoided reference to names of individuals and I am grateful for that. For reasons which are similar, in terms of the concerns which arise from them, I do not know whether your Lordship in the transcript would be willing to replace references to the Gem Street Gang with GSG or something of that kind. MR JUSTICE NICOL: I think that is unavoidable because the Gem Street Gang (Inaudible) I am not sure -- MR BULEY: My concern it is not -- if someone reads the judgment and they know about the case, they are obviously going to work out who this is, there is no question about that. Having a reference of that kind may make it just that little bit more (Inaudible). I am not going to press it further, I am in your Lordship's hands. In terms of the order, if I deal with that. I have predictable applications for costs. MR JUSTICE NICOL: Shall we deal with that now? Mr Poole, what do you want to say about costs? MR POOLE: No, certainly with principle costs, nothing. MR JUSTICE NICOL: I will order that the Secretary of State pay the claimant's costs to be assessed if not agreed. Are you legally aided as well? MR BULEY: Yes. MR JUSTICE NICOL: I will order a detailed assessment of the claimant's publicly funded costs as well. The claimant's solicitor to be at liberty to indicate if he wishes to waive that right as sometimes happens when the party costs (Inaudible) give him everything he wants. MR BULEY: That is new on me but I am grateful for that. There are some other bits of the order hopefully not too controversial but not utterly straightforward. If I just run through them (Inaudible). MR JUSTICE NICOL: Yes. MR BULEY: This is all routine. First of all, claim allowed, decision of 10 May, quashed. MR JUSTICE NICOL: I am not going to quash the Secretary of State's own refusal. What I am quashing is the certificate. MR BULEY: Yes (Inaudible). MR JUSTICE NICOL: And -- wait a minute, if I quash the certificate -- MR BULEY: The one point which occurs to me about that, and I am fairly neutral about it, but I am just worried about running time limits and so fourth. It may be safe -- I do not know if my learned friend has thoughts about it. Certainly one must quash the certificate (Inaudible). MR JUSTICE NICOL: If this is a certificate, it is a certificate because there were there was an immigration decision taken to refuse to revoke the deportation order. MR BULEY: Yes, exactly, and that is a decision of 10 May. Plainly he is perfectly entitled to make another decision to that effect, he is just not entitled to certify it (Inaudible) but I confess I started wondering that when your Lordship gave judgment. MR JUSTICE NICOL: What I want to achieve, Mr Poole, as you will gathered from my judgment, is that the claimant has another opportunity to appeal before the first tier tribunal. MR POOLE: Yes. MR JUSTICE NICOL: Can you and Mr Buley give some thought as to what is the necessary order for me to make in order to achieve that? What I would not want is for there to be some procedural argument, for instance as to whether a decision not to revoke a deportation order can be appealed after the deportation order has been fulfilled. MR POOLE: My Lord, no. Certainly -- MR JUSTICE NICOL: Also the timing point. MR POOLE: Yes. MR JUSTICE NICOL: Again, it seems to me that while I cannot order you in unqualified terms to bring the claimant back because that is not within your power, I can order you to take reasonable steps to do so and if this can be achieved, it might be sensible for time to run from any appeal as from the time he comes back to the UK. I am not saying that has to be the case. I do not know how closely contactable he is and how quickly he could be brought back. If you are only talking about a day or two, it may not make any difference. MR POOLE: I feel we will probably not simply for this reason; the claimant was removed on an emergency travel document. MR JUSTICE NICOL: So he has to get another travel document? MR POOLE: Yes. I am not saying that is going to take weeks but having said that, I am certainly not in a position to say until contact has been established with the Jamaica High Commission and the documentation prepared. I do not know how long it will be. MR JUSTICE NICOL: Is he going to be able to get a plane ticket? I suppose that is something the Secretary of State could perhaps help him arrange without a visa. Can I ask the two of you to co-operate sensibly as I am sure you will on how this order ought to be framed? MR POOLE: Yes. MR JUSTICE NICOL: I am not going to ask you to do it at 4.50 pm on a Friday evening but I am going to ask you to do it pretty quickly and, if possible, can we say by Wednesday morning next week? MR BULEY: For my purposes (Inaudible) we will want him back quickly, we will have to try a little bit more (Inaudible) if your Lordship said by Monday or even Tuesday. I do not think there is too much thinking to be done. MR JUSTICE NICOL: Think about the order I should make in terms of what has actually been done in the past. That may be the easy part but what needs to be done in the future may need more thought. MR BULEY: That seem to be a perfectly sensible (Inaudible). Can I just mention a couple of other quick things arising from it? MR JUSTICE NICOL: Yes. MR BULEY: First of all, one would hope, it is not for your Lordship to say anything now but just put down (Inaudible), that the drawing of the order need not delay (Inaudible) to taking steps. I just mention that (Inaudible) there it is. My Lord, two other aspects of the order I need to mention to you now, if I may. First of all, I will not go to the wall on this but we say we are entitled to a declaration that the Article 3 claim is not manifestly unfounded. Whether I need a declaration, I do not know. MR JUSTICE NICOL: I think that is part of your discussions with Mr Poole. MR BULEY: I am perfectly content with that. Secondly, my Lord, I think I used the phrase, "Previously best endeavours." Your Lordship uses the phrase reasonable steps and I think Mr Poole would press you to that. I do say that best endeavours is appropriate and can make a difference. Plainly there is no absolute entitlement, I entirely accept that, that must be right, but best endeavours is appropriate in my submission in a case where on the basis of what your Lordship has held, my client's life is presently at risk from a (Inaudible) in Jamaica. MR JUSTICE NICOL: I think the phrase, "All reasonable steps," will be interpreted in the context of a client who arguably has an Article 3 risk where he is now. MR BULEY: There it is. MR JUSTICE NICOL: But at the same time, the Secretary of State cannot achieve what is impossible. MR BULEY: No, that is plainly right and even best endeavours have that effect but anyway -- MR JUSTICE NICOL: All reasonable steps. MR BULEY: May the order also include liberty to apply. There have been cases where (Inaudible) so I would ask for that. I understand Mr Poole does not object to that. MR JUSTICE NICOL: It is not usual to have liberty to apply in a final order. MR BULEY: It is not but it is not usual to have final orders of this kind. If problems are thrown up, much better to have that and it is not impossible that questions -- MR JUSTICE NICOL: What I suggest is that there be there be liberty to apply in relation only to that part of the order concerned with bringing him back. MR BULEY: That is all I am asking, I am very grateful. My Lord, that is all I wanted to mention. I am sorry to take up time at the end of the day. MR JUSTICE NICOL: Mr Poole, is there anything you want to raise? MR POOLE: My Lord, no, as far as the section (Inaudible) is concerned. Certainly I hear what my learned friend says about time and I agree, practicalities. If your Lordship is saying by Wednesday, certainly we will liaise and try to do it sooner than that. If Wednesday next week would be convenient (Inaudible). MR JUSTICE NICOL: This is about drawing up a formal order. If the Secretary of State is able to take steps in conjunction with the claimant's representatives before then and including this evening then that is all the more desirable. MR POOLE: Yes. MR JUSTICE NICOL: Thank you both very much and I am sorry I have had to keep everybody in court rather longer than I would have liked to on a Friday evening.

Case C-86/03 Hellenic Republic v Commission of the European Communities (Action for annulment – Commission’s refusal to authorise the use of heavy fuel oils with a maximum sulphur content of 3% by mass in part of Greek territory – Directive 1999/32/EC – Sulphur content of certain combustible liquids) Summary of the Judgment 1. Environment – Atmospheric pollution – Directive 1999/32 – Reduction of the sulphur content of heavy fuel oils – Maximum sulphur content of certain combustible liquids – Derogation – Conditions for granting – Refusal by the Commission to authorise the use of heavy fuel oils with a maximum of sulphur content of 3% by mass – Contribution of emissions to exceeding the critical load in a Member State – Extent of the contribution and its role in exceeding the critical load – No effect – Principle of the protection of legitimate expectations – Infringement – None (EC Treaty, Art. 189a and 189c (now Arts 250 EC and 252 EC); Council Directive 1999/32, Art. 3(2); Commission Decision 2003/3) 2. Environment – Atmospheric pollution – Directive 1999/32 – Reduction of the sulphur content of certain combustible liquids – Maximum sulphur content of heavy fuel oils – Derogation – Conditions for granting – No contribution by emissions to critical loads being exceeded in the Member States – Principle of proportionality – Infringement – None (Council Directive 1999/32, Art. 3(2)) 1. The Commission’s decision rejecting a request by a Member State to authorise the use of heavy fuels with a maximum sulphur content of between 1% and 3% by mass on a part of its territory does not infringe either Article 3(2) of Directive 1999/32 relating to a reduction in the sulphur content of certain liquid fuels or the principle of the protection of legitimate expectations. First, according to the actual wording of Article 3(2), authorisation for the use of heavy fuel oils is subject, in addition, to the condition of compliance with air quality standards set for sulphur dioxide in the relevant Community legislation, to a second condition, according to which the sulphur dioxide emissions ‘do not contribute to critical loads being exceeded in any Member State’, although that provision does not specify the amount of that contribution or its role in exceeding critical loads. Nothing in the text of that provision supports the conclusion that a derogation may be granted where the contribution is not decisive for the exceeding of the critical loads, or where the contribution, although detectable, does not exceed a particular threshold. Second, as regards the principle of the protection of legitimate expectations, it cannot be accepted that a communication submitted by the Commission together with a draft directive, even where that communication is mentioned in the recitals in the preamble to that directive, gave rise to a legitimate expectation that the policies contained in it would be adhered to, where it is clear from Articles 189a and 189c of the EC Treaty (now Articles 250 EC and 252 EC) that the Commission may amend such a proposal at any time and that the Council may adopt an act constituting an amendment to the proposal. (see paras 58, 72) 2. The Council cannot be criticised for infringing the principle of proportionality by making an authorisation to use heavy fuel oils with a sulphur content of more than 1% by mass subject to strict conditions, such as those laid down in Article 3(2) of Directive 1999/32, relating to a reduction in the sulphur content of certain liquid fuels. Given that the sulphur present in oil has for decades been recognised as the main source of sulphur dioxide emissions, which are largely responsible for the acid rain and air pollution experienced in many urban and industrial areas, and the transboundary nature of the problem of acidification, that measure is capable of achieving the objective pursued by the directive, namely to reduce emissions of sulphur dioxide resulting from the combustion of certain types of liquid fuels. As regards, more particularly, the need for strict application of the condition in Article 3(2) relating to the emissions’ contribution to critical loads in the Member States being exceeded, the Council, having regard, in particular, to the effects of sulphur dioxide emissions on human health and on the environment and to the important contribution of those emissions to the transboundary problem of acidification, was able, without committing a manifest error of assessment, to take the view that it was necessary to make the grant of derogations for the use of heavy fuel oils with a sulphur content of more than 1% by mass subject to the condition that the sulphur emissions of a Member State do not contribute to critical loads being exceeded in the territory of the Member States, even if the economic costs of such a measure may be substantial and even if that contribution does not significantly contribute to the deterioration of the situation in the Member States. The importance of the objectives pursued is such as to justify even substantial negative financial consequences for certain operators, a fortiori, since the protection of the environment constitutes one of the essential objectives of the Community. (see paras 90-93, 95-96) JUDGMENT OF THE COURT (First Chamber) 15 December 2005 (*) (Action for annulment – Commission’s refusal to authorise the use of heavy fuel oils with a maximum sulphur content of 3% by mass in part of Greek territory – Directive 1999/32/EC – Sulphur content of certain combustible liquids) In Case C-86/03, ACTION for annulment under Article 230 EC, brought on 26 February 2003, Hellenic Republic, represented by P. Mylonopoulos and A. Samoni-Rantou, acting as Agents, with an address for service in Luxembourg, applicant, v Commission of the European Communities, represented by M. Konstantinidis and G. Valero Jordana, acting as Agents, with an address for service in Luxembourg, defendant, supported by: Council of the European Union, represented by S. Kyriakopoulou and B. Hoff-Nielsen, acting as Agents, intervener, THE COURT (First Chamber), composed of P. Jann, President of the Chamber, N. Colneric, J.N. Cunha Rodrigues (Rapporteur), M. Ilešič and E. Levits, Judges, Advocate General: A. Tizzano, Registrar: H. von Holstein, Deputy Registrar, having regard to the written procedure and further to the hearing on 28 April 2005, after hearing the Opinion of the Advocate General at the sitting on 16 June 2005, gives the following Judgment 1 By its application the Hellenic Republic seeks the annulment of Commission Decision 2003/3/EC of 17 December 2002 on a request from Greece for authorisation to use heavy fuel oils with a maximum sulphur content of 3% by mass in part of its territory (OJ 2003 L 4, p. 16) (‘the contested decision’). In the alternative, it seeks a declaration, on the basis of Article 241 EC, that Council Directive 1999/32/EC of 26 April 1999 relating to a reduction in the sulphur content of certain liquid fuels and amending Directive 93/12/EEC (OJ 1999 L 121, p. 13) (‘the Directive’) is inapplicable. Legal and factual background The Directive 2 Article 1(1) and (2) of the Directive, which was adopted on the basis of Article 130s of the EC Treaty (now, after amendment, Article 175 EC), provides: ‘1. The purpose of this Directive is to reduce the emissions of sulphur dioxide resulting from the combustion of certain types of liquid fuels and thereby to reduce the harmful effects of such emissions on man and the environment. 2. Reductions in the emissions of sulphur dioxide resulting from the combustion of certain petroleum-derived liquid fuels shall be achieved by imposing limits on the sulphur content of such fuels as a condition for their use within the territory of the Member States. …’ 3 According to Article 3(1), (2) and (5) of the Directive: ‘1. Member States shall take all necessary steps to ensure that as from 1 January 2003 within their territory heavy fuel oils are not used if their sulphur content exceeds 1.00% by mass. 2. Provided that the air quality standards for sulphur dioxide laid down in Directive 80/779/EEC … or in any Community legislation which repeals and replaces these standards and other relevant Community provisions are respected and the emissions do not contribute to critical loads being exceeded in any Member State, a Member State may authorise heavy fuel oils with a sulphur content of between 1.00 and 3.00% by mass to be used in part or the whole of its territory. Such authorisation shall apply only while emissions from a Member State do not contribute to critical loads being exceeded in any Member State. … 5. If a Member State avails itself of the possibilities referred to in paragraph 2, it shall, at least 12 months beforehand, inform the Commission and the public. The Commission shall be given sufficient information to assess whether the criteria mentioned in paragraph 2 are met. The Commission shall inform the other Member States. Within six months of the date on which it receives the information from the Member State, the Commission shall examine the measures envisaged and, in accordance with the procedure set out in Article 9, take a decision which it shall communicate to the Member States. This decision shall be reviewed every eight years on the basis of information to be provided to the Commission by the Member States concerned in accordance with the procedure set out in Article 9.’ 4 According to Article 2(6), for the purposes of the Directive ‘critical load means a quantitative estimate of exposure to one or more pollutants below which significant harmful effects on sensitive elements of the environment do not occur according to current knowledge’. 5 Article 9 of the Directive states: ‘The Commission shall be assisted by a committee of an advisory nature composed of the representatives of the Member States and chaired by the representative of the Commission. The representative of the Commission shall submit to the committee a draft of the measures to be taken. The committee shall deliver its opinion on the draft, within a time-limit which the chairman may lay down according to the urgency of the matter, if necessary by taking a vote. The opinion shall be recorded in the minutes; in addition, each Member State shall have the right to ask to have its position recorded in the minutes. The Commission shall take the utmost account of the opinion delivered by the committee. It shall inform the committee of the manner in which its opinion has been taken into account.’ The contested decision 6 It is clear from the recitals in the preamble to the contested decision that the procedure which led to its adoption was conducted as follows. 7 On 17 December 2001, the Hellenic Republic sought, on the basis of Article 3(2) of the Directive, the Commission’s consent to use heavy fuel oils with a maximum sulphur content of 3% by mass in the whole of its territory with the exception of the Attica Basin (third recital). 8 On 23 January 2002, the Commission requested further information from the Greek authorities which it received on 19 February 2002. On 4 June 2002, the Greek Government amended its request and applied for a temporary derogation until 2008 with a review for the remaining period (fourth recital). 9 According to the seventh recital, Greece submitted, inter alia, that it makes virtually no contribution to the deposition of sulphur or to critical loads for acidity being exceeded in other Member States. It acknowledges that it contributes 1% of the sulphur deposition in Italy. 10 The Commission requested the help of the cooperative programme for monitoring and evaluation of the long-range transmission of air pollutants in Europe (‘EMEP’). For that purpose, the Norwegian meteorological institute (Meteorological Synthesising Centre – West, ‘the Institute’) conducted a more detailed analysis of the Greek contribution to sulphur deposition, particularly in Italy, where critical loads for acidity are exceeded in 5% of the ecosystems sensitive to acidification (eighth recital). 11 The results of that investigation, which are set out in two reports of 22 February and 22 March 2002, show that Greek emissions contribute to critical loads for acidity being exceeded in at least six grid squares where it was established that critical loads have been exceeded. In those grid squares, the contribution from Greece does not exceed 0.5% and EMEP thereby concluded that that analysis is consistent with calculations that attribute to Greece 1% of the total sulphur deposition in Italy (9th and 10th recitals). 12 The advisory committee referred to in Article 9 of the Directive (‘the advisory committee’) met for the first time on 15 April 2002. It is common ground that during the meeting the committee declared itself to be in favour of the Commission’s draft decision to refuse the Greek Government’s request. 13 According to the 11th recital, the Greek Government asked the Commission, on 5 July 2002, to reconsider its request on the ground that the notification already submitted was incomplete and that additional information would be submitted by the end of July. By letter of 15 July 2002, the Commission requested the Greek authorities to provide the information promised as soon as possible, stating that the period of six months laid down in Article 3(5) of the Directive would start to run when such information was received. 14 On 30 July 2002, the Greek authorities submitted data on sulphur dioxide emissions in Greece for 2000 and suggested that their request should be examined on the basis of that data. On 3 October 2002, the Greek authorities also submitted a recent assessment of the level of protection of ecosystems in Italy taking account of the Greek contribution to critical loads for acidity being exceeded (12th recital). 15 It is clear from the 13th recital that EMEP, supported by the Coordination Centre for Effects on Mapping of Critical Levels and Loads (‘CCE’), confirmed the earlier conclusion that Greek emissions of sulphur dioxide, as reported by Greece for the year 2000, contribute to critical loads for acidity being exceeded in Italy. The results are summarised in a report of 19 November 2002, according to which it is substantiated beyond any reasonable doubt that Greek emissions do in fact contribute to excess deposition above the critical loads for acidification in other Member States, particularly in Italy. 16 In the light of the data submitted by the Hellenic Republic on ambient air quality and the analysis conducted by EMEP supported by CCE on the Greek contribution to critical loads being exceeded, the Commission, by the contested decision, refused to grant the derogation requested by the Hellenic Republic on the ground that the condition relating to critical loads being exceeded had not been satisfied (14th recital). 17 Finally, it appears from the 15th recital that the contested decision is in accordance with the opinion issued by the advisory committee at the meeting held on 10 December 2002. Forms of order sought 18 The Greek Government claims that the Court should: – annul the contested decision; – declare, in the event that the interpretation of the Directive put forward by the Commission is accepted, that the Directive is inapplicable on the basis of Article 241 EC; – order the Commission to pay the costs. 19 The Commission contends that the Court should: – dismiss the action; – order the Hellenic Republic to pay the costs. 20 By order of 10 September 2003, the Council of the European Union was granted leave to intervene in support of the Commission’s arguments. It asked the Court to dismiss the Hellenic Republic’s request for a declaration that the Directive is inapplicable on the basis of Article 241 EC as inadmissible and to order the applicant to pay the costs. The action 21 In support of its annulment action, the Greek Government relies on four pleas: infringement of the rights of the defence, infringement of Article 3(2) of the Directive, failure to comply with the principle of the protection of legitimate expectations and infringement of the principle of proportionality. The first plea: infringement of the rights of the defence Arguments of the parties 22 The Greek Government observes that, according to settled case-law, respect for the rights of the defence constitutes a fundamental principle of Community law. In particular, before a decision is adopted the party concerned must be informed in order to have a reasonable period in which to prepare his defence and should be sent an exact and complete statement of the complaints against him, together with a statement of the facts and considerations on which the decision is to be based. That was not the position in this case, particularly in the light of the conduct of the procedure before the advisory committee at its meeting on 10 December 2002. 23 First of all, as neither the notice of the meeting and the Commission’s draft decision nor the documents on which the Commission based its draft were sent to the national delegations until Wednesday 4 December 2002 at 14.30 and 5 December 2002 at approximately 11.00 respectively, the Greek Government had only two clear working days to prepare its defence. Thus, the advisory committee failed to observe the time-limits laid down in its own draft rules of procedure, according to which the notice of the meeting and any working documents must be sent at least 14 days in advance, except in urgent cases and where the measures envisaged are to be applied immediately, in which case the time-limit is reduced to five days before the date of the meeting. In this case, there was no justification for the use of the emergency procedure. 24 Second, the documents submitted to the advisory committee did not contain the update of an information note from the Commission Directorate-General for the Environment, of 10 December 2002 (‘the note of 10 December 2002’), in which the Commission acknowledged that the Greek contribution to critical loads being exceeded in other Member States might depend on the mathematical model used in the investigation. 25 Third, the composition of the advisory committee was substantially changed between the meeting on 15 April 2002 and the meeting on 10 December 2002. Only two members took part in both meetings. According to the Greek Government, the members who took part in the second meeting were unable to fully acquaint themselves with the facts considered, so that the procedure is also invalid for that reason. 26 Fourth, the minutes of the advisory committee’s meeting of 10 December 2002 were not sent to the Greek authorities for comment until 20 December 2002, that is three days after the contested decision was adopted, and contained a number of inaccuracies and/or omissions of substance having a direct relationship, in particular, with the data submitted by EMEP. In accordance with the advisory committee’s draft rules of procedure, any disagreement must be discussed and, where appropriate, inserted in an annex to the minutes so that the Commission is fully informed of the various points of view before adopting its decision. That is a fortiori so since, according to Article 9 of the Directive, the Commission must take the utmost account of the opinion delivered by the advisory committee. 27 The Commission contends that the procedure laid down in Article 3(5) of the Directive is instituted at the request of a Member State and that, by that request, the Member State has all the time necessary in which to express its views on the decision it seeks to have adopted, as is clearly apparent from that provision. Moreover, the Greek Government asked for and obtained a second review of its request on the basis of new data which it had itself submitted to the Commission. The principle that the parties should be heard is not applicable to a procedure of this kind. In those circumstances, the plea based on infringement of the rights of the defence is unfounded. 28 In any event, the complaints relating to the notice of the advisory committee meeting, its composition and the content of the minutes of its meeting must be dismissed. 29 The Commission observes in that connection that, following the request by the Greek authorities in June 2002 for a review of its position, it sent the Greek authorities the notice of the meeting, the agenda and the revised draft decision on 4 December 2002, together with the scientific assessment of the data provided by the government the following day, that is five days before the meeting on 10 December 2002, in accordance with the committee’s draft rules of procedure. The urgency of the situation was justified, in particular, by the fact that a decision had to enter into force by 1 January 2003. The Greek authorities could have submitted their counter arguments in writing at the meeting of 10 December 2002. 30 As regards the note of 10 December 2002, it is an internal document drafted after that meeting which does not contain any new matters which could have changed the course of the meeting. 31 The composition of the advisory committee is a matter for the Member States’ discretion. 32 Finally, as to the contentions relating to the minutes of the advisory committee’s meeting, the Commission replies that the only objections to the revised draft minutes distributed to the national delegations were by the Greek delegation on 17 February 2003, that they did not concern ‘substantial inaccuracies’ and that, in any event, the point of view expressed in the advisory committee’s opinion and taken into consideration by the Commission is that of the majority not the minority on the committee. Findings of the Court 33 As the Advocate General observes, in point 28 of his Opinion, the complaints set out by the Greek Government in its first plea do not concern the application of the principle of the respect for the rights of the defence of the Member State concerned in its relations with the Commission, but the proper conduct of the procedure before the advisory committee, so that it is unnecessary to examine whether and to what extent the principle applies to a procedure such as that laid down in Article 3(5) of the Directive. 34 As regards the first complaint, that the periods were too short between the notice of the advisory committee’s meeting and the transmission of the relevant documents received on 4 and 5 December 2002, on the one hand, and the meeting of 10 December 2002, on the other, it must be observed that Article 9 of the Directive does not require a specific time-limit to be observed for the transmission of the notice of a meeting, the agenda, the draft measures on which an opinion is requested and any other working document of the advisory committee before its meetings are held. That article merely provides that the advisory committee is to deliver its opinion on draft measures which are submitted to it by the Commission ‘within a time-limit which the chairman may lay down according to the urgency of the matter’. 35 Furthermore, the committee’s draft rules of procedure, relied on by the Greek Government in support of its argument, apart from the fact that they are not in force, provided, in any event, for the possibility of reducing the time-limit for the notice of the meeting and the transmission of working documents to five days in urgent cases. 36 Contrary to the Greek Government’s submissions, this case was urgent in so far as economic operators in Greece had to know whether on 1 January 2003, the date on which the Directive required Member States to stop using heavy fuel oils with a sulphur content greater than 1%, they could continue to use fuel oils whose sulphur content did not satisfy the requirements of Article 3(1) of the Directive. 37 Although the Greek authorities submitted the further information requested to the Commission on 3 October 2002, and although EMEP’s report summarising the assessment of that information reached the Commission on 21 November 2002, the use of short deadlines was necessary in order that the Commission’s decision, which had to take the utmost account of the committee’s opinion, could be adopted before the end of 2002. 38 The first complaint is therefore unfounded. 39 As regards the second complaint, alleging failure to send the note of 10 December 2002 to the advisory committee members to enable them to prepare effectively for the meeting of that date, it suffices to observe that the Greek Government does not deny that it is a purely internal document which was drawn up after the meeting in the course of the Commission’s decision-making procedure. Therefore, that complaint is also unfounded. 40 As regards the third complaint, alleging a change in the composition of the advisory committee between its first and second meetings, it must be observed that, in accordance with the first paragraph of Article 9 of the Directive, the appointment of representatives of the Member States to the advisory committee is within the Member States’ discretion, although they are not required to ensure that the same persons take part in the various meetings on the same request for an opinion. 41 As far as concerns the fourth complaint, relating to the supposedly late transmission to the Greek delegation of the minutes of the meeting of 10 December 2002, it should be made clear, first, that the third and fourth paragraphs of Article 9 of the Directive provide simply that the advisory committee’s opinion is to be recorded in the minutes, that each Member State may ask for its position to be recorded in the minutes and that the Commission must take the utmost account of that opinion. Second, the advisory committee’s draft rules of procedure, relied on by the Greek Government in support of its complaint, apart from the fact that they were not in force, stated only that the minutes are to be sent to the committee members within 15 working days of the meeting and that they are to inform the president in writing of any comments they may have, which are discussed by the advisory committee and, in the event of continuing disagreement, are to be annexed to the minutes. 42 In any event, even assuming that sending the draft minutes of the meeting of 10 July 2002 to the national delegations three days after the adoption of the contested decision constitutes a procedural irregularity, an irregularity of that nature would not entail the annulment of that decision, in so far as it is not established that, were it not for that irregularity, that decision, which was adopted in conformity with the decision delivered by the committee, could have led to a different result (see, to that effect, Joined Cases C-465/02 and C-466/02 Germany and Denmark v Commission [2005] ECR I-0000, paragraph 37). 43 In those circumstances, that complaint is also unfounded. 44 Since none of the four complaints relied on by the Greek Government in support of its first plea is well founded, that plea must be dismissed. The second plea: infringement of Article 3(2) of the Directive Arguments of the parties 45 The Greek Government claims, first of all, that Greece’s contribution to critical loads being exceeded is based on a projection that has not been verified by measurements, and that the results of EMEP’s analyses do not show that the second condition for the grant of a derogation, pursuant to Article 3(2) of the Directive, is not satisfied. It argues that, contrary to what is stated in the 13th recital in the preamble to the contested decision, it is not clear from EMEP’s report of 19 November 2002 and it is not established ‘beyond all reasonable doubt’ that the Greek emissions do in fact contribute to excess deposition above the critical loads for acidification in Italy. That statement is not part of the report, but appears only in an accompanying letter and expresses the author’s personal opinion, namely that of the Director-General of the Institute. 46 At the time of the procedure for the adoption of the Directive, EMEP’s reports for 1997 and 1998 estimated the amount of the Greek contribution to the sulphur depositions in Italy at zero. As regards the contributions for 2002, currently regarded as ‘existing’ but ‘negligible’, the amount of between 0.1 and 0.2% is derived from the method of calculation now used by EMEP and the Commission. Applying the method of calculation used in 1998 to the data currently available, the Greek contribution to critical loads being exceeded in each of the grid squares in northern Italy is 0%. The derogation mechanism can function properly only if account is taken of the scientific background against which the Directive was adopted, and the possibility of a derogation must be interpreted in the light of the information, data, models and scientific methods and techniques which were used during the procedure for the adoption of the Directive. 47 The Greek Government further submits that by applying a method of calculation different from that used in 1998, the Commission has substantially modified the scope of the Directive, which it could not do without complying with the cooperation procedure in Article 189c of the EC Treaty (now Article 252 EC) under which the Directive was adopted. 48 In any event, a deposition, in the technical sense of the word, of such a low level (below 0.5%) cannot be equivalent to a ‘contribution’ within the meaning of Article 3(2) of the Directive. Furthermore, the Commission wrongly submits that it is unnecessary for the contribution to be decisive for exceeding of the critical loads and that a finding of a contribution is sufficient in itself to justify a refusal to grant a derogation. The Directive’s aim is primarily to protect ecosystems from the harmful consequences of sulphur dioxide emissions. Having regard to its wording, that provision concerns emissions capable of contributing to critical loads being exceeded in a particular ecosystem, so that the refusal of a request presupposes that it is established beyond any doubt that sulphur depositions from that Member State in an EMEP grid square in which it has been observed that critical loads have been exceeded are decisive for those loads being exceeded. 49 A coherent interpretation of the Directive shows that the benefit of the derogation laid down in Article 3(2) may be refused only if that refusal results in an increase in the number of protected ecosystems. None of the unprotected ecosystems in the six EMEP grid squares in which it has been observed that critical loads were exceeded, and which might be affected by the sulphur dioxide depositions from Greece, will be protected as a result of the refusal of the request for a derogation. Furthermore, accepting the request would not have the effect of removing protection from a protected ecosystem in the grid squares. 50 Furthermore, the EMEP standard referred to by the Commission is a mathematical model for which there is no threshold below which the hypothetical deposition is ‘undetectable’. The Greek Government argues that it is necessary to ensure the effective application of the possibility for a derogation, the importance of which is noted by the Directive. The consequence of the interpretation put forward by the Commission is that no Member State may benefit from a derogation where its emissions contribute in any manner whatsoever to the depositions in the regions of a Member State in which the critical loads have been exceeded. 51 The Commission argues that the Directive refers to a ‘contribution’ whether large or small. The Directive does not have a concept of ‘technical deposition under 0.5%’ as opposed to the concept of ‘contribution’. It is not necessary that that contribution be decisive for the exceeding of critical loads since the finding of a contribution is sufficient to justify refusing to grant a derogation. Communication COM(97) 88 final of the Commission to the Council and the Parliament of 12 March 1997 on a Community strategy to combat acidification (‘the communication on acidification’), cited in the ninth recital in the preamble to the Directive concerning the derogation provided for in Article 3(2), does not refer to the law in force, and the Council deliberately made the conditions for the grant of derogations more strict in the text which was finally adopted. Thus the Greek Government cannot reasonably rely on that communication in support of its argument. 52 The Greek contribution is shown by the updated results of projections relying on general knowledge of atmospheric processes of long-range transfer acquired by the scientific community over the last 30 years. A projection is necessary for calculating the contribution to pollution in each Member State for the purpose of the Directive. The Institute is the scientific centre best placed to determine whether sulphur dioxide emissions originating in a Member State contribute to critical loads being exceeded in another Member State. 53 The findings in the EMEP reports demonstrate the existence of a sulphur deposition from Greek emissions which contributes to raising depositions to the point where critical loads of acidification are exceeded in the territory of other Member States, particularly in Italy. The contested decision is based on data on emissions for 2000 and 2001. The Greek contribution to the sulphur deposits in Italy is certainly small but not negligible. For three Member States, namely the Grand Duchy of Luxembourg, the Republic of Finland and the Kingdom of Sweden, the sulphur depositions in Italy are stated to be zero. 54 The Commission contends that the interpretation it supports does not alter the effectiveness of the provision at issue and respects the wording and the objective pursued by the Directive. The derogation may apply either where the requesting Member State’s contribution is zero, as a result of a deposition lower than the detection limits of the EMEP standard, or where the critical loads in the other Member States have not been exceeded, a situation which is neither theoretical nor without foundation. 55 Finally, the Commission points out that it merely applied the provisions of the Directive so that Article 252 EC was not infringed. Findings of the Court 56 By its arguments, the Hellenic Republic essentially challenges (i) the Commission’s interpretation of the second condition for the grant of a derogation under Article 3(2) of the Directive, namely that ‘the emissions do not contribute to critical loads being exceeded’ in the Member States and (ii) the method of evaluation used by the Commission to record such a contribution and, therefore, the very existence of any sulphur depositions from Greece which contribute to critical loads being exceeded in Italy. 57 First, as regards the interpretation of the condition that there must be no contribution to critical loads being exceeded, within the meaning of Article 3(2) of the Directive, the argument put forward by the Greek Government must be rejected. 58 According to the actual wording of that provision, authorisation for the use of heavy fuel oils with a sulphur content of between 1 and 3% by mass is subject, in addition to the condition of compliance with air quality standards set for sulphur dioxide in the relevant Community legislation, to a second condition, namely that the sulphur dioxide emissions ‘do not contribute to critical loads being exceeded in any Member State’, although that provision does not specify the amount of that contribution or its role in exceeding critical loads. Nothing in the text of that provision supports the conclusion that a derogation may be granted where the contribution is not decisive for the exceeding of the critical loads, or where the contribution, although detectable, does not exceed a particular threshold. 59 A restrictive interpretation of Article 3(2) of the Directive is supported – not only by the rule that exceptions are to be strictly interpreted – but also by an examination of the preparatory documents for the Directive, from which it is clear that although in the draft Council directive the Commission proposed that the derogation could be granted provided that the contribution to transboundary pollution was ‘negligible’, the Council in the Directive made the grant of the derogation subject to the condition that the emissions ‘do not contribute’ to critical loads being exceeded, without distinguishing between cases where the contribution is significant or not and without requiring that it be decisive for the purposes of the exceeding of the critical loads in question. 60 It is true that in the Spanish and Italian versions of Article 3(2) of the Directive it is stated in that same sentence that the emissions must not contribute ‘significantly’ to the critical loads being exceeded in the Member States. However, as the Advocate General pointed out, in point 63 of his Opinion, that terminology cannot prevail as none of the other linguistic versions contains such a notion and, even in the Spanish and Italian versions of the Directive, the second sentence of Article 3(2) provides that such authorisation is to apply only in so far as emissions from a Member State ‘do not contribute to critical loads being exceeded’ in the Member States, without repeating the expression ‘significantly’ which was used earlier. 61 Neither does that finding deprive Article 3(2) of the Directive of its effectiveness, since a derogation from the use of heavy fuel oils with a sulphur content of between 1 and 3% by mass may be obtained where, as the Commission observes, the results of the analyses show zero contribution to the critical loads being exceeded in the Member States or where any exceeding of the critical loads would cease to be recorded in the Member States following, in particular, the implementation of Directive 2001/80/EC of the European Parliament and of the Council of 23 October 2001 on the limitation of emissions of certain pollutants into the air from large combustion plants (OJ 2001 L 309, p. 1). 62 Next, as far as concerns the complaint criticising the method used by EMEP and the Commission to evaluate the contribution to the critical loads being exceeded, it must be observed that, contrary to the Greek Government’s submissions, no provision of the Directive requires the Commission to use a specific method of evaluation, nor, a fortiori, that the method used after the entry into force of the Directive must be that used as a reference in the Directive’s preparatory documents. 63 In those circumstances, the Commission cannot be criticised for relying on the results of analyses undertaken by the Institute using a method of evaluation whose scientific validity is not, otherwise, challenged by the Greek Government. 64 The Greek Government has failed to demonstrate that the Greek contribution to critical loads being exceeded, in particular in Italy, is not confirmed by the updated results relying, as the Director-General of the Institute stated in his accompanying letter of 19 November 2002, on general knowledge of long-distance atmospheric transfer processes which has been acquired by the scientific community over the last 30 years. 65 Contrary to the Hellenic Republic’s submissions, the statement in the 13th recital in the preamble to the contested decision (that it is proved beyond all reasonable doubt that the Greek emissions do in fact contribute to the excess deposits exceeding the critical loads for acidification in other Member States, particularly in Italy), which is contained in the letter from the Director-General of the Institute that carried out the analyses in question, is expressed by the author of that letter in his capacity as Director-General in the light of those analyses. Far from representing his personal opinion, that statement repeats the Institute’s views in the light of the analyses it carried out. 66 In any event, the contested decision was adopted in conformity with the opinion of the advisory committee so that the Community judicature cannot, save in the event of manifest error of fact or law or misuse of power, find fault with such a decision (see, to that effect, Case 216/82 Universität Hamburg [1983] ECR 2771, paragraph 14). However, proof of such an error or misuse of power has not been provided. 67 It is clear from all of the foregoing that the Commission, without infringing either Article 3(2) of the Directive or Article 252 EC, was able to adopt the contested decision, which is in conformity with the advisory committee’s opinion, by basing that decision on the results of the Institute’s analyses, according to which the depositions from Greece contributed to the critical loads being exceeded in a number of regions in Italy, even though that contribution did not exceed 0.5% of the sulphur deposits in question, and that it was not decisive for the critical loads being exceeded. 68 In those circumstances, the second plea must also be dismissed. The third plea: infringement of the principle of the protection of legitimate expectations Arguments of the parties 69 The Hellenic Republic submits that it could reasonably expect to benefit from a derogation under Article 3(2) of the Directive having regard, in particular, to the communication on acidification submitted by the Commission together with the initial proposal for a directive. That communication clearly suggested that the Hellenic Republic was to benefit from such a derogation in the parts of its territory which did not significantly contribute to the acidification problem. The sulphur depositions in Italy attributable to the Hellenic Republic represent in total for the period 1985 to 1996 a contribution which, at the time the Directive was adopted, was, on the basis of the EMEP report for 1998, deemed to be zero in terms of the overall contribution load for sulphur in Italy, a factor which further strengthened the Hellenic Republic’s legitimate expectation that it would be able to benefit from the derogating provision. 70 The Commission replies that the preparatory documents and the communication on acidification which led to the drawing-up of the draft Council directive cannot be regarded as firm assurances giving rise to expectations by the applicant that a particular situation would come into being. It is accepted that draft directives are often amended during the negotiations, which is what happened in this case. Findings of the Court 71 Any trader to whom an institution has given justified hopes may rely on the principle of the protection of legitimate expectations. Further, there is nothing to prevent a Member State from claiming in an action for annulment that an act of the institutions frustrates the legitimate expectations of particular traders (Case C‑342/03 Spain v Council [2005] ECR I-1975, paragraph 47). 72 However, it cannot be accepted that a communication submitted by the Commission together with a draft directive, even where that communication is mentioned in the recitals in the preamble to that directive, gave rise to a legitimate expectation that the policies contained in it would be adhered to, where it is clear from Article 189a of the EC Treaty (now Article 250 EC) and Article 189c of the EC Treaty that the Commission may amend such a proposal at any time and that the Council may adopt an act constituting an amendment to the proposal (see, to that effect, Joined Cases C-13/92 to C-16/92 Driessen and Others [1993] ECR I-4751, paragraph 33), which is in fact the position in this case as regards the conditions in which a derogation may be authorised for the use of heavy fuel oils with a content of more than 1% by mass. 73 Accordingly, since the contested decision did not infringe the principle of the protection of legitimate expectations, the plea to that effect must be dismissed. Fourth plea: infringment of the principle of proportionality Arguments of the parties 74 The Greek Government claims that the principle of proportionality requires a flexible approach to the grant of a derogation under Article 3(2) of the Directive. As the concepts of critical loads, exceeding critical loads and contribution to exceeding critical loads are vague, the very restrictive interpretation applied by the Commission is contrary to any flexibility which takes account of ‘the complexity of the territorial structure of the environmental problems covered’ to which the Commission makes reference in the communication on acidification. 75 The imbalance between the costs of the refusal and the minimal advantages to the environment should have led the Commission to grant the request. The cost borne by the Hellenic Republic is 50 times greater than that which the Italian Republic has to assume in order to reach the same level of environmental protection on its territory. The Commission’s submission would mean that Member States would have to assume substantial and disproportionate costs in order to reduce the sulphur content of heavy fuel oils, although the reduction obtained would not contribute in any way to achieving the environmental objectives pursued by the Directive, since there would be no change in the number of ecosystems exposed in each grid square where it is observed that critical loads are exceeded. Not a single unprotected ecosystem in the Italian region in question would be better protected if the sulphur dioxide emissions from the combustion of heavy fuel oils or any other source in Greece were to disappear. Furthermore, not one of the protected ecosystems in that area would be made vulnerable simply by granting the derogation. Since it is neither desirable nor necessary, the contested decision is contrary to the principle of proportionality. 76 The Greek Government adds that if the Commission’s very restrictive interpretation is in accordance with the spirit of the Directive, that would mean that the Directive itself does not comply with the principle of profitability and that it infringes the principle of proportionality. 77 The Commission argues that the fact that the Council tightened the conditions for granting a derogation, by withdrawing from Article 3 the concept of ‘negligible’ contribution proposed by the Commission, confirms that it does not have discretion when examining an application for a derogation. 78 The Council, for its part, has already taken account of the principle of proportionality. The evidence that the contested provision is appropriate is to be found in the eighth recital in the preamble to the Directive. The need for the measure is also based on the 9th, 10th and 15th recitals in the preamble to the Directive. 79 Furthermore, according to settled case-law, the importance of the objectives pursued may justify adverse economic consequences, and even substantial ones, for certain operators. Only where a measure adopted in the sphere of environmental policy is manifestly inappropriate in relation to the objective that the competent institution intends to pursue may the legality of such a measure be affected, which is not so in this case. Findings of the Court 80 It is clear from examining the plea alleging infringement of Article 3(2) of the Directive that the Commission has no discretion to grant a derogation under that provision where a contribution to exceeding critical loads is recorded, independently of the extent of that contribution and its role in exceeding them. In those circumstances, as the Commission also noted, the question whether the principle of proportionality was observed in this case amounts, in fact, to a challenge to the Directive itself. 81 To the same effect, the Greek Government argues in the alternative that if the interpretation of the Directive put forward by the Commission were accepted by the Court the Directive itself would infringe the principle of proportionality, so that that directive should be declared inapplicable pursuant to Article 241 EC. 82 The Commission and the Council take the view that the Greek Government’s plea that the Directive is unlawful is inadmissible in the absence of any pleas in law in the originating application in support of that plea. 83 That argument cannot be accepted. 84 In its originating application, the Greek Government argued in the alternative that the Community legislature has disregarded the principle of proportionality since the conditions laid down by the Directive for the purposes of the derogation do not comply with the criteria of economic rationality to which the Commission refers in its communication on acidification. 85 The application sets out with sufficient clarity the reasons why the principle of proportionality is infringed. The plea of illegality cannot, therefore, be declared inadmissible on that ground 86 However, even assuming that a Member State were authorised, in the context of an annulment action before the Community judicature, to plead the illegality of a Community directive addressed to it and against which it had not brought an annulment action within the period prescribed for that purpose by the fifth paragraph of Article 230 EC, that plea is, in any case, unfounded. 87 In accordance with the case-law of the Court (see, in particular, Case C-110/03 Belgium v Commission [2005] ECR I-2801, paragraph 61), a breach of the principle of proportionality presupposes that the Community measure imposes on those to whom it is addressed an obligation which goes further than is appropriate and necessary in order to attain the aim pursued by that measure. 88 Furthermore, in view of the need to strike a balance between certain of the objectives and principles mentioned in Article 130r of the EC Treaty (now, after amendment, Article 174 EC), the Directive, having paragraph 1 of Article 130s of the Treaty as its legal basis (which was intended to achieve the objectives of Article 130r), and in view of the complexity of implementing the criteria which the Community legislature must observe in conducting environmental policy, review by the Court must necessarily be limited to the question whether the Council, by adopting the Directive, committed a manifest error of appraisal (see, to that effect, Case C-284/95 Safety Hi-Tech [1998] ECR I-4301, paragraph 37). 89 It should be observed from the outset that, in so far as the Greek Government’s complaints are based on the declarations contained in the communication on acidification, it is common ground that the Council deliberately sharpened the conditions for the grant of a derogation for the use of heavy fuel oils with a sulphur content of more than 1% by mass. Therefore, that communication cannot reasonably be relied on in support of a claim of infringement by the Community legislature of the principle of proportionality. 90 According to Article 1(1) of the Directive, its aim is to reduce the emissions of sulphur dioxide resulting from the combustion of certain types of liquid fuels. For that purpose, Article 3(1) of the Directive provides that heavy fuels with a sulphur content of more than 1% by mass must no longer be used on the territory of the Member States from 1 January 2003. 91 As it is clear, in particular, from the third, fourth and eighth recitals in the preamble to the Directive, the sulphur present in oil has for decades been recognised as the main source of sulphur dioxide emissions, which are largely responsible for the acid rain and air pollution experienced in many urban and industrial areas. Furthermore, the problem of acidification is, as was stated notably in the fifth recital in the preamble to the Directive, a transboundary phenomenon. 92 Making an authorisation to use heavy fuel oils with a sulphur content of more than 1% by mass subject to strict conditions, such as those laid down in Article 3(2) of the Directive, constitutes, therefore, a measure capable of achieving the objective pursued by the Directive. 93 As regards the need for strict application of the condition relating to the emissions’ contribution to critical loads in the Member States being exceeded, the 10th recital in the preamble to the Directive states that ‘studies have shown that benefits from reducing sulphur emissions by reductions in the sulphur content of fuels will often be considerably greater than the estimated costs to industry in this Directive and … the technology exists and is well established for reducing the sulphur level of liquid fuels’. As the Commission argues, that recital was added by the Council to explain that the principle of proportionality was taken into consideration when it tightened the Commission’s proposal. 94 The 15th recital, with regard to the sulphur content of heavy fuel oils authorised by the Directive, in the preamble to the Directive states that it is appropriate to provide for derogations in Member States and regions where the environmental conditions allow. 95 Having regard, in particular, to the effects of sulphur dioxide emissions on human health and on the environment and to the important contribution of those emissions to the transboundary problem of acidification, the Council was able, without committing a manifest error of assessment, to take the view that it was necessary to make the grant of derogations for the use of heavy fuel oils with a sulphur content of more than 1% by mass subject to the condition that the sulphur emissions of a Member State do not contribute to critical loads being exceeded in the territory of the Member States, even if the economic costs of such a measure may be substantial and even if that contribution does not significantly contribute to the deterioration of the situation in the Member States. 96 The importance of the objectives pursued is such as to justify even substantial negative financial consequences for certain operators (see, to that effect, Case C‑331/88 Fedesa and Others [1990] ECR I-4023, paragraph 17, and Case C‑183/95 Affish [1997] ECR I-4315, paragraph 42), a fortiori, since the protection of the environment constitutes one of the essential objectives of the Community (see, in particular, Case C-176/03 Commission v Council [2005] ECR I-0000, paragraph 41, and Case C-320/03 Commission v Austria [2005] ECR I-0000, paragraph 72). 97 Accordingly, the plea alleging that the Directive is unlawful must also be dismissed as being unfounded. 98 Taking account of all of the foregoing, the action must be dismissed in its entirety. Costs 99 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has applied for costs and the Hellenic Republic has been unsuccessful, the Hellenic Republic must be ordered to pay the costs. Pursuant to Article 69(4), the Council must bear its own costs. On those grounds, the Court (First Chamber) hereby: 1. Dismisses the action; 2. Orders the Hellenic Republic to pay the costs; 3. Orders the Council of the European Union to bear its own costs. [Signatures] * Language of the case: Greek.

JUDGMENT OF THE COURT (Grand Chamber) 22 October 2013 ( *1 ) ‛Directive 77/799/EEC — Mutual assistance by the authorities of the Member States in the field of direct taxation — Exchange of information on request — Tax proceedings — Fundamental rights — Limit on the scope of the obligations of the requesting and the requested Member States towards the taxpayer — No obligation to inform the taxpayer of the request for assistance — No obligation to invite the taxpayer to take part in the examination of witnesses — Taxpayer’s right to challenge the information exchanged — Minimum content of the information exchanged’ In Case C‑276/12, REQUEST for a preliminary ruling under Article 267 TFEU from the Nejvyšší správní soud (Czech Republic), made by decision of 3 April 2012, received at the Court on 4 June 2012, in the proceedings Jiří Sabou v Finanční ředitelství pro hlavní město Prahu, THE COURT (Grand Chamber), composed of V. Skouris, President, K. Lenaerts, Vice-President, A. Tizzano, R. Silva de Lapuerta, M. Ilešič, M. Safjan and C.G. Fernlund (Rapporteur), Presidents of Chambers, J. Malenovský, E. Levits, A. Ó Caoimh, J.-C. Bonichot, D. Šváby, M. Berger, A. Prechal and E. Jarašiūnas, Judges, Advocate General: J. Kokott, Registrar: A. Calot Escobar, having regard to the written procedure, after considering the observations submitted on behalf of: — the Czech Government, by M. Smolek and J. Vláčil, acting as Agents, — the Greek Government, by M. Tassopoulou and G. Papagianni, acting as Agents, — the Spanish Government, by A. Rubio González, acting as Agent, — the French Government, by G. de Bergues, D. Colas and J.-S. Pilczer, acting as Agents, — the Polish Government, by B. Majczyna and M. Szpunar, acting as Agents, — the Finnish Government, by S. Hartikainen, acting as Agent, — the European Commission, by C. Barslev, M. Šimerdová and W. Mölls, acting as Agents, after hearing the Opinion of the Advocate General at the sitting on 6 June 2013, gives the following Judgment This request for a preliminary ruling concerns the interpretation of Council Directive 77/799/EEC of 19 December 1977 concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation and taxation of insurance premiums (OJ 1977 L 336, p. 15), as amended by Council Directive 2006/98/EC of 20 November 2006 (OJ 2006 L 363, p. 129) (‘Directive 77/799’), considered in the light of fundamental rights. The request has been made in proceedings between Mr Sabou, a professional footballer, and Finanční ředitelství pro hlavní město Prahu (Tax Directorate for the City of Prague), concerning the amount of his taxable income for 2004. Legal context European Union law Directive 77/799 Directive 77/799 was repealed by Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799 (OJ 2011 L 64, p. 1). However, bearing in mind the date of the facts in the main proceedings, those proceedings are still governed by Directive 77/799. The first and second recitals in the preamble to Directive 77/799 read as follows: ‘Whereas practices of tax evasion and tax avoidance extending across the frontiers of Member States lead to budget losses and violations of the principle of fair taxation and are liable to bring about distortions of capital movements and of conditions of competition; whereas they therefore affect the operation of the common market; Whereas, for these reasons the Council adopted on 10 February 1975 a resolution on the measures to be taken by the Community in order to combat international tax evasion and avoidance …’. The fifth and sixth recitals in the preamble to Directive 77/799 read as follows: ‘Whereas the Member States should, on request, exchange information concerning particular cases; whereas the State so requested should make the necessary enquiries to obtain such information; Whereas the Member States should exchange, even without any request, any information which appears relevant for the correct assessment of taxes on income and on capital …’ Article 1 of Directive 77/799, entitled ‘General provisions’, provided the following in paragraph 1: ‘In accordance with the provisions of this Directive the competent authorities of the Member States shall exchange any information that may enable them to effect a correct assessment of taxes on income and on capital …’ Under Article 2 of Directive 77/799, entitled ‘Exchange on request’: ‘1. The competent authority of a Member State may request the competent authority of another Member State to forward the information referred to in Article 1(1) in a particular case. The competent authority of the requested State need not comply with the request if it appears that the competent authority of the State making the request has not exhausted its own usual sources of information, which it could have utilised, according to the circumstances, to obtain the information requested without running the risk of endangering the attainment of the sought after result. 2. For the purpose of forwarding the information referred to in paragraph 1, the competent authority of the requested Member State shall arrange for the conduct of any enquiries necessary to obtain such information. In order to obtain the information sought, the requested authority or the administrative authority to which it has recourse shall proceed as though acting on its own account or at the request of another authority in its own Member State.’ Article 6 of Directive 77/799, entitled ‘Collaboration by officials of the State concerned’, provided the following: ‘For the purpose of applying the preceding provisions, the competent authority of the Member State providing the information and the competent authority of the Member State for which the information is intended may agree, under the consultation procedure laid down in Article 9, to authorise the presence in the first Member State of officials of the tax administration of the other Member State. The details for applying this provision shall be determined under the same procedure.’ Article 8 of Directive 77/799, entitled ‘Limits to exchange of information’, provided in paragraph 1: ‘This Directive does not impose any obligation upon a Member State from which information is requested to carry out inquiries or to communicate information, if it would be contrary to its legislation or administrative practices for the competent authority of that State to conduct such inquiries or to collect the information sought.’ Czech law Law No 253/2000 on international assistance in tax administration and amending Law No 531/1990 on territorial tax authorities, as amended, transposed the provisions of Directive 77/799 into Czech law. Articles 16 and 31 of Law No 337/1992 on the administration of taxes and fees provides as follows: ‘Article 16 Tax Inspection ... (4) A taxpayer who is the subject of a tax inspection has the right, in respect of the tax official, (e) to put questions to witnesses and experts at the hearing and the on-the-spot investigation, ... Article 31 Measures of inquiry ... (2) ... The tax authority shall inform the taxpayer in good time of the taking of evidence from witnesses, if there is no danger in delay.’ The dispute in the main proceedings and the questions referred for a preliminary ruling In his income tax return for 2004 in the Czech Republic, Mr Sabou claimed to have incurred expenditure in several Member States with a view to a possible transfer to one of the football clubs in those Member States. That expenditure would have reduced his taxable income by the corresponding amount. His income tax liability for 2004 was thus set at 29700 Czech crowns (CZK) (approximately EUR 1 100). The Czech tax authorities, however, raised doubts over the truthfulness of that expenditure and carried out an inspection involving requests for information from the tax authorities of the Member States concerned, acting in particular on the basis of Law No 253/2000 and Directive 77/799. Thus they sought assistance from the Spanish, French and United Kingdom tax authorities, asking them in particular for the views of the football clubs concerned. It follows from the replies of those authorities that none of the clubs allegedly approached knew either Mr Sabou or his agent. The Czech tax authorities also contacted the Hungarian tax authorities about a number of invoices submitted by Mr Sabou concerning services allegedly provided by a company established in Hungary. The requested authorities replied that that company was only an intermediary of a company established in a non-member country, and that only an inspection carried out in that country would make it possible to obtain reliable answers. Following their inspection the Czech tax authorities, on 28 May 2009, issued an additional notice of assessment setting the amount of the income tax owed by Mr Sabou for 2004 at CZK 251 604 (approximately EUR 9 800). Mr Sabou challenged that notice of assessment before the Finanční ředitelství pro hlavní město Prahu, which adjusted the notice by setting the amount of the tax at CZK 283 604 (approximately EUR 11 000). Mr Sabou brought an action challenging the adjusted notice before the Městský soud v Praze (City Court, Prague) which dismissed his action in a judgment of 27 July 2011. Mr Sabou then appealed on a point of law to the Nejvyšší správní soud (Supreme Administrative Court). Before that court, Mr Sabou claimed that the Czech tax authorities had obtained information about him illegally. First, they had not informed him of their request for assistance to other authorities, so that he had not been able to take part in formulating the questions addressed to those authorities. Secondly, he had not been invited to take part in the examination of witnesses in other Member States, in contrast to the rights he enjoys under Czech law in similar domestic proceedings. In the order for reference, the Nejvyšší správní soud mentions that the Czech tax authorities did not ask the requested authorities to examine witnesses. It states that, if the Czech authorities had made such a request, they would have informed Mr Sabou of this, so that he could take part in the examination if that was permitted by the laws of the requested Member States. As regards the content of the replies provided, the referring court mentions that some requested authorities identified the names of the persons questioned, while others merely identified the clubs which provided the information. Furthermore, it was not specified whether the information was obtained by telephone, electronically or in the course of a hearing. The referring court is unsure whether a taxpayer has a right to take part in exchanges of information between the authorities under Directive 77/799, and is uncertain to what extent fundamental rights, as guaranteed by the Charter of Fundamental Rights of the European Union (‘the Charter’), have any bearing on the existence of that right. The referring court points out that, if such a right were denied to the taxpayer, that would result in a reduction of his procedural rights compared with those guaranteed by Czech law in national tax proceedings. It refers to two of its judgments dated 30 January 2008 and 26 March 2009 respectively. In the first of these, it held that, as regards the examination of a witness, ‘ensuring a genuine opportunity [for the taxpayer] to participate in [that examination] is one of the key parameters of assessing the lawfulness of taking such evidence, and it is necessary rigorously to prevent any circumvention of it’. In the second, concerning tax proceedings in the Czech Republic involving recourse to assistance from another Member State under Directive 77/799 and the examination of a witness in that other Member State, the referring court found that only if the requested State’s authorities refused to allow the Czech taxpayer to take part in the hearing, under their own law, would the Czech tax authorities have been authorised to use as evidence information from the witness’s testimony taken in accordance with the law of the requested State. In those circumstances, the Nejvyšší správní soud decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling: ‘1. Does it follow from European Union law that a taxpayer has the right to be informed of a decision of the tax authorities to make a request for information in accordance with Directive [77/799]? Does the taxpayer have the right to take part in formulating the request addressed to the requested Member State? If the taxpayer does not derive such rights from European Union law, is it possible for domestic law to confer similar rights on him? 2. Does a taxpayer have the right to take part in the examination of witnesses in the requested Member State in the course of dealing with a request for information under Directive [77/799]? Is the requested Member State obliged to inform the taxpayer beforehand of when the witness will be examined, if it has been requested to do so by the requesting Member State? 3. Are the tax authorities in the requested Member State obliged, when providing information in accordance with Directive [77/799], to observe a certain minimum content of their answer, so that it is clear from what sources and by what method the requested tax authorities have obtained the information provided? May the taxpayer challenge the correctness of the information thus provided, for example on grounds of procedural defects of the proceedings in the requested State which preceded the provision of the information? Or does the principle of mutual trust and cooperation apply, according to which the information provided by the requested tax authorities may not be called in question?’ The jurisdiction of the Court of Justice As a preliminary point, the European Commission submits that, by its questions relating to the procedural rights of the taxpayer in circumstances where the tax authorities have decided to make use of the mutual assistance procedure under Directive 77/799, the referring court is seeking to determine whether the taxpayer has certain rights under the Charter. According to the Commission, in actual fact those questions concern, in part, the application of the Charter in conjunction with national law, and the Court therefore has no jurisdiction to reply to those questions. Thus the Commission notes, first, that the purpose of a request for assistance is the correct assessment of income tax, an area not harmonised by European Union law, and, secondly, that Directive 77/799 does not state how the requesting State is to deal with the information it receives with a view to assessing that tax. The Commission adds that that directive simply gives the Member States the possibility of seeking assistance from other Member States. Consequently, whether the requesting Member State is bound to inform the taxpayer of the request for assistance which it has made is an issue not of European Union law but only of national law. First, as regards the Charter, it must be pointed out that, as it came into force on 1 December 2009, it does not apply to the assistance procedure which led to the additional notice of assessment of 28 May 2009. Next, as regards the Court’s jurisdiction in this case to interpret Directive 77/799, the fact that the requesting Member State is not bound to submit a request for assistance to another Member State does not mean that the rules relating to the request for information and the use of the information obtained by that Member State can be considered to be outside the scope of European Union law. Where a Member State decides to make use of that assistance, it must comply with the rules laid down in Directive 77/799. It is clear, in particular from the fifth recital in the preamble to that directive, that Member States must respect certain obligations in the context of mutual assistance. Consequently, the questions referred relating to the obligations of the requesting Member State with regard to the taxpayer concern the implementation of European Union law, and the Court has jurisdiction to examine the application, in this context, of fundamental rights, in particular the right to be heard. It is clear from the case-law of the Court that the rights of the defence, which include the right to be heard, are among the fundamental rights that form an integral part of the European Union legal order (see, to that effect, inter alia, Case C-349/07 Sopropé [2008] ECR I-10369, paragraphs 33 and 36). Where national legislation comes within the scope of European Union law, the Court, when requested to give a preliminary ruling, must provide all the criteria of interpretation required by the national court to determine whether that legislation is compatible with fundamental rights (see, inter alia, Case C-260/89 ERT [1991] ECR I-2925, paragraph 42, and Sopropé, paragraphs 33 and 34). Consequently, it is necessary to reply to all the questions referred by the national court. Consideration of the questions referred The first two questions By its first two questions, which should be examined together, the referring court asks, in essence, whether European Union law, as it results in particular from Directive 77/799 and the fundamental right to be heard, confers on a taxpayer from a Member State the right to be informed of a request for assistance from that Member State addressed to another Member State, to take part in formulating the request addressed to the requested Member State, and to take part in an examination of witnesses organised by the requested Member State. First, it must be ascertained whether the mutual assistance procedure under Directive 77/799 establishes such a right for a taxpayer. As the Court found in Case C-184/05 Twoh International [2007] ECR I-7897, paragraphs 30 and 31, it is clear from the first two recitals in the preamble to Directive 77/799 that the aim of the directive is to combat international tax evasion and avoidance, and that it was therefore adopted in order to govern cooperation between the tax authorities of the Member States. The Court also mentioned that, under Article 2(1) of Directive 77/799, the tax authorities of a Member State ‘may’ request the tax authorities of another Member State for the information which they cannot obtain themselves. The Court thus pointed out that, by using the term ‘may,’ the European Union legislature indicated that national tax authorities have the possibility of making such a request, but are not in any way obliged to do so (see, to that effect, Twoh International, paragraph 32). On the other hand, following a request from the competent authority in accordance with Article 2 of Directive 77/799, the requested Member State is, in principle, bound to respond to that request, and, if appropriate, to make the necessary enquiries in accordance with Article 2 of Directive 77/799. It follows from Article 2(2) and Article 8 of Directive 77/799 that the competent authority of the requested State when replying to such a request, is to apply its national law and in particular its own rules of procedure. It is thus apparent from an examination of Directive 77/799, the purpose of which is to govern cooperation between the tax authorities of Member States, that it coordinates the transfer of information between competent authorities by imposing certain obligations on the Member States. The directive does not, however, confer specific rights on the taxpayer (see Twoh International, paragraph 31), and in particular it does not lay down any obligation for the competent authorities of the Member States to consult the taxpayer. That being the case, it is necessary to consider, secondly, whether the taxpayer may nevertheless derive from the rights of the defence a right to participate in the exchange of information between the competent authorities. The Court has previously ruled that observance of the rights of the defence is a general principle of European Union law which applies where the authorities are minded to adopt a measure which will adversely affect an individual (see Sopropé, paragraph 36). In accordance with that principle, the addressees of decisions which significantly affect their interests must therefore be placed in a position in which they can effectively make known their views as regards the information on which the authorities intend to base their decision (see, inter alia, C-32/95 P Commission v Lisrestal and Others [1996] ECR I-5373, paragraph 21, and Sopropé, paragraph 37). The authorities of the Member States are subject to that obligation when they take decisions which come within the scope of European Union law, even though the European Union legislation applicable does not expressly provide for such a procedural requirement (see Sopropé, paragraph 38, and Case C‑383/13 PPU G and R [2013] ECR, paragraph 35). The question arises as to whether the decision of a competent authority of a Member State to request assistance from a competent authority of another Member State and the latter’s decision to examine witnesses for the purposes of responding to that request constitute acts which, because of their consequences for the taxpayer, make it necessary for him to be heard. All the Member States which submitted observations to the Court argued that a request for information by one Member State sent to the tax authorities of another Member State does not constitute an act giving rise to such an obligation. They rightly consider that, in tax inspection procedures, the investigation stage, during which information is collected and which includes the request for information by one tax authority to another, must be distinguished from the contentious stage, between the tax authorities and the taxpayer, which begins when the taxpayer is sent the proposed adjustment. Where the authorities gather information, they are not required to notify the taxpayer of this or to obtain his point of view. A request for assistance made by the tax authorities under Directive 77/799 is part of the process of collecting information. The same applies to the reply made by the requested tax authorities and the inquiries carried out to that end by those authorities, including the examination of witnesses. It follows that respect for the rights of the defence of the taxpayer does not require that the taxpayer should take part in the request for information sent by the requesting Member State to the requested Member State. Nor does it require that the taxpayer should be heard at the point when inquiries, which may include the examination of witnesses, are carried out in the requested Member State or before that Member State sends the information to the requesting Member State. None the less, there is nothing to prevent a Member State from extending the right to be heard to other parts of the investigation stage, by involving the taxpayer in various stages of the gathering of information, in particular the examination of witnesses. Accordingly, the answer to the first and second questions is that European Union law, as it results in particular from Directive 77/799 and the fundamental right to be heard, must be interpreted as not conferring on a taxpayer of a Member State either the right to be informed of a request for assistance from that Member State addressed to another Member State, in particular in order to verify the information provided by that taxpayer in his income tax return, or the right to take part in formulating the request addressed to the requested Member State, or the right to take part in examinations of witnesses organised by the requested Member State. The third question By its third question, the referring court asks, in essence, whether Directive 77/799 must be interpreted as meaning that, first, the taxpayer may challenge the information concerning him conveyed to the tax authorities of the requesting Member State, and, secondly, when the tax authorities of the requested Member State convey the information gathered, they are bound to mention the sources of the information and how that information was obtained. It must be observed that Directive 77/799 does not address the taxpayer’s right to challenge the accuracy of the information conveyed, and it does not impose any particular obligation with regard to the content of the information conveyed. In those circumstances, only national laws can lay down the relevant rules. The taxpayer may challenge the information concerning him conveyed to the tax authorities of the requesting Member State in accordance with the rules and procedures applicable in the Member State in question. The answer to the third question is therefore that Directive 77/799 does not govern the question of the circumstances in which the taxpayer may challenge the accuracy of the information conveyed by the requested Member State, and it does not impose any particular obligation with regard to the content of the information conveyed. Costs Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. On those grounds, the Court (Grand Chamber) hereby rules that: 1. European Union law, as it results in particular from Council Directive 77/799/EEC of 19 December 1977 concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation and taxation of insurance premiums, as amended by Council Directive 2006/98/EC of 20 November 2006, and the fundamental right to be heard, must be interpreted as not conferring on a taxpayer of a Member State either the right to be informed of a request for assistance from that Member State addressed to another Member State, in particular in order to verify the information provided by that taxpayer in his income tax return, or the right to take part in formulating the request addressed to the requested Member State, or the right to take part in examinations of witnesses organised by the requested Member State. 2. Directive 77/799, as amended by Directive 2006/98, does not govern the question of the circumstances in which the taxpayer may challenge the accuracy of the information conveyed by the requested Member State, and it does not impose any particular obligation with regard to the content of the information conveyed. [Signatures] ( *1 ) Language of the case: Czech.

This is a troublesome case and we, must do our best to ensure, an exceptional case. It involves misconduct by a juror, Joanne Fraill, and one of the defendants, Jamie Sewart, during the course of a very substantial trial in the Crown Court at Manchester sitting at Minshull Street before His Honour Judge Lakin and a jury in the summer of 2010. Two previous attempts to conclude a trial had failed and in each case the jury was discharged. The third trial began in late May 2010. On 21 May Joanne Fraill was empanelled as a juror. This constitution of the court has sat as a Divisional Court to decide whether or not contempt of court has been proved, and then as the Court of Appeal Criminal Division, to decide whether any jury irregularities should result in the quashing of the conviction of Gary Knox, Sewart's partner. Gary Knox, together with Jamie Sewart, were tried with six other defendants, Francis Hunt, Anthony Grainger, Philip Meiring, Joanne Greaves and Gail Hadfield on a nine count consolidated indictment. Philip Berry was a police office who at the material time was suspended from duty. He pleaded guilty to count 5 on which he was jointly charged with Knox with conspiracy to commit misconduct in a public office. In summary, Berry provided confidential or personal information held by the Greater Manchester Police. He also pleaded guilty to a similar count in a different indictment. All the defendants, except Berry, were jointly charged on count 1 with conspiracy to supply heroin and on count 2 with conspiracy to supply amphetamines. On count 3 Hunt and Grainger were charged together with handling stolen goods (motor vehicles). Grainger had earlier pleaded guilty to this count. On count 4 Knox was charged with Meiring with being concerned in the supply of class A drugs. In count 6 he was charged with Berry with doing acts intending and intended to pervert the court of public justice. Effectively count 6 was an alternative to count 5. He was similarly charged in count 7, with attempting to deter police investigation of his criminal activities. In count 8 Jamie Sewart was charged with possession of class A drugs with intent to supply. In count 9 Hunt was charged with supplying class B drugs, as an alternative to his alleged involvement in count 2. These different counts in the indictment provide a sufficient nature of the criminality alleged against this group of defendants. Effectively there were two strands: the first, involvement in a major enterprise to supply dangerous drugs, and the second, the linked activities of and with a corrupt police officer, and an attempt to corrupt another police officer, in order to advance the drug related activities. So far as Knox was concerned, the essence of his defence was that he was the victim of rather than a participant in police corruption. He had been a high profile criminal (and all his previous convictions were before the jury) and a member of serious criminal gangs involved in the supply of drugs, on a major scale. All that, however, was in the past, and the police locally were deliberately seeking to incriminate him in offences of which he was innocent. The prosecution case was opened by the Crown on 26th May. The judge gave the jury an unequivocal direction that they must not use the internet. He directed them "you will make your decision about this case based solely upon the evidence which you hear during this trial, in this courtroom and upon nothing else. Most of us these days have access to the internet, it contains lots of fascinating information, some of about the criminal justice system and some it about specific criminal offences. If you do have access to the 'net, members of the jury, please do not go on the 'net during this trial to explore any issues which may arise. That would be wrong. As I have said, you must base your decision in this case solely on what you hear in this courtroom and upon nothing else". He also told them that they must base their decision, "solely on what you hear in the courtroom and upon nothing else." This direction was repeated from time to time throughout the trial. No juror could have been in any doubt precisely what the direction was, and precisely what it meant, and indeed it has not been suggested that Joanne Fraill did not appreciate that references to the internet were prohibited. It is equally clear that none of the defendants, including Jamie Sewart, can have been in any doubt that they should not contact or communicate with any member of the jury The Crown's case concluded on 30 June. The defence case began on 2 July. It finished on 19 July. After closing speeches and summing up, the jury retired to consider their verdicts on 28 July. It is worth noting, perhaps in passing, that following this lengthy and complicated trial, no criticism was directed at the careful summing up prepared by Judge Lakin. On 29 July the jury found Greaves and Hadfield not guilty on count 1, Hunt not guilty on count 3, Knox guilty on count 5 and Sewart not guilty on count 8. On 30 July Grainger was found not guilty on count 1. On 2 August Sewart was found not guilty on count 1, and Knox, Meiring, Sewart and Greaves not guilty on count 2. Accordingly by the end of 2 August Sewart had been acquitted of all three charges against her. Knox had been convicted on count 5, acquitted on count 2, but verdicts in his case on counts 1, 4 and 7 were awaited. In the meantime Sewart continued to attend the trial, in effect in support of her partner, Knox. On 3 August the majority verdict direction was given. Thereafter Hunt, Knox and Meiring were acquitted of count 1, and Knox was acquitted of counts 4 and 7. That left the verdicts in relation to Hunt, Grainger and Hadfield on count 2, and the verdict against Hunt on count 9 outstanding for the jury's decision. While they were continuing in retirement, on 4 August, it became apparent to Judge Lakin that an unknown juror had been in Facebook contact with Sewart, commenting to the effect that she was pleased that Sewart had been acquitted because she was "with her the whole of the way". She also suggested that it was a pity that Sewart had not been in court when the verdicts involving Knox were announced because she was not have been able to see "the look of delight" on Gary's face. Judge Lakin was, of course, ignorant of the identity of the juror who had been in communication with Sewart. After hearing counsel he adjourned the jury deliberations for the day, and decided that he should inquire of each juror individually whether there had been any contact with any defendants. Joanne Fraill was the eighth juror. Having explained the issue, the judge asked: "I have to ask you a question and it is this. Have you at any stage during the period from the retirement of the jury until today contacted or attempted to contact any other person, including any other juror, defendant or former defendant, i.e. a defendant acquitted of allegations made against them, by way of Facebook or email, about either your views of the evidence, your views of the jury verdict so far delivered and any reactions to such verdicts, or any other such matters. In short, I have evidence to suggest that Facebook contact has been made with Sewart. Have you made any such contact; …" Fraill must have indicated silently in some way that she had, because the transcript continues "You have. I am going to ask that you are separated from the other jurors and I will then bring you into court a little later and give directions as to .." at which the juror interrupted: "Can I just say I'm really sorry it wasn't meant to - " The judge responded that at this stage he did not want to hear any explanation but that she must be separated from the other jurors. That was arranged. Like the first seven jurors, the remaining jurors denied that there had been any contact with any defendants. Fraill was returned to court. She was told that her behaviour was grossly improper, and she was released on bail. The judge later concluded that the jury as a whole should be discharged from returning the remaining verdicts. Subsequently a new trial was ordered on the counts where verdicts were awaited. When this took place, one of the remaining defendants was convicted and two were acquitted. The extent of the contact between Fraill and Sewart was investigated. After Sewart had been acquitted on all the counts affecting her, the first contact was made by Fraill. Accordingly to Sewart's unchallenged evidence, confirming her account in interview, Fraill sent an e mail message to her Facebook account saying "you should know me, I cried with you enough". Fraill had set up a Facebook account in the name of Jo Smilie. Sewart submitted a Friend Request to her at 18.30. Sewart responded, and saw that the Jo Smilie account named Joanne Fraill as a friend and showed a photograph of Fraill. Sewart immediately recognised this as a photograph of one of the jurors who had recently acquitted her, and realised that the message had come from the juror. Sewart then entered into a conversation with Fraill using the Facebookl instant messaging service. Sewart was thus aware that she was communicating with a juror. The conversation took place between 18.31 and 19.07. At 18.38 Sewart asked "what's happenin with the other charge??", to which Fraill replied "which" followed by "yours?", which was followed by Sewart answering "no the class b". This was followed by Fraill texting "cant get anywaone to go either no one budging pleeeeeese don't say anything cause jamie they could call mmisstrial and I will get 4cked toO". This led to the response from Sewart "I know I have deleted all the messages", followed shortly by Frail texting "awe fuck nos hw a didnt get caught wiv my nods and blinks hand signals…" Shortly afterwards Fraill commented "don't worry about that chge no way it can stay hung for me lol…" (that is laughing out loud) and "at least then yer all home n dry" and, in reference to the defendant, Gail Hadfield she texted "when we gsve that first on gail I was crying cause they held on to yours because l couldn't make her mind up" and … "ah will nearly fucking there…get all your property back too…" to which Sewart commented "I will be doin ha ha and trying for compo" and later "keep in touch Ill get you a nice pressie if I get anything out of um…". After the conversation came to an end Sewart began to have second thoughts or reservations about what she had done. We are inclined to think that her anxieties were inspired less by her concern about the integrity of the judicial processes than by the risk she had run by becoming involved in the conversation. Nevertheless, the following morning she contacted her solicitor, who spoke to counsel who had acted for Sewart in the trial, and counsel arranged for the judge to be given the information about what had happened. On 4th August at 15.01 Gary Knox telephoned Sewart from HMP Manchester. He was using the Pin Phone system, and his call was recorded. In a brief conversation she asked whether he had heard what had happened and she said they might all be charged again because a jury member had put something on her Facebook. She told him that it was being investigated and she (that is the juror) was going to be in contempt of court. Seward said it was not her fault because the juror had put something on her Facebook saying something like "bet you know who I am. I've cried for you enough" and that all she had replied was "Oh my God. Thank you so much". His response was that she was to speak to her "brief". When she was arrested Fraill provided the investigating officers with her own handwritten diary which was apparently written in anticipation of her being brought before HH Judge Lakin on 2 September. In short, therefore, it was prepared after she knew that she was at risk of proceedings for contempt of court. In the diary she explains that she had contacted Sewart because she "wanted her to know that I wished her all the best for the future and that she needed to make up lost time (irreplaceable) with her children and other members of her family". We know now that this was a reference to the fact that when Sewart was arrested she had a 10 month old baby, and that for 14 months she had been separated from her. In addition, the diary admitted that Fraill had conducted an internet search for Gary Knox and a number of other names which had been of importance during the trial. "I can also honestly say I also searched for Gary Stewart [plainly an error for Gary Knox] which revealed that he had when he was a young man of 18 been shot himself. But I didn't dig deeper searches on the laptop were repeated throughout my service as a Juror – revealed the same, pretty much throughout the trial only finding item linked to previously tried which had to be set to a later date." "I had admittedly searched names – involved in the trial and mentioned in evidence as I believed if their names had significance to the trial – the only searches which had revealed any info was I think those of seven defenders and a little of Phil corrupt cop Berry especially drugs items – some of which were found at ex PC's Phil Berry's home and of course his corrupt actions". " The significance of this material is that research on police computer systems did indeed reveal a report that Gary Knox had been shot in the upper body on 13 September 1995 while in a motor vehicle on Davenport Street in Bolton. The diary is a self-serving document. It asserts that Fraill is "wholeheartedly sorry" for what she had done. In relation to matters currently under consideration she said that she was "absolutely overwhelmed" at the reaction of Sewart when she was cleared of all charges and this led to her need to explain to Sewart that she wanted to express apologies from the jury box for taking so long in deliberation and that she had shared her tears from a distance. The diary ends with an apology to fellow jurors for "my stupidity, which could have led to a wasted 10 weeks, hopefully, having read my four books of notes, which I…" and the diary then runs out. Reminding ourselves for the need for caution against the contents of a self-serving statement, this is in truth an abject account of what she had done. Following her arrest, Fraill was interviewed under caution, and provided a "no comment" interview. However a prepared statement was read by her solicitor which recorded: "At no time whilst as a juror have I agreed with any other person to pervert the course of justice. At no time have I positively or intended to act in a way that would pervert the course of the trial I was a juror of". When Sewart was interviewed under caution she denied making any initial contact with the first defendant, confirmed that she recognised Fraill as a juror, but denied that she had attempted to pervert the course of justice, commenting that she believed that she was doing nothing wrong because she had already been acquitted of the charges against her. From this evidence it is alleged that both Fraill and Sewart were in contempt of court. It is not alleged, and it has not been proved, that Sewart was guilty of perverting or attempting to pervert the course of justice by interfering with or seeking to interfere with the verdicts which the jury was still considering. We also note that although Fraill spoke in robust terms about how there was "no way" the jury would end up in disagreement, it has not been alleged, and she has not been convicted of perverting or attempting to pervert the course of justice. Where this offence is proved, sentence is at large, and on occasions sentences in double figures are imposed. For contempt of court, the maximum custodial term which may be imposed is two years. Contempt of court "The law of contempt is of ancient origin yet of fundamental contemporary importance…Essentially a creature of common law, contempt has been and continues to be developed and adapted to meet continuing challenges to the 'supremacy of the law'. One result of this continuing development and concern to protect the many facets of the administration of justice is that there are many forms of contempt". (Attorney-General v Newspaper Publishing PLC [1998] Ch 333 citing with approval a passage from Borrie and Lowe's Law of Contempt 2nd Ed (1983)). There is nothing new about the proposition that a juror may be in contempt of court. As long ago as the reign of Henry VII jurors were fined both for disobedience to the orders of the judge and also for discussions by one of them about the case they were trying with an external party. (See Bishop of N v Earl of Kent [1500] Y.B.T. 14 Hen 7 pl. 4 (cited in Oswalds Contempt of Court 3rd Edition, 1910 at pg 67-68). The Solicitor General has shown us a number of decisions down the centuries which unsurprisingly confirm this principle. (Foster v Horden [1676] 2Leb 205; Langdell v Sutton [1737] Barnes 32; Macrae [1892] the Times November 19, more recently repeated in Schot and Barclay [1997] 2 Cr App Re 303). When the jury is empanelled, each member individually and personally, either on oath or by affirmation, promises to "give true verdicts according to the evidence". It is elementary that a verdict which is not given by each juror conscientiously in accordance with his or her assessment of the evidence called at trial constitutes a breach of that promise. As the court observed in Thompson [2010] Crim 1623: "The verdict must be reached, according to the jury oath in accordance with the evidence. For this purpose each juror brings to the decision-making process, his or her own experience of life and general knowledge of the way things work in the real world; that is part of the stock-in-trade of the jury process, and the combination of the experience of a randomly selected group of 12 individuals, exercising their civic responsibility as a collective body, provides an essential strength of the system. However the introduction of extraneous material, that is non-evidential material, constitutes an irregularity. Examples…include telephone calls into or out of the jury room, papers mistakenly included in the jury bundle, discussions between jurors and relatives or friends about the case, and in recent years, information derived by one or more jurors from the internet. " As we said, this is familiar territory, reflective of long established common law principles, now universally understood, which underpin the jury system. In every case the defendant and for that matter we add, the prosecution, is entitled as a matter of elementary justice not to be subject to a verdict reached on the basis of material or information known to the jury but which was not in evidence at the trial. Judges, no less than any else, are well aware of and use modern technology in the course of their work. The internet is a modern means of communication. Modern technology, and means of communication, are advancing at an ever increasing speed. We are aware that reference to the internet is inculcated as a matter of habit into many members of the community, and no doubt that habit will grow. We must however be entirely unequivocal. We emphasise, even if we do so by way of repetition, that if jurors make their own inquiries into aspects of the trials with which they are concerned, the jury system as we know it, so precious to the administration of criminal justice in this country, will be seriously undermined, and what is more, the public confidence on which it depends will be shaken. The jury's deliberations, and ultimately their verdict, must be based – and exclusively based – on the evidence given in court, a principle which applies as much to communication with the internet as it does to discussions by members of the jury with individuals in and around, and sometimes outside the precincts of the court. The revolution in methods of communication cannot change these essential principles. The problem therefore is not the internet: the potential problems arise from the activities of jurors who disregard the long established principles which underpin the right of every citizen to a fair trial. Information provided by the internet (or any other modern method of communication) is not evidence. Even assuming the accuracy and completeness of this information (which, in reality, would be an unwise assumption) its use by a juror exposes him to the risk of being influenced, even unconsciously, by whatever emerges from the internet. This offends our long held belief that justice requires that both sides in a criminal trial should know and be able to address or answer any material (particularly material which appears adverse to them) which may influence the verdict. Quite apart from contempt of court at common law, section 8 (1) of the Contempt of Court Act 1981 provides for the confidentiality of the deliberations of the jury. "(1) …, it is a contempt of court to obtain, disclose or solicit any particulars of statements made, opinions expressed, arguments advanced or votes cast by members of a jury in the course of their deliberations in any legal proceedings". This is a wide ranging statutory provision. The language is entirely clear. Subject to statutory exceptions provided in section 8(2), which do not arise here, the provision applies to everyone, equally, whether to jurors, or witnesses, or defendants, or to the media, or even, to the trial judge. In the statutory provision the word "solicit" is expressly used. It has a simple meaning. It is, as Lord Hope of Craighead demonstrated in R v Mirtza; Connor and Rollick [2004] 1AC 1118: "Directed to persons who seek to obtain information from anyone else who is in possession of it". As Pill LJ explained in Attorney General and Secerson and Times Newspapers Limited [2009] EWHC (Admin) 1023: "The words used in section 8 in relation to the "deliberations"; statements made, "opinions expressed", "arguments advanced", and "votes cast" appear to me to cover the entire range of a jury's deliberations when considering their verdict or verdicts in a case." As with contempt of court at common law, the objective is simple, reflective of another well understood foundation for the jury system. Just because it is well understood, we can deal with it very briefly. Every member of the jury is entitled in the course of jury deliberations to express his or her views with the utmost frankness and clarity. Beyond the obvious courtesy of the give and take of discussion, there are no degrees or limitations of the views which may be expressed. This process is essential to the way in which juries work towards and finally arrive at their verdicts. Our arrangements proceed on the basis that everything that has been said in the course of these discussions must remain confidential to the members of the jury. And because they remain confidential to the jury, and are known to be so, the exchange of frank views and opinions is encouraged. No one is inhibited by the thought that the expression of an unpopular view, and its source, may become public knowledge. The offence therefore is committed by (amongst others) by anyone who deliberately solicits information about any aspect of a jury's deliberations, whether in the course of the trial or after its conclusion. Fraill is, as she has admitted, guilty of contempt of court because as a juror she communicated with Sewart via the internet and conducted an online discussion about the case with her when the jury deliberations had not been completed and verdicts had not been returned. During the course of the discussion she provided Sewart with information about the state of the jury's deliberations. This conduct contravened the provisions of section 8 of the 1981 Act and disobeyed the clear and unequivocal series of directions given by the trial judge prohibiting such conduct. She was also guilty of contempt of court for conducting research on the internet into the defendants in the criminal trial in which she was sitting as a juror for the purpose of obtaining further information of possible relevance to the issues at trial. Sewart denied that she was in contempt. She was called to give evidence before us. In the course of her evidence she admitted that she knew perfectly well that during the communications between her and Fraill, that Fraill was a member of the jury which had acquitted her, and which was still considering the last remaining verdicts. The substance of the discussions have been set out in paragraphs 16 above. We shall not repeat them. It is clear, however, from the texts that she knew that what she was doing was wrong, and one of the earlier questions, "whats happenin with the other charge??" asked by her is not open to any other interpretation than intentional solicitation of particulars of the jury deliberations. The remaining part simply underlined that the subject of the conversation was the deliberations of the jury. We had no hesitation in finding that Sewart's conduct constituted a clear contravention of section 8(1) of the 1981 Act. We shall return to the sentencing decision after dealing with the appeal of Gary Knox. Gary Knox First, we shall deal with the renewed ground of appeal. This is misconceived. The allegation against Knox is encapsulated in the indictment which alleged conspiracy to commit misconduct in a public office, which stated that between January 2005 and July 2008 Knox conspired with Philip James Berry, a police officer, in order to commit wilful acts of misconduct in a public office particularly of the nature of the misconduct, the provision of confidential or personal information about local drug dealers held by the Greater Manchester Police. No one suggested that Berry was not a police officer at the relevant dates. However it was agreed by the Crown that during the period covered by the indictment, Berry was probably suspended from his duties as a police officer, and accordingly the case had to be approached as if he had indeed been suspended throughout. From these facts it was submitted that whilst suspended from duty Berry could not properly be described as the holder of a public office. For the purposes of this offence, it is clear that a serving police officer does hold a public office. No doubt it may be argued that on retirement or resignation, or dismissal, whatever his continuing obligations of confidentiality and the like in relation to matters which fell within his responsibilities as a police officer, a former police officer ceases to be the holder of a public office. However on the face of it a suspended police officer continues to hold his office. He is indeed suspended, not dismissed. He is not entitled to give notice of retirement or resignation, at any rate without the consent of the Chief Constable. Pending the final determination of the disciplinary process, he continues to be paid, and at the end of that process the suspension may be lifted. Undeterred by these, if we may say so, obvious considerations, and basing himself on Regulation 4 of the Police Conduct Regulations 2004 and the Home Office Guidance on Police Officer Misconduct, Mr Barraclough submitted that a suspended police officer does not hold public office for the purposes of this offence. We have considered the regulation and the guidance. That said, the notice of suspension is quite unequivocal that whilst suspended the police officer is "subject to Police Conduct Regulation" and he may not give notice of an intention to retire or resign. The Guidance itself notes that: "During a period of suspension, officers are not empowered to carry out the duties of a police officer, although they remain subject to Police Regulations and the Code of Conduct and must comply with lawful orders and all instructions contained in force orders. A suspended officer is still subject to part 9 of the Police and Criminal Evidence Act 1984 and may be required to report to a senior officer at a nominated police station." There is nothing in the Regulations which suggests that a police officer who is suspended from duty ceases to be a police officer, or anything to suggest that what we may describe as the obvious conclusion that a suspended police officer continues to hold his office no longer applies, or indeed is undermined in any way. Throughout the period of suspension a suspended police officer is required to observe the police Code of Conduct. That is a duty owed to the public which remains in force throughout his period of suspension. He continues to hold this public office. We agree with the careful judgment of Judge Lakin on this issue as well as the observations of the single judge. This renewed ground of appeal is refused. We can now come to the fresh ground of appeal based on jury misconduct. Although some wide-ranging submissions might have been available to be deployed by any of the other defendants who were acquitted, we are required to focus on a single conviction on one count only of one defendant, Gary Knox. We have examined the Diary where the juror admits and describes the extent of her consideration of the Internet, and any relevant entries for Knox. It was not thought necessary for her to be cross-examined on the basis that she may have read more than she was prepared to admit, and it was equally not suggested that an examination of the relevant internet material on behalf of Knox would or might have produced any material prejudicial to Knox beyond that described by the juror, or put in evidence before the jury. As we have indicated, the Diary is a self-serving statement, and it would be wise for us to approach it with due caution. We would not necessarily assume that the confession would be full and complete, although reading it, that is how it appears. However in the absence of any further material, in this case we have reflected on the facts which were properly known to the jury as a result of evidence or admissions. As we have explained, the essence of Knox's defence was that he had been a serious criminal, with major convictions, but that he had given up that life and was the victim of a police conspiracy to convict an innocent man. As far as we can see there is nothing to suggest that the material considered by the juror was adverse to the defendant in the sense that it undermined this defence, or appeared to add weight to the prosecution case that the defence was nonsense. In other words, what the juror saw on the internet was for the purposes of the conviction of Knox, neither here nor there. The outcome might have been quite different if we had been required to examine convictions relating to any other of the defendants. That however did not arise. It is worth adding that although these considerations did not affect our reasoning, the conclusion is fortified by the overwhelming nature of the case against Knox on count 5, and by the further fact that the jury which convicted him of count 5, nevertheless acquitted him of the remaining allegations against him. Accordingly this appeal against conviction is dismissed. Sentence The starting point is simple. Misuse of the internet by a juror, or contravention of the contempt of court provisions in section 8(1) of the 1981 Act is always a most serious irregularity and contempt. In the context of a two year maximum custodial period, a custodial sentence is virtually inevitable. The sentence is intended to ensure the continuing integrity of trial by jury Joanne Fraill Quite apart from the broad considerations of sentences which must protect the jury system generally, the particular features of this defendant's actions are that although many verdicts had already been delivered by the jury, the verdicts overall were still incomplete, and the jury was discharged. Significant public resources were wasted. Any one involved was then put through the stresses and strains of another trial. For reasons we have explained, in the result it was not necessary for the only conviction to be returned by the jury to be quashed. That outcome had nothing to do with this defendant. Her conduct in visiting the internet repeatedly was directly contrary to her oath as a juror and her contact with the acquitted defendant as well as her repeated searches on the internet constituted flagrant breaches of the orders made by the judge for the proper conduct of the trial. In deciding the appropriate penalty for her contempt we have reflected on the mitigating features drawn to our attention by Mr Peter Wright QC on her behalf. Perhaps the most important is that the defendant was not involved in an attempt to pervert the course of justice. Throughout she was acting on her own initiative, without any oblique motive, and there is no evidence to suggest that she used her researches on the internet in order to exert improper influence on the verdicts of the jury. It is relevant that when the concerns of the judge were raised with each of the individual jurors none hinted at any concern. Without in any way condoning her actions in contacting Sewart after Sewart's acquittal, we carried out an examination of the psychiatric evidence to understand how her own background may have led her to wish to commiserate with Sewart's personal problems arising from the fact that a 14 month period in custody had separated her from her baby. That said, the text of the communications between them went much further than the expression of a compassionate concern. Finally, and significantly, it is a feature of this case that when the question of Facebook contact was raised with her in the Crown Court, this woman of good character, immediately and unhesitantly admitted what she had done and apologised for it. During the subsequent investigation she provided evidence against herself of her misuse of the internet throughout the trial. In effect therefore she acknowledged her guilt at the earliest possible opportunity, and for some months now she has been waiting for the present proceedings to take place, and to know what the consequences of her contempt will be. The effect of all these stresses and strains was virtually palpable here in court. There will be an order for immediate custody for a period of 8 months. Jamie Sewart This defendant's contempt of court would not have taken place if Fraill had not taken the initiative and contacted her. She responded to the contact made by Fraill in the euphoria of her own acquittal and release from custody, at the same time, knowing perfectly well that her contact was a juror and that conversation about the case was prohibited. Although her conduct was undoubtedly contumacious, she did not take advantage of the contact to make any significant attempt to influence this particular juror's thinking but rather went along with her comments. There is this further significant feature of the case. This defendant has spent 14 months in custody awaiting a trial at which she was subsequently acquitted. Of itself that might not have led us to suspend the order of committal, but in the present case it had these added features to which we made reference on Tuesday. The defendant was arrested when her baby was 10 months old. She was separated from her for 14 months. The baby went to live with her grandmother. Unsurprisingly she began to treat her grandmother as her mother. After 14 months, with the baby just about 2 years old, her mother returned to her. The bond between them had to be rebuilt. Another 11 months or so has gone by. If we did not suspend the effect of any custodial order we would once again separate mother and child. We do not believe that the administration of justice needs further vindication by the imposition of a custodial order which, by taking immediate effect would once again separate them. The order of the court will be a 2 month custodial term, but its implementation will be suspended for two years and, if nothing further is heard, at the end of that period it will lapse. Jury Directions Notwithstanding the clarity of the directions given to the jury on all the matters relevant to this case, we are concerned about two of the other directions given by judge Lakin to the jury at the beginning of the case. One of his directions implied that the obligation of jury secrecy might somehow cease to apply after verdicts have been reached and the trial concluded. We do not agree. For the reasons already given in this judgment, the confidentiality requires of jurors throughout the trial continues indefinitely after its conclusion. Our second reservation arises from the direction that Judge Lakin gave to the jury that they should not discuss the case at all until they retired to consider their verdict. Again, we do not agree. Obviously a jury cannot decide a case until it has heard all the evidence. But in principle if all twelve jurors are together, and they are on their own in the privacy of the jury room, they are not prevented, if they wish, from discussing aspects of the evidence which they have heard so far, or reflect together on matters raised in the case or by the evidence. The correct approach is for the judge to direct the jury never to discuss the case unless they are all together, and in private, and further to direct them that whatever their discussion at any stage of the case, they will obviously keep open minds and not jump to conclusions until the evidence is completed and the summing up has been given.

Opinion of Mr Advocate General Mancini delivered on 11 June 1987. - Gubisch Maschinenfabrik KG v Giulio Palumbo. - Reference for a preliminary ruling: Corte suprema di Cassazione - Italy. - Brussels Convention - Concept of Lis pendens. - Case 144/86. European Court reports 1987 Page 04861 Swedish special edition Page 00271 Finnish special edition Page 00273 Opinion of the Advocate-General ++++ Mr President, Members of the Court, 1 . The Italian Court of Cassation seeks an interpretation of the concept of lis pendens pursuant to the first paragraph of Article 21 of the Brussels Convention of 27 September 1968 on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters ( hereinafter referred to as "the Convention "). By a summons served on 12 December 1974, Giulio Palumbo, an Italian citizen, brought proceedings against Gubisch Maschinenfabrik KG, whose registered office is in Flensburg ( Federal Republic of Germany ), before the tribunale di Roma ( District Court, Rome ) for a declaration that the order he had placed with Gubisch for a machine tool was inoperative . Mr Palumbo argued that he had revoked the order even before it reached Gubisch for acceptance . In the event that the tribunale should hold that a sales contract had been concluded, Mr Palumbo claimed in the alternative its rescission for lack of consent or in any event its discharge for failure to comply with the mandatory time-limit for delivery . In entering an appearance Gubisch lodged a preliminary objection to the effect that the Italian court lacked jurisdiction on the ground that it had already instituted proceedings before the Landgericht Flensburg seeking payment from Mr Palumbo for the machine tool purchased by the latter on the basis of a valid contract . There was therefore a situation of lis pendens as between the two actions, which, pursuant to the first paragraph of Article 21 of the Convention, had to be resolved in favour of the German court, which was the court first seised . The tribunale di Roma dismissed the objection, stating that the two cases did not involve the same cause of action and it could not therefore decline jurisdiction in accordance with the aforesaid provision . Gubisch accordingly appealed to the Court of Cassation on the issue of jurisdiction . That court considered it necessary to submit the following question to the Court of Justice for a preliminary ruling : "Does a case where, in relation to the same contract, one party applies to a court in a Contracting State for a declaration that the contract is inoperative ( or in any event for its discharge ) whilst the other institutes proceedings before the courts of another Contracting State for its enforcement fall within the scope of the concept of lis pendens pursuant to Article 21 of the Brussels Convention of 27 September 1968?" In these proceedings, written observations were submitted by Gubisch, the Commission of the European Communities, the Government of the Federal Republic of Germany and the Government of the Italian Republic . 2 . The view is generally held that the concept of lis pendens to which Article 21 refers must be interpreted independently, that is to say without reference to its definition under the lex fori . There is disagreement,however, as regards the conditions governing the operation of that provision . According to the Italian Government, that provision must be interpreted literally . In other words, for lis pendens to arise, the actions brought by the parties must involve "the same subject-matter and the same cause of action ". Otherwise, the relationship, if any, between proceedings pending before the courts of different States is determined and regulated in the Convention by the rules on related actions . Consequently, and for the same reasons as those specified by the tribunale di Roma, the question submitted for a preliminary ruling must be answered in the negative . However, the other interveners maintain that the objection of lis pendens is designed to prevent the same dispute from being brought before the courts of different States, with the result that judgments may be given which are irreconcilable and for that very reason incapable of being recognized ( Article 27 ( 3 ) ). The provision under consideration therefore operates not only in the case of proceedings involving exactly the same subject-matter and cause of action but also in the case of actions which, whilst differing in scope, are based on the same legal circumstances . In this case, for instance, it is common ground that in order to be able to consider the substance of the action for enforcement brought by Gubisch the German court will in the first place have to establish whether a valid contractual relationship exists between the parties, which is precisely the main issue to be resolved by the Italian court . Hence a literal interpretation of Article 21 leads to the same problem being raised in different courts, but that danger is avoided by a broad interpretation of Article 21 which requires the court other than the court first seised to decline jurisdiction . Moreover, only the latter interpretation is in conformity with the spirit of the Convention; that is to say, only that interpretation is capable of ensuring that proceedings are swift and straightforward, so as to improve the mobility of national judgments . 3 . Both points of view are plausible and are skilfully argued . In my view, however, the first is more persuasive . I would recall that, according to the first paragraph of Article 21, lis pendens arises "where proceedings involving the same subject-matter and cause of action and between the same parties are brought in the courts of different Contracting States ". Under those conditions, "any court other than the court first seised shall of its own motion decline jurisdiction" in favour of the court first seised . On the other hand, the third paragraph of Article 22 provides that "actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings ". In those circumstances, the court other than the court first seised "may .. stay its proceedings ". As I have said, on reading those two provisions it is clear in the first place that the authors of the Convention intended to regulate lis pendens and related actions in an independent manner, and took care to specify their constituent elements and their consequences . The two provisions are designed to prevent as far as possible any conflicts between judgments within the territory of the Community . Hence the need for a uniform definition of the situations to which they relate . Turning to the substance of the rules, I would point out that the solutions they provide for diverge quite clearly from one another . Article 22 requires that the two actions should be "so closely connected" as to make it expedient to join them . Moreover, the proceedings in question must "be pending at the same level of adjudication, for otherwise the object of the proceedings would be different and one of the parties might be deprived of a step in the hierarchy of the courts" ( Report by Mr P . Jenard on the Convention of 27 September 1968, Official Journal 1979, C 59, p . 41, under Article 22; my italics ). In the case of lis pendens, it is not sufficient that the actions should be "connected"; they must involve the same subject-matter, the same cause of action and the same parties . That explains the mandatory nature of the provision in question, which requires the court other than the court first seised to decline jurisdiction even in the absence of an application to that effect by one of the parties . The first paragraph of Article 21 is therefore very strict . It is certainly stricter than the corresponding national rules or those in other conventions - and, I should add, quite innovative . In most of the Contracting States the objection of lis alibi pendens does not exist, and the conventions which do make provision for it impose the further requirement that the decision of the court first seised must be capable of being recognized in the State concerned . From the point of view of the consequences, moreover, the court first seised usually has the option of declining jurisdiction or is able to choose between declining jurisdiction and staying the proceedings ( see, generally, Droz, "Compétence judiciaire et effets des jugements dans le Marché commun", Paris, 1972, p . 179 et seq .; for international rules, see Article 20 of The Hague Convention of 1 February 1971 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters ). In my view, those factors are decisive . It is clear that, with legislative traditions that are so unfavourable to the concept of lis pendens, the courts of the Contracting States would have complied with the obligation to decline jurisdiction only if that obligation had been conditional on straightforward and unequivocal criteria . Accordingly, the fact that the first paragraph of Article 21 makes the existence of "proceedings involving the same subject-matter and cause of action and between the same parties" the basis for the objection does not reflect excessive formalism . On the contrary, the twofold or threefold use of the adjective "same" (" samme", "même", "derselbe", "idios", "stesso" or "medesimo", "dezelfde ") shows that that choice was dictated by a specific policy aim . If that is true, the broad interpretation according to which the provision should also be applicable in the case of actions which are different, although based on the same legal circumstances, ultimately confuses matters which the Convention was designed to keep apart, namely related actions and lis pendens . Moreover, even from a practical point of view that interpretation does not provide all the advantages which are claimed for it by its exponents . With regard to obligations, for instance, it would be sufficient to challenge the validity of a contract in order to paralyse, by raising an objection of lis pendens, any subsequent action brought on the basis of that contract before the courts of another State . That is certainly not the objective pursued by the first paragraph of Article 21 of the Convention . 4 . With that in mind, I now turn to this case . It is clear from the order for reference that the action pending before the tribunale di Roma is for a declaration that a contract of sale is inoperative because the offer was revoked, whilst the action before the German court assumes the validity of the contract and seeks to obtain judgment for the amount of the price . As the Commission has pointed out, the two cases do not involve either the same subject-matter or the same cause of action . Both cases are indeed concerned with the question whether a contract exists and whether it is operative . In the case pending before the Landgericht Flensburg, however, that question is secondary or, to be more precise, preliminary to consideration of the substance of the action to enforce payment of the price . In such circumstances, it is impossible to endorse the argument of the German Government that, for the purposes of the first paragraph of Article 21, the action for a declaration that the contract is inoperative is substantially incorporated in the action to enforce the contract . From the procedural point of view, the relief sought by the plaintiff in the two cases differs widely in terms of its scope and its effects . Instead, the two actions are "so closely connected" - on a preliminary issue - "that it is expedient to hear and determine them together" ( third paragraph of Article 22 ). In other words, the actions are related, and since that does not permit the transfer of jurisdiction provided for by the first paragraph of Article 21 there are those - Germany and the Commission, to be precise - who see the risk of a conflict of decisions on the same question . That fear is exaggerated, to say the least . According to the second paragraph of Article 22, a court other than the court first seised "may", on application by the parties, decline jurisdiction "if the law of that court permits the consolidation of related actions and the court first seised has jurisdiction over both actions", and it may in any event stay the proceedings . Furthermore, those two possibilities do not imply that of disregarding an objection raised by one of the parties . On the contrary, the court other than the court first seised is required to rule on that objection . As I have said, in other words, the rules laid down in the case of related actions are also designed to prevent the delivery of conflicting judgments, and they do so by means which, whilst they may not be automatic like those provided for in the case of lis pendens, are not any the less effective . 5 . In the light of all the foregoing considerations I suggest that the Court answer the question submitted by the Italian Court of Cassation by order of 28 May 1986 in proceedings brought by Gubisch Maschinenfabrik KG against Giulio Palumbo as follows : The first paragraph of Article 21 of the Brussels Convention of 27 September 1968 on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters must be interpreted as meaning that lis pendens arises only where proceedings between the same parties involving the same subject-matter and the same cause of action are brought in the courts of different Contracting States . The term lis pendens does not cover a case where one party applies to a court in a Contracting State for a declaration that a contract is inoperative ( or in any event for its discharge ) whilst the other institutes proceedings before the court of another Contracting State for its enforcement . (*) Translated from the Italian .

Judgment of the Court of 3 July 1985. - Maizena GmbH and others v Hauptzollamt Hamburg - Jonas. - Reference for a preliminary ruling: Finanzgericht Hamburg - Germany. - Monetary compensatory amounts on derived products. - Case 39/84. European Court reports 1985 Page 02115 Summary Parties Subject of the case Grounds Decision on costs Operative part Keywords AGRICULTURE - MONETARY COMPENSATORY AMOUNTS - FIXING - DERIVED PRODUCTS - SUM OF THE COMPENSATORY AMOUNTS FOR THE DERIVED PRODUCTS LESS THAN THE COMPENSATORY AMOUNT FOR THE BASIC PRODUCT - NEGLIGIBLE DISPARITY - PERMITTED ( COUNCIL REGULATION NO 974/71 , ART . 4 ( 2 ); COMMISSION REGULATION NO 3013/80 ) Summary IF , ACCORDING TO ARTICLE 4 ( 2 ) OF REGULATION NO 974/71 , IT IS UNNECESSARY TO FIX MONETARY COMPENSATORY AMOUNTS WHERE SUCH AMOUNTS ARE NEGLIGIBLE IN RELATION TO THE AVERAGE VALUE OF THE PRODUCTS CONCERNED , IT IS EQUALLY UNNECESSARY TO REQUIRE THE MONETARY COMPENSATORY AMOUNTS TO BE ADJUSTED SO AS TO REMOVE A DISPARITY WHICH REPRESENTS A NEGLIGIBLE PROPORTION OF THE MONETARY COMPENSATORY AMOUNTS THEMSELVES AND WHICH A FORTIORI MUST THEREFORE BE NEGLIGIBLE IN RELATION TO THE VALUE OF THE GOODS . SOME DISPARITY IS OFTEN INEVITABLE , BECAUSE ONE AND THE SAME SECONDARY PRODUCT CAN SOMETIMES BE OBTAINED FROM DIFFERENT MANUFACTURING PROCESSES , RESULTING IN THE MANUFACTURE OF PRODUCTS AND SECONDARY PRODUCTS TO WHICH DIFFERENT MONETARY COMPENSATORY AMOUNTS APPLY . IT FOLLOWS THAT IT IS IMPOSSIBLE , FROM AN ADMINISTRATIVE POINT OF VIEW , TO FIX DIFFERENT MONETARY COMPENSATORY AMOUNTS FOR SUCH A SECONDARY PRODUCT ACCORDING TO THE MANUFACTURING PROCESS BY WHICH IT IS OBTAINED , IN ORDER TO ENSURE THAT IN EACH PROCESS THE MONETARY COMPENSATORY AMOUNT FOR THE BASIC PRODUCT IS IDENTICAL TO THE SUM OF THE MONETARY COMPENSATORY AMOUNTS FOR THE PROCESSED PRODUCTS AND SECONDARY PRODUCTS . WHERE THERE IS A DISPARITY OF 5.9% , THE MONETARY COMPENSATORY AMOUNT FIXED FOR MAIZE BY REGULATION NO 3013/80 CANNOT BE REGARDED AS CLEARLY IN EXCESS OF THE SUM OF THE MONETARY COMPENSATORY AMOUNTS FIXED FOR THE VARIOUS PRODUCTS OBTAINED BY PROCESSING MAIZE IN A SPECIFIC MANUFACTURING PROCESS . Parties IN CASE 39/84 REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE FINANZGERICHT ( FINANCE COURT ) HAMBURG FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN MAIZENA GMBH , HAMBURG , AND OTHERS AND HAUPTZOLLAMT ( PRINCIPAL CUSTOMS OFFICE ) HAMBURG-JONAS Subject of the case ON THE VALIDITY OF COMMISSION REGULATION ( EEC ) NO 3013/80 OF 21 NOVEMBER 1980 AS REGARDS CERTAIN MONETARY COMPENSATORY AMOUNTS , Grounds 1 BY AN ORDER DATED 6 JANUARY 1984 , WHICH WAS RECEIVED AT THE COURT ON 14 FEBRUARY 1984 , THE FINANZGERICHT ( FINANCE COURT ) HAMBURG REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY TWO QUESTIONS ON THE VALIDITY OF COMMISSION REGULATION NO 3013/80 OF 21 NOVEMBER 1980 AMENDING REGULATION NO 2140/79 AS REGARDS CERTAIN MONETARY COMPENSATORY AMOUNTS AND REGULATION NO 2803/80 AS REGARDS CERTAIN EXPORT REFUNDS IN THE CEREALS SECTOR ( OFFICIAL JOURNAL 1980 , L 312 , P . 12 ) IN SO FAR AS IT FIXES THE MONETARY COMPENSATORY AMOUNTS APPLICABLE TO CERTAIN PRODUCTS PROCESSED FROM MAIZE , AND ON THE CONSEQUENCES WHICH WOULD ARISE FROM THE INVALIDITY OF THAT REGULATION . 2 THE QUESTIONS AROSE IN THE COURSE OF AN ACTION BEFORE THE FINANZGERICHT BETWEEN MAIZENA GMBH AND OTHER UNDERTAKINGS , FORMING A CONSORTIUM KNOWN AS ' MAIZENA EXPORT ' ( HEREINAFTER REFERRED TO AS ' MAIZENA ' ), ON THE ONE HAND , AND THE HAUPTZOLLAMT ( PRINCIPAL CUSTOMS OFFICE ) HAMBURG-JONAS ON THE OTHER . 3 MAIZENA , WHICH MANUFACTURES PRODUCTS PROCESSED FROM MAIZE IN THE FEDERAL REPUBLIC OF GERMANY , APPLIED , IN RESPECT OF VARIOUS QUANTITIES OF SUCH PRODUCTS EXPORTED OR ADMITTED FOR INWARD PROCESSING AND THEREFORE ENTITLED TO A REFUND BETWEEN 24 NOVEMBER AND 8 DECEMBER 1980 , FOR MONETARY COMPENSATORY AMOUNTS WHICH WERE GRANTED TO IT BY THE HAUPTZOLLAMT HAMBURG-JONAS IN ACCORDANCE WITH REGULATION NO 3013/80 . 4 MAIZENA CONSIDERED THAT IT WAS ENTITLED TO MONETARY COMPENSATORY AMOUNTS HIGHER THAN THOSE CALCULATED ON THE BASIS OF REGULATION NO 3013/80 AND LODGED AN UNSUCCESSFUL OBJECTION AGAINST THE DECISIONS BY WHICH THEY WERE GRANTED . IT THEN BROUGHT AN ACTION BEFORE THE FINANZGERICHT HAMBURG , WHICH DECIDED TO STAY THE PROCEEDINGS AND REFER TO THE COURT FOR A PRELIMINARY RULING THE FOLLOWING QUESTIONS : ' ( 1 ) IS COMMISSION REGULATION ( EEC ) NO 3013/80 OF 21 NOVEMBER 1980 INVALID IN SO FAR AS IT FIXES THE MONETARY COMPENSATORY AMOUNTS FOR THE FOLLOWING PRODUCTS , LISTED IN THE CORRESPONDING HEADINGS OF THE COMMON CUSTOMS TARIFF , ONLY AT THE LEVELS SET OUT HEREUNDER? 11.08 I AT DM 50.69 17.02 B I ( A ) AT DM 66.13 17.02 B II ( B ) AT DM 50.69 23.03 A I AT DM 67.14 11.02 G II AT DM 11.33 ( 2)SHOULD QUESTION 1 BE ANSWERED IN THE AFFIRMATIVE , WHAT ARE THE CONSEQUENCES OF SUCH INVALIDITY? ' 5 AS REGARDS THE FIRST QUESTION , MAIZENA OBSERVES THAT THE SYSTEM OF MONETARY COMPENSATORY AMOUNTS , WHICH WAS CREATED TO SAFEGUARD THE FUNCTIONING OF THE INTERVENTION SYSTEM IN SPITE OF THE WIDENING OF THE MARGINS OF FLUCTUATION FOR THE EXCHANGE RATES AND TO ENSURE NORMAL MOVEMENT OF PRICES , CAN SERVE THAT PURPOSE ONLY IF IT IS ARRANGED ON A NEUTRAL AND BALANCED BASIS . TO THAT END , ARTICLE 1 ( 1 ) OF REGULATION NO 974/71 OF THE COUNCIL , WHICH INTRODUCED MONETARY COMPENSATORY AMOUNTS , LAYS DOWN THE PRINCIPLE THAT THE MONETARY COMPENSATORY AMOUNTS CHARGED ON IMPORTS OF CERTAIN PRODUCTS MUST BE EQUAL TO THE MONETARY COMPENSATORY AMOUNTS GRANTED ON EXPORTS OF THOSE PRODUCTS . THAT PRINCIPLE CAN ONLY BE COMPLIED WITH AND UPHELD IF THE MONETARY COMPENSATORY AMOUNT FIXED FOR A BASIC PRODUCT AND THE AMOUNTS APPLICABLE TO PRODUCTS PROCESSED FROM THAT PRODUCT ARE ALSO EQUAL . 6 ACCORDING TO MAIZENA , REGULATION NO 710/79 OF THE COMMISSION OF 9 APRIL 1979 ( OFFICIAL JOURNAL 1979 , L 90 , P . 1 ) PROVIDED FOR AN ABSOLUTE BALANCE BETWEEN THE MONETARY COMPENSATORY AMOUNT APPLICABLE TO MAIZE AND THE SUM OF THE MONETARY COMPENSATORY AMOUNTS FIXED FOR THE VARIOUS PRODUCTS OBTAINED FROM MAIZE BY MEANS OF A SPECIFIC MANUFACTURING PROCESS . HOWEVER , THAT BALANCE WAS UPSET , FIRST BY REGULATION NO 746/79 OF THE COMMISSION OF 11 APRIL 1979 ( OFFICIAL JOURNAL 1979 , L 95 , P . 3 ) AND SUBSEQUENTLY BY REGULATION NO 3013/80 , WHICH BOTH REDUCED THE MONETARY COMPENSATORY AMOUNTS FIXED FOR PRODUCTS PROCESSED FROM MAIZE . REGULATION NO 3013/80 IS THEREFORE INCOMPATIBLE WITH THE SYSTEM OF MONETARY COMPENSATORY AMOUNTS , WHICH IS BASED ON THE PRINCIPLE OF THE STRICT NEUTRALITY OF COMPENSATORY AMOUNTS , AND ALSO INFRINGES ARTICLES 3 ( F ), 40 ( 3 ) AND 43 OF THE TREATY IN SO FAR AS IT DISTORTS COMPETITION AND PLACES PROCESSORS ESTABLISHED IN COUNTRIES WITH STRONG CURRENCIES AT A DISADVANTAGE COMPARED WITH THEIR COMPETITORS ESTABLISHED IN COUNTRIES WITH WEAK CURRENCIES . ON THE EXPORTATION OF PROCESSED PRODUCTS , THE FIRST RECEIVE MONETARY COMPENSATORY AMOUNTS THE SUM OF WHICH IS LOWER THAN THE MONETARY COMPENSATORY AMOUNT WHICH THEY HAD TO PAY ON THE IMPORTATION OF THE BASIC PRODUCT , WHEREAS IN THE SAME SITUATION THE SECOND PAY MONETARY COMPENSATORY AMOUNTS THE SUM OF WHICH IS LOWER THAN THE MONETARY COMPENSATORY AMOUNT GRANTED TO THEM ON THE IMPORTATION OF THE BASIC PRODUCT . 7 THE COMMISSION DOES NOT DENY THAT THE SYSTEM OF MONETARY COMPENSATORY AMOUNTS REQUIRES THAT ANY DISPARITY BETWEEN THE MONETARY COMPENSATORY AMOUNT APPLICABLE TO A BASIC PRODUCT AND THE TOTAL MONETARY COMPENSATORY AMOUNTS APPLICABLE TO THE VARIOUS DERIVED PRODUCTS OBTAINED FROM A SPECIFIC MANUFACTURING PROCESS SHOULD BE AVOIDED AS FAR AS POSSIBLE . IT WAS PRECISELY IN ORDER TO MEET THAT REQUIREMENT THAT THE COMMISSION ADOPTED REGULATION NO 3013/80 , WHICH REDUCED THE MONETARY COMPENSATORY AMOUNTS APPLICABLE TOPRODUCTS PROCESSED FROM MAIZE IN ORDER TO ATTAIN A GREATER BALANCE BETWEEN THE SUM OF THE MONETARY COMPENSATORY AMOUNTS FIXED FOR PRODUCTS OBTAINED FROM A SPECIFIC MANUFACTURING PROCESS AND THE MONETARY COMPENSATORY AMOUNT FIXED FOR THE BASIC PRODUCT . 8 THE COMMISSION ACKNOWLEDGES THAT THE MONETARY COMPENSATORY AMOUNTS APPLICABLE TO PRODUCTS AND SECONDARY PRODUCTS OBTAINED FROM PROCESSING MAIZE INTO STARCH OR GLUCOSE WERE FIXED BY REGULATION NO 3013/80 IN SUCH A WAY THAT THEY WERE IN GENERAL SLIGHTLY LOWER THAN THE MONETARY COMPENSATORY AMOUNT FIXED FOR THE BASIC PRODUCT , BUT IT ARGUES THAT THAT CANNOT MAKE THE REGULATION INVALID , ESSENTIALLY BECAUSE IN THIS CASE THE DISPARITY , DM 3.60 OR 5.9% , IS NEGLIGIBLE . 9 THAT ARGUMENT IS BASED ON THE RULINGS GIVEN BY THE COURT ON 15 OCTOBER 1980 ( CASE 4/79 PROVIDENCE AGRICOLE DE LA CHAMPAGNE V ONIC ( 1980 ) ECR 2823 ; CASE 109/79 MAISERIES DE BEAUCE V ONIC ( 1980 ) ECR 2883 ; AND CASE 145/79 ROQUETTE FRERES V FRENCH CUSTOMS ADMINISTRATION ( 1980 ) ECR 2917 ), IN WHICH THE COURT STATED THAT A SYSTEM FOR THE CALCULATION OF THE MONETARY COMPENSATORY AMOUNTS ON PRODUCTS PROCESSED FROM MAIZE WHICH RESULTS IN ESTABLISHING , FOR THE VARIOUS PRODUCTS OBTAINED BY PROCESSING A GIVEN QUANTITY OF MAIZE IN A SPECIFIC MANUFACTURING PROCESS , MONETARY COMPENSATORY AMOUNTS THE SUM OF WHICH IS A FIGURE ' CLEARLY IN EXCESS ' OF THE MONETARY COMPENSATORY AMOUNT FIXED FOR THAT GIVEN QUANTITY OF MAIZE CONSTITUTES AN INFRINGEMENT OF THE BASIC REGULATION , REGULATION NO 974/71 OF THE COUNCIL OF 12 MAY 1971 , AND ARTICLE 43 ( 3 ) OF THE TREATY . IT FOLLOWS FROM THOSE RULINGS THAT ONLY A FAIRLY SUBSTANTIAL DIFFERENCE BETWEEN THE MONETARY COMPENSATORY AMOUNT FOR THE BASIC PRODUCT AND THE TOTAL MONETARY COMPENSATORY AMOUNTS FOR THE PROCESSED PRODUCTS AND SECONDARY PRODUCTS SHOULD BE REGARDED AS RELEVANT . 10 MAIZENA CLAIMS THAT THE DISPARITY IN THIS CASE , WHICH THE COMMISSION CONCEDES TO BE 5.9% , IS IN FACT MUCH HIGHER OWING TO THE FACT THAT THERE IS VIRTUALLY NO MARKET FOR CERTAIN PROCESSED PRODUCTS , IN PARTICULAR MAIZE GERM AND GLUTEN FALLING UNDER TARIFF SUBHEADINGS 11.02 G II AND 23.03 A I OF THE COMMON CUSTOMS TARIFF RESPECTIVELY . 11 THE COMMISSION POINTS OUT THAT IN CASES 4/79 , 108/79 AND 145/79 IT ACTUALLY PUT FORWARD THE ARGUMENT THAT IN REALITY THERE WAS NO NOTICEABLE DIFFERENCE BETWEEN ALL THE MONETARY COMPENSATORY AMOUNTS APPLICABLE IN FRANCE ON THE EXPORTATION OF PRODUCTS PROCESSED FROM MAIZE AND THE MONETARY COMPENSATORY AMOUNT APPLICABLE ON THE IMPORTATION OF THE BASIC PRODUCT , SINCE THERE WAS VIRTUALLY NO MARKET FOR GERM AND GLUTEN AND THE MONETARY COMPENSATORY AMOUNTS FIXED FOR THOSE SECONDARY PRODUCTS WERE THEREFORE OF ONLY THEORETICAL SIGNIFICANCE . THE COURT , HOWEVER , DID NOT ACCEPT THAT ARGUMENT . THE COMMISSION ARGUES THAT IT MUST THEREFORE BE ASSUMED THAT THERE IS A MARKET FOR THOSE SECONDARY PRODUCTS , AS IS IN ANY EVENT DEMONSTRATED BY THE STATISTICS . 12 ON THAT POINT , IT SHOULD BE NOTED THAT THE STATISTICS PRODUCED BY THE COMMISSION AT THE COURT ' S REQUEST INDEED SHOW THAT THERE IS A TRADE IN GERM AND GLUTEN , THOUGH NOT OF AN ORDER TO COVER THE ENTIRE PRODUCTION OF THOSE PRODUCTS , AND PART OF THAT TRADE CONSISTS OF INTRA-COMMUNITY TRADE . THUS THE MONETARY COMPENSATORY AMOUNT FIXED FOR THOSE SECONDARY PRODUCTS IS NOT PURELY THEORETICAL BUT IS APPLICABLE IN PRACTICE . MOREOVER , MONETARY COMPENSATORY AMOUNTS MUST BE FIXED FOR GERM AND GLUTEN , SINCE TO FAIL TO DO SO WOULD ENCOURAGE THEIR EXPORTATION BY TRADERS ESTABLISHED IN COUNTRIES WITH WEAK CURRENCIES AND WOULD THUS DISTORT TRADE . 13 IT IS THEREFORE NECESSARY IN THIS CASE TO DETERMINE WHETHER THE MONETARY COMPENSATORY AMOUNT FIXED FOR MAIZE CAN BE REGARDED AS CLEARLY IN EXCESS OF THE SUM OF THE MONETARY COMPENSATORY AMOUNTS GRANTED IN RESPECT OF THE VARIOUS PRODUCTS PROCESSED FROM MAIZE , WHERE THERE IS A DISPARITY OF 5.9% . 14 AT ISSUE IN CASES 4/79 AND 109/79 WERE THE THREE SUCCESSIVE REGULATIONS FIXING MONETARY COMPENSATORY AMOUNTS , NAMELY REGULATION NO 1910/76 OF 30 JULY 1976 ( OFFICIAL JOURNAL 1976 , L 208 , P . 1 ), REGULATION NO 2466/76 OF 8 OCTOBER 1976 ( OFFICIAL JOURNAL 1976 , L 280 , P . 1 ) AND REGULATION NO 938/77 OF 29 APRIL 1977 ( OFFICIAL JOURNAL 1977 , L 110 , P . 6 ). 15 UNDER REGULATION NO 1910/76 , SO FAR AS THE MANUFACTURING PROCESS FOR THE PRODUCTION OF MAIZE GROATS AND MEAL IS CONCERNED , THE SUM OF THE MONETARY COMPENSATORY AMOUNTS APPLICABLE IN FRANCE TO PROCESSED PRODUCTS OBTAINED FROM 1.8 TONNES OF MAIZE AMOUNTED TO FF 100.81 , WHEREAS THE MONETARY COMPENSATORY AMOUNT APPLICABLE TO THE SAME QUANTITY OF MAIZE WAS FF 71.67 . THERE WAS THEREFORE A DIFFERENCE OF ABOUT 30% . 16 UNDER REGULATION NO 2466/76 , FOR THE SAME PRODUCTION PROCESS THE TOTAL OF THE MONETARY COMPENSATORY AMOUNTS APPLICABLE IN FRANCE TO PRODUCTS PROCESSED FROM MAIZE AMOUNTED TO FF 201.75 AND EXCEEDED BY ABOUT 30% THE MONETARY COMPENSATORY AMOUNT FIXED FOR THE BASIC PRODUCT , WHICH FOR 1.8 TONNES WAS FF 143.35 . 17 REGULATION NO 938/77 FIXED MONETARY COMPENSATORY AMOUNTS TOTALLING FF 280.21 FOR PROCESSED PRODUCTS , WHEREAS THE MONETARY COMPENSATORY AMOUNT FOR THE BASIC PRODUCT WAS FF 199.09 FOR 1.8 TONNES . THERE WAS THEREFORE LIKEWISE A DISPARITY OF ABOUT 30% . 18 IN CASE 145/79 , WHICH CONCERNED THE PROCESS FOR THE PRODUCTION OF STARCH , THE MONETARY COMPENSATORY AMOUNT OF FF 101.99 PER TONNE FOR THE BASIC PRODUCT COMPARED WITH A TOTAL OF FF 115.83 FOR THE SUM OF THE MONETARY COMPENSATORY AMOUNTS FOR THE PROCESSED PRODUCTS . HOWEVER , ACCOUNT MUST BE TAKEN OF THE FACT THAT THE DISPARITY OF FF 13.84 , OR ABOUT 12% , WAS DISTORTED BY THE METHOD OF FIXING THE MONETARY COMPENSATORY AMOUNT FOR STARCH WHICH HAD BEEN CALCULATED ON THE BASIS OF THE INTERVENTION PRICE FOR MAIZE WITHOUT DEDUCTING THE PRODUCTION REFUND FOR STARCH . IF , ON THE OTHER HAND , THE REFUND REFERRED TO IS SUBTRACTED FROM THE INTERVENTION PRICE FOR MAIZE , IN ACCORDANCE WITH THE COURT ' S RULING IN THAT CASE , THE MONETARY COMPENSATORY AMOUNT FIXED FOR STARCH , AND THE DISPARITY SET OUT ABOVE , INCREASE . 19 IN THE LIGHT OF THOSE CONSIDERATIONS , IT IS PLAIN THAT THE DISPARITY ESTABLISHED IN THIS CASE IS CLEARLY LOWER THAN THE DISPARITIES WHICH WERE AT ISSUE IN THE CASES CITED ABOVE . 20 THAT FINDING CANNOT BE ALTERED BY THE ARGUMENT PUT FORWARD BY MAIZENA TO THE EFFECT THAT THE DAMAGE SUFFERED BY TRADERS ESTABLISHED IN COUNTRIES WITH HARD CURRENCIES IS IN REALITY MUCH HIGHER BECAUSE THEY ARE AFFECTED BY A ' NEGATIVE ' DISPARITY , WHILST PRODUCERS ESTABLISHED IN COUNTRIES WITH WEAK CURRENCIES IN TURN BENEFIT FROM A ' POSITIVE ' DISPARITY OF SIMILAR PROPORTION ON THE EXPORTATION OF PRODUCTS PROCESSED FROM MAIZE . IF THAT ARGUMENT WERE ACCEPTED , THE DISPARITY CONCERNED IN THE JUDGMENT CITED ABOVE WOULD ALSO BE CONSIDERABLY INCREASED , SO THAT THE RELATIONSHIP BETWEEN IT AND THE DISPARITY ESTABLISHED IN THIS CASE WOULD NOT BE AFFECTED . 21 IN ADDITION TO THE CONSIDERATIONS DRAWN FROM THE CASES CITED ABOVE , IT SHOULD BE STATED THAT ACCORDING TO ARTICLE 4 ( 2 ) OF REGULATION NO 974/71 : ' NO COMPENSATORY AMOUNT SHALL BE FIXED FOR PRODUCTS FOR WHICH THE AMOUNT CALCULATED IN ACCORDANCE WITH ARTICLE 2 IS NEGLIGIBLE IN RELATION TO THEIR AVERAGE VALUE ' . IF IT IS UNNECESSARY TO FIX MONETARY COMPENSATORY AMOUNTS WHERE SUCH AMOUNTS ARE NEGLIGIBLE IN RELATION TO THE AVERAGE VALUE OF THE PRODUCTS CONCERNED , IT IS EQUALLY UNNECESSARY TO REQUIRE THE MONETARY COMPENSATORY AMOUNTS TO BE ADJUSTED SO AS TO REMOVE A DISPARITY SUCH AS THAT CONCERNED HERE , WHICH REPRESENTS A NEGLIGIBLE PROPORTION OF THE MONETARY COMPENSATORY AMOUNTS THEMSELVES AND A FORTIORI MUST THEREFORE BE NEGLIGIBLE IN RELATION TO THE VALUE OF THE GOODS . 22 LASTLY , IT SHOULD BE NOTED THAT , AS THE COMMISSION POINTED OUT IN ITS OBSERVATIONS , SOME DISPARITY IS OFTEN INEVITABLE , BECAUSE ONE AND THE SAME SECONDARY PRODUCT CAN SOMETIMES BE OBTAINED FROM DIFFERENT MANUFACTURING PROCESSES , RESULTING IN THE MANUFACTURE OF PRODUCTS AND SECONDARY PRODUCTS TO WHICH DIFFERENT MONETARY COMPENSATORY AMOUNTS APPLY . IT FOLLOWS THAT IT IS IMPOSSIBLE , FROM AN ADMINISTRATIVE POINT OF VIEW , TO FIX DIFFERENT MONETARY COMPENSATORY AMOUNTS FOR SUCH A SECONDARY PRODUCT ACCORDING TO THE MANUFACTURING PROCESS BY WHICH IT IS OBTAINED , IN ORDER TO ENSURE THAT IN EACH PROCESS THE MONETARY COMPENSATORY AMOUNT FOR THE BASIC PRODUCT IS IDENTICAL TO THE SUM OF THE MONETARY COMPENSATORY AMOUNTS FOR THE PROCESSED PRODUCTS AND SECONDARY PRODUCTS . 23 IT FOLLOWS FROM THE CONSIDERATIONS SET OUT ABOVE THAT , WHERE THERE IS A DISPARITY OF 5.9% , THE MONETARY COMPENSATORY AMOUNT FIXED FOR MAIZE BY REGULATION NO 3013/80 CANNOT BE REGARDED AS CLEARLY IN EXCESS OF THE SUM OF THE MONETARY COMPENSATORY AMOUNTS FIXED FOR THE VARIOUS PRODUCTS OBTAINED BY PROCESSING MAIZE IN A SPECIFIC MANUFACTURING PROCESS . 24 IT MUST THEREFORE BE CONCLUDED THAT CONSIDERATION OF THE FIRST QUESTION ASKED HAS DISCLOSED NO FACTOR OF SUCH A KIND AS TO AFFECT THE VALIDITY OF REGULATION NO 3013/80 . 25 AS THE SECOND QUESTION WAS ASKED ONLY IF THE FIRST QUESTION WAS ANSWERED IN THE AFFIRMATIVE , NO ANSWER IS REQUIRED . Decision on costs COSTS 26 THE COSTS INCURRED BY THE COMMISSION OF THE EUROPEAN COMMUNITIES , WHICH SUBMITTED OBSERVATIONS TO THE COURT , ARE NOT RECOVERABLE . AS THESE PROCEEDINGS ARE , IN SO FAR AS THE PARTIES TO THE MAIN PROCEEDINGS ARE CONCERNED , A STEP IN THE ACTION PENDING BEFORE THE NATIONAL COURT , THE DECISION ON COSTS IS A MATTER FOR THAT COURT . Operative part ON THOSE GROUNDS , THE COURT , IN ANSWER TO THE QUESTIONS REFERRED TO IT BY THE FINANZGERICHT HAMBURG BY ORDER OF 6 JANUARY 1984 , HEREBY RULES : CONSIDERATION OF THE FIRST QUESTION ASKED HAS DISCLOSED NO FACTOR OF SUCH A KIND AS TO AFFECT THE VALIDITY OF COMMISSION REGULATION NO 3013/80 OF 21 NOVEMBER 1980 .

Mr Justice Munby : This application for judicial review raises a short but important point relating to the powers of The Commissioners for Her Majesty's Revenue and Customs in relation to income tax. The question is whether the Commissioners' exercise of their powers under sections 20(3) and 20B(3) of the Taxes Management Act 1970 when requiring the production of documents or information from a barrister, advocate or (as in the present case) a solicitor is subject to the same conditions and safeguards as when an inspector is exercising his powers under section 20(3) in relation to anyone other than a barrister, advocate or solicitor. Mr Robin Mathew QC who appears on behalf of the claimant solicitor submits that the Commissioner's powers are so circumscribed. Ms Ingrid Simler QC on behalf of the Commissioners disputes this. In my judgment the Commissioners are correct. The statutory framework The provisions with which I am directly concerned form part of a comprehensive scheme which is set out in sections 20 to 20D of the Taxes Management Act 1970 (as amended). For present purposes the most directly relevant provisions are to be found in sections 20 and 20B. So far as material for present purposes section 20 (which is headed "Power to call for documents of taxpayer and others") provides as follows: "(1) Subject to this section, an inspector may by notice in writing require a person – (a) to deliver to him such documents as are in the person's possession or power and as (in the inspector's reasonable opinion) contain, or may contain, information relevant to – (i) any tax liability to which the person is or may be subject, or (ii) the amount of any such liability, or (b) to furnish to him such particulars as the inspector may reasonably require as being relevant to, or to the amount of, any such liability. … (3) Subject to this section, an inspector may, for the purpose of enquiring into the tax liability of any person ("the taxpayer"), by notice in writing require any other person to deliver to the inspector or, if the person to whom the notice is given so elects, to make available for inspection by a named officer of the Board, such documents as are in his possession or power and as (in the inspector's reasonable opinion) contain, or may contain, information relevant to any tax liability to which the taxpayer is or may be, or may have been, subject, or to the amount of any such liability … … (7) Notices under subsection (1) or (3) above are not to be given by an inspector unless he is authorised by the Board for its purposes; and – (a) a notice is not to be given by him except with the consent of a General or Special Commissioner; and (b) the Commissioner is to give his consent only on being satisfied that in all the circumstances the inspector is justified in proceeding under this section. … (8E) An inspector who gives a notice under subsection (1) or (3) above shall also give to – (a) the person to whom the notice applies (in the case of a notice under subsection (1) above), or (b) the taxpayer concerned (in the case of a notice under subsection (3) above), a written summary of his reasons for applying for consent to the giving of the notice. … (9) To the extent specified in section 20B below, the above provisions are subject to the restrictions of that section." Section 20B (which is headed "Restrictions on powers under ss 20 and 20A") provides in material part as follows: "(1) Before a notice is given to a person by an inspector under section 20(1), (3) … , the person must have been given a reasonable opportunity to deliver (or, in the case of section 20(3), to deliver or make available) the documents in question, or to furnish the particulars in question; and the inspector must not apply for consent under section 20(7) … , until the person has been given that opportunity. (1A) Subject to subsection (1B) below, where a notice is given to any person under section 20(3) the inspector shall give a copy of the notice to the taxpayer to whom it relates. (1B) If, on an application by the inspector, a General or Special Commissioner so directs, a copy of a notice under section 20(3) need not be given to the taxpayer to whom it relates; but such a direction shall not be given unless the Commissioner is satisfied that the inspector has reasonable grounds for suspecting the taxpayer of fraud. … (3) An inspector cannot under section 20(1) or (3) … give notice to a barrister, advocate or solicitor, but the notice must in any such case be given (if at all) by the Board; and accordingly in relation to a barrister, advocate or solicitor for references in section 20(3) and (4) … to the inspector there are substituted references to the Board. … (5) A notice under section 20(3), does not oblige a person to deliver or make available any document the whole of which originates more than 6 years before the date of the notice. (6) But subsection (5) does not apply where the notice is so expressed as to exclude the restrictions of that subsection; and it can only be so expressed where – (a) the notice being given by an inspector with consent under section 20(7), the Commissioner giving consent has also given approval to the exclusion; (b) the notice being given by the Board, they have applied to a General or Special Commissioner for, and obtained, that approval. For this purpose the Commissioner gives approval only if satisfied, on the inspector's or the Board's application, that there is reasonable ground for believing that tax has, or may have been, lost to the Crown owing to the fraud of the taxpayer. … (8) A notice under section 20(3) … does not oblige a barrister, advocate or a solicitor to deliver or make available, without his client's consent, any document with respect to which a claim to professional privilege could be maintained." (I note that the reference in section 20B(3) to section 20(4) is redundant, the latter provision having now been repealed.) I should also refer to certain provisions in section 20C: "(1) If the appropriate judicial authority is satisfied on information on oath given by an officer of the Board that – (a) there is reasonable ground for suspecting that an offence involving serious fraud in connection with, or in relation to, tax is being, has been or is about to be committed and that evidence of it is to be found on premises specified in the information; and (b) in applying under this section, the officer acts with the approval of the Board given in relation to the particular case, the authority may issue a warrant in writing authorising an officer of the Board to enter the premises, if necessary by force, at any time within 14 days from the time of issue of the warrant, and search them. … (2) Section 4A of the Inland Revenue Regulation Act 1890 (Board's functions to be exercisable by an officer acting under their authority) does not apply to the giving of Board approval under this section. (3) An officer who enters the premises under the authority of a warrant under this section may – (a) take with him such other persons as appear to him to be necessary; (b) seize and remove any things whatsoever found there which he has reasonable cause to believe may be required as evidence for the purposes of proceedings in respect of such an offence as is mentioned in subsection (1) above; and (c) search or cause to be searched any person found on the premises whom he has reasonable cause to believe to be in possession of any such things; but no person shall be searched except by a person of the same sex. … (4) Nothing in subsection (3) above authorises the seizure and removal of items subject to legal privilege." Section 20D defines "the appropriate judicial authority" as being, in England and Wales, a Circuit Judge or a District Judge (Magistrates' Courts). In accordance with the Commissioners for Revenue and Customs Act 2005, the Commissioners for Her Majesty's Revenue and Customs exercise all the functions previously vested in the Commissioners of Inland Revenue. Section 50 of that Act provides that references in previous enactments to the Commissioners of Inland Revenue (however expressed) are to be taken as references to the Commissioners for Her Majesty's Revenue and Customs. The effect of this is that statutory references to the Board (that is, the Board of Inland Revenue) are now to be taken as references to the Commissioners for Her Majesty's Revenue and Customs. Section 2(1) of the same Act provides that staff appointed by the Commissioners are to be known as "officers of Revenue and Customs." Inspectors are therefore now, for statutory purposes, "officers." Section 12 of the 2005 Act makes provision for the conduct of the Commissioners' proceedings. Section 12(2)(b)(i) provides that arrangements, made in accordance with sections 12(1) and 12(3) with the agreement of more than half of the Commissioners holding office at the time, may provide that a function of the Commissioners may be exercised by two Commissioners. Prior to the coming into force of the 2005 Act the Commissioners of Inland Revenue had a general statutory power under section 4A of the Inland Revenue Regulation Act 1890 to delegate the performance of any of the Board's functions to "any officer of the Commissioners acting under their authority". The 1890 Act was repealed by section 52 of and schedule 5 to the 2005 Act. The corresponding provisions are now to be found in sections 13(1) and 14(1)(c) of the 2005 Act, respectively providing that "an officer of Revenue and Customs may exercise any function of the Commissioners" and enabling the Commissioners "to delegate a function of the Commissioners … to any other person." Not surprisingly, these sweeping powers do not apply to certain "non-delegable functions" identified in sections 13(3) and 14(2). For present purposes the only relevant non-delegable function (see sections 13(3)(b) and 14(2)(b)) is approving an application for a search warrant under section 20C of the 1970 Act. It follows that there is nothing on the face of the legislation which expressly prevents the delegation to any "officer of Customs and Excise", indeed to "any person" of the Commissioners' powers under sections 20(3) and 20B(3) of the 1970 Act. In fact, the Commissioners' powers under sections 20(3) and 20B(3) have been delegated, by an instrument dated 9 October 2000 and signed by two of the then Commissioners of Inland Revenue, to a very small number of very senior officials: the Director of Cross-Cutting Policy, any Assistant Director of Cross-Cutting Policy or the Director of Special Compliance Office. In the present case, as we shall see, the powers were exercised by Mr Keith Thomas Moore, who has been Assistant Director of Cross-Cutting Policy (though the post is now called Assistant Director, Central Policy) since July 2003. The issue I am concerned in the present case with a notice purportedly issued by the Board under section 20(3) pursuant to the provisions of section 20B(3). It will be seen that whether a section 20(3) notice is given by an inspector or by the Board, it must be based upon "reasonable opinion." But in cases (not involving a barrister, advocate or solicitor) where an inspector issues a notice under section 20(3) there are various other conditions that have to be met: i) the inspector must have served a precursor notice: section 20B(1); ii) the inspector (who must be authorised by the Board) must have obtained the consent of a General or Special Commissioner: section 20(7); iii) the inspector must give a copy of the notice to the taxpayer: section 20B(1A); and iv) the inspector must also give a written summary of his reasons to the taxpayer: section 20(8E)(b). The question in the present case is whether those conditions have also to be satisfied where a section 20(3) notice is given by the Board to a barrister, advocate or solicitor. That is the only matter in issue. No challenge to the notice is mounted by reference to the circumstances in which or the reasons for which it was issued. The facts The claimant is a solicitor who acted as such from 1991 to 2001 for a client, Mr Potiriadis, who is for present purposes the taxpayer whose tax liability is in issue. On 21 September 2005 a notice dated 25 August 2005 and expressed to be given under sections 20(3) and 20B(3) was given to the claimant requiring him to deliver, or make available for inspection, by 30 November 2005 certain documents specified in the schedule to the notice. The notice was signed by Mr K T Moore, Assistant Director, Central Policy, "For and on behalf of The Commissioners for HM Revenue & Customs." The notice was counter-signed by a General Commissioner who on 20 September 2005 had given his approval under section 20B(6) to the exclusion from the notice of section 20B(5). In a covering letter also dated 25 August 2005 Mr Moore said that he was authorised by the Commissioners to give the notice. He asserted that section 20B(1) did not apply. On 17 November 2005 the claimant wrote to the Commissioners taking the point that no written summary of reasons had been given to Mr Potiriadis as required (so it was said) by section 20(8E). On 22 November 2005 the Commissioners replied, asserting that since the notice had been given by the Commissioners in accordance with section 20B(3), and not by an inspector, section 20(8E) did not apply. On 29 November 2005 the claimant responded, enclosing an opinion by leading counsel (Mr Mathew) and asserting that the notice was bad for failure to comply with section 20(8E). On 9 December 2005 the Commissioners replied in a long letter explaining why, in their view, section 20(8E) did not apply and why the notice was good: "there is nothing in your correspondence to suggest a legal basis for denying the validity of the notice." The letter observed that the claimant had three choices: to comply with the notice, to issue proceedings for judicial review or to wait for penalty proceedings. The letter concluded with a warning that, should the claimant neither comply with the notice nor commence judicial review proceedings within two weeks, the inspector would commence penalty proceedings. On 19 December 2005 the claimant filed his Form N461. On 5 January 2006 the Commissioners filed an acknowledgement of service disputing the claim. On 2 March 2006 Underhill J granted permission. The substantive hearing before me began on 15 January 2007 and finished the following morning when I reserved judgment. The construction of section 20B(3) It is convenient to start by recognising that the conditions which have to be satisfied where a notice under section 20(1) or 20(3) is given by an inspector, and in particular the requirement in such a case for consent by a General or Special Commissioner, have been described on high judicial authority as (see per Moses J in R v Inland Revenue Commissioners ex p Davis Frankel & Mead (a firm) [2000] STC 595 at para [27]; see also at paras [35], [38] and [49]) "important statutory safeguards against oppression or the unnecessary use" of what has been called on even higher authority (see per Lord Lowry in R v Inland Revenue Commissioners ex p T C Coombs & Co [1991] 2 AC 283 at page 301) "an intrusive and potentially oppressive (but presumably necessary) power." In the latter case, Lord Mackay of Clashfern LC commented at page 289 that: "In enacting these provisions Parliament obviously placed great weight on the position of the independent commissioner and the need for the commissioner's consent." Referring to what Lord Lowry had said in the same case at pages 301-302, Moses J went on in R v Inland Revenue Commissioners ex p Davis Frankel & Mead (a firm) [2000] STC 595 to observe at para [50] (citations omitted) that: "In R v IRC ex p T C Coombs & Co … Lord Lowry pointed out that the independent commissioner was the real and intended safeguard, that his consent was of paramount importance and that his consent provided an effective supervision curing any injustice." Understandably Mr Mathew seeks to derive support from these powerful observations for his fundamental submission that, on a proper reading of the legislation, the same statutory safeguards apply whether the notice under section 20(3) is given by an inspector or, in accordance with section 20B(3), by the Board. Mr Mathew puts his argument in various ways, which I shall address in due course, but whichever way it is put his argument, in my judgment, fails and must be rejected. With all respect to Mr Mathew's sustained argument to the contrary, on any sensible reading of the legislation the meaning and effect of section 20B(3) is quite clear. Section 20B(3) does three things: i) First ("An inspector cannot under section 20(1) or (3) … give notice to a barrister, advocate or solicitor") it disqualifies an inspector from giving any notice under section 20(1) or 20(3) to a barrister, advocate or solicitor. ii) Secondly ("but the notice must in any such case be given (if at all) by the Board") it provides that such a notice can be given only by the Board. (I note in passing that the first and second limbs of section 20B(3) quite plainly constitute "restrictions on powers" under section 20 as those words are used in the heading to section 20B.) iii) Thirdly ("and accordingly in relation to a barrister, advocate or solicitor for references in section 20(3) and (4) … to the inspector there are substituted references to the Board") it provides how certain provisions in the legislation are to be applied where, in accordance with the immediately preceding words, a notice under section 20(3) is given by the Board rather than by an inspector. For present purposes it is the last few words of section 20B(3) which are critical. The draftsman has there adopted a well-known technique of referential drafting. Rather than repeating the whole of section 20(3) with the slight modifications called for when the notice is given by the Board rather than by an inspector, the draftsman has simply indicated that when the notice is given to a barrister, advocate or solicitor (ie, when the notice is given by the Board rather than an inspector) section 20(3) is to be read with references to the Board substituted for references to an inspector. In other words, when the notice is given by the Board section 20(3) has to be read as if the words "an inspector" or "the inspector" were struck out and replaced by the words "the Board." That, as it seems to me, is the plain and obvious meaning of the third limb of section 20B(3). Now what is important, indeed determinative, for present purposes is not only what section 20B(3) says but, equally important, what it does not say. The substitution of references to the Board for references to the inspector is stated as applying to section 20(3); it is not stated as applying to section 20(7) or to section 20(8E) or to section 20B(1) or to section 20B(1A). Those sections, in other words, remain unaffected as to their language by anything in section 20B(3). And since each of those sections is, as a matter of its unaltered language, applicable only to notices given by "an inspector", they have no application in any case where the relevant notice is given not by an inspector but, by virtue of section 20B(3), by the Board. So, says Ms Simler, and this is really the kernel of her argument, as a matter of simple language, none of sections 20(7), 20(8E), 20B(1) and 20B(1A) applies where, as in the present case, a notice under section 20(3) is served not by an inspector but by the Board. As a matter of simple language, in my judgment, that must be right. Mr Mathew submits that I should adopt a purposive construction of section 20B(3). He submits that section 20B(3) must be construed so that it sits comfortably with the policy underlying, and with the whole scheme of, the statutory code which is to be found in sections 20 to 20D of the Act. He says that section 20B(3), insofar as it requires action by the Board rather than an inspector, is a supplementary safeguard, that is, a safeguard additional to and not in substitution for those which apply when notice is given under section 20(3) by an inspector. He suggests that the inclusion in section 20B(3) of the parenthetical words " … (if at all) … " demonstrates Parliament's recognition of what he calls the exceptional nature of the step being taken when a section 20(3) notice is served on a barrister, advocate or solicitor – something quite inconsistent with the removal, if the Commissioners are correct, of all the safeguards otherwise imposed by the legislative scheme and inconsistent also, he submits, with the description in the heading to section 20B of the section as containing "restrictions" on the powers set out in, inter alia, section 20(3). Ms Simler submits in response, that, properly construed, section 20B(3) does not require the Board to meet the same pre-conditions as an inspector; that section 20B(3) is properly described as and plainly operates as a "restriction" inasmuch as it prevents a notice, where it is to be given to a barrister, advocate or solicitor, from being given by an inspector; that the legislation, in the case of notices given to lawyers, deliberately replaces the requirement of what she calls low-level administrative decision (with General or Special Commissioner level supervision) with a requirement of what she calls high-level administrative decision; and that the scheme of the Act allows lawyers what she calls an effective opportunity to vindicate their rights under either judicial review proceedings or during enforcement (penalty) proceedings. She further submits that the Commissioners have in no case been granted any unfettered discretion to invade privacy, confidentiality or privilege. What she accepts are intrusive powers are, she points out, subject to statutory safeguards of various kinds, those safeguards being graduated and increasing proportionately, she submits, so that the more intrusive the power the greater the statutory safeguards. Different levels of administrative decision-making, supervised by different levels of judicial authority and subject to different procedures, are required for the exercise of different powers. She helpfully summarised for me in a most useful table what she accurately referred to as the somewhat complex statutory structure created by sections 20 to 20D of the Act. I need not for present purposes follow Ms Simler on her journey through the whole of that analysis, illuminating though it was. As an example of this graduated scheme, and as Ms Simler points out, at the top end of the scale, I can take section 20C which, as we have seen, confers powers of entry and search, if necessary by force. Here the statute requires both a decision by the Board itself (the power, as we have seen, is non-delegable) and prior judicial authorisation. Broadly speaking I accept Ms Simler's submissions. The meaning of section 20B(3) is, in my judgment, quite clear. Construed as Ms Simler would have me read it, and as I agree it must be read, section 20B(3) fits in quite comfortably, in my judgment, with the overall scheme of the legislation. And a purposive construction does not lead to any different conclusion. Although there is no previous decision directly in point, Ms Simler prays in aid powerful dicta in support of this reading of sections 20 and 20B. In the first place there is Moses J's careful analysis of the legislation in R v Inland Revenue Commissioners ex p Davis Frankel & Mead (a firm) [2000] STC 595. In that case a notice had been given, purportedly on behalf of the Board under sections 20(3) and 20B(3), by a Mr Brannigan who was, at the material time, the Director of Special Compliance Office. It was argued that Mr Brannigan lacked power to give the notice. The argument proceeded on two fronts. The wider and more general submission was that the Board alone could give a notice under section 20B(3), and that that power could not be delegated at all. The narrower submission was that the Board could not in any event delegate this particular power to an inspector, and Mr Brannigan, despite the high office he held, was in fact an inspector. The importance of the case for present purposes is that the foundation of both arguments was the assertion that, where a section 20(3) notice is given by the Board, none of the safeguards applying where the notice is given by an inspector operate – hence, so it was said, Parliament could not have intended the Board's power to be delegable. Moses J clearly accepted the premise upon which the argument proceeded, though of course it went unchallenged because the Inland Revenue had no interest in arguing the contrary. Thus Moses J commented (see at paras [27] and [49]) that: "It is important to observe that where a notice has been given by the Board to a solicitor certain important statutory safeguards against oppression or the unnecessary use of the power are not available … where there is power to give notice to a barrister, advocate or solicitor, and that power is restricted to the Board by virtue of s 20B(3) there is no other safeguard against the abuse of power other than the supervision of the Board itself." He continued at paras [51]-[52]: "[51] In the context of the power to be exercised by the Board under s 20B(3), the only safeguard is the requirement that the Board itself should decide upon the propriety of the notice. It cannot, it is argued, be supposed that that sole protection can be weakened by a power to delegate, particularly when delegation is to the very head of the office undertaking the investigation. The director of the SCO cannot, at the very least, present the appearance of distance and detachment from the vortex of the investigation, the opportunity for which is available to the Board itself. [52] I agree that the safeguards available, when action is taken by an inspector, are absent and that it is to be inferred that Parliament intended that the requirement that the Board itself exercise powers under s 20(3) is intended to provide some substitute for those statutory safeguards which it may be assumed would otherwise be in place. But I do not agree that it follows that there is no power to delegate to the director of the SCO. He is required to stand back and reach a fresh view, scrutinising with care the reports from the investigators who seek inspection, but he does so as the Board. For the reasons I have advanced earlier there is no prohibition on delegation and no prohibition on delegation to Mr Brannigan who acts as the Board and not as an inspector." Now, as Mr Mathew correctly observes, Moses J was not directly concerned with the point which is currently before me. Nonetheless, the arguments which Moses J had to address required the careful analysis of the legislation which is so apparent from his judgment. The observations by Moses J upon which Ms Simler relies were carefully considered. They were far indeed from being some casual or throwaway line. In my judgment, they lend very powerful support to Ms Simler's argument. Secondly, Ms Simler points to what Lord Hoffmann said in R (Morgan Grenfell & Co Ltd) v Special Commisioner of Income Tax [2002] UKHL 21, [2003] 1 AC 563, at para [11] when referring to the statutory safeguards: "The first form of safeguard is some form of judicial or administrative control, graduated according to the intrusiveness of the power. Thus the inspector's power to require delivery of documents under section 20(1) or (3) requires the consent of a general or special commissioner: subsection (7). Consent is not needed only if the Board of Inland Revenue itself makes the request under section 20(2). Likewise, only the Board may give a notice under section 20(1) or (3) to a barrister, advocate or solicitor: section 20B(3). Notices to tax accountants under section 20A(1) (see section 20A(3)) and searches under section 20C(1) require the consent or warrant (as the case may be) of "the appropriate judicial authority", which in England means a circuit judge: section 20D(1)(a)." Now the question in that case was whether, despite the language of section 20B(8), referring only to a notice given under section 20(3), legal professional privilege also applies where the notice is given under section 20(1). (The House held that it does.) So the question before the House was very different from that with which I am concerned, and Lord Hoffmann, when he used the words relied upon by Ms Simler, was doubtless speaking generally and not focussing as precisely as I have had to focus upon the precise meaning and effect of section 20B(3). Obiter dicta they may have been but, as Sir Robert Megarry once observed, there are dicta and dicta. Lord Hoffmann's observations, as it seems to me, provide further powerful support for Ms Simler's reading of the legislation. Mr Mathew submits that section 20B(3) operates as a deeming provision. He submits that section 20B(3) is a pre-condition to the exercise of the section 20(3) where the notice is intended to be given to a barrister, advocate or solicitor and that there is no indication at all that the draftsman sought to limit the other safeguards or conditions for the exercise of that power. He submits that the draftsman did this efficiently by putting the responsibility for the decision on the Board and then by substituting "the Board" for "the inspector" in section 20(3) so that – and this is the key submission – the other obligations inherent, on an exercise of the power by an inspector, were retained. By "substituting" one person for another, and I quote Mr Mathew, the draftsman "deemed the latter to be the former for all the purposes of section 20(3)." Mr Mathew in his oral submissions put the same point in slightly different words when he said that under section 20B(3) the Board has subsumed the inspector's powers and duties and so has to comply with all the limitations and pre-conditions which apply when the power under section 20(3) is being exercised by an inspector. In support of his arguments on this point Mr Mathew referred me to the well-known passage in the judgment of Nourse J in Commissioners of Inland Revenue v Metrolands (Property Finance) Ltd (1980) 54 TC 679 at page 697 and the equally well-known passage in the judgment of Peter Gibson J in Marshall (HM Inspector of Taxes) v Kerr (1993) 67 TC 56 at page 79. He also took me to various passages in the speeches of their Lordships both in the latter case and also in R v Dimsey [2001] UKHL 46, [2002] 1 AC 509. I have to say, with respect, that none of this was of the slightest assistance. In the first place, those cases were concerned with a very different type of statutory provision. In both Commissioners of Inland Revenue v Metrolands (Property Finance) Ltd (1980) 54 TC 679 (a decision on section 181(2) of the Town and Country Planning Act 1971) and R v Dimsey [2001] UKHL 46, [2002] 1 AC 509 (a decision on section 739(2) of the Income and Corporations Taxes Act 1988) the relevant statutory provision provided in terms that something was to be "deemed." In Marshall (HM Inspector of Taxes) v Kerr (1993) 67 TC 56 (a decision on section 24(11) of the Finance Act 1965) the relevant statutory provision was to the effect that something done by A was to be treated for certain purposes "as if" done by B. Section 20B(3) is not a deeming provision. It does not, at least in so many words, deem the Board, when exercising its powers under section 20B(3) to be an inspector. Indeed, it would be very odd to read the third limb of section 20B(3) in this way when the first limb has just spelt out that an inspector cannot do what the second limb has gone on to spell out that only the Board can do. Nor does section 20B(3) say that the Board is to exercise its powers "as if" those powers were being exercised by an inspector. Section 20B(3) is a very different type of provision. It is, as I have said, simply an example of the well-known technique of referential drafting. More generally, as both Nourse J and Peter Gibson J recognised, a deeming provision, in the sense in which that expression is used in the authorities to which Mr Mathew took me, is a provision which creates what they both referred to a "statutory fiction." That is, it is a provision which requires one to treat as real that which is only deemed to be so, and where the essential task for the court – and often the difficulty which is presented to the court – is to ascertain the extent to which, and for what purposes and between what persons, that "statutory fiction" is to be resorted to. But section 20B(3) creates no statutory fiction. Ms Simler submits, succinctly and in my judgment correctly, that section 20B(3) is not a deeming provision; it is merely a provision that substitutes "the Board" for "the inspector" in certain provisions but not in others – specifically, and expressly, in section 20(3) but not, for example, in section 20(7). The Convention Mr Mathew seeks support for his case by relying upon Article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms. He does not assert that section 20B(3) is incompatible with the Convention. What he does assert, however, is that section 20B(3) has to be, and can be, read in a manner compatible with the Convention and with the Strasbourg jurisprudence; that Ms Simler's reading of section 20B(3) is not compatible with the Convention and the jurisprudence; and that if section 20B(3) is to be read in a manner which is compatible with the Convention and the jurisprudence it must be read as Mr Mathew would have me read it – in other words reading into the statute when a section 20(3) notice is given by the Board the same safeguards as apply when such a notice is given by an inspector. I cannot agree with any of this. Section 20B(3) read as Ms Simler would have me read it is fully Convention-compliant. There is nothing in the Convention or in the Strasbourg jurisprudence requiring it to be read as Mr Mathew would have me read it. Article 8 provides as follows: "(1) Everyone has the right to respect for his private and family life, his home and his correspondence. (2) There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others." Ms Simler accepts that Article 8 is engaged, both as regards the taxpayer, Mr Potiridias, and also (see Tamosius v United Kingdom [2002] STC 1307 at page 1315 referring to Niemietz v Germany (1993) 16 EHRR 97) as regards his solicitor, the claimant. She also accepts that in respect of both of them the giving by the Board of the notice under sections 20(3) and 20B(3) amounted to an interference with the right to respect for private life protected by Article 8. Those concessions, in my judgment, were properly made. Mr Mathew for his part accepted that, at least in principle, this interference had the aim, legitimate under Article 8(2), of furthering "the economic well-being of the country": see X v Belgium (1982) 31 DR 231. This concession also, as it seems to me, was properly made. The argument accordingly focussed on the questions whether section 20B(3), if construed as the Commissioners would have me construe it, meets the two requirements that the interference was "in accordance with the law" and was "necessary in a democratic society." So far as concerns the latter requirement, the question of whether the interference was "necessary" in the particular case is something to be determined in the light of all the facts of the particular case. In the present case, as I have said, no challenge to the notice is mounted by reference to the circumstances in which or the reasons for which it was issued. The only challenge is in relation to the meaning and effect of section 20B(3). That, in principle, the provisions of section 20(3) and 20B(3) satisfy the test of necessity cannot sensibly be controverted and Mr Mathew did not suggest the contrary: compare, for example, Funke v France (1993) 16 EHRR 297 at para [56] (recognising that house searches and seizures may be "necessary" to prevent or prosecute tax evasion). Indeed, as we have seen, Lord Lowry accepted in R v Inland Revenue Commissioners ex p T C Coombs & Co [1991] 2 AC 283 at page 301 that the power under section 20(3) although intrusive and potentially oppressive was necessary. The real argument before me was founded on the requirement that any interference with rights protected by Article 8 must be "in accordance with the law." The Strasbourg jurisprudence shows that an interference will not be "in accordance with the law" unless it has some basis in domestic law, unless it is "accessible" to those concerned and unless it is stated with sufficient precision for its meaning and nature to be "foreseeable": see, for example, Chappell v United Kingdom (1989) 12 EHRR 1 at paras [52] and [56] and Huvig v France (1990) 12 EHRR 528 at paras [26] and [29]. There is no doubt but that those requirements are met in the case of the legislation with which I am here concerned. But the Strasbourg jurisprudence goes further. As the Strasbourg court said in Olsson v Sweden (1989) 11 EHRR 259 at para [61]: "The phrase 'in accordance with the law' does not merely refer back to domestic law but also relates to the quality of the law, requiring it to be compatible with the rule of law; it thus implies that there must be a measure of protection in domestic law against arbitrary interferences by public authorities with the rights safeguarded by, inter alia, para 1 of Article 8." Following on from this the Strasbourg court has repeatedly indicated, as it was put in Funke v France (1993) 16 EHRR 297 at para [56], that "the relevant legislation and practice must afford adequate and effective safeguards against abuse" (see also Chappell v United Kingdom (1989) 12 EHRR 1 at para [57]) or, as it was put in Tamosius v United Kingdom [2002] STC 1307 at page 1315, that there are "sufficient procedural safeguards attaching to the procedure to prevent any abuse or arbitrariness." Now it is apparent from the Strasbourg jurisprudence that in the case of Anton Piller orders (see Chappell v United Kingdom (1989) 12 EHRR 1) and searches or seizure of property (see Funke v France (1993) 16 EHRR 297 and Tamosius v United Kingdom [2002] STC 1307) there are unlikely to be sufficient procedural safeguards to meet the requirements of Article 8 in the absence of some mechanism of prior judicial authorisation. But there is nothing in the Strasbourg jurisprudence to suggest that prior judicial approval is necessarily required in the case of less intrusive interferences with the rights protected by Article 8 such as the particular form of interference with which I am here concerned. So the Strasbourg jurisprudence does not, in my judgment, assist Mr Mathew. There are, as it seems to me, two obvious and important differences between a notice given under section 20(3) and a search conducted under section 20C. In the first place, a search under section 20C is more intrusive, very much more intrusive, than a notice under section 20(3). Secondly, and in the nature of things, there is not the same ability for the victim of the Commissioners' attentions under section 20C to seek a pre-emptive judicial remedy as there is in the case of the recipient of a section 20(3) notice. In practical terms it will be difficult if not impossible for someone presented with a search warrant to apply to a judge before the warrant is executed. In contrast, and as the present case illustrates, there is no difficulty in the recipient of a notice applying to a judge for relief and, if the relief sought is judicial review, doing so before the stipulated time for compliance. (For this reason I am less impressed with the argument that the ability to defend subsequent enforcement proceedings provides an adequate safeguard.) These considerations amply demonstrate why section 20C, conformably with the Strasbourg jurisprudence, requires prior judicial approval. But equally they demonstrate, and in my judgment again conformably with the Strasbourg jurisprudence, that a section 20(3) notice if given by the Board in accordance with section 20B(3) does not require prior judicial sanction. Any need for judicial scrutiny in such a case is, in my judgment, adequately met by the availability of judicial review. In my judgment the Convention as expounded in the Strasbourg jurisprudence does not require prior judicial sanction when a section 20(3) notice is given by the Board. Nor does the Convention require the importation of the other safeguards that would apply if the notice was being given by an inspector. The combination of what Ms Simler calls high-level administrative decision-making and the ability to apply for judicial review before complying with the notice in my judgment comfortably meets the requirements of the Strasbourg jurisprudence. Two important qualifications I do not want there to be any misunderstanding. In particular I would not wish the Commissioners to read too much into this judgment. There are two important points to be made by way of qualification of what I have said. The first relates to the Commissioners' power to delegate their functions under section 20B(3). I agree entirely with everything Moses J said on this point in R v Inland Revenue Commissioners ex p Davis Frankel & Mead (a firm) [2000] STC 595. But there is, as it seems to me, a rather uneasy 'fit' between Ms Simler's characterisation of what happens under section 20B(3) as high-level administrative decision-making and the fact, as I have pointed out, that there is nothing on the face of the 2005 Act to prevent the Commissioners delegating their powers under section 20B(3) to any officer, indeed to "any person" they choose. In practice, of course, as we have seen, the delegation of this particular power is limited to a small number of very senior officials. And it is to be noted that Moses J was careful in R v Inland Revenue Commissioners ex p Davis Frankel & Mead (a firm) [2000] STC 595 to limit his decision (see para [50]) to the case of delegation to the director of Special Compliance Office. Just how far the Commissioners can lawfully go in delegating their functions under section 20B(3) is something, if the matter arises, for another day. But nothing in this judgment is to be taken as indicating that the outcome would necessarily have been the same had the delegation of their powers in relation to section 20B(3) in fact been to a wider class of lower level officials. On the contrary, and as I suggested during the course of argument, there may come a point where a purported delegation extends so far and to such a wide class of officials as to exceed the proper bounds of the Commissioners' power. To take an extreme example, if the Commissioners were to purport to exercise their power of delegation so as to authorise every inspector to exercise the Board's powers under section 20B(3), it is not at all obvious that such an authorisation would withstand attack. One can envisage powerful arguments that such an exercise of the statutory power to delegate would be unlawful, as an abuse of the power or as an exercise of the power for the collateral and unlawful purpose of enabling inspectors to evade the requirements to which sections 20 and 20B would otherwise subject them, just as one can envisage powerful arguments to similar effect based upon Article 8. The other matter relates to the availability of judicial review. If it is to be the important safeguard which, as it seems to me, is needed in circumstances where, because the notice under section 20(3) is being given by the Board rather than by an inspector, there is lacking the safeguard of prior judicial approval by a General or Special Commissioner, then judicial review has to be an effective remedy. And it is unlikely to be an effective remedy, and unlikely to be a remedy meeting the standards mandated by Article 8, unless there is proper scope for an appropriate degree of judicial examination and evaluation of the reasons why the Commissioners have decided to exercise their powers in the particular case. The function of the judge on a judicial review is, of course, one of review, but the intensity of the review will vary with the context and the circumstances. Where the Convention is engaged, context is everything. This is a topic which was considered – long before the Convention became part of our domestic law – in R v Inland Revenue Commissioners ex p T C Coombs & Co [1991] 2 AC 283. But care must be taken not to read too much into what the House of Lords said, certainly if their Lordships' speeches are to be relied upon as limiting the ambit of the material which the Commissioners must place before the court if a judicial review claim is brought against them in relation to their giving of a section 20(3) notice. It is important to appreciate that the notice in R v Inland Revenue Commissioners ex p T C Coombs & Co [1991] 2 AC 283 had been given by an inspector, and not by the Board, so all the statutory safeguards were in place, in particular the need for prior judicial consent by a General or Special Commissioner. The House of Lords was at pains to point out that, because of the duty of the General or Special Commissioner asked to give his consent under section 20(7) to have regard to "all the circumstances", there was a corresponding duty on the Inland Revenue to place before the Commissioner all the material available to it which was relevant to the application (see, for example, Lord Mackay of Clashfern LC at pages 288-289, Lord Jauncey of Tullichettle at page 289 and Lord Lowry at page 305). In those circumstances, as Lord Lowry pointed out at page 300: "The case for the validity of … any section 20(3) notice… is supported by the presumption of regularity, which is strong in relation to the function of the commissioner under section 20(7). He is an independent person entrusted by Parliament with the duty of supervising the exercise of the intrusive power conferred by section 20(3) and "in the absence of any proof to the contrary, credit ought to be given to public officers, who have acted prima facie within the limits of their authority, for having done so with honesty and discretion:" Earl of Derby v Bury Improvement Commissioners (1869) LR 4 Exch 222, 226. The commissioner must be taken to be satisfied that the inspector was justified in proceeding under section 20 and hence that the inspector held, and reasonably held, the opinion required by section 20(3). The presumption that that opinion was reasonable and that the commissioner was right to be satisfied can be displaced only by evidence showing that at the time of giving the … notice the inspector could not reasonably have held that opinion. In order to decide whether the applicants succeed in this task, the court must consider all the evidence on both sides and all the available facts, one of which is that the commissioner, having heard an application, consented to the giving of the notice." But where, as in the case of a notice given not by an inspector but by the Board, there is no scrutiny by a General or Special Commissioner, it seems to me that the presumption of regularity is much weaker and that correspondingly the Commissioners may face a stiffer evidential burden in seeking to ward off an application for judicial review. The starting point, as it seems to me, is what Lord Jauncey of Tullichettle said at page 289: "The revenue have a heavy responsibility when seeking to exercise their powers under section 20 of the Act of 1970 and they must only hide behind a cloak of confidence when this is absolutely necessary and not as a matter of course. If a person to whom a request for documents has been made asks reasonable questions or raises reasonable objections the revenue should deal with these matters unless there are compelling reasons for adopting a wall of silence." Accordingly, where the Commissioners give a section 20(3) notice under section 20B(3) they may find themselves in difficulties if they are too reticent when resisting reasonable and proper requests for information as to why they have decided to give the notice. And the mere fact that section 20(8E) does not apply to such a notice does not necessarily mean, as it seems to me, that the Commissioners can simply refuse to give any reasons for their decision. After all, public authorities sued in judicial review proceedings are under certain obligations. I have in mind, for example, cases such as R v Lancashire County Council ex p Huddlestone [1986] 2 All ER 941 at page 945 and R (Quark Fishing Ltd) v Secretary of State for Foreign and Commonwealth Affairs [2002] EWCA Civ 1409, [2002] All ER (D) 450 (Oct), at paras [50] and [55], with their references to the high standards of candour expected of public authorities in judicial review proceedings and to the obligation of public authorities involved in such proceedings to make full and fair disclosure and provide full and accurate explanations. Conclusion The application fails and must be dismissed with costs.

WARNING The judge hearing this motion 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. WARNING An order restricting publication in this proceeding was made under s. 517 of the Criminal Code and continues to be in effect.  This section of the Criminal Code provides: 517(1)         If the prosecutor or the accused intends to show cause under section 515, he or she shall so state to the justice and the justice may, and shall on application by the accused, before or at any time during the course of the proceedings under that section, make an order directing that the evidence taken, the information given or the representations made and the reasons, if any, given or to be given by the justice shall not be published in any document, or broadcast or transmitted in any way before such time as (a)     if a preliminary inquiry is held, the accused in respect of whom the proceedings are held is discharged; or (b)     if the accused in respect of whom the proceedings are held is tried or ordered to stand trial, the trial is ended. Failure to comply (2)     Everyone who fails without lawful excuse, the proof of which lies on him, to comply with an order made under subsection (1) is guilty of an offence punishable on summary conviction. (3)     [Repealed, 2005, c. 32, s. 17] R.S., 1985, c. C-46, s. 517; R.S., 1985, c. 27 (1st Supp.), s. 101(E); 2005, c. 32, s. 17. COURT OF APPEAL FOR ONTARIO CITATION: R. v. N.S., 2021 ONCA 605 DATE: 20210907 DOCKET: M52683 & M52732 (C69437) Fairburn A.C.J.O. (Motion Judge) BETWEEN Her Majesty the Queen Appellant and N.S. Respondent and Criminal Lawyers’ Association (Ontario), Canadian Alliance for Sex Work Law Reform, Monica Forrester, Valerie Scott, Jane X, Alessa Mason, Lanna Moon Perrin, and Tiffany Anwar Proposed Interveners Deborah Krick, Michael Dunn, and Jeremy Tatum, for the appellant Jeffery Couse, for the respondent Gerald Chan and Dragana Rakic, for the proposed intervener the Criminal Lawyers’ Association (Ontario) Michael Rosenberg and Alana Robert, for the proposed interveners the Canadian Alliance for Sex Work Law Reform, Monica Forrester, Valerie Scott, Jane X, Alessa Mason, and Lanna Moon Perrin Tara Santini, for the proposed intervener the Canadian Alliance for Sex Work Law Reform James Lockyer, for the proposed intervener Tiffany Anwar Michael H. Morris and Joseph Cheng, for the Attorney General of Canada Heard: August 19, 2021 via videoconference REASONS FOR DECISION A. Overview [1] The respondent (N.S.) was charged with numerous offences under the Criminal Code , R.S.C., 1985, c. C-46, including s. 286.2(1) (receiving material benefit from sexual services), s. 286.3(1) (procuring sexual services), and s. 286.4 (advertising sexual services). At trial, N.S. asserted that all three of those provisions infringed ss. 2(b), 2(d), and 7 of the Canadian Charter of Rights and Freedoms and were not justifiable limits under s. 1. The trial judge found that the provisions infringed s. 7 of the Charter , declared them of no force and effect, and declined to suspend the declaration of invalidity: R. v. N.S. , 2021 ONSC 1628; R. v. N.S. , 2021 ONSC 2920. [2] On June 15, 2021, the Crown filed an application to stay the effect of the declaration pending the resolution of the appeal in this matter. The Crown has already filed its motion record on the application for a stay, including seven affidavits in support of its position. That application is scheduled to be heard by a panel of this court on October 1, 2021. I have been informed that the Crown expects to perfect the appeal prior to the date that the stay application will be heard. [3] These reasons pertain to the relief sought by a number of proposed interveners. With the exception of the Criminal Lawyers’ Association (Ontario) (“CLA”), I will refer to all other proposed interveners collectively as the “Group Interveners”. This is appropriate because, both in written and oral submissions, they presented a united front at the motion forming the subject of these reasons. [4] At this time, the CLA only requests leave to intervene in the Crown’s motion for a stay. The Crown consents to the CLA’s motion. I would grant the requested relief, subject to the conditions set out at the end of these reasons. [5] The Group Interveners ask that they be permitted leave to intervene in the appeal of this matter. The Group Interveners also seek a number of other forms of cascading relief, relief that far exceeds what the CLA requests. In particular, the Group Interveners ask for the following: (i)    as their primary position, the Group Interveners ask for an order suspending the hearing of the appeal in this matter until such time that an application that the Group Interveners have lodged in the Superior Court of Justice has been adjudicated upon; (ii)    if the hearing of the appeal is not suspended, then the Group Interveners ask for an order granting them leave to intervene in the Crown’s motion for a stay pending appeal of the declaration of invalidity of ss. 286.2, 286.3(1), and 286.4 of the Criminal Code , including an order that the Group Interveners be permitted to introduce fresh evidence on the stay application and participate fully in cross-examinations on that application; (iii)   if the hearing of the appeal is not suspended until after the Superior Court application is adjudicated upon, the Group Interveners also request an order that they be permitted to file a fresh evidence application on the appeal proper, an application that would largely duplicate the materials they wish to file on the stay application (should the relief in (ii) above be granted), as well as the materials filed in support of their application in the Superior Court of Justice. [6] The Crown consents to the Group Interveners being granted leave to intervene in both the motion to stay and the appeal, subject to limitations being placed upon the length of their factums and submissions. However, the Crown opposes the Group Interveners being permitted to delay the hearing of the appeal and expand the evidentiary record in both the stay application and the appeal. [7] For the reasons that follow, the Group Interveners are granted leave to intervene in both the motion to stay and the appeal. They will be permitted to file written submissions and make oral argument in accordance with the terms set out at the end of these reasons. All other forms of relief are denied. B. The Requests of the Group Interveners [8] The Group Interveners consist of sex workers’ rights organizations, individual sex workers, and a third party. They include the Canadian Alliance for Sex Work Law Reform, a coalition of 25 leading sex workers’ rights organizations predominantly led by and for sex workers across Canada. This coalition is joined by current and former sex workers and a former escort agency operator. [9] The Crown acknowledges that the Group Interveners meet the criteria for leave to intervene as set out in this court’s prior jurisprudence: Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada Ltd. (1990), 74 O.R. (2d) 164 (C.A.), at p. 167; Bedford v. Canada (Attorney General) , 2009 ONCA 669, 98 O.R. (3d) 792, at para. 2 [ Bedford (2009)]. Accordingly, the Crown consents to the Group Interveners being granted leave to intervene in both the stay motion and the appeal proper. [10] I do not question the Crown concession on this point. The Group Interveners include well-recognized entities with a special expertise in the issues to be decided on appeal; all have a real, substantial, and identifiable interest in the subject matter of the proceedings; and each has an important perspective to bring to the appeal, which perspectives I am satisfied will differ in some respects from the immediate parties to the appeal: Bedford (2009), at para. 2. [11] Where the Group Interveners and the Crown part company is on the role that the Group Interveners should play in relation to this appeal. The Crown maintains that the Group Interveners should be held to the traditional intervener status of friends of the court and, therefore, not be permitted to act as if they are a party to this criminal appeal, weighing in on scheduling issues and expanding the issues to be decided and factual record upon which to decide them. [12] The group interveners want more. (1) Should the Appeal be Delayed Pending Adjudication of the Civil Application in the Superior Court of Justice? [13] The Group Interveners have brought a civil application in the Superior Court of Justice, in which they challenge the constitutionality of many (if not all) of the Criminal Code provisions pertaining to commercial sex work. As their primary form of relief in the criminal appeal before this court, the one focused most heavily upon in both written and oral submissions, the Group Interveners ask that the appeal be placed on pause until their civil application has been adjudicated. They say that this relief should be granted because their application is the best means of determining the constitutionality of the provisions at issue in this criminal matter. The Group Interveners emphasize that this appeal only involves three of the Criminal Code provisions relating to sexual services and that the record is, in their view, woefully inadequate. As well, the Group Interveners argue that the constitutionality of the provisions were only considered through a ss. 2(b), 2(d), and 7 Charter lens at trial, when in fact they should have also been considered, at a minimum, under s. 15 of the Charter . [14] The Group Interveners therefore argue that this appeal should be delayed so that their civil application can be adjudicated, thereby offering this court the benefit of “robust guidance” when considering the appeal in this matter. Alternatively, the Group Interveners say, if there is an appeal taken from the decision arising out of their civil application, then that appeal could be grouped with this one, a grouping that would provide this court with the benefit of a significantly expanded factual record, and with an expanded constitutional lens through which to consider the impugned Criminal Code provisions. It is said that this would promote judicial economy in this court, defend against inconsistent decisions, and ensure that this court has the best available information before it when deciding these important issues. [15] Notwithstanding the importance of these issues, I would not grant this relief. [16] The Group Interveners’ civil application before the Superior Court of Justice challenges the same Criminal Code provisions struck down in this case: ss. 286.2(1), 286.3(1), and 286.4. In addition, that application challenges three other sections of the Criminal Code , all of which also relate to commercial sex work: s. 213(1) (stopping or impeding traffic for the purpose of offering, providing, or obtaining sexual services), s. 213(1.1) (communicating to provide sexual services for consideration next to a school, playground or daycare centre), and s. 286.1 (obtaining sexual services for consideration). In short, as I understand it from the materials filed on this application, the Group Interveners are essentially challenging all of the sexual service provisions in the Criminal Code . [17] Not only is the constitutional approach to those provisions much broader in scope than what was before the trial judge in this appeal (including a s. 15 Charter argument that was not argued in this case), but the Group Interveners have filed a factual record on their civil application that can only be described as considerable in scope. A condensed version of that record was filed on this motion and is over 600 pages in length. As I understand it, the full extent of the record as it currently stands is over 2,000 pages deep. It was only filed in the Superior Court on July 14, 2021 and contains 16 affidavits, with five of them being expert affidavits. [18] The Attorney General of Canada (“AGC”) is the respondent on the civil application in the Superior Court of Justice. While the AGC does not take a position on the Group Interveners’ application in this court, the AGC appeared as a courtesy to answer any questions about the outstanding civil application. The AGC says that it has not yet filed its record on the civil application. If all goes according to plan, the AGC will aim to have its materials filed by December 15, 2021. While understandably reluctant to provide exact numbers, counsel to the AGC allowed that they will likely be filing between 10 to 20 affidavits on the civil application. Then a reply record will have to be filed. [19] While there is no timetable set as yet for cross-examinations on the civil application, I am informed that it is reasonable to expect that around eight weeks will be needed for those cross-examinations. Of course, cross-examinations will not commence until after all materials have been filed. [20] While counsel are “optimistic” that this matter could be ready to be heard in the Superior Court by June of 2022, respectfully, I would place emphasis on the word “optimistic”. The simple reality is that, based upon the information available to this court on this application, the Group Interveners’ application in the Superior Court is at a very preliminary stage. [21] I have come to this conclusion based in part upon the helpful April 27, 2021 civil endorsement form of Myers J. In his endorsement, Myers J. notes that the applicants (the Group Interveners in this matter) were at that time asking for a February 2022 date for the hearing of the civil matter, which he described as “not realistic.” He also described what was being proposed as a “huge ‘trial in a box’”, questioning the appropriateness of only a four-day hearing for an application that would likely involve 20 or more affidavits, in addition to all of the transcript arising from cross-examinations. [22] Justice Myers declined the request to schedule the matter for four days in February 2022. As he put it, if the matter did not go ahead on those days, it would essentially mean “the loss of a judge-week from a schedule already beset with backlog from the pandemic.” [23] I was informed at the hearing of this application that a case management judge has recently been assigned in the Superior Court, but that the first case management meeting will not happen until September 14, 2021. Whatever comes from that case management process, one thing seems clear today, even based upon the parties’ own schedules, this matter cannot be heard in the Superior Court until at least June of next year. [24] Even if the parties to the civil application have completed the record by June of 2022, an ambitious schedule to be sure, it is not for this court to weigh in on whether the Superior Court will have time to hear the matter at that time. It will be for the Superior Court to determine the form that the application will take, the number of days that will be assigned to the matter, and when the Superior Court’s schedule will accommodate the matter. In other words, it is not at all clear that this matter will be heard by June of next year. And, even if it is heard then, one cannot forget that the matter has to be decided. On a record of this size, it is a simple reality that whatever judge hears the civil application, it will take some time to produce the reasons. [25] It seems somewhat clear today that the civil application will not be concluded for a long time. [26] At the same time, I am informed by Crown counsel that the Crown appeal in this matter will be perfected before October 1, 2021, the date scheduled for the hearing of the stay application. The Crown also says that it will be ready to argue the appeal by the early new year. I was informed by counsel for the respondent on the criminal appeal that he may not be in a position to file responding submissions and argue the appeal until a few months later, likely into April of 2022. [27] I would add the following. While the respondent supports the Group Interveners in this case – provided it creates only what he describes as a “modest delay”, which he defines as the appeal being argued in 2022 – he is not prepared to say that he is without s. 11(b) Charter concerns. While he does not rest charged right now and, accordingly, his s. 11(b) Charter entitlement is not active, I keep the respondent’s s. 11(b) concern in mind in arriving at my conclusion in this case. The fact is that, should the Crown succeed on appeal, the respondent will again face jeopardy on these charges. In my view, his concern reflects the fact that this is a criminal matter with significant implications, not only for the respondent as an individual, but for the community at large. [28] In any event, even if the civil application could be heard in June of 2022, and even if the reasons on this potentially 30-plus affidavit case, involving what Myers J. referred to as a “trial in a box”, could be delivered within a couple of months, respectfully, it seems unrealistic that an appeal from those reasons could get before this court and heard by the end of 2022. Therefore, stepping back and looking at this matter realistically, the respondent’s position that he will agree to a “modest delay” of up to the end of 2022 likely cannot be accommodated. [29] I am not familiar with the hearing of a criminal appeal ever having been delayed pending the outcome of a civil application. While the Group Interveners rely on a couple of civil appeals that were delayed in the interests of justice, they are not apposite to the request being made here. [30] In one of the cases, the delay was predicated on the need for the trial judge to determine some outstanding issues which would reduce the number of appeals brought before this court as a result. A short stay was granted for that purpose: Korea Data Systems (USA), Inc. v. Aamazing Technologies Inc. , 2012 ONCA 756, 29 C.P.C. (7th) 51, at paras. 23-24. [31] The other authority relied upon by the Group Interveners is one where this court delayed a civil appeal on the basis that it involved “essentially the same litigation”. Like Korea Data Systems , the same parties were embroiled in different pieces of litigation arising out of one main set of allegations: Canadian Planning and Design Consultants Inc. v. Libya (State) , 2015 ONCA 661, 340 O.A.C. 98, at para. 53. [32] These decisions have no application to the Group Interveners’ request in this case. [33] In my view, the Group Interveners’ request to delay this appeal will result in a very long delay. The purpose of the request is really predicated on a desire to turn the appeal into something very different than what is being appealed. The objective of this delay is to ensure that this appeal is heard against the backdrop of: (a) a significantly expanded record, including another potentially 30-plus affidavits and cross-examinations; (b) additional impugned statutory provisions; and (c) additional constitutional arguments. Respectfully, this is a request to turn this appeal into more of a reference, akin to the case that is currently lodged in the Superior Court. [34] It is critical to keep in mind the context surrounding this appeal. This is a criminal appeal predicated on an indictment. The respondent brought a constitutional challenge to the statutory provisions under which he was charged. He chose how to litigate those issues and the record unfolded accordingly. As with all constitutional litigation, the trial judge decided the matter based upon the factual record and arguments put before him. The Crown appeals from that decision. [35] Appeals must proceed in an expeditious fashion. This is particularly true where there is conflicting jurisprudence on the very subject of the appeal, as is the case here. Contrary to the disposition in this case, the trial judge in R. v. MacDonald , 2021 ONSC 4423, found that R. v. N.S. , 2021 ONSC 1628, was “plainly wrong” and upheld the constitutionality of the same impugned provisions: at para. 16. Two further trial judges agreed with the findings of the trial judge in MacDonald , similarly asserting that the decision in N.S. is “plainly wrong”: R. v. Williams (2 July 2021), Brampton (Ont. S.C.); R. v. Maldonado Vallejos , 2021 ONSC 5809, at para. 19. Additionally, there is one other matter pending at the Superior Court, where the accused has been found guilty and has been given time to consider whether to bring a constitutional challenge to s. 286.2(1) of the Criminal Code : R. v. Y.S. , 2021 ONSC 4010, at paras. 52, 202-204. [36] In addition, there are at least two appeals pending before this court in which I am informed by the Crown that each appellant appears to be raising the constitutionality of the same or similar Criminal Code provisions for the first time on appeal: R. v. J.K. (3 August 2016), Brampton (Ont. C.J.), appeal as of right to Ont. C.A., C63449; R. v. S.M. (11 October 2019), Newmarket, 18/05543 (Ont. C.J.), appeal as of right to Ont. C.A., C67806. There is also an appeal in the matter of R. v. B. , 2018 ONSC 7205 (C69136 & C69138), where the constitutional challenge to the same provisions as this case was dismissed. That case involves persons under the age of 18 years. [1] [37] Of further concern are four cases cited by the Crown that were scheduled to be heard by the Superior Court between August 2021 and September 2021. [2] Depending upon the results of those decisions, this court could be faced with even more appeals of a similar nature. [38] Quite simply, the trial courts need some help with respect to this matter. In my view, this court would be abdicating its responsibility to provide guidance on matters of constitutional importance, especially where there is uncertainty on such matters, if it were to suspend the hearing of a criminal appeal – one that would bring those constitutional matters into focus – pending a civil matter being adjudicated in the Superior Court, which may or may not even resolve within the next calendar year. This is particularly true when there are other constitutional challenges to the legislation being litigated in trial courts across Ontario right now, as is the case here. [39] Finally, as part of the materials filed on this application, the Crown also filed its record for the stay application. I do not intend to address that record in any detail, a matter that should be left to the panel hearing the stay application. I would simply note the fact that, as of May 21, 2021, there were hundreds of active cases in the Province of Ontario involving the impugned Criminal Code provisions. [40] Whether the record in this case is as complete as it could be or not, and whether N.S. challenged the provisions as completely as he could have or not, this matter is one of importance to N.S., to other accused whose jeopardy hangs in the balance, to the public, and to the administration of justice. It cannot be put on hold for an indefinite period of time. [41] Therefore, I dismiss the request to delay the hearing of the appeal. (2) Should the Group Interveners be Permitted to Introduce New Evidence on the Stay Application? [42] If the Group Interveners had succeeded in their application to have the appeal delayed, then they would not have taken a position on the Crown’s stay application. However, in the event that the request to delay the appeal were to be dismissed, the Group Interveners asked to be permitted to make written and oral submissions on that application and to file a factual record. It was made clear during oral submissions – for reasons that I need not get into, but which reasons I accept – that the Group Interveners are not prepared to share their factual record with the respondent to the stay application. [43] While I would grant the Group Interveners’ request to be permitted to intervene, subject to the terms set out below, they may not augment the factual record. [44] I start with the proposition that interveners are not typically granted the ability to supplement the record: R. v. M.C. , 2018 ONCA 634, at para. 10; R. v. Morris , 2019 ONCA 509, at para. 7; R. v. Chapman (2005), 203 O.A.C. 233 (C.A.), at para. 6. Nor are they permitted to raise issues beyond those raised by the parties to the litigation. For instance, this court has denied an intervener’s request to raise a new constitutional argument for the first time on appeal: see e.g., Bedford v. Canada (Attorney General) , 2011 ONCA 209, at paras. 4-20 [ Bedford (2011)]. Notably, as pointed out by the Crown, the Supreme Court also recently commented that interveners “play a vital role in our justice system by providing unique perspectives and specialized forms of expertise that assist the court in deciding complex issues that have effects transcending the interests of the particular parties before it” but, even so, interveners should not be permitted to “widen or add to the points in issue”: R. v. Barton , 2019 SCC 33, [2019] 2 S.C.R. 579, at paras. 52-53. [45] In my view, the same can be said of requests to intervene relative to a stay application. This stay application is a criminal matter between the parties, one that can be decided on the facts as marshalled by the parties. I am confident that those facts will be sufficient to give proper life to the application for a stay. I am also confident that the Group Interveners’ presence on the application, and the submissions they will offer, will provide the court with the assistance necessary to properly decide the issues before it. [46] Therefore, while the Group Interveners may provide written and oral submissions at the stay application, they may not augment the factual record. (3) Should the Group Interveners be Permitted to Augment the Appeal Record? [47] This brings me to the next form of relief requested by the Group Interveners. [48] If they are denied a stay of the appeal pending their civil application playing through in the Superior Court, then they wish to augment the appeal record with the record they have filed in the Superior Court. As mentioned before, the record from the civil application is already a record of substantial heft and will only get larger with the affidavits to be filed by the AGC and the eight weeks of cross-examinations yet to come. [49] Permitting the Group Interveners to augment the appeal record in this fashion would turn this appeal into an entirely different case. As previously noted, and for the reasons already discussed, it would essentially turn this court into a court of first instance on this issue of constitutionality and render the trial judge’s reasons entirely nugatory to the result. I say this because the case in this court would be litigated on an entirely different basis. This would be unfair to the trial judge, it would be unfair to the Crown, it would be unfair to the respondent, and it would be unfair to the administration of justice. It is not how constitutional litigation should evolve. [50] In essence, it would turn this criminal appeal into a reference involving a broad-ranging civil application. If there is to be additional evidence led on appeal, it is the parties who will have to follow the usual course and bring a fresh evidence application, leaving it to the panel hearing the appeal to decide whether that evidence should be admitted: R. v. M. (A.) , 2005 CanLII 33773 (Ont. C.A.), at paras. 1, 4. C. Conclusion [51] The CLA and the Group Interveners are granted leave to intervene in the Crown’s motion to stay the effect of the declaration of invalidity pending the resolution of the appeal, subject to the following terms: (i) The CLA and the Group Interveners may each file a factum not exceeding 15 pages in length; (ii) The factums will be filed no later than September 16, 2021; (iii) Oral argument of no more than 10 minutes each will be permitted; (iv) The record will not be supplemented in any way; (v) The interveners shall not seek costs; and (vi) No costs will be ordered against the interveners or the parties. [52] The Group Interveners are granted leave to intervene in the appeal subject to the following terms: (i) They may file a factum not exceeding 15 pages in length; (ii) The factum will be filed in accordance with a direction given by the case management judge; (iii) Oral argument of no more than 15 minutes will be permitted; (iv) The record will not be supplemented in any way; (v) The interveners shall not seek costs; and (vi) No costs will be ordered against the interveners or the parties. “Fairburn A.C.J.O.” [1] The Crown has suggested that it may seek to have the appeal of R. v. N.S. heard with the appeal in R. v. B. [2] R. v. Beeransingh , in Newmarket; R. v. Bernard , R. v. Deidun , in Peel; R. v. MacMillian , in St. Catharines; and R. v. Saab , in Peel.

MOHAN M. SHANTANAGOUDAR, J. Leave granted. The Judgment dated 06.05.2015 passed by the High Court of Punjab Signature Not Verified Haryana at Digitally signed by ASHWANI KUMAR Date 2018.01.19 141307 IST Reason Chandigarh in F.A. No. 2435 of 1996 is called in question by the State of Punjab on the ground that the companypensation ordered to be paid in respect of the fruit trees standing on the acquired land is liable to be reduced substantially. Land of the respondent was acquired along with trees standing on it for companystruction of Hydel Channel. A numberification under Section 4 of the Land Acquisition Act, 1894 hereinafter referred to as the Act was issued on 12.01.1990 and the declaration under Section 6 of the Act was made on 28.02.1990. The Land Acquisition Collector passed the supplementary award awarding companypensation of the fruit trees standing on the acquired land on 10.03.1993. Reference Court had rejected the reference sought by the respondent holding that the award made by the Land Acquisition Collector was proper and companyrect. The respondent approached the High Court of Punjab Haryana by filing the appeal which came to be allowed by the impugned judgment and reference was accepted awarding companypensation to the tune of Rs. 5,77,377/- for the standing trees on the acquired land along with other statutory benefits as per Sections 23 1-A , 23 2 and 28 of the Act. Hence, this appeal by the State. Heard the parties. The companynsel for appellant taking us through the material on record submits that the judgment of the High Court is liable to be set aside inasmuch as it has number companysidered the evidence in proper perspective while companying to the companyclusion. She has drawn our attention to certain paragraphs of the judgment of the reference companyrt in support of the said companytention. Per companytra, learned advocate for the respondent argued in support of the judgment of the High Court. The respondent the claimant relied upon Exhibit A.1. i.e. the assessment report of AW-2 prepared by an expert, in support of his companytention seeking enhancement. On the other hand, the State relied upon the opinion of another expert i.e. RW-2 the report of RW-2 is at Exhibit R.1. to companytend that the respondent is number entitled for companypensation as sought in respect of the trees. According to respondent, 396 fruit trees were standing on the acquired land of the respondent. They were, orange 28, peach 76, mausami 135 and mango The Land Acquisition Collector awarded total companypensation of Rs. 37,321.12 including 30 percent solatium and 12 percent increase in respect of such fruit trees. As mentioned supra, the reference companyrt on evaluating the material on record companyfirmed the award of the Land Acquisition Collector. Though, the respondent AW-1 claimed that the 396 fruit trees were standing, in his deposition he stated that they were 250 fruit trees which included amrood, orange and mango. Such trees were 4 to 5 years old. The expert examined by the respondent i.e. AW-2 Sunder Singh is a retired District Agricultural Officer who served for 34 years in various capacities. According to his report total value of all the trees was Rs.6,35,114.70. Certain other factors such as distance of land from the town etc. are also deposed by him. Per companytra, the Patwari RW-1 examined on behalf of the appellant State has produced khasra girdawari register of the relevant village in respect of certain years. The total area of the acquired land belonging to the respondent is 7 kanals 2 marlas less than 1 acre . In 1985-86, wheat and other crops were shown to have sown in the land. However, subsequently orchard Bagicha has been added with different ink in the crops companyumn and according to him such entry was made, i.e. adding the word Bagicha, without any order from the companypetent authority. No initials were also found. According to RW-2, Horticulture Development Officer the acquired trees of the respondent were found to be of D category. He has given the value of every kind of standing fruit trees. The valuation of RW-2 is far less than the valuation provided by AW-2. The expert examined by the respondent AW-2 has admitted that there was a tank for storing water and buckets were lying. Meaning thereby the respondent was allegedly watering the fruit trees by pouring water with the help of buckets. There was numberperennial source of water. In that regard the reference companyrt companycluded that the irrigation facility was scanty. AW-2 has further deposed that there companyld be 90 fruit trees in one killa equal to one acre . If, only 90 fruits trees can be planted in one killa one acre , we are at a loss to understand as to how there companyld be 250 trees or 396 trees in 7 kanals and 2 marlas of land less than one acre that too of B category as is sought to be companytended by the respondent. In view of the above, it is clear that the High Court has over looked certain material aspects of the evidence before companying to the companyclusion.

Judgment of the Court of First Instance (Third Chamber) of 14 December 2006 – Gagliardi v OHIM – Norma Lebensmittelfilialbetrieb (MANŪ MANU MANU) (Case T‑392/04) Community trade mark – Opposition proceedings – Application for the Community figurative trade mark MANŪ MANU MANU – Earlier national word mark MANOU – Refusal to register – Scope and correction of the decision of the Board of Appeal – Restriction of the application for registration – Partial withdrawal of the opposition – Legal interest in bringing opposition proceedings – Proof of use of the earlier mark – Scope of the proof of use – Likelihood of confusion – Article 8(1)(b) of Regulation (EC) No 40/94 1. Community trade mark – Appeals procedure (Council Regulation No 40/94, Arts 43(5), 62(1) and 74(1)) (see paras 43-51) 2. Community trade mark – Observations of third parties and opposition – Examination of the opposition – Proof of use of the earlier mark (Council Regulation No 40/94, Art. 43(2) and (3)) (see paras 81-94) 3. Community trade mark – Definition and acquisition of the Community trade mark – Relative grounds for refusal – Opposition by the proprietor of an earlier identical or similar mark registered for identical or similar goods or services (Council Regulation No 40/94, Art. 8(1)(b)) (see paras 110-127) Re: ACTION brought against the decision of the Fourth Board of Appeal of OHIM of 15 June 2004 (Case R 154/2002-4), relating to opposition proceedings between Norma Lebensmittelfilialbetrieb GmbH & Co. KG and Salvatore Gagliardi. Information relating to the case Applicant for the Community trade mark: Salvatore Gagliardi Community trade mark sought: Figurative mark MANŪ MANU MANU for goods in Classes 18, 24 and 25 – Application No 1021690 Proprietor of the mark or sign cited in the opposition proceedings: Norma Lebensmittelfilialbetrieb GmbH & Co. KG Mark or sign cited in opposition: German Word mark MANOU for goods in Class 25 Decision by the Opposition Division: Opposition dismissed Decision of the Board of Appeal: Appeal upheld; application for registration dismissed Operative part The Court: Annuls the decision of the Fourth Board of Appeal of the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) of 15 June 2004 (Case R 154/2002-4) in so far as it refuses the application for registration of the mark MANŪ MANU MANU, first, for ‘footwear’ and ‘headgear’ in Class 25 and second, for goods in Classes 18 and 24; Dismisses the remainder of the action; Orders OHIM to bear its own costs and a third of those incurred by the applicant; Orders the applicant, Salvatore Gagliardi, to bear two thirds of its own costs; Orders the intervener, Norma Lebensmittelfilialbetrieb GmbH & Co. KG, to bear its own costs.

MR JUSTICE IRWIN: Dr Aaalamani has not attended today. There is a long track record of failure to attend. The decision I have made to proceed is based on that background, and on the absence of any explanation as to why he has gone to Iran, as we are informed he has. This is part of the pattern that one can observe from the proceedings in July 2006, in respect of which he seeks permission for judicial review. It seems to me there is absolutely no merit in this attempted appeal. Having read carefully the decision letter of 25 July 2006 and the documentation that surrounds it, and read also the full and helpful skeleton submissions on behalf of the respondent (the GMC) prepared by counsel, and supported orally today, it seems to me that there is no prospect whatever of a successful appeal. Therefore this application is dismissed. MR JUSTICE IRWIN: There is an application for costs and for summary assessment of those costs. Mr Weisselberg, I see that the assessment goes up to 5 November only, but does it include today? MR WEISSELBERG: It does, I understand. Certainly my fees are included and attendance at hearing has been marked for two hours by Mr Hilton, who sits behind me. I would say that those costs reflect a reasonable amount of money to pay for having to deal with a substantial bundle of materials. Although your Lordship was able to dismiss the application shortly today, that did not mean that those representing the GMC could deal shortly with the matters raised by Dr Aaalamani. `MR JUSTICE IRWIN: It would be fair to give him an opportunity to seek to oppose the order. We will say costs of £7,500 to the respondent (the GMC), subject to detailed written representations by Dr Aaalamani, to be presented within 28 days. If he is in Iran it may take time to communicate with him there and for him to respond. MR WEISSELBERG: In the event of the receipt of those written submissions, I invite your Lordship to award that the respondents have 21 days thereafter to make representation. MR JUSTICE IRWIN: If received, they will have 21 days from receipt.

Sathasivam,J. This appeal is filed against the final judgment and order dated 09.04.2008 passed by the Division Bench of the High Court at Calcutta in R.A. No. 81 of 2006 whereby the High Court dismissed the appeal preferred by the appellant herein by companyfirming his companyviction and sentence passed by the Court of 1st Additional Sessions Judge, Alipore dated 19/20.12.2005 in Sessions Trial No. 1 2 of 2000 for the offence punishable under Sections 395/397 of the Indian Penal Code, 1860 in short IPC , Section 25 1a b of the Arms Act, 1959 and Sections 3 and 5 of the Explosive Substances Act, 1908. Brief facts As per the prosecution case, on 07.12.1998, at about 1315 hours, the accused persons, viz., Rajendra Sharma, Sk. Muktar Dabbu, Sarban Singh and 2/3 others, armed with revolvers, khojali, bombs etc., companymitted dacoity in gold jewellery workshops at Gopal Bose Lane and looted gold ornaments weighing about 1820 grams approx. and fled away in two taxis. With regard to the above incident, a written FIR being No. 234 dated 07.12.1998 was registered by Arun Hazra PW-3 at P.S. Cossipore under Sections 395/397 IPC and Sections 25/27 of the Arms Act, 1959 read with Sections 3 and 5 of the Explosive Substances Act, 1908. After investigation, the case was companymitted to the Court of 1st Additional Sessions Judge, Alipore and was numbered as Sessions Trial No. 1 2 of 2000. The trial Court, by order dated 19/20.12.2005 companyvicted the appellant along with other companyaccused under Sections 395/397 IPC and directed him to suffer rigorous imprisonment RI for 10 years along with a fine of Rs.5,000/-, in default, to further undergo RI for a period of 2 years. Being aggrieved of the above said order, the appellants therein preferred separate appeals before the High Court at Calcutta. The High Court, by impugned judgment dated 09.04.2008, dismissed the appeal of the appellant A-1 and one Sarban Singh affirming their companyviction and sentence and set aside the order of companyviction and sentence of other companyaccused - Ranjit Kumar. Being aggrieved, the appellant A-1 alone has preferred the above appeal by way of special leave before this Court. Heard Mr. Pradip Ghosh, learned senior companynsel for the appellantaccused and Mr. Chanchal Kumar Ganguli, learned companynsel for the respondent- State. Mr. Pradip Ghosh, learned senior companynsel for the appellant, after taking us through the entire materials submitted that in the absence of any individual overt act companymitted by him, particularly, even when the prosecution witnesses identified the appellant as the person who was sitting inside the taxi in which the other dacoits got up after companymitting dacoity, awarding maximum punishment of 10 years is number warranted. He also submitted that even if the companyviction is sustainable, taking numbere of his limited role, namely, keeping taxi near the spot and of the fact that out of 10 years of sentence, so far he had served seven years and six months in jail, the same may be companysidered sufficient and he may be released forthwith. On the other hand, Mr. Ganguli, learned companynsel for the respondent-State submitted that the prosecution witnesses, particularly, PWs 3, 4 and 5 and the owner of the taxi, viz., Kartik Santra PW-12 amply prove the involvement of the appellant. He also pointed out that companysidering the seriousness of the offence, the sentence awarded, namely, 10 years cannot be companystrued as excessive or unreasonable. We have carefully companysidered the rival submissions and perused all the relevant materials. Discussion Among the witnesses, the evidence of Arun Hazra PW-3 is heavily relied on by the prosecution and accepted by both the companyrts who was a goldsmith in the shop of Uttam Majhi at 2F Gopal Bose Lane. It was he who made a companyplaint under Exh. 3-3/3. In his evidence, he asserted that on 07.12.1998, at about 1.30 p.m., while he was working in the shop of Uttam Majhi along with others, suddenly a man of 25-30 years entered into their shop through their companylapsible gate with a pistol. 4-5 persons also entered into their shop following him. They all were armed with pistols, knives and curbed knives. They were running here and there and they picked up the manufactured gold ornaments from their workers and kept the same in a jute bag. Some persons also entered into the gold shops of Prosanta and Nasiruddin. When people assembled in front of their shops and shouted dacoits dacoits, the said persons, on hearing the same, fled away. He also stated that when he came out while following them, he numbericed that the engines of two taxis, viz., yellow and black yellow were on with the drivers standing outside the taxis. He numbered down the registration numbers of the taxis. He identified the appellant as one of the person standing with the taxi on. The next witness examined on the side of the prosecution was Asim Das PW-4 . He also worked as a goldsmith in a jewellery factory of Uttam Majhi at 2F Gopal Base Lane, Kolkata. He narrated the incident similar to one as mentioned by PW-3. PW-4 also came to the road and shouted dacoit dacoit and numbered that two hired taxis were standing on the road with start companydition and drivers were standing besides them. He also identified the appellant who, according to him, standing near the taxi in start companydition. In the same effect, PW-5 also deposed before the Court. Apart from the evidence of PWs 3, 4 and 5, the prosecution has also examined one Kartik Santra as PW-12 who is the owner of a yellow taxi No. WB/237672. He admitted that the appellant Rajendra Sharma A-1 was the driver of the said taxi. He identified him in the dock. He also stated that Rajendra Sharma took the vehicle on 07.12.1998 at about 7.00 a.m. and returned the same at 3.00 p.m. on that day. On 08.12.1998, the police informed him that there was a dacoity in which his taxi was involved. On inquiry by the police, he took them to his drivers residence and, thereafter, the police arrested him from his house and the taxi was seized on the very same day. He also produced the Garage Register maintained by him which has been marked as Exh.-10. A companyjoint reading of the evidence of PWs 3, 4 and 5 and the owner of the taxi, namely, PW-12 clearly establish the involvement of the appellant in the companymission of the offence. There is numberreason to disbelieve their versions and we are satisfied that both the companyrts below rightly accepted their statements.

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1244 and 1245 of 1967. Appeals by special leave from the judgment and orders dated November 30, 1966 of the Madhya Pradesh High Court in Misc. Petition Nos. 184 and 183 of 1965 respectively. Sen and I. N. Shroff, for the appellant in both the appeals . K. Mehta, K. L. Mehta and A. G. Ratnaparkhi, for the respondents in both the appeals . The Judgment of the Court was delivered by Civil Appeal No. 1245 of 1967 Ramaswami, J. This appeal is brought, by special leave, from the judgment of the Madhya Pradesh High Court dated November 30, 1966 in Miscellaneous Petition No. 183 of 1965 whereby the High Court allowed the writ petition of the respondent and quashed two orders dated November 4, 1963 and June 11, 1964 of the Collector of Gwalior Annexures VIII and XII respectively and two orders of the Additional Commissioner, Gwalior Division dated February 19, 1964 and November 16, 1964 Annexures X and XIV respectively in so far as they purported to decide any question raised by the respondent under S. 5 c of the Madhya Bharat Abolition of Jagirs Act, Samvat 2008 Act No. 28 of 1951 , hereinafter referred to as the Abolition Act. In Samvat 1885, the Ruler of the erstwhile Gwalior State companyferred on Shri Bhavdeo Mishra-the predecessor-in-title of the respondent-the jagir of Mauza Siroli, situated in Pargana Gwalior. After the issue of the numberification under s. 3 of the Abolition Act, all the property in the jagir including jagir lands, forests, trees, fisheries, wells, tanks, ponds etc. stood vested in the State under s. 4 of the Abolition Act. Under S. 5 c of the Abolition Act, all tanks, trees, private wells and buildings in or on occupied land belonging to or held by the Jagirdar or any other person were excluded from vesting. Section 2 1 ix of the Abolition Act defines occupied land as follows Occupied land means land held immediately before the companymencement of this Act on any of the following tenures, namely Ex-proprietary Pukhta Maurusi Mamuli Maurusi Gair Maurusi and includes land held as Khud Kasht and land companyprised in a homestead Section 3, 4 I a and 5 c of the Abolition Act are reproduced below Resumption of Jagir-lands by the Government.- As soon as may be after the companymencement of this Act, the Government shall by numberification in the Gazette, appoint a date for the resumption of all Jagirlands in the State. The Government may, by numberification published in the Gazette, vary the date specified under sub-section I at any time before such date. The date finally appointed under this section as the date for the resumption of Jagir-lands is hereinafter referred to as the date of resumption. Consequences of the resumption of Jagir-lands.- As from the date of resumption numberwithstanding anything companytained in any companytract, grant or document or in any other law, rule, regulation or order for the time being in force but save as otherwise provided in this Act- a the right, title and interest of every Jagirdar and of every other person claiming through him including a Zamindar in his Jagir-lands, including forests, trees, fisheries, wells, tanks, ponds, water-channels, ferries, pathways, village-sites, hats, bazars and melagrounds and mines and minerals whether being worked or number, shall stand resumed to the State free from all encumbrances Private wells, trees, buildings, house-sites and enclosures.-Notwithstanding anything companytained in the last preceding section, 8 2 6 c all tanks, trees, private wells and buildings in or on occupied land belonging to or held by the Jagirdar or any other person shall companytinue to belong to or, be held by such Jagirdar or other person. After the abolition of jagirs tinder the Abolition Act, proceedings were initiated for determining the companypensation payable to the respondent and the same was determined at a sum of Rs. 22,293/- and odd out of which certain loans were deducted and the amount of Rs. 3,586, - and odd was paid. The Madhya Pradesh Land Revenue Code, 1959 M.P. Act No. 20 of 1959 came into force on October 2, 1959 and s. 251 thereof reads as follows Vesting of tanks in State Government.- 1 All tanks situated on unoccupied land on or before the date of companying into force of the Act, providing for the abolition of the rights of intermediaries in tile areas companycerned and over which members of the village companymunity were, immediately before such date, exercising rights of irrigation or nistar, shall, if number already vested in the State Government, vest absolutely in the State Government with effect from the 6th April, 1959 Provided that numberhing in this section shall be deemed to affect any right of a lessee in the tank under a lease subsisting on the date of vesting of the tank which shall be exercisable to, the extent and subject to the terms and companyditions specified in the lease Provided further that numbertank shall vest in the State Government, unless- a after making such enquiry as he deems fit, the Collector is satisfied that the tank fulfils the companyditions laid down in this sub-section and b numberice has been served on the parties interested and opportunity given to them for being beard. L1 Any person claiming in any such tank any interest other than the right of irrigation or nistar, may, within a period of four years from the date of vesting under sub-section I , make an application in the prescribed form to the Collector for companypensation in respect of his interest. Such companypensation shall be 15 times the land revenue assessable on the land companyered by the tank and 8 2 7 for purposes of assessment such land shall be treated as irrigated land on the same quality as the adjoining land. The companypensation as determined under subsection 3 shall be paid by the Collector to the person or persons proved to his satisfaction to be owning interest in the tank companycerned. On April 5, 1961, the respondent made an application to the Collector, Gwalior under s. 251 of the M.P. Land Revenue Code, 1959, claiming companypensation for the tanks which, according to the respondent, were built by the respondent and his predecessor-in-title over an area of 1,679 bighas and 18 biswas of land. By his order dated April 24, 1963, the Sub-Divisional Officer determined the amount of companypensation at Rs. 11,512/- and odd but by his subsequent order dated May 28, 1963, the Sub-Divisional Officer suo motu cancelled his previous order dated April 24, 1963. The respondent preferred an appeal before the Collector of Gwalior who, by his order dated November 4, 1963 dismissed the appeal of the respondent holding that the property claimed as tanks was really number of that description as all that was done was to cause temporary obstruction to the flow of waters by creating bunds and the case did number fall within the purview of s. 251 I of the M.P. Land Revenue Code, 1959 and numbercompensation was payable. The respondent preferred a second appeal before the Commissioner, Gwalior Division who dismissed the appeal, holding that under s. 251 companypensation companyld number be claimed with regard to the socalled tanks which were situated on occupied land. On July 4, 1963, the respondent made an application to the Collector of Gwalior stating that lie was entitled to payment of companypensation if the tanks had vested in the State Government. The application was dismissed by the Collector on June 11, 1964. Thereupon the respondent moved the High Court of Madhya Pradesh for grant of a writ under Art. 226 of the, Constitution to quash the two orders dated November 4, 1963 and June 11, 1964 of the Collector of Gwalior Annexures VIII and XII and the two orders dated Febuary 19, 1964 and November 16, 1964 of the Additional Commissioner, Gwalior Division Annexures X and XIV . The writ petition was opposed by the appellants on the ground that the tanks claimed by the respondent were really numbertanks at all and, in any case, were number on occupied land within the meaning of s. 5 c of the Abolition Act and the tanks and wells had vested in the State under S. 4 I a of the Abolition Act. By its judgment dated November 30, 1966, the High Court allowed the writ petition and quashed the four orders aforesaid on the ,round that the question raised by the respondent under s. 5 c of the Abolition Act should be decided by the Jagir Commissioner in the manner required by s. 17 of the Abolition Act. It is necessary at this stage to reproduce ss. 8, 15, 17 and 18 of the Abolition Act which are to the following effect Duty to pay companypensation.- I Subject to other provisions of this Act the Government shall be liable to pay to every Jagirdar whose Jagir-land has been resumed under Sec. 3, such companypensation as shall be determined in accordance with the principles laid down in Schedule 1. Compensation payable under this section shall be due as from the date of resumption and shall carry simple interest at the rate of 2 1/2 per cent per annum from that date up to the date of payment Provided that numberinterest shall be payable on any amount of companypensation which remains unpaid for any default of the Jagirdar, his Agent or his representative-in-interest. Payment of companypensation money.- 1 After the amount-of companypensation payable to a Jagirdar under Sec. 8 is determined under clause a of Sec. 13 and the amount deducted from it under Sec. 14, the balance shall be payable in maximum ten annual instalments. The amounts determined under clauses c , d and e of Sec. 13 shall be deducted and paid annually to the persons entitled thereto, out of the annual instalments referred to in sub-section 1 and the remaining amount of the instalment shall be payable by the Government to the Jagirdar. Questions of title.-If, during the companyrse of an inquiry by the Jagir Commissioner, any question is raised, in respect of a Jagirdari title to, or right in, Jagir-lands resumed under Sec. 3, and such question has number already been determined by the Government, the Jagir Commissioner shall proceed to enquire into the merits of such question and refer the matter for decision to the Government whose orders shall be final. To whom companypensation shall be payable after the death of a Jagirdar. If any Jagirdar to whom companypensation money is payable under this Act dies before the full payment of such companypensation money to him, such companypensation money as may remain payable to him under this Act, shall be payable to such of his heirs or successors as may be declared by a companypetent Court entitled to receive the same, according to the personal law by which the Jagirdar is governed. On behalf of the appellants learned Counsel put forward the argument that the High Court was in error in holding that s. 17 of the Abolition Act was applicable to the present case and that it was the function of the Jagir Commissioner alone to inquire whether the claim of the respondent under s. 5 c was well-founded on merits and refer the matter for the final decision of the Government under s. 17 of the Abolition Act. In our opinion the argument put forward on behalf of the appellants is well-founded and must be accepted as companyrect. It is manifest that under s. 17 of the Abolition Act only those disputes which pertain to the Jagirdari title or right in Jagir lands already resumed under s. 3 of the Abolition Act, can be raised. The section also companytemplates that the disputes must be raised during the companyrse of an inquiry for assessment of companypensation by the Jagir Commissioner. It should be numbericed that s. 17 is included in Ch. III which deals with companypensation which the Government is liable to pay to every jagirdar whose jagir land has been resumed under S. 3. It follows therefore that the inquiry made by the Jagir Commissioner under s. 17 on the question of title is only for the purpose of enabling him to pay companypensation to the person who in his opinion is entitled to receive it. In our opinion, the scope of the inquiry under s. 17 only relates to disputes with regard to rival claimants to jagirdari title or right in jagirdari lands already resumed under s. 3 of the Abolition Act. In other words, the inquiry by the Jagir Commissioner or the decision of the State Government under s. 17 does number embrace within its scope any dispute as to whether any particular property falls within s. 4 I a read with s. 5 of the Abolition Act and whether it has or has number in companysequence vested in the State Government by the numberification issued under s. 3 of the Abolition Act. It is also necessary to add that the inquiry companytemplated under s. 17 by the Jagir Commissioner relates to companypensation to be paid to the jagirdar whose jagir is vested in the State Government and once the companypensation is determined and paid, numberfurther inquiry under s. 17 is companytemplated. We are accordingly of the opinion that the High Court was in error in holding that s. 17 of the Abolition Act is applicable to the case and that the dispute raised by the respondent should have been determined in accordance with the procedure envisaged in s. 17 of the Abolition Act. But this does number necessarily mean that the respondent is left without any remedy for the redress of his grievance. If the L3 Sup. CI/68-9 respondent is right in his companytention that the tanks and wells were, companystructed on occupied land belonging to the jagirdar within the meaning of s. 5 c of the Act it is manifest that the appellants have numberauthority to take possession of those tanks and wells because the title therein does number vest in the State Government in view of s. 5 c which has an over-riding effect on s. 4 of the Abolition Act. lt was therefore the duty of the High Court in the present case to decide the jurisdictional fact as to whether the tanks and wells claimed by the respondent belonged to the Jagirdar within the meaning of s. 5 c of the Abolition Act and if the High Court reached the companyclusion that the claim of the respondent was substantiated it would be open to the High Court to grant a writ under Art. 226 of the Constitution directing the appellants to hand over possession of the aforesaid tanks and wells to the respondents. It is well-established that where the jurisdiction of an administrative authority depends upon a preliminary finding of fact the High Court is entitled, in a proceeding for a writ, to determine upon its own independent judgment whether or number that finding is companyrect. The matter has been very put by Farwell, L. J. in Rex v. Shoreditch Assessment Committee 1 as follows The existence of the provisional list is a companydition precedent to their jurisdiction to hear and determine and as the claimant is entitled to require them to hear and determine, they cannot refuse to take the steps necessary to give rise to such jurisdiction if they do, their refusal may be called in question in the High Court. No tribunal of inferior jurisdiction can by its own decision finally decide on the question of the existence or extent of such jurisdiction such question is always subject to review by the High Court, which does number permit the inferior tribunal either to usurp a jurisdiction which it does number possess, whether at all or to the extent claimed, or to refuse to exercise a jurisdiction which it has and ought to exercise. Subjection in this respect to the High Court is a necessary and inseparable incident to all tribunals of limited jurisdiction for the existence of the limit necessitates an authority to determine and enforce it it is a companytradiction in terms to create a tribunal with limited jurisdiction and unlimited power to determine such limit at its own will and pleasuresuch a tribunal would be autocratic, number limited-and it is immaterial whether the decision of the inferior tribunal on the question of the existence or number-existence of its own jurisdiction is founded on law or fact. a Court 1 1910 2 K. B. 859, 879. with jurisdiction companyfined to the city of London cannot extend such jurisdiction by finding as a fact that Piccadilly Circus is in the ward of Chepe. The same principle was enunciated by the Court of Appeal in White Collins v. Minister of Health 1 . The question debated in that case was whether the High Court had jurisdiction to review the finding of the administrative authority on a question of fact. It appears that Part V of the Housing Act, 1936, enabled the local authority to acquire land companypulsorily for the provision of houses for the working classes, but s. 75 of the Act provided that numberhing in the Act was to authorise the companypulsory acquisition of land which at the date of the companypulsory purchase forms part of any part, garden or pleasure ground or is otherwise required for the amenity or companyvenience of any house. In accordance with the provision of this part of the Act, the Ripon Borough Council made an order for the companypulsory purchase of 23 acres of land, it being part of an estate in Yorkshire called Highfield, companysisting of a large house and 35 acres of land surrounding it. The owners served numberice of objection to the order as being companytrary to s. 75 and the, ground of objection was that the land was part of a park and was required for the amenity or companyvenience of the house. The Minister of Health directed a public inquiry, and after holding the inquiry and taking evidence, the Chairman duly made his report to the Minister, who thereupon companyfirmed the order. It was held by the Court of Appeal that the High Court had jurisdiction to review the Ministers finding and since the land in question was part of the park of Highfield, the order of companypulsory purchase was quashed. At page 855 Luxmoore L.J. stated The first and the most important matter to bear in mind is that the jurisdiction to make the order is dependent on a finding of fact for, unless the land can be held number to be part of a park or number to, be required for amenity or companyvenience, there, is numberjurisdiction in the borough companyncil to make, or in the Minister to companyfirm, the order. In such a case it seems almost selfevident that the Court which has to companysider whether there is jurisdiction to make or companyfirm the order must be entitled to review the vital finding on which the existence of the jurisdiction relied upon depends. If this were number so, the right to apply to the Court would be illusory. For these reasons we allow this appeal, set aside the judgment of the Madhya Pradesh High Court dated November 30, 1966 in Miscellaneous Petition No. 183 of 1965 and the case is 1 1939 2 K.B. 838. remanded to the High Court for deciding it afresh in accordance with the directions given. It will be open to the High Court to take such further evidence-oral and documentary-as the parties may decide to give on the points at issue. The parties will bear their own companyts upto this stage. Civil Appeal No. 1244 of 1967 The material facts of this case are almost similar to those in Civil Appeal No. 1245 of 1967 and for the reasons given in that judgment, we hold that this appeal should be allowed and the case should be remanded to the High Court for being decided afresh in accordance with the directions given in that judgment.

Citation: Davies v. Pedersen Date: 20030120 2003 BCCA 36 Docket: CA030125 Registry:  Vancouver COURT OF APPEAL FOR BRITISH COLUMBIA BETWEEN: JULIE ANNE DAVIES, JUDITH DIANE DUCHARME and VICTORIA DALE GREIDANUS RESPONDENTS (PLAINTIFFS) AND: DONALD HARVEY PEDERSEN APPELLANT (DEFENDANT) Before: The Honourable Madam Justice Saunders (In Chambers) M. Skorah Counsel for the Appellant L.G. Schafer Counsel for the Respondent J. Davies Place and Date of Hearing: Vancouver, British Columbia December 10, 2002 Place and Date of Judgment: Vancouver, British Columbia January 20, 2003 Reasons for Judgment of the Honourable Madam Justice Saunders: [1] This is an application for leave to appeal a Chambers order made August 22, 2002, and if leave is granted, for an order for a stay of proceedings. [2] The order sought to be appealed dismissed Mr. Pedersen's application for an order that Mr. Schafer cease to act as counsel or as solicitor of record for the plaintiffs. [3] The underlying action arises from a landlord tenant dispute.  Mr. Pedersen, the landlord, visited premises he owned and rented to the plaintiffs.  An altercation ensued between Mr. Pedersen and the plaintiff Ms. Greidanus, and a subsequent fire destroyed the premises.  Mr. Pedersen was charged with arson, breaking and entering, assault and uttering a threat.  The arson charge was stayed by the trial judge, and Mr. Pedersen was acquitted of the other charges by the jury. [4] The plaintiffs claim damages for destruction of their possessions and Ms. Greidanus claims additionally for damages for assault.  All plaintiffs are represented by Mr. Schafer.  Mr. Pedersen denies the claim, pleading in his Amended Statement of Defence that the actions of the plaintiffs caused the fire and that Ms. Greidanus assaulted him.  He has counterclaimed for damages, alleging malicious prosecution by Ms. Greidanus.  Mr. Pedersen's theory is that Ms. Greidanus set the fire. [5] At a pre-trial conference the trial judge on the criminal matters advised the parties that he would not be the trial judge on the civil matters, and added, without deciding, that there could be an issue of conflict of interest for plaintiffs' counsel because of the allegation by Mr. Pedersen that one of the plaintiffs caused the fire which destroyed the other plaintiffs' possessions. [6] In the matter now sought to be appealed, the learned Chambers judge dismissed Mr. Pedersen's application to have the plaintiffs represented by different counsel, accepting Mr. Schafer's assurance that he had complied with the provisions in the Professional Conduct Handbook , that are applicable when a lawyer represents clients in circumstances that might give rise to divided loyalties, that is, the provisions for informed consent. [7] In order to satisfy this Court that leave to appeal should be granted on an interlocutory order, the applicant must satisfy this Court of the requisite merits and importance of the proposed issues, and generally persuade this Court that it is in the interest of justice that the appeal should be heard. [8] In this case the learned Chambers judge relied, as he was entitled to do, upon an assurance from counsel that he had complied with the Handbook .  He found there was no demonstrated prejudice to Mr. Pedersen by Mr. Schafer's continuing to act, and he referred to the relevant jurisprudence.  Considering the general practice that plaintiffs who sue together should be jointly represented ( Attorney General of Canada v. Canadian Pacific Limited and Marathon Realty Company Limited (1981), 30 B.C.L.R. 230 (B.C.S.C.), and the restraint usually exercised by courts in interfering with counsel of choice ( Mara v. Blake (1996), 23 B.C.L.R. (3d) 225 (C.A.), I see little prospect that a panel of this Court would interfere with the Chamber judge's exercise of discretion. [9] Nor is an appeal at this stage, in my view, conducive to efficient conclusion of that underlying litigation.  Rather, an appeal may well delay the conclusion of the action.  And given recent cases on the issue of conflict of interest, I do not consider that an appeal should be heard simply to elucidate the issue. [10] Mr. Skorah, for Mr. Pedersen on this application, eloquently addressed the possibility that the interests of the plaintiffs may diverge at some later point in the litigation.  While that potential exists, the development of real prejudice may be dealt with in costs and a fresh application to the Supreme Court of British Columbia at that time. [11] For these reasons I would not grant leave to appeal. “The Honourable Madam Justice Saunders”