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FIRST SECTION
CASE OF KNYAZEV v. RUSSIA
(Application no. 25948/05)
JUDGMENT
STRASBOURG
8 November 2007
FINAL
02/06/2008
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 Knyazev v. Russia,
The European Court of Human Rights (First Section), sitting as a Chamber composed of:
MrL. Loucaides, President,MrsN. Vajić,MrA. Kovler,MrsE. Steiner,MrD. Spielmann,MrS.E. Jebens,MrG. Malinverni, judges,and Mr S. Nielsen, Section Registrar,
Having deliberated in private on 11 October 2007,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 25948/05) against the Russian Federation lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Russian national, Mr Vitaliy Anatolyevich Knyazev (“the applicant”), on 8 July 2005.
2. The applicant was represented by Ms E. Liptser, a lawyer practising in Moscow. The Russian Government (“the Government”) were represented by Mr P. Laptev, Representative of the Russian Federation at the European Court of Human Rights.
3. On 29 August 2005 the Chamber decided to apply Rule 41 of the Rules of Court.
4. On 30 September 2005 the Court decided to give notice of the application to the Government. Under the provisions of Article 29 § 3 of the Convention, it decided to examine the merits of the application at the same time as its admissibility.
5. The Government raised an objection concerning the application of Article 29 § 3 of the Convention to the present case.
6. Having examined the arguments put forward by the Government, the Court decided to dismiss their objection concerning the application of Article 29 § 3 of the Convention.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
7. The applicant was born in 1977 and lives in Krymsk, Krasnodar Region.
1. The applicant’s detention in Lgov correctional colony OX-30/3
(i) The applicant’s account
(a) Alleged ill-treatment in March 2005 and subsequent investigation
8. According to the applicant, from 24 March 2005 he served a sentence in Lgov correctional colony OX-30/3, Kursk Region (учреждение ОХ-30/3). On his arrival at the colony, he was called to see the head of the colony, B., who invited him to become a member of a so-called “секция порядка” (literally, an “order section”, an informal category of prisoners who cooperated with the prison administration) and to conclude a written agreement on cooperation with the colony’s officials. The applicant refused. As a result of his refusal he was beaten by D., the deputy head of the correctional colony, K., a colony official, and R., head of the security unit. The beating was continued by other colony officials, who stripped him naked and beat him with rubber truncheons. The applicant was then placed for ten days in a disciplinary cell, where the beating continued. On a number of occasions he was beaten in the presence of an official from the Kursk Prosecutor’s Office. The applicant complained about the events to the Lgov Prosecutor’s Office.
9. On 10 July 2005 the institution of criminal proceedings was refused on the ground that “special equipment” had been used against the applicant in accordance with the law.
(b) Alleged ill-treatment on 23 May 2005
10. The applicant claimed to have been systematically beaten for writing complaints against the head of the correctional colony and the colony’s administration to various authorities, and that he had then been forced to eat the complaints he had written. In particular, on 23 May 2005 he was beaten with rubber truncheons and thrown to the ground, and an Alsatian dog was set on him. The dog mostly bit his hands, which he was using to cover his face. According to the applicant, the colony’s doctor noted the bite marks. He alleged that he still had scars on his hands. The head of the correctional colony then threatened the applicant that if he wrote more complaints he would have to spend the night in a cell with the dog.
(c) Events of 26-27 June 2005 and subsequent investigation
11. During the night of 26-27 June 2005 the applicant, together with two other inmates, M. and G., was taken to the office of prison official K., who asked him to report on the situation in the correctional colony. The applicant responded that he was not in control of the situation. As a result of this reply he was beaten and escorted to a cell where, it appeared, other inmates had cut their veins and stomachs. As a protest against the actions of the colony’s administration, the applicant also cut the veins on his right arm and, having found an electrode in premises where repair work was being carried out, thrust it in his right side in an attempt to reach the lungs. According to the applicant, after he had inflicted these penetrating wounds on 27 June 2005, he was questioned for the entire day and it was not until the evening that a physician pulled the electrode from his side; however, the glass cap remained in his stomach. The surgeon examined the applicant later and noted that a foreign body was still in his stomach, but did not remove it.
12. On the following day the applicant and other inmates submitted to the Prosecutor of the Kursk Region applications for the institution of criminal proceedings against B., the head of the correctional colony, colony officials D. and R. and others, on account of numerous instances of ill-treatment of prisoners. Criminal proceedings in case file no. 1519 were instituted against two prison officials, D. and R., on account of the alleged beating of inmate Sh. However, no criminal proceedings were instituted into the applicant’s allegations as set out in his complaint to the Prosecutor of the Kursk Region, and he was not granted the status of a victim in the criminal proceedings.
(ii) The Government’s account
(a) Alleged ill-treatment in March 2005 and subsequent investigation
13. According to the Government, the applicant was held in Lgov correctional colony OX-30/3 from 23 March to 29 June 2005. During this period the applicant repeatedly broke prison rules and on a number of occasions was seen by a psychologist, who diagnosed him as suffering from an emotionally unstable personality disorder.
14. On 23 March 2005, in the course of a routine search, the applicant was found to have forbidden items, namely three metal dowels and two razor blades. During the search and seizure of the items the applicant resisted the colony’s officials. In particular, he pushed them, grabbed their clothes and insulted some of them. One of the officials warned him that special equipment could be used against him if he continued behaving in such a way. Since the applicant refused to submit, two of the officials used a rubber truncheon against him. After the incident the applicant was examined by a doctor who found abrasions on his back and soft body tissues.
15. On the same day the deputy prosecutor of the Kursk Region was informed of the incident and a report on the use of the special equipment was drafted. The report stated that the rubber truncheon had been used for three seconds against soft body tissues. Later that day the deputy prosecutor of the Kursk Region personally met the applicant, who told him that he had no complaints against the administration of the correctional colony OX-30/3 and that the application of the special equipment had been justified.
16. On 1 April 2005 the deputy prosecutor of the Kursk Region again met the applicant, this time in relation to the injuries he had self-inflicted on 16 March 2005 while held in a remand prison (SIZO) in Kursk, prior to his transfer to correctional colony OX-30/3. In a written statement the applicant explained that he had thrust an electrode into his left side in order to attract attention, as he had wanted to be moved to a correctional facility closer to his home. He also stated that he had no complaints against the administration of the remand prison.
17. On 8 July 2005 the Lgov Interdistrict Prosecutor’s Office received the applicant’s complaint concerning the alleged beating following his arrival at correctional colony OX-30/3.
18. In explanations given on 9 July 2005, colony officials B., R., D. and Ryz. and the deputy prosecutor of the Kursk Region stated that physical force had never been used against the applicant and he had never been threatened with its application.
19. Following an inspection, on 10 July 2005 the prosecutor refused to institute criminal proceedings into the applicant’s allegations of ill-treatment. He also found that special measures were lawfully applied against the applicant on 23 March 2005. An appeal against that decision lay with a higher prosecutor or a court.
(b) Alleged ill-treatment on 23 May 2005
20. The Government submitted that the applicant had not applied for medical aid in connection with the alleged ill-treatment on 23 May 2005. The authorities became aware of these allegations only after the application had been communicated by the Court.
(c) The applicant’s general complaint about ill-treatment in the colony and subsequent investigation
21. On an unspecified date the applicant sent a complaint to the Prosecutor’s Office of the Kursk Region. The complaint was received by the Prosecutor’s Office on 4 July 2005. The applicant alleged that since his arrival at correctional colony OX-30/3 he had been regularly beaten by colony officials. He sought to institute criminal proceedings against them.
22. On 14 July 2005, following an inspection into the applicant’s allegations, the Prosecutor’s Office of the Seymskiy District of Kursk refused to institute criminal proceedings.
23. On 20 August 2005 the Prosecutor of Kursk, who was responsible for supervising penitentiary facilities, quashed the decision and remitted the case for additional inspection.
24. In the course of the initial and additional inspections the officials who were alleged to have beaten the applicant were questioned by the Prosecutor’s Office. In particular, the head of the colony, B., in his statements on 13 July and 3 September 2005 submitted that the inmates, including the applicant, had not been beaten or subjected to degrading treatment and that he had never ordered the use of physical force against them. He regarded the inmates’ complaints as slanderous and aimed at destabilising the situation in the colony. Similar submissions were made by D. on 13 July and 5 September 2002, by R. on 13 July 2005 and by Z. on 2 September 2005.
25. On 5 September 2005 the Prosecutor’s Office of the Seymskiy District of Kursk again refused to institute criminal proceedings. According to the findings of the inspection, the officials of colony OX-30/3 had not abused their official authority and did not use physical force against the applicant. The use of a rubber truncheon against him on 23 March 2005 had been justified since he had resisted the officials who had conducted the routine search. An appeal against the decision lay with a higher prosecutor or a court.
(d) Events of 26-27 June 2005 and subsequent investigation
26. During the night of 26-27 June 2005 the applicant self-inflicted a subcutaneous slash wound to his right forearm and subcutaneous slash wounds to the front abdominal wall and inserted a foreign body into the soft tissue of the front abdominal wall. He had no penetrating wounds. At 10.30 p.m. on 26 June 2005 the applicant was examined by a surgeon of the Lgov Central District Hospital, who removed the foreign body from the applicant’s abdominal wall and dressed the wounds. The applicant also underwent an X-ray. No foreign bodies, such as a glass cap, remained in the applicant’s body after he had been provided with medical aid.
27. On 27 June 2005 numerous complaints from inmates of correctional colony OX-30/3 were submitted to the Prosecutor’s Office of the Kursk Region. The inmates, including the applicant, alleged that they had been systematically beaten by the colony’s officials. On the same date criminal investigation no. 1519 was opened into the allegations of ill-treatment. The applicant was not granted the status of a victim in the criminal proceedings.
28. On 19 August 2005, following an inspection, criminal investigation no. 1519 was discontinued in the part related to the complaints lodged by the applicant and two other inmates, M. and G. In the course of the inspection the Prosecutor’s Office examined the relevant medical reports and questioned several officials of the colony, who submitted that no physical force had been applied to the applicant on 26-27 June 2005. The Prosecutor’s Office of the Kursk Region found that the applicant’s injuries had been self-inflicted and his allegations of ill-treatment were unsubstantiated. An appeal against the decision lay with a higher prosecutor or a court.
2. The applicant’s detention in Lgov remand prison IZ-46/2
(i) The applicant’s account
29. The applicant submitted that on either 29 or 30 June 2005 he had been escorted to Lgov remand prison IZ-46/2 (учреждение ИЗ-46/2 Льгова) under the guise of transportation to the medical unit. There he was questioned as a witness in relation to the allegedly unlawful actions of the administration of prison OX-30/3.
30. In remand prison IZ-46/2 officials from the Kursk Region Directorate of the Federal Service for the Execution of Sentences, including the head of the regional department, P., tried to force the applicant to repudiate his statements concerning the allegedly unlawful actions of the administration of correctional colony OX-30/3. They had threatened to institute criminal proceedings against him on charges of disorganising the work of prison institutions. The applicant lodged a complaint against P. Inmate Sh. was questioned as a witness. Although Sh. confirmed that P. had put pressure on him, trying to force him to repudiate his statements, the Lgov Interdistrict Prosecutor’s Office refused on 18 July 2005 to institute criminal proceedings against P.
31. According to the applicant, he was not provided with adequate medical assistance in remand prison IZ-46/2. Officials from the Prosecutor’s Office showed him entries in his medical file stating that he had been examined by a doctor; however, this was not true. Furthermore, a doctor from the regional hospital at the Federal Service for the Execution of Sentences forced him to refuse operative treatment in writing. The doctor explained that the Federal Service did not have sufficient funds for the operation and the applicant did not have enough money to pay for it either.
32. Between 23 and 24 July 2005 the applicant was allegedly taken out of his cell and placed in a car. He was not informed of either the destination or the purpose of the transportation. In the car he was threatened and insulted by the officials and, unable to bear it any longer, he cut the veins on his right arm. He was then returned to the remand prison. The applicant was not examined by a doctor until lunchtime of the following day, when his wounds were dressed and he was given an analgesic. On 25 July 2005 several prison officials tortured him, forcing him to refuse Ms Liptser’s assistance and to withdraw his complaint to the Court and the statements given in relation to criminal case no. 1519. In particular, they painfully twisted his arms and burnt him with an immersion heater.
(ii) The Government’s account
33. According to the Government, the applicant’s transfer to remand prison IZ-46/2 was ordered on 28 June 2005 and on 29 June 2005 he was escorted there. He remained in the remand prison until 26 July 2005.
34. On 29 June 2005 the applicant was examined by a medical attendant who noted the subcutaneous wounds inflicted by the applicant himself in colony OX-30/3. The medical attendant prescribed a dressing with antiseptic ointment. The applicant also stated that he had a foreign body in his stomach. An X-ray conducted on 30 June 2005 showed no foreign objects in the applicant’s body. The applicant’s wounds were dressed daily between 30 June and 14 July 2005.
35. On 11 July 2005 the applicant committed another act of self-mutilation. At 8.55 p.m. he was examined by a medical attendant who found subcutaneous wounds to the left elbow and the navel area. The wounds were dressed with an antiseptic bandage. The next day the applicant was again seen by the medical assistant, who dressed the wounds with a bandage and antiseptic ointment.
36. On 16 July 2005 the applicant’s wounds were dressed again. Because of the intumescence on his right forearm the applicant was given antibiotics. On the same date the applicant was examined by the head of the neurosurgical department of the regional hospital at the Federal Service for the Execution of Sentences. He stated that the earlier self-inflicted slash wounds to the applicant’s forearms and the front abdominal wall were infected. The applicant was offered surgical treatment which he refused on the same day in two written statements. The refusal was also reflected in his medical file. The X-ray showed no foreign objects in the applicant’s body.
37. In the night of 23-24 July 2005, on the way to the railway station for transportation to another penitentiary facility, the applicant wounded himself in the area of the right elbow joint. Because of the wound the applicant was not allowed to board the train and was returned to remand prison IZ-46/2. There he stated that he had self-inflicted the injury. The applicant had damaged the epidermis but the veins in the area of the elbow joint were not affected. His wound was dressed.
38. On 25 July 2005 the applicant was examined by a surgeon from the Lgov Central District Hospital, who found a subcutaneous wound in the area of the right elbow joint that was not bleeding. The applicant refused to have the wound stitched.
39. After the applicant had been transferred to remand prison IZ-32/1, Bryansk Region, he complained to the Lgov Interdistrict Prosecutor’s Office that he had been tortured with an immersion heater while held in remand prison IZ-46/2.
40. On 1 September 2005 the Lgov Interdistrict Prosecutor’s Office refused to institute criminal proceedings. The decision was quashed by a higher prosecutor and the case remitted for additional inspection.
41. On 15 September 2005 the Lgov Interdistrict Prosecutor’s Office again refused to institute criminal proceedings. The Prosecutor’s Office questioned officers from remand prison IZ-46/2 and inmates who had been held there at the same time as the applicant. They submitted that they had not seen the applicant being tortured and had not heard of him being ill-treated. The decision noted that on 25 July 2005 the applicant had not applied for medical aid. However, on the next day he had been examined by a doctor in remand prison IZ-46/2, prior to his transportation to remand prison IZ-32/1. No traces of burns had been found in the course of the examination. The Prosecutor’s Office concluded that the applicant had self-inflicted the injuries. An appeal against the decision lay with a higher prosecutor or a court.
3. The applicant’s detention in Bryansk Region remand prison IZ-32/1
42. On 26 July 2005 the applicant was escorted to remand prison IZ-32/1, Bryansk Region (учреждение ИЗ-32/1 по Брянской области).
43. On arrival the applicant was examined by a medical attendant, who noted a slash wound in the area of the right elbow joint, scars in the abdominal area and traces of burns on his body.
44. On 11 August 2005 Ms Liptser visited the applicant in the remand prison. During her visit the applicant made the following statement:
“In remand prison IZ-32/1 I am also subjected to pressure by officials of the Federal Service for the Execution of Sentences from the Kursk and Bryansk regions and their colleague from Moscow [...] They skilfully beat me without leaving any traces: they beat me on the head with books, on the face with their open palms... They are about to become residents here – they have been dealing with me for a week now from dusk till dawn. They say that I am the only one remaining. They let me make phone calls to remand prisons in Orel and Kursk, where other convicts tell me to withdraw [my complaints] and that they have already withdrawn theirs. [The officials] brought letters from others saying that I should withdraw [the complaints], refuse assistance from counsel, that “this must be done”. Then they began to beat me again and to burn me with a boiler forcing me to write [the withdrawal letters]... I read [Sh.’s] withdrawal of his application [before the Court] and his rejection of your services ... and a similar withdrawal written by M.”
“I was forced [under torture] to write dictated statements addressed to Mr Laptev, representative of the Russian Government before the Court, Mr Lukin, Russian Ombudsman, the Prosecutor of the Kursk Region and the European Court saying that I withdrew everything. These statements are dated 8 August 2005 and one [was written] on the same day but is dated 5 August 2005.”
“The statements dated 5 and 8 August 2005 should be considered invalid as they are nothing but a result of torture. Only statements written in the presence of my lawyers should be examined....”
45. The applicant also told his counsel that he had tried to send letters to his lawyers and to submit complaints against the officials who had ill-treated him. However, his complaints had either been returned to him or he had been forced to withdraw them. On 12 August 2005 the applicant’s counsel informed the Prosecutor’s Office of Bryansk Region and the General Prosecutor’s Office of the alleged ill-treatment, and on 15 August 2005 she submitted the same complaints to the Prosecutor’s Office of Kursk Region, asking that criminal proceedings be instituted on account of the use of torture against the applicant. On 12 August 2005 the applicant’s counsel also informed the Court that the applicant had been allegedly forced to write statements on withdrawal of his application to the Court.
46. On 15 August 2005 the applicant was examined by a doctor who noted brown streaks on his neck and back. The applicant refused to provide any explanation as to the origin of the injuries to the officials of remand prison IZ-32/1. The Government submitted that the applicant had committed another act of self-mutilation.
47. In a letter to his counsel dated 16 August 2005 the applicant reiterated his previous statements concerning the events in correctional colony OX-30/3 and the ill-treatment in remand prison IZ-32/1. He also indicated the names of other prisoners who could confirm his statements.
48. On 17 August 2005 the applicant complained about pain in the right side of his stomach. He was examined by a doctor from remand prison IZ-32/1 who suspected that there was a foreign body in the tissues of the front abdominal area. However, the applicant refused to permit palpation of his stomach.
49. In a letter of 18 August 2005 the applicant informed his counsel that the administration of remand prison IZ-32/1 was aware of the contents of the written statements he had addressed to the Deputy Prosecutor of the Bryansk Region. Furthermore, he alleged that he had been placed in a disciplinary cell for making statements to the Deputy Prosecutor.
50. On 22 August 2005 the applicant was seen by a surgeon. However, when asked to lie down for an examination, he refused.
51. On 24 August 2005 the applicant was examined by a doctor who noted a foreign body in the front abdominal wall. The applicant refused to permit palpation of his stomach. He reiterated the refusal at the examination on 26 August 2005. A fluorography conducted on the same date showed a nail measuring six centimetres in the soft tissues of the abdominal area. On 27 August 2005 the applicant agreed to have his stomach palpated. During the examination he stated that he could remove the nail himself; however, he thrust it into a different place. Later that day the applicant was transported to a hospital of the Federal Service for the Execution of Sentences. On arrival he refused any medical examination. On 29 August 2005 the applicant himself removed the nail from the abdominal wall. The doctors dressed his wound with an aseptic bandage.
52. On 31 August 2005 a doctor was called to the applicant’s cell because he had cut his right forearm in another act of self-mutilation. The wounds were dressed with an aseptic bandage.
53. Between 14 and 26 September 2005 the applicant was placed in a hospital at correctional facility OZh-118/5, Voronezh, for removal of another foreign body that he had thrust into the abdominal area and for subsequent treatment of the wound.
54. On 28 September 2005 the applicant arrived at remand prison IZ-46/1, Kursk Region.
55. On 21 October 2005 the Prosecutor’s Office of the Sovetskiy District of Bryansk refused to institute criminal proceedings into the applicant’s allegations of ill-treatment in remand prison IZ-32/1. The decision was based on the following findings.
56. The applicant, who was questioned in the course of the inspection conducted by the Prosecutor’s Office, submitted that during his placement in remand prison IZ-32/1 State agents tortured him with an immersion heater, beat him and forcibly injected drugs into his veins, seeking to force him to withdraw his complaints concerning Lgov correctional colony OX-30/3 and the application to the Court. When he could no longer bear the torture he submitted to the pressure and wrote statements to the Court, the ombudsman, the prosecutor of the Kursk Region and the representative of Russia at the Court, asking that the proceedings following his previous applications be discontinued.
57. The applicant’s cellmate, B., submitted that the applicant had often been taken out of the cell by remand prison officers. He had never complained about ill-treatment on returning to the cell. B. had never seen the applicant with any injuries.
58. Remand prison officers and officials of the Federal Service for the Execution of Sentences submitted that on a number of occasions they “had had conversations” with the applicant because he had been under preventive monitoring as a person inclined to absconding, attacking prison officers, taking hostages, self-mutilation and suicide. However, they had never applied either psychological or physical pressure to the applicant and he had never made any complaints in this regard during the conversations.
59. The inventory of personal items which the applicant had had with him in the remand prison included an immersion heater.
60. The medical attendant who examined the applicant on 26 July 2005 submitted that the applicant had explained that the injuries found had been caused by a dog and by officials from the Federal Service for the Execution of Sentences, who had burned him with an immersion heater. He also noted that the burn marks had been located in places where the applicant could have inflicted them himself.
61. The doctor who examined the applicant on 15 August 2005 submitted that he could not be sure that the injuries found had been burn marks. Furthermore, the applicant had refused to provide any explanation as to their origin.
62. The head of the Bryansk Forensic Bureau submitted that on the basis of the available medical documents and the applicant’s medical file it was not possible to come to any conclusions with regard to the nature of the applicant’s injuries, if any.
63. The Prosecutor’s Office concluded that the applicant’s allegations of ill-treatment were unsubstantiated and the injuries found had been caused by the applicant himself. An appeal against the decision lay with a higher prosecutor or a court.
4. Subsequent developments
64. On 11 November 2005 the Government sent the Court a copy of a statement dated 5 August 2005, addressed to the Representative of the Russian Federation at the Court, Mr Laptev, and written and signed by the applicant. The statement read as follows:
“I ask you to examine and accept the statement written in my own hand that I, Knyazev Vitaliy Anatolyevich, ask you, Mr P.A. Laptev, to recall from the European Court of Human Rights the application that I lodged through my counsel E.L. Liptser. I do not want it [the application] to be examined in the present proceedings.”
65. On 11 February 2006 the applicant was transferred to correctional colony no. 11, Khabarovsk Region.
II. RELEVANT DOMESTIC LAW
66. Article 125 of the Code of Criminal Procedure of 2001 provides for judicial review of decisions by investigators and prosecutors that might infringe the constitutional rights of participants in proceedings or prevent access to a court.
67. Article 91 § 2 of the Penal Code, as amended on 8 December 2003, provides that all incoming and outgoing correspondence of detainees is subject to censorship by the administration of the correctional facility. Correspondence with courts, prosecutors, penitentiary officials, the Ombudsman, the public monitoring board and the Court is not subject to censorship. Correspondence of convicted persons with their counsel is not subject to censorship unless the administration of the correctional facility has reliable information to the effect that it is aimed at initiating, planning or organising a crime or involving other people in the commission of a crime. In this case the correspondence is subject to control on the basis of a reasoned decision by the head of the correctional facility or his deputy.
68. Rule 12 of the Internal Regulations of Correctional Facilities adopted by Decree no. 224 of the Ministry of Justice of 30 July 2001 and amended on 8 July 2002, 23 March 2004 and 3 December 2004, provided that letters from detainees should be placed in mail boxes in the facilities or handed over to representatives of the administration in unsealed envelopes. The regulations were repealed by Decree no. 205 of the Ministry of Justice of 3 November 2005, which adopted new regulations. Rule 50 of the new regulations provides that letters from detainees should be placed in mail boxes in the facilities or handed over to representatives of the administration in unsealed envelopes, except for correspondence which is not subject to censorship (that is, with the organisations and persons listed in paragraph 67).
THE LAW
I. THE GOVERNMENT’S PRELIMINARY OBJECTIONS
A. Locus Standi
69. Having regard to the applicant’s statement of 5 August 2005 addressed to Mr Laptev, Representative of the Russian Federation at the Court, the Government stated that this had been written voluntarily by the applicant and his allegations that it had been written under pressure from State agents were unsubstantiated. The Government asked the Court to assess the applicant’s locus standi in the proceedings in view of this statement.
70. The applicant maintained that the statement had been written under torture and should therefore be disregarded.
71. The Court notes that on 11 August 2005, during a meeting with his counsel, the applicant told her that State officials had forced him to write statements to the effect that he had withdrawn his complaints before the law-enforcement agencies and the application to the Court. He stated that such statements should be regarded as invalid, since they had been written under torture. On the following day the applicant’s counsel informed the Court of the applicant’s submissions, which the Court then transmitted to the Government. On 11 November 2005 the Government sent the Court a copy of the applicant’s statement of 5 August 2005, in which he asked Mr Laptev to recall his application from the Court.
72. The Court observes that the applicant informed the Court that the statement dated 5 August 2005 had been written by him under pressure, asked the Court to disregard it should it be received and confirmed his wish to pursue the proceedings. In such circumstances the Court finds that the statement of 5 August 2005 has no impact on the applicant’s standing in the present proceedings. Having regard to the applicant’s complaint under Article 34 of the Convention concerning the same events, the Court decides to proceed with its examination below.
B. Validity of the authority form
73. The Government disputed the validity of the power of attorney issued by the applicant to his representative, Ms Liptser. They pointed out that the authority form was not authorised by the head of the detention facility in which the applicant had been held when he issued the power of attorney, as required by the domestic legislation. The Government submitted that this might mean either that the authority form had been forged or that it had been obtained by the applicant’s representative illegally. They regarded the applicant’s failure to comply with the relevant domestic rules as an abuse of the right of application and asked the Court to apply Article 35 § 3 of the Convention.
74. Article 35 § 3, in so far as relevant, provides:
“The Court shall declare inadmissible any individual application submitted under Article 34 which it considers ... an abuse of the right of application.”
75. The Court notes that the Government have not challenged the validity of the applicant’s signature on the submitted authority form. The objection is based on the assertion that the power of attorney should have been authorised in accordance with the domestic legislation. However, under Rule 45(3) of the Rules of Court, a written authority is valid for the purposes of proceedings before the Court. The Rules of Court contain no requirement for powers of attorney to be drawn up in accordance with the national legislation (see Khashiyev and Akayeva v. Russia (dec.), no. 57942/00 and no. 57945/00, 19 December 2002). In these circumstances, the Court has no grounds to doubt the validity of the power of authority issued by the applicant to his representative. Accordingly, the Government’s objection must be dismissed.
C. Request to strike out the application
76. The Government noted that when the application was communicated by the Court, they received the application form, dated 16 August 2005, together with annexes to the application form which were dated 21, 27 and 28 August 2005. The Government submitted that “if the application and annexes to it were lodged with the Court in the same form as they were received by the Representative of the Russian Federation at the European Court of Human Rights, the Russian Federation authorities ask the Court to strike the present application out of the list of cases examined by the Court, since a number of annexes were evidently issued later than the application form, this proving that the Court is being intentionally mislead”.
77. The Court is unable to discern the basis of the Government’s request to strike out the application. In any event, it finds no grounds to doubt the validity of the applicant’s submissions. Accordingly, the Government’s request must be dismissed.
D. Alleged abuse of the right of application
78. In the Government’s view, the applicant’s contentions that the medical assistance available to him had not been adequate amounted to an abuse of the right of application within the meaning of Article 35 § 3.
79. The Court reiterates that, except in extraordinary cases, an application may only be rejected as abusive if it was knowingly based on untrue facts (see Akdivar and Others v. Turkey, judgment of 16 September 1996, Reports of Judgments and Decisions 1996‑IV, §§ 53-54; I.S. v. Bulgaria (dec.), no. 32438/96, 6 April 2000; and Varbanov v. Bulgaria, no. 31365/96, § 36, ECHR 2000‑X).
80. Having regard to the statements made by the applicant in the present case, the Court does not consider that they amount to an abuse of the right of petition. Accordingly the Government’s objection is dismissed.
II. ALLEGED VIOLATION OF ARTICLES 3 AND 13 OF THE CONVENTION ON ACCOUNT OF THE ALLEGED ILL-TREATMENT IN LGOV CORRECTIONAL COLONY OX-30/3, LGOV REMAND PRISON IZ-46/2 AND BRYANSK REMAND PRISON IZ-32/1 AND THE LACK OF AN ADEQUATE INVESTIGATION
81. Relying on Articles 3 and 13 of the Convention, the applicant complained that he had been systematically ill-treated in Lgov correctional colony OX-30/3, which had compelled him to inflict self-injury. He also alleged that the investigation into his allegations had not been effective. The applicant further complained that he had been subjected to psychological pressure and torture in Lgov remand prison IZ-46/2 and remand prison IZ-32/1, Bryansk Region, and that there had also been no adequate investigation into these allegations. The relevant Convention articles provide:
Article 3
“No one shall be subjected to torture or to inhuman or degrading treatment or punishment.”
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
82. The Government submitted that the applicant had failed to exhaust domestic remedies and that his complaints were unsubstantiated. Physical force had been applied to the applicant by prison officials on only one occasion, namely on 23 March 2005 when he had resisted a routine search. The use of force had been justified. As to the applicant’s other allegations of ill-treatment, they had been carefully examined by prosecuting authorities and found unsubstantiated. In particular, a dog had never been set on him. All the injuries that had been found by prison doctors had been inflicted by the applicant on himself. During his imprisonment the applicant had been regularly seen by a psychologist, who had diagnosed him as suffering from an emotionally unstable personality disorder. In his psychological profile, prepared by the head of the psychological laboratory of the Federal Service for the Execution of Sentences, the applicant was described as having an inclination to self-mutilation as a way of avoiding prison regulations and opposing the prison administration. During the night of 26-27 June 2005 it was the applicant who had incited the other inmates of Lgov correctional colony OX-30/3 to commit self-mutilation. He had not been granted the status of a victim in criminal investigation no. 1519, and his complaint concerning the alleged ill-treatment in the colony had been dismissed. The applicant’s allegations of ill-treatment had been properly investigated by the prosecuting authorities, who had examined the relevant medical certificates and other documents and had questioned numerous witnesses, including the applicant’s cellmates, prison officers and medical experts. Therefore, in the Government’s view, the applicant’s complaints under Articles 3 and 13 were totally unsubstantiated.
83. The applicant contested the Government’s submissions. He reiterated his allegations that he had been subjected to ill-treatment throughout his detention. He had been regularly beaten in correctional colony OX-30/3 for his refusal to join the “order section” and subsequently, after his transfer from the prison, in order to be forced to withdraw his complaints to the domestic prosecuting authorities and the Court. The applicant further submitted that the investigation into his allegations had not been adequate because the persons questioned by the prosecutors had had an interest in denying that he had been subjected to ill-treatment. The applicant further submitted that his complaints concerning the actions of prison officials had not been sent to the addressees. Therefore, he had not failed to exhaust domestic remedies; rather, there had been no effective remedies. In sum, the applicant insisted that there had been a violation of Articles 3 and 13 of the Convention on account on ill-treatment in the detention facility and the lack of an adequate investigation.
84. As regards the applicant’s complaint under Article 3 of the Convention, the Court reiterates that the rule of exhaustion of domestic remedies referred to in Article 35 § 1 of the Convention obliges applicants to use first the remedies that are normally available and sufficient in the domestic legal system to enable them to obtain redress for the breaches alleged. The existence of the remedies must be sufficiently certain, in practice as well as in theory, failing which they will lack the requisite accessibility and effectiveness. Article 35 § 1 also requires that the complaints intended to be brought subsequently before the Court should have been made to the appropriate domestic body, at least in substance and in compliance with the formal requirements laid down in domestic law, but not that recourse should be had to remedies which are inadequate or ineffective (see Aksoy v. Turkey, judgment of 18 December 1996, Reports 1996-VI, pp. 2275-76, §§ 51-52, and Akdıvar and Others v. Turkey, judgment of 16 September 1996, Reports 1996-IV, p. 1210, §§ 65-67). It is also established that a mere doubt as to the prospect of success is not sufficient to exempt an applicant from submitting a complaint to the competent authority (see Whiteside v. the United Kingdom, decision of 7 March 1994, application no. 20357/92, DR 76, p. 80).
85. The Court further emphasises that the application of the exhaustion rule must make due allowance for the fact that it is being applied in the context of machinery for the protection of human rights that the Contracting Parties have agreed to set up. Accordingly, it has recognised that Article 35 must be applied with some degree of flexibility and without excessive formalism. It has further recognised that the rule of exhaustion is neither absolute nor capable of being applied automatically; for the purposes of reviewing whether it has been observed, it is essential to have regard to the circumstances of the individual case. This means in particular that the Court must take realistic account, not only of the existence of formal remedies in the legal system of the Contracting Party concerned, but also of the general context in which they operate, as well as the personal circumstances of the applicant. It must then examine whether, in all the circumstances of the case, the applicant did everything that could reasonably be expected of him to exhaust domestic remedies (see Akdivar and Others cited above, § 69, and Yaşa v. Turkey, judgment of 2 September 1998, Reports 1998‑VI, p. 2432, § 77).
86. The Court notes that under Article 125 of the Code of Criminal Procedure, decisions by investigators and prosecutors that might infringe the constitutional rights of participants in proceedings or prevent access to a court may be appealed to a court. The Court observes that although a court itself had no competence to institute criminal proceedings, its power to annul a refusal to institute criminal proceedings and indicate the defects to be addressed appears to be a substantial safeguard against the arbitrary exercise of powers by the investigating authority (see Trubnikov v. Russia (dec.), no. 49790/99, 14 October 2003). Therefore, in the ordinary course of events such an appeal might be regarded as a possible remedy where the prosecution decided not to investigate the claims.
87. Turning to the facts of the present case, the Court notes that the applicant filed several complaints before the prosecuting authorities concerning the alleged ill-treatment in Lgov correctional colony OX-30/3. The Lgov Interdistrict Prosecutor’s Office refused to institute criminal proceedings following the applicant’s first complaint on 10 July 2005. In relation to the applicant’s second complaint, the Prosecutor’s Office of the Seymskiy District of Kursk initially refused to institute criminal proceedings on 14 July 2005. After this decision was quashed by a higher prosecutor, the institution of criminal proceedings was again refused on 5 September 2005. On 19 August 2005 the Prosecutor’s Office of the Kursk Region discontinued criminal investigation no. 1519, instituted into the events that took place in the colony on 26-27 June 2005, in the part related to the complaints lodged by the applicant. Although the three decisions could be appealed against to a court, however, the applicant did not avail himself of that avenue.
88. The Court further notes that the applicant lodged two complaints with the prosecuting authorities concerning the alleged ill-treatment in Lgov remand prison IZ-46/2. The Prosecutor’s Office refused to institute criminal proceedings in relation to his first complaint on 18 July 2005. In relation to the applicant’s second complaint, the Prosecutor’s Office initially refused to institute criminal proceedings on 1 September 2005. After this decision was quashed by a higher prosecutor, the institution of criminal proceedings was again refused on 15 September 2005. The Prosecutor’s Office refused to institute criminal proceedings following the applicant’s complaint concerning the alleged ill-treatment in Bryansk remand prison IZ-32/1 on 21 October 2005. The Court observes that the three decisions could have been appealed to a court, but the applicant did not take this course.
89. In principle, the Court recognises the vulnerability of detainees and the difficulty that they face in pursuing complex legal proceedings. These considerations may be taken into account in the flexible approach to be adopted in such circumstances. However, in the present case the Court finds no reasons to dispense the applicant from exhausting a domestic remedy that was available to him. The Court notes that, throughout the proceedings, the applicant was assisted by a lawyer, who could have advised him to challenge the prosecutor’s decisions to a court. Furthermore, the applicant did not explain why, having received five refusals from the prosecuting authorities to institute criminal proceedings into his allegations of ill-treatment and a decision to discontinue criminal proceedings in relation to his complaint, he did not take such action, and the materials of the case contain no indication that it was impossible or even impractical (see Slyusarev v. Russia (dec.), no. 60333/00, 9 November 2006).
90. Therefore, the Court concludes that the applicant failed to exhaust available domestic remedies with regard to his complaint under Article 3 of the Convention.
91. As regards the applicant’s complaint under Article 13 of the Convention, the Court refers to its findings above that the applicant had an effective domestic remedy in respect of his complaints under Article 3, which he failed to have recourse to. Accordingly, the applicant’s complaint under Article 13 of the Convention is manifestly ill-founded.
92. It follows that this part of the application should be rejected pursuant to Article 35 §§ 3 and 4 of the Convention.
III. ALLEGED VIOLATION OF ARTICLES 2 AND 3 OF THE CONVENTION ON ACCOUNT OF ALLEGED LACK OF MEDICAL ASSISTANCE IN LGOV CORRECTIONAL COLONY OX-30/3, LGOV REMAND PRISON IZ-46/2 AND BRYANSK REMAND PRISON IZ-32/1
93. The applicant complained that he had not been provided with adequate medical assistance following his self-infliction of injuries in Lgov correctional colony OX-30/3 and later in Lgov remand prison IZ-46/2 and Bryansk remand prison IZ-32/1. He relied on Articles 2 and 3 of the Convention in this respect. The Court will examine the complaint under Article 3.
A. Admissibility
94. The Government contested the applicant’s argument. They submitted firstly that all of the applicant’s self-inflicted injuries had been subcutaneous. He had sustained no penetrating wounds. The applicant had always been provided with medical aid on the numerous occasions that he had self-mutilated. His slash wounds had been properly dressed with aseptic bandages and the foreign bodies that he had thrust into himself had been removed. The applicant had been seen in good time by a doctor and, in particular, by a surgeon when required. On several occasions the applicant had refused medical examination or treatment, which was reflected in his medical file. However, adequate medical aid had been made available to him at all times. The Government sent pictures of the applicant’s body which, they alleged, had been taken at the applicant’s request for submission to the Court. In their view, the pictures confirmed that the applicant’s wounds had been properly treated by medical specialists and had healed.
95. The applicant insisted that he had not been provided with adequate medical assistance. He contended that the Government’s submissions were not accurate as he had had penetrating and not subcutaneous wounds. The applicant claimed that on a number of occasions he had been forced to refuse medical aid. He had also had to remove foreign objects from his body himself because medical assistance had not been available. Surgeons had never removed them, and if there were entries in his medical file to that effect, it meant that they were forged.
96. The Court reiterates that Article 3 of the Convention enshrines one of the most fundamental values of democratic society. It prohibits in absolute terms torture or inhuman or degrading treatment or punishment, irrespective of the circumstances and the victim’s behaviour (see, among other authorities, Labita v. Italy [GC], no 26772/95, § 119, ECHR 2000-IV). However, to fall under Article 3 of the Convention, ill-treatment must attain a minimum level of severity. The assessment of this minimum level of severity is relative; it depends on all the circumstances of the case, such as the duration of the treatment, its physical and mental effects and, in some cases, the sex, age and state of health of the victim (see Valašinas v. Lithuania, no. 44558/98, §§ 100–101, ECHR 2001-VIII).
97. Turning to the facts of the present case, the Court notes firstly that the applicant did not submit any evidence to support his allegations that certain entries in his medical file had been forged or that some information provided therein had been inaccurate. Therefore, in the following analysis the Court will have due regard to the applicant’s medical file.
98. As regards the ill-treatment that the applicant alleged had taken place on 23 May 2005, the Government submitted that the applicant had never applied for medical aid in this connection. The Court notes that the applicant’s medical file contains no indication that he had applied for medical aid, and the applicant did not submit any evidence to the contrary.
99. As regards the injuries self-inflicted by the applicant during the night on 26-27 June 2005 in correctional colony OX-30/3, the Court notes that, within a short space of time, the applicant underwent an X-ray and was seen by a surgeon, who removed the foreign object, an electrode, from his body and dressed the wounds. In the materials available to the Court there is nothing to support the applicant’s allegation that some parts of the electrode remained in his body. Accordingly, the Court finds that the medical aid provided to the applicant was adequate to his condition.
100. The Court notes that during the applicant’s placement in Lgov remand prison IZ-46/2 he was diagnosed with subcutaneous wounds on 29 June, 11 and 23 July 2005. The applicant’s wounds were dressed daily between 30 June and 14 July 2005 and then on 16, 23 and 25 July 2005. On 16 July 2005, because of the intumescence on his right forearm, the applicant was given antibiotics. On the same date he was offered surgical treatment for the wounds, which, according to the entry in his medical file, he refused. On 25 July 2005 the applicant refused stitching for the wound in the area of the right elbow joint.
101. The Court observes that the applicant submitted no evidence to support his allegation that he had penetrating rather than subcutaneous wounds. Likewise, the Court has no evidence to conclude that the applicant was forced to refuse medical aid. It therefore finds that the medical assistance available to the applicant in remand prison IZ-46/2 was sufficient.
102. The Court further notes that during the applicant’s placement in Bryansk remand prison IZ-32/1 he complained about pain in his stomach on 17 August 2005. The doctor suspected that he had a foreign body in his stomach; however, the applicant refused to have it palpated. The applicant was again seen by a doctor and refused palpation of his stomach on 22, 24 and 26 August 2005. After fluorography conducted on the latter date showed a nail in the applicant’s abdominal area, he agreed to have his stomach palpated on 27 August 2005. On the same date he was transported to a hospital of the Federal Service for the Execution of Sentences in order to have the nail removed. However, on his arrival at the hospital he refused medical treatment and two days later removed the nail himself. Doctors dressed his wound. On 31 August 2005 a doctor dressed the wounds on the applicant’s right forearm, self-inflicted on an earlier date. Between 14 and 26 September 2005 the applicant was placed in hospital for removal of another foreign body in his abdominal area and subsequent treatment.
103. The Court observes that the applicant submitted no evidence to support his allegation that he had been forced to refuse medical aid. The materials available to the Court show that qualified medical assistance was made available to him both in the remand prison and in hospitals outside the detention facility. However, he refused it on several occasions. Inasmuch as the applicant may be understood to allege that the medical aid was not provided in good time, the Court considers that the State may not be held responsible for the delays caused by the applicant’s own refusal to undergo medical examinations or accept treatment. It finds that the medical aid available to the applicant was sufficient in the circumstances.
104. It follows that this part of the application is manifestly ill-founded and must be rejected pursuant to Article 35 §§ 3 and 4 of the Convention.
IV. ALLEGED VIOLATION OF ARTICLE 8 OF THE CONVENTION ON ACCOUNT OF ALLEGED INTERFERENCE WITH THE APPLICANT’S CORRESPONDENCE
105. The applicant complained under Article 8 that all his correspondence had been read by State officials and that a large number of his complaints and applications to various State authorities and a letter to his counsel, Ms Liptser, had not been sent to the addressees at all. He referred to Rule 12 of the 2001 Internal Regulations in support of his complaint. Article 8 of the Convention 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.”
A. Admissibility
106. The Government submitted that the applicant’s right to correspondence had been restricted in accordance with Article 91 § 2 of the Penal Code. However, the scope of the right as guaranteed by this provision had not been violated. The Government averred that all the applicant’s letters to the law-enforcement agencies, the Ombudsman, bar associations, his counsel and the Court had been sent to the addressees. The Government enclosed extracts of postal registers kept at Lgov remand prison IZ-46/2, remand prison IZ-46/1, Kursk Region, and correctional colony no. 11, Khabarovsk Region, pertaining to the applicant’s correspondence. They also submitted that during his placement in remand prison IZ-46/1 the applicant had received a letter and two postal packets. The Government contended that there had been no interference with the applicant’s correspondence.
107. The applicant maintained his allegations that his complaints to the law-enforcement agencies and a letter to his counsel had not been sent to the addressees by prison officers. He noted that, although the Government presented evidence that some of his letters had been sent, they did not prove that all of them had been sent. Furthermore, in the applicant’s view the Government failed to reply directly as to whether his correspondence had been subject to censorship.
108. The Court reiterates that any “interference by a public authority” with the right to respect for correspondence will contravene Article 8 of the Convention unless it is “in accordance with the law”, pursues one or more of the legitimate aims referred to in paragraph 2 of that Article and is “necessary in a democratic society” in order to achieve them (see, among many other authorities, the following judgments: Silver and Others v. the United Kingdom, 25 March 1983, Series A no. 61, p. 32, § 84; Campbell v. the United Kingdom, 25 March 1992, Series A no. 233, p. 16, § 34; and Niedbała v. Poland, no. 27915/95, § 78, 4 July 2000).
109. The Court notes the applicant’s complaint relates to the period when the 2001 Internal Regulations, which provided that all letters dispatched by detainees should be handed over to prison officers in unsealed envelopes, were still in force. The Court observes, however, that the provisions in the Regulations were subordinate to the Penal Code, which provides in Article 91 § 2 that detainees’ correspondence with courts, prosecutors, penitentiary officials, the Ombudsman, the public monitoring board and the Court was not subject to censorship. Correspondence with counsel was not subject to censorship except where authorised by a reasoned decision by the head of the correctional facility or his deputy, based on reliable information that the correspondence was aimed at initiating, planning or organising a crime.
110. The Court notes that, according to the postal registers submitted by the Government, twelve letters and complaints by the applicant were sent to various recipients from remand prison IZ-46/2 and eight letters and complaints from remand prison IZ-46/1. The Court observes that the applicant submitted no evidence that the 2001 Internal Regulations had been applied to him in disregard of the relevant provisions of the Penal Code. Likewise he failed to furnish any evidence that any of his letters had not been sent to the addressees or at least to submit specific details of the letters which, he alleged, had not been dispatched by the administration of the relevant detention facilities.
111. It follows that this part of the application is manifestly ill-founded and must be rejected pursuant to Article 35 §§ 3 and 4 of the Convention.
V. ALLEGED VIOLATION OF ARTICLE 34 OF THE CONVENTION
112. The applicant further complained under Article 34 of the Convention that State officials had forced him to write a statement on withdrawal of his application before the Court, which was later sent to the Court by the Government. Article 34 of the Convention reads, in so far as relevant, as follows:
“The Court may receive applications from any person ... claiming to be the victim of a violation by one of the High Contracting Parties of the rights set forth in the Convention or the Protocols thereto. The High Contracting Parties undertake not to hinder in any way the effective exercise of this right.”
113. The Government contested the applicant’s submissions. They stated that his allegations of ill-treatment had been reviewed by domestic prosecuting authorities and found to be unsubstantiated.
114. The applicant maintained his complaint.
115. Having regard to paragraph 72 above, the Court will now proceed to examine the applicant’s complaint under Article 34 of the Convention in the light of the general principles established in its case law. The Court reiterates that it is of the utmost importance for the effective operation of the system of individual petition instituted by Article 34 that applicants or potential applicants should be able to communicate freely with the Court without being subjected to any form of pressure from the authorities to withdraw or modify their complaints (see, among other authorities, Akdivar and Others v. Turkey, cited above, § 105, and Aksoy v. Turkey, judgment of 18 December 1996, Reports 1996-VI, p. 2288, § 105). In this context, “pressure” includes not only direct coercion and flagrant acts of intimidation but also other improper indirect acts or contacts designed to dissuade or discourage applicants from pursuing a Convention remedy (see Kurt v. Turkey, judgment of 25 May 1998, Reports 1998‑III, p. 1192, § 159).
116. Furthermore, whether or not contacts between the authorities and an applicant are tantamount to unacceptable practices from the standpoint of Article 34 must be determined in the light of the particular circumstances of the case. In this respect, regard must be had to the vulnerability of the complainant and his or her susceptibility to influence exerted by the authorities (see the Akdivar and Others and Kurt judgments, cited above, p. 1219, § 105, and pp. 1192-93, § 160, respectively). The applicant’s position might be particularly vulnerable when he is held in custody with limited contacts with his family or the outside world (see Cotleţ v. Romania, no. 38565/97, § 71, 3 June 2003).
117. The Court notes that on 11 August 2005 the applicant told his counsel that he had been forced by State officials to write statements on withdrawal of his application before the Court. The applicant submitted that such statements should be regarded as invalid, as they had been written under pressure. On the following day the applicant’s counsel informed the Court accordingly. The Court then transmitted the applicant’s submissions to the Government. On 11 November 2005 the Government sent the Court a copy of the applicant’s statement of 5 August 2005, addressed to the Representative of the Russian Federation at the Court, Mr Laptev. In the statement the applicant asked Mr Laptev to recall his application from the Court. In their letter sent together with the applicant’s statement, the Government contended that it had been written by the applicant voluntarily and his allegations that it had been written under pressure from State agents were unsubstantiated. The Government asked the Court to assess the applicant’s locus standi in the proceedings in view of this statement, which the Court has addressed above.
118. The Court observes that the applicant informed the Court that the statement dated 5 August 2005 had been written by him under pressure, asked the Court to disregard it should it be received and confirmed his intention to pursue the proceedings. The Court is astonished that after these submissions had been transmitted to the Government, they sent the Court the applicant’s statement of 5 August 2005 and, moreover, insisted that it had been written by him voluntarily. In the Court’s view, such conduct on the part of the Government was not consistent with their obligation not to interfere with the applicant’s right of individual petition.
119. The respondent State has therefore failed to comply with its obligations under Article 34 of the Convention.
VI. APPLICATION OF ARTICLE 41 OF THE CONVENTION
120. 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
121. The applicant claimed 35,000 euros (EUR) in respect of non-pecuniary damage caused by the physical and moral sufferings he had sustained.
122. The Government considered the claim to be unsubstantiated. In their view, should the Court find a violation of the applicant’s rights in the present case, such a finding should constitute sufficient just satisfaction.
123. Having regard to the nature of the breach in this case, and making its assessment on an equitable basis, the Court holds that the finding of the State’s failure to comply with its obligations under Article 34 of the Convention constitutes in itself sufficient just satisfaction for the non‑pecuniary damage, if any, sustained by the applicant.
B. Costs and expenses
124. The applicant also claimed EUR 3,000 for the costs and expenses incurred before the Court and, in particular, for the assistance of his representative who acted pro bono and visited him in the detention facilities.
125. The Government argued that the claim should be rejected altogether since the applicant failed to submit any documents to support his claim that the costs had actually been incurred (see Rotaru v. Romania [GC], no. 28341/95, ECHR 2000‑V).
126. The Court notes that in the present case the applicant did not furnish any documents to show that he had actually incurred the expenses claimed. Therefore, regard being had to the information in its possession, the Court rejects the applicant’s claim for costs and expenses.
FOR THESE REASONS, THE COURT UNANIMOUSLY
1. Dismisses the Government’s preliminary objections;
2. Decides to proceed with the examination of the applicant’s complaint under Article 34 and declares the remainder of the application inadmissible;
3. Holds that the State has failed to fulfil its obligation under Article 34 not to hinder the effective exercise of the right of individual petition;
4. Dismisses the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 8 November 2007, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Søren NielsenLoukis LoucaidesRegistrarPresident
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Leave granted. Though numberice has been served on the companytesting respondents, they have number appeared either in person or through companynsel. We have heard Shri O.P. Rana, learned senior companynsel for the petitioner. The acquisition of the land by the Ghaziabad Development Authority was initiated by numberification of February 25, 1986, under Section 4 1 of the Land Acquisition Act, 1894 for short, the Act enquiry under Section 5A was dispensed with under Section 17 4 of the Act and the Declaration under Section 6 was made on February 26, 1986. Both the numberifications and declaration were simultaneously published on April 10, 1986. The respondents 1 and 2 have filed writ petition No. 7155/86 in the High Court of Allahabad challenging the validity of the numberification under Section 4 1 on the ground that local publication as required under Section 4 1 was number made. The exercise of the power under Section 17 4 was also wrongly invoked, as simultaneously numberification under Section 4 1 and declaration under Section 6 companyld number be published. The High Court accepted the companytentions and by impugned order dated November 3, 1987, allowed the writ petition and quashed the numberification of Section 4 1 and the declaration under Section 6. Thus this appeal by special leave. Section 4 1 of the Act envisages that whenever it appears to the appropriate Government that land in any locality is needed or is likely to be needed for any public purpose of for a companypany a numberification to that effect shall be published in the official Gazette and in two daily newspapers circulating in that locality of which at least one shall be in the regional language. This was added by Amendment Act 68 of 1984. Earlier thereto under the local amendment of U.P., publication in one newspaper was sufficient. The Collector is required to cause public numberice of the substance of such numberification to be given at companyvenient places in the said locality. The State of UP made amendment to Section 4 by UP Land Acquisition VIII of 1974/XXII of 1954, whereunder between the words and and the word Collector the following shall be inserted and be deemed always to have been inserted. The proviso thereto was added as under- Except in the case of any land to which by virtue of a direction of the State Government under sub section 4 of Section 17 the provision of Section 5 A shall number apply. In other words, the mandatory requirement of the publication of the numberification in the locality was dispensed with in a case where the Government had opined that the land was urgently needed, under Section 17 4 . When the authorities have dispensed with the enquiry under Section 5A, the requirement of local publication shall number apply. Consequently, the finding of the High Court is unsustainable. It is rather unfortunate that this amendment was number brought to the numberice of the High Court when the writ petition was allowed. But operation of the statutory local amendment to the Act has dispensed with local publication in two newspapers. The numberification under Section 4 1 is number vitiated for number-publication of the numberification in the local newspapers. The next question is whether Section 17 4 applies and the action taken was inconsistent with the provisions of the Act. It is seen that but for local amendment, on publication of the numberification under Section 4 1 and exercising of the power under Section 17 4 , the publication of the declaration under Section 6 is mandatory pre-condition for taking possession of the land. Even on publication of declaration under Section 6, numberice under Section 9 is necessary to the owner or person interested in the land and on expiry of 15 days from the date of the numberice under Section 9 the Government is entitled to take possession of the land. By operation of Sub-section 2 of Section 17 though award has number been made under Section 11 the land stands vested in the Government, free from all encumbrances. In the State of UP an amendment has been made by UP Amendment Act repeal 32 of 1990 and the Land Acquisition Validation Act 1991, UP Act 5 of 1991 , which had companye into force w.e.f. September 24, 1984, envisaging insertion of a proviso to sub-section 4 of Section 17 which reads thus- In Section 17 of the Land Acquisition Act, 1894, as amended in its application to Uttar Pradesh, hereinafter referred to as the principal Act, in sub-section 4 the following proviso shall be inserted at the end and shall be deemed to have been inserted on September 24, 1984, namely, Provided that where in the case of any land, numberification under Section 4, sub-section 1 has been published in the Official Gazette on or after September 24, 1984 but before January 11, 1989 and the appropriate Government has under this sub-section directed that the provisions of Section 5-A shall number apply, a declaration under Section 6 in respect of the land may be made either simultaneously with or at any time after the publication in the Official Gazette of the numberification under Section 4, sub-section 1 . In other words by operation of the proviso to Section 17 4 in relation to its application to the State of UP, Notification under Section 4 1 and the declaration under Section 6 would simultaneously be published. The appropriate Authority is empowered to issue numberice under Section 9 and take possession on expiry of 15 days. The High Court, therefore, was number companyrect in its companyclusion that the Government would number have published simultaneously the numberification under Section 4 1 and the declaration under Section 6 and immediately taken possession of the land in question. | 7 |
C. Lahoti, J. The appellant is a tea companypany. In the year 1982 it imported two decanter machines from Germany. The customs duty, additional duty and the other duties leviable thereon were duly paid. The machines were installed at the tea factory of the appellant situated at Munnar Kerala . In the year 1992 some parts of the machine requiring such repairs as companyld number be carried out in India, were sent to Germany after obtaining previous permission of the Government of India. The parts were repaired and thereafter re-imported in July, 1993. The appellant claimed exemption from payment of customs duty under Notification No.13/81 which was denied by the Assistant Collector of Customs. An appeal preferred by the appellant before the Commissioner of Customs Appeals was allowed. The Revenue preferred a further appeal before the CEGAT which has been allowed and the order of the Assistant Collector of Customs restored. Cross appeal preferred by the appellant has been dismissed. Aggrieved by the order of Tribunal, the appellant has filed these appeals under Section 130 E of the Customs Act, 1962. The only question arising for decision is whether the appellant is entitled to benefit of Notification No.13/81 read with Export Import Policy, 1992-97 hereinafter Policy, for short . Export and Import Policy 1992-97 announced certain benefits and privileges to 100 export oriented units EOUs . Vide order dated 9th June, 1992 the Government of India declared the appellant a unit entitled to facilities and privileges admissible under the 100 export oriented scheme by permitting the companyversion of the appellant from existing domestic tariff area DTA into 100 EOU at Munnar in the State of Kerala for the manufacture of instant tea powder and aqueous tea aroma by-product upto the specified capacity. This decision of the Government of India entitled the appellant to import additional capital goods worth Rs.300 lacs CIF for the project as per the list enclosed which included decanters, two in number. It was also specified that the import of capital goods, raw materials and companyponents for production under this scheme shall be exempt from customs duty. Availing the benefit of EOU sanction letter the appellant had imported capital goods other than those in issue worth Rs.225 lacs. A balance of Rs.75 lacs entitlement was still available to the appellant. According to the appellant the companyt of repairs incurred in Germany was Rs.38,06,017/- which was declared by it to be the value of the goods for the purpose of re-importation in terms of Notification number13/81. Notification No.13/81 has been issued in exercise of powers companyferred by sub-section 1 of Section 25 of the Customs Act, 1962. The Central Government has exempted capital goods, inter alia, when imported into India for the purpose of manufacture of articles for export out of India by 100 EOUs provided that the importer has been granted necessary licence for the import of the goods for the said purpose. This is one of the several companyditions that is required to be satisfied. The Import Export Policy 1992-97, vide para 24, provides that second hand capital goods and any other second hand goods shall number be imported unless permitted by this policy or in accordance with a licence issued in this behalf. Para 25 catalogues a to l sectors of the industry for which second hand capital goods may be imported without a licence. Admittedly, the appellant does number fall in any of such categories. Para 26 provides that any other second hand capital goods i.e. other than those specified in para 25 may be imported in accordance with a licence issued in that behalf. Para 31 permits imported capital goods or parts thereof being sent abroad for repairs and reimported but subject to certain specified companyditions. Para 159 permits companyversion of an existing domestic tariff area DTA unit into an EOU. It is specifically provided - numberconcession in duties and tax shall, however, be available under the scheme for plant machinery and equipment already installed. Para 172 allows the units to re-import, after repairs abroad, machinery equipment exported by them for this specific purpose and payment of foreign exchange for this purpose. There is yet another numberification No.204/76 issued under Section 25 1 of the Customs Act whereby articles when re-imported into India after having been exported for repairs subject to companypliance with certain specified companyditions have been declared liable to payment of duty only on the value of such re-imported goods which would be made up of the fair companyt of repairs carried out plus insurance and freight charges both ways. The Tribunal has referred to and made analysis of all the abovesaid provisions and then companycluded that the Import Export Policy 1992-97 read with Notification No.13/81 gives exemption to the goods imported for the first time in India and does number companyer the goods already imported and sent abroad for the purpose of repairs and then reimported to India. Having heard the learned companynsel for the parties, we are of the opinion that the order of the Tribunal cannot be found fault with. Under Section 20 of the Customs Act, 1962 read with the definition of import as given in clause 23 of Section 2, imported goods would include re-imported goods as well and therefore the goods sent out of India and reimported would also be liable to payment of duty in the same manner in which they would have been liable if imported for the first time in India. In the matter of goods sent out for repairs only there is exemption numberification number204/76. The benefit thereof has been taken by the appellant. A perusal of Import Export Policy 1992-97 and Exemption Notification No.13/81 clearly shows that the benefit thereof was number available to the appellant in the case at hand. The machinery parts exported for repairs and re-imported thereafter did number require any licence for the import of the goods, which licence is one of the companyditions precedent to attract applicability of Notification No.13/81. Same is the inference which flows from the provisions companytained in paragraphs 24, 25, 26 and 31 of the Policy. Para 172 of the Policy makes it legal to re-import after repairs abroad the machinery and equipment exported specifically for the purpose of repairs and also allows release of foreign exchange payment for the purpose. Both these things may number have been permissible but for para 172 of the Policy. This is the only effect of para 172. Reliance on para 172 so as to link the Policy with Notification No.13/81 is misconceived. Para 159, while permitting companyversion of an existing DTA into EOU, specifically excludes any companycession in duties and tax under the Policy being made available to plant and machinery already installed. The parts exported and re-imported by the appellant were of the machinery already installed on the date of promulgation of the Policy. | 7 |
Gokhale J. The appellant in this appeal is a retired Additional Sessions Judge of the State of Orissa. In this appeal by Special Leave, he seeks to challenge the judgment and order dated 20.10.2002, rendered by a learned Judge of the Orissa High Court in suo-moto Criminal Revision No. 367 of 1997, arising out of Session Trial Case No. 187/55 of 1995, to the extent the learned Judge has made certain observations against the appellant who had decided that session case. These remarks were made on account of the appellant number framing the charge under Section 302 of the Indian Penal Code IPC against the accused in that case, when the material on record warranted framing of that charge. The facts leading to this appeal are as follows Appellant number framing the charge under Section 302 IPC, when warranted. The appellant joined the Orissa judicial service in November 1971. In August 1991, he was promoted to the cadre of District Judges. During the period of his service, the appellant was transferred from place to place, and at the relevant time in March 1996, was posted as the Additional District and Sessions Judge, Rourkela, when the above referred case bearing S.T. No. 187/55 of 1995 was assigned to him. The case of the prosecution in that session case was as follows. There was a land dispute between one Megha Tirkey the accused and one Samara Tirkey, who was alleged to have been murdered by the accused. Jayaram Tirkey is the younger brother of accused. On 25.06.1995, at about 1100 a.m., Samara Tirkey the deceased is said to have abused Smt. Mangi the wife of Jayaram Tirkey PW-1 on account of the alleged encroachment of Samaras land by the uncle of Jayaram, one Shri Daharu Kujur. On the next day, i.e. on 26.6.1995, Jayaram Tirkey alongwith his brother Megha Tirkey, the accused went to the house of Samara Tirkey, the deceased. Initially, Samara Tirkey was number available and Jayaram and Megha Tirkey enquired about his whereabouts with his wife Hauri PW-3 . In the meanwhile, Samara Tirkey reached over there. Jayaram Tirkey asked Samara as to why he had scolded Jayarams wife in his absence. Samara Tirkey is said to have raised his hand towards Jayaram when accused Megha Tirkey dealt a lathi blow on the head of Samara Tirkey whereby he fell down. Thereafter, the accused Megha Tirkey gave two more lathi blows on his chest. When Hauri caught hold of the accused, he gave a lathi blow to her also and she received a lacerated wound on her forehead. Samara Tirkey was taken to the Raurkela Govt. Hospital, where he died on 27.6.1995 at about 200 p.m. Megha Tirkey was charged under Section 302 and 323 IPC. The matter reached before the appellant on 21.03.1996 when he passed the following order- Order No.8 dt. 21.03.1996 The accused is produced in custody by the escort party. Learned Associate Lawyer who represents the State is present. Learned Defence companynsel is also present. Learned Associate Lawyer opens the prosecution case by describing the charges brought against the accused and stating by what evidence he proposes to prove the guilt of the accused. The learned Defence companynsel submits that there is companyplete absence of evidence to frame charge u s 302 IPC and that the available evidence may bring at-best an offence u s 304 IPC. After hearing submissions of both sides in this behalf and on companysideration of the materials available in the case diary, I find there is numbersufficient material to frame charge u s 302 IPC but there are sufficient materials against the accused for presuming that he has companymitted the offence u s 304 IPC and 323 IPC. Hence, charge u s 304 IPC and u s 323 IPC are framed against the accused. The charges being read-over and explained, the accused pleads number guilty and claimed to be tried. The Defence does number admit the genuineness of the documents filed by the prosecution. Put up on 25.4.96 for fixing a date of hearing of the Sessions trial. Sd - Addl. Sessions Judge, Rourkela, 21.3.96 Subsequently, the appellant was transferred from Rourkela, and the matter proceeded before one Shri S.K. Mishra, the subsequent Additional Sessions Judge at Rourkela. It so happened that during the trial, some of the prosecution witnesses, viz. PW Nos. 2, 4, 5, 6, 7 were declared hostile by the prosecution since they did number support the case. The Judge, however, found the evidence of Hauri PW No. 3 wife of Samara Tirkey, the deceased, as acceptable and reliable. Her testimony was supported by the medical evidence. The Doctor found a lacerated injury on her forehead. She stated that the accused had given a lathi blow on the head of the deceased and then on his chest, in her presence. She also stated about the lathi blow given to her. The post-mortem examination revealed that amongst other injuries, the left side mandible of the deceased was fractured and there was subdural haematoma over the left parietal region of the scalp. The other vital organs like lungs, liver, kidney were all companygested. Due to these injuries, the deceased went into companya and then died. The learned Judge held that the prosecution had established the charges beyond reasonable doubt and found the accused guilty of offences under Section 304 and 323 of IPC, and companyvicted him accordingly. He sentenced him to undergo Rigorous Imprisonment for five years under Section 304 1 of IPC and for one month for offence under Section 323 IPC, with both the punishments running companycurrently. Note by the Inspecting Judge It so transpired that later the inspection of the Court of Additional District Sessions Judge, Rourkela was carried out by Honble Mr. Justice P.K. Mishra, then a Senior Judge of the High Court of Orissa. At that stage, while going through the file of S.T. No.187/55 of 1995, Mr. Justice P.K. Mishra came across the above referred Order No.8 dated 21.3.1996 passed by the appellant herein. Thereupon Mr. Justice P.K. Mishra made the following numbere on that file- In this case, the only accused Megha Tirkey was chargesheeted under sections-302/323 IPC for c l u b b i n g the victim Samra Tirkey to death on 26.06.1995 at 3.30 P.M. The additional Sessions Judge, Rourkela while discharging the accused from the offence under Section - 302 framed charges under sections 304/323 of the Indian Penal Code without recording any reason for discharging the accused from the offence under Section 302 IPC. The order of the Additional Sessions Judge only states that material available in the case diary is insufficient to frame a charge under Section 302 IPC. It is the settled principle of law that while framing charge the Sessions Judge under Section -228 Cr.P.C. need number assign reasons, but he is bound to record reasons while recording a discharge under Section 227 Cr.P.C. In the present case, the widow of the deceased P.W.3 has testified that the accused dealt a forceful lathi blow on the head of the deceased and two more blows on his chest. The post-mortem examination reveals that ramus of the left side mandible of the deceased was fractured on the chin besides left parietal region of the scalp. Relying on the ocular testimony of widow of the deceased and the post-mortem examination report that lends support to her evidence, the Additional Sessions Judge recorded a companyviction under Section 304 1 /323 of the Indian Penal Code and sentenced the accused to undergo R.I. for five years on the first companynt and one month R.I. on the second companynt with a direction for companycurrent running of sentences. It is numberbodys case that the offence was companymitted on grave and sudden provocation. The Addl. Sessions Judge should number have nipped the case U s 302 IPC at the bud by discharging the accused thereof by a number speaking order. This is a fit case for suo-moto revision U s 401 Cr.P.C. Suo-moto Criminal Revision In view of the numbere of Honble Justice Mr. P.K. Mishra, the High Court took up a suo-moto Criminal Revision against the order dated 21.3.1996, which was numbered as No.187/55 of 1995. The learned Single Judge, who heard the matter, went through the judgment rendered at the end of the trial in Case No.187/55 of 1995, as well as the order of framing charge dated 21.3.1996. He examined the material on record and numbered that P.W. No. 3 had companye to the rescue of her husband when he received lathi blows. She had also received a lathi blow. Her evidence was, therefore, a credible evidence. He referred to the postmortem report which stated that out of the four external injuries, injury No. 4, i.e., fracture of ramus of left side mandible, was grievous. On dissection, it had been found by the Doctor that the brain membrane was companygested. There was a subdural haematoma over the left parietal lobe and brain was companygested. The other vital internal organs like lungs, liver, spleen, kidney were all companygested. The Doctor P.W. No.8 opined that death was due to companya resulting from injury to brain and scalp bones and the injuries were ante-mortem in nature. On this factual aspect, the learned Single Judge held as follows - If the materials in the case diary reveal two distinct offences of the same nature then it is appropriate to frame charge for more grievous offence or to frame charge for both the offences distinctly and separately. That being the settled position of law and the prosecution case stands in the manner indicated above, therefore, there is numberhesitation to record a finding that learned Additional Sessions Judge, Rourkela went wrong in framing charge for the offence under Section 304, IPC by declining to frame charge under Section 302 IPC for numberreason explained in the order passed under Section 228 Cr.P.C. Impugned observation by the Single Judge The learned Single Judge, however, numbered that by the time he was deciding the Criminal Revision, the accused had already served the sentence of five years of Rigorous Imprisonment. Therefore, he did number deem it to be a fit case for ordering a retrial under Section 300 2 of Code of Criminal procedure, 1973 Cr.P.C. for short . He disposed of the suo-moto Criminal Revision accordingly by his order dated 28.10.2002. The learned Single Judge, however, made certain observations in para 5 of his order which are material for our purpose. This para reads as follows - A Judicial Officer before being posted as Addl. Sessions Judge gets the experience of companyducting sessions cases as Assistant Sessions Judge. Therefore, in this case, it cannot be said that the companycerned Presiding Officer had numberrequisite experience to deal with a matter relating to companysideration of charge and to pass appropriate legal order under Sections 227 and 228 Cr. P.C companyrectly. When the accused was number charged for the offence under Section 302, IPC and instead he was charged for the offence u s 304 IPC, it was incumbent on the trial companyrt to explain the circumstances and to reflect the same in the order as to what was the reason or lack of evidence number to frame charge for the offence under Section 302 IPC. This Court finds numberreasonable excuse for the companycerned Presiding Officer to companymit a blunder in the above indicated manner If the said Judicial officer has number yet been companyfirmed in the cadre of O.S.J.S S.B. , then before companyfirming him in that cadre his performance be thoroughly verified and in the event of finding glaring deficiency in his performance, as in this case, then he may be kept on probation for a further period as would be deemed just and proper by the High companyrt. If he has already been companyfirmed in that cadre, then his performance be thoroughly verified before giving him promotion to the higher scale. Thus, in first part of this para, the learned Judge has held that the appellant had companymitted a blunder in number framing the charge under Section 302 IPC. In the latter part of the para, he has made certain observations about the manner in which the appellant had passed the order dated 21.3.1996, and also some companyrectional suggestions about the appellant. Subsequent to these observations in this order dated 28.10.2002, the High Court Administration examined the record of the appellant and denied him the Selection grade. The appellants representation dated 24.09.2003 in that behalf was also rejected by the High Court Administration as per the companymunication dated 20.11.2003 to the appellant from the Special Officer Administration . Being aggrieved therewith the appellant took Voluntary Retirement on 30.11.2003, and subsequently filed the present Appeal by special leave on 13.02.2004 to challenge the above order dated 28.10.2002 and the observations made therein. Submissions on behalf of the Appellant Mr. Uday Gupta, learned Counsel for the appellant, submitted that the order passed by the appellant on 21.3.1996 was a judicial order. It is possible to say that this order was an erroneous one, but merely for that reason, it was number proper for the inspecting judge to direct that a suo-moto Revision be filed against the same. In any case, it was wrong on the part of the learned Single Judge who heard the suo-moto Revision, to make the observations which he has made in the above quoted paragraph 5 of his order which has affected appellants career. Mr. Gupta submitted that the appellant had otherwise a good service record after his promotion in District Judges Cadre in August 1991. He had worked initially as an Additional Special Judge Vigilance at Bhubaneshwar, thereafter for two years as the Presiding Officer of the E.S.I Court at Rourkela, then as Additional Sessions Judge at Rourkela in 1996 and then for three years as the Presiding Officer of the Central Govt. Industrial Tribunal at Asansol, West Bengal. Subsequently, he became the Additional District Judge and Presiding Officer of the Motor Accidents Claims Tribunal in Cuttack, Orissa from July 1999 to November 1999. From November 1999 to September 2002, he was the Director Law Studies , Gopabandhu Academy of Administration, Bhubaneshwar, and subsequently the Additional District Judge, Talcher, Orissa, from October 2002 to 30.11.2003. He pointed out that the appellant had participated in various seminars and companyferences and presented his papers. His record was otherwise quite good. Mr. Gupta relied upon the judgment In the matter of K A Judicial Officer 2001 3 SCC 54. The companycerned judicial officer in that matter was assigned a companyrtroom which had great infrastructural difficulties. Complaints in that behalf were number being attended in spite of a number of representations to the PWD officials. Being dissatisfied by this inaction, the learned Judge issued a numberice to the companycerned authorities as to why action in companytempt should number be taken against them. The PWD acted promptly thereafter, and carried out the necessary repairs. Learned Judge therefore dropped the companytempt proceedings but still held that there was a case to take companynizance under Sections 380, 201 and 120-B of IPC and issued process against the companycerned officers. Being aggrieved by that order, the matter was carried to the High Court where the High Court observed that the learned Magistrate had exceeded her jurisdiction defying all judicial numberms to pressurize the officers, and her order was a gross abuse of the process of Court since there was numberoccasion to invoke the particular sections of IPC. When the Judicial Officer carried the matter to this Court, this Court observed in paragraph 15 of the above judgment that by the observations of the High Court, the Judicial Officer was being companydemned unheard. This Court observed in paragraph 15 that such observations give a sense of victory to the litigant number only over his opponent but also over the Judge who had decided the case against him and the same should be avoided. The companynsel for the appellant relied upon the report of the First National Judicial Pay Commission to submit that at times the Trial Judges are really on trial as observed in the report. The learned Counsel for the appellant then relied upon the observations in para 13 of the judgment of this Court in V.K. Jain Vs. High Court of Delhi through Registrar General and Others 2008 17 SCC 538 and the principles of law laid down in para 58 thereof. In that matter, the appellant while working as a Judicial Officer in the Higher Judicial Services of Delhi, vide his order dated 4.3.2002, permitted an accused in a criminal case to go abroad subject to the companyditions that the accused would file Fixed Deposit Receipts FDR of Rs. one lakh and also surrender passports of his mother and wife. When the said order dated 4.3.2002, was challenged, the High Court found those companyditions unacceptable. In its order, the High Court made certain observations against the petitioner and in paragraph 15 held that- 5This is numberhing but a medieval way of administering justice when family members used to be kept as hostages in lieu of either release of their detained kith and kin or procure the surrender of the wanted man. Being aggrieved by that order the Judicial Officer carried the matter to the Supreme Court, where this Court cautioned against making such strong observations, it expunged those remarks from the order of Delhi High Court. In sub-paragraph IX of para 58, this Court laid down the following principle- IX. The superior companyrts should always keep in mind that disparaging and derogatory remarks against the judicial officer would cause incalculable harm of a permanent character having the potentiality of spoiling the judicial career of the officer companycerned. Even if those remarks are expunged, it would number companypletely restitute and restore the harmed Judge from the loss of dignity and honour suffered by him. Mr. Gupta emphasized these observations and submitted that the High Court should number have made the above observations in para 5 of the impugned order which have caused an incalculable harm to the career of the appellant. He then relied upon paragraphs 16 to 20 of the judgment in Prakash Singh Teji Vs. Northern India Goods Transport Company Private Limited and Anr. 2009 12 SCC 577. In that matter, in the facts of the case the High Court had described the approach of the Judicial Officer companycerned as hasty, slipshod and perfunctory. The adverse remarks against the appellant were removed in paragraph 20 of the judgment in the light of the principles laid down in K A Judicial Officer Supra . This Court held that harsh or disparaging remarks are number to be made against persons and authorities whose companyduct companyes into companysideration before companyrts of law, unless it is really necessary for the decision of the case as an integral part thereof. Reply by the Respondents The arguments of the appellant were companyntered by Mr. Janaranjan Das and Mr. Suresh Chandra Tripathy appearing for the respondents. Affidavits in reply have been filed by the State Government and also on behalf of Respondent Nos. 3 and 4 to the appeal, i.e. Registrar Administration and Registrar Judicial of High Court of Orissa. It is pointed out in the affidavit on behalf of the High Court that this was number a solitary incident companycerning the appellant. Adverse remarks were entered into his companyfidential record for the years 1973-79 companytinuously, and again for 1981, 1983, 1987 to 1989, and 1991. It was also pointed out that in a case under Narcotic Drugs and Psychotropic Substances Act, 1985 N.D.P.S. Act , the appellant had granted bail in the teeth of the prohibition under Section 37 of that Act. He was, therefore, placed under suspension from 19.12.1992. An inquiry was initiated, though after companysidering the report of the inquiry, the proceeding was dropped and the appellant was allowed to resume from 15.8.1994. He was then posted as Additional District Judge, Rourkela where he heard the matter companycerning the murder of Samara Tirkey. With respect to this submission of the respondents, the companynsel for the appellant pointed out that after the revocation of suspension, his service record was good, and in fact thereafter the remark of being outstanding was recorded in his service book for a few years. The companynsel for the respondents companyntered this submission by pointing out that subsequent to the revocation of suspension also there were representations against appellants honesty and integrity, particularly while working as the Industrial Tribunal cum Labour Court in Asansol, West Bengal. In fact because of that, he was transferred back to Malkanagiri, Orissa where he opted for voluntary retirement. It was submitted on behalf of the respondents that the case No. 187/55 of 1955 was a serious one companycerning the death of a young person aged about 40 years. The deceased was given a lathi blow on his head because of which he fell down, whereafter also two lathi blows were given on his chest. His wife also received a lathi blow and she was an eye witness. Medical Evidence showed that because of these blows the deceased had died. None of these aspects has been companysidered by the appellant in his order dated 21.03.1996, extracted above. All that the appellant has stated in this order is that he had heard the submissions of both sides, and on the companysideration of the material available in the case diary, he found that there was numbersufficient material to frame the charge under Section 302 IPC. As against that, according to the respondents there was sufficient material on record to justify the framing of the charge under Section 302 IPC, and in any case while declining to frame the charge under Section 302 IPC, the appellant ought to have discussed as to why according to him the material on record was number sufficient. Absence of reasons in such a case amounts to a dereliction of duty. The order in such a matter has to be a self-explanatory one. Since it is number so, all that the learned Single Judge deciding the Revision has done, is to suggest to the High Court Administration to take companyrective steps with respect to the appellant, and the same was justified. Consideration We have numbered the submissions of both the companynsel. We are companycerned with the role of the Judge at the stage of framing of a charge. The provision companycerning the framing of a charge is to be found in Section 228 of Cr.P.C. This Section is however, companynected with the previous section, i.e. Section 227 which is companycerning Discharge. These two sections read as follows- Section 227 - Discharge - If, upon companysideration of the record of the case and the documents submitted therewith, and after hearing the submissions of the accused and the prosecution in this behalf, the Judge companysiders that there is number sufficient ground for proceeding against the accused, he shall discharge the accused and record his reasons for so doing. Section 228 - Framing of charge 1 If, after such companysideration and hearing as aforesaid, the Judge is of opinion that there is ground for presuming that the accused has companymitted an offence which- a is number exclusively triable by the Court of Session, he may, frame a charge against the accused and, by order, transfer the case for trial to the Chief Judicial Magistrate3or any other Judicial Magistrate of the first class and direct the accused to appear before the Chief Judicial Magistrate, or, as the case may be, the Judicial Magistrate of the first class, on such date as he deems fit, and thereupon such Magistrate shall try the offence in accordance with the procedure for the trial of warrant-cases instituted on a police report b is exclusively triable by the Court, he shall frame in writing a charge against the accused. Where the Judge frames any charge under clause b of subsection 1 , the charge shall be read and explained to the accused and the accused shall be asked whether he pleads guilty of the offence charged or claims to be tried. As seen from Section 227 above, while discharging an accused, the Judge companycerned has to companysider the record of the case and the documents placed therewith, and if he is so companyvinced after hearing both the parties that there is numbersufficient ground to proceed against the accused, he shall discharge the accused, but he has to record his reasons for doing the same. Section 228 which deals with framing of the charge, begins with the words If after such companysideration. Thus, these words in Section 228 refer to the companysideration under Section 227 which has to be after taking into account the record of the case and the documents submitted therewith. These words provide an intercompanynection between Sections 227 and 228. That being so, while Section 227 provides for recording the reasons for discharging an accused, although it is number so specifically stated in Section 228, it can certainly be said that when the charge under a particular section is dropped or diluted, although the accused is number discharged , some minimum reasons in nutshell are expected to be recorded disclosing the companysideration of the material on record. This is because the charge is to be framed after such companysideration and therefore, that companysideration must be reflected in the order. It is also to be numbered that a discharge order is passed on an application by the accused on which the accused and the prosecution are heard. At the stage of discharging an accused or framing of the charge, the victim does number participate in the proceeding. While framing the charge, the rights of the victim are also to be taken care of as also that of the accused. That responsibility lies on the shoulders of the Judge. Therefore, on the analogy of a discharge order, the Judge must give his reasons atleast in a nutshell, if he is dropping or diluting any charge, particularly a serious one as in the present case. It is also necessary for the reason that the order should inform the prosecution as to what went wrong with the investigation. Besides, if the matter is carried to the higher Court, it will be able to know as to why a charge was dropped or diluted. The observations of this Court in the case of State of Bihar Vs. Ramesh Singh AIR 1977 SC 2018 1977 4 SCC 39 are very apt in this behalf. A bench of two Judges of this Court has observed in that matter that at the initial stage of the framing of a charge, if there is a strong suspicion evidence which leads the Court to think that there is ground for presuming that the accused has companymitted an offence, then it is number open to the Court to say that there is numbersufficient ground for proceeding against the accused. The Court referred to the judgment of a bench of three Judges in Nirmaljit Singh Hoon Vs. State of West Bengal 1973 3 SCC 753, which in turn referred to an earlier judgment of a bench of four Judges in Chandra Deo Singh Vs. Prokash Chandra Bose AIR 1963 SC 1430, and observed as follows in para 5- In Nirmaljit Singh Hoon v. State of West Bengal - Shelat, J. delivering the judgment on behalf of the majority of the Court referred at page 79 of the report to the earlier decisions of this Court in Chandra Deo Singh v. Prokash Chandra Bose - where this Court was held to have laid down with reference to the similar provisions companytained in Sections 202 and 203 of the Code of Criminal Procedure, 1898 that the test was whether there was sufficient ground for proceeding and number whether there was sufficient ground for companyviction, and observed 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 forum at the appropriate stage and issue of a process companyld number be refused. Illustratively, Shelat, J., further added Unless, therefore, the Magistrate finds that the evidence led before him is selfcompanytradictory, or intrinsically untrustworthy, process cannot be refused if that evidence makes out a prima facie case. emphasis supplied Further, as observed later in paragraph 6 of a subsequent judgment of this Court in Niranjan Singh Vs. Jitendra Bhimraj 1990 4 SCC 76, at the stage of the framing of the charge, the Judge is expected to sift the evidence for the limited purpose to decide if the facts emerging from the record and documents companystitute the offence with which the accused is charged. This must be reflected in the order of the judge. Thus it cannot be disputed that in this process the minimum that is expected from the Judge is to look into the material placed before him and if he is of the view that numbercase was made out for framing of a charge, the order ought to be clear and self-explanatory with respect to the material placed before him. In the present case, all that the appellant stated in his order dated 21.03.1996 was, that on companysideration of the material available in the case diary, he had found that there was numbersufficient material to frame the charge under Section 302 of IPC. This is numberhing but a bald statement and was clearly against the statement of the injured eye witness, and supporting medical papers on record. The appellant has number even referred to the same. He has also number stated in his order as to why he was of the opinion that the material available in the case diary was insufficient. Such a bald order raises a serious doubt about the bona fides of the decision rendered by the Judge companycerned. In the instant case, a young person had been killed. It was number a case of grave and sudden provocation. The material on record showed that there was an injured eye witness and there was the supporting medical report. The material on record companyld number be said to be self-contradictory or intrinsically unreliable. Thus, there was a prima facie case to proceed to frame the charge under Section 302 IPC. The reason given for dropping the charge under Section 302 was totally inadequate and untenable, and showed a number-application of mind by the appellant to the statements in the charge-sheet and the medical record. The order does number explain as to why a charge under Section 304 was being preferred to one under Section 302 IPC. In fact, since the material on record revealed a higher offence, it was expected of the appellant to frame the charge for more grievous offence and number to dilute the same. The impugned order of the learned Single Judge deciding Revision numberes that the appellant had been functioning in the rank of the District Judge from August 1991 onwards, i.e. for nearly 5 years prior to his order dated 21.3.1996. The impugned order further states in para 5, that a Judicial Officer, before being posted as an Additional Session Judge, gets an experience of taking the sessions cases as Assistant Session Judge. It cannot, therefore, be said that the appellant did number have requisite experience to pass a companyrect legal order under Section 228 of Cr.P.C. That apart, all that the impugned order in Revision has done is to suggest to the High Court Administration, that if the appellant is number yet companyfirmed, his probation should wait and if he has already been companyfirmed, his performance be verified before giving him the higher scale. Since the appellant, was already companyfirmed in service, all that the High Court has done on the administrative side is to check his record, and thereafter to deny him the selection grade. The above observation in the impugned order in Revision is a suggestion to the Administration of the High Court. It is number a case of making any adverse or disparaging remarks as in the three cases cited on behalf of the appellant. In fact, in the first judgment cited by the appellant, in the case of K. Jain supra , the observation of this Court in clause No. I of para 58 is very significant, namely that the erosion of the credibility of the judiciary in the public mind, for whatever reason, is the greatest threat to the independence of judiciary. Having numbered that the appellant had failed in discharging his duty in framing the companyrect charge, and having also numbered that his record was number good, the High Court companyld number have granted him the selection grade. The selection grade is number to be companyferred as a matter of right. The record of the companycerned Judge has to seen, and that having been done in the present case in pursuance to the observations of the learned Single Judge , and having numbered the serious deficiencies, the High Court has denied the selection grade to the appellant. Interestingly enough, in this Appeal by Special leave, the appellant is number directly seeking to challenge the denial of selection grade. He is challenging the observations in the impugned order which led to denial of the selection grade. In our view, the impugned order companytained numberhing but a companyrectional suggestion to the High Court Administration which the Administration has accepted. It is only because of the numbere made by inspecting Judge that the cursory order passed by the appellant in the Sessions case diluting the charge against the accused came to the numberice of the High Court Administration. | 4 |
Dipak Misra, J. In this appeal, by special leave, the assail is to the judgment and order dated 10th March, 2006 passed by the Division Bench of the High Court of Kerala in M.F.A. No. 55 of 2006 wherein the High Court has accepted the report of the Scrutiny Committee companystituted under the Kerala Scheduled Castes and Scheduled Tribes Regulation of Issue of Community Certificates Act, 1996 for short the Act wherein the caste certificate granted in favour of K.P. Manu, the appellant herein, had been cancelled. The facts giving rise to the present appeal are that one Shri S. Sreekumar Menon invoked the jurisdiction of the Scrutiny Committee under Section 11 3 of the Act challenging the grant of caste certificate, namely, Hindu Pulaya to the appellant on the ground that the said certificate had been obtained by him on misrepresentation, and that apart the companycerned authority had issued the caste certificate in total transgression of law. The Committee companyducted an enquiry and eventually by its order dated 4th February, 2006 had returned a finding that the appellant was erroneously issued a caste certificate inasmuch as he was number of Hindu origin and hence, companyld number have been companyferred the benefit of the caste status. It is number in dispute that the great grandfather of the appellant belonged to Hindu Pulaya Community. His son Chothi embraced Christianity and accepted a new name, that is, Varghese who married Mariam who originally belonged to Hindu Ezhava companymunity and later on companyverted to Christianity. In the wedlock three sons, namely, Varghese, Yohannan and Paulose were born. The father of the appellant, Paulose, got married to Kunjamma who was a Christian. The appellant who was born on 03.01.1960 sometime in the year 1984 at the age of 24 companyverted himself to Hindu religion and changed his name to that of K.P. Manu. On the basis of the companyversion he applied for a caste certificate to Akhila Bharata Ayyappa Seva Sangham. Be it stated, the appellant after companyversion had obtained a certificate from the companycerned companymunity on 5th February, 1984. Eventually, the Tehsildar who was authorised to issue the caste certificate had issued the necessary caste certificate. On the basis of the companyplaint made, the Scrutiny Committee embarked upon an enquiry and recorded a finding holding, inter alia, that the appellant does number belong to that caste. The report of the Scrutiny Committee appears to have been influenced by two aspects, namely, that the appellant was born to Christian parents, whose grandparents had embraced Christianity and second, there is numbermaterial brought on record to show that the appellant after companyversion has been following the traditions and customs of the companymunity. To arrive at the second companyclusion, emphasis has been laid on the fact that the appellant after companyversion, had married a Christian lady. On the basis of the aforesaid report of the Scrutiny Committee, the State Government took action and directed the employer of the appellant, respondent No. 2 herein, to remove him from service and recover a sum of Rs.15 lakhs towards the salary paid to him. The said report of the Committee and the order in sequitur having the base on the report were the subject matter of challenge before the High Court in appeal. On a perusal of the order passed by the High Court it is perceptible that it has affirmed the findings of the Committee on the basis that the paternal as well as maternal grandfather of the appellant belonged to Christian companymunity and professed Christian faith that the parents of the appellant were born as Christians and they companytinued to profess Christianity that the appellant also was born as a Christian that there is numbercaste by name Pulaya companyvert that neither the state government number the revenue officials have the power to effect any alteration in the caste name companytrary to the Constitution Scheduled Castes Order, 1950 issued under the authority of the Constitution of India that the appellant cannot claim the caste status of Pulaya merely on the ground that he had embraced Hinduism at the age of 24 that his claim that he should be treated as one belonging to scheduled caste companymunity has been rightly rejected by the Committee after companysidering all the relevant facts and the law on the subject and that neither the appellant number his parents had enjoyed the caste status of Pulaya. On the aforesaid basis, the High Court opined that by embracing Hinduism at the age of 24, the appellant who was born to Christian parents and professed Christian faith is number entitled to claim that he is Hindu-Pulaya. In the ultimate result, the writ petition was dismissed. Calling in question the legal propriety of the aforesaid order, it is submitted by Mr. Naphade, learned senior companynsel for the appellant that the High Court has fallen into serious error in its understanding of the ratio laid down by the Constitution Bench in the case of The Principal Guntur Medical College, Guntur Ors. v. Y. Mohan Rao1, inasmuch as it has ruled that benefit available to a Scheduled Caste can only be made available to a person, if his parents were companyverted to Christianity and he has been reconverted and further satisfies other companyditions like following the customs and traditions of the Caste after reconversion but would number be applicable to a person if his grandparents had companyverted to Christianity. Learned senior companynsel would submit that the finding of the Scrutiny Committee does number deserve acceptation inasmuch as the expert agency which has been companystituted under Section 9 of the Act to inquire into certain aspects though has given a categorical finding that the appellant had produced the requisite certificate, yet has fallaciously companycluded that after companyversion he has number been following the traditions of Christian religion, for he has entered into wedlock with a Christian woman. Learned senior companynsel has also placed reliance on a two-Judge Bench decision in Kodikunnil Suresh J. Monian v. N.S. Saji Kumar Ors.2. Resisting the submissions canvassed by Mr. Naphade, learned senior companynsel for the appellant, Ms. Liz Mathew, learned companynsel for the respondent-State submitted that the reasoning of High Court cannot be faulted inasmuch as the Constitution Bench does number lay down that a person born as a Christian whose grandparents had embraced Christianity can, on reconversion, companye back to the stream of his her original caste on acceptance by the companymunity, and further the principle stated therein should number be stretched to companyer that arena. That apart, submits she, the onus is on the appellant to adduce proof in respect of the fact that after companyversion he has been following the Hindu rites and customs that is meant for the caste and in the case at hand the said burden has number been discharged. As we perceive, the companytroversy fundamentally has three arenas, namely, 1 whether on companyversion and at what stage a person born to Christian parents can, after reconversion to the Hindu religion, be eligible to claim the benefit of his original caste ii whether after his eligibility is accepted and his original companymunity on a companylective basis takes him within its fold, he still can be denied the benefit and iii that who should be the authority to opine that he has been following the traditions and customs of a particular caste or number. We have enumerated the basic tests and in companyrse of our discussion, we shall delve into certain ancillary issues regard being had to the area of analysis. To appreciate the questions that we have formulated, it is necessary to refer to the authorities in chronology. A three-Judge Bench in C.M. Arumugam V. S. Rajgopal and others3, while dealing with the companycept of caste, referred to the pronouncements in Coopoosami Chetty V. Duraisami Chetty4, Muthusami V. Masilamani5 and G. Michael V. S. Venkateswaran6 and opined thus It is numberdoubt true, and there we agree with the Madras High Court in G. Michael case that the general rule is that companyversion operates as an expulsion from the caste, or, in other words, the companyvert ceases to have any caste, because caste is predominantly a feature of Hindu society and ordinarily a person who ceases to be a Hindu would number be regarded by the other members of the caste as belonging to their fold. But ultimately it must depend on the structure of the caste and its rules and regulations whether a person would cease to belong to the caste on his abjuring Hinduism. If the structure of the caste is such that its members must necessarily belong to Hindu religion, a member, who ceases to be a Hindu, would go out of the caste, because numbernon-Hindu can be in the caste according to its rules and regulations. Where, on the other hand, having regard to its structure, as it has evolved over the years, a caste may companysist number only of persons professing Hindu religion but also persons professing some other religion as well, companyversion from Hinduism to that other religion may number involve loss of caste, because even persons professing such other religion can be members of the caste. This might happen where caste is based on economic or occupational characteristics and number on religious identity or the companyesion of the caste as a social group is so strong that companyversion into another religion does number operate to snap the bond between the companyvert and the social group. This is indeed number an infrequent phenomenon in South India where, in some of the castes, even after companyversion to Christianity, a person is regarded as companytinuing to belong to the caste. When an argument waspic advanced before the Madras High Court in G. Michael case that there were several cases in which a member of one of the lower castes who has been companyverted to Christianity has companytinued number only to companysider himself as still being a member of the caste, but has also been companysidered so by other members of the caste who had number been companyverted, Rajamannar, C.J., who, it can safely be presumed, was familiar with the customs and practices prevalent in South India, accepted the position that instances can be found in which in spite of companyversion the caste distinctions might companytinue, though he treated them as exceptions to the general rule. Emphasis supplied Thereafter, the Court referred to number of authorities of various High Courts and ruled that it cannot be laid down as an absolute rule uniformly applicable in all cases that whenever a member of caste is companyverted from Hinduism to Christianity, he loses his membership of the caste. It is true that ordinarily on companyversion to Christianity, he would cease to be a member of the caste, but that is number an invariable rule, and it would depend on the structure of the caste and its rules and regulations. The Court referred to certain castes, particularly in South India, where this companysequence companyld number follow by companyversion since such castes companyprise both Hindus and Christians. Eventually, the Court opined that There is numberreason either on principle or on authority which should companypel us to disregard this view which has prevailed for almost a century and lay down a different rule on the subject. If a person who has embraced another religion can be reconverted to Hinduism, there is numberrational principle why he should number be able to companye back to his caste, if the other members of the caste are prepared to readmit him as a member. It stands to reason that he should be able to companye back to the fold to which he once belonged, provided of companyrse the companymunity is willing to take him within the fold. It is the orthodox Hindu society still dominated to a large extent, particularly in rural areas, by medievalistic outlook and status-oriented approach which attaches social and economic disabilities to a person belonging to a scheduled caste and that is why certain favoured treatment is given to him by the Constitution. Once such a person ceases to be a Hindu and becomes a Christian, the social and economic disabilities arising because of Hindu religion cease and hence it is numberlonger necessary to give him protection and for this reason he is deemed number to belong to a scheduled caste. But when he is reconverted to Hinduism, the social and economic disabilities once again revive and become attached to him because these are disabilities inflicted by Hinduism. A Mahar or a Koli or a Mala would number be recognised as anything but a Mahar or a Koli or a Mala after reconversion to Hinduism and he would suffer from the same social and economic disabilities from which he suffered before he was companyverted to another religion. It is, therefore, obvious that the object and purpose of the Constitution Scheduled Castes Order, 1950 would be advanced rather than retarded by taking the view that on reconversion to Hinduism, a person can once again become a member of the scheduled caste to which he belonged prior to his companyversion. Emphasis added The aforesaid pronouncement has to be understood from companystitutional and social perspective as the Court has viewed that there is numberrational principle why should a person, who has embraced another religion should number be able to companye back to his caste, and further the object and purpose of the Constitution Scheduled Castes Order, 1950 would be advanced if, on reconversion, to his original religion, he would become a member of his original caste and number suffer from the same social and economic disabilities. Before the Constitution Bench, in Y. Mohan Rao supra , the question arose whether a person whose parents belong to a scheduled caste before their companyversion to Christianity can, on companyversion or re-conversion to Hinduism, be regarded as a member of the Scheduled Caste so as to be eligible for the benefit of reservation of seats for scheduled castes in the matter of admission to a medical companylege. The parents of the respondent therein originally professed Hindu religion and belonged to Madiga caste which is admittedly a caste deemed to be a scheduled caste in the State of Andhra Pradesh as specified in Part I of the schedule to the Constitution Scheduled Castes Order, 1950. The respondent was born after the companyversion, that is to say, he was born of Christian parents and he had got himself companyverted to Hinduism on September 20, 1973 from Andhra Pradesh Arunchatiya Sangham stating that he had renounced Christianity and embraced Hinduism after going through Suddhi ceremony and he was thereafter received back into Madiga caste of Hindu fold. On the strength of the certificate, he had applied for admission in respect of the reserved seat to Guntur Medical College. Initially he was provisionally selected for admission, but his selection was cancelled as he was number Hindu by birth. On a writ petition being filed, the High Court referred to the Constitution Scheduled Castes Order, 1950 and opined that a candidate, in order to be eligible for a seat reserved for scheduled caste, need number belong to a scheduled caste by birth and when such a stipulation is made by the Government Notification, it has travelled beyond the 1950 order. The view expressed by the learned Single Judge in the writ petition was accepted by the Division Bench. It was companytended by the State before the larger Bench that when the respondent was companyverted to Hinduism, he did number automatically become a member of the Madiga caste, but it was open to the members of the Madiga caste to accept him within their fold and it was only if he was so accepted, that he companyld have claimed to have become a member of the said caste. The Constitution Bench referred to the three-Judge Bench in C.M. Arumugam supra and posed the issue in the following manner Now, before we proceed to companysider this companytention, it is necessary to point out that there is numberabsolute rule applicable in all cases that whenever a member of a caste is companyverted from Hinduism to Christianity, he loses his membership of the caste. This question has been companysidered by this Court in C. M. Arumugam v. S. Rajgopal and it has been pointed out there that ordinarily it is true that on companyversion to Christianity, a person would cease to be a member of the caste to which he belongs, but that is number an invariable rule. It would depend on the structure of the caste and its rules and regulations. There are some castes, particularly in South India, where this companysequence does number follow on companyversion, since such castes companyprise both Hindus and Christians. Whether Madiga is a caste which falls within this category is a debatable question. The companytention of the respondent in his writ petition was that there are both Hindus and Christians in Madiga caste and even after companyversion to Christianity, his parents companytinued to belong to Madiga caste and he was, therefore, a member of Madiga caste right from the time of his birth. It is number necessary for the purpose of the present appeal to decide this question. We may assume that, on companyversion to Christianity, the parents of the respondent lost their membership of Madiga caste and that the respondent was, therefore, number a Madiga by birth. The question is companyld the respondent become a member of Madiga caste on companyversion to Hinduism? That is a question on which companysiderable light is thrown by the decision of this Court in C.M. Arumugam supra . Thereafter, the Court accepting the principle stated in C.M. Arumugam supra proceeded to opine that the reasoning given in the said judgment has to be accepted and made applicable to a case where the parents of a person are companyverted from Hinduism to Christianity and he is born after their companyversion and has subsequently embraced Hinduism. In addition to the companyversion, he has to be accepted by the members of the caste and is taken as a member within its fold. In that companytext, the Court ruled thus The reasoning on which this decision proceeded is equally applicable in a case where the parents of a person are companyverted from Hinduism to Christianity and he is born after their companyversion and on his subsequently embracing Hinduism, the members of the caste to which the parents belonged prior to their companyversion accept him as a member within the fold. It is for the members of the caste to decide whether or number to admit a person within the caste. Since the caste is a social companybination of persons governed by its rules and regulations, it may, if its rules and regulations so provide, admit a new member just as it may expel an existing member. The only requirement for admission of a person as a member of the caste is the acceptance of the person by the other members of the caste, for, as pointed out by Kirshnaswami Ayyangar, J., in Durgaprasada Rao v. Sudarsanaswami7, in matters affecting the well being or companyposition of a caste, the caste itself is the supreme judge. emphasis supplied . It will, therefore, be seen that on companyversion to Hinduism, a person born of Christian companyverts would number become a member of the caste to which his parents belonged prior to their companyversion to Christianity, automatically or as a matter of companyrse, but he would become such member, if the other members of the caste accept him as a member and admit him within the fold. underlining is ours From the aforesaid paragraph, it is plain as day that if the parents of a person are companyverted from Hinduism to Christianity and he is born after the companyversion and embraces Hinduism and the members of the caste accept him, he companyes within the fold of the caste. Mr. Naphade, learned senior companynsel for the appellant would companytend that the reasoning that has been made applicable to the parents, there is numberreason or justification for number applying the said principle to the grandparents. Learned companynsel for the State, per companytra, would companytend that the Constitution Bench has number laid down any principle as regards the grandparents and the same is with the avowed purpose as it cannot companyer several generations. In this regard, we may profitably refer to a three- Judge Bench decision in Kailash Sonkar V. Maya Devi8. In the said case, the Court posed the issue thus The knotty and difficult, puzzling and intricate issue with which we are faced is, to put it shortly, what happens if a member of a scheduled caste or tribe leaves his present fold Hinduism and embraces Christianity or Islam or any other religion - does this amount to a companyplete loss of the original caste to which he belonged for ever and, if so, if he or his children choose to abjure the new religion and get reconverted to the old religion after performing the necessary rites and ceremonies, companyld the original caste revive? The serious question posed here arose and has formed the subject-matter of a large catena of decisions starting from the year 1861, traversing a period of about a century and a half, and culminating in a decision of this Court in the case of G.M. Arumugam v. S. Rajagopal. The Court, after referring to several decisions including the decision in C.M. Arumugam supra , has held thus In our opinion, the main test should be a genuine intention of the reconvert to abjure his new religion and companypletely dissociate himself from it. We must hasten to add here that this does number mean that the reconversion should be only a ruse or a pretext or a companyer to gain mundane worldly benefits so that the reconversion becomes merely a show for achieving a particular purpose whereas the real intention may be shrouded in mystery. The reconvert must exhibit a clear and genuine intention to go back to his old fold and adopt the customs and practices of the said fold without any protest from members of his erstwhile caste. In order to judge this factor, it is number necessary that there should be a direct or companyclusive proof of the expression of the views of the companymunity of the erstwhile caste and it would be sufficient companypliance of this companydition if numberexception or protest is lodged by the companymunity members, in which case the caste would revive on the reconversion of the person to his old religion. Another aspect which one must number forget is that when a child is born neither has he any religion number is he capable of choosing one until he reaches the age of discretion and acquires proper understanding of the situation. Hence, the mere fact that the parents of a child, who were Christians, would in ordinary companyrse get the usual baptism certificate and perform other ceremonies without the child knowing what is being done but after the child has grown up and becomes fully mature and able to decide his future, he ought number to be bound by what his parents may have done. Therefore, in such cases, it is the intention of the companyvertee which would determine the revival of the caste. If by his clear and companyclusive companyduct the person reconverts to his old faith and abjures the new religion in unequivocal terms, his caste automatically revives. What is important for our purpose is paragraph 34 of the said decision, which is as follows In our opinion, when a person is companyverted to Christianity or some other religion the original caste remains under eclipse and as picsoon as during his her lifetime the person is reconverted to the original religion the eclipse disappears and the caste automatically revives. Whether or number the revival of the caste depends on the will and discretion of the members of the companymunity of the caste is a question on which we refrain from giving any opinion because in the instant case there is overwhelming evidence to show that the respondent was accepted by the companymunity of her original Katia caste. Even so, if the fact of the acceptance by the members of the companymunity is made a companydition precedent to the revival of the caste, it would lead to grave companysequences and unnecessary exploitation, sometimes motivated by political companysiderations. Of companyrse, if apart from the oral views of the companymunity there is any recognised documentary proof of a custom or companye of companyduct or rule of law binding on a particular caste, it may be necessary to insist on the companysent of the members of the companymunity, otherwise in numbermal circumstances the case would revive by applying the principles of doctrine of eclipse. We might pause here to add a rider to what we have said i.e. whether it appears that the person reconverted to the old religion had been companyverted to Christianity since several generations, it may be difficult to apply the doctrine of eclipse to the revival of caste. However, that question does number arise here. Emphasis added Learned companynsel for the State has laid immense emphasis on the last part of the aforequoted paragraph wherein the Court has observed that in a case where the person reconverted to the old religion had been companyverted to Christianity since several generations, it may be difficult to apply the doctrine of eclipse to the relevant caste. Mr. Naphade, learned senior companynsel would companytend that the three-Judge Bench has number referred to the Constitution Bench decision in Y. Mohan Rao supra and had that been adverted to, in all possibility, the Court companyld have held if it companyld travel to the immediate generation, there was numberwarrant or justification number to take in its fold the grandparents. His further submission is in the case at hand, it is number a case of several generations, but only the grandparents. In this companytext, a reference may be made to the authority in S. Anbalagan v. B. Devarajan and others9. In the said case, the Court dwelt upon the legal position in regard to the caste, their status on companyversion, or reconversion to Hinduism. After referring to various authorities, namely, Administrator-General of Madras v. Anandachari10, Muthusami Mudaliar v. Masilamani supra , Gurusami Nadar v. Irulappa Konar11, Rajagopal v. Armugam12, Perumal Nadar v. Ponnuswami13, Vermani v. Vermani14, Durgaprasada Rao supra and Chatturbhuj Vithaldas Jasani v. Moreshwar Parashram15, came to hold as follows These precedents, particularly those from South India, clearly establish that numberparticular ceremony is prescribed for reconversion picto Hinduism of a person who had earlier embraced another religion. Unless the practice of the caste makes it necessary, numberexpiatory rites need be performed and, ordinarily, he regains his caste unless the companymunity does number accept him. In fact, it may number be accurate to say that he regains his caste it may be more accurate to say that he never lost his caste in the first instance when he embraced another religion. The practice of caste however irrational it may appear to our reason and however repugnant it may appear to our moral and social sense, is so deep-rooted in the Indian people that its mark does number seem to disappear on companyversion to a different religion. If it disappears, it disappears only to reappear on reconversion. The mark of caste does number seem to really disappear even after some generations after companyversion. In Andhra Pradesh and in Tamil Nadu, there are several thousands of Christian families whose forefathers became Christians and who, though they profess the Christian religion, numberetheless observe the practice of caste. There are Christian Reddies, Christian Kammas, Christian Nadars, Christian Adi Andhras, Christian Adi Dravidas and so on. The practice of their caste is so rigorous that there are intermarriages with Hindus of the same caste but number with Christians of another caste. Now, if such a Christian becomes a Hindu, surely he will revert to his original caste, if he had lost it at all. In fact this process goes on companytinuously in India and generation by generation lost sheep appear to return to the caste-fold and are once again assimilated in that fold. This appears to be particularly so in the case of members of the Scheduled Castes, who embrace other religions in their quest for liberation, but return to their old religion on finding that their disabilities have clung to them with great tenacity. We do number think that any different principle will apply to the case of companyversion to Hinduism of a person whose forefathers had abandoned Hinduism and embraced another religion from the principle applicable to the case of reconversion to Hinduism of a person who himself had abandoned Hinduism and embraced another religion. Underlining is ours Thus, in the aforesaid case the Court has ruled that there is numberreason that any different principle will apply to a person whose forefathers had abandoned Hinduism. In Puneet Rai v. Dinesh Chaudhary16, S.B. Sinha, J. in his companycurring opinion has observed thus In Caste and the Law in India by Justice S.B. Wad at p. 30 under the heading Sociological Implications, it is stated Traditionally, a person belongs to a caste in which he is born. The caste of the parents determines his caste but in case of reconversion a person has the liberty to renounce his casteless status and voluntarily accept his original caste. His caste status at birth is number immutable. Change of religion does number necessarily mean loss of caste. If the original caste does number positively disapprove, the acceptance of the caste can be presumed. Such acceptance can also be presumed if he is elected by a majority to a reserved seat. Although it appears that some dent is made in the classical companycept of caste, it may be numbericed that the principle that caste is created by birth is number dethroned. There is also a judicial recognition of caste autonomy including the right to outcaste a person. If he is companysidered to be a member of the Scheduled Caste, he has to be accepted by the companymunity. In State of Kerala Anr. v. Chandramohanan17, the appellant had lodged a companyplaint against the respondent alleging that he had taken one eight year old girl to the classroom in Pattambi Government U.P. School with an intent to dishonour and outrage her modesty. The said companyplaint was treated as first information report under Section 509 of the I.P.C. The Investigating Officer, during investigation, came to know that the father of the victim belonged to Mala Aryan companymunity, which is companysidered to be a Scheduled Tribe in the State of Kerala and lodged another FIR charging the respondent under Section 3 1 xi of the Scheduled Castes and Scheduled Tribes Prevention of Atrocities Act, 1989 for short, the 1989 Act as well as under Section 509 of the I.P.C. Being aggrieved by the said order, the respondent filed a petition under Section 482 of the Code of Criminal Procedure, for quashing of the charges framed under Section 3 1 xi of the 1989 Act and the High Court took the view that since the victims parents had embraced Christianity, the victim had ceased to be a member of the Scheduled Tribe and accordingly quashed the charges in respect of the said offences. The three-Judge Bench referred to Article 342 of the Constitution, the object of the said Article which is meant to provide right for the purpose of grant of protection to the Scheduled Tribes having regard to the economic and educational backwardness wherefrom they suffer, the Constitution Scheduled Tribes Order, 1950 made in terms of the aforesaid provisions, The Customary Laws of Muda and Oraon by Dr. Jai Prakash Gupta, Tribal India A Profile in Indian Ethnology by K.L. Bhowmik, the decisions in Nityanand Sharma v. State of Bihar18, Puneet Rai supra , N.E. Horo v. Jahanara Jaipal Singh19 and thereafter held that- Before a person can be brought within the purview of the Constitution Scheduled Tribes Order, 1950, he must belong to a tribe. A person for the purpose of obtaining the benefits of the Presidential Order must fulfil the companydition of being a member of a tribe and companytinue to be a member of the tribe. If by reason of companyversion to a different religion a long time back, he his ancestors have number been following the customs, rituals and other traits, which are required to be followed by the members of the tribe and even had number been following the customary laws of succession, inheritance, marriage etc. he may number be accepted to be a member of a tribe. In this case, it has been companytended that the family of the victim had been companyverted about 200 years back and in fact the father of the victim married a woman belonging to a Roman Catholic, wherefrom he again became a Roman Catholic. The question, therefore, which may have to be gone into is as to whether the family companytinued to be a member of a Scheduled Tribe or number. Such a question can be gone into only during trial. After so holding, the Court referred to in extenso the decision in M. Arumugam supra and came to rule thus- The aforementioned decision is, thus, also an authority for the proposition that upon companyversion, a person may be governed by a different law than the law governing the companymunity to which he originally belonged picbut that would number mean that numberwithstanding such companyversion, he may number companytinue to be a member of the tribe. Learned companynsel for the appellant has drawn our attention to the circulars issued by the State of Kerala with a view to show that the members of the tribes are being treated in the same capacity despite companyversion. We are afraid that such circulars being number law within the meaning of Article 13 of the Constitution of India, would be of numberassistance. We, therefore, are of the opinion that although as a broad proposition of law it cannot be accepted that merely by change of religion a person ceases to be a member of the Scheduled Tribe, but the question as to whether he ceases to be a member thereof or number must be determined by the appropriate companyrt as such a question would depend upon the facts of each case. In such a situation, it has to be established that a person who has embraced another religion is still suffering from social disability and also following the customs and traditions of the companymunity, which he earlier belonged to. Under such circumstances, we set aside the order under appeal and remit the same to the Sessions Court, Palakkad, to proceed in accordance with law. At this juncture, we are disposed to think that reference to certain reports and articles would be profitable for the purpose of understanding the ground reality and appreciate factual score in proper perspective. In the article, namely, Dalits in India by James Massey, B.R. Ambedkar, as is reflected from the said article, has devoted two long essays on the subject under the title Christianising the Untouchables and The Condition of the Convert. Speaking about the general companyditions of Christians Dalits, Ambedkar had put a direct challenge by saying It is necessary to bear in mind that Indian Christians are drawn chiefly from the Untouchables Dalits and, to a much less extent from low ranking Shudra castes. The social services of Missions must therefore be judged in the light of the needs of these classes. What are those needs? The services rendered by the Missions in the fields of education and medical relief are beyond the ken of the Indian Christians. They go mostly to benefit the high caste Hindu. James Massey has analysed the reasons ascribed by Ambedkar by stating- What has Christianity achieved in the way of changing the mentality of the companyvert? Has the Untouchable companyvert risen to status of the touchables? Have the touchable and untouchable companyverts discarded caste? Have they ceased to worship their old pagan gods and to adhere to their old pagan superstitions? These are far-reaching questions. They must be answered and Christianity in India must stand or fall by the answers it gives to these questions. James Massey, the learned author has referred to the observations of Karnataka Backward Classes Commission, 1952. The relevant part is as follows- A Scheduled Caste man might have made some progress, or might have embraced Islam or Christianity, and thereby the disabilities, under which he suffered as a result of untouchability, might have, to some extent, disappeared. But the fact remains that such castes, tribes and racial groups still companytinue to suffer under other social, educational and economic handicaps and taboos. Archbishop George Zur, Apostolic Pro-Nuncio to India in his inaugural address to the Catholic Bishops Conference of India, CBCI in the meeting held in Pune during December 1991, made the following observations Though Catholics of the lower castes and tribes form 60 per cent of Church membership they have numberplace in decision-making. Scheduled caste companyverts are treated as low caste number only by high caste Hindus but by high caste Christians too. In rural areas they cannot own or rent houses, however, well-placed they may be. Separate places are marked out for them in the parish churches and burial grounds. Inter-caste marriages are frowned upon and caste tags are still appended to the Christian names of high caste people. Casteism is rampant among the clergy and the religious. Though Dalit Christians make 65 per cent of the 10 million Christians in the South, less than 4 per cent of the parishes are entrusted to Dalit priests. There are numberDalits among 13 Catholic bishops of Tamil Nadu or among the Vicars-general and rectors of seminaries and directors of social assistance centres. Mandal Commission report of the Backward Classes Commission 1980, speaking about the Indian Christians in Kerala had expressed thus- Christians in Kerala are divided into various denominations on the basis of beliefs and rituals and into various ethnic groups on the basis of their caste background even after companyversion, the lower caste companyverts were companytinued to be treated as Harijans by all sections of the society including the Syrian Christians, even though with companyversion the former ceased to be Harijans and untouchables In the presence of rich Syrian Christians, the Harijan Christians had to remove their head-dress while speaking with their Syrian Christian masters. They had to keep their mouth closed with a hand It was found that the Syrian and Pulaya members of the same Church companyduct religious rituals separately in separate buildings Thus lower caste companyverts to a very egalitarian religion like Christianity, ever anxious to expand its membership, even after generations were number able to efface the effect of their caste background. A Church of South India Commission in 1964 investigating the grievances of Dalit Christians, whether they split off or remain with the Church of South India, wrote- First and foremost is the feeling that they are despised, number taken seriously, overlooked, humiliated or simply forgotten. They feel that again and again affairs in the diocese are arranged as if they did number exist. Caste appellations are still occasionally used in Church when they have been abandoned even by Hindus. Backward class desires and claims seem again and again to be put on the waiting list, while projects which they feel aim chiefly at the benefit of the Syrian companymunity seem to get preferential companysideration. In appointments, in distribution of charity, in pastoral care and in the attitude shown to them, in disputes with the authorities, the treatment they receive, when companypared with that received by their Syrian brothers, suggests a lack of sympathy, companyrtesy and respect. Chinappa Commission Report 1990 states- By and large, the Christian companymunity in Karnataka is an advanced companymunity except for SC and ST companyverts, whose position has number improved very much for the better. Thanks to the all pervasive caste system which has penetrated the barriers of religion also, SC and ST companyverts to Christianity and their descendants companytinue, to a great degree, to be victims of the same social injustice to which the SCs and STs are subjects. Dr. Y. Antony Raj, the author of Social Impact of Conversion companyments The mass companyversion from Christianity to Hinduism, Islam and Buddhism is often explained as the frustration of the companyerts to Christianity. Devadason names the reason for such reconversion as disillusionment among the CSCO. Till recently says he, the companyversion to Christianity was companysidered an attractive proposition. That trend has slowed down, if number stopped. This was because of the disillusionment among the Harijan companyverts, who discovered that they had carried with them their caste stigma and that inter-caste marriage and other companytacts companytinued to be as difficult as before. As per the analysis made by John C.B. Webster, in the book, The Dalit Christians A History, in Chapter III titled The Politics of Numbers, Dr. Ambedkar, being aware of the companytinuing problems of Dalit Christians had ruled out companyversion to Christianity. To quote the learned author He was certainly aware of them. In what was probably the most perceptive analysis of the Christian companymunity from this period, Ambedkar numbered that caste Hindus were the chief beneficiaries of Christian educational and medical work, that caste companytinued within the churches, and that Dalits suffered from the same disabilities after as before companyversion to Christianity. More importantly, Christianity failed the political test. For one thing, while Christianity may have inspired Dalit companyverts to change their social attitudes, it had number inspired them to take practical steps to redress the wrongs from which they suffered. In this companytext, it will be fruitful to make a reference to the authority in State of M.P. and Another v. Ram Kishna Balothia and Another20. In the said case, the two-Judge Bench was called upon to deal with the validity of the Scheduled Castes and Scheduled Tribes Prevention of Atrocities Act, 1989, especially Section 18 that stipulates that Section 438 of the CrPC will number apply to the persons companymitting an offence under the said Act. While upholding the validity of the provisions and annulling the judgment of the High Court of M.P., the learned Judges have referred to the Statement of Objects and Reasons accompanying the Scheduled Castes and Scheduled Tribes Bill, 1989 when it was introduced in the Parliament. To quote It sets out the circumstances surrounding the enactment of the said Act and points to the evil which the statute sought to remedy. In the Statement of Objects and Reasons it is stated Despite various measures to improve the socio-economic companyditions of the Scheduled Castes and the Scheduled Tribes, they remain vulnerable. They are denied number of civil rights. They are subjected to various offences, indignities, humiliations and harassment. They have, in several brutal incidents, been deprived of their life and property. Serious crimes are companymitted against them for various historical, social and economic reasons 2. When they assert their rights and resist practices of untouchability against them or demand statutory minimum wages or refuse to do any bonded and forced labour, the vested interests try to company them down and terrorise them. When the Scheduled Castes and the Scheduled Tribes try to preserve their self-respect or honour of their women, they become irritants for the dominant and the mighty. Occupation and cultivation of even the Government allotted land by the Scheduled Castes and Scheduled Tribes is resented and more often these people become victims of attacks by the vested interests. Of late, there has been an increase in the disturbing trend of companymission of certain atrocities like making the Scheduled Caste persons eat inedible substances like human excreta and attacks on and mass killings of helpless Scheduled Castes and Scheduled Tribes and rape of women belonging to the Scheduled Castes and the Scheduled Tribes A special legislation to check and deter crimes against them companymitted by number- Scheduled Castes and number-Scheduled Tribes has, therefore, become necessary. The above statement graphically describes the social companyditions which motivated the said legislation. It is pointed out in the above Statement of Objects and Reasons that when members of the Scheduled Castes and Scheduled Tribes assert their rights and demand statutory protection, vested interests try to company them down and terrorise them. In these circumstances, if picanticipatory bail is number made available to persons who companymit such offences, such a denial cannot be companysidered as unreasonable or violative of Article 14, as these offences form a distinct class by themselves and cannot be companypared with other offences. We have referred to the aforesaid materials and the observations singularly for the purpose that there has been detailed study to indicate the Scheduled Castes persons belonging to Hindu religion, who had embraced Christianity with some kind of hope or aspiration, have remained socially, educationally and economically backward. The Constitution Bench in Y. Mohan Rao supra has clearly laid down that if a person born to Christian parents, who, belonging to Scheduled Caste had companyverted themselves to Christianity, the said person on reconversion to his religion and on acceptance by his companymunity with a further rider that he would practise the customs and traditions of the caste, would be treated as a member of the said Scheduled Caste and if the said caste is one of the castes falling within the Constitution Scheduled Castes Order, 1950, then he will be treated as a Scheduled Caste. As we understand the authority it does number lay down that it only would apply to the parents and exclude the grandparents. At this stage, two decisions are required to be properly understood. In Kailash Sonkar supra , the three-Judge Bench while applying the doctrine of eclipse to the original caste and the principle of revival applying the said doctrine, has observed whether to a situation where the person reconverted to the old religion had been companyverted to Christianity since several generations, it may be difficult to apply the doctrine of eclipse to the revival of caste. The Court, by way of abundant caution, has also proceeded to state that the question did number arise there. That apart, it has number expressed any opinion. Therefore, it cannot be treated as a precedent for the purpose that it would only encompass the previous generation. In S. Anbalagan supra which we have referred to in extenso earlier, has laid down that if the caste disappears, it disappears only to reappear on reconversion and the mark of caste does number seem to really disappear even after some generations after companyversion. As has been held therein, the process goes on companytinuously in India and generation by generation last sheep to return to their caste fold are once again assimilated to that fold. The three- Judge Bench has companymented that the members of the scheduled castes who had embraced another religion in their quest for liberation, but return to their old religion on finding that their disabilities have clung to them with great tenacity and thereafter stated that it does number think that any different principle would apply to the case of companyversion to Hinduism of a person whose forefathers had abandoned Hinduism and embraced another religion from the principle applicable to the case of reconversion to Hinduism of a person who himself had abandoned Hinduism and embraced another religion. This view, in our companysidered opinion, is in companysonance with the Constitution Bench in Y. Mohan Rao supra and does number run companynter to it. One may raise a question how does one find out about the forefathers. There can be a false claim but that would be the subject matter of inquiry. Therefore, the principle of definitive traceability may be applied during the inquiry and the onus shall be on the person who claims the benefit after reconversion. To elaborate, he has to establish beyond a shadow of doubt that his forefathers belonged to the scheduled caste that companyes within the Constitution Scheduled Castes Order, 1950 and he has been reconverted and his companymunity has accepted him and taken him within its fold. In our companysidered opinion, three things that need to be established by a person who claims to be a beneficiary of the caste certificate are i there must be absolutely clear cut proof that he belongs to the caste that has been recognised by the Constitution Scheduled Castes Order, 1950 there has been reconversion to the original religion to which the parents and earlier generations had belonged and iii there has to be evidence establishing the acceptance by the companymunity. Each aspect according to us is very significant, and if one is number substantiated, the recognition would number be possible. In the case at hand, as far as the first aspect is companycerned, as we have stated hereinbefore, there is numberdispute. If a person who is born to Christian parents who had companyverted to Christianity from the Scheduled Caste Hindu can avail the benefit of the caste certificate after his embracing Hinduism subject to other qualifications, there cannot be any soundness of logic that he cannot avail the similar benefit because his grandparents were companyverted and he was born to the parents who were Christians. They must have belonged to that caste and after companyversion the companymunity has accepted. Our view is fortified by the authority in S. Anbalagan supra . Thus, the reasoning as ascribed by the Scrutiny Committee as well as by the High Court on this score is unacceptable. As far as the companymunity acceptance is companycerned, Mr. Naphade has drawn our attention to the enquiry report submitted by the expert agency, companyclusion of which reads thus CONCLUSION Thus, the anthropological study has revealed that the claimant K.P. Manus case father K.P. Paulose and his mother Kunjamma belong to Christian Community of Pulayan origin. The investigation has revealed they still profess Christianity. In the Government Circular No. 18421/E2/87 SCSTDD dated 15.12.1987 it has been made clear that the religious status of parents will number affect the caste status of neo-converts provided they become major and companyy of the said GO is marked here as Document-7. So the claimant after becoming major embraced Hinduism and revived his caste. The caste organisation to which he belongs has also accepted his companyversion. It has been found that he has a registered marriage with Sylamma belonging to Christian companymunity of Pulayan origin. The claimant and his children do number follow Christian religion. The companymunity certificate which was produced by the appellant is as follows AKHILA BHARTA AYYAPPA SEVA SANAGHOM HEAD OFFICE - KOTTAYAM At the request of Mr. K.P. JOHN and his family residing in Kanayannur Taluk, Mulamthuruthy Village, Ward-VI, Kaniyamol House, the persons listed below is companyverting today on behalf of Ayyappa Seva Sangham from Christian Pulayan companymunity to Hindu Pulayan companymunity, after performing Sudhi Karma according to the Hindu rites and customs. The new names adopted are mentioned against the old names of the persons listed below Kottayam - 5/2/1984 General Secretary No. Old Name New Name Date of Birth Age K.P. John K.P. Manu 31.1.1960 23 K.P. Thomas K.P. Babu 20.4.1968 15 For Akhila Bharata Ayyappa Seva Sangham Sd - General Secretary Be it stated here that the said Sangham has been recognised as one of the agencies by the Government of Kerala as a companypetent organisation to issue the companymunity certificate. There is numberdoubt that the appellant had companyverted himself and thereafter was accepted by the companymunity. He has been taken within its fold. At this juncture, certain findings recorded by the Scrutiny Committee require to be reproduced The Committee examined the aspect whether the aforementioned decisions can have any application to the claimants companyversion to Hinduism in 1984. The Committee numbered that neither the claimant number his parents was born as Hindu and later companyverted to Christianity from Hinduism. In fact they are born as Christians. Hence there is numberelement of re-conversion in the claimants case. Hence the question of reviving caste status as Pulayan SC on the ground that some of his ancestors were having Pulayan SC status does number arise. The claimant traces SC Pulayan status from generations back despite the fact that his ancestors in the descending generation, companysistently opted to renounce Pulayan caste status and Hindu religious status by companyverting to Christianity. Ordinarily one gets his her caste on the basis of his her parents. In other words, one shall be, on birth deemed to be belonging to the caste of his her parents. In the facts and circumstances of the claimants case, the claimant and his parents were devoid of any caste identity right from their birth. It is significant to numbere that ten years after his companyversion to Hinduism, the claimant has companytracted marriage with a Christian lady, as per Special Marriage Act. Hence, the Committee found that the claimants case does number companye under the ambit of aforementioned verdicts. The said report has been given the stamp of approval by the High Court. In the impugned order, the Division Bench, after referring to the report, has held thus The paternal as well as maternal grand father of the appellant belonged to Christian companymunity and professed Christian faith. Patents of the appellant were born as Christians and they companytinued to profess Christianity. The appellant also was born as a Christian. Annexure-I Certificate shows that in the SSLC book he is shown as a person belonging to Christian religion. As rightly found by the respondent there is numbercaste by name Pulaya companyvert. Neither the state government number the revenue officials have the power to effect any alteration in the caste name companytrary to the Presidential Order issued under the authority of the Constitution of India. Appellant cannot claim the caste status of Pulayan merely on the ground that he embraced Hinduism at the age of 24. His claim that he should be treated as one belonging to scheduled caste companymunity has been rightly rejected by the respondent after companysidering all relevant facts and the law on the subject. Neither the appellant number his parents had enjoyed the caste status of Pulayan. Hence by embracing Hinduism at the age of 24, the appellant who was born to Christian parents and professed Christian faith is number entitled to claim that he is Hindu- Pulaya. The aforesaid reasoning is companytrary to the decisions of this Court and also to what we have stated hereinbefore. As far as marriage is companycerned, in our companysidered opinion, that should number have been companysidered as the central and seminal facet to deny the benefit. When the companymunity has accepted and the companymunity, despite the marriage, has number excompanymunicated or expelled, the same would number be a disqualification. The companymittee, as we find, has placed reliance on S. Swvigaradoss v. Zonal Manager, F.C.I.21 The said decision requires to be adverted to. In the said case, the parents of the petitioner, initially belonged to Adi Dravid by caste, hailing from Kattalai village in Tirunelveli District, Tamil Nadu and they had, before his birth, companyverted into Christian religion. The petitioner had filed a suit companytending, inter alia, that after he had become a major, he has companytinued as Adi Dravid. The suit was decreed but eventually, it was reversed in second appeal. The Court referred to Article 341 1 of the Constitution, decisions in B. Basavalingappa v. D. Munichinnappa22, Bhaiyalal v. Harikishan Singh23, Srish Kumar Choudury v. State of Tripura24, Kumari Madhuri Patel v. Addl. Commissioner, Tribal Development25 and opined thus The Courts, therefore, have numberpower except to give effect to the numberification issued by the President. It is settled law that the Court would piclook into the public numberification under Article 341 1 or Article 342 1 for a limited purpose. The numberification issued by the President and the Act of Parliament under Scheduled Castes and Scheduled Tribes Order Amendment Act, 1976 and the Schedules appended thereto can be looked into for the purpose to find whether the castes, races or tribes are sic or parts of or groups within castes, races or tribes shall be Scheduled Castes for the purposes of the Constitution. Under the Amendment Act, 1976, again Parliament has included or excluded from schedules appended to the Constitution which are number companyclusive. Schedule I relates to Scheduled Castes and Schedule II relates to Scheduled Tribes. Christian is number a Scheduled Caste under the numberification issued by the President. In view of the admitted position that the petitioner was born of Christian parents and his parents also were companyverted prior to his birth and numberlonger remained to be Adi-Dravida, a Scheduled Caste for the purpose of Tirunelveli District in Tamil Nadu as numberified by the President, petitioner cannot claim to be a Scheduled Caste. In the light of the companystitutional scheme civil companyrt has numberjurisdiction under Section 9 of CPC to entertain the suit. The suit, therefore, is number maintainable. The High Court, therefore, was right in dismissing the suit as number maintainable and also number giving any declaration sought for. Emphasis added The two principles that have been stated in the aforesaid paragraph are i that a companyrt can look into the Notification by the President and the act of the Parliament under the Scheduled Castes and Scheduled Tribes Order Amendment Act, 1976 and the schedule appended thereto for the limited purpose to find whether the castes, races or tribes are parts or groups within the caste, races or tribes, especially scheduled castes for the purpose of Constitution, and it is because what has been included or excluded therein are companyclusive and ii that a person born to Christian parents, who initially belonged to the Scheduled Caste, even after his reconversion cannot claim to be a Scheduled Caste. As far as first proposition of law is companycerned, there can be numbercavil over the same and we respectfully companycur. As far as the second principle is companycerned, it is essential to numbere that the authorities of larger Bench in Y. Mohan Rao supra , Kailash Sonkar supra and S. Anbalagan supra were number brought to the numberice of the Court. Irrefragably, the second principle runs companytrary to the proposition laid down in the Constitution Bench in Y. Mohan Rao supra and the decisions rendered by the three-Judge Bench. When a binding precedent is number taken numbere of and the judgment is rendered in ignorance or forgetfulness of the binding authority, the companycept of per incuria companyes into play. In A.R. Antulay v. R.S. Nayak26, Sabyasachi Mukherji, J. as His Lordship then was observed that 42. Per incuriam are those decisions given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the companyrt companycerned, so that in such cases some part of the decision or some step in the reasoning on which it is based, is found, on that account to be demonstrably wrong. At a subsequent stage of the said authority, it has been held that 47. It is a settled rule that if a decision has been given per incuriam the companyrt can ignore it. In Union of India and Others v. R.P. Singh27, the Court observed thus In Siddharam Satlingappa Mhetre v. State of Maharashtra28, while dealing with the issue of per incuriam, a two-Judge Bench, after referring to the dictum in Young v. Bristol Aeroplane Co. Ltd29. and certain passages from Halsburys Laws of England and Union of India v. Raghubir Singh30, had ruled thus The analysis of English and Indian Law clearly leads to the irresistible companyclusion that number only the judgment of a larger strength is binding on a judgment of smaller strength but the judgment of a companyqual strength is also binding on a Bench of Judges of companyqual strength. In the instant case, judgments mentioned in paras 124 and 125 are by two or three Judges of this Court. These judgments have clearly ignored a Constitution Bench judgment of this Court in Sibbia case31 which has companyprehensively dealt with all the facets of anticipatory bail enumerated under Section 438 CrPC. Consequently, the judgments mentioned in paras 124 and 125 of this judgment are per incuriam. Tested on the aforesaid principles, it can safely be companycluded that the judgment in S. Swvigaradoss supra , as far as the second principle is companycerned, is per incuriam. In the instant case, the appellant got married to a Christian lady and that has been held against him. It has also been opined that he companyld number produce any evidence to show that he has been accepted by the companymunity for leading the life of a Hindu. | 4 |
Thursday 31 October 2002
LORD JUSTICE JUDGE:
This is an appeal with his permission from the decision of Mr Reorder Greenwood sitting at Exeter County Court on 19 March 2002, finding that Devon County Council was liable to Mrs Jennifer Beaton for personal injuries, loss and damage.
Mrs Beaton sustained unpleasant injuries on 13 September 1999 when she was on a bicycle ride with her family along the Tarka Trail near Biddeford shortly after they had all re-entered the disused railway tunnel known as Landcross Tunnel. Subject to liability, her damages were agreed at £18,000.
Landcross Tunnel is a disused railway tunnel about 175 metres in length, forming part of the Tarka Trail which was opened in 1991. This is a well-used cycle track. Something like 30,000 cyclists, presumably of all ages -- grandparents and grandchildren -- use the tunnel annually. It may also be open to pedestrians, although we were told there was no evidence one way or another on that point.
It must be a lovely local amenity -- a route along which cyclists are protected from encounters with cars, lorries or motorcycles. Inside the tunnel itself the track curves, so that as you enter the other end it out of your view. It is artificially lit by a series of lights placed in the roof at 20 metre intervals along its length. The lighting is not particularly bright, certainly when contrasted with the natural light produced by a sunny day. No doubt the eyes have to adjust fairly rapidly to the change. It is obviously brighter at the two entrances to the tunnel than it is in the middle. It is also likely (though not relevant to the decision) that part of the tunnel's attraction for children at any rate is created by the contrast and the excitement of entering a tunnel.
Between the date when it opened and the date of the hearing no complaints were received about the tunnel's condition. There had been but one previous accident. That occurred when the lighting had failed altogether and did not involve, as this accident did, the surface of the track.
The track is 16 feet wide. Largely the surface is concrete. It is not absolutely level. There is a slight slope running from the centre of the path to its edge. Gullies between eight and twelve inches wide and five to six inches deep run along each side of the concrete track. Each is adjacent to the side of the tunnel wall. In short, one side of each gully is adjacent to the concrete path, and the other is immediately adjacent to the inner wall. The gullies are filled with small stones or stone chippings. There was no finding critical of the presence of the gullies or their design. Their essential purpose was drainage, particularly with water percolating through the tunnel wall. Another purpose was gas main protection. In any event it was recognised that unfilled gullies running 175 metres along each side of the concrete path and five to six inches deep, would represent a potential hazard to cyclists using the track. That is why they were filled. There was no express warning about the presence of the gullies, but they would certainly have been visible to cyclists as they entered into the tunnel. More important, however, their proximity to the tunnel walls is such that no one would reasonably anticipate a cyclist deliberately cycling or choosing to cycle very close to the walls themselves.
There is a degree of supervision of the tunnel on behalf of the County Council. There are two rangers with responsibility for it. It is visited weekly, although, on the judge's findings, the rangers were more concerned with lighting and possible obstructions and litter on the path rather than with the gullies themselves. They had no specific responsibilities for the gullies, but if they were concerned with obstructions on the track they would presumably have noticed if stones were lying about on the track when they should have been in the gullies themselves.
The accident in which Mrs Beaton was involved was a sad end to a happy family bicycle ride. It is difficult not to feel a large measure of sympathy for her. She and her husband, their daughter and son-in-law and their three grandchildren were out on a bicycle ride together. Two of the grandchildren were old enough to ride their own bicycles. The third was a toddler, sitting in a trailer behind his father's bicycle. The family had passed through the tunnel safely travelling in one direction. It was on the return journey, shortly after they had re-entered the tunnel, that the accident with which we are concerned happened.
The family was riding along at a perfectly safe speed when for some reason -- and it does not matter why -- things started to go wrong. The son-in-law came to a halt. The daughter stopped and came off her bicycle. Mrs Beaton herself was a little further behind. Seeing what was happening in front of her, she braked and came to a halt. Naturally enough she then put her right foot to the ground. According to the judge's findings, her "right foot either caught the edge of the concrete or fell directly into an area which was not at the same level as the concrete". The result was a very unpleasant and painful fall and injury. The judge's finding is subject to criticism on behalf of the County Council.
The judge found that the stones in the gully at the point where Mrs Beaton put her foot down to the ground were not flush with the concrete surface of the track. There was a depression or undulation in the stones in the gully at the point where she fell, which he held was "two-and-a-half inches or even less" deep. The judge appears to have accepted that by and large the stones along the lengths of both gullies matched the edge of the concrete. Indeed, when Mrs Beaton's husband went back to the scene to take photographs of it, he and his son-in-law, who was with him, had to remove stones from the gully to be able to take photographs of the scene to illustrate the incident as it had happened. He could not believe that repairs had not been carried out; but on the evidence they had not. This evidence of Mr Beaton's findings at the scene was consistent with the evidence of one of the rangers who, when the incident was reported, checked the gullies in detail without knowing precisely where the accident had happened. According to the judge's findings, the ranger discovered that by and large the stones within the gullies matched the edges of the concrete floor. The judge found that the worst that the ranger could find in terms of undulation was two-a-half inches and no more. It is pointed out in argument before us that that worst undulation was not found at the place where Mrs Beaton's accident had happened. In any event, it was not thought to be a problem requiring repair.
The judge held the County Council liable. He said that the County Council should reasonably have foreseen an accident of the sort described by Mrs Beaton. He directed himself that the basis of the claimant's case seemed to him to be "whether or not it was reasonably foreseeable so far as the defendants are concerned, that an accident of the sort which she has described would happen and on that basis whether the defendants had a duty under the Occupier's Liability Act to ensure that it did not".
His analysis of the obligations of the occupier of land is criticised on the basis that it equates the obligation to take reasonable care of and for visitors with an obligation to ensure against accidents. For the claimant it is suggested that this may have been a slip of the tongue. The judge did not, so it is argued, adopt a strict liability test. In that context I must refer to one or two passages in the judgment immediately after the judge had described the duty in terms which on the face of it suggest an obligation to ensure that this accident did not happen. He described how the lighting placed in the ceiling of the tunnel "was likely to be inadequate specifically to identify at any point as one proceeded the precise delineation of the tunnel floor". Later in his judgment, in relation to drops in the level between the side of the path and the gully, the referred to a drop in level, "however small". He also referred to the risk of someone either cycling or walking in falling and missing one's step. He spoke of "an unwitting lack" of foresight. Indeed, having heard the evidence of the two rangers, he spoke of not being prepared to criticise them in the context of failing to appreciate, unwittingly or not, the danger of an accident.
The judge examined, and was particularly concerned about the lighting within the tunnel and its inadequacy. He referred to the difficulty in seeing the precise delineation of the tunnel floor. He concluded that, although the gullies were useful in terms of drainage, they created an inherent danger against which there was no warning. He did not address the question whether the gullies would have been visible to anyone entering the tunnel at the time when they did enter the tunnel. What he described in his own assessment as "the important element" in the finding against the County Council was that the lights were not adequate to enable a cyclist to be able to see precisely where to put down a foot. He is criticised for ignoring the evidence from the rangers on the issue of the lighting.
The judge went on to observe that, given the possibility that cyclists would for many reasons from time to time stop and put a foot down to the ground in the area where the edge of the concrete meets the stone gully or drain channel, notwithstanding the absence of previous complaints or injuries, there was what he described in one place as a "clear risk", in another as a "considerable risk" of a fall such as that which occurred to the claimant, Mrs Beaton.
From the passages to which I have briefly referred, it seems clear that the judge approached this case as if the duty of Devon County Council was greater than it was, and greater than the "common duty of care" imposed by the Occupier's Liability Act. The submission on the behalf of the County Council seems to me to be well-founded. We now have to approach the facts on the basis that the correct analysis should be undertaken.
This was a cycle path. There was nothing wrong with the track itself. It was wide enough to carry cyclists peddling in opposite directions. The gullies were so close to the wall that there was no obvious reason to believe that they would normally be in use at all. They were designed so that they should be filled with stones and effectively (although not, on the judge's findings, at every single point along the length of both gullies) they were properly filled and to the same level as the track itself.
When properly analysed, the judge's findings amount to criticism of the County Council in relation to the available lighting and because of an obligation to provide that every yard of each gully should be fully stocked with stones. In my judgment, it is open to question whether on the evidence the judge was entitled to reach the conclusion that Mrs Beaton had indeed put her foot into a hole of two-and-a-half inches or less in the gully. If she did, it is surprising that neither the ranger who went to the scene immediately the incident had been reported, nor Mrs Beaton's husband, when he visited the site, could find any evidence of such a hole at the place where his wife had fallen. That, however, seems to me not to require any further analysis. It is also surprising that the judge made the finding that he did in relation to lighting. These findings were not in any way linked to the place where the claimant fell, and he made no reference whatever to the evidence of the rangers on this issue. I consider that the observations of Mr Beaton and his son-in-law about what they were able to see after the accident are irrelevant to the issue of lighting; but more important, I doubt whether the issue of lighting is an issue of any great importance in itself. Even if lighting had been better, it seems to me, that faced with the unfolding situation involving her children and her grandchild being carried in the trailer, Mrs Beaton was bound to come to a stop and, as she did so, put her foot down on the ground simply to keep herself upright. As I have said, the judge's findings in relation to lighting do not, in my judgment, affect this issue in the way that he thought. But he has made the findings and I do not think we would be justified in setting them aside.
We are therefore left with a blemish in this long path in a place in which cyclists would be unlikely to be travelling. The cyclist would be most unlikely to be travelling with a shoulder close to the edge of the wall; far better, for obvious reasons, to be towards the centre of the path. Cyclists would keep away from the gullies, not because of any possible danger beneath their feet, but because it is not pleasant to cycle close to a tunnel wall when there is ample room elsewhere. Moreover, in the present case neither the existence of the gully itself nor its basic design was criticised by the judge as unnecessary for the purposes for which it was there, or inadequate for safety purposes. The judge himself spoke of the gullies serving an admirable purpose. In the end the case before him, as he analysed it, presented itself on the basis that the issue was whether or not the gully had been kept filled and should have been kept filled throughout its entire length with stones.
Other suggestions made in the pleadings and in the course of counsel's address, namely, for example, a white line or some sort of metal cover over the gully, were not in the end supported by the evidence and the judge had no criticism to make of its design.
In my judgment, a very significant piece of evidence failed to attract the attention of the judge. The reason why it failed to do so seems to arise from the fact that he misdirected himself about the standard of care owed by the local authority. The history of the use of the track during the previous years before the accident amply supported the contention that the track was reasonably safe for use by cyclists. If the judge had been directing himself correctly, he would have attached much more weight than he did to this uncontroverted evidence. As it is, all he did was to express sympathy to the defendants in the context of this being the first accident involving a gully. In fact that evidence served to demonstrate -- and the County Council was entitled to rely on it for this purpose -- that far from the risk of any accident being, as the judge found, considerable, it was minimal. Probably his misdirection meant that in the end he failed to carry out the balancing exercise which is required when deciding the question whether or not a breach of duty has been established. In my judgment, there was no sufficient evidence, even on the judge's own findings, that there had been a breach of Devon County Council's obligation to take reasonable care for the cyclists using that track on the day of this accident. The case therefore was not established.
I shall deal very briefly with the issue of contributory negligence. The judge rejected it. It has been raised, certainly on paper, and briefly on the appeal in the course of the argument. The issue does not now arise, but in the present context it is right to make clear that for my part I can see no negligence or fault of any kind in Mrs Beaton herself. As I have endeavoured to explain in the narrative of the events leading to her injuries, she simply came across an unfolding problem involving members of her family. She was not riding along in any sort of silly way; she was simply riding along the cycle track on a sunny afternoon when this happened. She brought herself to a halt in a perfectly sensible way and, having done so, she put her foot down. To find that she had been culpable in any way would, in my judgment, be an abuse of language. That, however, does not assist her in relation to the main issue. In my judgment, the judge was wrong to hold that the County Council was liable to her. Accordingly, despite the sympathy I feel for Mrs Beaton in view of the injuries she suffered, this appeal should be allowed.
LORD JUSTICE MAY: I have found this a troublesome case, not least because, as my Lord has just said, I have great sympathy, as anyone would, for Mrs Beaton and her family. She was badly injured and she and her family will have been distressed by what occurred on what should have been a thoroughly enjoyable day out. No doubt the injury and the distress has continued since. In the result, however, I agree that the appeal should be allowed for the reasons which Judge LJ has given. I adopt, without repeating, his account of the facts and circumstances and add a few words of my own.
I agree that a fair reading of the Recorder's judgment indicates that he misdirected himself as to the extent of an occupier's common duty of care under section 2 of the Occupier's Liability Act 1957. This provides that an occupier of premises owes the same duty, the common duty of care, to all his visitors except insofar as he is free to and does extend, restrict, modify or exclude his duty to any visitor or visitors by agreement or otherwise. Then critically in subsection (2), the common duty of care is a duty to take such care as in all the circumstances of the case is reasonable to see that the visitor will be reasonably safe in using the premises for the purpose for which he has invited or permitted the occupier to be there.
The claim was also put in the claim form in negligence, but it is not suggested, nor do I think, that the extent of any common law duty was different from the statutory duty. The critical short part of the paragraph of the Recorder's judgment as to the standard of care contains these words:
"Now, the basis it seems to me of the Claimant's case must be whether or not it was reasonably foreseeable, so far as the Defendants are concerned, that an accident of the sort which she has described would happen and on that basis whether the Defendants had a duty under the Occupier's Liability Act to ensure that it did not."
As to the question there considered of foreseeability, the claimant's case had no difficulty because way back in 1991 when this tunnel was being made ready to be part of the cycle path, the County Council Works Division produced a works estimate, and that included this sentence: "Edge voids to be filled with single-sized stone for drainage, gas main protection, and pedestrian safety". So an empty gully on the side of this tunnel was in fact foreseen as potentially dangerous to pedestrians. That is why the gully was filled with a kind of gravel. So much for foreseeability.
I agree that the Recorder's use of the word "ensure", taken with other passages in the judgment to which my Lord and counsel have referred, show the general tenor of the Reorders approach and indicate that he imposed on the defendants a higher standard of care than that required by the statute. In the light of this error, this court must re-assess the facts found by the Recorder.
My highlight reasons (and I emphasise this is only a summary of the main points) for agreeing that this appeal should be allowed are: first, the critical main question was whether Mrs Beaton stepped down into a hole in the gravel whose presence constituted a failure on the part of the defendants to take reasonable care. Secondly, although there was some evidence of a larger hole, the Recorder did not decide the claim on the basis of it. He seems to have decided in Mrs Beaton's favour on the supposition that there may have been a drop of no more than two-and-a-half inches at the place where she stepped down. I say "supposition" because I agree that there is a powerful case that the evidence did not justify such a finding. No one could find such a drop after the accident and there was no basis for rejecting the defendant's evidence that no remedial work had been done in the meantime. Thirdly, I am not persuaded, even on the basis of a drop of no more than two-and-a-half inches, that the possibility of minor imperfections in the gravel in the gully was sufficient to establish breach of the statutory common duty of care in circumstances where no relevant accident had occurred in the tunnel for eight years or more, during which the evidence was that it was used by 30,000 cyclists a year. Fourthly, the lighting may have been dim towards the centre of the tunnel and for much of its length, but it was bright daylight outside on this September day. The gullies extended to the ends of the tunnel and must therefore have been visible to a cyclist entering the tunnel. It is accepted that Mrs Beaton would not have been looking precisely where she was putting her foot at the moment she stopped. Thus any dimness in the lighting cannot sensibly be said to have been causative of her accident. For these highlight reasons I agree that the appeal should be allowed.
ORDER: Appeal allowed with costs to be subject to detailed assessment. | 2 |
Judgment of the Court of 3 May 2001. - Portuguese Republic v Commission of the European Communities. - State aid - Aid for producers of liqueur wines and eaux-de-vie - Aid granted by the French Republic in the context of an increase in internal taxation. - Case C-204/97.
European Court reports 2001 Page I-03175
Summary
Parties
Grounds
Decision on costs
Operative part
Keywords
State aid - Draft aid plans - Examination by the Commission - Preliminary phase and inter partes phase - Purpose of the preliminary phase - Obligation on the Commission to examine all the facts and points of law notified by the Member State concerned and brought to its notice by the interested parties - Obligation, in the event of difficulties in assessing the compatibility of the aid, to initiate the inter partes procedure
(EC Treaty, Art. 93(2) and (3) (now Art. 88(2) and (3) EC))
Summary
$$The procedure under Article 93(2) of the Treaty (now Article 88(2) EC) is essential whenever the Commission has serious difficulties in determining whether an aid is compatible with the common market. Therefore, when taking a decision in favour of an aid, the Commission may restrict itself to the preliminary phase provided for under Article 93(3) only if it is able to satisfy itself after an initial examination that the draft aid plan is compatible with the Treaty. In that respect, State aid, certain of the conditions of which contravene other provisions of the Treaty, cannot be declared by the Commission to be compatible with the common market. If, on the other hand, the initial examination leads the Commission to the opposite conclusion or if it does not enable it to overcome all the difficulties involved in determining whether the aid is compatible with the common market, the Commission is under a duty to carry out all the requisite consultations and, for that purpose, to initiate the procedure under Article 93(2) of the Treaty.
The preliminary stage provided for in Article 93(3) of the Treaty is intended merely to allow the Commission a sufficient period of time for reflection and investigation so that it can form a prima facie opinion on the draft aid plans notified to it, thus enabling it either to conclude, without the need for detailed examination, that the aid is compatible with the common market or, by contrast, to make a finding that the content of those plans raises doubts as to that compatibility. In that respect, the Commission is required to examine all the facts and points of law brought to its notice by persons, undertakings and associations whose interests may be affected by the granting of the aid. It is therefore in the light of both the information notified by the State concerned and that provided by any complainants that the institution must make its assessment in the context of the preliminary examination provided for in Article 93(3) of the Treaty.
( see paras 33-35 )
Parties
In Case C-204/97,
Portuguese Republic, represented by L. Fernandes, Â. Seiça Neves and C. Botelho Moniz, acting as Agents, with an address for service in Luxembourg,
applicant,
supported by
Kingdom of Spain, represented by R. Silva de Lapuerta, acting as Agent, with an address for service in Luxembourg,
intervener,
v
Commission of the European Communities, represented by A. M. Alves Vieira and D. Triantafyllou, acting as Agents, with an address for service in Luxembourg,
defendant,
supported by
French Republic, represented by K. Rispal-Bellanger and G. Mignot, acting as Agents, with an address for service in Luxembourg,
intervener,
APPLICATION for annulment of the Commission's decision of 6 November 1996 concerning aid intended to be granted by the French Republic to producers of liqueur wines and eaux de vie in the form of aid for promotional measures and technical aid for research, technical support and investment, a summary of which was published in the Official Journal of the European Communities of 6 March 1997 (OJ 1997 C 70, p. 14),
THE COURT,
composed of: C. Gulmann, President of the Third and Sixth Chambers, acting for the President, A. La Pergola, M. Wathelet and V. Skouris (Presidents of Chambers), D.A.O. Edward (Rapporteur), J.-P. Puissochet, P. Jann, L. Sevón and R. Schintgen, Judges,
Advocate General: S. Alber,
Registrar: H. von Holstein, Deputy Registrar,
having regard to the Report for the Hearing,
after hearing oral argument from the parties at the hearing on 28 March 2000, at which the Portuguese Republic was represented by C. Botelho Moniz, the Kingdom of Spain by R. Silva de Lapuerta, the French Republic by F. Million and S. Seam, acting as Agents, and the Commission by D. Triantafyllou and M. Afonso, acting as Agent,
after hearing the Opinion of the Advocate General at the sitting on 18 May 2000,
gives the following
Judgment
Grounds
1 By application lodged at the Court Registry on 29 May 1997, the Portuguese Republic brought an action under the first paragraph of Article 173 of the EC Treaty (now, after amendment, the first paragraph of Article 230 EC) for annulment of the Commission's decision of 6 November 1996 concerning aid intended to be granted by the French Republic to producers of liqueur wines and eaux de vie in the form of aid for promotional measures and technical aid for research, technical support and investment, a summary of which was published in the Official Journal of the European Communities of 6 March 1997 (OJ 1997 C 70, p. 14).
2 By orders of the President of the Court of 23 September 1997, the Kingdom of Spain and the French Republic were granted leave to intervene in support of the forms of order sought by the Portuguese Republic and the Commission respectively.
Facts and legal background
3 During 1992 and 1993, the French Government amended its national legislation concerning excise duty on alcoholic drinks and established a differentiated system of taxation for liqueur wines and naturally sweet wines. Thus, following the adoption of the amending Finance Law for 1993 No 93-859 of 22 June 1993, those wines bore, from 1 July 1993, a consumption duty the rate of which per hectolitre was fixed, for liqueur wines, at FRF 1 400 (FRF 9 per bottle) and, for naturally sweet wines, at FRF 350 (FRF 2.25 per bottle).
4 During 1993 and part of 1994, certain French producers of liqueur wines partially suspended payment of excise duty by withholding the difference between the amount of duty affecting liqueur wines and the amount of duty affecting naturally sweet wines.
5 From May or June 1994, that excise strike was suspended. In a statement published in the June 1994 issue of the journal VITI, the President of the Confédération nationale des producteurs de vins de liqueur à appellation d'origine contrôlée (National Confederation of Producers of Liqueur Wines with a Registered Designation of Origin; CNVDLAOC) justified that suspension by reference to the fact that, according to him, the French Government envisaged paying French producers of liqueur wines, in order to compensate for the difference in taxation, an annual indemnity and compensation for the years 1994 to 1997. He stated in particular:
The producers of [liqueur wines] have been conducting this strike for a year. They have blocked in an account 30 million francs of taxes due to the State in order to obtain a reduction of the utterly excessive differential between taxes on [liqueur wines] and on [naturally sweet wines].
The strike is suspended because the ministry has implicitly recognised that it may not be able to maintain the differential in taxation between [liqueur wines] and [naturally sweet wines]. It has agreed that this conflict should be resolved by the European Court of Justice in Luxembourg, before which we will bring the matter. In addition, it agrees to pay us from 1994 to 1997 an annual indemnity of 20 million francs and compensation of 4 million in 1994, 8 million in 1995, 12 million in 1996, and 16 million in 1997 in order to compensate progressively for the current level of the taxes being maintained.
6 On 24 March 1995, the Associação de Exportadores de Vinho do Porto (Association of Port Wine Exporters; AEVP) sent two complaints to the Commission, one claiming that the French system of taxing liqueur wines was incompatible with Article 95 of the EC Treaty (now, after amendment, Article 90 EC) and the other alleging that the compensatory measures envisaged by the French Government in favour of its national producers of liqueur wines infringed Article 92 of the EC Treaty (now, after amendment, Article 87 EC) and Article 93 of the EC Treaty (now Article 88 EC).
7 On 12 April 1995, following the lodging of that latter complaint, the Commission requested the French authorities to notify the proposed aid in question to it. It stated in particular that, according to the information it had received, aid in the form of financial compensation [was to be] granted by the French Government to producers of liqueur wines, in order to eliminate the difference in taxation between "liqueur wines" and "naturally sweet wines" for products of French origin. By a two-page questionnaire it requested various items of information.
8 By letter of 17 July 1995, the French authorities sent the Commission a draft aid plan in favour of producers of liqueur wines and eaux de vie with a registered designation of origin (the draft aid plan), such aid being designed to include a promotional aspect and a technical aspect.
9 According to that draft, the promotional measures were designed, first, to favour the sale of wine products from areas of excess production and, secondly, to assist certain particularly disadvantaged regions. The promotion measures for cognac, armagnac and calvados were to concern only non-member countries. It was stated that through promotional measures, it is possible in a broad sense of that term to envisage the organisation of fairs and exhibitions, arrange public relations exercises in the form of tastings in France and abroad, to carry out market studies.
10 As for the technical aid, this was to consist of measures aimed at reinforcing structures for the production and elaboration of products, [thus implying] better stability of wines, improved storage capacities, increased training of winegrowers, a rapid spread of oenological progress.
11 The letter of 17 July 1995 ended with the following statement:
Finally, the French authorities wish to make clear that this aid is not in any way equivalent to compensation for differences in taxation between "naturally sweet wines" and "liqueur wines". The diversity of the beneficiary products, eaux-de-vie de vins (Cognac, Armagnac), eaux-de-vie de cidre (Calvados), liqueur wines (Pineau, Floc, Macvin, Cartagène, Pommeau), proves this.
12 The sending of the draft aid plan by the French authorities was followed by copious correspondence between those authorities and the Commission.
13 The Commission produced that correspondence before the Court of Justice pursuant to an order of the Court of 21 September 1999. The correspondence shows that, between the notification of the draft aid plan by letter of 17 July 1995 and the communication of the contested decision to the French authorities by letter of 21 November 1996, that is to say over a period of 16 months, the Commission sent the French authorities five requests for additional information, to which the latter gave six replies with annexes containing additional details of the draft aid plan.
14 According to the Commission, substantial additional information and considerable clarification were necessary to enable it to take a decision. In that respect, the telex sent by the Commission to the French authorities on 30 January 1996, after the latter had already twice supplied additional information, contains the following passage:
After a preliminary examination, it appears that this latest [information] is not complete and that further information is therefore necessary for a detailed examination of this plan.
15 On 29 May 1996, the authorised representatives of the AEVP sent the Commission a letter requesting immediate initiation of the procedure under Article 93(2) of the Treaty, suspension of the aid in progress in the event of its implementation having started, full information on the development of the preliminary stage of the case and access to the file and to the information supplied by the French authorities. The AEVP also informed the Commission of its intention to send it a letter of formal notice pursuant to Article 175 of the EC Treaty (now Article 232 EC) in the event of the Commission's failure to define its position on the complaint and on the request for initiation of the procedure under Article 93(2) of the Treaty.
16 By letters to the Commission of 19 July and 2 September 1996, the AEVP repeated its request for immediate initiation of the procedure under Article 93(2) of the Treaty. Finally, by letter of 25 September 1996, the AEVP called upon the Commission to act, pursuant to the second paragraph of Article 175 of the Treaty.
17 On 6 November 1996, by the contested decision, the Commission decided not to raise any objection to the draft aid plan on the ground that it could benefit from the derogation in favour of aid to facilitate the development of certain activities laid down in Article 92(3)(c) of the Treaty. It informed the French Government of that decision by letter of 21 November 1996 and the AEVP by letter of 11 March 1997. A summary of the contested decision was published on 6 March 1997 in the Official Journal of the European Communities.
18 The letter of 21 November 1996 shows that, before taking the contested decision, the Commission obliged the French authorities to amend the draft aid plan by abandoning the granting of aid in favour of investment in storage. In addition, the French authorities assured the Commission that the implementation of the aid would comply with the provisions of Community law mentioned by the Commission. Those provisions included, in particular, Commission Communication 86/C 272/03 of 28 October 1986, concerning State involvement in the promotion of agricultural and fisheries products (OJ 1986 C 272, p. 3), Commission Communication 87/C 302/06 of 12 November 1987, Framework for national aids for the advertising of agricultural products and certain products not listed in Annex II to the EEC Treaty, excluding fishery products (OJ 1987 C 302, p. 6), Commission Communication 96/C 45/06 of 17 February 1996, concerning the Community framework for State aid for research and development (OJ 1996 C 45, p. 5), Commission Communication 96/C 29/03 of 2 February 1996, concerning Guidelines for State aid in connection with investments in the processing and marketing of agricultural products (OJ 1996 C 29, p. 4), and Commission Decision 94/173/EC of 22 March 1994 on the selection criteria to be adopted for investments for improving the processing and marketing conditions for agricultural and forestry products and repealing Decision 90/342/EEC (OJ 1994 L 79, p. 29).
The pleas in law put forward by the Portuguese Republic
19 The Portuguese Republic, supported by the Kingdom of Spain, puts forward two pleas in law in support of its application for annulment of the contested decision.
20 The first plea alleges that there has been an infringement of essential procedural requirements arising, first, from infringement of the rules of procedure laid down by Article 93(2) and (3) of the Treaty, and, secondly, from a breach of the obligation, laid down in Article 190 of the EC Treaty (now Article 253 EC), to state the reasons on which measures are based.
21 The second plea alleges an infringement of the Treaty or of rules of law concerning its application, arising, first, from a breach of the combined provisions of Articles 92(1) and 95 of the Treaty and, secondly, from failure to comply with general criteria for applying the derogations laid down in Article 92(3) of the Treaty.
The first plea
Arguments of the parties
22 By its first plea, the Portuguese Republic complains first that the Commission adopted the contested decision without initiating the procedure laid down in Article 93(2) of the Treaty, and, secondly, that it failed to comply with the obligation to state reasons for its decision.
23 Basing its argument on Case 120/73 Lorenz [1973] ECR 1471, at paragraph 4 of the judgment, the Portuguese Government points out that the duration of the preliminary examination stage under Article 93(3) of the Treaty, in the context of which the Commission took the contested decision, has been fixed at two months. It argues, moreover, that the opening of the examination phase provided for in Article 93(2) of the Treaty is indispensable where the Commission has serious difficulties in assessing whether a draft aid plan is compatible with the Treaty.
24 The Portuguese Government argues that, in this case, the Commission obviously did not consider, when examining the plan for the first time, that the measures notified by the French authorities were compatible with the Treaty. On the contrary, it took a prolonged investigation, involving copious correspondence between the Commission and the French Government over a period of 16 months from the date of notification of the draft aid plan, for the Commission finally to authorise the aid measures referred to in the contested decision.
25 The Commission argues that, as is shown in Case C-301/87 France v Commission [1990] ECR I-307 (the Boussac judgment), at paragraphs 27 and 28, the period of two months which it is allowed before having to initiate the procedure under Article 93(2) of the Treaty does not start to run until the time when the Commission has all the documents necessary to be able to examine the compatibility of an aid plan with the Treaty.
26 It emphasises that information given by Member States concerning planned aid are frequently incomplete and imprecise on secondary points. That is why, in its submission, it is required, during the preliminary stage, to collect additional information and assurances in order to ensure that the aid planned conforms fully with the provisions of Community law. However, as was the case here, those adjustments concern only secondary aspects and the detailed arrangements for implementing the aid. The Commission should therefore be accorded/allowed a degree of discretion in order to overcome the difficulties raised by the examination of a draft aid plan when notified to it, since those difficulties may be of negligible importance.
Findings of the Court
27 It is appropriate at the outset to recall the relevant rules of the system established by the Treaty for monitoring State aid.
28 Under Article 92(1) of the Treaty, save where otherwise provided in the Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market.
29 Article 93 of the Treaty provides for a special procedure by which the Commission is to keep State aid under constant review. As regards proposed new grants of aid by the Member States, it establishes a procedure which must be followed before any aid can be regarded as lawfully granted. Under the first sentence of Article 93(3) of the Treaty, as interpreted by the case-law of the Court, the Commission is to be notified of any plans to grant or alter aid before those plans are implemented (Case C-367/95 P Commission v Sytraval and Brink's France [1998] ECR I-1719, paragraph 35).
30 The Commission then conducts an initial review of the planned aid. If at the end of that review it considers a plan to be incompatible with the common market, it must without delay initiate the procedure under the first subparagraph of Article 93(2) of the Treaty, which provides: [I]f, after giving notice to the parties concerned to submit their comments, the Commission finds that aid granted by a State or through State resources is not compatible with the common market having regard to Article 92, or that such aid is being misused, it shall decide that the State concerned shall abolish or alter such aid within a period of time to be determined by the Commission (Sytraval and Brink's France, paragraph 36).
31 The parties concerned within the meaning of Article 93(2) of the Treaty include not only the undertakings benefiting from the aid but also the persons, undertakings or associations whose interests might be affected by the grant of the aid, in particular competing undertakings and trade associations (Case 323/82 Intermills v Commission [1984] ECR 3809, paragraph 16).
32 In the context of the procedure laid down by Article 93, the preliminary stage of the procedure for reviewing aid under Article 93(3) of the Treaty, which is intended merely to enable the Commission to form a prima facie opinion on the partial or complete compatibility of the aid in question, must therefore be distinguished from the examination under Article 93(2), which is designed to enable the Commission to be fully informed of all the facts of the case (Case C-198/91 Cook v Commission [1993] ECR I-2487, paragraph 22; Case C-225/91 Matra v Commission [1993] ECR I-3203, paragraph 16; Sytraval and Brink's France, paragraph 38).
33 It follows that the procedure under Article 93(2) of the Treaty, which gives other Member States and the parties concerned the assurance that they will be able to make their views known and enables the Commission to be fully informed of all the facts of the case before taking its decision, is essential whenever the Commission has serious difficulties in determining whether an aid is compatible with the common market. Therefore, when taking a decision in favour of an aid, the Commission may restrict itself to the preliminary phase provided for under Article 93(3) only if it is able to satisfy itself after an initial examination that the aid is compatible with the Treaty. If, on the other hand, the initial examination leads the Commission to the opposite conclusion or if it does not enable it to overcome all the difficulties involved in determining whether the aid is compatible with the common market, the Commission is under a duty to carry out all the requisite consultations and, for that purpose, to initiate the procedure under Article 93(2) of the Treaty (see, in particular, Case 84/82 Germany v Commission [1984] ECR 1451, paragraph 13; Cook, paragraph 29; Matra, paragraph 33; Sytraval and Brink's France, paragraph 39).
34 The preliminary stage provided for in Article 93(3) of the Treaty is intended merely to allow the Commission a sufficient period of time for reflection and investigation so that it can form a prima facie opinion on the draft aid plans notified to it, thus enabling it either to conclude, without the need for detailed examination, that the aid is compatible with the common market or, by contrast, to make a finding that the content of those plans raises doubts as to that compatibility (see, to that effect, Case C-99/98 Austria v Commission [2001] ECR I-1101, paragraphs 53 and 54).
35 In that respect, the Commission is required to examine all the facts and points of law brought to its notice by persons, undertakings and associations whose interests may be affected by the granting of the aid (see, to that effect, Sytraval and Brink's France, paragraph 51). It is therefore in the light of both the information notified by the State concerned and that provided by any complainants that the institution must make its assessment in the context of the preliminary examination provided for in Article 93(3) of the Treaty.
36 The facts of this case must be examined in the light of those principles.
37 It is clear from the two complaints lodged by the AEVP that they were essentially based on the existence of a link between, on the one hand, the difference in taxation between liqueur wines and naturally sweet wines, and, on the other, the aid to French producers of liqueur wines. In the second complaint, which concerned infringement of Articles 92 and 93 of the Treaty, the AEVP expressly maintained that the aid in question was intended to compensate French producers of liqueur wines for that difference in taxation, which meant, essentially, that only foreign producers of liqueur wines were subject to the higher level of taxation.
38 According to the AEVP, which supplied the Commission with details on the origin of the draft aid plan, it was in response to the excise strike by French producers of liqueur wines that the French Government announced financial compensation for those producers, thus enabling that strike to be suspended.
39 In support of its analysis, the AEVP produced articles from the trade press of the wine and spirits industry. It drew the Commission's attention in particular to the statement of the president of the CNVDLAOC published in the June 1994 issue of the journal VITI, reproduced in paragraph 5 of this judgment.
40 The complaints of the AEVP thus contained strong evidence to suggest that the aid envisaged might result in discriminatory taxation for the purposes of Article 95 of the Treaty.
41 It follows from the general scheme of the Treaty that the procedure under Article 93 must never produce a result which is contrary to the specific provisions of the Treaty. Accordingly, State aid, certain of whose conditions contravene other provisions of the Treaty, cannot be declared by the Commission to be compatible with the common market (see, in particular, Case C-156/98 Germany v Commission [2000] ECR I-6857, paragraph 78).
42 In addition, as the Commission acknowledged at the hearing, in determining whether aid is compatible with the common market, it must take account of market conditions, including fiscal aspects.
43 Furthermore, the Commission stated in its letter to the French authorities of 12 April 1995, cited in paragraph 7 of this judgment, that, according to the information which it had received, aid in the form of financial compensation would be granted to producers of liqueur wines in order to eliminate the difference in taxation between liqueur wines and naturally sweet wines for products of French origin.
44 However, in the draft aid plan which it notified to the Commission on 17 July 1995, the French Government mentioned the question of taxation only briefly, and did so in the terms set out in paragraph 11 of this judgment.
45 An examination of the whole of the file, as produced by the Commission following the order of the Court of 21 September 1999, shows that that was the sole response of the French Government to the allegation that the object of the intended aid was to eliminate the difference in taxation between liqueur wines and naturally sweet wines for products of French origin.
46 Neither in the contested decision nor in its letter to the French authorities of 21 November 1996, cited in paragraphs 17 and 18 of this judgment, did the Commission refer to the fact that the complaint by the AEVP was based essentially on a link between the difference in taxation between liqueur wines and naturally sweet wines and aid to French producers of liqueur wines.
47 Nor has the Commission explained why it concluded that that complaint was unfounded.
48 As the Advocate General has pointed out at point 90 of his Opinion, part of the aid in question appears to favour a category of producers which coincides largely with the category of French producers of liqueur wines fiscally disadvantaged by the system of taxation. It must therefore be acknowledged that the possible existence of a link between the system of taxation and the draft aid plan in question represented a serious difficulty in determining whether that plan was compatible with the provisions of the Treaty.
49 In those circumstances, only by initiating the procedure under Article 93(2) of the Treaty would the Commission have been in a position to appreciate the issues raised in the complaints lodged by the AEVP and to determine whether or not the possible link between the difference in taxation and the draft aid plan constituted an infringement of Article 95 of the Treaty and consequently whether or not that plan was incompatible with the common market.
50 In any event, the contested decision is devoid of any statement of reasons on that point, contrary to the requirements of Article 190 of the Treaty.
51 It follows that, as a result both of the failure to initiate the procedure under Article 93(2) of the Treaty and of the breach of the duty to state reasons, the contested decision is unlawful. The first plea in law put forward by the Portuguese Republic must therefore be upheld.
52 It is therefore not necessary to examine the second plea.
53 In those circumstances, the application of the Portuguese Republic must be allowed and the contested decision annulled in consequence.
Decision on costs
Costs
54 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 Portuguese Republic has applied for costs and the Commission has been unsuccessful, the latter must be ordered to pay the costs. Under the first subparagraph of Article 69(4) of the Rules of Procedure, Member States and institutions which intervene in the proceedings are to bear their own costs. In those circumstances, the Kingdom of Spain and the French Republic must bear their own costs.
Operative part
On those grounds,
THE COURT
hereby:
1. Annuls the Commission's decision of 6 November 1996 concerning aid intended to be granted by the French Republic to producers of liqueur wines and eaux de vie in the form of aid for promotional measures and technical aid for research, technical support and investment;
2. Orders the Commission of the European Communities to pay the costs;
3. Orders the Kingdom of Spain and the French Republic to bear their own costs. | 6 |
SIR IGOR JUDGE: On 14th June 2006, at North Somerset Magistrates' Court, Paul Alfred Howe pleaded guilty and was committed to the Crown Court for sentence under section 3 of the Powers of Criminal Courts (Sentencing) Act 2000. On 25th July 2006 in the Crown Court at Bristol before His Honour Judge Ticehurst, he was sentenced for 30 offences of making indecent photographs or pseudo-photographs of children to imprisonment for public protection.
The judge assessed the period to be specified under section 82A of the 2000 Act as two-and-a-half years. He took a starting point of 5 years. That was made up of the unused period of a licence, to which we shall refer in a moment, which was almost exactly 1 year and 4 years consecutive, to the instant 30 offences which were before the court. In addition to those sentences appropriate orders were made in relation to notification confiscation and so on, and it is unnecessary for the purposes of this case to analyse those further. The application for leave to appeal against sentence has been referred to the Full Court by Rafferty J.
The applicant was born in 1964. In July 2002, at the Crown Court at St Albans, he was sentenced to a total of 4 years' imprisonment, for indecent assault on a child and for making indecent photographs or pseudo-photographs of children. He was released from that custodial term in November 2004. Almost exactly a year later, on 15th November 2005, he was using a terminal at an Internet cafe at Weston-super-Mare when a fellow customer saw him accessing pornographic sites. The customer contacted a member of the staff, who contacted the manager, who attended the cafe and went into the next booth and observed what the applicant was doing. He saw that the applicant was viewing images of females who appeared to be in their teens and were wearing school uniforms. The manager then contacted a friend who was proficient in the technicalities of the Internet and inquired if he could access what the applicant was viewing without the applicant discovering.
This exercise then took place, and produced an image of a girl aged 14 or 15 in a provocative stance. The image immediately contacted the police, who came and arrested the applicant.
A datastick was seized from him along with a datastick from the terminal he had been using. The images on those datasticks were analysed. They were found to contain a total of 382 indecent images of children, 278 were at level 1, 19 at level 2, 32 at level 3 and 53 at level 4.
The first 29 offences in the list committed to the Crown Court were specimen offences, covering 12 images at level 1, six at level 2, five at level 3 and six at level 4. The final offence covered the remaining images.
Our attention has been drawn to the fact that there were no images at level 5, and none of the images at level 4 were what is described as "moving images". It is further pointed out that it was not alleged that the applicant was in the production of this material for the purposes of distribution.
The pre-sentence report provided a very careful analysis of the applicant, his previous offending and the particular matters of immediate relevance. The report underlined that the applicant had been a man of good character with a successful career, who had committed offences for which he was convicted in July 2002. It considered the risk of reoffending, and predicted that the risk of reoffending now, in the light of the offences committed so soon after release from prison, suggested that, untreated, the risk would be high and probably in the region of 80 per cent. As to the nature of the harm, it was pointed out that, of course, the making of the photographs was not in itself a contact crime, but the whole concern of this particular legislation is that, however the viewer may be behaving, the images are provided as a result of the abuse of real children, who are being exploited by real adults for the sexual gratification of others.
The report, in a passage under "proposed sentence", analysed a variety of different aspects of the case, beginning by regarding as an alarming feature that these offences raised the possibility that the applicant presented a real and present danger to children. The writer of the report did, however, examine a report from a private therapist, Glynn Hudson-Ali, from whom by now the applicant was receiving treatment. The object of the treatment was to enable the applicant to gain a better understanding of what was driving him to commit these offences. The writer of the pre-sentence report commented that although he had no particular details of the information from the Thames Valley Sex Offender Programme, there might be sufficient evidence to conclude that the applicant could be safely treated in the community. It is important, however, to emphasise that that suggestion was very carefully guarded indeed.
The judge had before him the therapeutic report to which reference has already been made. Our attention was drawn to the passage in which the writer of the report addressed the applicant's "dangerousness". It referred to the previous indecent assault, when the applicant touched the genitals of a child at his home when he was in a drunken state. It then addressed the way in which the applicant had progressed and what had happened to him thereafter, and assessed the risk that the applicant represented to children in the area as "minimal", and the risks either to his own child or members of his immediate family such as nephews or nieces as "negligible".
Concern is expressed about the risk of the applicant returning to the Internet, which was much higher, put in mathematical terms at perhaps 30 per cent. We do not read paragraph 7.5, from which we have just quoted, as directly addressing the issue of the danger posed to children by the applicant continuing to look at and use the Internet. In the context of the risk being minimal, what the writer was addressing was the risk of any direct physical assault on children. For the present purposes the judge was prepared, and we are prepared, to approach the case on the basis that that is no longer in issue. What matters is the risk to children if the applicant were to return to look at the material of the kind which brought him before the court on this occasion.
The judge concluded that only an immediate custodial sentence was justified. He was particularly concerned, as we are, about the fact that these offences were committed within 12 months of the applicant being released from prison for offences of a similar nature. He, of course, gave credit to the applicant for his guilty pleas but decided that the sentence could not be suspended. He then examined, as he was required to do, the nature of the risk posed by the applicant. He came to the conclusion that there was a significant risk to the public of committing further specified offences. He acknowledged that making indecent photographs or pseudo-photographs is not in itself a crime which involves, and in this case did not involve, the making of direct personal contact with children. Nevertheless, as he explained and we have observed, people who look at images of this kind are watching real children. The process involves the exploitation of real children for the purposes of sexual gratification. And, as again is plain, at least some of the market in this material exists because there are those who wish to examine it and derive satisfaction from doing so.
Having examined the evidence the judge concluded that the applicant presented a significant risk of substantial harm to children. He based that on the pattern of misconduct. Accordingly he decided that a sentence of imprisonment for public protection was appropriate. He then examined the appropriate level of sentence, for, if the case had proceeded as a determinate case, he concluded that 12 months of the unserved portion of the licence period should be served, followed by a 4-year sentence for those offences. That sentence was based on the number of images at level 4, and the significant feature that these offences had been committed so shortly after the release from the previous sentences. As the judge put it, the appellant had clearly not learned the dangerousness and the harm that his own behaviour could create.
Having reached a total sentence of 5 years on a determinate basis, he halved that, as he is required to do by statute, hence the two-and-a-half years period.
The case was referred to the Full Court by the Single Judge on the basis that there may have been some error in the way in which the matter had been referred to the Crown Court, and whether, on that basis, the court may have passed an unlawful sentence on what the judge described as count 9 and count 31.
What has happened is that the judge was wrongly informed that the sentence on offence 9 was unlawful, but in fact that offence had been withdrawn, so was never before the sentencing Crown Court.
As to offence No 31, in relation to the Crown Court, that was offence No 30. The point that there arises then is that offence 30, in the Crown Court, referred to images created between 21st June 2005 and 16th November 2005.
Somewhere that too appears to have been an error. However we are not sure of that, because we are told by counsel that in Magistrates' Court the relevant starting was put at January 2005, rather than June 2005. That has this significance: if the offence was committed before the beginning of April 2005, in relation to this count only, a sentence of imprisonment for public protection would not have been a sentence available to the judge. This would not be an unimportant technicality, but a point of jurisdiction.
If the offence was committed between 25th January and 16th November, the allegation spanned the date when the relevant statutory provisions came into force. Our attention has been drawn to section 234 of the Criminal Justice Act 2003, which reads:
"Determination of day when offence committed.
Where an offence is found to have been committed over a period of two or more days, or at some time during a period of two or more days, it shall be taken for the purposes of section 229 to have been committed on the last of those days."
In other words, section 234 is a deeming provision.
It is, however, a provision which addresses section 229, and that concerns the assessment of dangerousness and the way in which the Court should approach that decision. It is not directed to sections 225 to 228, which are the offences which actually create the sentencing powers which are now under consideration.
We shall simply observe that if section 234 is to be treated creating a power to pass a sentence of greater severity than was available at the time when the offence was committed, there would be significant problems with retrospectivity, and Article 7 of the European Convention of Human Rights. If section 234 is simply evidential so that the court should apply a presumption, when no other evidence about the date when the offence was committed is available, then perhaps the difficulty would not arise. The evidence to show that the offence was committed before April 2005 would be there, if it were available and would speak for itself.
Our very tentative view would be that section 234 should be read in context with section 229, which, as we have already indicated, is evidential, and directed to the assessment of whether or not the particular offender represents a danger. In practical terms in this case, however, the decision is academic, which is why we do not resolve it.
In relation to offence No 30, whether or not there is an error in the committal papers about the January, rather than 25th June 2005, date, our pragmatic view is that we should simply remove the order for imprisonment for public protection made under offence 30. We emphasise that it is a pragmatic approach to his practical problem which arises in this case. It makes absolutely no difference to the sentence imposed on the applicant, and there are no circumstances in which our decision is to be regarded as a precedent.
We can now come to the essential grounds of appeal. First it is said that the judge was wrong to find the level of risk appropriate to found an order of imprisonment for public protection. We have examined the evidence in the course of this judgment. In our view, the judge was fully entitled to reach the conclusion that he did, and that the applicant was properly to be regarded as someone who fell within the meaning of dangerousness for the purpose of the order of imprisonment for public protection. That was based on the original offences 2002 offences, the commission of further similar offences, in 2005, and the assessments made in the reports.
Ultimately, of course, the decision is for the judge. We can see no reason for interfering with it. The other submission is that, even if that first argument fails, the period of 4 years as the starting point for the assessment of the determinate sentence was manifestly excessive. We have in the course of the judgment already indicated that the absence of level 5 images and the absence of moving images at level 4, and the actual involvement of the applicant in this material, who, as was pointed out to us and again as we have narrated, was not involved in the production for the purposes of distribution.
We have stood back from the sentence imposed. We have come to the conclusion that the sentence was, in the context of the guidance given in Oliver, and on the basis of the applicant's plea of guilty, a severe sentence. We have nevertheless concluded that it was within the appropriate range of sentence for these offences by this offender. In those circumstances, the sentence was not manifestly excessive. We shall not interfere with it. Accordingly the application for leave to appeal save in relation to offence No 30 will be refused. As to offence No 30, we shall simply leave in place the determinate sentence which the judge imposed but the sentence of imprisonment for public protection on that count only will be quashed. | 5 |
Order of the General Court (First Chamber) of 14 June 2012 —Technion and Technion Research & Development Foundation v Commission(Case T-546/11) Action for annulment — Sixth framework programme for research, technological development and demonstration activities — Letter confirming the findings of an audit report and informing the applicant of the next steps in the procedure — Acts inseparable from the contract — Inadmissibility 1. Proceedings — Legal basis of an action — Choice for the applicant, not the EU judicature (see para. 30) 2. Actions for annulment — Action relating in reality to a contractual dispute — Action concerning a letter of an institution inseparable from contractual relations between the latter and the applicant — No jurisdiction of the EU judicature — Inadmissibility (Art. 263 TFEU) (see paras 32-34, 50) 3. Actions for annulment — Action relating in reality to a contractual dispute — Reclassification of the action — Conditions — Applicant not having expressly requested reclassification — Action not based on any plea claiming infringement of the rules governing the contractual relationship — Exclusion from reclassification (Arts 263 TFEU and 272 TFEU) (see paras 58, 59) Re:
APPLICATION for annulment of the decision allegedly contained in the letter of the Commission of 2 August 2011 confirming the conclusions of the financial audit concerning the financial statements declared by Technion — Israel Institute of Technology, concerning four contracts concluded under the sixth framework programme of the European Community for research, technological development and demonstration activities, contributing to the creation of the European research area and to innovation (2002-2006), and informing Technion of the next steps in the procedure.
Operative part
1.
The action is dismissed as inadmissible;
2.
Technion — Israel Institute of Technology and Technion Research & Development Foundation Ltd is ordered to pay the costs. | 0 |
LORD JUSTICE THORPE: This is an application for permission to appeal a judgment of His Honour Judge Martineau given in the Central London County Court on 6th October 2000. As an application for permission it would ordinarily be heard without notice, but, as a result of what is said to have been a request from my clerk, the defendant police authority are here today by Mr. Walsh of counsel who appeared in the court below. I am grateful to Mr. Walsh for coming. He has considerably assisted the determination of this application since he has a good deal of knowledge, which is not open to either me or to Mr. Thomas, who has come into the case to make the application on behalf of the applicant. There has been a change of solicitors since the conclusion of the trial, and counsel who appeared for the claimant in the trial has been replaced by Mr. Thomas.
Mr. Thomas, by his amended notice of appeal and by his skeleton argument, says that Judge Martineau was wrong in law to conclude that the claimant's arrest was lawful, for reasons to which I will come in a moment. The circumstances in which Judge Martineau came to give a ruling were that there had been an extensive trial on oral evidence, and issues of fact had emerged which were crystallized into a number of questions which were put to the jury for their determination. I do not know what those questions were. I do not know how they were answered but Mr. Walsh says that they were answered in the defendant's favour, and that was the consequence of evidence from the claimant which was simply belied by three contemporaneous video recordings: (1) the shop recording which would have been the property of the book-maker, William Hill; (2) a video taken by one of the team of arresting officers, and (3) a video subsequently taken in the custody suite. That begins to explain some of the passages in the aftermath of judgment where the judge questions whether legal aid should ever have been extended to the claimant for what he ultimately describes as a quite hopeless case. So I have to balance, on the one hand, the possibility that the judge was wrong in law and therefore erroneously withdrew the issue of damages from the jury, against the overall background that the case appeared to him to have been absolutely hopeless. Certainly, counsel who appeared in the court of trial does not seem to have been crushed by the judge's observations, since he made an application for permission to appeal which the judge inevitably refused.
I turn to the judge's reasoning of his conclusion on the issue of law. The issue in question with which I am concerned is whether the arrest of the claimant in the King's Cross William Hill betting shop was lawful or not. The circumstances were that the arresting team believed that the claimant was a suspected drug dealer. They had made a mistake as to the claimant's identity and that mistake led them to arrest the wrong person. There is no doubt at all that in carrying out that arrest they exercised force which the judge considered to be considerable and inferentially excessive unless justified by all the circumstances. The judge found that justification in two particulars. The nature of the arrest was to seize the claimant by the throat, and the judge concluded that the arresting officers sincerely believed that the claimant was a cocaine dealer who had, immediately before the arrest, transferred her stock in trade from hand to mouth and was about to swallow. The judge concluded that in those circumstances it was reasonable for the officers to seize the claimant about the neck and to apply pressure because, were she to swallow, the drug would be or might be highly dangerous to her and, secondly, it was important that the arresting officers should retrieve the drug as evidence that would substantiate prosecution and conviction.
Whether the judge was right in that process of reasoning is open to question. In my view, it is at any rate within the boundary of the arguable. But what is the point in granting permission to this applicant if ultimate success on the point of law would only be to revive a claim that was bound to rejection in the jury room on the facts? I do not know enough about this case to reach that conclusion, and Mr. Thomas for the applicant asserts that the medical evidence of physical injury would certainly justify a jury in bringing in an award that was substantial rather than nominal. I resolve this dilemma, therefore, by granting permission but directing that, before the case goes further in this court, the parties should be invited to submit to this court's ADR scheme. On any view this is a case which should be resolved by negotiation rather than by the extensive and expensive process of appeal, with the prospect only of an order for retrial. The reality of the case might well be that this is an application which should have been concluded today in the way that Mr. Walsh submits. On the other hand, it seems to me that I could not in conscience reject the argument that Mr. Thomas seeks to advance on the narrow point of law. That then is the direction. Permission is granted but there will be no further steps in the appellate process until the parties have received and responded to a letter of invitation from this court to submit their differences to this court's ADR scheme. The scheme has had considerable success in the past in resolving police damage cases. I see no reason why, with good sense, this case should not also be similarly resolved.
Order: Application allowed as per judgment. | 0 |
S. Venkataramiah, J. This appeal is filed by the appellant Dewan Joynal Abedin against the judgment dated December 2, 1986 of the High Court at Gauhati setting aside his election to the Legislative Assembly of Assam at the election held on the 16th December, 1985 from the 22-Salmara South Legislative Assembly Constituency on an election petition filed by respondent No. 1 Abdul Wazed alias Abdul Wazed Miah in Election Petition No. 2 of 1986. The last date for making numberinations for election from the aforesaid companystituency was 22nd November, 1985 and the date for the scrutiny of numberinations was November 23, 1985. The appellant, the 1st respondent and the second respondent Bazlul Basit were the three candidates on whose behalf numberination papers had been filed before the expiry of the time fixed for making numberinations. Respondent No. 3, M. Bhattacharjee, was the Returning officer. At the time of the scrutiny respondent No. 2 raised objection to the numberination of respondent No. 1 on the ground that respondent No. 1 had number companypleted 25 years of age on the date of scrutiny as required by Article 173 b of the Constitution which provided that a person was number qualified to be chosen to fill a seat in the Legislature of a State unless he was in the case of a seat in the Legislative Assembly number less than twenty-five years of age and in the case of a seat in the Legislative Council number less than thirty years of age. The proposer of one of the numberination papers filed on behalf of the respondent No. 1 prayed for some time to refute the objection. The Returning Officer, however, proceeded to reject the numberination papers filed on behalf of the 1st respondent on 23.11.1985 holding that the 1st respondent had number companypleted 25 years of age and therefore was number qualified to be a member of the Legislative Assembly. The election process companytinued with only the appellant and the second respondent as the candidates and after the poll the appellant was declared as having been elected on the basis of the larger number of votes secured by him. Thereupon the 1st respondent filed the election petition before the High Court out of which this appeal arises companytending that he had infact companypleted 25 years of age on the date of his numberination and that the rejection of his numberination papers was erroneous. The 1st respondent further companytended that on account of the rejection of his numberination papers the election of the appellant was liable to be set aside under Section 100 1 c of the Representation of the People Act, 1951 hereinafter referred to as the Act which provided that the election of a successful candidate was liable to be set aside on the ground that any numberination had been improperly rejected. In the companyrse of his written statement the appellant raised several pleas, and of them three were material for purpose of this case. First he pleaded that the 1st respondent had number companypleted 2 5 years of age on the date of scrutiny of numberinations and therefore the numberination papers had been rightly rejected secondly he pleaded that the 1st respondent had number subscribed an oath as required by Article 173 a of the Constitution and therefore the 1st respondent was number qualified to companytest the election and thirdly he pleaded that the 1st respondent was also disqualified to be chosen to fill a seat in the Legislature of the State as on the date of scrutiny of the numberinations the 1st respondent had a subsisting companytract entered into by him with the Government of Assam under which he had been treated as a lessee of the Phulbari Ghat Ferry for the period between 1.4.1985 and 31.3.1986. The 1st respondent pleaded that he had companypleted the age of twenty-five years on the date of scrutiny of numberination that he had subscribed an oath as required by Article 173 a of the Constitution and that while it was true that he had entered into such a companytract he had been released from the said companytract on 21.11.1985 by the Executive Engineer companycerned and therefore there was numbersubsisting companytract between him and the Government of Assam on the date of Scrutiny. On the basis of these pleas Issue No. 5 and Issue No. 6 were framed by the High Court which read as follows Whether the numberination paper of the petitioner has been improperly rejected? If so, whether the election of the respondent is void? Or, whether the numberination paper of the petitioner was liable to be rejected as alleged in para 7 of the written statement? Whether the petitioner had incurred disqualification under Section 9A of the Representation of the People Act? After recording the evidence produced by the parties the learned Judge of the High Court who tried the election petition held that the 1st respondent had companypleted the age of 25 years on the date of scrutiny and therefore he had the necessary qualification for being a member of the Legislative Assembly. He accordingly held on the first part of issue No. 5 in favour of the 1st respondent. On the second part of issue No. 5 the learned Judge held that the appellant had number proved that the 1st respondent had number subscribed an oath as required by law. On issue No. 6 the learned Judge held that the 1st respondent had been relieved from the charge of Phulbari Ghat Ferry with effect from 21.11.1985 and therefore there was numbersubsisting companytract between the 1st respondent and the Government of Assam on the date of scrutiny of numberinations and therefore the 1st respondent was number disqualified under Section 9-A of the Act. In view of his findings recorded on Issues N0.5 and 6 the learned Judge came to the companyclusion that the rejection of the numberination papers filed on behalf of the 1st respondent was improper and therefore the election was liable to be set aside. He accordingly set aside the election of the appellant. Aggrieved by the judgment of the learned Judge the appellant has filed this appeal under Section 116-A of the Act. When this appeal was taken up for hearing on the first date it was numbericed that the High Court had number companysidered the question whether Section 9-A of the Act was attracted at all to the companytract in question as it appeared to be number one of those companytracts which had the effect of disqualifying a candidate under Section 9-A of the Act. The case thereafter was adjourned to a subsequent date for hearing to enable the learned Counsel to make their submissions on the above question also. By the next date of hearing the appellant filed a petition before the Court seeking an amendment of the written statement raising the plea that the 1st respondent was also disqualified from companytesting the election as he held an office of profit under the State Government by virtue of the companytract that had been entered into by him with the State Government even though the companytract in question may number be one of those companytracts specified in Section 9-A of the Act. In other words it was companytended that the 1st respondent was disqualified under Article 191 1 a of the Constitution which provided that a person would be disqualified for being chosen as, and for being, a member of the Legislative Assembly of a State if he held any office of profit under the Government of India or the Government of any State specified in the First Schedule, other than an office declared by the Legislature of the State by law number to disqualify its holder. It is necessary to refer to one aspect of the case. Although before the High Court it was urged by the appellant that the 1st respondent had number subscribed on oath in companypliance with the provisions of Article 173 of the Constitution and thus he was number eligible to companytest the election and that the High Court had negatived the said companytention, numberarguments were addressed before us by the learned Counsel for the appellant questioning the finding of the High Court on the above question. We do number, therefore, find it necessary to discuss the evidence relating to the above issue. Three questions arise for companysideration in this appeal i whether the 1st respondent had number companypleted the age of 25 years on the last date for filing numberination? ii whether the companytract in question said to have been entered into by the 1st respondent with the Government of Assam to companylect the toll at the ferry was a companytract for the execution of any works undertaken by the Government of Assam attracting Section 9-A of the Act and if so whether the said companytract was subsisting on the date of scrutiny of numberination? and iii whether the 1st respondent held an office of profit under the Government of Assam by virtue of being a lessee of the right to companylect the toll at the ferry? On the question of the age of the 1st respondent there is practically numberevidence adduced on behalf of the appellant. The Electoral Roll, which was marked as Exhibit 7, in the case showed that the 1st respondent was aged 29 years. In support of his case, the 1st respondent had examined three witnesses, P.W.2 Aripulla, P.W.3 Sirajul Islam and P.W.6 Habibar Rahman. He also produced his High School Leaving Certificate Exhibit 12 which showed that he was above 25 years on the date of the numberination. The High Court has summed up its companyclusion on the above question at paragraph 14 of its judgment thus As already held that the High School Leaving Certificate Ext-12 and admission register cannot be rejected. The oral evidence of the witnesses relating to the age has number been shaken in the cross-examination. As regards age, the relatives are best witnesses. Considering the High School Leaving Certificate Ext-12 Electoral Roll Ext-7 and oral evidence of P?W 2 Aripulla, PW 3 Sirajul Islam and PW 6 Habibar Rahman, it is companycluded on the age of the petitioner on the date for making numberination or scrutiny of numberination that he had companypleted the age of 25 years. We have gone through the evidence bearing on the above question. We are of the view that the High Court was right in upholding that the 1st respondent was more than 25 years of age on the date of scrutiny and he was eligible to be a member of the Legislative Assembly. Thus the ground on which the Returning Officer had rejected his numberination papers is untenable. This takes us to the next question, namely, whether the 1st respondent was disqualified for being chosen as a member of the Legislative Assembly on account of the companytract entered into by him in the companyrse of his trade or business with the Government of Assam subsisting on the date of scrutiny of numberinations as provided by Section 9-A of the Act. Section 9-A of the Act reads thus- 9-A. Disqualification for Government companytracts, etc. - A person shall be disqualified if, and for so long as, there subsists a companytract entered into by him in the companyrse of his trade or business with the appropriate Government for the supply of goods to, or for the execution of any works undertaken by, that Government. There is a public ferry at Phulbari-ghat, which is under the companytrol of the Executive Engineer, Public Works Department, Goalpara Roads Division. It is admitted by the 1st respondent that he was the lessee of the tolls of the said public ferry for the period between 1.4.1985 and 31.3.19 86 but his case, however, was that he had been relieved from the said companytract on 21.11.1985. But the appellant pleaded in the companyrse of his written statement that only on 25.11.1985, that is on the date of scrutiny of the numberination papers, the Executive Engineer had at the request of the appellant, allegedly made on 18.11.1985 released the petitioner from the companytract and that the order of release had been made after the scrutiny was over. The High Court had, therefore, to companysider the question whether the order of release had been made on the 21.11.1985 or on 25.11.1985 after the scrutiny of numberination papers. On a companysideration of the evidence led by the parties, the High Court held that the 1st respondent had been relieved of the charge of the ferry on 21.11.19 85 and that he was number disqualified under Section 9-A of the Act. As stated earlier when the matter was argued before us on the first date of hearing the learned Counsel for the parties were asked to make their submission on the question whether a lease of the ferry tolls attracted the provisions of Section 9-A of the Act and the learned Counsel have made their submissions in that behalf. The management of a public ferry is governed by the provisions of the Northern India Ferries Act, 1878 hereinafter referred to as the Ferries Act which has been extended to the State of Assam. Section 8 of the Ferries Act reads thus Letting ferry tolls by auction - The tolls of any public ferry may, from time to time, be let by public auction for a term number exceeding five years with the approval of the Commissioner, or by public auction, or otherwise than by public auction, for any term with the previous sanction of the State Government. The lessee shall companyform to the rules made under this Act for the management and companytrol of the ferry, and may be called upon by the officer in whom the immediate superintendence of the ferry is vested, or, if the ferry is managed by a municipal or other public body under Section 7 or Section 7-A, then by that body, to give such security for his good companyduct and for the punctual payment of the rent as the officer or body, as the case may. be, thinks fit. When the tolls are put up to public auction, the said officer or body, as the case may be, or the officer companyducting the sale on his or its behalf may, for reasons recorded in writing, refuse to accept the offer of the highest bidder, and may accept any other bid, or may withdraw the tolls from auction. Section 9 of the Ferries Act provides for the recovery from the lessee. Section 10 of the Ferries Act provides for the cancellation of the lease by the Government. Section 11 of the Ferries Act provides for the surrender of the lease by the lessee. Section 12 of the Ferries Act makes provision for the promulgation of rules which inter alia may provide for the companytrol and the management of all public ferries within a division and for regulating the traffic at such ferries for regulating the time and manner at and in which, and the terms on which, the tolls of such ferries may be let by auction, and prescribing the persons by whom auctions may be companyducted and when the tolls of the ferry have been let under Section 8 of the Ferries Act for companylecting the rents payable for the tolls of such ferries. Section 13 of the Ferries Act prohibits plying of any ferry within two miles of a public ferry without sanction from the appropriate authority. Section 14 of the Ferries Act provides that whoever uses the approach to, or landing-place of, a public ferry is liable to pay the toll payable for crossing such ferry. Under Section 15 of the Ferries Act provision is made for fixing the rates of tolls. It says that the tolls, according to such rates as are, from time to time, fixed by the State Government, shall be levied on all persons, animals, vehicles and other things crossing any river by a public ferry and number employed or transmitted on the public service. The State Government is, however, given power to declare that any persons, animals, vehicles or other things shall be exempt from payment of such tolls. Where the tolls of a ferry have been let under Section 8 of the Ferries Act any such declaration, if made after the date of the lease, shall entitle the lessee to such abatement of the rent payable in respect of the tolls as may be fixed by the Commissioner of the Division or such other officer as the State Government may, from time to time, appoint in this behalf by name or in virtue of his office. The Rules have been framed by the Chief Engineer, Assam under Section 12 of the Ferries Act for purposes of the companytrol and management of and for regulating the traffic at all Government ferries. Under the said Rules, for Government ferries suitable ferry boats, engines or mars are supplied at the expense of the Public Works Department. The lessee shall be responsible as a bailee for these boats, engines and mars and he shall, on the expiry or earlier termination of his lease, return them to the Executive Engineer in good companydition, allowance being made for fair wear and tear. The lessee who acquires the right to companylect toll is bound to cross over on tender of payment in cash of the authorised toll or on production of a season ticket or pass, all persons desiring to cross within the hours for which the ferry according to the terms of the lease is open. He is precluded from carrying persons whom he may know or suspect to be fugitives from justice or to be bent upon an unlawful purpose. He cannot carry over at any one time in his ferry boat or mar more than the number of persons, animals, vehicles or other things specified in his lease as permitted to be so ferried. He has to provide a shed 15 feet long by 15 feet broad, on each side of the ferry for the temporary accommodation of persons wishing to cross. The lessee has to furnish monthly a return in the prescribed form supplied to him by the Executive Engineer giving particulars which are required to be furnished through it. The approach roads to all Government ferries and low level bridges are companystructed and maintained by the Public Works Department. The lessee is responsible for companyveying immediate information of damage to approaches to the companycerned authorities. The Public Works Department has to provide sufficient means for embarking and disembarking all persons, animals, vehicles and things which a lessee is bound to cross over at his ferry with the exception of ropes and tying posts for securing the mar. All Government ferries shall generally be let by public auction provided that, for special reasons to be recorded in writing, the executive Engineer or Sub-Divisional Officer, Public Works Department, may reserve any ferry from lease and may work it direct. Collection of tolls by departmental agency will only be resorted to when absolutely unavoidable. The auction sale of the right to carry passengers at the ferry is held by the Deputy Commissioner Civil Sub-Divisional Officer or some officer deputed by him for the purpose. The person whose bid is accepted has to pay the purchase money in accordance with the Rules. If there is any default on the part of the lessee in paying the amount payable by him, the lease is liable to be cancelled. These are broadly the features of the companytract between a lessee of a ferry and the Government. The question for companysideration is whether a person who takes on lease a ferry under Section 8 of the Ferries Act becomes disqualified for companytesting the election to the State Legislature under Section 9-A of the Act. At this stage it is necessary to set out the history of the provisions companytained in Section 9-A of the Act. When the Act was enacted originally there was Section 7 of the Act the relevant part of which read as follows A person shall be disqualified for being chosen as and for being a member of the either House of Parliament or of the Legislature Assembly or Legislative Council of a State - d if, whether by himself or by any person or body of persons in trust for him or for his benefit or on his account he has any share or interest in a companytract for the supply of goods to, or for the execution of any works or the performance of any services undertaken by the appropriate Government. In 1958 this provision was amended. In the Statement of Objects and Reasons of the Representation of the People Amendment Bill, 1958, which was enacted as the Representation of the People Amendment Act, 1958 it was stated as follows The language of Section 7 d of the 1951 Act which provides for disqualification in case of companytracts with the Government is wide and vague enough to bring any kind or category of companytract within its scope and it has been a fruitful source of election disputes in the past. Persons who only occasionally broadcast any talk from the radio station or companytribute article to any Government publication may companye within the mischief of this section. The Bill was referred to a Select Committee of Parliament. The said Select Committee reported on December 15, 1958 with regard to the proposed redrafting of Section 7 d . The Select Committee suggested as follows The Committee have carefully companysidered the proposed substituted Clause d of Section 7 of the Representation of the People Act, 1951. The Committee feel that in view of the expanding activities of the Central and State Government as the biggest purchasers and suppliers of goods including food grains and other essential companymodities, a large number of persons in the companyntry will have some companytractual relationship with the Government in these matters. Under the circumstances it will number be proper to disqualify all such persons who are having companytractual dealings with the Governments from standing for election or being elected as members of Parliament or State Legislatures., The Committee, therefore feel that the better companyrse would be altogether to omit the existing Clause d of Section 7 of the Act. This suggestion was number, of companyrse accepted. After the amendment in 1-958 Section 7 d of the Act read thus A person shall be disqualified for being chosen as, and for being a member of either House of Parliament or of the Legislative Assembly or Legislative Council of a State - d if there subsists a companytract entered into in the companyrse of his trade or business by him with the appropriate Government for the supply of goods to, or for the execution of any works undertaken by that Government. By the Representation of the People Amendment Act, 1966 some of the provisions of the Representation of the People Act were amended. On that occasion Sections 7, 8, 9 and some other provisions of the Act, which provided for the disqualification of persons for being chosen as members of Parliament or of the State Legislature were substituted by new Sections 7, 8, 8A, 9, 9A, 10 etc. The present Section 9-A was enacted in the place of the former Section 7 d . Section 9-A of the Act enacted in the same pattern in which Section 7 d , stood after the amendment in 1958. An explanation was, however, added to it which provided that only by reason of the fact that the Government had number performed its part of the companytract either wholly or in part, it companyld number be said that the companytract which attracted Section 9-A was subsisting where a companytract had been fully performed by the person by whom it had been entered into with the appropriate Government. An analysis of Section 9-A of the Act shows that only in two cases a person would be disqualified if he has entered into a companytract with the appropriate Government in the companyrse of his trade or business which is subsisting on the date of scrutiny of numberination. They are i when the companytract is one for supply of goods to the appropriate Government and ii where the companytract is for the execution of any works undertaken by that Government. If a companytract belonging to either of the two categories is subsisting on the date of the numberination, the person will be disqualified for being chosen as a member. In the present case the companytract is number one for supply of goods to the Government. It does number, therefore, fall under the first class of companytracts which create the disqualification. The question for determination is whether the companytract to companylect toll at a Government ferry entered into in accordance with the Ferries Act amounts to a companytract for the execution of any works undertaken by the Government. At this stage we should remember that the words or the performance of any services were omitted from Section 7 d by the amendment made in the year 1958. In N. Satyanathan v. K. Subramanyan and Ors. this Court had occasion to companystrue Section 7 d of the Act before its amendment in 195 8. In that case the appellant was a companytractor who had entered into an agreement with the Central Government whereby he had companytracted with the Governor-General for the provision of a Motor Vehicle Service for the companyveyance of postal articles and mail bags. Under the companytract the Governor-General had agreed to pay to the companytractor Rs.200/- per month during the subsistence of the agreement as his remuneration for service to be rendered by him. The appellant therein was held to be disqualified under Section 7 d of the Act, as it stood then, as he had undertaken to carry out a service which the Government had undertaken to do. The Court said that it cannot be gainsaid that the Government in the Postal Department is rendering a very useful service and that the appellant has by his companytract with the Government undertaken to render that kind of service on a specified route. The present case is a straightforward illustration of the kind of companytract companytemplated by Section 7 d of the Act. The Court took the above view in view of the presence of words the performance of any service under Section 7 d of the Act, as it stood then. Those words were omitted from Section 7 d on its amendment in the year 1958 and Section 9-A of the Act as it stands today also does number companytain those words. In Ram Padarath Mahto v. Mishri Singh and Anr. a similar question arose for companysideration. The appellant in that appeal was a member of a joint Hindu family which carried on the business of Government stockists of grain under a companytract with the Government of Bihar. His numberination for election to the Bihar Legislative Assembly was rejected on the ground that he was disqualified under Section 7 d of the Act, as he had an interest in a companytract for the performance of services undertaken by the Bihar Government. The appellant companytended that the service undertaken by the Government was the sale of foodgrains under the Grain Supply Scheme and the companytract was number for the sale of such foodgrains and did number attract the provisions of Section 7 d of the Act. This Court held that the companytract was number one for the purpose of any service undertaken by the Government and the appellant therein was number disqualified under Section 7 d of the Act. The Court held that a companytract of bailment which imposed on the bailee the obligation to stock and store the food-grains in his godowns was number a companytract for the purpose of the service of sale of grain which the Government had undertaken. The Government had undertaken the work of supplying grain but the companytract was number one for the supply of grain. The Court distinguished the decision in N. Satyanathan v. K. Subramanyam supra while reaching the companyclusion that the appellant was number disqualified for being chosen as a member of the Bihar Legislature. So even at a time prior to the amendment of Section 7 d of the Act in the year 1958 it was possible to take the view that certain types of companytracts entered into with the appropriate Government, even though they were subsisting on the date of scrutiny of numberination did number disqualify a person from being chosen as a member of the State Legislature. It is pertinent to refer to the observation made by Gajendragadkar, J. in Ram Padarath Mahtos case supra which runs as under It may sound technical, but in dealing with a statutory provision which imposes a disqualification on a citizen it would be unreasonable to take merely a broad and general view and ignore the essential points of distinction on the ground that they are technical. The narrow question is if the State Government undertook the work of supplying the grain, is the companytract one for the supply of grain? in our opinion, the answer to this question must be in the negative that is why we think the High Court did number companyrectly appreciate the effect of the companytract when it held that the said companytract brought the appellants case within the mischief of Section 7 d . Unless the companytract in question is one which clearly falls under Section 9-A of the Act, it would number be proper to hold that the person who is a party to the companytract is disqualified for being chosen as a member to the State Legislature. In Lakshmikantha Rao v. D. Chinna Mallaiah and Ors. the question that arose for companysideration was whether a person who was carrying on the business in arrack and toddy under the companytract with the Government under the provisions of the Andhra Pradesh Excise Act, 1968 was disqualified for being chosen as a member of the Legislature. The facts of that case briefly stated were thus. There was an agreement between the highest bidder, i.e., the returned candidate and the Government in respect of the carrying on the business in arrack and toddy. A perusal of the relevant provisions, i.e., Sections 15 and 17 of the Andhra Pradesh Excise Act and Rule 21 of the Rules framed under that Act as well as the agreements signed framed under that Act as well as the agreements signed by the returned candidate, showed that the highest bidder had to deposit the monthly rentals and purchase the arrack from the Government at the issue price and sell the same to the public. If there were any arrears in the monthly rentals the same companyld be recovered as arrears of land revenue. Similarly with regard to the toddy shop he had to tap the toddy from the trees allotted to him by the Government by paying the tree-tax and sell the toddy to the public. For the toddy shop also he had to pay monthly rentals and if he fell in arrears the same companyld be recovered as arrears of land revenue. There were other incidental companyditions in the agreements. The Andhra Pradesh High Court held that since the companytracts entered into by the successful candidate with the State Government to sell arrack and toddy did number companye within the State Government to sell arrack and toddy did number companye within the mischief of Section 9-A of the Act as they were neither for supply of goods to the Government number for the execution of any works undertaken he did number suffer from any disqualification for being chosen as a member of the Legislative Assembly. We have gone through the above decision carefully. We are of the view that the High was right in the said case in holding that the returned candidate had number suffered from any disqualification by reason of the fact that he was an excise companytrator. In the present case the position of the 1st respondent is more or less similar to the position of the returned candidate in the decision of the Andhra Pradesh High Court. The 1st respondent had acquired in the public auction the right to companylect the toll by paying the amount which he had offered to pay under the companytract. He had number undertaken thereby any companytract for execution of any works undertaken by the Government. The word works in the expression in execution of any works appearing in Section 9-A of the Act is used in the sense of projects, schemes, plants, such as building works, irrigation works defence works etc. The 1st respondent in this case had number undertaken to carry on any such work. According to the Shorter Oxford English Dictionary the expression work means a structure or apparatus of some kind an architectural or engineering structure, a building edifice. When it is used in plural, i.e., as works it means architectural or engineering operations a fortified building a defensive structure, fortification any of the several parts of such structure. The word works used in Entry 35 of List II of the Seventh Schedule of the Constitution of India which reads as works, lands and buildings vested in or in the possession of the State is used in the same sense. The running of boats across inland waterways is a topic which falls under Entry 32 of List III of the Seventh Schedule which reads thus Shipping and navigation on inland waterways as regards mechanically propelled vessels, and the rule of the road on such waterways, and the carriage of passengers and goods on inland waterways subject to the provisions of List I with respect to national waterways. It is, therefore, difficult to hold that when a person acquires the right to companylect toll at a public ferry under Section 8 of the Ferries Act he is performing a companytract of execution of works undertaken by the Government. It may have been perhaps different if the words in performance of any services which were present in Section 7 d of the Act, as it stood prior to its amendment in 1958 had been there in Section 9-A of the Act. We do number find any substance in the argument urged on behalf of the appellant that because under Condition No. 10 of the form of lease prescribed under the Ferries Act the lessee is under an obligation during the period of lease to mark buoys or in any other suitable manner, all submerged obstruction or dangerous rocks in the rivers within half a mile of the landing ghats and shall be held responsible for any loss of damage caused to the mar boats striking against such submerged obstructions or dangerous rocks it should be held that the 1st respondent had undertaken to execute works undertaken by the Government. The above companydition only requires the lessee to mark buoys or in any other suitable manner the places where there were any submerged obstruction or dangerous rocks within half a mile of the landing ghats. Having regard to the companyditions of the lease and the provisions of the Act and the Rules made thereunder we are clearly of the view that the activity undertaken by the lessee under the agreement cannot be companysidered as an agreement for execution of works undertaken by the State Government. We are, therefore, of the view that the companytract which the 1st respondent had entered into with the State Government even though it was subsisting on the date of scrutiny of numberinations would number have the effect of disqualifying him for being chosen as a member of the State Legislative Assembly since Section 9-A of the Act is number at all attracted to such a case. The learned Counsel for the appellant however tried to justify the rejection of the numberination papers of the 1st respondent on the ground that the appellant was holding an office of profit under the State Government when the companytract to ply the boats at the ferry was subsisting. We find it difficult to agree with the learned Counsel that under the companytract in question the 1st respondent had been inducted into any office under the State Government. An office means a public or private employment with certain duties to be performed. The words office and officer are used sometimes in a wide sense and sometimes in a narrow sense. A lawyer is sometimes called an officer of the Court. But still he is number holding any office of profit as such for purposes of the law of elections. A lessee of tolls under the Ferries Act is only a companytractor who under the lease acquires the right to companylect whatever toll is paid by persons who use the ferry against payment to Government in advance whatever amount he had agreed to pay at the time of auction. Whether he makes any profit in that business or number depends ultimately on the amount of toll he is able to realise during the whole period of lease. Such a companytract is essentially in the nature of a business. It cannot be termed as an office in any sense. A transaction of lease under the Ferries Act is number a lease of an office. In State of Uttar Pradesh v. Satya Narain Prasad this Court dealing with a case in which the question involved related to the termination of lease under Section 10 of the Ferries Act has referred to the right of a lease as one having the character of a business in the following passage at page 200- In companystruing Section 10 of the Act it has to be borne in mind that it deals with the cancellation of a lease of tolls of a public ferry. In other words, once the numberice is effective valuable rights of a lessee came to an end. This is recognised by the Legislature by providing a six months numberice. This period is given so that he can wind up this particular business. underlining by us It is urged that since the 1st respondent had the right to secure the services of the police whenever needed the 1st respondent should be deemed a person holding an office of profit. The right to requisition the services of the police again did number make the 1st respondent a person holding an office of profit. In fact for that matter anybody may companyplain to the police and seek their assistance when there is threat to public property or to the person or property of any person. We hold that the 1st respondent was number holding an office of profit when he was a lessee under the Ferries Act just like an Excise companytractor or a fair price shop dealer who sells grains supplied by Government is number such a holder of office of profit. In view of the above findings it is number necessary to decide the question whether the lease was subsisting on the date of scrutiny of numberination or number. Thus in any view of the matter it cannot be held that the 1st respondent was disqualified for being chosen as a member of the State Legislature. | 4 |
Order of the Court (Fourth Chamber) of 25 March 1998. - Fédération française des sociétés d'assurances, Union des sociétés étrangères d'assurances, Groupe des assurances mutuelles agricoles, Fédération nationale des syndicats d'agents généraux d'assurances, Fédération française des courtiers d'assurances et de réassurances and Bureau international des producteurs d'assurances et de réassurances v Commission of the European Communities. - State aid - Appeal - Tax concessions granted to La Poste - Insurance products. - Case C-174/97 P.
European Court reports 1998 Page I-01303
Summary
Keywords
1 Appeals - Pleas in law - Erroneous appraisal of the facts - Inadmissible
(EC Treaty, Art. 168a; EC Statute of the Court of Justice, Art. 51)
2 Appeals - Pleas in law - Mere repetition of pleas in law and arguments submitted to the Court of First Instance - Inadmissible - Appeal dismissed
(EC Statute of the Court of Justice, Arts 49 and 51; Rules of Procedure of the Court of Justice, Art. 112(1)(c))
3 State aid - Prohibition - Derogations - Aid granted to an undertaking entrusted with the operation of a service of general economic interest - Conditions - Commission's discretion
(EC Treaty, Arts 90(2) and 92)
Summary
4 According to Article 168a of the Treaty and the first paragraph of Article 51 of the Statute of the Court of Justice, an appeal may rely only on grounds relating to the infringement of rules of law, to the exclusion of any appraisal of the facts.
5 Where an appeal merely repeats or reproduces verbatim the pleas in law and arguments previously submitted to the Court of First Instance, including those based on facts expressly rejected by that Court, it fails to satisfy the requirements under Article 51 of the Statute of the Court of Justice and Article 112(1)(c) of the Rules of Procedure and is therefore clearly inadmissible. In reality, such an appeal amounts to no more than a request for re-examination of the application submitted to the Court of First Instance, which, under Article 49 of the Statute, falls outside the jurisdiction of the Court of Justice.
6 The grant of State aid may, under Article 90(2) of the Treaty, escape the prohibition laid down in Article 92 thereof provided that the sole purpose of the aid in question is to offset the additional costs incurred in performing the particular task assigned to an undertaking entrusted with the operation of a service of general economic interest and that the grant of the aid is necessary in order for that undertaking to be able to perform its public service obligations under conditions of economic equilibrium.
In the case of a tax advantage granted to an undertaking entrusted with public service tasks, but which also has activities in competitive sectors, the requirements laid down by Article 90(2) of the Treaty cannot have been disregarded where it has been concluded that the possibility of a cross-subsidy taking place is excluded to the extent to which the aid in question remains lower than the additional costs generated by the particular task referred to in that provision, that is to say, where the condition has been laid down that the tax advantage should not exceed the additional costs engendered by the public service. | 7 |
MR JUSTICE BEAN: On this appeal by Mr Goliszewski against the decision of District Judge Evans ordering his extradition to Poland, Mr Keith, whose experience in these matters is very substantial, recognises there are no substantive grounds on which I could reverse the decision of the District Judge. But there is available to me a medical report of 13th June from Mr Kucheria, consultant orthopaedic surgeon, which indicates -- and it is not in dispute that this is genuine -- that Mr Goliszewski has continuing symptoms from a road accident on 15th April last year and that Mr Kucheria advises that the patient should have a MRI scan of his left shoulder and right knee to see what is happening.
It is notorious that there is something of a backlog in extraditions to Poland and I do not regard this as a case of immense urgency. I shall dismiss the appeal, but direct that the order to that effect is not sealed until 31st July, that is 14 days from today. That will then be the date from which the 14 day period envisaged by section 36(5) will operate, and thus it will not be until after 14th August that the authorities could extradite Mr Goliszewski to Poland. Subject to that extension of time, the appeal must be dismissed. | 5 |
Election Petition No. 1 of 1997 Delivered By C.AGRAWAL, J. C. AGRAWAL, J. This election petition has been filed jointly by two petitioners, namely, Charan Lal Sahu and Mitheles Kumar. They have challenged the election of respondent No. 1 to the office of the president of India in the election that was held for the said office in pursuance of the numberification dated June 9, 1997 published by the Returning Officer, Shri Gopalan, Secretary General, Lok Sabha. The said election was companyducted under the provisions of the presidential and vice-Presidential Elections Act, 1952 hereinafter referred to as the Act. Part II of the Act Sections 3 to 12 companytains provisions relating to companyduct of presidential and Vice- Presidential elections. Section 3 provides for appointment of the Returning officer and the Assistant Returning officer Officers by the Election Commission. Section 4 1 of the Act makes provision for issuance of a numberification by the Election Commission prescribing the last date for making numberinations, the date for the scrutiny of numberinations, the last date for the withdrawal of candidatures, the date on which a poll shall, if necessary, be taken. Section 5 provides for giving of a public numberice of election by the returning Officer after the issuance of the numberification under sub-section 1 of Section 4. Section 5A prescribes that any person may be numberinated as a Candidate for election to the office of President or Vice-President if he is qualified to be elected to that office under the Constitution. Section 5B provides for presentation of numberination papers and lays down the requirements for a valid numberination. Sub-section 1 of Section 5B requires that the numberinating paper companypleted in the prescribed form must be subscribed by the candidate as assenting to the numberination. In clause a of sub-section 1 , as it stood prior to June 5, 1997. it was further prescribed that in the case of presidential Election, the numberination papers shall also be subscribed by at least ten electors as proposers an dat least ten electors as seconders. Sub-section 2 of Section 5B lays down that each numberination paper shall be accompanied by a certified companyy of the entry relating to the candidate in the electoral roll for the parliamentary companystituency in which the candidate in the electoral roll for the parliamentary companystituency in which the candidate is registered as an elector. A numberination paper to which such certified companyy is number attached is required to be rejected under sub-section 4 of Section 5B. Section 5C, prior to June 5, 1997, prescribed that a candidate shall number be deemed to be duly numberinated for election unless he deposits or causes to be deposited a sum of two thousand five hundred rupees. Section 5E makes provision for scrutiny of numberinations and under sub-section 4 a numberination paper can be rejected by the returning officer on the grounds a to e of that sub-section. Ground c provides for rejection of a numberination paper on the ground that it is number subscribed by the required number of proposers or seconders and g round e provides for rejection on the ground that there has been a failure to companyply with any of the provisions of Section 5B or Section 5C. Section 6 deals with withdrawal of candidature. Section 8 lays down the procedure in companytested and uncontested elections. Section 9 provides for manner of voting at elections and Section 10 deals with companynting of votes. Section 11 provides for declaration of result after the companynting of votes has been companypleted. Part III of the Act Sections 13 to 20 companytains provisions relating to Disputes regarding elections. Subsection 1 of Section 14 prescribes that numberelection shall be called in question excepting by presenting an election petition and under sub-section 2 this Court has been specified as the authority which shall have jurisdiction to try an election petition. Sub-section 1 of Section 14A lays down that an election petition can either be presented by any candidate at such election or, in the case of Presidential election, by twenty or more electors joined together as petitioners. The expression candidate is defined in clause a of Section 13 to mean a person who has been or claims to have been duly numberinated as a candidate at an election. Section 18 prescribes the grounds on which the election of a returned candidate can be declared to be void. On June 5, 1997 the president of India promulgate the Presidential and Vice-Presidential Elections Amendment Ordinance, 1997 No. 13 of 1997 , hereinafter referred t o as the Ordinance, to further amend the Act. By the Ordinance clause a of Sub-section 1 Section 5B was amended and for the words ten electors the words fifty electors were substituted and as a result it became necessary that a numberination paper for presidential election should be subscribed by at least fifty electors as proposers and at least fifty electors as seconders. By the Ordinance, Section 5C was also amended and for the words two thousand five hundred rupees the words fifteen thousand rupees were substituted and as a result the amount o be deposited as security was raised from two thousand five hundred rupees to fifteen thousand rupees. The Ordinance was replaced by the Presidential and Vice-Presidential Election Amendment Act, 1997 Act 35 of 1997, hereinafter referred to as the Amendment Act, which was enacted by parliament on August 29, 1997. Charan Lal Sahu, Petitioner No. 1, filed a writ petition No. 293/97 in this Court under Article 32 of the Constitution wherein he challenged the validity of the Ordinance. The said writ petition was dismissed by the Court by the following order passed on June 9, 1997- The Writ petition is dismissed Another writ petition No. 322/97 was filed by one H. Parmar. The said writ petition was also dismissed by the Court by the following order passed on July 11,1997- This writ petition under Article 32 is misconceived. So far as the challenge to the Ordinance is companycerned, this stands companycluded by dismissal of an earlier writ petition W.P. No. 237/97 entitled L. Sahu vs. UOI Ors. We are companystrained to observe that this is misuse of the PIL jurisdiction. After the enactment of the Amendment Act, petitioner No. 1 again filed a writ petition No. D13334/97 to challenge the validity of the Amendment Act. The said writ petition was also dismissed by the Court by the following order passed on October 13,1997- This writ petition is wholly misconceived. We are unable to appreciate the petitioners persistence with the same even after we tole him so and also in view of the fact that a similar challenge has already been rejected earlier by orders dated 19/6/1997 and 11/7/1997 in W.P. C No. 293/97 and W.P. C No. 322/97 respectively. we have numberdoubt that this petition is a clear abuse of the process of the Court. The writ petition is, therefore, dismissed. After the issuance of the numberification under Section 4 1 of the Act by the Election Commission the Returning Officer published a numberification dated June 9, 1997 under Section 5 of the Act for election of the President of India. In response to the said numberification numberination forms were filed by a number of persons including the petitioners. The numberinations of respondent Nos. 1 and 2 were accepted and the numberinations of the rest, including the petitioners, were rejected by the Returning officer. Since there was a companytest between respondents Nos. 1 and 2, poll was taken and after companynting of votes, respondent No. 1 was declared to have been elected to the office of the president of India on July 17, 1997. On August 14,1997 the petitioners filed this election petition wherein they have prayed that the election of respondent No. 1 be declared void. The petitioners have asserted that they were duly numberinated candidates and are companypetent to file the election petition. They have claimed that their numberination was improperly rejected and the numberination of respondent Nos. 1 and 2 was improperly accepted. The petitioners have challenged the validity of the provisions companytained in Sections 5B and 5C of the Act as they stood prior to the amendments introduced in the said provisions by the ordinance and have challenged the validity of the amendments made in Section 5B and 5C by the Ordinance. There is numberaverment in the election petition that the numberination form for numberination of petitioner No 1 was subscribed by fifty electors as proposers and fifty electors as seconders as required by Section 5B 1 a , as amended by the Ordinance. On the other hand, in the letter dated June 24,1997 addressed by the petitioner No. 1 to the Returning Officer which has been filed as Annexure III to the Election petition, petitioner No. 1 has stated that his numberination paper was proposed by seven electors and that fifty proposers and fifty seconders were number required. As regards petitioner No. 2 it has been asserted in the Election petition that his numberination paper was signed by 64 proposers and 61 seconders. During the pendency of the election petition the Ordinance was replaced by the Amendment Act. The petitioners have filed an application for amendment of the election petition to substitute the Ordinance by the Amendment Act at pages 5 and 40 of the election petition. The application is allowed and the petitioners are permitted to carry out the said amendment in the election petition. In response to the numberice issued on the Election petition an Affidavit-in-Opposition to the Election petition has been filed by respondent No. 1. In the said Affidavitin-Opposition a preliminary objection has been raised with regard to the maintainability of the Election petition by the petitioners on the ground that the petitioners were number candidates at the election and they are number entitled to maintain the Election petition under Section 14A of the Act. Reference has been made to the letter of petitioner No. 1 dated June 24, 1997 addressed to the Returning Officer Annexure III to the Election petition wherein petitioner No. 1 had claimed that he had seven proposers and did number claim any seconders at all and it is submitted that the said letter shows that petitioner No. 1 did number have fifty proposers and fifty seconders. As regards t he numberination paper of petitioner No.2 it is stated in the Affidavit-in- Opposition that in the numberination paper names of 64 proposers had been mentioner but 29 out of them had number subscribed their signatures at all and, therefore, the number of proposers was 35 only. similarly, there were names of 61 seconders but out of them 28 did number sign and, therefore, there were only 33 seconders. It is also stated that the numberination of petitioner No. 2 was rejected on the threshold as it was number accompanied by the certified companyy of the electoral roll as required under Section 5B 2 of the Act. In the said Affidavit-in-Opposition reply has also been given to the averments companytained in the Election petition on merits and it is denied that the numberination paper of respondent No. 1 was wrongfully accepted and it is asserted that the certified companyy of the entry in the electoral roll was filed as required under Section 5B 2 of the Act. As regards challenge to the validity o the ordinance, reliance has been placed on the Orders of this Court dismissing P. Civil No. 293 of 1997 filed by petitioner No. 1 and P.No. 322 of 1997 filed by Shri P.H. Parmar. Rejoinder affidavit of petitioner No. 1 has been filed in reply to the said Affidavit-in-Opposition of respondent No. 1. In the said Rejoinder affidavit the averments in the Affidavit-in-Opposition that the numberination paper of petitioner No.1 was subscribed by 35 electors as proposers and 33 electors as seconders and that the numberination paper of petitioner No.2 was number accompanied by the certified companyy of the electoral roll have number been companytroverted. We must, therefore, proceed on the basis that the numberination papers of both the petitioners did number fulfil the requirements of Section 5B 1 a of the Act inasmuch as neither of these numberination papers was subscribed by the requisite number of fifty electors as proposers and fifty elector as seconders and that in so far as petitioner No. 1 is companycerned, his numberination paper was number even subscribed by ten propoers but was subscribed by seven proposers only and further that the numberination paper of petitioner No. 2 was filed without companyplying with the requirements of Section 5B 2 of the Act. Rules governing election petition filed under part III of the Act are companytained in Order XXXIX of the Supreme Court Rules, 1966. Rule 34 of Order XXXIX provides that subject to the provisions of the said order or any special order or direction of the Court the Procedure on an election petition shall follow, as nearly as may be, the procedure in proceedings before the Court in the exercise of its original jurisdiction. As regards proceedings in the exercise of the original jurisdiction of the Court Order XXIII Rule 6 provides that the plait shall be rejected a where it does number disclose a cause of action, or b where the suit appears from the statement in the plaint to be barred by any law. The preliminary objection raised by respondent No. 1 in the Affidavit-in-Opposition is that the petitioners are number entitled to maintain the Election petition in View of Section 14A of the Act since they were number candidates at the election. if the said preliminary objection is accepted, the election petition will be liable to be rejected as being barred by law, i.e., section 14A of the Act. We have, therefore, heard the petitioners as well as the learned companynsel for respondent No. 1 and the learned Attorney General of India on the said preliminary objection. Section 14A of the Act relating to the presentation of the election petition provides as follows- 14a. 1 An Election petition calling in question an election may be presented on one or more of the grounds specified in sub-section 1 of Section 18 and Section 19 to the Supreme Court by any candidate at such election, orin the case of Presidential election, by twenty or more election may be presented on one or more of the grounds specified in sub-section 1 of Section 18 and Section 19 to the Supreme Court by any candidate at such election, orin the case of Presidential election, by twenty or more electors joined together as petitioners in the case of Vice- Presidential election, by ten or more electors joined together as petitioners. Any such petition may be presented at any time after the date of publication of t he declaration companytaining the name of the returned candidate at the election under Section 12 but number later than thirty days from the date of such declaration. The word candidate is defined in section 13 a of the Act as under- a candidate means a person who has been or claims to have been duly numberinated as a candidate at an election The word elector is defined in section 2 d of the Act in these terms d elector, in relation to a presidential election, means a member of the electoral companylege referred to in article 54, and in relation t a Vice-Presidential election, means a member of the electoral companylege referred to in article 66 Shri Sorabjee, the learned senior companynsel appearing for respondent No.1, arguing in support of the preliminary objection, has urged that an election petition calling in question the presidential election can either be filed by a candidate at such election or by twenty or more electors joined together as petitioners. In the present case the election petition has number been filed by twenty or more electors joined together as petitioners but has been filed by two petitioners only. It can be entertained only if either of the petitioners can be held to be a candidate Referring to the definition of candidate companytained in Section 13 a of the Act, Shri Sorabjee has submitted that neither of the petitioners was a duly numberinated candidate number companyld he claim to have been duly numberinated as a candidate at an election since the numberination papers submitted by both of them were number subscribed by fifty proposers and fifty seconders as required under Section 5B 1 a of the Act, as amended by the Amendment Act. It is, therefore, submitted that the petitioners have numberlocus standi to file this election petition and it should be dismissed as number maintainable. It has also been urged that the question as to the validity of Sections 5B and 5C of the Act, cannot be raised in an election petition filed under Section 14A of the Act and that an Election petition can be maintained only on any of the grounds mentioned in Section 18 of the Act. It has also been submitted that in any event the validity of Sections 5B and 5C, as the said provisions stood prior to June 5, 1997, requiring that the numberination should be subscribed by ten electors as proposers and ten electors as seconders has been upheld in Charan Lal Sahu vs. Neelam Sanjeeva Reddy, 1978 3 SCR 1, decided by a bench of 7 Judges of this Court and that the challenge to the validity of the amendments introduced in Sections 5B and 5C by the Ordinance and the Amendment Act has been negatived by this Court while dismissing the three writ petitions to which reference has been made earlier and that two of these writ petitions were filed by petitioner No. 1 himself. The learned Attorney General has also taken the same stand and has submitted that since neither of the petitioners can be held to be a candidate under Section 13 a of the Act they are number entitled to maintain the election petition under section 14A of the Act and that the same is liable to be dismissed at the threshold. Petitioner No. 1, Charan Lal Sahu, has argued the case as petitioner-in-person and as companynsel representing petitioner No.2. he has submitted that both the petitioners were candidates under section 13 a of the Act since they were duly numberinated candidates. it has been urged that the requirement that the numberination paper for the presidential election should be subscribed by ten electors as proposers and ten electors as seconders companytained in Section 5B 1 a , as it stood prior to the amendment introduced in the said provision by the Ordinance and the Amendment Act and the requirement introduced in the said provision y the Ordinance and the Amendment Act that the numberination paper should be subscribed by fifty electors as proposers and fifty electors as seconders, is unconstitutional and void. The submission of the petitioners is that they are entitled to challenge the validity of the provisions companytained in Section 5B, as t stood prior to the amendments introduced by the Ordinance and the Amendment Act and also the amendment made therein by the Ordinance and the Amendment Act in the election petition and that such a challenge is number barred. It has been companytended that the earlier decisions negativing the challenge to the validity of Section 5B did number take into companysideration the provision regarding secrecy of ballot companytained in Article 55 3 of the Constitution and that in view of the said provision in the Constitution the earlier requirement that the numberination paper must be subscribed by ten proposers and ten seconders and the present requirement about subscription by fifty proposers and fifty seconders is unconstitutional. It is urged that if the said provision in Section 5B is held to be unconstitutional then the petitioners must be regarded as duly numberinated candidates and they are entitled to file this Election petition. In view of Section 14A of the Act an election petition calling in question a presidential election can be resented either by a candidate at such election or twenty or more electors joined together as petitioners are claiming the right to file the petition on the basis that they were candidates at the election. The said claim of the petitioners has to be examined on the basis of the definition of candidate as companytained in Section 13 a of the Act whereunder a person who has been or claims to have been duly numberinated as a candidate at an election is to be treated as a candidate. The question for companysideration is whether the petitioners, whose numberination papers did number satisfy the requirements of Section 5B 1 a of the Act, can be regarded as persons who had been numberinated as a candidate at an election is to be treated as a candidate at an election is to be treated as a candidate. The question for companysideration is whether the petitioners, whose numberination papers did number satisfy the requirements of Section 5B 1 a of the Act, can be regarded as persons who had been numberinated or can claim to have been duly numberinated as candidate at the election in question. In Charan Lal Sahu vs. Neelam Sanjeeva Reddy Supra, this Court has dealt with the question of locus standi of the petitioner petitioner No.1 herein who had filed the Election Petition. In that case also the Election petition was filed by a person whose numberination was number subscribed by the requisite number of proposers and seconder as per the provisions companytained in Section 5B 1 a applicable at that time. This Court held that the petitioner had numberlocus standi to challenge the election and to maintain the petition. After stating that the petitioner had admitted in the petition that he was number numberinated as provided by Section 5B of the Act and had also number deposited the sum of money as required by Section 5C of the Act, the Court has held- Thus, on the very admissions in the petition or plaint, the petitioner was number a candidate either duly numberinated or one who companyld claim to be son numberinated. pp. 5-6 Again in Charan Lal Sahu Ors. vs. Giani Zail Singh Anr., 1984 2 SCR 6, it was found that the numberination papers filed of the two petitioners who had filed the election petition were number subscribed by ten electors as proposers and ten electors as seconders. It was companytended on behalf of the petitioners that even if it is held that they were number duly numberinated as candidates, the election petitions companyld number be dismissed on that ground since they were claiming to have been duly numberinated as candidates. Rejecting the said companytention this Court said- It is true that in the matter of claim to candidacy, a person who claims to have been duly numberinated is on par with a person who, in fact, was duly numberinated. But the claim to have been duly numberinated cannot be made by a person whose numberination paper does number companyply with the mandatory requirement of Section 5B 1 a of the Act. That is to say, a person whose numberination paper, admittedly, was number subscribed by the requisite number of electors as proposers and seconders cannot claim that he was duly numberinated. Such a claim can only be made by a person whose electors as proposers and seconders cannot claim that he was duly numberinated. Such a claim can only be made by a person who can show that his numberination paper companyformed to the provisions of Section 5B and yet it was the Returning Officer rejects a numberination paper on the ground that one of the ten subscribers who had proposed the numberination is number an elector the petitioner can claim to have been duly numberinated if he proves that the said proposer was in fact an elector. Thus, the occasion for a person to make a claim that he was duly numberinated can arise only if his numberination paper companyplies with the statutory requirements which govern the filing of numberination papers and number otherwise. The claim that he was duly numberinated necessarily implies and involves the claim that his numberination paper companyformed to the requirements of the statute. Therefore, a companytestant whose numberination paper is number subscribed by at least ten electors as proposers and ten electors as seconders, as numberinated, any more than a companytestant who had number subscribed his assent to his own numberination can. The claim of a companytestant that he was duly numberinated must arise out of his companypliance with the provisions of the Act. It cannot arise out of the violation of the act. Otherwise, a person who had number filed any numberination paper at all but who had only informed the Returning Officer orally that he desired to companytest the election companyld also companytend that he claims to have been duly been duly numberinated as a candidate. pp.- 15-16 In Mithilesh Kumar Sinha etc. vs. Returning Officer for Presidential Election Ors., 1992 1 SCR Supp. 651, the same question arose with regard to the election petition filed by petitioner No. 2 whose numberination paper had been rejected on the ground that it was number subscribed by the requisite number of proposers and seconders since some of the proposers and seconders who had subscribed to the numberination paper of petitioner No. 2 had earlier subscribed to the numberination paper of another candidate and the subsequent signatures of such proposers and seconders had become Inoperative on the numberination paper of petitioner No.2. The Election petition filed by Petitioner No. 2 was rejected by this Court on the ground that since the numberination paper of petitioner No.2. did number companyply with the mandatory requirements of Section 5B 1 a he had numberlocus standi to file the petition. It has been held- To be entitled to present an election petition calling in question an election the petitioner should have been a candidate at such election within the meaning of Section 13 a for which he should have been duly numberinated as a candidate and this he cannot claim unless the mandatory requirements of Section 5B 1 a and Section 5C were companyplied with by him. Where on undisputed facts there was numbercompanypliance of any of these mandatory requirements for a valid numberination, the petitioner was number a candidate within the meaning of Section 13 a and, therefore, number companypetent according to Section 14A to present the petition. It is also settled by the decisions of this Court that in order to have the requisite locus standi as a candidate within the meaning of section 13 a for being entitled to present such an election petition in accordance with Section 14A of the Act the petitioner must be duly numberinated as a candidate in accordance with Section 5B 1 a and Section 5C. Unless it is so the petitioner cannot even claim to have been duly numberinated as a candidate at the election as required by Section 13 a . pp. 685-686 In view of the decisions referred to above, it must be held that neither of the petitioners was a candidate as the said expression is defined in Section 2 d of the Act since neither of them had been duly numberinated number companyld he claim to have been numberinated as a candidate inasmuch as the numberination papers filed by both of them did number companyply with the mandatory requirements of Section 5B 1 a of the Act and numberination paper of petitioner No.2. was filed without companyplying with the requirements of Section 5B 2 of the Act. On that view it must be held that neither of the petitioners has the locus standi to maintain the petition. As regards the submission urged on behalf of the petitioners regarding the Validity of the provisions of Sections 5B and 5C as they stood prior to June 5, 1997, it may be stated that the sad provisions has been upheld by this Court in Charan Lal Sahu VS. Shri Fakruddin Ali Ahmed Ors. AIR 1975 SC 1288 Charan Lal Sahu vs. Neelam Sanjeeva Reddy supra and Charan lal sahu vs. Giani Zail Singh supra. Petitioner No. 1 was a party to all these decisions. The challenge to the validity of the amendments introduced by the Ordinance and the Amendment Act has been negatived by this companyrt in the three writ petitions referred to above, two out of which were filed by petitioner No.1. The petitioners have urged that in this petition the challenge to the validity of Section 5B is based on the ground that it violates the principle of secrecy of ballot incorporated in Article 55 3 of the Constitution and that this ground has number been companysidered in the earlier decisions. We do number find any merit in this companytention. The requirement in Section 5B 1 a about the numberination paper being subscribed by a particular number of electors as proposers and seconders does number, in any way, involve the infringement of the secrecy of ballot at the election inasmuch as the elector who has subscribed the numberination paper of a person as a proposer or as a seconder is free to cast his vote in favour of any candidate and is number bound to vote for the person whose numberination paper he has subscribed as a proposer or seconder. The identity of the candidate in whose favour he has cast his vote is number to be disclosed. In order to get over the requirements of Section 5B 1 a of the Act petitioner No.1 has submitted that his numberination paper was subscribed by seven members of the Legislative Assembly of Uttar Pradesh as proposers and six members of the said Assembly as seconders. It has been pointed out that as per the statement of value of votes of elected members of the State Legislative Assemblies issued as per the provisions of Article 55 2 of the Constitution value of vote of a member of the Legislative Assembly of Uttar Pradesh is 208 while the value of a member of the Legislative Assembly of Arunachal Pradesh is 8. The submission is that the companybined value of the votes of the seven members of the Legislative Assembly of Uttar Pradesh who had subscribed the numberination paper of petitioner No. 1 as proposers and six members who had subscribed as seconders is much more than the value of votes of 50 members of the Legislative Assembly of Arunachal Pradesh and, therefore, the numberination paper of petition No. 1 must be treated as having been subscribed by 50 electors as proposers and seconders. Under Section 5B 1 a what is required is that the numberination paper must be subscribed by 50 electors as proposers and by 50 electors as subscribers. In relation to Presidential election the expression elector is defined in Section 2 d of the Act to mean a member of the electoral companylege referred to in Article 54. Under Article 54 every elected member of the Legislative Assembly of the State is a member of the electoral companylege for election of the President. In other words, each member of the Legislative Assembly of a State is an elector under Section 2 d of the Act to mean a member of the electoral companylege referred to in Article 54. Under Article 54 every elected member of the Legislative Assembly of the State is a member of the electoral companylege for election of the President. In other words, each member of the Legislative Assembly of a State is an elector under Section 2 d of the Act. For the purpose of Section 5B 1 a of the Act the numberination paper must be subscribed by the requisite number of members of the State Legislative Assemblies or parliament as proposers and seconders and the value of the votes of the member has numberbearing on the said requirement laid down in Section 5B 1 a of the Act. For the reasons aforementioned, it must be held that since the numberination papers of the petitioners did number fulfil the mandatory requirements of Section 5B 1 a of the Act and Petitioner No. 2 also failed to companyply with the requirements of Section 5B 2 of the Act, the petitioners were number duly numberinated as candidate at the election and they cannot also claim to be duly numberinated as candidate at the election and they cannot also claim to be duly numberinated as candidate at the election and they cannot also claim to be duly numberinated as candidate at the election and they cannot also claim to be duly numberinated as candidate at the election and they cannot be regard as candidate under Section 13 a of the Act. The preliminary objection raised by respondent No. 1 that the petitioners cannot maintain the election petition must, therefore, be accepted and the election petition must be dismissed on this ground alone. Before we companyclude, we would like to advert to an aspect which cannot be ignored. Before filling this election petition, petitioner number 1 had earlier filed three election petition challenging the election of the returned candidates in the presidential elections held in years 1974, 1977 and 1982. All these election petition were dismissed on the ground that petitioner had numberlocus standi to maintain the election petition. See Charan Lal Sahu vs. Shri Fakruddin Ali Ahmed Ors. supra Charan Lal Sahu vs. Shri Neelam Sanjeeva Reddy and Charan Lal Sahu vs. Gaini Zail Singh supra. Similarly petitioner No.2 had earlier filed two election petitions challenging the election of the returned candidates in the presidential elections challenging the election of the returned candidates in the presidential elections held in the years 1987 and 1992. Both these election petitions were dismissed on the ground that petitioner had numberlocus standi to maintain the Election petition. See Mithilesh Kumar vs. Sri R. Venkataraman Ors. 1988 1 SCR 525 and Mithilesh Kumar Sinha vs Returning Officer for Presidential Election supra . In Charan Lal Sahu vs. Giani Zail Singh Supra this Court, while referring to the Election petition fled by petitioner No.1. had observed It is regrettable that election petition challenging the election to the high office of the president of India should be filed in a fashion as cavalier as the one which characterises these two petitions. The petitions have an extempore appearance and number even a second look, leave alone a second thought appears to have given to the manner of drafting these petitions or to the companytentions raised therein. In order to discourage the filing of such petitions, we would have been justified in passing a heavy order of companyts against the two petitions, we would have been justified in passing a heavy order of companyts against the two petitioners. But that is likely to create a needless misconception that this Court, which has been companystituted by the Act as the exclusive forum for deciding election petition whereby a presidential or vice-presidential election is challenged, is loathe to entertain such petitions. It is of the essence of the functioning of a democracy that election to public offices must be open to the scrutiny of an independent tribunal. A heavy order of companyts in these two petitions, howsoever justified on their own facts should number result in nipping in the bud a well-founded claim on a future occasion. Therefore, we refrain from passing any order of companyts and , instead, express our disapproval of the light-hearted and indifferent manner in which these two petitions are drafted and filed.1.7 In Mithilesh Kumar vs. Sri R. Venkataraman Ors. supra, this Court had observed While we expect every companyscientious citizen eligible to file an election petition to question an election on the grounds prescribed by the Act, we do number wish that any petitioner should make use of this Court as a forum to file a petition without giving adequate thought to its companytents and also the provisions of law governing the case merely to seek some chap publicity. We regret to say that seeing ones name in newspapers everyday has lately become the worst intoxicant and the number of people who have become victims of it is increasing day by day. .537 In Mithilesh Kumar Sinha. vs. Returning Officer for presidential Election it was observed by this Court as follows Experience has shown that the solemnity and significance attaching to such petitions has been reduced to a farce by the cavalier fashion in which resort is had to this remedy. The mere fact that the entire gamut of both these petitions is fully companyered by several earlier decisions of this Court to some of which these very petitioners were parties shows that the existing provisions are inadequate to prevent such abuse of the process of law. p.698 We find that these observations have had numbereffect. This election petition which has been jointly filed by the two petitioners shows numberimprovement. It suffers from the same defects as the earlier petitions filed by the petitioners. It seems that the petitioners are obsessed with a desire that they should find a place in some Book of Records. | 4 |
Judgment of the Court (Second Chamber) of 12 July 1979. - Maggi GmbH v Hauptzollamt Münster. - Reference for a preliminary ruling: Finanzgericht Münster - Germany. - Inward processing - Monetary compensatory amounts. - Case 260/78.
European Court reports 1979 Page 02693
Greek special edition Page 00309
Summary
Parties
Subject of the case
Grounds
Decision on costs
Operative part
Keywords
AGRICULTURE - MONETARY COMPENSATORY AMOUNTS - APPLICATION BY THE MEMBER STATES - EXEMPTION UNDER ARRANGEMENTS CONCERNING INWARD PROCESSING TRAFFIC - NOT PERMISSIBLE
( REGULATION NO 1380/75 OF THE COMMISSION )
Summary
THE PROVISIONS OF REGULATION NO 1380/75 OF THE COMMISSION LAYING DOWN DETAILED RULES FOR THE APPLICATION OF MONETARY COMPENSATORY AMOUNTS MUST BE INTERPRETED AS MEANING THAT A MEMBER STATE MAY NOT APPLY ITS NATIONAL RULES IN THE MATTER OF INWARD PROCESSING TRAFFIC SO AS TO EXEMPT FROM MONETARY COMPENSATION , IN INTRA-COMMUNITY TRADE , GOODS IMPORTED FROM ANOTHER MEMBER STATE IN WHICH THEY ARE IN FREE CIRCULATION .
Parties
IN CASE 260/78
REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE FINANZGERICHT ( FINANCE COURT ) MUNSTER FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN
MAGGI GMBH
AND
HAUPTZOLLAMT MUNSTER
WITH
OBERFINANZDIREKTION ( REGIONAL FINANCE BOARD ) MUNSTER , INTERVENING ,
Subject of the case
ON THE QUESTION WHETHER AN EXEMPTION FROM MONETARY COMPENSATORY AMOUNTS GRANTED BY A MEMBER STATE WITHIN THE CONTEXT OF INWARD PROCESSING ARRANGEMENTS ON GOODS IN FREE CIRCULATION IN ANOTHER MEMBER STATE IS COMPATIBLE WITH COMMUNITY LAW ,
Grounds
1 BY AN ORDER OF 6 OCTOBER 1978 , WHICH WAS RECEIVED AT THE COURT OF JUSTICE ON 13 DECEMBER 1978 , THE FINANZGERICHT MUNSTER SUBMITTED , UNDER ARTICLE 177 OF THE EEC TREATY , THE FOLLOWING QUESTIONS FOR A PRELIMINARY RULING :
' ' 1 . ON 8 SEPTEMBER 1975 WAS IT IN PRINCIPLE COMPATIBLE WITH COMMUNITY LAW , AND IN PARTICULAR WITH THE PROVISIONS OF REGULATION ( EEC ) NO 974/71 OF THE COUNCIL OF 12 MAY 1971 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1971 ( I ), P . 257 ) AND REGULATION ( EEC ) NO 1380/75 OF THE COMMISSION OF 29 MAY 1975 ( OFFICIAL JOURNAL , L 139 , P . 37 ) THAT A MEMBER STATE OF THE COMMUNITY AS ORIGINALLY CONSTITUTED , IN INTRA-COMMUNITY TRADE AND ON THE BASIS OF ITS NATIONAL LAW CONCERNING INWARD PROCESSING ARRANGEMENTS ( IN THE PRESENT CASE , ARTICLE 47 ET SEQ . OF THE ZOLLGESETZ ( CUSTOMS LAW ) OF THE FEDERAL REPUBLIC OF GERMANY OF 1961 IN CONJUNCTION WITH ARTICLE 2 ( 1 ) OF THE ABSCHOPFUNGSERHEBUNGSGESETZ ( LAW RELATING TO THE IMPOSITION OF LEVIES ) OF 1962 ), SHOULD EXEMPT FROM PAYMENT OF THE MONETARY COMPENSATORY AMOUNT GOODS WHICH HAD BEEN IN FREE CIRCULATION IN ANOTHER MEMBER STATE AND ON WHICH MONETARY COMPENSATORY AMOUNTS ARE TO BE LEVIED ON IMPORT UNDER COMMUNITY LAW , SUBJECT TO THE CONDITION THAT THE GOODS WERE NOT TO BE PUT INTO FREE CIRCULATION IN THE IMPORTING STATE BUT WERE TO BE PROCESSED UNDER THE SURVEILLANCE OF THE CUSTOMS AND RE-EXPORTED AS CONSTITUENT PARTS OF OTHER GOODS TO THE COUNTRY OF ORIGIN OR TO ANOTHER MEMBER STATE?
2 . IN THE EVENT OF QUESTION 1 BEING ANSWERED IN THE AFFIRMATIVE : WAS THE EXEMPTION FROM THE LEVYING OF THE MONETARY COMPENSATORY AMOUNT ALSO COMPATIBLE WITH COMMUNITY LAW WHERE NATIONAL LAW ( IN THIS CASE , ARTICLE 47 ( 2 ) OF THE GERMAN CUSTOMS LAW ) MADE IT DEPENDENT UPON A PRIOR ASSESSMENT BY THE CUSTOMS AUTHORITY OF THE RELIABILITY OF THE PROCESSOR?
3 . IN THE EVENT OF QUESTIONS 1 AND 2 BEING ANSWERED IN THE AFFIRMATIVE : WAS THE EXEMPTION FROM THE LEVYING OF THE MONETARY COMPENSATORY AMOUNT ALSO COMPATIBLE WITH COMMUNITY LAW WHERE NATIONAL LAW ( IN THE PRESENT CASE , ARTICLE 48 ( 2 ) OF THE GERMAN CUSTOMS LAW ) MADE IT DEPENDENT UPON A PRIOR BALANCING BY THE CUSTOMS AUTHORITIES OF THE INTERESTS OF THE PROCESSOR AGAINST THE INTERESTS OF THE DOMESTIC MANUFACTURER IN THE COUNTRY OF IMPORTATION?
' '
2 THOSE QUESTIONS WERE SUBMITTED IN THE COURSE OF AN ACTION BETWEEN THE GERMAN CUSTOMS AUTHORITIES AND A GERMAN UNDERTAKING CONCERNING THE REFUSAL BY THE FORMER TO APPLY INWARD PROCESSING ARRANGEMENTS TO CERTAIN QUANTITIES OF SUGAR IMPORTED FROM FRANCE FOR USE IN THE MANUFACTURE OF SOUPS INTENDED FOR EXPORT TO FRANCE AND BELGIUM . THE APPLICATION OF INWARD PROCESSING ARRANGEMENTS HAD BEEN REQUESTED IN ORDER TO OBTAIN EXEMPTION FOR THE IMPORTED SUGAR FROM MONETARY COMPENSATORY AMOUNTS ON IMPORTATION IN VIEW OF THE FACT THAT THE FINISHED PRODUCT DID NOT BENEFIT FROM THE GRANT OF MONETARY COMPENSATION ON EXPORTATION .
3 IN ORDER TO REPLY TO THE QUESTION SUBMITTED IT IS NECESSARY FIRST OF ALL TO CONSIDER THE PROVISIONS OF REGULATION ( EEC ) NO 1380/75 OF THE COMMISSION OF 29 MAY 1975 LAYING DOWN DETAILED RULES FOR THE APPLICATION OF MONETARY COMPENSATORY AMOUNTS ( OFFICIAL JOURNAL 1975 , L 139 , P . 37 ) WHICH , PURSUANT TO ARTICLE 21 THEREOF , ENTERED INTO FORCE ON 1 JUNE 1975 .
4 TITLE II ( ARTICLE 6 ) OF THAT REGULATION LAYS DOWN DETAILED RULES FOR THE APPLICATION OF MONETARY COMPENSATORY AMOUNTS IN TRADE WITH THIRD COUNTRIES AND TITLE III ( ARTICLES 7 TO 15 ) LAYS DOWN DETAILED RULES FOR THEIR APPLICATION IN INTRA-COMMUNITY TRADE . WHILST ARTICLE 6 PROVIDES THAT THE PROVISIONS CONCERNING THE CHARGING OF CUSTOMS DUTIES SHALL APPLY TO MONETARY COMPENSATORY AMOUNTS , THERE IS NO PROVISION OF THAT NATURE IN TITLE III . ONLY CERTAIN SPECIFIC CUSTOMS PROVISIONS ARE APPLICABLE TO INTRA-COMMUNITY TRADE AND THE RULES RELATING TO INWARD PROCESSING ARRANGEMENTS ARE NOT AMONGST THEM .
5 THIS INTERPRETATION OF THE WORDING OF THE PROVISIONS IS IN ACCORDANCE WITH THE INTENTION UNDERLYING THEM . THE REPRESENTATIVE OF THE COMMISSION EXPLAINED IN THE COURSE OF THE PROCEDURE BEFORE THE COURT THAT , AFTER THE ACHIEVEMENT OF THE CUSTOMS UNION HAD REMOVED THE JUSTIFICATION FOR INWARD PROCESSING ARRANGEMENTS IN INTRA-COMMUNITY TRADE , THE COMMISSION WISHED TO ENSURE THAT THE ARRANGEMENTS WERE NOT RE-ESTABLISHED WHEN THE SYSTEM OF MONETARY COMPENSATORY AMOUNTS WAS INTRODUCED . FURTHERMORE , IT IS CLEAR FROM ARTICLE 2 OF COUNCIL DIRECTIVE NO 69/73 OF 4 MARCH 1969 ON THE HARMONIZATION OF PROVISIONS LAID DOWN BY LAW , REGULATION OR ADMINISTRATIVE ACTION IN RESPECT OF INWARD PROCESSING ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1969 ( I ), P . 75 THAT THOSE ARRANGEMENTS DO NOT APPLY TO GOODS WHICH ARE IN FREE CIRCULATION WITHIN THE MEMBER STATES . IT WOULD THUS HAVE BEEN NECESSARY TO ENACT SPECIFIC PROVISIONS IF IT HAD BEEN INTENDED TO RE-INTRODUCE THE ARRANGEMENTS IN THE CONTEXT OF THE SYSTEM OF MONETARY COMPENSATION .
6 THE COMMISSION ALSO POINTED OUT THAT THERE IS NO REAL ECONOMIC NECESSITY TO EXEMPT THE IMPORTER FROM MONETARY COMPENSATORY AMOUNTS IN CIRCUMSTANCES SUCH AS THOSE IN THE PRESENT CASE SINCE THE COMMISSION , AS A MATTER OF POLICY , ALSO APPLIES THE MONETARY COMPENSATION ARRANGEMENTS TO DERIVED PRODUCTS WHERE THE PROPORTION OF RAW MATERIALS COVERED BY THAT SYSTEM EXCEEDS A REASONABLE LEVEL .
7 IN THOSE CIRCUMSTANCES THE REPLY TO THE FIRST QUESTION REFERRED TO THE COURT SHOULD BE THAT THE PROVISIONS OF REGULATION NO 1380/75 OF THE COMMISSION OF 29 MAY 1975 LAYING DOWN DETAILED RULES FOR THE APPLICATION OF MONETARY COMPENSATORY AMOUNTS MUST BE INTERPRETED AS MEANING THAT A MEMBER STATE MAY NOT APPLY ITS NATIONAL RULES IN THE MATTER OF INWARD PROCESSING TRAFFIC SO AS TO EXEMPT FROM MONETARY COMPENSATION , IN INTRA-COMMUNITY TRADE , GOODS IMPORTED FROM ANOTHER MEMBER STATE IN WHICH THEY ARE IN FREE CIRCULATION .
8 IN VIEW OF THAT ANSWER TO THE FIRST QUESTION IT IS UNNECESSARY TO REPLY TO THE SECOND AND THIRD QUESTIONS .
Decision on costs
COSTS
9 THE COSTS INCURRED BY THE COMMISSION OF THE EUROPEAN COMMUNITIES , WHICH HAS SUBMITTED OBSERVATIONS TO THE COURT , ARE NOT RECOVERABLE ; SINCE 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 NATIONAL COURT , THE DECISION AS TO COSTS IS A MATTER FOR THAT COURT .
Operative part
ON THOSE GROUNDS ,
THE COURT ( SECOND CHAMBER ),
IN ANSWER TO THE QUESTIONS SUBMITTED TO IT BY THE FINANZGERICHT MUNSTER BY AN ORDER OF 6 OCTOBER 1978 , HEREBY RULES :
THE PROVISIONS OF REGULATION NO 1380/75 OF THE COMMISSION OF 29 MAY 1975 LAYING DOWN DETAILED RULES FOR THE APPLICATION OF MONETARY COMPENSATORY AMOUNTS MUST BE INTERPRETED AS MEANING THAT A MEMBER STATE MAY NOT APPLY ITS NATIONAL RULES IN THE MATTER OF INWARD PROCESSING TRAFFIC SO AS TO EXEMPT FROM MONETARY COMPENSATION , IN INTRA-COMMUNITY TRADE , GOODS IMPORTED FROM ANOTHER MEMBER STATE IN WHICH THEY ARE IN FREE CIRCULATION . | 5 |
FIFTH SECTION
CASE OF KRYUKOV v. UKRAINE (VI)
(Application no. 53249/07)
JUDGMENT
STRASBOURG
21 December 2010
This judgment is final but it may be subject to editorial revision.
In the case of Kryukov v. Ukraine (VI),
The European Court of Human Rights (Fifth Section), sitting as a Committee composed of:
Rait Maruste, President,Mirjana Lazarova Trajkovska,Zdravka Kalaydjieva, judges,and Stephen Phillips, Deputy Section Registrar,
Having deliberated in private on 30 November 2010,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 53249/07) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Ukrainian national, Mr Sergey Aleksandrovich Kryukov (“the applicant”), on 10 November 2007.
2. The Ukrainian Government (“the Government”) were represented by their Agent, Mr Y. Zaytsev, of the Ministry of Justice.
3. On 19 October 2009 the President of the Fifth Section decided to give notice of the application to the Government. In accordance with Protocol No. 14, the application was allocated to a Committee of three Judges.
THE FACTS
THE CIRCUMSTANCES OF THE CASE
4. The applicant was born in 1951 and lives in Melitopol.
A. The first set of proceedings
5. On 23 October 1995 Mrs P., the applicant's former wife, instituted divorce proceedings in the Melitopol Court against the applicant. She also sought separation of their property.
6. On 19 March 1996 the applicant lodged a counter-claim.
7. On 10 January 1997 the court disjoined the divorce proceedings from the proceedings concerning separation of property.
8. By a judgment of 15 May 2002, the court allowed the applicant's counter-claim in part and ordered the separation of property comprising of various household items (furniture, kitchen utensils, etc.).
9. On 25 July 2002 the Zaporizhzhya Regional Court of Appeal upheld the above judgment.
10. On 16 October 2002 the applicant lodged an appeal in cassation against the above decisions and on 11 November 2002 he requested the courts to renew the procedural time-limit for lodging it. On 2 December 2002 the Melitopol Court rejected the applicant's request as unsubstantiated. On 24 March 2003 the Zaporizhzhya Court of Appeal upheld the above decision. On 19 August 2004 the Supreme Court quashed the above decisions as unsubstantiated and on 27 September 2004 the Melitopol Court renewed the applicant the time-limit for lodging his appeal in cassation.
11. On 24 March 2007 the Supreme Court forwarded the applicant's appeal in cassation to the Odessa Regional Court of Appeal, which, acting as a court of cassation, rejected it as unsubstantiated on 7 May 2007.
12. According to the Government, in the course of the proceedings the applicant amended his counter-claim on several occasions. The courts adjourned eight hearings following his requests or due to his failure to appear. Some nine hearings were further adjourned following the requests of Mrs P., her failure to appear or due to the illness of a judge.
B. The second set of proceedings
13. The applicant stated that in September 2005 he had been deprived of a flat he had lived in together with Mrs P. The applicant instituted court proceedings against Mrs P. concerning his right to live in the flat. He has not provided any information as to their outcome.
THE LAW
I. THE COMPLAINT ABOUT THE LENGTH OF PROCEEDINGS
14. The applicant complained that the length of the first set of proceedings had been incompatible with the “reasonable time” requirement, laid down in Article 6 § 1 of the Convention, which reads, in so far as relevant, as follows:
“In the determination of his civil rights and obligations ..., everyone is entitled to a ... hearing within a reasonable time by [a] ... tribunal...”
15. The Government contested that argument.
16. The period to be taken into consideration began only on 11 September 1997, when the recognition by Ukraine of the right of individual petition took effect. However, in assessing the reasonableness of the time that elapsed after that date, account must be taken of the state of proceedings at the time. The period in question ended on 7 May 2007. The proceedings thus lasted for about nine years and eight months before three levels of jurisdiction.
A. Admissibility
17. The Court notes that the 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
18. The Court reiterates that the reasonableness of the length of proceedings must be assessed in the light of the circumstances of the case and with reference to the following criteria: the complexity of the case, the conduct of the applicant and the relevant authorities and what was at stake for the applicant in the dispute (see, among many other authorities, Frydlender v. France [GC], no. 30979/96, § 43, ECHR 2000-VII).
19. The Court considers that the complexity of the case and the conduct of the applicant, who somewhat contributed to the length of the proceedings (see paragraph 12 above), cannot explain their overall length. On the other hand, the Court finds that the protraction of the proceedings was mainly caused by the lengthy consideration of the case by the Melitopol Court (see paragraphs 7-8 above) and by the Supreme Court (see paragraphs 10-11 above), for which the Government did not provide plausible explanation. Furthermore, the Government did not explain and did not provide any supporting documents to demonstrate that the applicant's requests for the adjournment of some of the hearings caused lengthy delays.
20. 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, for instance, Frydlender v. France, cited above; Pavlyulynets v. Ukraine, no. 70767/01, § 53, 6 September 2005; and Moroz and Others v. Ukraine, no. 36545/02, § 62, 21 December 2006).
21. Having examined all the material submitted to it, the Court considers that the Government have not put forward any fact or argument capable of persuading it to reach a different conclusion in the present case. Having regard to its case-law on the subject, the Court considers that in the instant case the length of the proceedings was excessive and failed to meet the “reasonable time” requirement. There has accordingly been a breach of Article 6 § 1.
II. REMAININIG COMPLAINTS
22. The applicant complained under Articles 6 § 1 and 13 of the Convention about the outcome of the proceedings. He further complained under Article 8 of the Convention that he had been unlawfully deprived of the flat. Relying on Article 1 of Protocol No. 1, the applicant alleged that the separation of the property jointly owned by him and his former wife had not been in accordance with the law.
23. Having carefully examined the applicant's submissions in the light of all the material in its possession and in so far as the matters complained of are within its competence, the Court finds that they do not disclose any appearance of a violation of the rights and freedoms set out in the Convention.
24. It follows that this part of the application must be declared inadmissible as being manifestly ill-founded, pursuant to Article 35 §§ 3 and 4 of the Convention.
III. 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 submitted his claims for just satisfaction out of time. Accordingly, the Court considers that there is no call to award him any sum on that account.
FOR THESE REASONS, THE COURT UNANIMOUSLY
1. Declares the complaint under Article 6 § 1 of the Convention about the length of the first set of proceedings admissible and the remaining complaints inadmissible;
2. Holds that there has been a violation of Article 6 § 1 of the Convention.
Done in English, and notified in writing on 21 December 2010, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Stephen PhillipsRait MarusteDeputy RegistrarPresident
| 0 |
IN
THE SUPREME COURT OF JUDICATURE
CHANF
97/0181/3
IN
THE COURT OF APPEAL (CIVIL DIVISION)
ON
APPEAL FROM THE HIGH COURT OF JUSTICE
(MR
JUSTICE LLOYD
)
Royal
Courts of Justice
Strand
London
WC2
Wednesday,
29 July 1998
B
e f o r e:
LADY
JUSTICE BUTLER-SLOSS
LORD
JUSTICE THORPE
LORD
JUSTICE CHADWICK
-
- - - - -
HELEN
CARR-GLYNN
Plaintiff/Appellant
-
v -
FREARSONS
(a firm)
Defendant/Respondent
-
- - - - -
(Computer
Aided Transcript of the Palantype Notes of
Smith
Bernal Reporting Limited, 180 Fleet Street,
London
EC4A 2HD
Tel:
0171 831 3183
Official
Shorthand Writers to the Court)
-
- - - - -
MR
G ZELIN
(Instructed by Wannop & Fox, 30305 Chichester South Pallant House,
Chichester, West Sussex (London Agents: Kingsford Stacey, London, WC2A 3UB)
appeared on behalf of the Appellant
MR
GUY MANSFIELD QC & MR M HUBBARD
(Instructed by Browne Jacobson, Nottingham, NG1 7B5) appeared on behalf of the
Respondent
-
- - - - -
J
U D G M E N T
(As
approved by the Court
)
-
- - - - -
©Crown
Copyright
LORD
JUSTICE CHADWICK: The appellant, Mrs Helen Carr-Glynn, is the niece of the
late Mrs Nellie Larder (“the testatrix”) who died on 11 August
1993. The respondents are a firm of solicitors whom the testatrix instructed to
prepare her last will, which she executed on 9 February 1989. By clause 2(b) of
that will the testatrix gave to her niece all her share or interest in the
property known as “Homelands”, Burley, Hampshire. At the time when
the will was prepared and executed “Homelands” was held by the
testatrix and her nephew, the appellant’s brother Mr Peter Burchell, as
beneficial joint tenants. The testatrix died without having severed the joint
tenancy. On her death the property vested in the surviving joint tenant.
Accordingly, the gift in clause 2(b) could not take effect. The share or
interest in the property to which the testatrix had been entitled during her
lifetime did not form part of her estate. The appellant’s expectation as
a beneficiary under the 1989 will was disappointed.
The
appellant blames the respondents, as the solicitors who prepared the 1989 will,
for the loss of her expectation. She asserts, in effect, that it was their
responsibility to ensure that she received the benefit which the testatrix
intended that she should receive. In the present action she sought damages
against the solicitors in respect of their alleged breach of duty. The action
was tried before Mr Justice Lloyd. His judgment is reported at [1997] 2 All ER
614. He held that, where a solicitor’s breach of his duty of care to a
testator in preparing her will resulted in a loss to the estate, the solicitor
owed no duty of care to an intended beneficiary under the will whose gift was
thereby rendered ineffective. He held, also, that even if such a duty had been
owed, the plaintiff had not established on the facts before him that there had
been a breach of that duty. By an order made on 17 December 1996 he dismissed
the action. The appellant’s appeal from that order is now before this
Court.
The
1989 will was admitted to probate on 20 September 1993. The Judge found as a
fact (i) that, at the time when she executed the 1989 will, the testatrix
intended that the appellant should receive a one half share in the property
“Homelands” on her death, (ii) that she retained that intention
until her death and (iii) that, if she had been advised that it was necessary
to serve a notice of severance, she would have done so. Those findings are not
challenged by the respondents on this appeal. The Judge found, also, that the
manner in which the solicitors had dealt with the matter (through one of their
then partners, Miss Turner) was “entirely reasonable and proper”.
That finding is challenged by the appellant. It is convenient to resolve that
issue before examining the questions of law raised by this appeal.
The
appellant and her brother are the children of the testatrix’s sister
Jessie. The Judge found that the testatrix had bought “Homelands”
in 1953 as a home for Jessie and the two children. By a deed of gift dated 12
December 1969 and made between the testatrix and her nephew, Peter, the
testatrix transferred the property into their joint names to hold as beneficial
joint tenants. The defendant firm (but not Miss Turner) acted for the testatrix
in the purchase and in the transfer. Miss Turner first acted for the testatrix
in the preparation of a will which was executed on 25 October 1983. It seems
likely that Miss Turner did not then know of the deed of gift. By clause 2(b)
of the 1983 will the testatrix left “my property known as
‘Homelands’” to Peter. By clause 2(c) of the 1983 will the
testatrix gave to her niece, the appellant, all monies standing to the credit
of any deposit account in her name at the Skegness Branch of Barclays Bank.
The
testatrix came in to see Miss Turner by appointment on 2 February 1989. She
gave instructions for the preparation of a new will, which Miss Turner noted by
reference to the existing clauses in the 1983 will:
2(b) Mrs
N now has only 1/2 share of “Homelands” and wants to leave this to
niece HELEN CARR GLYN
(c) nephew Frank Newbitt [address] to have Barclays A/c
She
noted, also, that the firm had acted on the transfer of
“Homelands”. The effect of the instructions was that the appellant
was to have the half share in the property instead of the bank accounts.
Miss
Turner prepared the draft will in accordance with the instructions which she
had been given. She wrote to the testatrix on 6 February 1989, inviting her to
call in so that the will could be executed. The letter includes the following
paragraph:
However,
I must mention that I am not entirely sure that the gift of your share or
interest in the property at Burley to your niece will be effective. When I
checked our records I found that we no longer have our file relating to this
matter and the deeds were sent to the National Westminster Bank in March 1970.
From the records which we still have I can confirm that the property is in the
joint names of yourself and your nephew but there are two forms of joint
ownership. One of these would leave you free to dispose of your own half share
of the property in your Will but the other would have the effect that, on your
death, your share would automatically pass to your nephew. If you wish me to
obtain the deeds and check the position then please let me know and I will
prepare the appropriate authority for you and your nephew to sign. I look
forward to hearing from you.
The
testatrix came into her solicitors’ office on 9 February 1989 without
having responded to the suggestion that Miss Turner should check the deeds. She
executed her will in the presence of Miss Turner. Miss Turner’s
attendance note of the visit records:
Mrs
L to get deeds so ownership of “Homelands” can be checked. Pointed
out nephew’s authority would be needed as well as her own.
Following
the visit Miss Turner sent the testatrix a copy of the will which she had
executed, together with a note of the firm’s charges. The original of the
1989 will was placed in the firm’s strong room. The covering letter,
dated 9 February 1989, did not refer to the doubt as to the efficacy of the
gift of the share in “Homelands” or to the need to resolve that
doubt. There was no further contact between the testatrix and Miss Turner.
Miss
Turner gave evidence at the trial. It is clear from the witness statement which
she signed on 15 March 1996 that she had no recollection of the two meetings
with the testatrix, which had taken place some seven years earlier, other than
what could be deduced from her attendance notes. That is, of course, not at all
surprising. After referring to the attendance note of 9 February 1989 Miss
Turner said this:
8. From
that I deduce that I again told the testatrix that there was doubt over the
bequest of her half share in the property, “Homelands”, to the
Plaintiff and that the simplest thing would be for her to get hold of the deeds
or copies of them from the National Westminster Bank.
The
Judge made the following finding in relation to the attendance on 9 February
1989, at [1997] 2 All ER 614, 620b-f:
I
find that on 9th February 1989 Miss Turner discussed the position as regards
joint ownership of “Homelands” with the deceased. The explanation
which she gave in her letter of 6th February as to the two types of joint
ownership is reasonably clear as to the difference, I find that she reiterated
this explanation, but also that she mentioned that, if it was indeed a joint
tenancy, it would be possible to change that position so that a half share
could pass under the will. I do not suppose that she went into much in the way
of detail as regards the process of severance, but I find that she told the
deceased that it could be done simply by a letter being written to Peter
Burchell. I find that she again offered to get the deeds from the bank as she
had done in the letter, but the deceased decided she would do that herself. The
deceased was an intelligent woman with experience of business who knew her own
mind. It seems to me that she was perfectly capable of taking and following up
such a decision for herself. . . .
Miss
Turner did not suggest to the deceased that a notice of severance could be sent
anyway, nor did she put a suitable form of letter before the deceased for her
to consider signing. I find that Miss Turner did not advise that Peter
Burchell’s co-operation was necessary to change the position as regards
the joint tenancy, but that she did say his consent would be needed to get the
deeds from the bank. She did not make a diary note to remind the deceased about
the position if she heard no further news from the deceased within any given
time.
The
allegations of negligence on which the appellant relied in support of her claim
may be summarised as follows: (i) that Miss Turner failed to take whatever
steps were necessary to ascertain whether or not the property was held in
beneficial joint tenancy before inviting the testatrix to sign the 1989 will;
(ii) that, by the letter of 6 February 1989, she led the testatrix to believe
that Mr Burchell would need to be party to any document that might be required
in order to make the gift in the will effective; (iii) that Miss Turner ought
to have prepared a notice of severance to be signed by the testatrix at the
time that she executed the will, ought to have ensured that the testatrix did
sign such a notice and ought to have ensured that such notice was served on Mr
Burchell; (iv) that Miss Turner ought not to have allowed or invited the
testatrix to execute her will without first having satisfied herself that all
necessary steps were or would be taken to ensure that the gift of the
testatrix’s share in “Homelands” would be effective; and (v)
that after the execution of the will Miss Turner ought to have taken adequate
steps to ascertain whether or not a notice of severance was necessary.
The
Judge rejected each of those allegations of negligence. The substance of his
decision is found in the following passages of his judgment:
The
explanation which she [Miss Turner] gave in her letter of 6th February as to
the two types of joint ownership is reasonably clear as to the difference. . .
. [1997] 2 All ER 614, 620c.
.
. . Miss Turner correctly drew the deceased’s attention to the
desirability of getting the deeds and offered herself to take the necessary
steps. . . .
ibid,
628h-j.
.
. . I have found that Miss Turner gave proper advice about the position. It
was up to the deceased to decide whether to execute her will at once or to wait
until the position was ascertained. . . .
ibid,
629d.
The
way it was left at the end of 9th February was that it was not for her [Miss
Turner] to get the deeds. . . .
ibid,
629f.
.
. . it was not a case in which Miss Turner had any reason to suppose that there
was particular urgency. I do not see how it could be said that failing to
suggest an immediate notice of severance without waiting to see what the
position was on the deeds is something which no reasonable solicitor could have
done in 1989. . . . Given the absence of any particular reason to suppose
urgency, I cannot see that it was negligent for Miss Turner to take the view
that one should wait and try to find out the position as it was on the deeds
first and then, if it turned out to be a joint tenancy, consider with the
client and advise whether a notice of severance should be given and, if the
client decided in favour, then take the necessary action. . . .
ibid,
629h-630a.
Although
the Judge found that there was no reason to suppose that there was particular
urgency, it is necessary to bear in mind that the testatrix was 81 years of age
when she made her will in 1989. It must have been within the contemplation of a
solicitor who was instructed to make a will for a client of that age that the
matter ought to be dealt with promptly, lest the client’s testamentary
intentions be defeated by events beyond his or her control. Indeed, Miss Turner
acted with commendable speed in preparing the will within a few days of
receiving instructions. The real criticism is that she invited the testatrix to
execute the 1989 will at a time when neither she nor the testatrix knew whether
the gift in clause 2(b) could take effect and in circumstances in which (i)
that doubt could immediately, easily and unilaterally be laid to rest by the
service of a notice of severance and (ii) the position, if the gift did not
take effect, was that the appellant (whom the testatrix clearly intended to
benefit) would be excluded from any participation in the estate by the
alteration to clause 2(c) of the 1983 will.
This
was not, as the Judge recognised (at 629g-h), a case in which the testatrix
would be in any doubt as to whether to sever the joint tenancy on the basis
that she might be the survivor and might therefore lose a real chance of
gaining the whole property. If the testatrix had been faced with the choice
between serving a notice of severance and allowing the gift of her interest in
the property to fail, there was no reason for Miss Turner to think that she
would have had any hesitation in deciding to serve the notice. The Judge found
(at 620g) that the testatrix had some reservations about writing to her nephew;
but that was something which, as Miss Turner had advised her, she would need to
do in order to obtain the deeds from the bank. Although, if the deeds showed a
tenancy in common, it would be unnecessary, thereafter, for the testatrix to
tell her nephew about her intentions, the need, as Miss Turner thought, to
obtain his co-operation in order to examine the deeds would have already
alerted him to the fact that something was afoot. In those circumstances I am
unable to accept that Miss Turner could properly take the view that the
sensible course was to wait to see what the position was on the deeds. There
was nothing to be gained by that course; and a clear risk that the
testatrix’s intentions might be defeated by the delay to which it would
or might give rise. In my view, a competent solicitor, acting reasonably, would
have advised the testatrix that, in order to be sure that her testamentary
wishes should have effect, she should serve a notice of severance in
conjunction with the execution of the will.
Miss
Turner did not give that advice. She did not tell the testatrix that the doubt,
identified in her letter of 6 February 1989, could and should be laid to rest
by the service of a notice of severance before or at the same time as the will
was executed; that there was no need to obtain the deeds before serving the
notice; and that there was nothing to be gained, and potentially much to be
lost, by delay. In my view the Judge was wrong to hold that Miss Turner acted
in a manner which was “entirely reasonable and proper”. I am
satisfied that in failing to advise that a notice of severance ought to be
served immediately she fell below the standard of care to be expected from a
competent solicitor acting reasonably.
The
Judge found that, if that advice had been given, the testatrix would have acted
upon it. As he observed (at 620j) the testatrix had a very specific reason for
wanting to make sure that the gift to the appellant was effective. If notice of
severance had been served the assets in the estate would have included a one
half share in the property “Homelands”. As it is, the assets in the
estate are less than they would have been if the testatrix had been properly
advised. It follows that,
prima
facie
,
the respondents would be liable at the suit of the testatrix’s personal
representatives for the loss caused to her estate by their failure to advise
service of a notice of severance. But, again
prima
facie
,
any recovery by the personal representatives would not benefit the appellant.
The damages would form part of the residue; and she is not the residuary
beneficiary under the 1989 will.
In
those circumstances the appeal raises the question whether, as a matter of law,
the respondents owed to the appellant, who was not their client, a duty to take
care in carrying out the testamentary instructions which they had received from
the testatrix so that the appellant would receive the benefit that the
testatrix intended that she should receive.
The
position of a disappointed beneficiary has received recent consideration by the
House of Lords in White v Jones [1995] 2 AC 207. In that case the
testator’s intentions were frustrated by the solicitors’ delay in
carrying out his instructions to prepare a new will providing for legacies to
his daughters. The testator died before the new will was available for
execution. The House of Lords decided, by a majority, that the assumption of
responsibility by a solicitor to his client, who had given instructions for the
drawing up of a will for execution, extended to an intended beneficiary under
the proposed will in circumstances where the solicitor could reasonably foresee
that a consequence of his negligence might be the loss of the intended legacy
without either the testator or his estate having a remedy against him. That
statement of the principle, taken from the headnote to the report, reflects a
passage in the speech of Lord Goff, at 268C-E, with which Lord Browne-Wilkinson
and Lord Nolan expressed agreement:
In
my opinion, therefore, your Lordships House should in cases such as these
extend to the intended beneficiary a remedy under the
Hedley
Byrne
principle
by holding that the assumption of responsibility by the solicitor towards his
client should be held in law to extend to the intended beneficiary who (as the
solicitor can reasonably foresee) may, as a result of the solicitor’s
negligence, be deprived of his intended legacy in circumstances in which
neither the testator nor his estate will have a remedy against the solicitor.
At
first sight the facts in the present case take it outside the principle as
stated by Lord Goff. This is a case in which the estate, itself, would have a
remedy.
The
question, therefore, is whether the remedy which the House of Lords was
prepared to extend to a disappointed beneficiary in White v Jones is confined
to those cases, of which White v Jones was an example, in which the estate
itself has no remedy - so that, absent a remedy at the suit of the beneficiary,
there is no remedy at all; or is to be further extended to cases in which the
estate does have a remedy but where the estate’s remedy will be of no
advantage to the disappointed beneficiary.
The
Judge answered that question in the negative. He said this, at [1997] 2 All ER
614, 628d:
It
seems to me unacceptable that solicitors should be at risk of two separate
claims for identical loss at the suit both of the personal representatives and
a beneficiary, when recovery by one would not bar recovery by the other.
I
agree. If that were the result which the law required it would properly be
regarded as unacceptable and unjust. But, as it seems to me, it ought properly
be regarded as equally unacceptable and unjust if the result which the law
requires is that, because of the solicitors’ negligence, the loss which
the personal representatives are able to recover on behalf of the estate passes
to someone who was not the beneficiary intended by the testatrix; leaving the
intended beneficiary without recompense. It is, I think, pertinent to keep in
mind the observations of Lord Browne-Wilkinson in White v Jones [1995] 2 AC 207, 276C:
To
my mind it would be unacceptable if, because of some technical rules of law,
the wishes and expectations of testators generally could be defeated by the
negligent actions of solicitors without there being any redress. It is only
just that the intended beneficiary should be able to recover the benefits which
he would otherwise have received.
If
the law in this field is to reflect what would generally be recognised as
acceptable and just the application of the relevant principles should lead to
the result that the estate and its beneficiaries are restored to the position
in which they would have been if the solicitors had not failed in their duty to
the testatrix. It is submitted on behalf of the respondent solicitors that that
is a result which cannot be achieved by applying the relevant principles of law
to the facts in the present case. That submission must be examined against the
speeches of those (Lord Goff, Lord Browne-Wilkinson and Lord Nolan) who formed
the majority in the House of Lords in White v Jones.
The
Court of Appeal in White v Jones [1995] 2 AC 207, 216ff, had reached a
conclusion in favour of the claimants by applying the decision of Sir Robert
Megarry, Vice-Chancellor, in Ross v Caunters [1980] Ch 297. Lord Nolan was, I
think, content to decide the appeal on the basis of the duty identified in Ross
v Caunters. As he pointed out [1995] 2 AC 207, 293E:
The
moral that solicitors, when preparing a will, owe a duty to an intended
beneficiary as well as to the testator must by now have become familiar to them
and their insurers. To reverse the decision in
Ross
v Caunters
at
this stage would be, in my judgment, a disservice to the law.
That
approach, however, was not endorsed by Lord Browne-Wilkinson; and was expressly
rejected by Lord Goff (at 268A). It cannot provide an answer in the present
case.
Lord
Browne-Wilkinson, with whose reasoning Lord Nolan expressed agreement (at
295D), held (at 276F) that:
.
. . by accepting instructions to draw a will, a solicitor does come into a
special relationship with those intended to benefit under it in consequence of
which the law imposes a duty to the intended beneficiary to act with due
expedition and care in relation to the task on which he has entered.
But
it is not clear that Lord Goff was prepared to adopt a formulation of the duty
in those terms. He recognised the need “to fashion a remedy to fill a
lacuna in the law and so prevent the injustice which would otherwise occur on
the facts of cases such as the present” (at 268B); but to achieve that
end he found it unnecessary, on the facts in White v Jones, to go beyond
holding (at 268D):
.
. . that the assumption of responsibility by the solicitor towards his client
should be held in law to extend to the intended beneficiary who (as the
solicitor can reasonably foresee) may, as a result of the solicitor’s
negligence, be deprived of his intended legacy in circumstances in which
neither the testator nor his estate will have a remedy against the solicitor.
Lord
Goff went on to say this (at 269C-D):
Let
me emphasise that I can see no injustice in imposing liability on a negligent
solicitor in a case such as the present where, in the absence of a remedy in
this form, neither the testator’s estate nor the disappointed beneficiary
will have a claim for loss caused by his negligence. This is the injustice
which, in my opinion, the judges of this country should address by recognising
that cases such as these call for an appropriate remedy, and that the common
law is not so sterile as to be incapable of supplying that remedy when it is
required.
Both
Lord Browne-Wilkinson (at 276F) and Lord Nolan (at 295D) expressed their
agreement with the reasons given by Lord Goff. It must, I think, follow that it
is reasoning in Lord Goff’s speech - and only that reasoning - that can
be said to have received the support of the majority in the House of Lords.
The
complaint against the solicitors in the present case rests on their failure to
ensure that the testatrix served a notice of severance in respect of the joint
tenancy. It cannot be said that the solicitors failed to prepare a will for
execution in terms which would have given effect to her wishes if the relevant
asset had formed part of her estate. The lack of care lay in failing to ensure
that the asset fell into the estate; not in failing to effect a valid
testamentary disposition of an asset which did form part of the estate. It is
that, of course, which founds the claim which the personal representatives have
against the solicitors. This important distinction between the facts upon which
White v Jones was decided and the facts in the present case requires
consideration of two separate but related questions: (i) whether the assumption
of responsibility - which was held in White v Jones to extend beyond the client
to an intended beneficiary in connection with the preparation of a will -
extends also to an intended beneficiary in connection with the service of a
notice of severance without which the relevant provision in the will cannot
take effect, and (ii) whether the assumption of responsibility can extend
beyond the client in a case where the estate does have a remedy.
It
is essential to have in mind that, in the circumstances of the present case,
the need to take care to ensure that the asset fell into the estate was
integral to the carrying into effect of the testatrix’s intention that
her share in the property “Homelands” should pass to the appellant
under her will. It was because the testatrix was making an alteration to the
provisions in clause 2(b) of the 1983 will - under which her share in that
property had been devised to her co-owner - that the need for severance arose.
This is a not a case in which the solicitors were instructed to advise in
relation to an
inter
vivos
transaction which was independent of the will-making process. On a proper
analysis, the service of a notice of severance was part of the will-making
process. The appellant was as much an intended beneficiary of the severance as
she was of the new clause 2(b) in the 1989 will. To refuse to treat the
appellant as an intended beneficiary who (as the solicitors could reasonably
foresee) might, as a result of their negligence in carrying out the
testatrix’s testamentary instructions, be deprived of the legacy which
she was intended to enjoy on the ground that the negligence lay in failing to
get in the asset rather than to provide for its disposition would, in my view,
properly be regarded as bizarre. I am satisfied that, subject to the need to
avoid the injustice of imposing double liability on the solicitors, it would be
consistent with the approach of the majority of the House of Lords in White v
Jones to recognise that the appellant is a person in relation to whom the
assumption of liability by the respondents towards their client, the testatrix,
ought to be extended.
It
is essential, also, to have in mind that this is a case in which,
prima
facie
,
the appellant would receive no benefit from a successful claim by the estate
against
the
solicitors. The proceeds would form part of the residuary estate in which she
has no beneficial interest. They would pass to another. Lord Goff identified as
“the real cause for concern” in cases such as White v Jones what he
described (at 262F) as:
.
. . the extraordinary fact that, if a duty owed by the testator’s
solicitor to the disappointed beneficiary is not recognised, the only person
who may have a valid claim has suffered no loss, and the only person who has
suffered a loss has no claim.
That
was the lacuna which had to be filled in cases of that nature. Lord Goff held
(at 268B-C), that the courts were entitled - indeed, bound - to fashion a
remedy to meet the need. For my part, I would find it equally extraordinary
and as much a real cause for concern if the only person for whose benefit a
valid claim could be pursued (the residuary legatee) was a person who had
suffered no loss - because, absent the respondents’ negligence, the
property would not have formed any part of the residue - and the only person
who has suffered a loss (the appellant) has no claim. I am satisfied that it
would be consistent with the approach of the majority of the House of Lords in
White v Jones to fashion a remedy in cases of this nature also, if that can be
done without imposing a double liability on the solicitors, in order to avoid
what would otherwise be an injustice. It seems to me that that is a legitimate
step to take in the light of what Lord Nolan described (at 295B) as “the
pragmatic, case-by-case approach which the law now adopts towards negligence
claims”.
In
fashioning an appropriate remedy in cases of this nature it is necessary to
keep in mind (i) that the personal representative’s claim on behalf of
the estate cannot be ignored - for there may be circumstances in which, had the
property been got in at the time when the will was made, it would have been
available as an asset of the estate to meet the liabilities of the estate - and
(ii) that it cannot be right to fashion a remedy to avoid injustice to the
disappointed legatee if that itself leads to the injustice of imposing a double
liability on the solicitors. It was argued forcibly on behalf of the
respondents that these two considerations - and, in particular, the second -
had the effect that no appropriate remedy could be devised; and that the court
should simply accept that, in cases of this nature, the effect of the
solicitors’ negligence was that the residuary legatee obtained a windfall
benefit at the expense of the specific legatee. I am not persuaded that the
powers of the court are so limited that it cannot do justice to each of the
three interests concerned - the specific legatee, the estate and the solicitors.
The
key, as it seems to me, is to recognise that, in a case of this nature, the
duties owed by the solicitors are limited by reference to the kind of loss from
which they must take care to save harmless the persons to whom those duties are
owed - see per Lord Bridge in Caparo Industries Plc v Dickman [1990] 2 AC 605,
627D, cited by Lord Hoffmann in Banque Bruxelles SA v Eagle Star Insurance Co
Ltd [1997] AC 191, 212B-C. The duty owed by the solicitors to the testator is a
duty to take care that effect is given to his testamentary intentions. That is
the context in which the duty to take care to ensure that the relevant property
forms part of the estate arises. The duty in relation to the relevant property
is a duty to take care to ensure that that property forms part of the
testator’s estate so that it can pass to the intended beneficiaries on
his death. It is not in contemplation, in a case of this nature, that the
testator will dispose of the property in his lifetime. The loss from which the
testator and his estate are to be saved harmless is the loss which those
interested in the estate (whether as creditors or as beneficiaries) will suffer
if effect is not given to the testator’s testamentary intentions.
The
duty owed by the solicitors to the specific legatee is not a duty to take care
to ensure that the specific legatee receives his legacy. It, also, is a duty to
take care to ensure that effect is given to the testator’s testamentary
intentions. The loss from which the specific legatee is to be saved harmless is
the loss which he will suffer if effect is not given to the testator’s
testamentary intentions. That is the loss of the interest which he would have
had as a beneficiary in an estate comprising the relevant property.
The
duties owed by the solicitors to the testator and to the specific legatee are
not inconsistent. They are complementary. To the extent that the duty to the
specific legatee is fulfilled, the duty to the testator is cut down. If and to
the extent that the relevant property would have been distributed to the
specific legatee in the ordinary course of administration, the other persons
interested in the estate can suffer no loss. In so far as the relevant property
or any part of it would have been applied in the ordinary course of
administration to discharge liabilities of the estate, the specific legatee can
suffer no loss.
To
impose duties on the solicitors which enabled both the personal representatives
and the specific legatee to recover for the loss of the relevant property would
involve both double recovery and double liability. The duties would not be
commensurate with the loss against which the persons to whom they were owed
were to be saved harmless. But there is no reason in principle, as it seems to
me, why, in cases of this nature, the law should not impose complementary
duties; so that for breach of the one the specific legatee is enabled to
recover the loss which he has suffered and for breach of the other the personal
representatives are enabled to recover, and recover only, the loss suffered by
the other persons interested in the estate. Justice will be done to each of the
three interests concerned - the specific legatee, the estate and the solicitors
- if solicitors who, in the course of carrying out the testator’s
testamentary instructions, have failed to take care to ensure that the relevant
property forms part of the estate are liable to compensate the specific legatee
for the loss which he has suffered as a result of the breach of duty owed to
him; and are liable to compensate the estate for the loss (if any) suffered by
the other persons interested in the estate for breach of the duty owed to the
testator.
In
any case in which it could be suggested that there are, or may be, persons
interested in the estate (other than the specific legatee) who have suffered
loss by reason of the solicitor’s breach of duty to the testator and
whose interests personal representatives ought to be concerned to protect it
would be appropriate for both the personal representatives and the specific
legatee to be parties to an action brought by either against the solicitors.
That would enable the court to ensure that all matters in dispute are
effectively and completely determined and adjudicated upon in the same action -
see Order 15, rules 4(1) and 6(2)(b)(i) of the Rules of the Supreme Court 1965.
But no cause or matter is to be defeated by the non-joinder of any party - see
Order 15 rule 6(1) - and, in a case where there is no suggestion that anyone
interested in the estate other than the specific legatee has suffered loss by
reason of the solicitor’s breach of duty, it seems to me unnecessary that
the personal representatives should be joined as formal defendants. The action
is properly constituted without them.
For
the reasons which I have set out I would allow this appeal. I understand that,
in the present case, it is not suggested that there is anyone other than the
appellant who has suffered loss by reason of the respondents’ failure to
advise service of a notice of severance. If the amount of the
appellant’s loss cannot be agreed, there will have to be a direction for
the assessment of damages.
LORD
JUSTICE THORPE: Mrs Larder used Frearsons when she needed a solicitor. In
that sense they were her family solicitors. In such cases the continuity over
an extended period of years is often with the firm rather than with any
individual within the firm. When she wanted to put her property into joint
ownership with her nephew Peter in 1969 she used Frearsons. When she wanted to
make a will she used Frearsons and over the years whenever she wanted to change
her will she used Frearsons.
She
was clearly fond of her niece Helen and when Helen got into financial
difficulties she wanted to help her. Her plan and intention was to increase
the benefit that Helen would receive under her will at her death. Under the
penultimate will Helen was only due to receive a small legacy. Her plan and
intention was to substitute for that legacy her half share in Homelands. At
her death Helen and her brother Peter would become joint owners and the value
of the half share would resolve Helen’s financial difficulties. Since at
that date she was 81 years of age the solution was unlikely to be long deferred.
In
those circumstances there can be no doubt as to the nature of Frearsons
retainer. It was simply to give effect to her wishes and to implement her
plan. Miss Turner quite rightly recognised that in order to implement the plan
it was necessary to ensure that her joint ownership with Peter rested on a
tenancy in common and not a joint tenancy. In view of the age difference
between Mrs Larder and Peter coupled with the absence of any testamentary
provision in relation to the property it was more than likely that the existing
arrangement was a joint tenancy. The ease with which a joint tenancy can be
converted into a tenancy in common seems one of the simplest procedures in an
area of law where procedures are not always simple. All Mrs Larder had to do
was to write the requisite letter. Of course research to establish the nature
of the existing tenancy had an obvious rational attraction since it might
preclude the need for the short letter of severance. If Frearsons had the
deeds or the conveyancing file establishing the fact would have been simple but
to suggest that the joint owners should authorise the bank to release or copy
the deeds was an unnecessarily cumbersome proposal. Not only was it cumbersome
but it was also hazardous if not satisfactorily completed before the execution
of the will. The obvious hazard was that the effect of the execution might be
not to solve Helen’s financial problems but to cut her out of the will.
Miss Turner caused or permitted Mrs Larder to undergo that risk. The simple
letter of severance would have eliminated the risk. In my opinion Miss Turner
was plainly negligent in failing to advise the sending of a letter of severance
once she appreciated that she was unable to discover the nature of the existing
joint ownership. The judge found that had she given the advice to send a
letter of severance clearly Mrs Larder would have accepted it.
The
instinct to do justice is clearly aroused by this analysis. Only Miss
Turner’s negligence frustrated Mrs Larder’s kindly intention to
solve Helen’s financial problems. In a perfect world Peter would have
foregone his unintended benefit thus removing the ingredient of damage. But
since his relationship with Helen seemingly precludes him from doing what many
would feel him morally obliged to do Helen is in my opinion entitled to follow
the White v Jones route to arrive at the position which her aunt planned for
her. I am relieved that my lord, Lord Justice Chadwick, concludes that a
permissible incremental extension of the holding in White v Jones
meets
the arguments addressed by Mr Mansfield and I gratefully adopt his reasoning
LADY
JUSTICE BUTLER-SLOSS:
I
agree.
Order: Appeal
allowed; judgment for damages to be assessed; defendant to pay the plaintiff's
costs here and below; legal aid taxation of the plaintiff's costs; application
for leave to appeal to the House of Lords refused. (
This
order does not form part of the approved judgment
) | 1 |
JU D G ME N T DR. ANAND. J. This appeal by special leave isdirected against the judgment and order ofthe High Courtof Judicature Bombay PanajiBench, Goa dated 5th of July 1990. The case has a checquered history but we shall refer to the facts to the extentrelevant for the purpose of disposal of this appeal. On 23rd July 1961 the predecessors of respondents filed a Civil suit in theCourt of Civil Judge SeniorDivision, Bicholin for declaration that they are the owners andpossessors of the disputed properties.That suit was triedunder the portuguese Civil procedure Code. After going through the pleadings and the documents and especificacao was drawn up bythe trial companyrt besides a questionario, issues in the case . The especificacao and the questionario were drawn up under Articles 515 and 516 of the portuguese Civil procedure Code. Objectionsfiled to the especificacao were decided on 10.3.62. Parties led evidence, both oral and documentary in supportof their respective claims.Vide judgment and order dated 27.7.67, the trial companyrt dismissedthe suit. The plaintiffs in thesuit filed a first appeal against the judgment and order dated 27.7.67 in the companyrt ofthe learned JudicialCommissioner. After hearingthe parties, the learned Judicial Commissioner found the trial companyrt had number applied its mind tothe issue of title as also to the effect of certain documents produced by the parties which were in the natureof agreements. The learnedJudicial Commissioner appointed Mr. Pinto Menezes, as Local Commissioner who wasto inspect the suit land, examinethe documents on the record but without recording any further evidence to submit a report, after companysidering the evidence already on the record, regardingthe issue of ownership of the disputed immovable property. The Local Commissioner submittedhes report on 8.11.69,holdingthat at theplaintiffs werethe owners of the immovable property known as Bismachotembo. Itwas also foundby the Local Commissioner that immovable property called disputedland which lay between theaforesaid two immovable properties, belongsto theplaintiffs in the suit, who therefore had title to that property. The learned JudicialCommissioner perusedthe report of the Local Commissioner and foundthat he had number given any report on the question of possession of the property in dispute. Vide order dated9.2.70, the learnedJudicial Commissioner remanded the caseto the companyrt of learned Civil Judge Senior Division to adjudicate on the issue off possession and prescription as claimed by the defendants on the basisof the evidencealreadyavailable on the record after taking numbere of the report of the Local Commissioner. The learned Civil Judge Senior Division , after hearing learned companynselfor thepartieson the issue of possession and prescription,Vide his order dated 4.8.71, came to theconclusion that theplaintiffs were in possession ofthe disputed piece of immovableproperty and that the defendants had failed to prove that they hadbeen in possession of the disputed land by prescription, as allegedby them. After recording thisfinding, the learned Civil Judge forwarded the finding on the issue of possession and prescription alongwith the record of the case to the companyrt of the learned Judicial Commissioner. In the meanwhile, the companye of Civil procedure,as applicable to the rest ofthe companyrts in India, was also made applicable to the companyrts in the territory of Goa with effect from, 15.6.66. The learned Judicial Commissioner, therefore,noticedthat under the Civil procedure Code read with theCivil Courts Act 1965, the companyrt of the Judicial Commissioner numberlonger had jurisdiction to entertainand hear an appeal from the judgment, order or decree passed by the learned Civil Judge and that such an appeal companyld lie onlybefore the companycerned District Judge. The learned Judicial Commissioner,vide order dated 31.8.1972 forwardedthe recorded ofthe case to the District Judge atPanaji for disposal of the appeal. Both the original plaintiff as well as the original defendants having died in the meanwhile,their legal representativeswere brought on the record to prosecute the appeal.The learned District Judge at panaji heard the appeal and vide judgment and order dated 29.3.84, set aside the judgment and decree of Civil Judge dated 27.7.67 and passed a decreein the suit in favour of the plaintiffs. The defendants in that suit, challenged the judgment and decree dated 29.3.1984 passedby theDistrict Judge, through a second appeal in the Panaji Bench of the High Court. Second Appeal No.30 of1984 . After hearing learned companynsel for the parties, a learned single Judge of the High Court found that the FirstAppellate Court had failed to takeinto companysideration the especificacao prepared by the trial companyrt and vide judgment dated 31.3.89 set aside thejudgment and decree of theFirst Appellate Court dated29.3.84 and remanded the appeal to the District Judge to decide the first appeal afresh after taking into companysideration the especificacao and othermaterial on therecord.After remand of theappeal,the learned District Judge heard the parties and vide judgment andorder dated 30.9.89 set aside the judgment of the trialcourt dated 27.7.67 andallowing the appeal,the District Judge passed a decree for declaration and possessionof the suit property in favour of the original plaintiffs. It was found bythe learned District Judge that theplaintiffs were the owners ofthe property bearingNo.5501 , which included the disputed immovable property also.A further declaration was alsogiven to the effectthat the defendants were in possession of the property bearing No. 5568 and the claimof the defendants to be inpossession ofsuit propertywas negatived. The successors in interestof thedefendants in the original suit appellants herein filed a second appeal against the judgment andorder of theDistrict Judge dated30th September 1989. Videjudgment and order dated 5.7.90, impugned herein, the High companyrtdismissed the second appeal. Mr. Dhruv Mehta, learned companynsel appearing for appellants, submitted that both the First Appellate Court and the High Court hadfailed to companysider the especificacao which reflected the admissions of the parties and that an order of especificacaobeing final andconclusive companyld number be companytroverted through evidence as had beendone by the respondents inthe present case. Itwas urged that an especificacao is binding on the parties and both the companyrts companyld number go behind it more so because the respondents hereinhad number challengedthe companyrectness of the especificacao through an appeal. Learned companynsel further submitted thatthe First Appellate Court also fell in an error in describing the tombacao survey document as a privatedocument, having numbersanctity of law,ignoring the fact that the respondents herein hadneither raised any objection number filed anyreclamacao against the tombacao. Mr. Verma, learned senior companynsel appearing for the respondents on the other hand submitted that the especificacao did number reflectthe companyrect state of affairs and theevidence on therecord exposed its incorrectness and as such the first appellate companyrt as well as the high Court were right in prefering the evidence to the especificacao, which had been drawn upeven before theissues were framed. The proceedings of the trial companyrt dated 10th March 1962, settling the especificacao in thepresentcase read as follows Iconsider as proved by way of documents and by the agreement of the partiesthe following documents The plaintiffis the owner and possessor by himself and through his companyveyers of theproperty described at the land Registration Office of this Camarca under No.5501 ofbook B912 new. Thisproperty was described and apportioned inthe Inventario among minors carried out at the Bardez Comarco companyrt in the years 1907-08, on the demise of the previous possessor , Jose Jovem Flaviano Ferreira, late numberary public of Bardez, with the boundaries mentioned in the endorsement on the description No.5501, having been purchased with the same boundariesby the plaintiff and hisbrother Govinda bydeed dated 13.12.1913,ratified bythat of19.9.1915. Theproperties Motouvadi, borderingthe property No. 5501 are described at the same land Registration Office under No.5668 ofBook b 15 new and 761 of Book B old, and the right to 1/3 of this latter belongs to the plaintiff. Vishnu Porobo, member of the joint Hindu family to which the propertyNo.5668 belonged did intervene as instrumental witness in the deed dated 19.9.1915, referred to in clause b of this Especificacao facts admitted . The defendant Xencora stored outside the stone-wall, which exists onthe western side of the property No.5668, sterile mineral-ore and thereafter he felled a Satondo tree, valued at Esc. 36000, this felling having taken place probably in the month ofSeptember, 1960. According to the predial description No.5501 theproperty referred to lies in thevillage, Bicholim,while the companytroverted strip liesin the bordering village ofBordem. The companyveyer of the defendants, Indira Dondo,sold to the latter the property Motou- Vadda with its adjoining plot Gumtachi-Molly. The property Motou-Vadda has onthe west a stony-wall throughout its extension. At the time of the Land Survey ofthe Comunidade of Bordem against which theplaintiff did number file a claim of objections when it was liable to reclamacaoof the interested parties, the plot identified in para 13 of the written-statement was surveyed as belonging to the companyveyer of the defendants, or beit, upto the row ofstones referredto in para 10 of the sameand the usurpation of 19,322 sq. metresunconfessed but paid by the defendants, has been found. On the same occasion, the western part in respect of the row ofstoneswall surveyedand the usurpation of 19,052 sq. metres discivered, companyfessed byBaburao, was paid its value. The Villages of Bordem and Bicholim are surveyed and their boundaries defined, although the survey cadastre maynot be finalised. From the deed of purchase of the property No. 5501, it is seen that thisproperty is bounded on the numberthby theproperty of the Comunidadeof Bordem and number by that of Aleixo Joao Lobo, according towhat ismentioned in the predial description, which is also companyfirmedby the cadastre of Bordem. With a view to appreciate the submissions made at the bar. it is first necessary to companysider as to what is the nature and status of the especificacao. Articles 515 and 516 of the Portuguese companye dealwith the settlement of especificacaoand thequestionnario. These Articles read as follows Art. 515- When the trialis to be held, theJudge within eight days shall specify thefacts which he companysiders as admitted for want of denial, admitted by agreement of parties and provedby documents and heshall fix in serial order the points offact in companytroversy and which are relevantfor thedecision of the case. From this questionnaire as well asfrom the specification , a companyy shall be given to the parties, who may file, induplicate, theobjections which they deemed fit. The duplicate shall be handed overto the opposite side within next two subsequentdays the lattermay give its say in the matter. After the expiry of such period, the objectionsshall be decided . Para 1- The questionnaireshall be amongst the factspleaded, companysist ofall facts companytrovertedrelevant tothe case and those which may be indispensable for its resolution. Para 2- The objection may be related to specification or questionnaire. The latter may be objected for deficiency, excess, companyplexityor obscurity. Para 3- From the orderdeciding the objection, appeal lies to Relacao High Court from the decision of the latter numberappeal shall lie to the supreme companyrt . Article516- once the questionnairo is settled the parties shall be numberified to give the list of witnesses and apply for any other mode of evidence. From a companybined reading ofArticles 515 and 516 supra it become obvious that an especificacao is only a step in the proceedings during the trial and is a record of settlement aimed at narrowingdown the companytroversy in the case. It certainly has probative value but cannot be given the status of abindingjudicial order which cannot be given the status of a binding judicial order which cannot be companytroverted through evidence led at the trialon the basis of the pleadings of the parties and the issues raised. The High Court therefore, rightly found that the matters sorted out atthe time of settlement of the especificacao are required to be borne in mind while deciding the dispute and that the factsdetailed in the especificacao should be taken into companysideration for the purpose ofadjudicating variousissuesraisedin the suit but numberetheless the companytroversy inthe suit is to be decided onthe basis of evidence, bothoral and documentary, led at the trial bearingin mind the especificacao. That an especificacao is only astep in the proceedings aimedto narrow down the companytroversy and is only a proceduralstep isalso obvious from the fact that inclause i of especificacao reliance has been placed on tombacaotreating it as a document of companyclusive nature and a public document. The tombacao has been foundthat the tombacao record tookplace in the year 1948. it was incomplete and in respect of thesame there was numberpromulgation. The High Court, therefore, rightlyfound that the District Judgewas justified in number relyingupon that record which was number of a companyclusive nature to arrive at its findings. Therelevancy, the proof and theevidentiary value of a documenthas to be decided at the trial numberwithstanding, the recordof the especificacao becausein the event, the documents on the basis of which an especificacao is drawnup, treating the statements in those documents as admissions, is found atthe trial either number proved or number genuineor otherwise number relevant, it cannot be said that the statements made in the especificacao would over-ride the doubtfulnature of the document and the trial companyrt would beunableto pronounce upon thecorrectness, relevancy and authenticity ofthe document. The companyrt is duty bound to pronounce upon the relevancy andauthenticity of thedocument on the basisof evidence ledat the trial numberwithstandingwhat is settled in theespecificacao, drawn up at the initial stages of the case, as number to do so would result in miscarriage of justice. We, therefore, find it difficult to accept the submission of Mr. Mehta that the First Appellate Court or the High companyrt companyld numberhave recorded findings on the basis of the evidence led at the trial, strictly in support of the pleadings, which run companytrary to the record of the especificacao and we are of the view that an especificacao is only in the natureof a step in the proceedings of the trial, which has probative value and is requiredto be borne in mind but thesame cannot be preferred to the evidence led at the trial which companyclusively shows thestatement or any part of it in the especificacao to be either incorrect or numberproved or having numberevidentiary value or relevance or sufferingfrom any like defect. Atthe time when a Local Commissioner wasappointed by the learned Judicial Commissioner in exercise of the judicial powers, the especificacao stood already settled. The Local Commissionerwas still directed toexamine the question of ownership,title,possession andprescription and number of the parties raisedany objection to that companyrse being adopted.After the receipt of the reportof the Local Commissioner, the casewas remanded to the trial companyrt for determination of prescription because of the claim to possession raised on its basis by the defendants. Admittedly, the especificacao dated 10.3.62 did number companycern itself with claim based on prescription for deciding which the case had been remanded, and therefore, the question of prescription had tobe decided independent of the especificacao on the basis ofthe relevant material.once the claim of the defendants to ownership and possession on the basis of prescription falls, the statements in the especificacao, which make a record companytrary thereto, have to be ignored andthe findings recorded by the first appellate companyrt after remand and by the High Court that the defendants appellants had failed to substantiate their claim to ownership and possession of the disputed landon the basis of adverse possession,must be preferred, numberwithstanding any statement to the companytrarycontained in the especificacao. Coming number to the meritsof theinstant appeal. The defendant appellants did number file any objections to the report of the local companymissioner, who found theIndira Dando did number sell the disputed plot knownas Motou-Vadda to the defendants who were owners ofthe adjoiningplot Gumtachi-Molly numberwithstanding the in clause g of the especificacao. At the trial, defendants-appellants in the suit did number claimtitle to the suit property by way of any transfer, companyveyance, sale or gift. Theyrested their claim on titleby adverse possession. The issue relating to adversepossession of the suit property by the defendants has been companysidered by the companyrts below. After the learned Judicial Commissioner referredthe issue of possessionvide order dated 9.2.1970, to the civil Judge senior Division the same was debated before the learned Civil Judge, who vide order dated 4.8.1971, came to the companyclusion that the defendants hadfailed to provethat they were in possession of thesuit land for the prescribed period of 30 years. The learnedDistrict Judge, in appeal also found that the defendants had failed to prove their adverse possessionover the disputed property and on the companytrary the plaintiffs had proved their possession and title to the said property throughout. After the report of the local Commissioner, the District Judge,Panaji,once again by his judgment and order dated 30.9.1989 came to the companyclusion that the defendants had failed to prove their possessionof the suit property for a period of 30 years or more and that the plaintiffs on the other hand had proved their title and possession of the suit land. The HighCourt agreed with the companycurrent findings of fact recorded by the companyrts below, both on the issue of possession aswell ason the issue oftitle and by a wellconsidered and detailedorder negativedthe claim of the defendants appellants herein to possession by prescription. The companycurrent findings recorded by the companyrts below to negative the claim of ownership of the defendant appellants arebased on proper appreciation of evidence, both oral and documentary on the record. In ouropinion, the companyrts below have taken companysiderable pains to decide the issues between the parties after applying companyrect principles of law.The High Court to the extent necessary also examined the record, including the evidence, whilehearing the arguments in the second appeal filedthe appellants under section100 ofthe companye of civil procedure, with a view to do companyplete justice between theparties. | 1 |
COURT OF APPEAL FOR ONTARIO
CITATION: Downing Street Financial Inc. v. Harmony
Village-Sheppard Inc., 2017 ONCA 611
DATE: 20170720
DOCKET: M48044 (C63937)
Tulloch J.A. (In Chambers)
BETWEEN
Downing Street Financial Inc., in Trust
Applicant (Respondent in Appeal)
and
Harmony Village-Sheppard Inc., as General Partner
of Harmony Village-Sheppard LP, and City Core Developments Inc.
Respondents (Respondents in Appeal)
David P. Preger and Michael J. Brzezinski, for the
moving party, Court-appointed Receiver, Rosen Goldberg Inc.
Barbara Green, for the responding parties, Fortress
Shepard (2016) Inc., Fortress Real Developments and Derek Sorrenti
Raymond M. Slattery, for the responding party,
Purchasers
Mitchell Wine, for the responding party, Jozef Zubrzycki
Sean Zweig, for the responding party, the Successful
Bidders
David T. Ullmann, for the responding party, Downing
Street Financial Inc., in Trust
Heard: June 29, 2017
Tulloch JA:
A.
Introduction
[1]
The moving party on this motion was Rosen Goldberg Inc., the receiver in
the underlying insolvency proceedings (the Receiver). The Debtor is Harmony
Village-Sheppard LP. The responding parties on the motion were Fortress Shepard
(2016) Inc., Fortress Real Developments and Derek Sorrenti (collectively,
Fortress).
[2]
The Receivers purpose in bringing this motion was to defeat Fortress
appeal from a court order approving an asset sale (the Approval Order) and
thereby to secure that sale, for which the closing date was June 30, 2017.
Fortress had filed a Notice of Appeal in this court, dated June 21, 2017, in
which it had sought to appeal the Approval Order, asserting that this court had
jurisdiction solely based on s. 193(c) of the
Bankruptcy and Insolvency Act
,
R.S.C. 1985, c. B-3 (the
BIA
).
[3]
I heard the motion on June 29, 2017, and, given its urgency, I granted
the motion orally and notified the parties that written reasons would follow.
These are my written reasons.
B.
Background
(1)
The Property and the Stakeholders
[4]
Before its insolvency proceedings, the Debtor had been developing some
real estate in Toronto (the Property) as a residential condominium project,
marketed to seniors. At the time of the Receivers appointment, the Debtor had
pre-sold 223 units in this project to various purchasers (the Unit
Purchasers), although construction had not yet begun.
[5]
The Property is subject to three encumbrances. Downing Street Financial
Inc. (DSFI) holds the first in priority, securing payment of approximately
$20 million. The second in priority, held by JYR Capital Mortgage Investment
Corp. and Li Ruixia as tenants in common, secures payment of approximately
$1,395,000. The third encumbrance is a syndicated mortgage involving 542
investors. According to Fortress, Sorrenti and a related company are the
trustees of this syndicated mortgage.
(2)
The Approval Order
[6]
The Superior Court judge who reviewed the sale (the motions judge)
made the Approval Order on June 19, 2017, and issued a brief endorsement on the
same date. The Approval Order, granted in response to a motion by the Receiver,
approved the Receivers sale of the Property to Pinnacle International One
Lands Inc. (Pinnacle).
[7]
The sale to Pinnacle was the culmination of a court-approved sale process
under the Receivers supervision in which Pinnacle and Fortress had competed
for the Property.
(3)
The Stalking Horse Bid
[8]
Pursuant to the Receivers appointment order, dated January 20, 2017, the
Receiver conducted a stalking horse sale process, in which a sale agreement
between the Receiver and Fortress would constitute the stalking horse bid
(the Stalking Horse Bid). The Stalking Horse Bid would have required Fortress
to assume the Debtors agreements of purchase and sale with the Unit
Purchasers. The Stalking Horse Bid also was a credit bid. On closing, the
first mortgagee, DSFI, would have been paid in full, while the purchaser would
have assumed the existing debt secured under the second and third charges.
[9]
The Receiver and Fortress each provided different explanations for why
Fortress repudiated the Stalking Horse Bid. However, the parties agreed in
their submissions that, beyond the deal discussed in the next paragraph, the
stalking horse process did not attract any offers for the Property.
[10]
According to Fortress, Fortress always had intended to find a developer
to build the condo project, and it ultimately had negotiated a sale of the
Property to Pinnacle (the Pinnacle-Fortress APS). The Pinnacle-Fortress APS
required Pinnacle to assume the terms of the Stalking Horse Bid. Fortress
advised the Receiver of its deal with Pinnacle, and the Receiver acquiesced on
the condition that the sale price of the Pinnacle-Fortress APS would not exceed
the Stalking Horse Bids sale price, so that Fortress intermediary role would
not cost the Debtors estate any value.
[11]
However, in Fortress narrative, the Stalking Horse Bid failed because,
on April 4, 2017, only three days before the court-approval hearing for the
Pinnacle-Fortress APS, Pinnacle informed Fortress that it no longer was willing
to assume the contracts with the Unit Purchasers. Fortress informed the
Receiver of this problem, and the Receiver refused to save the deal by amending
the requirements of the Stalking Horse Bid.
[12]
In the Receivers version, Fortress told the Receiver on April 6, 2017,
the day before the hearing to approve the Pinnacle-Fortress APS, that Fortress would
not complete the purchase of the Property pursuant to the Stalking Horse Bid
because Fortress no longer was willing to assume the Unit Purchasers contracts.
(4)
Subsequent Offers and Negotiations
[13]
According to the Receiver, its subsequent efforts produced three offers
for the Property. One of them, from an offeror whom the Receiver does not
identify, which involved a price that the Receiver found unacceptably low. The
other two offers were from Fortress and from Pinnacle, respectively. Fortress
offer, dated April 13, 2017, involved the same price as the Stalking Horse Bid
and similar financial terms. The important differences were that Fortress would
not assume the contracts with the Unit Purchasers, but that Fortress deposit
would be slightly higher. Pinnacle communicated its offer to the Receiver
several days later. The Receiver accepted Pinnacles offer on May 2, 2017, and informed
Fortress of this acceptance on May 3, 2017.
[14]
The Receiver asserts that it had legitimate concerns regarding Fortress
financial capacity. The Receivers motion record includes some e-mail
correspondence raising such concerns. The correspondence suggests that Fortress
was unwilling to provide a deposit large enough to satisfy the Receiver.
(5)
Fortress Opposition to Pinnacles Offer
[15]
Fortress advised the Receiver on April 28, 2017 that it would oppose any
deal between the Receiver and Pinnacle. Fortress alleged that Pinnacle had
improperly exploited its earlier negotiations with Fortress to develop its own
direct offer to the Receiver.
[16]
On June 16, 2017, several days before the scheduled hearing of the
Receivers motion for approval of Pinnacles bid, Fortress submitted to the
Receiver a new, third, offer to purchase the Property. This offer relied on a
financing commitment from another party, MarshallZehr, to cover the cash
component of Fortress offer, all closing costs, and the costs of the financing.
During the hearing of this motion, counsel for Fortress conceded that the
Receiver had correctly identified several conditions of the MarshallZehr
financing that would limit Fortress ability to obtain additional financing
from other parties. However, counsel for Fortress asserted that such formal
conditions would not be a practical obstacle to the Fortress offers
feasibility.
C.
Fortress Appeal
[17]
After the granting of the Approval Order on June 19, 2017, Fortress
filed a Notice of Appeal in this court, dated June 21, 2017. The relief that
Fortress seeks from this court is the following: an order setting aside the
Approval Order, and an order directing the Receiver to accept Fortress June
16, 2017 offer that would also serve as an approval and vesting order for a
sale on that offers terms.
[18]
Based on the Notice of Appeal and Fortress submissions on this motion,
the essence of Fortress planned argument on appeal would seem to be that the
motions judge did not apply the right legal test when making the Approval
Order; his brief endorsement said that he approved Pinnacles bid because it
was the best offer to purchase the Property from the point of view of the
majority of stakeholders. In oral argument for this motion, counsel for
Fortress suggested that this language in the motions judges endorsement
demonstrates that the motions judge did not correctly apply the relevant
principles from
Royal Bank v. Soundair Corp.
(1991), 4 O.R. (3d) 1
(C.A.).
[19]
The Notice of Appeal relies only on s. 193(c) of the
BIA
in support
of this courts jurisdiction to hear the Appeal. Fortress explicitly disclaims
reliance on s. 193(e), the provision for leave to appeal, by asserting in the
Notice that it does not require leave to appeal. Rule 31 of the
Bankruptcy
and Insolvency General Rules
, C.R.C., c. 368, precludes reliance by an
appellant on s. 193(e) of the
BIA
when that appellants Notice of
Appeal does not include the relevant application for leave to appeal.
Therefore, jurisdiction pursuant to s. 193(e) is unavailable in this case.
[20]
Fortress chose to rely exclusively on s. 193(c) despite the clear
direction in recent case law in favour of narrow construal of the rights to
appeal in ss. 193(a) to (d) of the
BIA
:
Re Enroute Imports Inc.
,
2016 ONCA 247, 35 C.B.R. (6th) 1, at para. 5. As Brown J.A. explained in his
chambers decision in
2403177 Ontario Inc. v. Bending Lake Iron Group Ltd.
,
2016 ONCA 225, 396 D.L.R. (4th) 365, at paras. 50-53, these automatic rights of
appeal create disharmony between the
Companies Creditors Arrangement Act
,
R.S.C. 1985, c. C-36 (the
CCAA
) and the
BIA
because s. 13
of the
CCAA
imposes a leave requirement for all appeals from orders
made under that statute. Therefore, the goal of regulatory harmony between
these two major insolvency statutes favours narrow construal of the
BIA
s
automatic rights of appeal. This jurisprudential context, along with Fortress
strategic decision not to seek leave to appeal, informed my decision on s.
193(c).
D.
Analysis
(1)
Subsection 193(c) of the
BIA
[21]
Subsection 193(c) of the
BIA
provides a right to appeal to the Court of Appeal if
the property involved in the appeal exceeds in value ten thousand dollars. As
Blair J.A., in chambers, noted in
Business Development Bank of
Canada v. Pine Tree Resorts Inc.
, 2013 ONCA
282, 115 O.R. (3d) 617, at para. 17, a narrow construal of property involved
in the appeal is necessary because otherwise the low quantum of this automatic
right to appeal would make s. 193(e) practically redundant.
[22]
In
Bending Lake
, at para. 53, Brown J.A., summarizing prior case law,
identified three kinds of order from which s. 193(c) would not grant a right to
appeal: (i) orders that are procedural in nature; (ii) orders that do not bring
into play the value of the debtors property; and (iii) orders that do not
result in a loss. I will consider only the third category because doing so will
suffice to resolve the s. 193(c) analysis.
(2)
Does the Approval Order Result in a Loss?
[23]
As Brown J.A. explained at para. 61 of
Bending Lake
, for an
order to result in a loss in the relevant sense, the order in question must
contain some element of a final determination of the economic interests of a
claimant in the debtor.
[24]
Fortress is correct that, in
Bending Lake
, Brown J.A. relied on
the fact that there was no competing bid for the disputed property, as well as
the fact that there was an absence of any valuation of the debtors estate in
the record before the motions judge:
Bending Lake
, at paras. 63-66. In
contrast, in this case, there were competing bids with different purchase
prices.
[25]
Nevertheless, I do not accept that the Approval Order resulted in a loss
in the relevant sense.
[26]
Although some of the factors on which Brown J.A. relied do not apply in
this case, these distinctions do not defeat the broader reasoning of
Bending
Lake
. I quote from para. 64 of
Bending Lake
at length:
The determination of whether the property involved in the
appeal exceeds ten thousand dollars is a fact-specific one. In order to bring
itself within s. 193(c), the [appellant] must do more than make a bald
allegation of improvident sale. This is real-time insolvency litigation in
which delays in the proceeding can prejudice the amounts fetched by a receiver
on the realization process.
The [appellant] must
demonstrate some basis in the evidentiary record considered by the motion judge
that the property involved in the appeal would exceed in value $10,000, in the
sense that the granting of the Approval and Vesting Order resulted in a loss of
more than $10,000 because the Receiver could have obtained a higher sales price
for the Debtors property.
Bald assertion is not sufficient, otherwise a
mere bald allegation of improvident sale in a notice of appeal could result in
an automatic stay of a sale approval order under
BIA
s. 195 as the
appellant pursues its appeal. [Emphasis added.]
[27]
I focus here on the requirement for some basis in the evidentiary
record to support an assertion that the impugned sale would cause a loss to
the Debtors estate, as opposed to a bald assertion to that effect. In its
submissions before me, the primary basis for Fortress assertion that the
impugned order might result in a loss is the fact that the nominal purchase
price in Fortress offer was higher than the nominal purchase price in
Pinnacles offer.
[28]
The passage that I have quoted from
Bending Lake
casts the
issue as whether the Receiver could have obtained a higher sales price for the
Debtors property. However, given the diversity among financing structures for
commercial sale agreements, I do not think that I betray the spirit of Brown
J.A.s reasons by reading his comments to contemplate a more substantive
assessment of competing offers than a mere comparison of formal prices.
[29]
On this motion, Pinnacle presented compelling evidence to suggest that
the practical value of its offer exceeded that of Fortress offer.
[30]
First, the deposit in Pinnacles offer was much higher than the deposit
in Fortress offer. This factor gains salience from the correspondence that
demonstrates that, during the sale process, Fortress resisted the Receivers
demands to increase the deposit in its offer substantially.
[31]
Second, the Pinnacle offer was entirely in cash, whereas only
approximately 40% of the Fortress offer was in cash. Fortress planned to fund
the rest of its offer through credit. This factor gains salience from the
structure of the Debtors pre-existing secured debt. Fortress explains in its
submissions that Fortress (more specifically, Sorrenti), along with a related
company, is trustee for the 542 investors who collectively hold the beneficial
interest in the Debtors third encumbrance, a syndicated mortgage. Fortress
further submits that its ordinary business is in real estate consulting and
arranging financing for real estate development projects. Fortress submissions
before me did not assuage the concern that the effect of the Fortress offer, if
accepted, would have been to allow Fortress to preserve its business interest
in the Property as a development project at the risk of providing less recovery
for other creditors, including the investors for whom Sorrenti acts as trustee.
Indeed, Fortress explained in its submissions that it entered into a Joint
Venture Agreement with another firm in the hope, based on anticipated profits,
of providing full repayment of the second and third mortgages on the Property.
[32]
Third, Fortress conceded in its submissions that its offer would not
have involved assuming the Unit Purchasers contracts. Instead, it promised a
friends and family VIP event for the Unit Purchasers and opportunities for
first access and special pricing. This concession undermines Fortress
assertion that the Stalking Horse Bid would have succeeded had it not been for
Pinnacles
refusal to assume the Unit Purchasers
contracts.
[33]
Fourth, the Receivers Report states that the highest-ranking secured
creditor, DSFI, supported Pinnacles bid over Fortress, despite the fact that
both offers purported to provide full recovery to DSFI.
[34]
Fifth, Fortress does not dispute the Receivers assertions that the
stalking horse process attracted no bidders other than Fortress and Pinnacle
and that the Receivers subsequent efforts procured only one other offeror, who
offered a price that was unacceptably low and that caused concern that the
markets valuation of the Property might be much lower than Pinnacles.
[35]
Although Fortress argument for the application of s. 193(c) is slightly
more plausible than that of the appellant in
Bending Lake
, Fortress
has not demonstrated a sufficient basis in the record that was before the motions
judge for me to conclude that there is an arguable case that the Receiver could
have obtained a better deal than Pinnacles.
[36]
Therefore, s. 193(c) did not grant a right of appeal to Fortress because
the impugned order did not result in a loss or gain in the relevant sense.
(3)
Leave to Appeal (s. 193(e))
[37]
As I noted earlier in these reasons, Fortress did not meet the
procedural requirements for consideration of an application for leave to
appeal. Therefore, what follows is
obiter dicta
. However, since both
parties made alternative submissions on s. 193(e), I will address the issue
briefly.
[38]
Although leave to appeal pursuant to s. 193(e) is discretionary and
must be exercised in a flexible and contextual way, the prevailing
considerations are whether the proposed appeal :
(i) raises an issue of general importance to the practice in
insolvency matters or the administration of justice as a whole;
(ii) Is it
prima facie
meritorious; and
(iii) Would it unduly hinder the progress of the insolvency
proceedings:
Enroute
, at para. 7.
[39]
I will address the second criterion, i.e., the
prima facie
merit,
first. As I mentioned above, the Notice of Appeal and Fortress submissions on
this motion suggested that the primary ground for Fortress appeal was that the
motions judge applied the law incorrectly when he approved Pinnacles bid
because it was the best offer to purchase the Property from the point of view
of the majority of stakeholders.
[40]
The allegation was that the motions judge misapplied the criteria from
Soundair
for judicial review of a receivers sale of property.
Soundair
, at p.
6, identifies four duties of a judge reviewing a receivers sale. Those duties
are to:
(1) consider whether the receiver has made sufficient effort
to get the best price and has not acted improvidently;
(2)
consider the interests of all
parties
;
(3) consider the efficacy and integrity of the process by
which offers are obtained; and
(4) consider whether there has been unfairness in the working
out of the process. [Emphasis added.]
Furthermore, at p. 7,
Soundair
prescribes a
deferential standard of review in this court.
[41]
Given this framework and the facts of the sale process that I summarized
above, the argument that the motions judge misinterpreted or misapplied the
Soundair
test is implausible. The motions judges comment that the Pinnacle offer
was best from the point of view of the majority of stakeholders does not
indicate a failure to have
considered
Fortress
interests. Therefore, the appeal was
prima facie
meritless.
[42]
I will address the other factors more briefly. This appeal did not raise
any issue of general importance to insolvency practice or the broader
administration of justice; it was a fact-specific dispute about the propriety
of a receivers sale. Additionally, given the difficulty that the Receiver had faced
in finding prospective purchasers other than Pinnacle and Fortress, a hearing
of the appeal probably would have unduly hindered the Debtors insolvency
proceedings.
E.
Disposition
[43]
These are my reasons for my granting of the Receivers motion on June
29, 2017. The Receiver did not seek an order for costs of the motion.
Released: MT JUL 20 2017
M. Tulloch J.A.
| 5 |
Mr Justice Hamblen :
Introduction
This is a novel case.
An employer sues a former employee for damages for making fraudulent or negligent misrepresentations in a job application.
The particular part of the application involved in the present case was the medical questionnaire, but it could as well have been the application form or a CV. It might also have been the reference provided, and indeed the action originally included Rhondda Cynon Taff County Borough Council ("RCT") as Second Defendant in respect of the reference they had given. That claim was compromised before trial.
In many cases material representations made in a job application form will induce the contract of employment made and yet it appears that there is no precedent for an action for damages such as that brought in these proceedings. The likely reason is that in most such cases there will be no damages. The appropriate remedy will be rescission and termination of the contract of employment.
In the present case the contract of employment has already been terminated and the sole remedy claimed is damages. The salary paid to the employee is not claimed, no doubt because even if the contract of employment had not been made with her it would have been made with someone else and the same salary would have been paid. It is nevertheless claimed that in the unusual circumstances of the present case substantial damages of nearly £1 million have been suffered.
The basis of that claim is that as a consequence of the employment of the First Defendant, Mrs Laird, the Claimant Council ("CBC") incurred extraordinary expenses that would not have been incurred had some other managing director been employed.
As a consequence of differences which arose between Mrs Laird and the leader of the council, Cllr McKinlay, and other members and officers, much time and expense was spent by CBC in dealing with the resulting disputes which arose rather than the normal running of CBC business. These included Joint Negotiating Committee ("JNC") disciplinary proceedings brought against Mrs Laird and grievance and court proceedings brought by Mrs Laird, as well as a complaint made by her to the Standards Board of England ("SBE"). Outside support had to be brought in to help CBC staff deal with these disputes and to support them. Mrs Laird was off sick for substantial periods, was then suspended and ultimately retired on an ill health pension. CBC claim as damages the time and costs of dealing with these various disputes and their consequences as well as the ill health element of the pension paid. They are encouraged in bringing these claims by the causation rules in respect of claims in deceit and, on present authority, in respect of claims under section 2(1) of the Misrepresentation Act 1967.
Mrs Laird not only denies liability but disputes every element of the damages claimed. In essence she alleges that all the disputes and ensuing problems which arose during her employment were caused by CBC's own breaches of duty or fault. She also seeks to set off against the claim made her own claim for damages for stress and ill health. She also seeks to bring into account benefits which she says accrued to CBC only as a result of CBC employing her when it did.
The outline facts
"Cheltenham lies at the edge of the Cotswolds and is renowned for its gracious Regency architecture reflecting the Spa' town's rich heritage, mixing readily with the cosmopolitan atmosphere of a fashionable and thriving centre for commerce, education and the arts". So read the opening words of the Introduction to Cheltenham in the Recruitment information issued by CBC for the post of managing director in early November 2001.
One of the applicants for the post so advertised was Mrs Laird. At the time she was Group Director of Community Services at RCT, having previously worked as Chief Executive at the Chartered Institute of Housing ("CIH"), and as Director of Housing and Environmental Services at Derby City Council, among other posts during a working career of some 28 years.
Following receipt and review of her application form and the taking up of references Mrs Laird was invited to interview. From 2 to 4 January 2002 she attended interviews which included a session before the council. She made the final shortlist of three and was eventually chosen as the preferred candidate by a council vote of 18:17. Following the vote she was offered the job.
On 7 January 2002 CBC wrote to Mrs Laird "to confirm the Council's offer to you of the appointment ...". The offer was stated to be "conditional upon medical clearance being obtained from our Medical Adviser".
On 8 January 2002 Mrs Laird completed a medical questionnaire, which she sent to Gloucestershire County Occupational Health Services ("GCOHS"). It did not mention any history of depression, stress related illness, or any anti-depressant medication.
On 9 January 2002 Mrs Laird replied to CBC's letter saying she was "pleased to accept the post of Managing Director on the terms and conditions outlined in your letter" and that she had "returned the medical questionnaire, as requested, to the Council's Medical Adviser". On 10 January 2002, GCOHS's representative signed a form, which was sent to the council, stating that "[b]ased on the information given on the health questionnaire, the applicant has been found to be ... fit".
On 14 January 2002 CBC wrote to Mrs Laird informing her that the medical clearance certificate had been received and that "we can now proceed with your appointment", and giving a start date of 4 February 2002. There followed various delays in the production and agreement of the detailed terms of Mr Laird contract and the contract, which was dated 2 August 2002, was not in fact signed until early September 2002.
At the time of Mrs Laird's appointment CBC had a Conservative majority and its leader, Cllr Duncan Smith, had played a prominent role in her appointment. There was planned to be a restructuring of the council and the new managing director was meant to play a major role in this. Indeed, Mrs Laird immediately started the process of planning and making organisational changes, a process which involved changing roles and titles, as well as a number of voluntary redundancies. On 2 May 2002 there were local elections which saw the Conservatives ousted as the majority party and replaced by the Liberal Democrats. The new leader of the Cabinet was the Liberal Democrat Cllr McKinlay. The leading Liberal Democrats were less enthusiastic supporters of the restructuring plans, and had reservations as to how it should be carried out.
From the outset Mrs Laird and Cllr McKinlay found it difficult to work with each other and an atmosphere of mutual distrust developed. During the following months tensions and disputes arose between them and also between Mrs Laird and certain other members and officers of CBC.
On 23 April 2003 Mrs Laird informed CBC's then monitoring officer, Mr Ford that she intended to complain to the SBE about the conduct of the leader, Cllr McKinlay. On 24 April 2003 Cllr McKinlay wrote to Mr Ford setting out concerns about Mrs Laird's conduct which he wanted investigated.
Mrs Laird's complaint to the SBE dated 25 April was directed against three Liberal Democrat councillors including Cllr McKinlay. On 30 April 2003 three opposition councillors made further allegations to the SBE concernng members of the cabinet. From 8 May 2003 onwards, solicitors acting for Mrs Laird corresponded with (and subsequently litigated against) CBC in relation to her employment position.
On 16 October 2003 Mrs Laird lodged a written grievance with the council comprising a narrative followed by six numbered complaints. On 27 October 2003 the council resolved to set up a panel of seven councillors ("the JNC Panel") to undertake preliminary consideration of disciplinary allegations made by Cllr McKinlay against Mrs Laird, and report back. On 11 November 2003 two grievances from other staff against Mrs Laird were lodged with the then assistant director of human resources.
Mrs Laird's grievance was heard over four days from 13 November to 2 December 2003. Solicitors and a barrister were involved at the hearings. On 18 December 2003 the committee hearing the grievance issued its report. Of the six complaints, three were dismissed; one (concerning annual appraisal) was upheld in part; and two were adjourned on the ground that they overlapped with the complaint to the SBE and/or possible defamation proceedings.
On 25 May 2004 the JNC Panel reported back to the full council, recommending that a statutory designated independent person ("DIP") be appointed to consider five allegations against Mrs Laird. The five allegations, and numbered factual particulars supporting each allegation, were set out in the body of the report. On 3 June 2004 the council resolved to approve the recommendations of the JNC Panel.
After an unsuccessful attempt by Mrs Laird to obtain a High Court injunction in Bristol to prevent the appointment of a DIP and to prevent her suspension the council resolved to suspend Mrs Laird on full pay and to appoint a DIP.
On 4 November 2004 Steven Kingston, the Ethical Standards Officer ("ESO") responsible for reporting on the complaints to the SBE, produced his report effectively dismissing all the complaints.
In late 2004 and early 2005 the DIP attempted to start his investigation but Mrs Laird's ill health hindered this. At the direction of the DIP, Dr Aylard, a consultant psychiatrist then jointly instructed by the council and Mrs Laird, interviewed Mrs Laird on 13 April 2005 and reported in writing on 4 May 2005 that Mrs Laird was unfit to undergo the DIP investigation.
Dr Aylard's report included quoted extracts from Mrs Laird's general practitioner records which included details of the anti-depressant medication (Seroxat, Lofepramine and Dothiepin) Mrs Laird had taken since 1997.
The DIP determined on 4 August 2005 that he could not continue his investigation. By letter dated 9 August 2005 the council notified Mrs Laird's solicitors that it regarded her contract of employment as frustrated by the confirmation from the DIP that there was no reasonable prospect of the substantive investigation into the disciplinary allegations against Mrs Laird ever taking place or being concluded.
On 6 September 2005 Mrs Laird made an application to CBC for immediate payment of ill health retirement benefits. After considering medical evidence and taking legal advice CBC decided that Mrs Laird was entitled on the ground of permanent incapacity to an immediate ill health pension under the statutory scheme. Her pension was released to her on 30 March 2006, backdated to 10 August 2005.
On 12 June 2006 CBC applied for third party Norwich Pharmacal disclosure against Gloucestershire Partnership NHS Trust, of which GCOHS forms a part. CBC also applied for pre-action disclosure against Mrs Laird, which she unsuccessfully opposed. After a hearing on 21 July 2006 the judge made the order sought.
Through compliance with that order, on or about 31 August 2006 CBC obtained a copy of Mrs Laird's pre-employment medical questionnaire and discovered that it contained no mention of depression, depressive illness, stress related illness, or any anti-depressant medication.
On 26 October 2006 the employment tribunal at Bristol dismissed a claim which Mrs Laird had brought and subsequently withdrawn, for unfair dismissal, payment of pension contributions and compensation for disability discrimination.
The present proceedings were brought, alleging negligence only, not fraud, by a claim form dated 9 May 2007. Following directions given by HHJ Seymour QC at the pre-trial review on 5 December 2008, CBC issued a second claim for fraudulent misrepresentation, which HHJ Seymour QC had ordered be consolidated with the existing claim.
I have appended to the judgment a list of the various abbreviations used in this judgment and a dramatis personae.
The statutory background
In order to understand the context and detail of many of the disputes which arose during Mrs Laird's time at CBC it is necessary to have an appreciation of the statutory background.
Local authority members
The conduct of elected members of a local authority is regulated by Part III of the Local Government Act 2000 ("the 2000 Act") and regulations. Section 57 created the SBE. Section 58 (but now section 57A) gives any person the right to complain of a breach of the statutory code of conduct ("the Code of Conduct") which all local authorities must adopt and all elected members must sign as a condition of taking office.
The SBE may, inter alia, refer a complaint of breach of the Code of Conduct to an ESO under section 58(1)(a), for investigation. Under section 59, after investigating the ESO may decide that there has been no breach of the Code of Conduct; or that there has been a breach but no action need be taken; or may refer the matter to the authority's monitoring officer; or may refer the matter for adjudication by a tribunal.
In the most serious cases referred to an independent case tribunal, that tribunal may impose various sanctions including requiring a written apology, requiring the councillor to undergo training, or disqualifying a councillor from holding office for up to five years.
Local authority officers
A holder of a "politically restricted post" may not become a member of a local authority: Local Government and Housing Act 1989 ("the 1989 Act") section 1 (unless granted a special exemption under what is now section 3A). Those disqualified from being local authority members include the head of paid service, the monitoring officer and the statutory chief officers (section 2).
By section 4 of the 1989 Act a local authority must designate one of their officers as "the head of their paid service" and must provide that officer with such staff, accommodation and other resources as are, in his or her opinion, sufficient to allow his or her duties under section 4 to be performed. The head of paid service is the statutory term for the person who is usually known as the authority's chief executive or managing director – in this case Mrs Laird.
Under section 4 of the 1989 Act the head of paid service must report to the authority in writing setting out his or her proposals on the manner in which the discharge by the authority of its different functions should be co-ordinated; the number and grades of staff required by the authority for the discharge of its functions; the organisation of the authority's staff; and the appointment and proper management of the authority's staff.
By section 5 of the 1989 Act the authority must designate one of its officers as the "monitoring officer" who may not (in the case of most councils, including CBC) be the head of paid service. The monitoring officer is charged, under sections 5 and 5A, with the statutory duty to ensure that the authority and its executive comply with the law, and to report contraventions of legal obligations or cases he considers to be maladministration. The monitoring officer at CBC at the material time was Mr Ford.
By section 151 of the Local Government Act 1972 "... every local authority shall make arrangements for the proper administration of their financial affairs and shall secure that one of their officers has responsibility for the administration of those affairs." This is the statutory chief finance officer, commonly known as "the section 151 officer" or more colloquially, "the 151". The monitoring officer at CBC at the material time was Mr David Perry.
Under the Local Authorities (Standing Orders) (England) Regulations 2001 (SI 2001/3384) ("the 2001 Regulations") the power to approve the appointment or dismissal of the head of paid service must be exercised by the authority itself (regulation 5). Under regulation 7, where a question of discipline arises in relation to the head of paid service, monitoring officer or chief finance officer, the authority must appoint a DIP (either by agreement or in default of agreement, nominated by the Secretary of State) to investigate and report on whether any disciplinary action should be taken. In this case the DIP was Mr Adrian Lynch QC.
The DIP has various powers including that of continuing any temporary suspension of the relevant officer. The authority's powers are correspondingly circumscribed. In particular, it may not suspend the relevant officer for more than two months without a direction from the DIP (schedule 3, para 3 and regulation 7(3)); and it may not dismiss the officer or take any other disciplinary action except in accordance with a recommendation from a DIP made in a report under regulation 7.
A head of paid service (since 1993) and (since 7 November 2001) a monitoring officer and statutory chief finance officer, are therefore given statutory protection against dismissal. The purpose is, manifestly, to protect them against dismissal by elected members for political reasons, or where the officer's duty to uphold the law and act properly requires him or her to confront elected members. In practice, the likelihood of dismissal is much diminished by these provisions and the likelihood of a departure on agreed terms much increased.
Under the former Local Government Pension Scheme Regulations 1997 (SI 1997/1612), as amended ("the 1997 Regulations"), detailed provision was made in relation to the pensions of local government employees. The 1997 Regulations were replaced with effect from 1 April 2008 with other regulations, without major changes to the substance of the law. The 1997 Regulations governed local authority officers' pensions during the material period.
Regulation 27(1) of the 1997 Regulations provided that where
"a member [of the Local Government Pension Scheme] leaves a local government employment by reason of being permanently incapable of discharging efficiently the duties of that employment or any other comparable employment with his employing authority because of ill-health or infirmity of mind or body, he is entitled to an ill-health pension and grant."
By regulation 27(5) the words "permanently incapable" in regulation 27(1) mean "that the member will, more likely than not, be incapable, until, at the earliest, his 65th birthday".
The preconditions of the entitlement of Mrs Laird to an ill health pension and grant at the material time were therefore: (i) that she must leave a local government employment; (ii) that it must be more likely than not that she will be incapable until her 65th birthday of discharging efficiently the duties of her (or comparable) employment; and (iii) that she must leave a local government employment by reason of that incapacity.
The contractual background
Mrs Laird's contract of employment incorporated, with some modifications, the JNC terms and conditions. The most relevant provision for present purposes is clause 16 which deals with "Procedures for Redundancy, Capability and Discipline". It provides as follows:
"PROCEDURES FOR REDUNDANCY, CAPABILITY AND DISCIPLINE
INTRODUCTION
16.1 Procedures are set out below for use in cases relating to discipline, capability and redundancy. The joint secretaries of the JNC should be notified as soon as it is proposed to use any of these procedures and both parties are also recommended to contact the appropriate side secretary as soon as possible to ascertain whether more detailed assistance might be desirable.
16.2 In general, informal conciliation is to be preferred to formal procedures if it can bring about a mutually agreed solution to the problems that have arisen. Such solutions should make it clear what specific changes in behaviour and/or performance are expected and within what timescales.
16.3 The joint secretaries are available at any stage in the procedures to act in an impartial conciliation role, whether formal or informal if required to do so by either party.
GENERAL
16.4 The principles of natural justice and of good management practice must govern the conduct of any proceedings against the chief executive on the grounds of either alleged misconduct (i.e. 'discipline') or alleged inability to carry out the role of chief executive (i.e. 'capability'). Authorities should also have full regard to the principles and standards set out in the ACAS Code of Practice on Disciplinary Procedures.
16.5 Any decisions in such matters must be in accordance with the requirements of the law, in particular the provisions of the Local Authorities (Standing Orders) Regulations 1993. These regulations specify that no "disciplinary action" may be taken by an authority other than in accordance with a recommendation made by a designated independent person. "Disciplinary action" is defined in the Regulations so as to include proposed dismissal, for any reason other than redundancy, permanent ill-health, or failure to renew a fixed term contract. In other words, the designated independent person procedure covers cases both of 'discipline' and of 'capability'.
16.6 Discipline and capability procedures should be handled as quickly as is consistent with the need to investigate the case fully and to give the chief executive a fair opportunity to reply fully to complaints.
MODEL DISCIPLINARY PROCEDURE
16.7 Except where alternative arrangements have been agreed in advance between the authority and the chief executive, the following model procedure should apply in cases of alleged misconduct.
16.8 The model procedure can be modified by mutual agreement to suit the particular circumstances of the case, but not so as to contradict the requirements of the regulations. There is an obligation on both the authority and the chief executive to give fair consideration to reasonable proposals from the other party to modify the model procedure to suit local circumstances.
16.9 Where a question of discipline is raised in connection with a chief executive, a politically balanced group of not fewer than three elected members, appointed by the leader of the council, should give careful consideration to any allegations. If, following careful consideration, members feel further investigation is required, a preliminary and careful investigation should be carried out by the members nominated to consider the allegations.
16.10 The purpose of the preliminary investigation is to determine if a question of discipline exists which, if established, could not be resolved informally, e.g. through an unrecorded informal warning.
16.11 Once the preliminary investigation has commenced, the chief executive should be notified in writing of the allegations which are being investigated and be given the opportunity to make representations on them to the investigating members before they decide to proceed further.
16.12 The role of a preliminary investigating committee is to conduct a careful investigation in order to decide if there is a case for the independent person to consider further. The committee will draw up the charges the independent person will hear.
16.13 Fair notice should be given to enable the chief executive adequate time to prepare a response to the complaints which give rise to the investigation. During the preliminary investigation the chief executive is entitled to attend and has a right to be represented by his or her trade union representative or some other person of his or her choice, but not at the authority's cost.
16.14 In accordance with normal disciplinary procedures, including the ACAS guidelines, the members of the investigating committee must satisfy themselves that there is a case to answer. Where there is evidence from third parties then this evidence must be evaluated, and if it is intended that it form the basis of the case, then these matters should be put to the chief executive in order that he or she may respond or comment before a decision is made to proceed.
16.15 If, following the preliminary investigation, the members nominated to consider the allegations decide that a case exists which requires full investigation, it will be necessary for both parties to agree the appointment of an independent person in accordance with Regulation 3(1) of the Local Authority (Standing Orders) Regulations 1993. If the parties cannot agree on an independent person, in the first instance the joint secretaries will be able to advise. If agreement is still not reached the independent person has to be appointed by the Secretary of State. A decision to have a full investigation should be communicated in writing to:
(i) the chief executive and at his or her request to any trade union of which he or she is a member, and
(ii) the joint secretaries of the Joint Negotiating Committee.
SUSPENSION
16.16 In discipline cases, suspension may be appropriate where the chief executive's continuing presence at work might compromise the investigation or impair the efficient exercise of the council's functions.
16.17 If at any stage it is felt appropriate, the chief executive may (subject to whatever consultation or approval may be required under the authority's standing orders) be suspended from duty by the council or appropriate committee or sub-committee acting under delegated powers on full pay pending further investigation. Written notice stating the reasons for any such suspension shall be given. The suspension may be for a maximum of two months only and shall be subject to any direction of the independent person, appointed under paragraph 16.15, who may direct the authority to terminate the suspension, to continue it, or to vary the terms upon which it has taken place.
16.18 If the authority wishes to extend the period of suspension beyond two months this must be approved b y the independent person.
INVESTIGATION BY THE INDEPENDENT PERSON
16.19 It is the duty of the independent person appointed in accordance with the 1993 Regulations to prepare a report. The report will be produced following a comprehensive investigation into any allegations. The chief executive should be given not less that ten working days notice of the commencement of the investigation and should at the same time be given full details of the allegations made against him/her. Within that time the chief executive has the right to request:-
(i) further details of the allegations made and
(ii) a postponement of the investigation for a period to be agreed between the parties, or in default of agreement, for a period not exceeding 14 days.
The chief executive is entitled to be present and has a right to be represented by his or her trade union representative or some other person of his or her choice throughout the investigation. It shall be for the authority to submit evidence of the allegations against the chief executive by witnesses and the submission of relevant documents. Such witnesses shall be open to cross examination by or on behalf of the chief executive and by the independent person. The chief executive may give evidence, call any witnesses whom he or she considers appropriate and submit any relevant documents. Any such witnesses and the chief executive (if giving evidence) shall be open to cross examination by the authority's representative and by the independent person. The authority's representative and finally the chief executive or his or her representative has the right to sum up at the end of the investigation. In no case should the independent person hear one party without the other being present.
16.20 In order to ensure all the relevant factors are considered the independent person shall, at his or her discretion, have power at any stage in the proceedings at which he/she considers appropriate:
(i) to direct that no further steps (whether by the authority or any committee, sub-committee or officer of theirs) should be taken in respect of their disciplinary action proposed or contemplated;
(ii) to direct that any suspension shall end, and the chief executive shall be reinstated;
(iii) to direct that no steps towards disciplinary action or further disciplinary action against the chief executive, other than steps taken in the presence or with the agreement of the independent person, are to be taken before a report is made in accordance with paragraph 12.21 below:
(iv) to inspect any relevant documents in the possession, or under the control, of the authority, and any other documents which any person is prepared to show to him/her;
(v) to require any employee of the authority to answer questions concerning the conduct of the chief executive providing that if any such employee has not been called to give evidence the person presenting the complaint on behalf of the authority and the chief executive (or his/her representative) may question the employee (in an appropriate forum) on the answers given to the independent person.
Note: The authority shall pay the remuneration of the independent person, and any costs incurred by him/her or in connection with the discharge of his/her functions under these regulations.
THE REPORT OF THE INDEPENDENT PERSON
16.21 The report of the independent person shall be presented to the council or the appropriate committee of the council acting under delegated powers and shall:
(i) state his/her opinion as to whether (and if so the extent to which) the evidence he/she has obtained supports any allegations of misconduct against the chief executive;
(ii) recommend the disciplinary action (if any) or range of actions which appear to him/her appropriate for the authority to take against the chief executive. The appropriate course of action will be drawn from the following list:
recorded oral warning
written warning
suspension on half pay or no pay for a specified period
relegation (i.e. a reduction in salary) for a specified period
an invitation to resign or accept retirement
dismissal with notice
16.22 Alternatively the independent person may recommend that the parties explore other alternatives, e.g.
(i) early retirement
(ii) secondment
16.23 The independent person shall at the same time send a copy of his report to the chief executive.
16.24 Before the council or appropriate committee as the case may be considers the report or the recommendations of the independent person the chief executive or his or her representative has the right to address the council or committee, but, unless the council or committee consents, has no right to call witnesses."
The Issues
The parties were largely agreed as to the essential issues to be determined which can be summarised as follows:
(1) Formation of Mrs Laird's contract of employment:
(a) Whether the contract of employment between Mrs Laird and CBC ("the Employment Contract) was formed on 4 (or on 7 or 8) January 2002 (as Mrs Laird asserts) or on 14 January 2002 (as CBC asserts);
(b) Whether formation of the Employment Contract was conditional (and if so on what legal basis) on Mrs Laird completing a medical questionnaire and being assessed as fit for appointment.
(2) Misrepresentation:
(a) How the Court should approach the construction of the wording of the medical questionnaire and was it seeking only statements of subjective and honestly held belief?;
(b) Whether the representations made by Mrs Laird in answering the medical questionnaire ("the Representations") were false;
(c) If false, whether Mrs Laird honestly believed the Representations to be true;
(d) If false, whether the Representations were made (i) fraudulently (in the sense articulated in the authorities on the tort of deceit), (ii) negligently (at common law), and/or (iii) without reasonable grounds for belief in their truth, for the purposes of section 2(1) of the Misrepresentation Act 1967;
(e) Whether CBC's remedy for any alleged misrepresentation was restricted to terminating Mrs Laird's employment, rather than suing for damages;
(f) Whether the Representations were made to CBC for the purposes of the Misrepresentation Act 1967 ("the 1967 Act"), section 2(1);
(g) Whether CBC relied on the Representations and/or was induced by them to enter into the Employment Contract;
(h) If no misrepresentation had been made and Mrs Laird had disclosed her full medical history, whether CBC would have been in breach of duty under the Disability Discrimination Act 1995 ("the DDA") had it refused to employ her;
(i) Whether CBC and/or GCOHS unreasonably failed to seek details of Mrs Laird's medical history from her GP, and, if so, with what consequence, if any.
(3) Whether CBC's claim for fraudulent misrepresentation is barred by limitation, or whether it is brought in time in the light of section 32(1) of the Limitation Act 1980.
(4) Whether CBC made negligent and/or other misrepresentations or failed to make proper disclosure to Mrs Laird at the time of her appointment about the level of support for her and for the proposed restructuring of the council's management and change in culture, and, if so, with what consequence, if any.
(5) Whether CBC, by its officers, members, and/or employees, breached the Employment Contract, were guilty of statutory harassment (under the Protection from Harassment Act 1997 ("the 1997 Act")), breached the Health and Safety at Work Act 1974 ("the 1974 Act"), the Human Rights Act 1998 ("the HRA") and/or the DDA by allegedly:
(a) Mounting and failing to protect Mrs Laird against (and investigate) a campaign of alleged harassment; and seeking to have her employment end; and otherwise failing to protect her health;
(b) Failing to engage in mediation/conciliation with Mrs Laird;
(c) Failing to have and then to implement properly and fairly and with the correct results a Grievance Procedure;
(d) Bringing and launching allegedly unfounded (and whether in fact and/or in law, and including as to whether or not, if made out, they would have justified dismissal or other disciplinary action) allegations and a disciplinary process (under "the JNC Procedure") against Mrs Laird, and then running the JNC Procedure in an allegedly biased and unfair manner, and with it reaching allegedly wrong and unfounded conclusions;
(e) Suspending Mrs Laird;
(f) Unlawfully searching and taking material from Mrs Laird's private possessions;
(g) Delaying and refusing to accept Mrs Laird's application to retire on grounds of ill-health, and then her ill-health pension;
(h) Bringing this Claim.
(6) Whether, if the matters alleged at paragraph (5) above are established, and in the light of the wording of the Medical Questionnaire and the fact that the Council did not seek advice from Mrs Laird's doctors, Mrs Laird can rely in consequence by way of defence on any or all of:
(a) Equitable set-off, including (in relation to any alleged personal injury) whether set-off would be subject to a potential limitation bar under sections 11 and 35 of the Limitation Act 1980 and whether an extension of time can or should be granted under section 33 of the Limitation Act 1980;
(b) Break in the chain of causation;
(c) Contributory negligence;
(d) CBC relying upon its own wrongdoing.
(7) Whether Mrs Laird's allegations at paragraph (5) above, or some of them, are not open to her as they are res judicata and/or issue estopped and/or an abuse of process, having been raised in previous proceedings brought by Mrs Laird against CBC and/or its then leader.
(8) What loss and damage has been suffered by CBC and whether such losses are recoverable against Mrs Laird, including issues of:
(a) Remoteness and legal causation/scope of the duty/tort;
(b) Duty to act reasonably in mitigation;
(c) Entitlement to recovery of the costs of the grievance and JNC procedures; the reasonableness and justification of them;
(d) Entitlement to recovery of the costs of the ill-health pension and the basis for calculating such loss (and including if and to what extent any transfer value from Mrs Laird's previous entitlements should be taken into account);
(e) Whether Mrs Laird can rely on alleged financial benefits to CBC deriving from her employment in relation to (i) the Local Authority Social Housing Grant ("LASHG"), (ii) Arms Length Management Organisation ("ALMO") funding, (iii) savings from restructuring, (iv) the "Save a Pound scheme, (v) Car Parking charges, and/or (vi) the Brewery Development, and, if so, whether CBC would have been (and to what extent) better or worse off financially had it not employed Mrs Laird and instead (and if so when) employed someone different.
The history of Mrs Laird's employment
Before considering the individual issues to be determined it is necessary to place them in context by setting out some of the history of Mrs Laird's employment and making various findings in relation thereto.
The full history of Mrs Laird's employment would fill many volumes. Aspects of it are already covered in a 36 page Grievance Panel report and a 144 page SBE report. At the trial I heard evidence from 30 witnesses of fact whose witness statements ran to some 650 pages. I shall here set out the most salient features of that history only. Certain aspects of the history will be further addressed in relation to the individual issues.
In 2001 CBC had a Conservative administration led by Cllr Duncan Smith. In the light of the 2000 Act various changes to the running of CBC were made in autumn 2001. These included replacement of government by individual committees with government by a central cabinet headed by a leader, the cabinet being made up of representatives of the majority party.
It was planned that these changes should be followed by a major restructuring of CBC. Central to the restructuring plan was the appointment of a new managing director who was going to formulate and implement the intended changes.
The task of handling the recruitment process for the managing director was given to the Structural Review Committee ("the SRC"), headed by Cllr Duncan Smith. They appointed the South West Provincial Employers, which is associated with the South West Regional Assembly ("SWRA"), to provide human resources advice and assist it in the administration of the recruitment process.
In early November 2001 CBC advertised for the post of managing director, its most senior officer, and head of paid service for the purposes of section 4 of the 1989 Act. The advertisement stated, inter alia, that CBC was "seeking a high calibre manager with proven experience of step change to work with the Council to change the structure and culture of the organisation" and that the successful candidate would be "a natural leader with the ability to inspire a dedicated team of professionals".
CBC supplied prospective candidates with an application pack which included: Recruitment information for the post of Managing Director, a Job Description, a Personnel Specification Form, and a Job Application Form.
The Job Description included the following statements in relation to the job's requirements:
(1) "To continue our progress and to take account of the new political arrangements we need to go through a step change in the organisation and culture. Driving this forward will be one of the key responsibilities of the Managing Director";
(2) "To advise the Council on the most effective structure for the challenges ahead and to lead the paid staff through the practical stages of structural and cultural change";
(3) "To provide leadership and direction to the employees and to develop a culture in which all employees are constantly challenging the status-quo and driving to improve themselves and the services they provide"; and
(4) "To promote harmonious relationships between members and officers."
The Personnel Specification included the following statements as to the personal qualities required:
(1) "Skills and Abilities (including basic, technical, communication, managerial skills, skills dealing with people, etc.)";
(2) Under "Skills and Abilities": "provide leadership which inspires and motivates the staff to achieve defined performance targets within scarce resources";
(3) Under "Skills and Abilities": "a high level of sensitivity to and support of political judgments";
(4) Under "Skills and Abilities": "the ability to support and work closely with the Cabinet whilst building and sustaining the confidence of all members"; and
(5) Under "Circumstances": "resilience to meet the challenge of a sustained, high pressure environment".
Mrs Laird was supplied with an application pack. On 6 December 2001 Mrs Laird sent to SWRA a completed Job Application Form dated 29 November 2001 ("the Application Form"), a supporting statement, and a covering letter.
Mrs Laird's application was reviewed, references were taken up and she made it through to the shortlist of candidates. In early January 2002 she was invited to Cheltenham for interview. The timetable for the interview process was managed by SWRA, and in particular its chief executive, Ms Bryony Houlden.
Interviews took place between 2 and 4 January 2002. On the evening of 2 January 2002 a buffet supper was held at which the six remaining candidates were given the opportunity to talk to members of the council. Each of the candidates circulated round the various tables, giving them the chance to meet and discuss issues with different members.
On the morning of 3 January 2002 Mrs Laird made a presentation to the SRC, followed by an interview. Later in the afternoon she met with Ms Houlden and was told she was in the final three. During that discussion she raised with Ms Houlden the fact that the recruitment pack referred to the appointment being on NJC terms and conditions, whereas chief executives were meant to be appointed on JNC terms and conditions for CEOs. Ms Houlden expressed surprise at this and agreed with Mrs Laird that JNC terms and conditions were more apposite.
On the morning of 4 January 2002 Mrs Laird had a meeting with Cllr Duncan Smith at which the need for change at CBC and the fact that it might prove unpopular was discussed.
A little while later Mrs Laird was informed by Ms Houlden that a problem had arisen with her application in connection with the circumstances of her departure from the CIH. The reference provided by the chief executive of Derby City Council had said that "Her departure from the Institute was well chronicled at the time. Don't be put off by that particular episode". The SRC had asked Ms Houlden to look into this and she had spoken to a local government contact who had told her that there had been serious personality clashes between Mrs Laird and the CIH Board.
Mrs Laird explained that she had been dismissed from the CIH after she had raised issues concerning members approving substantial projects without proper authorisations. She said that the fact that the CIH recognised they were in the wrong was reflected in the Compromise Agreement reached which involved a substantial payment being made to her. The SRC asked to see a copy of the Compromise Agreement. Mrs Laird agreed to this, provided that it was returned since it was meant to be confidential. The SRC were apparently satisfied with the explanations given.
That afternoon Mrs Laird and the other two remaining candidates made a presentation to and were asked questions by the council. Mrs Laird assumed that the full council was present, although in fact six of the forty one councillors were absent. There is nothing unusual about this, especially given that the meeting was being held over the holiday period.
The council vote came down to a straight race between Mrs Laird and Mrs Isobel Garner, the other candidate being eliminated in the first round of voting. The vote ended in favour of Mrs Laird by a majority of one vote, the voting being 18:17. There was then a resolution passed that Mrs Laird be offered the job, and, if she did not accept, that it be offered to Mrs Garner.
Following the council meeting Mrs Laird and the other candidates were rung by Ms Houlden and Mrs Laird was told she was being offered the job. She was asked to come to CBC's offices to discuss terms.
Back at CBC's offices Mrs Laird was met by Cllr Duncan Smith and Ms Houlden who offered their congratulations. There was then a discussion about salary levels and it was eventually agreed that Mrs Laird would be appointed on a salary of £75,000 which would increase to £79,000 subject to the satisfactory completion of specific objectives to be agreed. There was also a discussion about the giving of notice to her present employers with Cllr Duncan Smith expressing the desire for a reduced period to be agreed so that she could start as soon as possible.
There was no discussion at this stage of all the elements of the financial package, such as leave entitlement or car allowances, although relocation costs of up to £7,500 were agreed. Nor was there any discussion of the detailed terms of the contract. Ms Houlden told Mrs Laird that she would need to contact Mr Ford to discuss finalisation of all the details of the offer and Cllr Duncan Smith said words to similar effect.
Following this discussion Mrs Laird shook hands with Ms Houlden and Cllr Duncan Smith, at which stage Ms Houlden left. An agreement in principle had been reached and it was assumed by all that the required formalities would be sorted out satisfactorily.
The terms of a press release were then discussed and agreed between Mrs Laird, CBC's press officer, Miss Katherine Gunn, and Cllr Duncan Smith. Mrs Laird then went to Cllr Duncan Smith's office where they had a discussion of the changes that might be made to CBC and savings that could be achieved. Cllr Duncan Smith explained that there was some urgency about this as the CBC budget was due to be considered in February 2002 and was currently adrift from target by about £250,000. There was a discussion about staffing savings and Cllr Duncan Smith said that documentation would be sent over to Mrs Laird so that she could begin thinking about such issues. She was also asked to return to CBC on 9 January 2002 to spend the day there.
On 7 January 2002 a press release was issued. It stated that Mrs Laird had been appointed as the new managing director "subject to medical and reference formalities". On the same day Mr Perry sent Mrs Laird various documents relating to the budget proposals and Mr Ford wrote to Mrs Laird "to confirm the Council's offer to you of the appointment of Managing Director". The letter further stated that the offer was "conditional upon medical clearance being obtained from our Medical Adviser" and asked Mrs Laird to complete the enclosed medical questionnaire.
On 8 January 2002 Mrs Laird completed the medical questionnaire, which she sent to GCOHS, as requested.
On 9 January 2002 Mrs Laird spent the day at CBC where she met various officers, including the departing chief executive, Mr Lawrence Davison.
On the same day she replied to Mr Ford's letter saying she was "pleased to accept the post of Managing Director on the terms and conditions outlined in your letter" and that she had "returned the medical questionnaire, as requested, to the Council's Medical Adviser".
On 10 January 2002, GCOHS's representative signed a form, which was sent to the council, stating that "[b]ased on the information given on the health questionnaire, the applicant has been found to be ... fit".
On 14 January 2002 CBC wrote to Mrs Laird informing her that the medical clearance certificate had been received and that "we can now proceed with your appointment", and giving a start date of 4 February 2002. On the same day Mrs Laird gave formal notice to RCT.
Prior to her start date, Mrs Laird made a further visit to CBC and did a considerable amount of work on the budget and on her restructuring proposals, but she did not formally start working at CBC until 4 February 2002.
Mrs Laird presented her plans for phase 1 of the restructuring process at a council meeting on 15 February 2002. Those plans involved reducing the number of directors from five to four, and replacing the heads of service with a considerably smaller number of assistant directors, whose responsibilities would be structured on a themed basis. The council approved the plans for phase 1, and delegated the task of approval of the plans for phase 2 to the SRC.
Cllr Duncan Smith, the leader of the Conservative administration, had played a major role in the appointment of Mrs Laird. They enjoyed a close working relationship and a shared desire to achieve the restructuring agenda which had been outlined at the time of Mrs Laird's appointment, an agenda which she firmly believed in.
In May 2002 control of CBC changed to the Liberal Democrats, led by Cllr McKinlay. A change in political control is a commonplace in local government and should not give rise to undue difficulties, but in this case it did. For her part, Mrs Laird was saddened that she would no longer be working alongside Cllr Duncan Smith pursuing their shared agenda and was keen to carry on with that agenda so far as she could. On the Liberal Democrat side, there was from the outset a degree of wariness of Mrs Laird given her close working relationship with the previous administration.
The first intimation of the difficulties which lay ahead occurred even before the elections. On or about 25 February 2002, at a time when Cllr McKinlay either had been or was about to be made leader of the Liberal Democrats, he visited Mrs Laird together with Cllr Stuart-Smith. The purpose of the visit was to raise certain concerns that the Liberal Democrat group had in relation to the restructuring plan, bearing in mind that they considered it a real possibility that they would become the majority party following the upcoming elections. Although the Liberal Democrats were not opposed to restructuring, they did have concerns about how it was to be implemented. Specifically they had concerns about regeneration, which had long been an important issue for the Liberal Democrats. There had previously been a regeneration department and it was unclear how that area of work was to be covered under any restructuring. They wanted these concerns to be take into account in the proposals to be made for the implementation of the restructuring since they wanted to avoid being in the position of seeking to reverse what had just been done, should they take control of the council. Should that happen then they would wish to review the implementation of the restructuring proposals and in the meantime they did not want anything irreversible done.
At the meeting the councillors raised these concerns. Mrs Laird interpreted these concerns as being indicative of opposition to the restructuring plan generally and an inappropriate attempt to interfere in decisions already taken by council. Her response was in effect to tell the councillors that this was none of their business. The plan had been decided upon by the council and it was her job to implement council decisions. She made it clear that no councillor had the authority to countermand, amend or ignore a resolution of the council.
Cllr McKinlay was exasperated at this response to the concerns which they had been seeking to raise and may have become angry, but I do not accept that he behaved in an intimidating manner, as Mrs Laird alleges. Whilst it may be that Mrs Laird felt threatened by the difficult position in which she felt that Cllr McKinlay was putting her, I do not accept that she was threatened. It was a frustrating meeting which left both parties annoyed with each other, but no more than that.
There was a further meeting between the same parties on 2 April 2002 at which Cllrs McKinlay and Stuart-Smith made a further attempt to make Mrs Laird take on board their concerns, but with no more success than at the first meeting. At one stage Cllrs McKinlay and Stuart Smith left the room to discuss whether it was worth continuing with the meeting given the lack of progress they seemed to be making. I do not accept Mrs Laird's evidence that this occurred at the first meeting, nor that they left the room to calm Cllr McKinlay down because he had become so angry. He was more exasperated than angry and although he may have expressed his frustration at the lack of progress being made, I am satisfied that he did not do so in an inappropriate or intimidating manner.
On 2 May 2002 the elections took place and the Liberal Democrats became the controlling party. The following morning Cllr McKinlay visited the offices as the new leader and looked in on Mrs Laird. He says that Mr Ford was present in her office at the time. This was denied by Mrs Laird and I accept that there was a meeting between Mrs Laird and Cllr McKinlay alone that day. At that meeting there was a discussion about the new cabinet and the restructuring was again talked about. Mrs Laird made it clear that she would strongly resist any changes to her report on restructuring and said that, as head of paid service, the responsibility for the report was hers alone. Cllr McKinlay made clear in a firm manner his disagreement with the suggestion that the restructuring proposals were solely her province and said that things would be different now that there was a new administration.
At the time of the meeting Mrs Laird was tired and distressed. She had been up most of the night dealing with the election and she was disappointed that she was no longer going to be working alongside Cllr Duncan Smith and the Conservatives. This may have caused her to be more upset by the meeting than was warranted. Firm disagreement had been expressed by Mr McKinlay but not in an aggressive or intimidating way.
Over time the importance and the upset caused by the meeting appears to have assumed greater significance in the mind of Mrs Laird. She produced a handwritten note of the meeting which was typed up in November 2002. I do not accept that it was contemporaneous and find that it was written up shortly before the typed up file note was made, by which time her relationship with Cllr McKinlay had significantly deteriorated. The note and Mrs Laird's evidence was to the effect that at the meeting Mr McKinlay had accused her of being a "Tory nark" and said that he did not trust her and did not feel obliged to honour her appointment. Whilst it is probably true that Mr McKinlay regarded Mrs Laird as being too closely associated with the Conservatives and he may well have indicated this at the meeting, I do not accept that he used these words.
This meeting, together with the two earlier unproductive meetings which had taken place, meant that from the start the relationship between Mrs Laird and Cllr McKinlay was difficult and beset with mutual wariness. Matters were not helped by the outcome of the first council meeting held by the new administration on 10 May 2002. By the time of the meeting the structure of the new administration had not been decided upon and the opposition made life difficult for Cllr McKinlay by asking questions which suggested that he had no clear grasp of matters. They forced him to withdraw the nomination of Cllr Lloyd as a cabinet because he was also Mayor. They then asked him a question which he asked Mrs Laird to respond to, but she said she could not do so without breaching political neutrality rules, leaving Cllr McKinlay open to opposition taunts of being unable to answer questions without assistance. Rightly or wrongly, he felt let down by Mrs Laird both in terms of preparation for the meeting and in the conduct of the meeting, and the Liberal Democrats' displeasure was made clear to Mrs Laird by Cllr Stuart-Smith in robust terms after the meeting.
Meanwhile, rumours were circulating that Mrs Laird would not be staying in her post. The editor of the local paper, the Gloucestershire Echo ("the Echo") approached Mrs Laird about this and there was a proposal that a joint press statement be issued by all four Group Leaders dispelling these rumours. Cllr McKinlay did not agree to do so as he thought it might simply make matters worse, but Mrs Laird interpreted this as demonstrating a lack of support.
There were also reports coming back to Cllr McKinlay of Mrs Laird being rude about the competence of the new administration and stating to officers that the divisions amongst the Liberal Democrats meant that it should effectively be regarded as a "hung council".
Further, in relation to restructuring there continued to be disagreements. Mrs Laird was adamant that none of the approved proposals should be changed and took the stance that this was a staffing matter which was her responsibility as head of paid service, rather than that of the cabinet. The relative roles and responsibilities of the managing director and the cabinet were therefore also in issue.
Even before the end of the first month of the new administration the collision course between Mrs Laird and the Cllr McKinlay and the new administration was clearly set and mutual wariness was fast turning into mutual antipathy and distrust.
In a later reported conversation in August 2003, Cllr McKinlay was noted as saying in relation to Mrs Laird that: "She thinks she can take on the world. She always thinks she is right, which from my point of view is sodding infuriating". Mrs Laird is a perfectionist who insists that things are done in a certain way. In her approach and manner she can appear inflexible, superior and dismissive of others. She regarded Cllr McKinlay and the new Liberal Democrat administration as being inexperienced and not very competent and she was somewhat contemptuous in some of her dealings with them. I have no doubt that this did "infuriate" Cllr McKinlay, who possesses a fairly short fuse and was inclined to distrust and dislike Mrs Laird from the beginning. This made for an increasingly combustible relationship.
On 6 June 2002 there was a meeting between Mrs Laird and Cllr Jordan representing the Liberal Democrat group in order to discuss restructuring issues. Mrs Laird claimed that during this meeting Cllr Jordan said that as he had not been involved in her appointment he did not feel able to support it and that he shared Cllr McKinlay's views about her. This is similar to the comments previously attributed to Cllr McKinlay which I do not accept were made and I am not satisfied that they were made on this occasion either.
In June 2002 a further issue arose which was to be a further catalyst in the deteriorating relationship between Mrs Laird and Cllr McKinlay. This concerned Mr John Webster, who was a council official who had recently agreed to take early retirement. On 15 June 2002 he wrote to Cllr McKinlay making various allegations against Mrs Laird. In particular he alleged that Mrs Laird had claimed that he had leaked information to the press about CBC's restructuring proposals and that she knew this because his phone had been "bugged".
Cllr McKinlay considered that Mr Ford should be instructed to investigate the allegations made and so informed Mrs Laird. She took umbrage at this suggestion. Her view was that there was nothing to the allegations and that Mr Webster, as a former employee who had signed a compromise agreement with CBC, had no right to have complaints internally investigated. She also regarded Mr Webster as being a friend of Cllr McKinlay as well as a fellow Liberal Democrat, and that accordingly Cllr McKinlay should not have been dealing with the matter. As she said, the meeting "did not end amicably".
On 26 June 2002 a letter was received from Unison on behalf of their union members expressing concerns about the restructuring and the climate of "fear and uncertainty" it had allegedly created. There followed a meeting at the beginning of July 2002 between Mrs Laird and Cllrs McKinlay and Stuart-Smith at which this letter and the restructuring were discussed. At the meeting Mrs Laird was instructed not to go ahead with the restructuring for the moment and to address the management issues raised. If she did so then Cllr McKinlay would send a memo to senior staff saying that the cabinet supported her.
Mrs Laird claimed that at this meeting Cllrs McKinlay and Stuart-Smith told her that she should think very carefully about her position, which she interpreted as an attempt to force her to resign. This was denied by Cllr McKinlay who said that it was Mrs Laird who asked whether she needed to consider her position to which they replied that she did not. Indeed it was his evidence that this was a positive meeting that cleared the air and led to an improvement in relations. I am not satisfied that Cllrs McKinlay and Stuart-Smith made comments in the terms alleged. However, it is correct that no written memo of support was sent round despite the agreement to do so, although I accept that a statement of support was made orally by Cllr McKinlay at a meeting with heads of service a few days later.
Mrs Laird was away on holiday from 12 August to 2 September 2002 and shortly after her return she had an interim performance appraisal at which a pay rise was agreed with Mrs Laird agreeing to undergo personal skills training. Cllr McKinlay was a member of the appraisal panel.
Shortly thereafter issues concerning Mr Webster's complaint were to flare up and cause a significant further deterioration in relations. Whilst Mrs Laird had been on holiday Mr Webster had written another letter of complaint to the effect that he had been unaware at the time of the compromise agreement that there were outstanding disciplinary matters concerning him. He requested that SWRA investigate the matter, ensure that correct procedures were carried out, identify any allegations made against him and prepare a statement of what had happened. Having consulted Mrs Pitman, Cllr McKinlay had written back agreeing to do so.
When Mrs Laird heard this she became extremely angry and upset. She understood this to relate to the original complaint made involving allegations against her which was being investigated by Mr Ford. She regarded any attempt to involve outside bodies in such an investigation as unconstitutional and unjustified. She severely reprimanded Ms Pitman in relation to what had been done and then forcefully repeated her concerns at a meeting with Cllr McKinlay on 16 September 2002. She accused him of a range of breaches of the Code of Conduct.
On the following day there was a further meeting between them. In her own words she told him that "in advancing his friend's complaint so resolutely it was impossible not to question his motives for doing so or to believe he was not abusing his position" – a serious allegation. Mr McKinlay's evidence, which I accept, was that she threatened him with the SBE and legal action and even mentioned the possibility of imprisonment.
It is clear that at these meetings Mrs Laird was angry and threatening towards Cllr McKinlay – in colloquial terms she "lost it". In her mind the reference of Mr Webster's complaint to the SWRA was all part of a plan on Cllr McKinlay's part to undermine her and favour his friend and this made her furious. However, in truth this was an over reaction on Mrs Laird's part. The original complaint was being investigated by Mr Ford and indeed he reported on 16 September 2002 effectively dismissing the complaint. The request to involve the SWRA arose out of a further complaint which had been made by Mr Webster that did not involve allegations being made against Mrs Laird personally. The SWRA were not being asked to go over exactly the same ground as Mr Ford. The upshot of these two heated and confrontational meetings was an almost complete breakdown in their relationship. As Mr McKinlay put it, "it is from this point on that my relationship with Mrs Laird deteriorated markedly".
Further disagreements emerged at a council meeting on 30 September 2002. At the meeting Mr McKinlay claimed that there had been an increase in staff departures and sickness absences in the last year and asserted that this was due to the restructuring initiated by Mrs Laird. Mrs Laird then produced statistics which did not support this claim. After the meeting Mr McKinlay berated Mrs Laird for having contradicted him during a council meeting and shouted at her.
On 6 November 2002 there was a meeting between Mrs Laird and Cllr Hay, the only female cabinet member, at which the issues between Mrs Laird and Cllr McKinlay were discussed. This led to an arrangement whereby it was agreed that there would be regular Friday meetings between Mrs Laird and Cllr McKinlay to discuss CBC business and also a face to face meeting to discuss their difficulties.
Prior to the face to face meeting Mr McKinlay took advice from Ms Houlden of SWRA and was told to be open minded and honest. In following this advice at the meeting Mr McKinlay told Mrs Laird that he often felt physically sick as a result of the stress she put him under. This was interpreted by Mrs Laird as a statement that the sight of her made him sick – i.e. as an insult rather than a statement of fact. This interpretation was later repeated by Mrs Laird to a number of staff and opposition councillors as an example of his abusive behaviour. The clear the air meeting therefore ended up making matters still worse.
Towards the end of 2002 and in early 2003 rumours started circulating that the cabinet was seeking advice as to how to terminate Mrs Laird's employment. There was some substance to these rumours as the cabinet had consulted Ms Houlden as to what the options were in the light of the apparent breakdown in the relationship between Mrs Laird and Cllr McKinlay. Her advice was that there should be a private conversation between Mrs Laird and Cllr McKinlay about how they saw the future. If it was the view of the leader and cabinet that current arrangements were not working then that should be made clear to Mrs Laird and she should be asked for her views as to how it might be resolved. If there was agreement that the problems were insoluble then there could be a mutually agreed parting of company. If her view was that the problems were soluble, but they disagreed, then they could pursue a disciplinary action against her if they had evidence of misconduct. Alternatively they could consider a restructuring which meant that the post of managing director was no longer needed. This advice over the telephone was followed up by a meeting between Ms Houlden and various Liberal Democrats including Cllr McKinlay at Cllr Hay's house on 5 February 2003 at which the various options were further discussed.
One possibility which was considered at around this time was for Cllr McKinlay to step down as leader. This, however, was rejected by the cabinet who indicated that they shared a number of the leader's concerns about Mrs Laird and thought that he should stay in place.
Meanwhile differences and disagreements between Cllr McKinlay and Mrs Laird continued. Each would interpret the other's statements and actions in a suspicious light and assume a hidden agenda. There were disagreements about Mrs Laird's role in relation to a major local development scheme; about the performance of Mr Ford and what should be done about it; about the preparation of the budget, and various other issues.
An example of the degree of mutual distrust that had been reached is provided by a questionnaire which had been sent out to members relating to staffing of committees in February 2003. Cllr McKinlay was angered by what he saw as the slanted nature of the questionnaire and commented as follows in an email sent to other members of the Liberal Democrat group:
"The Managing Director believes that we as an administration are committed to Area Committees and devolving power to them. She is in effect doing all in her power to ensure this cannot take place, by claiming resources are not available to run them, and by conducting a rigged consultation exercise, to support her position"
In fact the questionnaire had been prepared by Mr Ford whilst Mrs Laird was away on sick leave and so, whatever the merits or demerits of the questionnaire, Cllr McKinlay was wrong to assume that it was down to Mrs Laird.
The result of the discussions between the cabinet and SWRA was that it was decided to approach Mrs Laird to see if there was any room for an agreed parting of ways. The job of approaching Mrs Laird was deputed to Cllr Stuart-Smith who visited Mrs Laird on the afternoon of 5 March 2002.
The plan had been to have an off the record conversation but it does not appear to have been handled very well by Cllr Stuart-Smith. Instead of agreeing at the outset that it was to be an off the record meeting he did not raise this until the end, when he said that the meeting should not be discussed and that he would deny that it had taken place. Further, his opening gambit had been to ask Mrs Laird "what would it take for you to go?" This was repeated later in the conversation to which Mrs Laird replied that it would be more than CBC could afford and that if she had to put a figure on the cost it would be £1 million.
Mrs Laird was clearly shocked at this turn of events and regarded it as being an attempt to dismiss her. However, I accept that it was meant to be only an informal, exploratory discussion, although this should have been agreed before anything was said and the discussion could and should have been handled more adroitly by Cllr Stuart-Smith.
On 7 March 2003 Mrs Laird wrote to Mr Ford in relation to the approach which had been made to her, alleging that she had been constructively dismissed and demanding that he address the issue in his statutory capacity as monitoring officer.
On 10 March 2003 Mrs Laird informed the other three directors about what had happened. On 13 March 2003 Cllr McKinlay wrote to her in the following terms:
"It has come to my attention from a number of sources that you have made comments concerning my conduct towards you in private meetings to a number of members of staff. In particular that you have said that I am regularly "very rude" to you, and that you often feel "bullied and intimidated" by my behaviour towards you.
I am to say the least surprised at these comments, as at no time in the past ten months have you raised these concerns with myself, and it is certainly never my intention to in any way be either rude or bullying.
I must also tell you that I regard these comments with the utmost seriousness. Not only are they defamatory to myself, but they undermine my position as Leader of the Council. I must therefore insist that you either:-
1) Stop making these unsubstantiated comments or
2) Make a formal complaint against me, so that my name can be cleared by an independent investigation.
In the light of the above, I am no longer prepared to have meetings you unless a witness is present to verify the content of the conversation."
On 17 March 2003 Mrs Laird replied to Cllr McKinlay's letter refuting his claims. On 19 March 2003 Mrs Laird met with the opposition leaders and told them of her concerns and her belief that she had been bullied by Cllr McKinlay. Despite Cllr Godwin and Mrs Laird's evidence to the contrary, I do not accept that Cllr McKinlay was invited to this meeting. Indeed, it would have made little sense for him to be invited given that the purpose of the meeting was for Mrs Laird to air her concerns about him. However, after this meeting with Mrs Laird the opposition leaders sought an urgent meeting with Cllr McKinlay, to which he refused to agree.
Mrs Laird had meanwhile involved her union, ALACE, and Mr Richard Penn of the union had sought a meeting with the cabinet to discuss the issues raised. The meeting took place on 25 March 2003 but at Mrs Laird's request it was attended by representatives of the cabinet rather than the entire cabinet; in the event Cllrs Hay and Fidgeon. At the meeting they claimed that she was difficult to work with and was disliked by staff.
On 31 March 2003 there was an article in the Echo stating that a "massive rift" had erupted between Mrs Laird and Cllr McKinlay, that trust had completely broken down, and that they will only communicate by letter or if a third party is present. This was one of a number of articles appearing in the Echo during this period which was obviously based on leaked CBC information.
During early April 2003 a further dispute blew up between Mrs Laird and Cllr McKinlay regarding a report to council concerning a LAHSG grant.
Mrs Laird had had this report amended partly to reflect legal implications raised by Mr Ford and partly to cover her own position, as in order to secure the grant she had made the decision to proceed to exchange of contracts in relation to a property before all the usual steps were in place. She had therefore asked for the words "who exercised the necessary powers on the council's behalf" to be added in relation to her. Cllr McKinlay interpreted this as being an attempt to enhance her role and he also considered that Mrs Laird had sought to mislead as to the need for the matter to be brought to council's attention by means of a report. In relation to this latter point, I find that Cllr McKinlay's concern was understandable in the light of the contemporaneous documents but was not in fact correct. Cllr McKinlay then asked for the report to be withdrawn as it was in his name, but Mrs Laird nevertheless circulated it.
This episode provides an illustration of both parties being at fault, refusing to back down, and building up an incident out of all proportion. In particular, Cllr McKinlay was at fault for reading too much into the amendments made by Mrs Laird to the report and interpreting it as unjustified self promotion; whilst Mrs Laird was at fault for failing to follow Cllr McKinlay's ultimate instructions in relation to a report that was in his name.
On 15 April 2003 ALACE received a letter from SWRA advising that Cllr McKinlay intended instituting disciplinary proceedings against Mrs Laird unless "mutual resolution" could be agreed. There had and continued to be discussions between Mr Penn of ALACE and Mr Richard Payne of SWRA to see whether a resolution was possible. On 17 April 2003 Cllr McKinlay was advised by Mr Payne that Mr Penn had contacted him to say that Mrs Laird might be interested in an offer. Cllr McKinlay instructed him to find out what figure she was interested in and there was a discussion between them as to what figure might be appropriate, the suggestion being 2/3 of Mrs Laird's salary. Cllr McKinlay also said that if any offer was to be accepted it would be best if Mrs Laird left straight away.
There then followed a discussion between Mr Payne and Mr Penn. Mr Payne's instructions were to discuss the parameters of what offer might be acceptable rather than to make a formal offer, but the figure of £63,000 was mentioned by him as well as the intention that she should leave straight away should any offer be accepted. This was interpreted by Mr Penn to be an offer and this was relayed back to Mrs Laird on 19 April as an offer of £63,000 to leave immediately and not return to work the following Tuesday.
As the managing director is a council appointment Mrs Laird considered that any such offer made on the instructions of the cabinet to be unlawful and she reported what had happened to opposition leaders and formally to the monitoring officer, Mr Ford. However, in fact no formal offer had been made. In the context of ongoing negotiations a proposal had been put forward, but that had been subject to approval by others, and specifically the District Auditor, the section 151 officer and the monitoring officer.
On 22 April 2003 Cllr McKinlay emailed Mr Ford raising complaints against Mrs Laird and requesting that a JNC Panel be established. On 24 April 2003 he made a formal request by letter and he wrote to Mrs Laird the same day informing her that he was so doing. In his letter to Mr Ford Cllr McKinlay summarised his complaints as being that "Mrs Laird had intentionally mis-informed me as Leader of the Council and Cabinet colleagues" and that she been "intentionally seeking to undermine position of myself as Leader, other Cabinet members, and indeed Officers".
By letter dated 23 April 2003 Mrs Laird informed Mr Ford that she would be making a formal complaint to the SBE. She summarised her concerns as follows:
"I am writing to let you know that following careful consideration, I have decided that I no longer have any alternative but to formally lodge my concerns about the Conduct of the Leader of the Council with the English Standards Board. My concerns specifically relate to examples of behaviour that I believe breaches the Code of Conduct in the following areas:
1. Failure to treat people with respect, including attempts to prevent those who work for the Authority from being unbiased.
2. Damaging the reputation of the Office of Leader and potentially the Council as a whole.
3. Using the position of Leader improperly to someone's disadvantage.
4. Misusing the Authority's resources."
On 28 April 2003 the leaders of the opposition made a complaint to the SBE complaining of the cabinet's conduct, principally in relation to the "offer" made to Mrs Laird and the cabinet's involvement in staffing matters.
Following Cllr McKinlay's formal request Mr Ford took steps to set up a JNC Panel and on 28 April 2003 invited Mrs Laird's comments on the composition of any such panel. Mrs Laird's position was that the JNC Panel could only be appointed by the full council rather than the leader. This continued to be a major bone of contention. Mr Ford took counsel's advice which supported his position, whilst Mrs Laird took advice from Wragge's and Berwin Leighton Paisner to contrary effect. Eventually at the end of June 2003 counsel changed his advice and it was accepted that the JNC Panel would need to be appointed by the council. A meeting to consider doing so was called for 28 July 2003.
Another bone of contention during this period was the lack of information provided to Mrs Laird about the nature of Cllr McKinlay's complaints. In his letter to Mr Ford of 24 April 2003 Cllr McKinlay had summarised his complaints, but he had asked Mr Ford to keep the allegations confidential and Mr Ford had acted accordingly.
Mrs Laird not surprisingly wanted to know the details of the allegations being made and this was the subject of frequent requests to Mr Ford. Mr Ford was eventually advised by counsel that the "gist" of the complaints should be made known to Mrs Laird. Cllr McKinlay was so informed and on 18 July 2003 he wrote a letter which stated as follows:
"1. You have intentionally misinformed the Leader and other members of the Cabinet.
2. You have intentionally sought to undermine the Leader's position, that of members of the Cabinet and of some of your fellow officers".
This was a very generalised "gist" and Mr Ford told Cllr McKinlay that he did not think it was sufficiently detailed. Eventually on the day of the council meeting of 28 July 2003 a more detailed document was provided by Cllr McKinlay, setting out his main concerns.
Meanwhile, on 24 July 2003 Mrs Laird's union wrote to all councillors complaining that it was still not known, despite repeated requests, what the substance of the allegations being made actually were, four months after they had first been raised.
On the same day Berwin Leighton Paisner wrote threatening legal action if the proposal to appoint a JNC Panel was adopted. The letter also raised allegations of sex discrimination, victimisation and harassment, breach of the Public Interest Disclosure Act 1998 and constructive dismissal and highlighted that there was no cap on compensation.
In the light of Berwin Leighton Paisner's letter, and the late production of more detailed complaints by Cllr McKinlay, it was resolved that it would not be possible to proceed with the resolution to appoint the JNC panel. Trenchant criticism was made by a number of opposition councillors of the late provision of detail of the complaints made against Mrs Laird and of this treatment of her.
Further, shortly before the meeting anonymous letters had been placed in every councillor's post tray concerning Mrs Laird. The letter drew attention to the alleged circumstances in which Mrs Laird had left the CIH. As soon as this was brought to the attention of Mrs Laird efforts were made to retrieve any still unopened letters.
The strain of recent weeks and of the events of 28 July 2003 had meanwhile taken their toll on Mrs Laird and she suffered a break down. Her GP advised that she was suffering from acute anxiety and depression and insisted that she be signed off work immediately.
Mrs Laird returned to work briefly on 30 July 2003 to brief her fellow directors on what needed to be done in her absence. She was distressed to discover that the contents of the anonymous letters had been circulated by email to every councillor via an email address called "Daphne – Townsend @ excite.com".
Mrs Laird then went to the police to raise her concerns about the anonymous letters, the emails and her conviction that her computer was being accessed without her consent. The matter was then handed over to the SBE who advised that it fell within their jurisdiction.
Meanwhile on 4 August 2003 a long discussion took place at CBC's offices between Cllr McKinlay and Ms Marie Fallon, Group Director for Environment and acting managing director in the absence of Mrs Laird. The conversation covered a number of CBC matters including Mrs Laird and Cllr McKinlay's relationship with her. During the course of the conversation Cllr McKinlay was rung on his mobile phone. He sought to reject the call as he did not want to be interrupted and put his phone back in his pocket. Unfortunately it appears that he had in fact answered the call and so the phone remained on. On the other end of the line was a reporter from the local paper, the Echo, who listened in and made a transcript of much of the ensuing conversation.
When it was learned what had happened Wiggin & Co were instructed by CBC and they wrote to the Echo seeking to prevent publication of any details of the conversation. This was unsuccessful and on 8 August 2003 an article appeared under the heading "Breaking point – Leader says he and the MD can't go on – and the council is grinding to a halt". An edited transcript of the overheard conversation was set out. It included the following statements by Cllr McKinlay (certain other comments were edited out):
"It's getting to the point where cabinet members don't want to turn up at meetings".
…
"The chief officer has undermined the cabinet to the point where we find ourselves".
…
"When we first came to office a year ago in May, I thought I would give her a chance. There now comes a point where we have to say this has had it. It's one person's word against another. These are problems that are only going to get worse"
…
"There are no rules, it's just a running battle all over the place".
…
"The council is at breaking point. The people who speak to each other are the people who trust each other. There used to be morale here but that's going, nobody trusts anybody and we're left with a whole load of individuals holding everything up..
People are keeping their own counsel and it's just going to get worse and we have to run a council when every trick in the book is going to be played".
…
"Things are grinding to a halt and that's my responsibility, it's where the buck stops".
…
"Unless we break this stranglehold nothing can go forward".
The edited out comments included the following:
"She thinks she can take on the world.
She always thinks she is right, which from my point of view is sodding infuriating."
…
"Part of her just does things on a whim"
…
" Mrs Laird will keep on doing these sort of things if she continues to get away with it.
She goes and takes home the security tapes so she can watch them at home and see whoever may have been coming in and out.
They're taped over every seven days so presumably they could be doctored?
We have to sit here while the managing director takes them home for three days completely unsupervised.
Why do we let her get away with it? Because everyone is shit scared of her, that's why."
…
"This is going to get nasty and very very dirty".
…
"What I want is a clear unchallengeable way to take this process forward."
Mrs Laird was warned by the editor of the Echo shortly before the article was published but was understandably distressed by it. The article was syndicated nationally and Mrs Laird was pressed by reporters asking for her comments.
Shortly thereafter CBC hired Mr Patrick Brady to assist them on a consultancy basis. Mr Brady was a former solicitor who had been Chief Executive, head of paid service and monitoring officer at High Peak Borough Council. He was brought in to assist Mr Ford, although Mrs Laird interpreted his appointment as being made in order to help get rid of her. At this stage CBC also started seeking advice from Mr Timothy Kerr QC.
It had been agreed that Mrs Laird be given the opportunity to have an input in the instructions to be provided to Mr Kerr QC, although she complained that insufficient time for this had been given to her for this purpose and that the existing instructions were partial. For this she blamed Mr Brady and from that time on she believed that he was biased against her. This snap judgment was unfair on Mr Brady, but reflected the fact that Mrs Laird's state of mind by this time was such that she would readily assume people were working against her. In fact, Mr Brady carried out his task in an even handed manner, although over time he formed an unfavourable view of Mrs Laird, as is reflected in some of his contemporaneous messages and indeed the intemperate terms of passages in his witness statement, as was acknowledged by him in evidence.
Following the receipt of Mr Kerr QC's advice in late September 2003 Cllr McKinlay and five other councillors wrote to the Mayor requesting an extraordinary meeting to consider Cllr McKinlay's complaint against Mrs Laird and the establishment of a JNC panel. On the same day Mr Ford wrote to Davies and Partners informing them of the meeting. Davies and Partners were now acting for Mrs Laird personally and had asked Mr Ford to correspond with them rather than Mrs Laird directly. They had also written a number of aggressive letters to CBC, threatening claims and making criticisms of Mr Ford's performance of his duties as monitoring officer.
Mrs Laird returned from a holiday on 10 October 2003 and learned of the extraordinary meeting which had been called by reading about it in the press, notwithstanding that she had understood from her union representative that a "truce" had been called which meant that no meeting would be called while she was away. She also learned that one of the issues raised in Mr Kerr QC's advice was possible termination of Mrs Laird's employment due to medical incapacity. She had also received a letter from Mr Huckle asking her to direct requests made by her whilst off sick for information or work from staff through him, as these requests were causing difficulties and disruption. However, she interpreted this as an attempt to cut her off from council activity. The combination of these matters caused her to become very distressed and to suffer a severe panic attack that led to her being taken to hospital.
Deciding that attack was the best means of defence, Mrs Laird then resolved to submit her own grievances against Cllr McKinlay and other Liberal Democrat councillors and to seek to have this determined before Cllr McKinlay's complaint was to be considered. On 15 October 2003 the opposition leaders advised the Mayor that they required an extraordinary council meeting to hear Mrs Laird's grievances on 23 October 2003. On 16 October 2003 Mrs Laird served a grievance setting out six complaints against Cllr McKinlay. Some of the complaints involved other Liberal Democrat councillors, namely Cllrs Thornton, Fidgeon, Hay, Stuart-Smith, Surgenor, Lloyd, Jordan and Franklin. In summary, Mrs Laird's complaints were as follows:
(1) There had been a breach of implied duty of trust and confidence by leader and members of cabinet;
(2) There had been a failure of the leader to comply with the contractual requirement to offer and undertake an annual appraisal for Mrs Laird;
(3) There had been an attempt to terminate Mrs Laird's employment without the lawful consent of the council;
(4) Mrs Laird had been repeatedly defamed and undermined by the leader;
(5) There had been a failure of the leader and cabinet to comply with Mrs Laird's contractual rights in respect of the JNC procedure or to follow internal management practices when pursuing complaints about her; and
(6) In convening the meeting of the 27 October 2003 the leader and others failed to have regard to Mrs Laird's privacy and health and acted in a way that caused distress and harm ("Grievances 1 to 6").
For the purpose of the 23 October 2003 meeting, Mr Ford had prepared a report about Mrs Laird's grievance. He recommended that the grievance be received and arrangements made to deal with it. The report contained one inaccuracy regarding the involvement of the Joint Secretaries which was an error. Mr Ford explained in an addendum about the inaccuracy and that it did not affect the substance of his recommendations.
On 22 October 2003 Mrs Laird sent an email to a number of people, including the Mayor, Mr Ford, Ms Pitman, Mr Perry and the group leaders, making reference to the lack of "truthfulness" shown by Mr Ford's error, to CBC's "risk exposure" and to members' potential personal liability.
On 23 October 2003 Mrs Laird circulated what she called "A Grievance Matter – Erratum Notification to Council" to the monitoring officer's report under cover of a letter to all councillors. Although recognising at the start of the covering letter that she had a personal interest in the matter, Mrs Laird later stated that she was writing the letter as head of paid service and sought the exclusion of Mr Ford and Mr Brady from the meeting.
The 23 October 2003 meeting proved to be a highly charged and upsetting event for many concerned. Since Mrs Laird was officially still off sick, and the meeting was being held to hear her own complaint, Mr Huckle considered that he should assist the Mayor in chairing the meeting. Mrs Laird, however, insisted that she should sit in her usual place and objected to the presence of Mr Huckle, who eventually sat at the back of the room. As stated above, Mr Ford had prepared a report for the meeting as monitoring officer but was aggrieved to find that Mrs Laird had amended his report, purporting to do so as head of paid service. He regarded this as undermining his position, especially as the amended document had been circulated by letter to all members. She was also overbearing towards him at the meeting and, through her solicitor, alleged that he had been partial and that Mr Brady, having worked closely with Mr Ford, might also be "tagged with bias".
The end result of the meeting was that it was resolved that a panel of members be appointed to hear Mrs Laird's grievances. Following the meeting, Mrs Laird's husband, Mr Hugh Laird, sent an email to Mrs Becky Robinson of Mrs Laird's secretariat in the following terms:
"How many days does it take the Cabinet to get a decision to put the Managing Director in front of a disciplinary panel? – 240"
How many days does it take the Managing Director to get the Cabinet in front of a Grievance Panel? – 5!"
Pass it on".
This email, which was acknowledged by Mr and Mrs Laird to be inappropriate, was passed on to senior management. It suggests that there was a strategy to delay and block the JNC proceedings.
On 27 October 2003 the extraordinary council meeting was heard to consider Cllr McKinlay's complaint. It was resolved that a disciplinary matter had been raised and that a politically balanced JNC Panel be appointed to conduct a preliminary investigation into Cllr McKinlay's complaints and to report back to council with its findings. The panel was to consist of Cllrs Seacome (Conservative), Jones, Britter and Ledeux (Liberal Democrat) and Cllr Mrs Hale (Labour).
There was an issue as to whether Mrs Laird attended the CBC offices on that day. In a statement made to the JNC panel Mr Grahame Lewis said that he had been told by Mr Michael Redman that he had met her in the basement corridor of CBC's offices around midday on 27 October when she had told him that the council meeting that day would not take place because opposition members would not be attending. He said that they had found this to be an extraordinary statement to make and had checked for themselves if opposition members attended, which they did. Mrs Laird denied having this conversation and said that she was at home all day. She produced email records showing that she was at home around midday and swipe card records indicating that she was not at the offices then. Mr Redman's evidence was that he had such a conversation with Mrs Laird on the pavement to the rear of CBC's offices in the early afternoon. A swipe card record indicating Mrs Laird entered the first floor of the building at about 17.08 that day was also produced.
The unusual nature of the reported conversation, and Mr Redman and Mr Grahame Lewis's stated reaction to it, suggests that it is unlikely to have been made up. Further, Mrs Laird had received an earlier email from Cllr Godwin indicating that his group might not be attending the meeting. I find that Mrs Laird did have a conversation along the lines reported by Mr Lewis with Mr Redman in the late afternoon of 27 October outside CBC's offices and that she did enter the offices at around 17.08 that day when she met with Ms Pitman.
On 10 November 2003 the three group directors, Mr Huckle, Ms Fallon and Mr Perry, wrote to the Mayor raising concerns about Mrs Laird's conduct and the effect the dispute was having on the running of council business and staff morale. They summarised their concerns as being:
(1) " We are very concerned about staff morale. We believe that the delays in resolving the current dispute are making the problem worse.
(2) Despite our best efforts, the Council is in danger of not adequately discharging its duty of care to staff, particularly those who are to an extent "caught in the crossfire".
(3) We believe that Mrs Laird's approach to some staff could be seen by them as intimidating and harassing, and has undermined the professional role of the Monitoring Officer and the Assistant Director Human Resources.
(4) Mrs Laird has, in our opinion, obstructed our efforts to manage her requests for information from staff at a time when she has been off work sick and suffering from stress.
(5) Much of the cost and time expended so far has arisen as a direct result of Mrs Laird's reluctance when there were straightforward and relatively inexpensive courses of action available to her to demonstrate her innocence of the complaints made against her.
(6) Staff are concerned about getting involved in the dispute and in particular at giving evidence either to the Standards Board or the internal panels, for fear of possible reprisals from the Managing Director or members.
(7) We consider that Mrs Laird has failed at times to adequately separate her role of Head of Paid Service from her own personal position."
On 11 November 2003 Mr Ford wrote to Ms Pitman raising his own grievance against Mrs Laird. He said that he had become increasingly troubled by "the unacceptable way" that he had treated by Mrs Laird, that he would accept whatever grievance process she determined and that he wanted to see "the unacceptable manner in which I had been treated recognised and to receive an appropriate apology". The main alleged actions about which complaint was made were:
(1) "Suggesting in a number of places and ways that I have been other than impartial in undertaking my statutory duties in connection with her dispute with the Cabinet.
(2) Instructing or allowing her solicitor, Mr Simon Collingridge, to write a series of disrespectful letters to and about me such as would not normally be expected between solicitors.
(3) Submitting a document to the extraordinary council meeting on 23 October which purported to amend or correct my professional report to the Council.
(4) Submitting a letter and a report to members at that same meeting calculated to discredit me in my statutory role.
(5) Instructing or allowing her solicitor to accuse me at that same meeting of a bias.
(6) Promoting her point of view in such an authoritative manner as to be oppressive."
On the same day Unison wrote to Mr Huckle raising a grievance against Mrs Laird. They alleged that:
"We are aware of instances of direct intimidation, undermining and bullying of our members by the Managing Director over a considerable period of time. These have been discussed at length with paid officers of UNISON. However the climate of fear engendered by Ms Laird has been such that members have been afraid to raise their concerns for fear of repercussions. The situation has now deteriorated to crisis point and as a result several of our members are in the process of lodging written grievances against the Managing Director….We believe that this in itself is an indicator of the lamentable state of industrial relations in Cheltenham Borough Council.
Over the past few weeks it has become increasingly clear to us that staff, particularly at senior level, are experiencing enormous and unacceptable pressure and strain. The additional workloads caused by having to devote time to dealing with the results of the very public disagreement of the Managing Director with her employer is taking staff away from their day to day duties. This is never a good thing but is particularly difficult in the light of CPA. Morale in the authority, which has been at low ebb for some time, is now even lower."
On 12 November 2003 Mrs Karen Watson, Mrs Laird's former personal assistant, lodged a grievance against her with Ms Pitman alleging that Mrs Laird had discriminated against her because she was a mother with young children; that Mrs Laird had prevented her from doing her job properly, and that Mrs Laird had bullied and harassed her.
By the middle of November 2003 it was therefore apparent that it was not simply a case of there being issues between Mrs Laird and Cllr McKinlay and the cabinet. There were now issues between Mrs Laird and directors, officers and staff and the protracted and bitter dispute between the managing director and the leader was taking its toll on staff morale generally. Of particular significance was the fact that Mrs Laird's fellow directors had felt it necessary, as Mr Huckle put it, to "put their heads above the parapet" and to record their concerns in writing.
Mrs Laird rejected all the directors' complaints and formed the view that the directors were acting out of self-interest and to protect their position. However, I find that the concerns raised by the directors were genuine and understandable. In particular, there can be no doubt that staff morale was suffering and that this was being exacerbated by the length of time it was taking for the disputes involving Mrs Laird to be resolved. It is also correct that Mrs Laird found it difficult to recognise the distinction between her personal interests and those of CBC. Thus, on a number of occasions she would intervene in her capacity as "head of paid service" in relation to matters in which she had a personal interest, such as the JNC process.
In relation to Mr Ford, there is no doubt that Mrs Laird and others, such as Cllr Duncan Smith and Cllr Godwin, had long had concerns about his competence. Earlier in the year there had been a meeting between group leaders to consider this issue, but Cllr McKinlay, who was a supporter of Mr Ford, had effectively prevented matters being taken further. As the year had progressed and the disputes had escalated Mrs Laird had been increasingly convinced that he was biased against her in the dispute with Cllr McKinlay. I do not accept that this was the case. Mr Ford may have been somewhat disorganised, indecisive and slow in responding on certain issues, but he was scrupulously honest and at all times sought to perform his job to the best of his ability.
As to the quality of Mr Ford's legal advice, there are only two matters in relation to the dispute in relation to which it might be said that Mr Ford's advice was wrong, and on both occasions he was relying on counsel. The first was the question of who should appoint a JNC panel: initially he thought the leader should. Counsel, Mr Fletcher, at first thought so too; Mr Ford relied on counsel's initial advice. The second is that he did not quarrel with Mr Fletcher's view that the cabinet members were not obliged to declare a prejudicial interest at the full council meeting on 27 October 2003. The ESO subsequently regarded that as a mitigating factor that meant no action need be taken despite what he regarded as strictly speaking a breach of the Code of Conduct and, in any event, the cabinet members withdrew before the vote and did not vote on the issue
In relation to Mrs Watson, Mrs Laird's had had concerns about her performance as well, but she had also formed the view that she was very much on Cllr McKinlay's side. Given that at one stage she was their shared PA this created difficulties. Mrs Laird was also convinced that Mrs Watson was having a relationship with Cllr McKinlay, and indeed eventually they moved in together and later married, although Cllr McKinlay claimed that they did not become intimate friends until later on. I did not hear evidence from Mrs Watson and do not feel able to put any weight on the allegations made by her.
Meanwhile the Grievance Panel procedure was going ahead. Mr Peter Lewis, a solicitor in CBC's legal services department, had the task of making the administrative arrangements for the Grievance Panel. A detailed grievance procedure was set out in a letter to Mrs Laird's solicitors dated 24 October 2003. Specialist training was provided by an external human resources consultant to the Grievance Panel members.
When the Grievance Panel met, it was advised by Mr Peter Lewis (in respect of procedures and the law) and by the independent human resources ("HR") consultant, Mr Tim Rothwell (in respect of HR principles, policies and best practice).
The Grievance Panel hearing took place over 4 days: 13, 14 and 27 November and 2 December 2003. With regard to legal representation at the grievance hearing, Mrs Laird had the assistance of her solicitors throughout and Ms Melanie Tether (of Counsel) was instructed on behalf of CBC in relation to Grievances 1 and 4.
On 20 November 2003 the Staff and Support Services Committee ("SSSC") resolved to refer the further complaints made against Mrs Laird to the JNC Panel.
On 10 December 2003 Mrs Laird returned to work.
On 11 December 2003 the JNC Panel had its first meeting. Mrs Laird was not invited to be there and was not present. Cllr Seacome was appointed as chairman and the JNC Panel were assisted and advised by Mr Brady and Ms Sarah Farooqi, a solicitor with CBC. Having considered the complaints made they decided that there was sufficient evidence for an investigation to be carried out into whether there was a case to answer. It was resolved that further information in relation to the complaints should be obtained by 19 December 2003, that the information should be forwarded to Mrs Laird by 23 December 2004 and that Mrs Laird should respond by 12 January 2004.
On 12 December 2003 Mrs Laird wrote to CBC concerning the medical referral they had been requesting since 21 October 2003. She was mistrustful of this request because she perceived it as a ruse to enable CBC to retire her on medical grounds. However, it was necessary for this to be done if CBC was to be in an informed position to be able to discharge its duty of care. In her letter she stated that she was willing to consider a medical "in principle" but there would be conditions and her solicitor would write to say what they were. Mrs Laird was also reluctant to agree to the risk assessment which CBC was requesting be carried out.
On 16 December 2003 the Grievance Panel issued a 30 page report. They upheld Grievance 2 in part (relating to the annual appraisal). Grievances 3 and 4 were adjourned pending the report of the SBE and (in the case of the allegations of defamation) a Court judgment. Grievances 1, 5 and 6 were dismissed.
On 18 December 2003 the Grievance Panel report was adopted by the council.
On 22 December 2003 Mrs Laird was provided with information relating to the JNC complaints. Further information was provided on 23 December and 31 December 2003. Given the deadline given to respond by 12 January 2004, Mrs Laird spent much of the holiday period working on her response to the JNC Panel.
On 5 January 2004 she asked for further time to respond to the allegations, and on the same day she attended a return to work interview.
On 12 January 2004 Mrs Laird nevertheless put forward a substantial response to the JNC Panel, accompanied by some 600 pages of supporting documentation.
The JNC Panel met on 15 January 2004 to consider the position. Mrs Laird attended with her solicitor and a trade union representative and a representative of the Employers Organisation. During the course of the meeting Mrs Laird became distressed and had to leave the meeting.
The meeting continued with her solicitor and trade union representative present. The JNC Panel accepted Mrs Laird's contention that the paperwork was complex and potentially difficult to understand and resolved that Mr Brady should assemble the paperwork, present it in an appropriate form and submit a report to the JNC Panel which would then be provided to Mrs Laird for her response.
On 16 January 2004 Mrs Laird reported her distressed departure from the meeting the previous day as a health and safety incident. In the report she stated that he had subsequently seen her GP and that he would be writing a letter. In fact Mrs Laird had seen her GP on 13 January 2004 and he had agreed to write a letter following that consultation. The GP's letter dated 16 January 2004 expressed concerns about "the potential harm that could be caused by subjecting someone, returning from an episode of severe anxiety depression to a prolonged and intensely stressful hearing".
On 29 January 2004 Mrs Laird's solicitor wrote to Ms Farooqi outlining a number of concerns regarding the procedure adopted by the JNC Panel, Mr Brady's involvement in the JNC process, the calling of meetings and the SBE investigation. Ms Farooqi replied by letter on 2 February 2004. The concerns raised were considered by the JNC Panel at a meeting on 4 February 2004. Mrs Laird was present for part of that meeting but did not make representations. The JNC Panel resolved to continue with its work and reconvene on 11 February 2004.
On 3 February 2004 Mrs Laird issued proceedings in the Northampton County Court against CBC seeking repayment of legal fees allegedly incurred on its behalf - Claim No. 4QZ03830. In the short hand summary of the claim on the front of the claim form she stated that: "Council passed a resolution on 18/12/03 to reimburse the claimant". The resolution in fact instructed the s.151 officer to settle the claim "in so far as he is satisfied that it relates to advice taken to the benefit of the Council". In negotiations with Mrs Laird the s.151 officer had indicated that he considered that there should be a partial reimbursement of the fees. The effect of the resolution was therefore the authorisation of reimbursement of Mrs Laird, although the resolution did not state so in terms. In all the circumstances, I do not consider that this was a attempt to mislead the Court, as CBC contends.
On 4 February 2004 Mrs Laird set out the conditions under which she would be willing to have a medical assessment. Mrs Laird had understandable concerns about confidentiality, but the effect of her suggested conditions would have been that no one who actually mattered would be able to see the medical report, as Ms Fallon pointed out in her reply of 6 February 2004.
On 10 February 2004 there was a further incident involving Mrs Laird and Cllr McKinlay. On her return to work she had requested that Cllr McKinlay stay away from the secretariat. He had refused to agree to this although he generally ensured that he would only go there when Mrs Laird was not in her office. On 10 February he had gone there to wish Browen Ball a happy birthday. While he was there Mrs Laird came into the room and asked him to leave, which he refused to do. His presence there meant that as far as Mrs Laird was concerned she could not leave her office, but he did not take steps to physically prevent her from doing so.
The following day the JNC Panel reconvened and decided that the "statement of concerns" which had been prepared by Mr Brady should be sent to Mrs Laird. She was invited to respond by 5 March 2004 and was given a choice of 10, 11 or 18 March 2004 as dates when she could appear before the JNC Panel, if she wished.
On 17 February 2004 Mrs Laird wrote to Ms Farooqi objecting to the JNC Panel, to the new timetable, and to the need to deal with revised charges and evidence. In that letter and in a further letter of 20 February 2004 Mrs Laird stated that she had no confidence in the JNC process. The JNC Panel considered the correspondence at a meeting that day and decided to reconvene after there had been a meeting between the Chairman, Ms Farooqi and Mrs Laird to discuss the JNC proceedings and Mrs Laird's concerns. That meeting took place on 24 February 2004. At the meeting Mrs Laird handed over a letter in which she explained that she considered that the best way of ensuring that she received a fair hearing and natural justice would be if a DIP was appointed without delay.
On 26 February 2004 Mrs Laird issued a court claim against Cllr McKinlay alleging harassment and seeking an injunction - Claim No. 4CN00734.
On the same day Mr Collingridge of Davies and Partners wrote to Mr Ford asserting that there was no contractual requirement to submit to medical examination, and stating that Mrs Laird would only do so with a view to ill health retirement.
On 4 March 2004 Mrs Laird served a further response to the JNC Panel statement of concerns together with over 100 pages of supporting documentation. On 11 March 2004 Ms Farooqi wrote to Mrs Laird's solicitors setting out five draft charges.
On 15 March 2004 the JNC Panel met and heard from Mrs Laird's representatives. Mrs Laird was represented by both her solicitor and counsel, who made written and verbal submissions on her behalf.
The JNC Panel considered the submissions made by Mrs Laird and her counsel and trade union representative to the effect, among other things, that: the JNC Panel should allow Mrs Laird further time to respond to the draft charges sent to her on 11 March 2004; an independent investigator should be appointed by the JNC Panel to make sure that the concerns that Mrs Laird was being asked to respond to were investigated independently; when this investigation had been completed a report be given to Mrs Laird so that she could respond; Mrs Laird did not have confidence in the process of the JNC so far and that she was unable to fully answer the concerns that had been outlined in the report to the JNC that was submitted to her in February 2004; and the preliminary investigation that had been conducted by the JNC Panel was not complete and, therefore, an investigator should be appointed to conduct an investigation and to prepare a report for the JNC Panel.
Despite the effect that further delay would have upon all of the parties involved in the process, the JNC Panel decided to agree to Mrs Laird's requests and to appoint an independent consultant to overview the work. A provisional timetable was set that required the investigator to be appointed by 29 March 2004 and then one month allowed for the consultant to conduct his or her overview and a week to prepare a report. The JNC Panel would then have a week to consider the report. The JNC Panel would meet thereafter to hear the final submissions of Mrs Laird following any additional material being put to her. The parties agreed that the timetable would become clearer once the consultant had been appointed. That consultant was Mr Coopey, a human resources consultant, who was instructed on 26 March 2004.
A council meeting had been called for 19 March 2004 to consider the JNC Panel proceedings. Mrs Laird was concerned this meeting might lead to her suspension. These concerns had been raised with Ms Farooqi who had informed her solicitors that the JNC Panel had no plans to make any such recommendation but that the council retained that option. About an hour before the meeting was due to take place Mrs Laird was visited by two Conservative councillors, Cllrs Garnham and Melville-Smith, who advised her that regardless of the JNC Panel's recommendations they intended to move a resolution to suspend her at the meeting. She told them that they had prejudged the matter, that this was a breach of the Code of Conduct which she would have to report to the head of legal services and suggested that they report themselves. They said they would not do so and that it would be her opinion against theirs.
Following this meeting, and in the light of her concern about possible suspension, Mrs Laird sent an email instruction timed at 1422 hours to Mr Adrian Thompson, an administrator in central services, which was to be of importance in relation to her subsequent suspension. The email stated that:
"Forgive me for asking this, - I wouldb'yt do so if it wasn't necessary. There is a very strong possibility I will be suspended this evening. My personal e-mail box contains very sensitive information which no political party should see and will need erasing immediately.
If this happens can you please enter my system the code the code is w5shing and delete permanently everything in my personal e-mail box both in and sent items. If it is possible to take a cd of everything after 28/7 03 before doing so then I would be most grateful.
I am sorry to burden you with such a heavy responsibility but please treat this request as an operational instruction if I am suspended today that require immediate implementation.
I am sorry to ask this of you."
At the 19 March 2004 council meeting the recommendations of the JNC Panel report were adopted and there was no motion to suspend Mrs Laird, although the issue was discussed and the council was advised generally by Alastair McGregor QC.
On 24 March 2004 Mr Rothwell, the HR consultant engaged by CBC, advised that Mrs Laird was now prepared to agree to an independent medical assessment without the previous conditions, but with some conditions still. The agreed position was set out in a letter from Mr Rothwell to Mr Collingridge dated 31 March 2004, which included certain safeguards in respect of confidentiality and the dropping of Mrs Laird's demand that the purpose of the medical assessment should be confined to ill health retirement.
Following Mr Coopey's appointment Ms Farooqi was engaged in providing documentation and assistance to him. On 21 April 2004 Mr Coopey issued a draft report recommending that various further tasks be undertaken. Mrs Laird's solicitors were so advised.
On 6 May 2004 the JNC Panel met and considered Mr Coopey's report. It was resolved that the report and accompanying paperwork be forwarded to Mrs Laird's solicitors by 11 May 2004 and that the JNC Panel would reconvene on 25 May 2004.
On 11 May 2004 Ms Farooqi wrote to Mrs Laird's solicitors and supplied a copy of the JNC Panel's minutes of 6 May 2004 and Mr Coopey's report. The report expressed the view that the style and format in which the concerns and supporting documentation had been presented was appropriate. It set out minor reservations in relation to the grouping of the allegations and the setting out of the supporting evidence. The report set out 6 principal allegations with particulars provided of each. It summarised the evidence, Mrs Laird's response and set out comments. Ms Farooqi's letter invited Mrs Laird to submit any final written material by 4.00 pm on 21 May and also invited her and her representatives to attend the meeting of 25 May 2004.
On 19 May 2004 Mrs Laird's solicitors wrote to Ms Farooqi stating that they were working through Mr Coopey's report but would not be ready for the 25 May 2004 meeting. On the following day they threatened an injunction if the meeting was not adjourned. Ms Farooqi replied that she had no authority to agree an adjournment and suggested that application be made to the JNC Panel itself.
The JNC Panel met on 25 May 2004 and the meeting was attended by Mrs Laird, her solicitor and her counsel. Counsel for Mrs Laird made, among other submissions, a submission that the decision made by the council on 27 October 2003 to establish the JNC Panel was invalid as certain members had failed to declare an interest and that Mrs Laird should be given more time to respond to the allegations that were laid against her. The JNC Panel considered all of the representations made on behalf of Mrs Laird and resolved to continue as it considered that the Panel was validly constituted and that Mrs Laird had had sufficient time to respond to the allegations.
The JNC Panel then invited Mrs Laird to make any representations that she might have before the JNC Panel made its final report to council. Mrs Laird declined to do so.
After the meeting on 25 May 2004 the JNC Panel prepared a report to the the council recommending the appointment of a DIP. A copy of the report was forwarded to Mrs Laird's solicitor on 27 May 2004
The charges which it was recommended in the report that the DIP be appointed to hear were as follows:
"Charge 1: That the Managing Director has on a number of occasions deliberately sought to undermine the cabinet or its members, or has acted in a manner which she must have known would have that effect.
Charge 2: That the Managing Director has on a number of occasions acted in an inappropriate, unhelpful, obstructive and/or bullying manner towards Councillor McKinlay, the Leader of the Council, that had the effect of undermining him or was intended to undermine him.
Charge 3: That the Managing Director on a number of occasions has deliberately sought to undermine and/or bully or harass members of staff or has acted in a manner that has had or was likely to have that effect and has generally acted in relation to employment matters in a manner inappropriate for a Managing Director of Cheltenham Borough Council.
Charge 4: That the Managing Director on a number of occasions intentionally misled or misinformed the Leader of the Council, Cabinet members, other councillors, members of staff and others.
Charge 5: That the Managing Director has on a number of occasions acted in an inappropriate and unprofessional manner, both before and since questions of discipline were first raised with her, in particular by failing to distinguish between her private interests and her public duties."
On 1 June 2004 Mrs Laird's solicitors informed Ms Farooqi that Mrs Laird would be seeking an injunction to prevent the council from considering the JNC Panel's report. CBC responded by undertaking not to implement any resolution to appoint a DIP until after the inter partes hearing of the injunction application.
On 2 June 2004 Mrs Laird received a copy of the draft report of the SBE, which dismissed most of her complaints.
On 3 June 2004 there was a council meeting which considered the JNC Panel's report and resolved to appoint a DIP. Mrs Laird's solicitors were informed by Ms Farooqi of that decision.
On 4 June 2004 Mrs Laird issued Claim No. 4BS50323 in the High Court challenging the JNC Panel and seeking an injunction to prevent the council implementing its recommendations. On the same day Mr Peter Lewis wrote to Mrs Laird informing her that the council would meet on 11 June 2004 to consider her possible suspension.
Also on 4 June 2004 Mrs Laird suffered a severe panic attack, and was signed off sick from work by her GP. She was never to return to work.
On 11 June 2004 Mrs Laird's interim injunction application against CBC was dismissed and Mrs Laird was ordered to pay CBC's costs on an indemnity basis.
Following the dismissal of the injunction application the council met on the evening of 11 June 2004. Mrs Laird's solicitor had submitted a letter regarding the question of Mrs Laird's suspension prior to the meeting. At the meeting the council resolved to suspend her in view in particular of the evidence that Mrs Laird had, in anticipation that she might be suspended at the meeting called for 19 March 2004, given instructions to Mr Thompson to delete materials from her computer.
Mrs Laird was informed of her suspension by telephone by Mr Peter Lewis. Following receipt of the news she suffered a particularly severe panic attack, collapsed on the floor and hurt her shoulder. She was found unconscious and hyperventilating by her husband who called the emergency services.
Although it is possible that a less severe reaction might have occurred had the news been broken to her in a different manner, I find that it was reasonable for Mr Peter Lewis to consider that the most important thing was for Mrs Laird to be informed of the position straight away, rather than run the risk of learning of it from third parties, or indeed the press. I also find that there were other reasons for Mrs Laird's distress and in particular, the draft SBE report, the outcome of the Court hearing on 11 June 2004 and the results of the elections which had just been held, which meant Cllr McKinlay remaining as leader.
Following her suspension, Mrs Laird's office was secured. However, in light of the concerns highlighted regarding Mrs Laird and the use of her email account it was decided that Mrs Laird's email account should be opened. Ms Farooqi thought it was highly likely that there would be emails in Mrs Laird's account that were either legally privileged or emails that she should not see. She therefore instructed counsel to access a CD-ROM containing Mrs Laird's email account and remove those emails that counsel believed were legally privileged or otherwise inappropriate for her to see. She wrote to Mrs Laird's solicitor on 25 June 2004 and informed him of her proposals regarding Mrs Laird's email account.
On 5 July 2004 CBC instructed Dr Phillip, a consultant occupational health physician to assess whether Mrs Laird was medically fit to continue in her role as managing director, if she was unfit whether she was likely to become medically fit within a reasonable time and whether or not Mrs Laird was permanently unfit to undertake her role and should be considered for retirement by reason of being permanently incapable of discharging her duties of her employment or comparable employment. From April 2004, Ms Pitman and Mr Rothwell had been trying to agree arrangements with Mrs Laird for her to see an Occupational Health Consultant who would undertake an examination of her. Mrs Laird saw Dr Phillip on 17 July 2004.
On 30 July 2004, Mr Peter Lewis, wrote to Mrs Laird's solicitor regarding access to her office. In his letter, Mr Peter Lewis indicated that he would like to access Mrs Laird's office and he invited a representative from Mrs Laird's solicitor to be present when this happened. Mr Peter Lewis also explained that personal documents, excluding those that were legally privileged, that were relevant to the investigation could be copied and he offered Mrs Laird's solicitor the opportunity to be present. Mrs Laird's office was accessed by Ms Farooqi and Mr Peter Lewis on or around the 4 or 5 August 2004. Mrs Laird's remaining personal items were gathered together and placed in boxes. The documents that were found in Mrs Laird's office were also placed in marked boxes.
On 2 August 2004 Mr Lynch QC took up appointment by the council on the nomination of the Office of the Deputy Prime Minister to act as DIP and issued his first report extending Mrs Laird's suspension until 1 September 2004.
On 23 August 2004 the JNC Panel made representations to the DIP seeking continuation of Mrs Laird's suspension. On 2 September 2004 the DIP extended Mrs Laird's suspension to 1 October 2004. On 29 September 2004 the first oral hearing before the DIP was held and he decided to proceed with his investigation. On 30 September 2004 the DIP ordered the continuation of Mrs Laird's suspension until 1 November 2004.
Meanwhile, on 24 September 2004 Dr Philipp reported by letter. He was not prepared to certify that Mrs Laird was entitled to ill health retirement, because he said that if the legal issues were dealt with and Mrs Laird then had clinical support for say six months, she could be back at work. In his penultimate paragraph he dealt with occupational health advice in the event of a return to work: he did not rule out a return to work.
On 26 October 2004 Mrs Laird's claim against Cllr McKinlay in Claim No. 4CN00734 was struck out by District Judge Frenkel as having no real prospect of success and Mrs Laird was ordered to pay Cllr McKinlay's costs.
On 4 November 2004 SBE issued its final report into the complaints against Cllr McKinlay and the other Cabinet members. The SBE report ran to 144 pages. It considered 36 different allegations. The allegations made were in summary that members failed to treat others with respect, compromised the impartiality of council employees, disclosed confidential information, brought their office or authority into disrepute, improperly secured an advantage or a disadvantage, misused the authority's resources, failed to give reasons for executive decisions, failed to report a suspected breach of the Code of Conduct, failed to disclose a personal interest and took part in a meeting in which they had a prejudicial interest. It was concluded that in relation to all the allegations there was either no evidence of a failure to comply with the Code of Conduct or that no action needed be taken.
On 16 November 2004 DIP declined Mrs Laird's request that he stay his investigation and directed the parties to seek joint advice from Dr Phillip on the risk of Mrs Laird committing suicide if preliminary steps in the investigation were taken. On 23 December 2004 Dr Phillip issued a further report on Mrs Laird suggesting that a consultant psychiatrist advise on the issue of suicide risk.
On 28 January 2005 Mrs Laird discontinued her claim No. 4BS50323 against CBC (and was subsequently ordered to pay £46,000 in costs).
On 11 February 2005 the DIP issued a further report directing that an independent consultant psychiatrist should be appointed to report on Mrs Laird.
On 24 February 2005 Mrs Laird's claim against CBC for legal fees Claim No. 4QZ03830 was struck out as disclosing no reasonable grounds.
On 3 March 2005 DIP issued further reports requesting that the parties seek a consultation for Mrs Laird with Dr Paul Aylard, consultant psychiatrist, as soon as reasonably practicable. On 14 March 2005 DIP issued a further report addressing the contents of the brief to be put before Dr Aylard and on 11 April 2005 a Joint letter of instruction issued to Dr Aylard.
On 15 April 2005 the DIP issued a further report extending Mrs Laird's suspension.
On 4 May 2005 Dr Aylard issued his report on Mrs Laird., stating that in his view Mrs Laird was unfit to go through the DIP investigation and was permanently incapable of undertaking a senior management position. His report advised that:
"48. In my opinion, in Mrs Laird's case all of the above motives for threatening an act of self harm are likely to be important, with the least important being a wish to die. At the moment Mrs Laird believes that the enquiry will not go forward and has very effectively been using her hyperventilation and her threats of suicide to prevent this from happening. If she believes the enquiry will go forward then she is highly likely to start to increase the level of threats and may start to actually self harm either by cutting or taking an overdose. In terms of risk factors for successful suicide, Mrs Laird is in that group of patients who is likely to make threats of suicide but is unlikely to actually commit suicide. Nevertheless, the risk of successful suicide is significantly greater in Mrs Laird's case then it would be for an individual of normal fortitude without her history.
To summarise
50. Mrs Laird has a history of recurrent depressive illnesses dating back to 1997. She has developed her fourth episode of depression whilst working at The Cheltenham Borough Council. The course of her depression has become magnified by her involvement in a series of large group processes, both a claim for harassment against Andrew McKinlay and a disciplinary action against herself. Mrs Laird is currently severely depressed and suffering marked panic attacks. She is at a slightly increased risk of successful suicide and a very significantly increased risk of attempted suicide.
51. Because of her pre employment history of depression, combined with her present depressive episode, I am of the opinion that she is permanently incapable of working in a senior management position…"
On 20 May 2005 the DIP issued a further report requesting the parties' submissions on whether an investigation could be conducted. Having received various submissions and issued a number of further reports, on 4 August 2005 the DIP issued a report concluding that it was impracticable for him to hold a substantive investigation into the allegations against Mrs Laird.
On 9 August 2005 CBC wrote to Mrs Laird's solicitors informing them that in the light of the DIP's conclusion it considered Mrs Laird's contract of employment to be frustrated. The letter stated that:
"The Council is now faced with the position in which its Managing Director Mrs Laird is suspended on full pay, serious allegations remain on the record as to Mrs Laird's conduct and the DIP Mr Lynch is unable to complete his enquiry relating to those allegations as it is not possible for him to conduct an investigation due to Mrs Laird's state of health.
In the unique circumstances set out above leading counsel has advised that Mrs Laird's contract of employment is frustrated with effect from receipt of Mr Lynch's report confirming the above. The frustrating event is the confirmation that, in the circumstances, there is no reasonable prospect of the substantive investigation ever taking place or being concluded.
In consequence of the frustration of Mrs Laird's contract of employment the Council is no longer in a position to continue to pay her contractual benefits, which will cease of today's date."
On 6 September 2005 Mrs and Mr Laird applied to CBC for an ill-health retirement pension. CBC replied to Mrs Laird's solicitors on 1 November 2005 CBC stating that an occupational health physician would be instructed to assess Mrs Laird for eligibility for an ill-health retirement pension. On 24 January 2006 Gloucestershire County Council ("GCC") confirmed to CBC that Mrs Laird was permanently unfit for work and that her application for ill-health retirement would be supported. On 13 March 2006 the SSSC resolved to release Mrs Laird's ill-health retirement pension back dated to 10 August 2005 and Mrs Laird was so advised on 29 March 2006.
In the meantime, on 7 November 2005 Mrs Laird presented Claim No. 1402006/2005 to the Bristol Employment Tribunal alleging disability discrimination and unfair dismissal. CBC filed its response on 16 November 2005. Eventually, on 27 October 2006 Mrs Laird's claim was dismissed following withdrawal.
Having been alerted to Mrs Laird's medical history by Dr Aylard's report CBC were meanwhile seeking to inquire further into it. On 16 November 2005 CBC requested of GCOHS disclosure of Mrs Laird's medical questionnaire. On 12 December 2005 GCOHS declined to disclose the questionnaire without Mrs Laird's consent. On 2 May 2006 CBC wrote to Mrs Laird's solicitors requesting that she provide consent to disclosure to CBC by GCOHS of her questionnaire. On 21 July 2006 HHJ Havelock-Allen QC sitting in the High Court Bristol District Registry ordered pre-action disclosure to CBC against RCT, GCOHS and Mrs Laird. On 31 August 2006 GCOHS disclosed to CBC the medical questionnaire.
Having considered the position CBC eventually resolved to bring the present proceedings against Mrs Laird. On 4 May 2007 CBC issued Claim No. 7BS90328 against Mrs Laird and RCT (alleging negligence). On 15 December 2008 CBC issued Claim No. HQ0804978 against Mrs Laird (alleging fraud).
Dr Aylard has been called as an expert by CBC in these proceedings. In relation to the risks to Mrs Laird involved in the prosecution of the proceedings he advised as follows:
"In 2005, Mrs Laird describes how during the months leading up to my appointment she had in fact been hoarding tablets. In my opinion, Mrs Laird remains at a significantly increased risk of psychiatric illness over the next few months, particularly in January when her case is due to be heard. Mrs Laird is, in my opinion, at an increased risk of episodes of hyperventilation presenting as panic attacks and/or "fits". Mrs Laird also has a greatly increased risk of attempted self harm and unfortunately there is the possibility that one of the episodes of attempted self harm may be intentionally or unintentionally fatal."
In the light of this and other evidence I directed that before Mrs Laird gave evidence a medical assessment of her fitness to do so be carried out and recommendations be made as to what supportive measures could be provided whilst she was giving evidence. Such an assessment was carried out by Mrs Laird's expert psychiatrist, Professor Lader, and the supportive measures he recommended were provided.
The issues
Formation of Mrs Laird's contract of employment
(1)(a) Whether the contract of employment between Mrs Laird and CBC ("the Employment Contract) was formed on 4 (or on 7 or 8) January 2002 (as Mrs Laird asserts) or on 14 January 2002 (as CBC asserts);
(b) Whether formation of the Employment Contract was conditional (and if so on what legal basis) on Mrs Laird completing a medical questionnaire and being assessed as fit for appointment.
CBC contends that, as one would expect with any major appointment in local government, the offer of employment made to Mrs Laird was subject to there being a satisfactory medical report. This was spelt out in the recruitment documentation and in Mr Ford's letter of 7 January 2002 in which it was stated in terms that the offer was "conditional upon medical clearance being obtained from our Medical Adviser".
CBC further contends that this was expressly accepted by Mrs Laird who replied to Mr Ford's letter on 9 January 2002 saying that she was "pleased to accept the post of Managing Director on the terms and conditions outlined in your letter". Having received medical clearance from GCOHS, CBC wrote to Mrs Laird on 14 January 2002 informing her that "we can now proceed with your appointment". CBC say it is not until then that a contract was concluded, the condition of a satisfactory medical having been satisfied.
Mrs Laird contends that the employment contract was made on 4 January 2002 by direct negotiation between Mrs Laird and the then leader of the council, Cllr Duncan Smith, with the assistance of Ms Holden, the chief executive of SWRA. She contends that that agreement was made without mention of or provision for a condition of a medical questionnaire or health clearance. In those circumstances she contends that the medical questionnaire is irrelevant as being after the event. Further, she contends that there was no council resolution authorising Mr Ford to raise the issue of the medical questionnaire, and that Cllr Duncan-Smith and Ms Houlden had failed to make mention of such a requirement during the recruitment process.
The recruitment process was conducted by CBC through the SRC and its recruitment advisers, SWRA acting mainly through Ms Houlden. The original documentation included:
(a) An Introduction.
(b) Advisory Notes.
(c) A Job Description.
(d) A Personnel Specification Form.
(e) An Information for Prospective Employees Form. Under the heading "Medical Examination" this stated:
"All appointments are conditional upon the receipt of a satisfactory medical report from the council's medical advisor. For this purpose, persons offered appointments will be required to complete a medical questionnaire for submission, on a confidential basis, to the council's medical advisor. Physical medical examinations will be conducted if it is considered necessary in any particular case."
(f) A Job Application Form, including a "NB" in bold just below the signature section of the Form stating that the candidate "will be required to complete a detailed medical declaration before appointment".
Mrs Laird signed and dated her application just above the note in bold about a medical declaration before appointment and her supporting statement concluded with a paragraph starting "I enjoyed reading the Council's appointment pack ....".
The documentation, and in particular the Application Form and the Information Form, therefore included express reference to the requirement of a medical declaration/report.
Following the interview process and the offer of a job made to Mrs Laird on 4 January 2002, on 7 January 2002 Mr Ford wrote to Mrs Laird "to confirm the Council's offer to you of the appointment ...". The offer was stated to be "conditional upon medical clearance being obtained from our Medical Adviser". The same letter also stated: "When we have your medical clearance and Rhondda Cynon Taf Council's consent, we can agree your start date." A press release issued the same day announced the appointment "subject to medical and reference formalities".
On 8 January 2002 Mrs Laird completed the medical questionnaire, which she sent to GCOHS.
On 9 January 2002 Mrs Laird replied to CBC's letter saying she was "pleased to accept the post of Managing Director on the terms and conditions outlined in your letter" and that she had "returned the medical questionnaire, as requested, to the Council's Medical Adviser". No issue was taken as to the terms in which Mr Ford's letter had been expressed, the requirement to fill in the medical questionnaire or the stated conditionality of the offer made.
On 10 January 2002, GCOHS's representative signed a form, which was sent to the council, stating that "[b]ased on the information given on the health questionnaire, the applicant has been found to be ... fit".
On 14 January 2002 CBC wrote to Mrs Laird informing her that the medical clearance certificate had been received and that "we can now proceed with your appointment", and giving a start date of 4 February 2002. On the same day Mrs Laird gave formal notice to RCT.
CBC say that it was only then that any contract was concluded and that throughout the process the formation of the contract had been made subject to receipt of a satisfactory medical report.
As CBC submits, a contract may be subject to the happening of an event as a condition precedent to the existence of the contract: see Chitty on Contracts (30th ed.) Vol. 1 at 2-148 to 2-157. "Undeniably, it is possible for an employer to make an offer conditional on something to be objectively determined (for example, the passing of a medical examination)"; per Mustill LJ in Wishart v National Association of Citizens Advice Bureaux Ltd [1990] ICR 794, CA, at 801C; cf. per Ralph Gibson LJ at 805C-E.
In the present case the condition of a satisfactory medical report was spelt out in the Information Form which formed part of the application for the job made by Mrs Laird. The requirement to complete a medical declaration before appointment was re-iterated in the Application Form itself. It was confirmed by Mr Ford's letter of 7 January 2002, the terms of which Mrs Laird accepted. On the documents the conditionality of a satisfactory medical report is clear.
Further, it would reasonably be expected that an appointment of this nature would be subject to a satisfactory medical report. This was a major post and CBC would be expected to be satisfied that an applicant was medically fit to carry it out before committing itself to any contract of employment, quite apart from considerations relating to its own duty of care.
That this was usual practice in local government was borne out by the evidence of a number of witnesses, such as Ms Houlden, Cllr Hale and Mr Ford.
Mrs Laird disputed that this was the case in relation to JNC appointments and indeed it appears that the medical questionnaire she filled in for her job at RCT was dealt with after the contract had been made. However, on the evidence as a whole I am satisfied that usual and reasonably expected practice in local government is for appointments generally, including JNC appointments, to be subject to a satisfactory medical report. It would also be usual and reasonably expected practice for contracts for such appointments, and in particular appointments at the level of chief executive, to be concluded in writing rather than orally.
It would also be unusual for an employee to enter into a contract of employment prior to agreeing or giving notice of termination of an existing employment contract, as Mrs Laird's case contemplates. The nature of the contract with CBC was said to be "a contract by an employee of one employer with a new employer to take steps to determine the existing employment and to commence a new employment with the new employer following that first determination". Whilst it would no doubt be possible to conclude such a contract, it would not be usual.
Despite the documentary position, and what I find to be usual and reasonably expected practice, Mrs Laird nevertheless contends that the contract of employment was made orally prior to and without reference to medical clearance. She contends as follows:
(1) the appointment resolution stated that the offer was to be on terms agreed by the SRC which acted through and approved what was done by Cllr Duncan Smith and Ms Houlden.
(2) the appointment was agreed on 4 January 2002 when all the terms were agreed between Mrs Laird and Cllr Duncan Smith and Ms Houlden (the persons tasked with this by full council resolution).
(3) there was no mention then of a medical questionnaire or any conditionality.
(4) the agreed publicity at that point made no mention of a medical questionnaire.
(5) Ms Houlden had agreed that the published NJC terms were inappropriate and could not apply (and had therefore effectively accepted that the earlier written documentation emanating from the council, including all references to medical questionnaires, was irrelevant and inapposite).
(6) Mrs Laird would never have allowed her acceptance to be unconditional or to be publicised (and so that RCT, her then employers, learnt of it) and effectively resigned from RCT, and would not have withdrawn her other application, had she known that the offer was conditional. Her later steps were after all these matters had occurred
(7) Mr Ford had no authority to insert this condition in these circumstances. In fact Mr Ford was not told by Cllr Duncan Smith of what had been agreed with Mrs Laird on the evening of 4 January 2002 and subsequently had to modify the terms of the written contract when it was explained to him as to the agreements which had then been made.
(8) The mere fact that an oral agreement is subsequently reduced to writing does not prevent the oral agreement being final and binding.
As to (1), the appointment resolution stated that Mrs Laird "be offered the position of Managing Director, Cheltenham Borough Council, on terms to be agreed by the Structure Review Committee". Whilst it is correct that it does not refer to conditionality or the need for medical clearance, one would not expect it to do so. That was a matter of detail to be dealt with by others. The council was dealing with who should be offered the appointment, not its terms. The terms had been and would be continued to be dealt with by the SRC. Whilst the SRC acted principally through Cllr Duncan Smith and Ms Houlden in agreeing the main terms of the contract with Mrs Laird, the detailed terms of the contract, including required formalities, would reasonably be expected to be and were left by the SRC to CBC's legal department, as borne out by Mr Ford's letter of 7 January 2002. Further, I accept the evidence of Ms Houlden that she told Mrs Laird that she would need to contact Gerald Ford to discuss finalisation of all details and that Cllr Duncan Smith said words to similar effect.
As to (2), it is not correct that all terms were agreed on 4 January 2002. The main terms, and in particular salary terms, were agreed, but there remained a number of matters to be finalised, such as leave entitlement and car allowances. Even if the JNC terms and conditions had been agreed as the underlying contract terms, that did not in itself mean that all terms had been agreed. One would expect there to be negotiation as to the appropriate adaptation of such terms to fit this appointment, as indeed subsequently occurred. In summary, there was an agreement in principle at that stage, but no binding contract, still less an abandonment of expressly stated contractual pre-conditions, such as the requirement of a satisfactory medical report.
As to (3), it is correct that neither Cllr Duncan Smith nor Ms Houlden made any mention of a medical questionnaire. That is hardly surprising since this was a matter which was already dealt with in the documentation provided, and which would in any event be expected to be dealt with by Mr Ford as part of contract finalisation. No doubt their expectation was that the need for medical clearance would not prove to be any obstacle, but that does not mean that this important formality was still not required to be met. Further, although no express statement of conditionality was made, it was made clear to Mrs Laird that the finalisation of the contract was a matter to be dealt with between her and Mr Ford.
As to (4), the only press release in evidence was one dated 7 January 2002 which stated in terms that the appointment was "subject to medical and reference formalities". Mrs Laird's evidence was that the press release was agreed by her was on 4 January 2002 and was issued that day. She said that that press release did not mention this "subject". I accept that the press release was agreed on 4 January 2002, but I do not accept that it was in different terms to that dated 7 January 2002. There is no good reason why the terms of the press release should change in this respect and it is inherently unlikely that it would do so. It is far more likely that in agreeing the press release Mrs Laird was concentrating on the quotations set out from her and Cllr Duncan Smith, rather than the more routine parts of the press release, and that she simply did not pick this point up, and I so find.
As to (5), Mrs Laird did raise with Ms Houlden the issue of the inappropriateness of the NJC terms and Ms Houlden did express general agreement with her. However, this did not mean a requirement such as a satisfactory medical report, which would be equally relevant regardless of the terms and conditions used, was also inappropriate, still less that there was an agreement that it be dispensed with. Mrs Laird's evidence was that since the Information Form referred to NJC terms and conditions and they were inapposite, it followed that the whole Form was irrelevant and could be disregarded. This does not follow. In fact, most of the headings in the Form remained relevant regardless of the terms and conditions of appointment (for example, "interview expenses", "payment of salary", "superannuation", "special leave", "sickness" etc.). In any event, as Mrs Laird ought to have appreciated, issues such as the terms and conditions to be used would be a matter for CBC itself, not its recruitment advisers.
As to (6), the matters relied upon are equally consistent with a confident expectation of employment rather than actual employment. In any event, it is what a person in Mrs Laird's position would reasonably have understood rather than what she may or may not have actually understood that matters.
As to (7), Mr Ford was not inserting any new condition. He was simply re-iterating a condition that had been present from the outset. In any event, matters of this kind were within his authority as the person tasked with dealing with the details and formalities of her employment. Just as the SRC Committee through Cllr Duncan Smith could delegate matters to Ms Houlden, it could also delegate matters to the CBC legal department and Mr Ford.
As to (8), this may be correct, but it does not assist Mrs Laird in this case. There was no binding contract made orally.
For all these reasons, I do not accept Mrs Laird's case in relation to the formation of the contract. The contract was concluded on 14 January 2002 and the making of the contract was throughout conditional on there being a satisfactory medical report. However, I accept that Mrs Laird believed that a binding contract had been concluded on 4 January 2002, as evidenced by the fact that immediately thereafter she withdrew from the Ashford post she had applied for, agreed a notice period with RCT and started on CBC work.
Misrepresentation:
(2)(a) How the Court should approach the construction of the wording of the medical questionnaire and was it seeking only statements of subjective and honestly held belief?;
The medical questionnaire provided as follows:
"All questions to be answered
If you need any help in answering any of these questions, you should consult your own Doctor or the Council's Medical Adviser (to whom this form should be returned) at the Occupational Health Department…
(Any false or misleading statement will prejudice the continued employment of the applicant)".
The questions were then set out. The material questions and answers in the medical questionnaire were as follows:
(1) "A) Do you normally enjoy good health" - "Yes".
(2) "C) Do you have either a physical and/or mental impairment" – "No".
(3) "D) Have any of your near relatives suffered from… Mental Trouble" – "No".
(4) "G) Date when you last had medical treatment and reason:" – "Bruising to lower back following a fall at work 17/9/2001".
(5) "H) Have you any ongoing condition which would affect your employment?" – ""No - nb I get occasional migraine but this does not affect my ability to work or usually require time off from work. (Treated with Zonig)
The name and address of Mrs Laird's doctor was then given and the form concluded as follows:
"I declare that all the statements on the above answers are true and given to the fullest of my ability and acknowledge that if I have wilfully withheld any material fact(s), I am, if engaged, liable to the termination of my contract of service.
I agree to the Council's Medical Advisor seeking information from any Doctor who has at any time attended me and I authorise the giving of such information".
It was common ground that this was a poorly drafted questionnaire. The evidence of Dr McNamara, CBC's occupational health expert, was that it was "very poorly drafted" and "quite inadequate". He explained that usually such forms are much fuller and clearer, and that they often give examples to assist in answering the questions and provide explanatory notes. He acknowledged that a lay person would be likely to interpret the questions differently to a doctor and that people might interpret the "not particularly well phrased questions" in different ways.
It is also to be noted that there is no sweep up question calling for disclosure outside the questions asked, such as, for example: "Is there anything else in your history or circumstances which might affect our decision to offer you employment?".
In construing the medical questionnaire Mrs Laird submits that:
(1) CBC cannot seek to go outside the wordings of the questions asked; Mrs Laird is entitled to assume that they ask for the information which CBC desired – see Moore v Hermes [2003] Lloyd's LR IR 315 at p318-9.
(2) Mrs Laird is entitled to construe the wording in a fair and reasonable way and any ambiguities should be resolved in her favour – see Revell v London [1934] 50 Lloyd's Rep 114. It was for CBC, which had put forward the form, to avoid ambiguity.
(3) Where the question of whether there is a misrepresentation depends upon a matter of judgment by the representor, the Court should be reluctant to find a misrepresentation. This is because (i) it is dangerous in the context of an exercise of judgment to engage in a microscopic analysis of the words used because that is not the exercise and (ii) there has to be a "misrepresentation" which is a global word with serious consequence - see Avon v Swire Fraser [2000] Lloyd's Rep IR 535 at paras 1-20, and 200.
(4) The wording that says that Mrs Laird acknowledges that "I declare that the statements… are true and given to the fullest of my ability and knowledge and if I have wilfully withheld any material fact(s), I am, if engaged, liable to the termination of my contract of service" is only consistent with the form asking for subjectively true answers i.e. what the relevant person genuinely believes. This is supported by this being a medical questionnaire where the person completing it could not be understood to have professional medical knowledge. The result is that the answer only needs to have been given in good faith i.e. honestly - Avon v Swire Fraser [2000] Lloyd's LR I R 535 at paras 16-7, and also the line of insurance cases such as Fowkes v Manchester 3 B&S 917, Economides v Commercial [1998] QB 587 at p598-9 and Zeller v British Caymanian [2008] Lloyd's LR IR 545 (which deals with a medical declaration).
In my judgment:
(1) The medical questionnaire should be construed objectively – i.e. as a reasonable person in the position of Mrs Laird would have done – see, for example, the Zeller case para. 19 at p550 per Lord Bingham.
(2) If the questionnaire is ambiguous, so that more than one meaning might reasonably be given to a particular question asked, then an answer correctly addressing either of those meanings would be true – see Revell v London [1934] 50 Lloyd's Rep 114.
(3) In considering that issue it is relevant that Mrs Laird is a lay rather than a medical person. She would not be expected to have any technical or specialist understanding of any of the questions raised or terms used.
(4) Since this is CBC's form it is for CBC to make it clear and unambiguous, and it cannot reasonably expect the candidate to do its job for them. The candidate's stated duty was to answer the questions asked correctly to the best of their "ability and knowledge" and not wilfully to withhold material facts.
(5) A non-disclosure would only give rise to a right of termination if it related to a material matter which had been "wilfully" withheld. There is no general duty of disclosure and the duty acknowledged is expressed in terms of "wilfully" witholding. "Wilfully" means a deliberate or at least reckless withholding.
As to whether the form was only seeking subjectively true answers I am not persuaded that it is so limited. The form sought various statements of fact, statements which self evidently were likely to be relied upon and therefore liable to cause loss or damage if care was not taken to ensure that the statements were accurate. In the ordinary way a person making such statements would be expected to take reasonable care in so doing. That is their duty at common law, and, where the 1967 Act applies, as a matter of statute law. Clear words would be required to exclude or limit that duty.
The fact that the form is being filled in by someone who does not have professional medical knowledge is reflected in the way in which the form is to be construed. It does not have a bearing on whether reasonable care should be taken by that person in so doing.
Further, none of the cases relied upon by Mrs Laird have a declaration requirement in the same terms as in the present case, and in particular the acknowledgment that the statements are made to the fullest of the maker's "ability". The form does not simply require statements to be made to the best of the maker's "knowledge and belief". "Ability" would ordinarily include taking reasonable care in the making of a statement. The terms of the declaration in relation to representations is therefore not inconsistent with there being a duty of care and I so hold.
(b)Whether the representations made by Mrs Laird in answering the medical questionnaire ("the Representations") were false;
CBC says that various answers in the medical questionnaire were false as Mrs Laird had had past episodes of depression and was taking an antidepressant at the time which she did not reveal. Mrs Laird says that she had had three past episodes of stress-related illness (and not depression) which she understood and which were linked to specific non-recurrent events, and that the relevant stress and illness had ceased and that she was only taking the anti-depressant as part of a "weaning-off" process.
The medical history as revealed by Mrs Laird's medical notes was materially as follows:
(1) "12.5.97 - 'Felt better while off work - first day back yesterday - anxious ++ severe attack of C.P. (CP refers to chest pain) - Couldn't breathe "like a tight band" - Inderal made no difference - also feels depressed - on examination well - ECG completely normal - further long discussion - stop Inderal today - rx Seroxat 1 mg in the morning - to take time off work - counselling suggested - thinking about it' (Seroxat is an anti-depressant).";
(2) "17.5.97 - 'Very stressed re work ...'";
(3) "20.5.97 - 'Feeling better - sleeping ++ - much less CP - continue Seroxat - med 3 two weeks stress'";
(4) "5.6.97 - 'Much better - Seroxat 20mg - certificate 2 weeks stress'";
(5) "18.6.97 - "Still stressed - rather low last week - discussed - med 3 two weeks stress'";
(6) "29.7.97 - 'Back at work part time - still stressed - discuss - waiting to see counsellor - repeat Seroxat 20mg mane'";
(7) "14.11.97 - 'Very long discussion - very low since 4 week trip away - increase Seroxat 30mg'";
(8) "12.12.97 - 'Now on Seroxat 20 mg - very well – weaning off'";
(9) "6.1.98 – Long discussion re work – seems a lot more positive – no symptoms of stress – taking "time out" – Keeping v. fit – needs medical report";
(10) "19.3.98 – Discussion re work – has been suspended – seems to be coping quite well"
(11) "2.9.98 - 'Very low - last job 4 months - was very high pressured - recent bereavement - very low self esteem - ongoing legal problems with the company - greatly decreased income - was main breadwinner - not taking Seroxat every day - long chat - refer counsellor - restart Seroxat - mother supportive - discussed exercise, caffeine reduce usage'";
(12) "4.9.98 - 'Further long chat - major problem with low self esteem - suggest sees general practitioner for review 1 to 2 weeks - taking Seroxat regularly'" (there was also a referral to the Practice Counsellor that day);
(13) "18.1.99 - 'Very well - new job - relocating to Cardiff - continue Seroxat 20mg daily'";
(14) "7.6.99 - 'Continue Seroxat'";
(15) 13.12.99 – Smear discussed – v. Anxious re : smear as problem in past – mild depression – last job – long chat - Lofepramine 70mg ...(another anti-depressant) ";
(16) "5.1.00 – Some improvement on Lofepramine 70 mg ;
(17) 14.1.00 – Feels awful. Still looking for work. Lofepramine to 70 mg (twice) a day ;
(18) 13.4.00 - 'Lofepramine 70mg (twice) a day...;
(19) "26.6.01 - 'Unwell 2 weeks disturbed sleep nausea - problems at work - med 3 two weeks - lethargy review'";
(20) "9.7.01 - 'Problems at work - being bullied by boss - wants to return to work tomorrow despite feeling that the work situation is making her depressed - still not sleeping - try Dothiepin 25mg in the morning'(another anti-depressant)";
(21) "19.7.01 - 'Tearful at work - wants to continue at work despite feeling unwell - still having problems with boss - Dothiepin 1 tablet in the morning restart (had stopped treatment) refer to private counsellor'";
(22) "9.8.01 - 'Going back to work with difficulty - Dothiepin 50mg - crying every day with stress - increase Dothiepin to 70mg'";
(23) "19.9.01(?)" – "Outward bound course 13/9/01. A + E Hertfordshire H.A. Bruising of lower back. On analgesics. No radiation.. no sphincter disturbance. Gait normal. Continue analgesics. Off work 14/9/01".
(24) "6.10.01 - 'No back pain at all. Happy with Dothiepin 75mg. Review 1/12"; and
(25) "17.1.02 - 'Has been offered new job by Cheltenham in February 2002 - to continue Dothiepin 75mg for 28 days then swap to Dothiepin 25mg'".
In relation to Mrs Laird's medical condition I heard evidence from two psychiatrists, Dr Aylard and Professor Lader. Dr Aylard interviewed Mrs Laird on 13 April 2005. Professor Lader interviewed her on 1 September 2008 and on 11 March 2009. I also heard evidence from Mrs Laird's GP, Dr Mulrenan, and an occupational physician, Dr McNamara.
Based on the GP notes and Mrs Laird's account of her medical history the expert psychiatrists were in broad agreement as to her medical condition in January 2002. Mrs Laird had suffered three episodes of depression with associated anxiety. These episodes were all associated with periods of stress and were also work related.
The first episode occurred in May 1997 and resulted in her taking just over two months off work on the advice of her GP, from the middle of May until the end of July 1997. She was "burnt out" due to a culmination of stresses, including pressure at work and the strain of constant long haul travelling. She was prescribed an anti-depressant, Seroxat, in a standard GP dosage of 20 mg. She remained low at times following her return to work and in November 1997 the dosage was increased to 30 mg per day. By December 1997 she was reported to be "very well" and to be "weaning off" Seroxat. In January 1998 she was showing no symptoms of stress and in March 1998 she was reported to be coping quite well even though this was the time when she was suspended from the CIH leading to her departure from the job the following month. By this time she was taking Seroxat sporadically, if at all.
The second episode occurred in September 1998 around the time that her stepsister, to whom she was very close, died unexpectedly after a short illness. At the time Mrs Laird was working as a consultant for Chapman Hendy and was paid on the basis of assignments carried out rather than on a regular basis. These were infrequent which meant that it was a time of financial difficulty and worry. Not having a full time job also affected Mrs Laird's self esteem. This episode was not related to pressures at work, but was work related in the wider sense in that it was linked to the fact that she was not in regular work. She was referred to a counsellor and restarted on Seroxat at 20 mg per day. By the New Year of 1999 she was better, was reported to be "very well", and had taken on a 9 month job in Cardiff. She was continued on Seroxat.
At the end of 1999 Mrs Laird was very anxious as a result of a unsatisfactory cervical smear test she had had. She was put on to a different anti-depressant, Lofepramine (a trycyclic anti-depressant), at a standard GP dosage of 70 mg. In January 2000 this was increased to 70 mg twice a day, and this continued until at least April 2000. Thereafter no further problems are reported until the middle of the following year and Mrs Laird appears to have come off the anti-depressants. This was not an episode of depression.
The third episode occurred at end of June 2001 when she had problems at RCT, where she was then working. Her chief executive, Mr Ryley, was insisting that she be seconded to carry out a major customer service project within a short time scale and Mrs Laird had major anxieties about her ability to carry this out. She was also having problems with Mr Ryley as he felt she was after his job. These worries led to her taking two weeks off sick on the advice of her GP from 26 June to 10 July 2001. On 9 July 2001, the day before she returned to work, she was prescribed Dothiepin, another trycyclic anti-depressant. By 19 July 2001 she had stopped taking Dothiepin but was told to restart it as she was still feeling unwell. On 9 August 2001 she was still finding work stressful and her dosage was increased to three tablets of 25 mg per day, which was still a standard GP dosage. This prescription was renewed in October 2001 and reduced to 25 mg in January 2002. In fact, Mrs Laird had stopped taking it regularly before then, and she stopped taking it completely by the end of February 2002.
From Mrs Laird's perspective, her medical history shows that she had had three significant stress related illnesses in the last five years. The main episode had been in May to July 1997, when she had had to take over 2 months off work. Mrs Laird herself described this in terms of being a breakdown. The other episodes had been in September 1998 and June/July 2001, and on the latter occasion she had had to take two weeks off work. Aside from these periods off work Mrs Laird had been able to carry on working, even though at times she found work stressful.
Each of the episodes were work related, although there were also other stressors involved and the work stressors were not all the same. In relation to the first episode it was mainly a combination of the stress of the responsible job she was performing and the cumulative effect of constant long haul travel. In relation to the second episode it was mainly a combination of bereavement and the worry of not being in full time work. In relation to the third episode it was mainly a combination of the workload she was being asked to take on and issues arising out of her relationship with her boss.
From the time of the first episode Mrs Laird had been on anti-depressants for significant periods during the last five years, generally at a standard GP dosage level. When she felt better Mrs Laird would wean herself off the anti-depressants and often stop taking them altogether.
The three episodes of anxiety Mrs Laird had suffered were in fact episodes of depression. She was adamant that she had never been told that she suffered depression in a clinical sense. It is very possible that her GPs did not explain the episodes to Mrs Laird in these terms, although it is likely that the word depression would have been used on occasion. Even if it was, it is likely that Mrs Laird would not have wanted to admit even to herself that she suffered from depression, and to have rationalised her problems in terms of stress or anxiety.
The expert psychiatrists were agreed that it is standard practice for a person recovering from a depressive illness to be maintained on anti-depressants even though the depressive symptoms appear to be fully remitted. This is because it is difficult to be sure that full remission has occurred and because tapering off anti-depressant will lessen the likelihood of withdrawal symptoms.
They were also agreed that although Mrs Laird was taking anti-depressant medication in January 2002 she had recovered from her episode of depression in the summer of 2001, and indeed that she had done so by October 2001.
Professor Lader summarised her condition in January 2002 as follows:
"The nature of Mrs Laird's constitution was that she became depressed when stressed. When not stressed she functioned very well. This was only impairment in the sense that she was at risk of breakdown when stressed. If not stressed she could have spent the rest of her career without any further depressive symptoms".
Dr Aylard broadly agreed. Mrs Laird had a "vulnerability" to stress although he considered that Mrs Laird's depression was not purely reactive and that to some extent she had a predisposition to be depressed as a constitutional attribute. Whilst he agreed that Mrs Laird could function perfectly well when not stressed, he doubted that she was sufficiently robust to withstand the stresses involved in a high pressure job, such as that she was applying for.
Once a person has had an episode of depression there is a significant prospect of them suffering a further such episode, and the risk increases the more episodes of depression there have been. In his report Dr Aylard put that risk at being over 60% in the case of a person with Mrs Laird's history of three episodes within five years, although in evidence he put it at closer to 70-80%.
Aside from her history of episodes of depression the other aspect of Mrs Laird's medical history that is of importance is the back injury she suffered in September 2001, as referred to in the medical notes. Mrs Laird had gone on a management course and on 13 September 2001 suffered a back injury, for which she went to hospital, received an intra-muscular injection and an X-ray. She went to see her own doctor about this probably on 19 September 2001 when the back pain was discussed and she was told to keep taking analgesics.
Mrs Laird went back to the surgery on 6 October 2001 for a repeat prescription of Dothiepin. She was not planning to see her doctor but because she was free she went in to see her. The doctor recorded no back pain, prescribed a contraceptive and the continuance of the Dotheipin.
Against that background of her actual medical condition and history I turn to consider whether the answers given in the questionnaire were in fact false, bearing in mind that the questions are addressed to a lay person and are to be understood as a reasonable person in Mrs Laird's position would understand them:
(1) "Yes" in response to the question, "Do you normally enjoy good health?"
When depressed she did not enjoy good health. When not depressed, she did. But she was only depressed for limited periods prior to January 2002 and this was not her "normal" state of health. For the great majority of the time she was not depressed and had had only had a total of about three months off work for depression related reasons during her working life. Otherwise she did generally enjoy good health. A reasonable person in Mrs Laird's position would regard herself as normally enjoying good health. This was the or at least a correct answer.
(2) "No" in response to the question, "Do you have either a physical and/or mental impairment?"
She did not have an impairment in the technical sense – i.e. under the Mental Health Act or the DDA. Nor did she have cognitive or learning difficulties. She had a vulnerability to episodes of depressive disorder but she did not have an ongoing depressive disorder. Although she was still taking anti-depressants in January 2002 this was because it was usual practice to continue to do so for six months after an episode of depression. But she was not depressed in January 2002 and had recovered from her previous illness. I consider that the question would reasonably be understood as relating to an ongoing condition that impaired her physical or mental abilities either generally or in January 2002. At that time she did not have such a condition, or, if medically her vulnerability is to be so categorised, reasonably did not regard herself as having such a condition. A reasonable person in Mrs Laird's position at the material time would not regard herself as having a physical or mental impairment. This was the or at least a correct answer.
(3) In reply to the question, "Date when you last had medical treatment and reason" she stated "Bruising to lower back following a fall at work 17/9/2001";
This was the last time she had gone to hospital or to a doctor to be medically treated. Whilst it is correct that she had picked up a repeat prescription at her doctor's in October 2001 this was a continuation of her treatment from July/August of that year. As it happened, she saw her doctor on that occasion, but that was fortuitous. Had she simply picked up a repeat prescription from the surgery it would be difficult to regard it as being an instance of medical treatment, and that is effectively what happened. The question is not directed at whether any medication is being taken but at the last instance of medical treatment. It is a question to be answered in the singular. The phrasing suggests seeing a medically qualified practitioner for the purpose of considering and addressing a set of symptoms. I consider that the question would reasonably be understood as being directed at the last time she had symptoms for which she needed to see and be treated by a medically qualified practitioner, rather than picking up continuing medication that required no examination or consultation. A reasonable person in Mrs Laird's position would not regard herself as having had medical treatment for stress or depression in October 2001 and would have considered her last medical treatment to have been for back pain in September 2001, as stated. This was the or at least a correct answer.
(4) To the question, "Have you any ongoing medical condition which would affect your employment?", she replied, "No - nb I get occasional migraine but this does not affect my ability to work or usually require time off from work. (Treated with Zonig)";
Medically, whether Mrs Laird had an ongoing medical condition is a difficult question. She had a vulnerability to depression but not one that was manifesting itself at that time. The vulnerability was ongoing but not the depression. Dr Aylard was of the view that she did have such a condition since she was taking anti-depressants. But it is standard practice to go on taking anti-depressants for a considerable period after there has been a period of depression. It is not in itself indicative of any ongoing problem. From a lay person's perspective, I consider that the question would reasonably be understood as being directed at a condition that was continually suffered or at least regularly suffered and that her vulnerability was not such a condition. Even if that is wrong, the question is directed at a condition that "would" affect her employment – i.e. a condition that is going to do so, not one that might do so or even is likely to do so. On the medical evidence Mrs Laird's vulnerability was more likely than not to affect her employment given the stressful nature of the job she was taking on, but it was not bound to do so. A reasonable person in Mrs Laird's position would not have regarded herself as suffering from an "ongoing" medical condition, nor, if her vulnerability to depression would reasonably be regarded as such a condition, that it was a condition such as "would" affect her employment. This was the or at least a correct answer.
I therefore find that the representations made by Mrs Laird in answer to the medical questionnaire were not false, nor, given the terms of the questions asked, were they misleading.
(c) If false, whether Mrs Laird honestly believed the Representations to be true;
If, contrary to my above findings, false statements were made I have no doubt that Mrs Laird nevertheless honestly believed that the statements made were true.
For this purpose what matters is Mrs Laird's understanding of her medical condition rather than her actual condition. Her understanding was that she had suffered attacks of anxiety and stress due to specific events, but not that she had suffered or was suffering from a depressive disorder.
The plausibility of this being her stated of mind is supported by the evidence of CBC's own expert psychiatrist, Dr Aylard. He explained how people who are in fact suffering from depression are reluctant to acknowledge it and tend to rationalise it in different terms (e.g. stress) and to find reasons to explain it away. This is entirely consistent with Mrs Laird's state of mind as explained in evidence.
In January 2002 she would have regarded herself as being well and enjoying a good state of health. She had recovered from her last period of depression. Although she was still taking anti-depressants this was because it is standard practice to do so rather than because she needed to do so. Her understanding that it was advisable to be weaned off such medication was entirely correct.
I further find that Mrs Laird's understanding of her health and medical condition as I have found it to be was a reasonable understanding.
Against the background of that understanding there can be little doubt that Mrs Laird would have believed the answers she had given to be true and correct answers.
Further, in signing the questionnaire Mrs Laird was expressly consenting to her doctor being consulted and she said, which I accept, that she believed this would be done. In such circumstances there would have been no point in lying in the questionnaire, even if she had been inclined so to do, which I find she was not.
CBC place particular reliance on the answers given by Mrs Laird when she applied for the RCT job in April 2000. In that form, she gave the following answers:
"Have you been receiving medical treatment during the last 12 months?
Yes – since December 1999 (following unexpected redundancy) for
mild depression".
Are you, at present, taking any medication?
If so, please specify:
Lofepramine".
CBC submits that this shows that Mrs Laird regarded treatment of mild depression as being "medical treatment" and therefore she must have known that she should have answered the question in the medical questionnaire "Date when you last had medical treatment?" by referring to her treatment for depression. However, for reasons already given, the question in the medical questionnaire was of a more limited nature and was addressing a specific occasion rather than a period of time. In any event, there is no reason to suppose that Mrs Laird could remember or had in mind the questions and answers on the RCT questionnaire when she filled in the CBC questionnaire.
It was suggested that Mrs Laird knew that her treatment for depression was material for her employer to know, as shown by the fact that such disclosure had been made to RCT. It was also suggested that Mrs Laird deliberately kept this quiet because she knew that it would lead to inquiries being made of her GP and thereby threaten her employment with CBC. I reject these contentions. As already found, Mrs Laird in fact expected CBC to take up matters with her GP regardless of the answers given by her. The reason disclosure had been made to RCT was that it was made necessary by a specific question addressed to what medication she was currently taking. This apparently had not concerned them so, if anything, Mrs Laird's experience with RCT would have led her to believe that disclosure of these matters would not be problematical. Moreover, Mrs Laird in fact thought that she already had employment with CBC, which is a yet further reason why she had no reason to fear disclosure or to lie.
I have taken into account the fact that I have not accepted Mrs Laird's evidence on certain issues in the case, but for the reasons outlined above she had no particular reason to fear disclosure or lie in relation to the medical questionnaire, still less to do so in the Machievellian way suggested by CBC. Moreover, she was not desperate for the CBC job. She was currently employed; her own preference was for the Ashford job she had applied for; even if neither Cheltenham or Ashford had led to an appointment there were likely to be other job opportunities forthcoming. I accordingly find that Mrs Laird honestly believed the representations made to be true.
(d) If false, whether the Representations were made (i) fraudulently (in the sense articulated in the authorities on the tort of deceit), (ii) negligently (at common law), and/or (iii) without reasonable grounds for belief in their truth, for the purposes of section 2(1) of the Misrepresentation Act 1967;
The leading authority on the essentials of the tort of deceit remains Lord Herschell's judgment in Derry v. Peek [1889] 14 App Cas 337 at 376:
"First, in order to sustain an action of deceit, there must be proof of fraud and nothing short of that will suffice. Secondly, fraud is proved when it is shown that a false representation has been made (i) knowingly, (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false."
The standard of proof required in relation to an allegation of fraud is that of the balance of probabilities. The fact that fraud is a very serious allegation may be relevant to the inherent probabilities of its occurrence, but it does not affect the standard of proof.
In Re H (Minors) [1996] AC 563 Lord Nicholls stated at 586D:
"The balance of probability standard means that a court is satisfied an event occurred if the court considers that on the evidence, the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on a balance of probability. Fraud is usually less likely than negligence."
This passage was considered by the House of Lords in Re B (Children) (Care Proceedings: Standard of Proof) [2009] 1 AC 11 and most recently by the Court of Appeal in Dadourian Group International Inc & Others v Simms & Others is [2009] EWCA Civ 169 in which the position was summarised by the Court as follows (per Arden LJ at para 32):
"Their Lordships affirmed the decision in Re H and provided an explanation of what Lord Nicholls' judgment meant. Baroness Hale (with whom the other Law Lords agreed) explained that nothing in Re H suggests that a different standard of proof is to be applied in circumstances where the alleged conduct is particularly serious or unusual. There is one standard of proof and that is the simple balance of probabilities. The fact that the alleged conduct is particularly serious or unusual does not displace or change this fundamental principle. Baroness Hale stated that the inherent probabilities are simply one factor to be taken into account, where relevant, in deciding where the truth lies. However generally "there is no logical or necessary connection between seriousness and probability". Therefore arguments that Re H had introduced a principle that where a serious allegation is in issue the standard of proof required is higher were incorrect."
Directing myself in accordance with the authorities, in the light of my findings above I have no doubt that the representations were not made fraudulently, even if false. I also have no doubt that there was no wilful withholding of material matters.
As to whether, on the assumption they were false, the representations were made negligently, there is considerable overlap with the issue of how a reasonable person in Mrs Laird's position would have understood the questions.
Even if, contrary to my findings, the questions are not to be reasonably understood as I have held, the interpretation I have set out is at least a plausible interpretation of ambiguous questions and I am quite satisfied that it would not be negligent so to interpret them.
Given the ambiguity of the questions asked and Mrs Laird's reasonable understanding of her medical history, as I have found it to be, it was not negligent of her to answer the questions as she did.
I find that Mrs Laird filled out the medical questionnaire as a reasonable layman might, as Dr McNamara was inclined to accept. She had proper grounds and reasoning for each of her answers. Accordingly she took reasonable care, and did not complete it as no reasonable person would have done (the usual test for negligence). Equally she had reasonable grounds for believing in the truth of the answers she had given.
CBC places particular reliance on Mrs Laird's evidence that she found some of the questions difficult to understand but did not consult her doctor or GCOHS as the form suggested. However, her doctor was part-time and unavailable; CBC had no human resources department of appropriate personnel to deal with, and all that was given for GCOHS was an address with no telephone number. In any event, she ultimately reasonably concluded that she could complete the form unassisted.
(e) Whether CBC's remedy for any alleged misrepresentation was restricted to terminating Mrs Laird's employment, rather than suing for damages;
If I had found there to have been an actionable misrepresentation I would not have held that CBC's remedy was so restricted.
Mrs Laird relies on the wording in the form: "I declare that the statements… are true and given to the fullest of my ability and knowledge and if I have wilfully withheld any material fact(s), I am, if engaged, liable to the termination of my contract of service". She contends that this amounts to an agreement that the only remedy available is termination.
In my judgment clearer language than this would be required to exclude the remedies that would ordinarily be available as a matter of law for actionable misrepresentation, let alone for fraudulent misrepresentation. This wording is spelling out the potential consequences of misrepresentation or deliberate withholding of material facts, but it is not circumscribing such consequences.
(f) Whether the Representations were made to CBC for the purposes of the Misrepresentation Act 1967, section 2(1);
Section 2(1) of the 1967 Act provides that:
"Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss ...." (emphasis added ).
Mrs Laird submis that because the medical questionnaire was for the use of CBC's medical advisor, GCOHS, rather than CBC itself the statements made therein were not made "to" CBC within the meaning of the 1967 Act, GCOHS being a separate entity "acting under some independent role".
In my judgment this is too narrow an interpretation of the 1967 Act and of the purpose of the representations made. Although the immediate representee was GCOHS, the ultimate representee was CBC since it was for its benefit that the questionnaire was being filled in. GCOHS had no independent interest in assessing Mrs Laird's medical condition. It was doing so for the benefit of the CBC. In such circumstances I consider and find that the representations were being made to CBC, albeit through the filter of GCOHS.
Further, the words "to him" in section 2(1) do not narrow the class of persons who would be representees in law. There is little doubt that at common law and in equity, the representee did not necessarily need to be the person to whom the false statement was made. As stated in Chitty on Contracts. Vol. 1 at 6-028: "[E]very man must be held responsible for the consequences of a false representation made by him to another, upon which a third person acts, and so acting, is injured or damnified, provided it appear that such false representation was made with the intent that it should be acted upon by such third person in the manner that occasions the injury or loss"; per Lord Cairns in Peek v Gurney [1873] LR 6 HL 377, at 413. It is most unlikely that Parliament intended in the 1967 Act to narrow the class of representees to those to whom a representation was directly addressed. "The Act of 1967 does not ... alter the rules as to what constitutes an effective misrepresentation": Chitty on Contracts Vol. 1 at 6-001. No good reason has been advanced as to why such an alteration should have been intended and the consequence would be an illogical fissure between the position under the 1967 Act and at common law.
(g) Whether CBC relied on the Representations and/or was induced by them to enter into the Employment Contract;
The representations made in the medical questionnaire led to Mrs Laird being declared fit for employment, on the strength of which CBC decided to proceed with Mrs Laird's appointment. This is borne out by the correspondence and the formation of the contract as I have found it to be.
It was not until 14 January 2002, after Mrs Laird had been declared fit for employment, that CBC wrote to Mrs Laird informing her that the medical clearance certificate had been received and that "we can now proceed with your appointment", and the contract was made.
The evidence of CBC's expert, Dr McNamara, was that if Mrs Laird had disclosed that she had a history of depression, or even that she was taking anti-depressants, then she would very likely have been called in for a consultation with an occupational health advisor, that this would have drawn out the details of her medical history and that her GP would probably have been consulted. The history as reflected in her medical notes would thereby have come out and it was his view that, given the stressful and highly pressurised nature of the job she was applying for, she would probably have been declared not medically fit for the post. The possibility of reasonable adjustments for the purpose of the DDA would have been considered, but it would have been concluded that such adjustments were not practicable given Mrs Laird's history and the demands of the job.
Mrs Laird did not call any expert occupational physician to counter Dr McNamara's evidence and I largely accept that evidence. I find that GCOHS would essentially have acted as Dr McNamara suggested. I consider that, rather than concluding that she was unfit for the job, GCOHS would have concluded that she may be fit to carry out the job, but that given her history there were risks in her so doing. However, whichever conclusion was reached there is little doubt that the council would have concluded that it was not appropriate to offer her the job.
Given the closeness of the vote in favour of Mrs Laird over Mrs Garner it is apparent that any doubts raised as to her medical capability to fulfil the job would be likely to have made a real difference, as was indeed the evidence of a number of CBC witnesses.
The minutes of the council record that:
(1) the vote between Mrs Laird and Mrs Garner recorded a majority of only one vote (18 votes to 17) in Mrs Laird's favour;
(2) therefore if only one member out of 35 would have changed his or her vote, the result would have been a tie;
(3) if only two members out of 35 would have changed their vote, the post would have been offered to Mrs Garner and not Mrs Laird;
(4) the council resolved that Mrs Laird be offered the post; and
(5) the council resolved that if Mrs Laird did not accept the position, it should be offered to Mrs Garner.
It is sufficient for CBC to prove that the representations made were one of the inducing causes of the contract. It is not necessary to show that it was the sole inducing cause.
I am satisfied that CBC have discharged that burden. Mrs Laird submits that it was necessary for CBC to prove what it would have done if the false representation had not been made. I do not accept that this is necessary, but, if it is, I find that CBC would have employed another managing director. Whether, as CBC contends, that would have been Mrs Garner, is considered further below.
Mrs Laird further contends that in considering the issue of inducement one should have regard to the fact that if she in fact had an "impairment" and had made a misrepresentation in stating otherwise it follows that CBC would have been in breach of duty under the DDA if it refused to employ her, and that this makes it likely that she would have been appointed regardless. Even if it was right that CBC would have been in breach of its duty under the DDA in refusing Mrs Laird employment, which, for the reasons discussed further below I find not to be the case, I do not accept this would have materially influenced CBC's decision. This was too important a job for CBC to take on someone with a significant impairment, even if refusing to do so would have involved a breach of the DDA and a potential liability to pay compensation. I therefore do not consider that this affects the issue of inducement.
(h) If no misrepresentation had been made and Mrs Laird had disclosed her full medical history, whether CBC would have been in breach of duty under the Disability Discrimination Act 1995 ("the DDA") had it refused to employ her?
In order to establish a claim under the DDA, the employee would have to be "disabled" within the meaning of the DDA; the employer would have to know the facts establishing the disability; the employer's treatment of the employee by not employing her would have to be unjustified; and the job would have to be reasonably capable of adjustment; see Hammersmith and Fulham LBC v. Farnsworth [2000] IRLR 691, EAT; Quinn v. Schwarzkopf Ltd [2002] IRLR 602, Court of Session (Inner House); Malcolm v. London Borough of Lewisham [2008] 1 AC 1399, HL.
In her witness statement at para 870 Mrs Laird stated, after mentioning the statutory test for disability: "I first became disabled and therefore entitled to the protection of the Disability Rights Act [sic] in March 2004, during my employment with the Claimant". Thus it is her own evidence that she was not disabled within the meaning of the DDA in early 2002 and this accords with the views of both sides' experts.
In such circumstances, it is doubtful that it would be open to Mrs Laird to contend otherwise, and ultimately it was common ground that she was not "disabled" at that time and therefore that there would have been no breach of duty.
After the close of the hearing Mrs Laird sought to raise a further argument that even if she was not disabled in early 2002, she would or may have had a "past disability" within the meaning of the DDA. It is too late for this further argument to be raised and it is not open to Mrs Laird. In any event, it was not explored in the evidence and has not been proven.
(i) Whether CBC and/or GCOHS unreasonably failed to seek details of Mrs Laird's medical history from her GP, and, if so, with what consequence, if any.
In the light of the answers given in the medical questionnaire I find that it was not unreasonable of CBC and GCOHS to fail to seek further details of Mrs Laird's medical history. The answers given did not suggest that she suffered from any serious medical condition and in those circumstances there was reasonably considered to be no need for further inquiry.
(3) Whether CBC's claim for fraudulent misrepresentation is barred by limitation, or whether it is brought in time in the light of section 32(1) of the Limitation Act 1980.
This issue turns on whether, if Mrs Laird fraudulently misrepresented her medical history in her answers to the medical questionnaire, CBC could with reasonable diligence have discovered the fraud by 16 December
2002, six years before the fraud claim was issued on 15 December 2008.
There was a major factual dispute as to whether and if so to what extent Mrs Laird made verbal disclosures to individuals at CBC about her past state of health. She claimed that she had informed various individuals about her earlier mental breakdown in 1997 whilst at the CIH. None of the identified witnesses could recall this. I find that she had discussions with various work colleagues about job stresses and work/life balance and mentioned that she had been unwell whilst at the CIH, but I am not satisfied that she specifically told anyone that she had suffered a breakdown until some considerable time into her employment and certainly after 16 December 2002. The first mention of this fact in any document does not occur until considerably later.
Even if she had mentioned her breakdown at an earlier stage, I am satisfied that she did not do so in terms that should have put CBC on inquiry. It is to be noted that Mrs Laird does not allege that she told anyone at CBC that she was or might be medically unfit, that she suffered from depression or that that she was taking anti-depressants.
In the above circumstances, I find that CBC was not put on notice of any facts which ought to have alerted it in 2002 to the likelihood that the answers given in the questionnaire were false and fraudulent. Even if, contrary to my findings above, Mrs Laird made CBC aware that she had had a mental breakdown or other psychiatric or psychological problems in the past, CBC had no reason in 2002 to suppose that its new managing director had made false representations to GCOHS.
Further, even if CBC had been on notice, as events later showed, it would have required a Norwich Pharmacal order to obtain the medical questionnaire. However, CBC could not have obtained a Norwich Pharmacal order against GCOHS by 16 December 2002. The application would have to have been made by about September 2002, but there was nothing remotely resembling a potentially litigious dispute at that stage.
By the same reasoning such an application, even if it could have been made in about September 2002, would not have been granted; especially as it would require a breach of GCOHS's duty of confidentiality: cf. Koo Golden East Mongolia v Bank of Nova Scotia [2008] QB 717, CA, per Sir Anthony Clarke MR at paras 34-38 and 49-51.
Finally, Mrs Laird contends that CBC is to be imputed with knowledge of what its alleged agent, GCOHS, had been told by Mrs Laird. I reject this contention. GCOHS had no duty to communicate the contents of the questionnaire to the Council and a court order was necessary to require them to do so later. CBC had no right to see the completed questionnaire without a Norwich Pharmacal order.
(4) Whether CBC made negligent and/or other misrepresentations or failed to make proper disclosure to Mrs Laird at the time of her appointment about the level of support for her and for the proposed restructuring of the council's management and change in culture, and, if so, with what consequence, if any.
Mrs Laird contends that CBC made misrepresentations to her at the time of her engagement, in failing to inform her that elements of the council were strongly opposed to the introduction of a business culture and associated restructuring and that the council had been split as to her employment. She says that she would not have accepted this employment had she known of such material matters and not been misled by the council's presentation of the situation to her.
I do not accept that the position was anything like as black and white as claimed by Mrs Laird, or that any representation was made as alleged or at all.
Whilst it is true that the vote to offer the post to Mrs Laird was carried by one vote, I do not consider that there was any duty so to inform Mrs Laird . The vote was carried and the vote was that of the council. How that vote was made up was an internal matter confidential to the council and is not a matter which would ordinarily be expected to be told to a successful candidate. Indeed, all CBC's witnesses to whom this was put stated that they had never heard of a successful candidate being given the voting figures. Further, following the vote there was a unanimous resolution to offer the post to Mrs Laird.
Moreover, bare voting figures alone would tell a candidate little: a wide margin might mask the fact that there was a small minority that was bitterly opposed to the successful candidate, while a narrow margin would be consistent with all councillors thinking both candidates would do an excellent job.
The suggestion that there was strong opposition to the proposed new business culture and restructuring is an oversimplification. As matters turned out, a number of councillors had reservations as to how the restructuring was to be implemented, but at the time of Mrs Laird's appointment there was no strong opposition to the principle of restructuring. Even if there had been, and even if this had been widely known, which it was not, I do not consider there was any duty so to inform Mrs Laird.
Further, there is an air of extreme unreality about the case sought to be made. The head of paid service is required to be politically impartial and to support the agenda of whichever party or coalition is in power. The local electorate determines that issue. Elections were scheduled for May 2002, as Mrs Laird knew. As a result of a review of ward boundaries, the whole council was to stand for election. The recruitment pack made this clear and stated the then current political composition of the council. The post for which Mrs Laird was applying was politically restricted under the 1989 Act. If political changes meant changes to CBC's policy on the issue of restructuring then that is something she would be expected and would have to deal with. It was part and parcel of the job she was taking on.
Finally, Mrs Laird's case on this issue appears to assume a duty of disclosure but this was not a contract of a nature involving any duty of disclosure. In so far as it was alleged that there was some implied representation, or an implied representation giving rise to a duty to correct it, I do not accept that any relevant or sufficient representation of fact has been established.
Breach of duty by CBC
(5) Whether CBC, by its officers, members, and/or employees, breached the Employment Contract, were guilty of statutory harassment (under the Protection from Harassment Act 1997 ("the 1997 Act")), breached the Health and Safety at Work Act 1974 ("the 1974 Act"), the Human Rights Act 1998 ("the HRA") and/or the DDA.
In the List of Issues the alleged breaches of duty were stated to be as follows:
(a) Mounting and failing to protect Mrs Laird against (and investigate) a campaign of alleged harassment; and seeking to have her employment end; and otherwise failing to protect her health;
(b) Failing to engage in mediation/conciliation with Mrs Laird;
(c) Failing to have and then to implement properly and fairly and with the correct results a Grievance Procedure;
(d) Bringing and launching allegedly unfounded (and whether in fact and/or in law, and including as to whether or not, if made out, they would have justified dismissal or other disciplinary action) allegations and a disciplinary process (under "the JNC Procedure") against Mrs Laird, and then running the JNC Procedure in an allegedly biased and unfair manner, and with it reaching allegedly wrong and unfounded conclusions;
(e) Suspending Mrs Laird;
(f) Unlawfully searching and taking material from Mrs Laird's private possessions;
(g) Delaying and refusing to accept Mrs Laird's application to retire on grounds of ill-health, and then her ill-health pension;
(h) Bringing this Claim."
Mrs Laird relies on her claim for damages for these alleged breaches of duty in a purely defensive manner. If and to the extent that she was found liable to CBC in damages she seeks to set off her own damages claim to extinguish or reduce CBC's claim.
In the light of my conclusion on liability, it is therefore not strictly necessary to determine this cross claim. However, in deference to the evidence given and the arguments made I shall express my principal conclusions on her claim.
As set out further below, for the most part I do not accept Mrs Laird's allegations of breach of duty against CBC.
Further, if and to the extent that Mrs Laird can prove a breach of duty by CBC, she cannot prove that any distinct loss was caused thereby.
Mrs Laird claims that CBC's wrongdoings have caused or exacerbated her pre-existing psychiatric difficulties. However, no schedule of loss has been provided in support of this contention nor has any evidence been provided which proves a link between such difficulties and any specific breach alleged or established.
Mrs Laird's approach is to allege that each of the breaches alleged by her have caused or contributed to her loss and damage, without seeking to differentiate between them. If she proved her entire case then such an approach might be sustainable, but as soon as she fails to prove parts of her case then it runs into evidential difficulties.
The major cause of the exacerbation of Mrs Laird's psychiatric difficulties whilst at CBC was her conflict with Cllr McKinlay and the pursuit by him of his complaints through the JNC process. If Cllr McKinlay's statements and actions and the pursuit of the JNC proceedings did not involve a breach of duty by CBC then even if breaches of duty in other respects could be proved it would not be possible to establish that any distinct loss and damage had been caused thereby. Similarly, even if some of Cllr McKinlay's statements or actions did involve a breach of duty, if many or the majority of them did not do so, then again it becomes difficult to prove any loss.
In the light of the factual findings I have made in relation to the history of Mrs Laird's employment, and as further set out below, I am not satisfied that the JNC proceedings involved any breach of duty on CBC's part, nor that the statements and actions of Cllr McKinlay involved any such breach of duty. In those circumstances the claim for damages made fails.
Whilst, I shall address Mrs Laird's allegations of breach, given (1) that she has succeeded on liability and (2) my conclusion that her damages claim fails in any event, I do not propose to do so in great detail. Save where otherwise indicated below, I essentially accept CBC's case on breach.
In relation to Mrs Laird's case on breach I indicated during the course of the trial that a number of the allegations made were inadequately particularised and I required Mrs Laird to set out a properly particularised case. A detailed document was then produced which set out a wide range of duties and alleged breaches of duties. CBC took objection to a number of the further detailed factual allegations thereby being made. In so far as the detailed document raised allegations against individuals who had not previously been identified in the pleadings, and therefore who CBC had not had cause to proof or to consider as witnesses, I accept that it is too late for them to be raised at trial.
As far as CBC's duties are concerned, its main relevant general contractual duties are as follows:
(1) A duty that it will not, without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of trust and confidence and trust between employer and employee ("the trust and confidence term").
(2) A duty to take reasonable care for the health and safety of Mrs Laird ("the welfare term").
Breach of the trust and confidence term is repudiatory – see Morrow v Safeway Stores [2002] IRLR 9. The conduct of the party in breach must therefore be serious, not trivial. Viewed objectively, the conduct must be "likely" either to "destroy" or at least to "seriously damage" the relationship of trust and confidence.
In relation to the duty of trust and confidence Mrs Laird contended for a number of specific consequential duties, such as a duty to treat her with respect, not to act unreasonably towards her, not to leak information to the press, not act so as to undermine her etc. In my judgment these are more properly regarded as instances of alleged breaches of the trust and confidence term, rather than free standing contractual obligations.
In relation to the welfare term, which is the contractual counterpart of the duty of care in tort, Mrs Laird contended for further specific duties such as a duty to use all reasonable care to provide a safe place and system of work in accordance with the Health and Safety at Work Act 1974 (which does not sound in damages) and a duty to use all reasonable care to avoid statutory harassment. In my judgment these are relevant to the general duty of care imposed by the welfare term and the alleged breach thereof rather than being of independent significance.
It has been held that the "trust and confidence implied term means, in short, that an employer must treat his employees fairly" – per Lord Nicholls in Eastwood v Magnox Electric plc [2005] 1 AC 503 at p523G. The duty to act fairly may have particular significance in relation to grievance and disciplinary procedures and I accept that CBC was under a duty to operate those procedures in a fair manner so as not to destroy or seriously damage the relationship of trust and confidence. Mrs Laird contended for a number of further specific duties such as a duty not to include new complaints, a duty to permit Mrs Laird to attend all JNC Panel meetings, a duty to formulate fully particularised charges etc. Again, in my judgment these are more properly regarded as being instances of alleged breaches of the duty to act fairly, rather than free standing obligations, and will be considered in that context.
There were also a number of specific contractual provisions which Mrs Laird alleged to have been breached. These will be considered below in the context of the allegations of breach of duty.
In relation to a number of the allegations of breach of duty one general issue which arises is the circumstances in which CBC will be responsible for the acts of the leader, cabinet or councillors.
In so far as Mrs Laird is relying on a tortious cause of action she must establish that CBC is vicariously liable for the wrongdoing. In the present context, it was accepted that the applicable test is that set out in Moores v. Bude-Stratton TC [2001] ICR 271 per Lindsay J at para. 23:
"As for determining whether a wrongdoer is on his own business, just as no single test is nowadays seen to be determinative of whether a person is an employee (as opposed, for example, to being self-employed or an independent contractor), so also no one test is determinative of a person being on his own business for the purposes of vicarious liability, very commonly a closely related question. Similar questions arise in both cases: was remuneration paid for the doing of what was done; was what was done, done for the benefit of the party sought vicariously to be made liable ("the propositus")? Was the act complained of reasonably incidental to the duties of the wrongdoer as cast upon him by the propositus? Was the propositus in a position of control, not only to order what was to be done but how it was to be done? Was the propositus in a position to select who should do the activity in the course of which the wrongful act occurred? Could the propositus suspend or stop that activity? Was what was done expressly or impliedly authorised by the propositus? Was it an unauthorised way of doing something which was authorised? Was it the performance of an act of a class the wrongdoer was not required to do at all or had been forbidden to do? No single question and answer is likely to be determinative but together the answers should provide a composite from which it can be adjudged whether vicarious liability exists."
In essence, there will be vicarious liability where the tortious act of the individual is an act which can fairly be attributed to CBC, on the basis of "Councillors having particular delegated duties in relation to its employees" ibid., para 29.
In so far as Mrs Laird is relying on a contractual cause of action, an individual councillor owes no free standing duty as an individual to observe the employer's "trust and confidence" obligation: see Lindsay J in Moores at paras 27-29. However, there may be cases in which, "perhaps, Councillors having particular delegated duties in relation to its employees may, in particular cases, be in a different position": ibid., para 29.
In the present case, the parties to the employment contract are Mrs Laird and CBC which is a statutory corporation. For the purpose of assessing whether there is a breach of (a) the trust and confidence term or (b) the welfare term, the question should be whether the wrongful act complained of can properly be described as the act of "the council".
What constitutes "the council" for this purpose is a question of fact and degree. In a normal employment case not involving the most senior officer, the council's more senior managers would or would not personify "the council", depending on whether they were acting in the course of their employment. Where the employee concerned is the most senior officer, "the council" means "those who direct its mind and will".
Depending on the circumstances, "those who direct its mind and will" may include the executive, but only when acting as the executive exercising employment functions in relation to the managing director's employment; and not when acting in a purely political capacity; nor where the expression "the executive" is used merely to describe the sum of each individual member of it. The question is not just as to the identity of the persons under consideration, but also as to the issue being considered.
For example the monitoring officer, though in the present case a subordinate of the managing director, would not by himself normally be considered to be "the council" vis-à-vis the managing director. But the monitoring officer could perhaps personify "the council" if the issue was one which engaged his statutory functions as monitoring officer.
As CBC accepted, in the context of dealing with the managing director's employment position, "the council" includes the executive where acting as such, and it could in some circumstances include a smaller cohesive political grouping such as the leader, deputy leader and a few key executive members, who may de facto exercise political control over the council via their domination of its executive. But "the council" would not normally include opposition leaders, nor individual subordinates of the managing director.
Against the above background, each of the alleged breaches of duty will now be addressed in outline terms.
(a) Mounting and failing to protect Mrs Laird against (and investigate) a campaign of alleged harassment; and seeking to have her employment end; and otherwise failing to protect her health;
Out of the myriad of allegations raised by Mrs Laird under this heading, the principal matters that in my judgment gave rise to a potential case of breach of the trust and confidence and/or welfare term were as follows:
(1) the meeting between Mrs Laird and Cllr McKinlay on 3 May 2002;
(2) the meeting between Mrs Laird and Cllrs McKinlay at the beginning of July 2002;
(3) the handling of Mr Webster's complaints by Cllr McKinlay and the meetings between him and Mrs Laird related to them;
(4) the meeting between Cllr McKinlay and Mrs Laird in early November 2002;
(5) the meeting between Cllr Stuart Smith and Mrs Laird on 5 March 2003;
(6) the meetings/discussions concerning the terms under which Mrs Laird might leave CBC;
(7) the leaking of confidential matters concerning Mrs Laird to the press and the circulation of letters/emails about her.
(8) the overheard and subsequently reported meeting between Cllr McKinlay and Ms Fallon on 4 August 2003.
(9) undermining comments allegedly made by Cllr McKinlay to Mrs Laird and to staff about her.
(10) CBC's failure to provide Mrs Laird with her annual appraisals in 2003 and 2004.
In setting out the history of Mrs Laird's employment I have made a number of findings that bear on each of these allegations. With those findings in mind, I shall briefly address and set out my conclusion in relation to each of these allegations.
(1) the meeting between Mrs Laird and Cllr McKinlay on 3 May 2002;
In the light of my findings as set out in paragraphs 88 to 90 above, I do not accept that Cllr McKinlay acted in a bullying, intimidating or inappropriate manner at this meeting. This was a vexed meeting at which firm disagreement with Mrs Laird's position was expressed by Cllr McKinlay and at which he may well have indicated that he regarded her as being too closely associated with the Conservative party, but I do not accept that he spoke in the terms set out in the note relied upon by Mrs Laird and in her evidence. I accordingly do not find any breach of duty proved in relation to this meeting. Nor do I find any such breach of duty proved in relation to the earlier meetings between them on or about 25 February 2002 and 2 April 2002, which are addressed at paragraphs 84 to 87 above. In any event, at the time of such earlier meetings Cllr McKinlay was not leader of the council and was not acting in an employer role.
(2) the meeting between Mrs Laird and Cllrs McKinlay and Stuart-Smith at the beginning of July 2002;
In the light of my findings at paragraphs 100 and 101 above, no breach of duty in relation to this meeting has been proved. Cllrs McKinlay and Stuart-Smith did not tell Mrs Laird that she should consider her position and although they did not send round a written memo of support, as had been agreed, Cllr McKinlay did express such support orally to the heads of service.
(3) the handling of Mr Webster's complaints by Cllr McKinlay and the meetings between him and Mrs Laird relating to them;
In the light of my findings at paragraphs 98 to 99, 103 to 106 no breach of duty has been proved in relation to this matter. However unjustified Mr Webster's complaints may have been, they needed to be addressed and it was sensible for them to be referred to Mr Ford. Whilst it may not have been necessary to involve SWRA in investigating Mr Webster's further complaint, I do not find, as was alleged, that this was done by Cllr McKinlay as part of a vendetta against Mrs Laird in support of his friend. Cllr McKinlay rightly considered that an investigation was required if these complaints were ever to be put to rest, as ultimately they were. Nor do I find that Cllr McKinlay spoke inappropriately to Mrs Laird at their meetings concerning these matters; if anything, it was the other way round.
(4) the meeting between Cllr McKinlay and Mrs Laird in early November 2002;
I refer to my findings at paragraphs 108 to 109 above. Whilst it would have been preferable if Cllr McKinlay had avoided saying anything about feeling physically sick, what he said was a statement of fact rather than an insult. If it had been an insult, it would have been a breach of the trust and confidence term, but I do not find that to be the case.
(5) the meeting between Cllr Stuart Smith and Mrs Laird on 5 March 2003;
I refer to my findings at paragraphs 115 to 117 above. In my judgment it was a breach of the trust and confidence term for Cllr Stuart Smith to meet with Mrs Laird and to open that meeting by asking "What would it take for you to go?". In the context of mutual ongoing discussions about the future of Mrs Laird's employment such a comment might have been justifiable, but this statement was made before it was agreed that there should be any such discussions. At the time Cllr Stuart-Smith was acting with delegated authority on behalf of the cabinet and thereby CBC. However, I do not find that any loss has been proved as a result of this breach.
(6) the meetings/discussions concerning the terms under which Mrs Laird might leave CBC;
I refer to my findings at paragraphs 126 to 128 above. The offers that were made were exploratory offers in the context of ongoing discussions, rather than formal or binding offers. As such, I do not find that any breach of duty was involved either in making them or in their terms.
(7) the leaking of confidential matters concerning Mrs Laird to the press and the circulation of letters/emails about her.
This was a matter of serious concern throughout Mrs Laird's employment. Confidential matters concerning council business would frequently end up in the Echo. It is fair to say that this appears to have been done by supporters as well as opponents of Mrs Laird. If it could be established that such leaks were being carried out to undermine Mrs Laird by named individuals who could be identified with CBC then that would be a breach of the trust and confidence term. However, there are real difficulties of proof.
In her pleadings Mrs Laird did not identify named individuals, and to the extent that she sought to do so during the course of the trial I do not consider that to be open to her. This means that it is not possible for vicarious liability to be proved. Unless one knows who is doing the leaking and the circumstances in which it is being done, it is difficult if not impossible to determine whether an act of the council is involved.
The closest one comes to identification of any individual is in relation to the letters and emails referred to in paragraphs 139 and 141 above. It was alleged that this was done by Cllr Fidgeon who was involved with Mr Nigel Jones MP's office, from where the "Daphne-Townsend" emails were said to have come. However, this was not pleaded, Cllr Fidgeon was not called and it was therefore not possible for this issue to be explored properly.
In the light of the generalised nature of the pleaded case and the evidence I am not in a position to make any findings of breach of duty in relation to these matters.
(8) the overheard and subsequently reported meeting between Cllr McKinlay and Ms Fallon on 4 August 2003.
I refer to my findings at paragraphs 143 to 146. If this conversation had been deliberately allowed to be overheard by Cllr McKinlay then that would be a breach of the trust and confidence term. However, quite properly on the evidence, no such case was put to him.
CBC accepted vicarious liability for Cllr McKinlay's careless mistake in failing to switch off his mobile phone but I do not consider that mere carelessness in this context suffices to establish a breach of the trust and confidence term.
As to the content of the discussion. Cllr McKinlay was speaking to Ms Fallon in her capacity as the most senior director available and acting managing director. It was a frank and frustrated expression by Cllr McKinlay of his views, done in an attempt to find some way forward, rather than to undermine.
I do not find the alleged breach of duty proved either in the content or the allowed overhearing of the conversation.
(9) undermining comments allegedly made by Cllr McKinlay to Mrs Laird and to staff about her.
Mrs Laird alleged that Cllr McKinlay made bullying and/or undermining comments to her on a number of occasions. As set out in my findings, I accept that he spoke to her forcefully from time to time, and that on occasion he overstepped the mark, as for example following the meeting of 30 September 2002, referred to in paragraph 112. However, I do not find that there was any campaign of bullying or harassment, or a sufficient course of conduct to constitute a breach of the trust and confidence or welfare term.
Mrs Laird also alleged that Cllr McKinlay spoke critically of her to staff and thereby undermined her position. I accept that on occasion he was critical of her, just as she was of him, as, for example, in her reported comments referred to in paragraph 93. However, I am unable to find specific examples of such comments that would be sufficient to constitute a breach of the trust and confidence term.
(10) CBC's failure to provide Mrs Laird with her annual appraisals in 2003 and 2004.
CBC had a contractual responsibility for arranging Mrs Laird's appraisals. It is the fact that appraisals were not arranged in 2003 and 2004. However, I accept CBC's case that it made genuine attempts to arrange an appraisal in February 2003 until those attempts were overtaken by events which rendered any such appraisal impracticable and of little value. I also accept that Mrs Laird's interest in the appraisal had a tactical element, because she thought her defences against disciplinary process was impregnable as long as the 2003 appraisal had not been done. Moreover, on 5 January 2004 Mrs Laird expressly waived her right to an annual appraisal in 2003. In relation to 2004, in so far as Mrs Laird was at work it was for the purpose of dealing with the JNC proceedings and an appraisal would have served little purpose. I am not therefore satisfied that CBC acted unreasonably or unfairly in relation to Mrs Laird's annual appraisals, or that the failure to have such appraisals involved any breach of the trust and confidence or welfare term.
In relation to all the other matters relied upon by Mrs Laird under this general heading I do not find any breach of duty proved and accept CBC's case in relation thereto.
(b) Failing to engage in mediation/conciliation with Mrs Laird;
This was alleged to be a breach of CBC's duty of care and of its duty to operate the JNC procedure fairly.
Recourse to mediation is not a contractual right of the employee. It is an option but not an obligation. It takes two to mediate and very often one party will take the view that it would serve no useful purpose. In this case there were reasonable grounds for taking that view. In particular mediation could reasonably be considered to be inappropriate given: (1) that the breakdown in relations between the elected leader and cabinet and the chief executive was reasonably regarded as being irretrievable; (2) the need to protect subordinate staff who were suffering or could suffer stress (principally Mr Huckle, Ms Fallon, Mr Perry, Mr Ford, Mrs Watson and Ms Pitman) or who had made allegations in good faith against the chief executive; (3) that complaints to the SBE could not necessarily be withdrawn and, even if they could in practice be withdrawn, there was no indication that Mrs Laird would be willing to withdraw them.
(c) Failing to have and then to implement properly and fairly and with the correct results a Grievance Procedure;
The contract provided no specific grievance procedure. However, there is no contractual obligation to have any grievance procedure. There is a statutory obligation to produce a written statement of particulars of employment within two months of the start of employment: section 1(1) and (2) of the Employment Rights Act 1996. By section 3(1)(b)(ii) and 3(2) the statement is required to include a note specifying by description or otherwise a person to whom the employee can apply for the purpose of seeking redress of any grievance relating to her employment, other than a grievance relating to health or safety at work.
The only remedy for breach of the obligation is that by section 11 the employee may apply to an employment tribunal during the employment or within three months after it has ended, requesting the tribunal "to determine what particulars ought to have been included or referred to in a statement so as to comply with the requirements ..." (section 11(1)). Thus, Mrs Laird could have obtained a tribunal decision on the point, but did not do so. Further, her written contract dated 2 August 2002 contained a provision deeming that contract to be the statutory written statement of particulars.
In so far as Mrs Laird sought to suggest that the grievance procedure later provided was not proper or fair, I reject that contention. On the contrary CBC was scrupulous in the setting up and carrying out of the hearing of her grievance and acted with commendable despatch.
After Mrs Laird brought her grievance on 16 October 2003, Mr Peter Lewis devised an ad hoc procedure which was fair and detailed as set out in his letter to Mrs Laird's solicitors dated 28 October 2003. The panel members went on a training day before sitting. The procedure was operated fairly and, significantly, without dissent.
The grievance was heard fully over four days in the period from 13 November to 2 December 2003. Mrs Laird was represented by her solicitors and was able to question witnesses and make submissions both personally and through her solicitor. The proceedings were transcribed. The Grievance Panel was chaired by a solicitor and Conservative councillor, Cllr Melville-Smith.
The Grievance Panel produced a written report of its findings dated 18 December 2003 which was presented to the full council. The Panel recommended dismissal of three complaints, upholding one in part, and deferring two others until the SBE investigation was completed or Mrs Laird had pursued a claim for defamation. The full council adopted the findings of the Grievance Panel. There was nothing unfair or unlawful about the conduct of the grievance proceedings.
There is no basis for the suggested obligation on a Grievance Panel to reach the "correct results". The Grievance Panel's function was to consider and determine the grievance in good faith and not for an ulterior purpose; and this was not a free standing contractual obligation but only a facet of the employer's general obligation to abide by the trust and confidence term. I am satisfied that they did consider and determine the grievance in good faith and not for an ulterior purpose.
Finally, Mrs Laird contends that the Grievance Panel was not politically balanced. This was not a contractual requirement, but in any event I accept CBC's contention that the Grievance Panel is to be regarded as being an "ordinary committee" of CBC.
An "ordinary committee" of a local authority is one to which the "political balance" requirements set out in section 15 of the 1989 Act apply. As such, it must be politically balanced in the sense enacted by section 15; see section 15(7), section 16, schedule 1 para 1(a), para 4(1) and Local Government Act 1972 section 102(1).
Broadly, the membership of the committee must be proportionate to membership of political groups represented on the authority as a whole. The Grievance Panel was so proportionate and therefore was "politically balanced".
(d) Bringing and launching allegedly unfounded (and whether in fact and/or in law, and including as to whether or not, if made out, they would have justified dismissal or other disciplinary action) allegations and a disciplinary process under the JNC procedure against Mrs Laird, and then running the JNC procedure in an allegedly biased and unfair manner, and with it reaching allegedly wrong and unfounded conclusions;
There are two main aspects to Mrs Laird's case in regard to the JNC proceedings. First, that they were unfounded and that CBC was in breach of duty in bringing them or allowing them to be brought. Secondly, that the way in which they were constituted and conducted was unfair and unlawful.
In relation to the merits of the complaints made in the JNC proceedings, the complaints were made by Cllr McKinlay, Mr Ford and Mrs Watson. CBC is not responsible for the raising of those complaints. CBC's only involvement in the merits of those claims was in deciding that there was sufficient in the complaints to justify the appointment of a JNC Panel, in the JNC Panel's report itself, and in the decision that, in the light of the JNC Panel report, there was a disciplinary case to answer which a DIP should be appointed to investigate. In the substantive decisions made thereby CBC could only be in breach of duty if it could be shown that the decisions thereby made were made in bad faith or for an ulterior purpose, which I do not find to be the case. I do not accept that they owed any duty in relation to the correctness or otherwise of such decisions.
It is therefore not necessary to seek to make any ruling on Cllr McKinlay's various complaints and I do not propose to do so, although I have made various findings of fact of relevance to them in relation to witnesses whose evidence I heard. There were a number of other relevant witnesses from whom I did not have evidence.
In relation to the constitution and conduct of the JNC proceedings. CBC owed a contractual duty to comply with the JNC procedures laid down in the contract, namely clause 16 of the JNC conditions. In so far as these contractual provisions were breached CBC would be in breach of contract.
CBC also owed a duty to operate the JNC procedures fairly in the sense already described and the terms of the contractual procedure would be highly relevant to that duty. The duty of fairness is not an absolute and what it requires in any given case will depend on the context in which it arises.
In this case the most relevant context is clause 16 of the JNC Conditions which has already been set out.
It is to be noted that the first reference made in clause 16 to notice being required to be given to the chief executive is once the preliminary investigation has commenced (clause 16.11) – i.e. after the panel to investigate whether a question of discipline exists which could not be resolved informally has been appointed.
In the above circumstances, I consider that in so far as there was anything required by the duty of fairness prior to the appointment of the JNC Panel itself, it would be limited to providing an outline of what the complaints were and giving Mrs Laird an opportunity to state whether there was any clear and demonstrable reason why they did not justify or qualify for the appointment of a JNC Panel.
In relation to the JNC proceedings themselves I consider that the essence of what the duty of fairness required was identification of the proposed charges and an opportunity to address them before deciding whether or not there was a case to answer.
As to apparent bias, the scope of the common law rule against bias and its application to the facts of a particular case depends on what the facts are, as does the content of the obligation to act fairly in a particular case: see e.g. R. v. Avon County Council ex p. Crabtree, CA transcript, 15.11.95, per Neill LJ at pp. 11-12 and 15-19; de Smith's Judicial Review (6th edition, 2007), at pp.359-362; Fordham, Judicial Review Handbook (5th edition, 2008), at pp. 321, 597-602.
Where an investigating body is acting in a policing role, looking into whether suspicions of wrongdoing are justified by what they find, "it is wholly inappropriate for the case to be approached in the same way as one would approach a person performing a normal judicial role or quasi-judicial role; a situation where the person is making a determination": per Woolf J in R v. Secretary of State for Trade ex p. Perestrello [1981] 1 QB 19, at 35B-C; although an investigating body must act in good faith and not for any ulterior purpose: ibid. at 35E-G.
Further, in the context of planning applications it has been observed that "the test of apparent bias relating to predetermination is an extremely difficult test to satisfy": per Longmore LJ at para 109 in R (Lewis) v. Redcar and Cleveland Borough Council [2009] 1 WLR 83, CA, recently applied in the different context of a school reorganisation by Forbes J in R (Chandler) v. London Borough of Camden [2009] EWHC 219 (Admin) at paras 62-63.
As to the political composition of the JNC Panel, Mrs Laird alleged that the JNC Panel was not "politically balanced" as required by the JNC conditions. However, the JNC Panel, like the Grievance Panel, was an "ordinary committee" of the council, and as such it was required by statute to be politically balanced in the sense that its composition was required to reflect the proportion of seats held by each political group on the council as a whole. The words "politically balanced" in JNC Condition 16.9 mean the same as in section 15 of the 1989 Act, which is prefaced by the subheading "Political balance on committees etc".
I have made various findings in relation to the JNC proceedings when dealing with the history of Mrs Laird's employment.
I find that CBC should have provided details of Cllr McKinlay's allegations to Mrs Laird earlier than they did. However, sufficient details of the allegations were eventually provided on 28 July 2003. This was three months before the JNC Panel was appointed, which was more than sufficient time for Mrs Laird to respond, particularly bearing in mind that the only question at that stage was whether a question of discipline had been raised.
Once the JNC Panel was appointed Mrs Laird was given ample opportunity to address the charges made. She was provided with the main complaints and the material relating to them by the end of December 2003. The JNC Panel did not finally determine to recommend the appointment of a DIP until 25 May 2004, nearly five months later. During the intervening period Mrs Laird had plenty of time to make such written and oral representations as she wished.
It is true that the charges were revised and that the supporting materials were not initially presented in a helpful manner. However, Mrs Laird was aware of the essence of the allegations being made against her from an early stage and indeed on 12 January 2004 put forward a substantial response to them together with 600 pages of supporting documents. A further response was provided by her on 4 March 2004 together with 100 pages of supporting documentation. Whilst Mr Coopey's report was not provided to Mrs Laird until 11 May 2004, his report largely consisted of refining existing allegations and evidence with which Mrs Laird was already familiar. She was given the opportunity to respond in writing and orally to that report and I am satisfied that the time allowed was sufficient for this to be done. I reject Mrs Laird's contention that she should have been given yet further time and that the meeting of 25 May 2004 should have been adjourned.
Mrs Laird was invited to various JNC meetings at which any concerns she had could be expressed, notably on 15 January, 15 March, and 25 May 2004. CBC also went to considerable trouble and expense to ensure that the proceedings were conducted properly, as demonstrated by the involvement of Mr Brady, Ms Farooqi and latterly Mr Coopey.
In all the circumstances, I do not find that any breach of the duty of fairness has been proved.
Nor do I find that any case of apparent bias has been made out. The Panel was "politically balanced" as required by the contract and no case of apparent bias can be made on the basis of the resulting political composition of the Panel. Nor do I accept that the Liberal Democrat members were actually or apparently predisposed against Mrs Laird as alleged or at all. All the Panel members approached their task fairly and conscientiously, including Cllr Hale against whom a specific allegation of pre-determining the issues was addressed, which allegation I reject.
(e) Suspending Mrs Laird;
Mrs Laird alleges in effect that she was suspended without good cause. Any suspension must be in accordance with Local Authorities (Standing Orders) (England) Regulations 2001 (SI 2001/3384), schedule 3, para 3 - i.e. it must be for the purpose of investigating the alleged misconduct occasioning the action; and any such suspension must be on full pay and terminate no later than the expiry of two months beginning on the day on which the suspension takes effect.
At its meeting on 19 March 2004 the council rightly refrained from deciding to suspend Mrs Laird (with the benefit of advice from Mr McGregor QC) because it did not then have evidence of a risk that Mrs Laird might interfere with the investigation. However, shortly before the meeting that day Mrs Laird instructed Mr Thompson (in the event that she was suspended) to remove and delete certain emails from her personal computer.
I am satisfied that the council was entitled to conclude that this gave rise to a reasonable suspicion that she might interfere with the investigation into her alleged misconduct. The council wrote to Mrs Laird on 4 June 2004 (with her injunction proceedings pending and having given a temporary undertaking) offering her the opportunity to make written representations as to whether or not she should be suspended and enclosing the relevant documents including the email instruction to Mr Thompson.
Mrs Laird's solicitor made copious representations in his letter of 11 June 2004, the same day as the failed injunction application. These were considered by the council at its meeting on the evening of 11 June 2004, together with the relevant documents and report. The outcome was that the council decided to suspend Mrs Laird, as recorded in the letter dated 11 June 2004 from Mr Peter Lewis to Mrs Laird. I am satisfied that that decision was lawful and involved no breach of duty by CBC.
Mrs Laird's suspension was required to be on full pay, and therefore actually protected her against any reduction to half pay or less which might otherwise have resulted from her prolonged sickness absence. She remained on full pay for over a year until the frustration of her contract on 9 August 2005. The DIP repeatedly directed that her suspension should continue, but there appears to be no criticism of his various decisions to do so; nor, understandably, were they opposed at the time.
(f) Unlawfully searching and taking material from Mrs Laird's private possessions;
Mrs Laird alleges that someone invaded, unreasonably and unfairly, her office and searched her handbag and a personal file, and took and copied private and personal materials and documents, and so as to cause her alarm and distress. On the evidence I am not satisfied that any inappropriate search, copying or taking occurred.
In circumstances where an employee is suspended for the purposes of carrying out an investigation into alleged misconduct, the employer's obligations under the Human Rights Act are discharged by appropriate steps to safeguard the personal possessions of the employee and to ensure that legally privileged documents or genuinely private correspondence or other documents are not inadvertently seen by the employer. That is what CBC did.
On 16 June 2004 Mr Peter Lewis wrote to Mr Laird about his wife's personal effects. The next day Mr Lewis wrote to Mrs Laird's solicitors detailing the steps taken and to be taken to safeguard Mrs Laird's personal possessions and privacy. The steps taken involved: (i) making enquiries into Mr Laird's allegations; (ii) restricting access to Mrs Laird's office; (iii) securing it and changing the locks; (iv) ensuring that only Mr Lewis had the keys; (v) instructing junior counsel to peruse and remove privileged or private documents from the CD taken of Mrs Laird's work – not "personal" - email accounts.
No substantive response to Mr Lewis' letter of 16 June 2004 was ever received nor was any complaint from Mrs Laird or her solicitors made. By 3 November 2004, Ms Iyengar had removed material from the email accounts which she advised that CBC should not see by reason of privilege or interference with private life. That procedure was sensible and protected Mrs Laird against any invasion of privacy.
In all the circumstances I am satisfied that CBC did not act unlawfully as alleged or at all in relation to Mrs Laird's private possessions.
(g) Delaying and refusing to accept Mrs Laird's application to retire on grounds of ill-health, and then her ill-health pension;
The essence of Mrs Laird's case was that the processing of Mrs Laird's application to retire early and receive an ill health pension, was unreasonably delayed.
In this connection, it should be borne in mind that where a public body has grounds to believe that disciplinary offences have been committed by a senior officer and the officer wishes to retire early, the body needs to balance the public interest in allowing retirement against the public interest in pursuing the disciplinary proceedings to their conclusion. The employing body is not obliged to dispense with the incomplete disciplinary process and there is a risk of acting unlawfully if it does so without adequate cause: see R (Coghlan) v. Chief Constable of Greater Manchester [2005] 2 All ER 890 per Wilkie J at paras 45, 49, 54 and 62-65; cf. see R v. Chief Constable of Devon and Cornwall ex p. Hay [1996] 2 All ER 711 per Sedley J at 725a-d.
CBC strongly disputed that it unreasonably delayed agreeing to ill health retirement. In this regard I make the following findings in addition to those set out at paragraphs 175, 191, 199, 218, 222, 225, 229 and 231 above :
(1) Mrs Laird sought to limit the source, content and purpose of medical evidence that would be available to CBC and this made it very difficult for CBC reliably to ascertain Mrs Laird's true medical state until May 2005.
(2) Mrs Laird failed to provide expert medical support (as distinct from Dr Mulrenan, a GP not a psychiatrist) for the episodes of hyperventilation and panic attacks on which she was relying and which she relayed to Dr Mulrenan.
(3) Dr Philipp did not report that Mrs Laird was permanently unfit and therefore met the test for ill health retirement. He recommended in December 2004 that an independent psychiatric assessment and report from Dr Aylard should be obtained.
(4) Mrs Laird was responsible for much of the delay in then obtaining that report. She delayed the process by making repeated submissions to the DIP that his investigation should cease on the basis of Dr Philipp's report the previous month. She then delayed the process further by not attending the appointment fixed for 4 March 2005. She did not see Dr Aylard until 13 April 2005.
(5) Dr Aylard's view was fully accepted and was not questioned by CBC. At no point after it was received was any further suggestion ever made that Mrs Laird was feigning or exaggerating her symptoms.
(6) The delays thereafter, from May 2005 to March 2006, principally arose from:
(a) the need to obtain legal advice in unusual factual circumstances;
(b) the ongoing DIP investigation and the initially uncertain effect on it of Dr Aylard's report;
(c) the summer 2005 holiday period, which coincided with the last phase of the DIP's investigation and CBC's letter of 9 August 2005 treating Mrs Laird's contract as frustrated;
(d) the decision of Mrs Laird to bring an employment tribunal claim under, inter alia, the DDA, on or about 7 November 2005 even after CBC had confirmed on 1 November that it had decided to assess Mrs Laird's application for an ill health pension by obtaining a statutory medical assessment;
(e) the legitimate efforts of the council – unsuccessfully at that stage – to obtain Mrs Laird's pre-employment medical questionnaire from GCOHS;
(f) the statutory requirement for an occupational health assessment and the delays in arranging an appointment for that purpose;
(g) the ordinary administrative functions of processing the paperwork and transmitting the proper documents to the administering authority.
In the above circumstances, I am satisfied that CBC did not unreasonably delay in processing Mrs Laird's claim to be entitled to an ill health pension and so find.
(h) Bringing this Claim.
The discrimination alleged is disability discrimination. However, there was no expert evidence before the Court specifically addressing this issue. Mrs Laird sought to introduce such evidence at the close of CBC's case (and after Dr Aylard had given evidence) but I rejected that very late application, which would have involved a further examination of Mrs Laird, a further report and the need to recall Dr Aylard. I also reject Mrs Laird's still later contention that she may be able to rely on past disability, which was in any event not explored in the evidence and was not proven.
It was seemingly assumed that since it was common ground that Mrs Laird was sufficiently ill to retire on an ill health pension, it would also be common ground that she was disabled for the purpose of the DDA. However, this does not follow. Retirement for ill health depends on the workplace environment and the person's ability to fulfil the job in question. DDA disability depends on domestic environment and the person's ability to carry out normal day to day activities. There was little, if any, evidence directed at this issue and on the material before the Court I find that Mrs Laird has not proven that she is disabled within the DDA.
As to harassment, the alleged cause of action appears to be common law negligence and actionable (i.e. criminal) statutory harassment under the Protection from Harassment Act 1997.
The case put is that the bringing and prosecuting of this claim is unlawful "including in relation to the ill health Pension ... and in relation to CSL's mental health and so as to create a hostile and intimidating and offensive environment for CSL".
Mrs Laird consented to consolidation of the recently brought fraud claim and with the pre-existing negligence claim. Both claims appear to be encompassed within her contention. Thus the proposition is that it was illegal to sue Mrs Laird in 2007 for negligence and in 2008 for fraud because this would be harassment under the 1997 Act.
The allegation that bringing the present claims is unlawful is relied upon as a defensive measure. Mrs Laird does not maintain any action for damages for harassment; she only relies upon it (and her other allegations) to reduce or extinguish any liability in damages she may have to CBC. The allegation made is therefore made "on the [disputed] assumption that some wrongdoing and cause of action is proved" (para 53(1) of the Re- amended Defence).
It follows that Mrs Laird's contention is that she has a defence that the bringing of the claim is unlawful, even on the footing that its merits are good, i.e. that she is guilty of the fraud or negligence alleged against her. In other words, she submits that because the bringing and prosecuting of the claims causes her distress, they cannot be brought even though they would succeed on their merits. This cannot be and is not the law and indeed, if accepted, it would in effect put Mrs Laird above the law.
Mrs Laird seeks to place reliance on Allen v. Southwark [2008] EWCA Civ 14 for the proposition that:
"Actionable statutory harassment under the 1997 Act includes any course of conduct (involving at least two episodes) which objectively cause harm or distress – sections 1,3. This can include the taking of legal proceedings."
The legal proceedings in Allen which it was held could arguably constitute harassment were proceedings brought without any foundation which were all withdrawn, dismissed or struck out. They are not in anyway analogous to the claim brought by CBC which is clearly a claim fit for trial. I accordingly reject this allegation of breach of duty.
Conclusion on breach of duty
The only breach of duty by CBC which I have found to have been established concerns the meeting at which Cllr Stuart-Smith asked "What would it take for you to go?". However, for the reasons set out above, no loss has been proven as a consequence of this breach and accordingly Mrs Laird's claim for damages fails.
Equitable Set-Off and Limitation
(6) Whether, if the matters alleged at paragraph (5) above are established, and in the light of the wording of the Medical Questionnaire and the fact that the Council did not seek advice from Mrs Laird's doctors, Mrs Laird can rely in consequence by way of defence on any or all of:
(a) Equitable set-off, including (in relation to any alleged personal injury) whether set-off would be subject to a potential limitation bar under sections 11 and 35 of the Limitation Act 1980 and whether an extension of time can or should be granted under section 33 of the Limitation Act 1980;... .
In the light of my conclusions on breach of duty CBC do not need to rely on these further matters. If relevant, I would not hold that they preclude Mrs Laird's claim.
CBC originally contended that the claim made by Mrs Laird by way of equitable set off would be statute barred. However, CBC ultimately acknowledged that equitable set off is a true defence and since the Limitation Act time limit operates by barring the remedy rather than extinguishing the right it does not apply to the defence of equitable set off – see Henriksendns v THZ [1974] QB 233 at 245F-247A, 254G, 264B-C, and Federal v Molena [1978] QB 927 at 973H-975B; Halsburys Laws Vol 42 at 434n3.
CBC nevertheless placed reliance on the doctrine of laches and submitted at a late stage of the trial that in any event the claims raised by Mrs Laird do not give rise to any right of equitable set off. If this latter contention was correct it would mean that for the first time it would matter that Mrs Laird's claim was expressed as a set off rather than as a counterclaim. Given the lateness of this argument coming forward I therefore gave leave to Mrs Laird to put her claim by way of counterclaim up to the amount of the claim.
Whether the counterclaim could be brought depends on whether I should disapply the Limitation Act time limit.
A personal injury claim relied upon as a defence by way of set-off (under CPR rule 16.6) by a defendant who has not previously made a claim in the action, is deemed by section 35(1)(b) and (3) of the Limitation Act 1980 to have commenced on the same date as the original action. Where the defendant relies on a cause of action which arose more than three years before that date, the claim is statute barred unless the court exercises its discretion under section 33 to disapply the time limit, having regard to all the circumstances and in particular to the factors set out at section 33(3)(a)-(f).
These factors are: (a) the length of and reasons for the delay; (b) the likely effect of the delay on cogency of evidence; (c) the conduct of the other party after the cause of action arose, including responses to requests from the party seeking an extension of time; (d) the duration of any "disability" (i.e. where the party is a child or mental patient, see Civil Procedure (White Book) 2008 vol. 2 at 8-93, p.2070) on the part of the party seeking to disapply the time limit; (e) how promptly and reasonably the party acted once armed with knowledge of the facts; and (f) the steps taken by the party to obtain advice and the nature of the advice.
"In the exercise of the discretion, the basic question to be asked is whether it is fair and just in all the circumstances to expect the defendant to meet the claim on the merits, notwithstanding the delay in commencement" - Cain v Hamlani [2008] EWCA Civ 1451 at para 72. In considering that question, of particular importance will be the effect of the delay and the extent to which it has disadvantaged the defendant in his investigation of the claim or the assembly of evidence and the reasons for the delay.
The present claim in negligence was brought on 9 May 2007. Mrs Laird's original unamended defence was dated 2 August 2007. It included para 57 in the same form as in the current defence, which is now a defence to the fraud claim as well.
By section 35(1)(b) and (3) of the Limitation Act 1980 Mrs Laird's claim by way of set-off is deemed to have been commenced on 9 May 2007. To the extent that her cause of action, if any, arose more than three years before that date, i.e. before 10 May 2004, it is statute barred unless either, as Mrs Laird contends, the Limitation Act time limit does not apply to the defence of equitable set off, or the court disapplies the time limit in the exercise of discretion under section 33 of the 1980 Act, after considering the factors set out in section 33(3)(a)-(f).
CBC submits that Mrs Laird's cause of action, if any, arose before 10 May 2004. This is borne out by the fact that she brought proceedings against Cllr McKinlay on 26 February 2004 seeking an injunction to restrain him from "further harassing, alarming or distressing the Claimant" and from "visiting the first floor of the Council's Municipal Offices", as well as damages and interest. In her particulars of claim in that action, Mrs Laird relied on "particulars of harassment" under the Protection from Harassment Act 1997 and pleaded a series of alleged incidents going back as far as 25 February 2002. I accept CBC's submission on this issue in relation to all matters relied upon before 10 May 2004.
CBC further submits that the court should not disapply the three year time limit, having regard to all the circumstances, including the factors set out at section 33(3)(a)-(f) of the 1980 Act.
Whilst sympathetic to CBC's position in the light of the fact and nature of the claims already made by Mrs Laird, the difficulty is that essentially all matters raised by her claim have been investigated, evidenced and fought out at the trial in any event and arise under other headings (such as causation) and in such circumstances there is no real prejudice – see Cain v Hamlani at paras 57, 63-72,73,74, 80-1. Further, there is an unfairness involved in enforcing different time limits for the claim and counterclaim. I am accordingly prepared to disapply the time limit.
If so, then it does not matter whether Mrs Laird's claim does or does not give rise to a right of equitable set off.
Finally, CBC submits that Mrs Laird's claim, if it were not statute barred and it were otherwise good on its merits, is bad because she relies on her own wrong in bringing it. They relied on the principle set out by the majority in Hewison v. Meridian Shipping Pte Ltd that precludes a claimant from recovering damages which are based on an assertion that he would have committed an unlawful act and where the illegality is neither collateral or insignificant: see Hewison v. Meridian Shipping Pte Ltd [2003] ICR 766, CA, per Clarke LJ at paras 28 and 45; per Tuckey LJ at paras 48-53 (Ward LJ dissenting); Clerk & Lindsell at 3-27. I am not satisfied that that principle applies here. There are clear differences between the cases, and in particular the fact that Mrs Laird is not making a claim based on putative future deception or which involves an assertion of future unlawful acts.
The Chain of Causation
(6) Whether, if the matters alleged at paragraph (5) above are established, and in the light of the wording of the Medical Questionnaire and the fact that the Council did not seek advice from Mrs Laird's doctors, Mrs Laird can rely in consequence by way of defence on any or all of: ....
(b) Break in the chain of causation;
This issue only arises if my finding on liability is overturned. In such circumstances, Mrs Laird contends that CBC's damages claim nevertheless fails because the chain of causation was broken.
First, it is contended that actionable non-disclosure at the point of recruitment of (a) lack of unanimity about the proposed restructuring and change of culture and (b) the closeness of the vote in Mrs Laird's favour "breaks all chain of causation".
Secondly, it is contended that the various breaches alleged under Issue (5) above caused Mrs Laird such stress as would have caused anyone to have a breakdown and that accordingly "the chain of causation is broken as CBC's losses are due to its own fault".
Where the victim of a tort is alleged to have broken the chain of causation by its own conduct, in general the conduct needs to be wholly unreasonable and of such overwhelming impact that it eclipses the tortfeasor's wrongdoing. Merely negligent conduct is more appropriately dealt with as a matter of contributory negligence or an unreasonable failure to mitigate loss: see the discussion in Clerk & Lindsell, at 2-96 to 2-104.
In the present case I have found that there was no actionable non-disclosure and for the same or similar reasons there was no unreasonable conduct. Further, the conduct sought to be relied upon is a prior rather than an intervening event. In essence it amounts to saying that had Mrs Laird been given certain information she would not made any representation and therefore any misrepresentation. However, that does not explain or excuse the misrepresentation which she did make, a fortiori if it had been a fraudulent misrepresentation.
I have also rejected virtually all of Mrs Laird's allegations of breach and so they also cannot found the requisite unreasonable conduct. The only breach that I have found to have been made out has not been shown in itself to have the requisite impact or potency. In any event, it is not losses based on her breakdown that are being claimed, but losses resulting from the fact of her employment.
It may be that in relation to certain of the individual heads of loss claimed issues of causation may arise but I am satisfied that no general case of break in the chain of causation or novus actus interveniens has been made out.
Contributory Negligence
(6) Whether, if the matters alleged at paragraph (5) above are established, and in the light of the wording of the Medical Questionnaire and the fact that the Council did not seek advice from Mrs Laird's doctors, Mrs Laird can rely in consequence by way of defence on any or all of: ....
(c) Contributory negligence;
Contributory negligence is not available as a defence to an action for deceit, but is available as a defence to an action for common law negligence or under the Misrepresentation Act 1967 – see Standard Chartered Bank v Pakistan National Shipping Corporation and Others (Nos 2 and 4) [2003] 1 AC 959, HL, per Lord Hoffmann at paras 17 and 18.
In relation to the wording of the medical questionnaire, if and to the extent that it was not very clearly worded that will impact on whether Mrs Laird gave false answers or was negligent in her answers but it is not in itself negligence or "fault" within the meaning of the 1945 Act. Further, if she was negligent notwithstanding lack of clarity in the questionnaire then that was due to her own fault.
In relation to the fact that CBC did not seek advice from Mrs Laird's doctors, I am not satisfied that this would amount to "fault" within the 1945 Act. In particular:
(1) Any negligence would have been that of GCOHS rather than CBC since it was to GCOHS that the questionnaire was addressed and CBC had no right to see it. GCOHS is not to be identified with CBC for the purpose of contributory negligence - see Clerk & Lindsell on Torts (19th edition, 2006) at 3-65 to 3-67,
(2) This is further borne out by the fact that GCOHS would have owed no duty of care to Mrs Laird when reporting to the council on whether she was fit or not: see Kapfunde v. Abbey National plc [1999] ICR 1, CA per Kennedy LJ at 6-12; per Millett LJ at 15-16; Clerk & Lindsell (op. cit.) at 8-40.
(3) Moreover, GCOHS was not negligent on the facts because nothing untoward was disclosed on Mrs Laird's completed medical questionnaire.
As to the alleged breaches of duty, it has not been shown (even if proved) that these were a cause of the losses being claimed, which are premised on the fact of employment of Mrs Laird rather than specific later acts.
Alleged Reliance on the Council's Own Wrong
(6) Whether, if the matters alleged at paragraph (5) above are established, and in the light of the wording of the Medical Questionnaire and the fact that the Council did not seek advice from Mrs Laird's doctors, Mrs Laird can rely in consequence by way of defence on any or all of: ....
(d) CBC relying upon its own wrongdoing.
This argument is a variant of the argument that the chain of causation was broken by CBC's unreasonable acts. CBC has committed no wrong material to the claim being made and does not need to and does not rely on its own wrong in order to make good its claim. The holdings made above under the heading of the chain of causation are repeated, mutatis mutandis.
Issue Estoppel and Abuse of Process
(7) Whether Mrs Laird's allegations at paragraph (5) above, or some of them, are not open to her as they are res judicata and/or issue estopped and/or an abuse of process, having been raised in previous proceedings brought by Mrs Laird against CBC and/or its then leader.
Despite raising this issue CBC was content for evidence on all the relevant issues to be heard in any event. Further, in the light of the findings I have made CBC has no need to rely on these matters. Nevertheless I shall briefly address the arguments raised.
A cause of action estoppel will arise where the cause of action relied on a second claim is the same as the cause of action in the first claim and the first claim has been dismissed, as opposed to merely discontinued, whether or not the two claims are identical in every respect.
Where a High Court claim is discontinued under CPR rule 38.2(1), the court's permission to bring a fresh claim is not needed (unless the circumstances in rule 38.2(2) obtain). A defendant who, fearing a second action, wishes to have the action dismissed instead of discontinued could only achieve this result by applying under rule 38.4 to have the notice of discontinuance set aside within 28 days after it was served. However, by CPR rule 38.7 a claimant wishing to bring a second action needs the permission of the court if the defendant has filed a defence in the first action, and the second action arises out of the same or substantially the same facts as the first action.
Cause of action estoppel and issue estoppel apply not just to subsequent litigation between the same parties, but also between the "privies" of the same parties; see the discussion of "privies" in Megarry V-C's judgment in Gleeson v J Wippell & Co Ltd [1977] 1 WLR 510, approved by Lord Bingham in Johnson v. Gore-Wood at 32.
The modern law relating to re-litigation where there is not a strict issue estoppel or cause of action estoppel is found in the speech of Lord Bingham in Johnson v. Gore-Wood & Co [2002] AC 1, at 31:
"The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not."
Mrs Laird has brought three previous claims against CBC and one against its leader. CBC submitted that three of the previous claims should operate to debar Mrs Laird from advancing in this case contentions already advanced in those three previous claims.
The claim against Cllr McKinlay
On 26 February 2004 Mrs Laird brought a claim against Cllr McKinlay. Mrs Laird alleged that Cllr McKinlay had harassed her since 25 February 2002 "on occasions too frequent to recall with particularity" and relied on 14 alleged incidents during the period from 25 February 2002 to 10 February 2004. She asserted that her health had been adversely affected.
If CBC is vicariously liable for Cllr McKinlay's actions then CBC are arguably "privies" for the purposes of the doctrine of cause of action estoppel, issue estoppel and abuse of process, applying the principles discussed by Megarry V-C in in Gleeson v J Wippell & Co Ltd (cit. sup.).
District Judge Frenkel struck out the claim with costs on 26 October 2004 on the ground that it had no real prospect of success.
On ordinary principles the dismissal of the claim would mean that Mrs Laird could not bring a subsequent claim asserting a cause of action based on Cllr McKinlay's alleged harassment of Mrs Laird based on his actions up to 10 February 2004, or possibly 26 October 2004. However, in the present case Mrs Laird's cause of action is based not just on the actions of Cllr McKinlay but also on the actions of others. Nor, given that the prior claim was made against Cllr McKinlay only, can it be said that she ought to have raised those further allegations in the prior proceedings. In those circumstances I do not consider that there is a cause of action estoppel.
Similar difficulties arise in relation to any claim of issue estoppel. The alleged breaches of duty depend on the actions of Cllr McKinlay together with others. District Judge Frenkel's judgment decides that the allegations made against Cllr McKinlay alone do not establish the alleged breach of duty by him, but no specific finding of fact in relation to any particular allegation is made. To the extent that the actions of Cllr McKinlay are relied upon as part of a wider case of breach of duty it therefore cannot be said that there is a discrete issue upon which an estoppel arises. Further, the claim against Cllr McKinlay was only under the 1997 Act. It could not and did not assert a contractual or concurrent tortious liability.
For similar reasons, I also do not consider that this is a case of abuse of process. There is overlap between the proceedings but not a sufficient identity between them for there to an abuse or for it to be "unjust harassment". This is further borne out by the matters set out in paragraph 507 below, which equally apply to the proceedings brought against Cllr McKinlay.
The High Court claim against the council
On 20 May 2004 Mrs Laird's then solicitors wrote to CBC that they were instructed to apply for an injunction to restrain the JNC Members' Panel from meeting on the ground that it was breaching JNC procedures. Correspondence followed and a meeting of the JNC Members' Panel took place on 25 May 2004, attended by (inter alios) Mrs Laird's counsel who made both written and oral submissions. The Panel recommended that the full council should appoint a DIP to consider five charges.
Mrs Laird's solicitor then stated that he intended to apply to the court to restrain the proposed full council meeting on 3 June 2004. CBC undertook not to implement any decision to appoint a DIP, until after the return date. CBC then resolved to approve the recommendation to appoint a DIP but subject to its undertaking.
The claim form was issued on 4 June 2004 endorsed with full particulars of claim. The pleaded claim purported to be founded on breach of Mrs Laird's employment contract, and alleged that the decision (in October 2003) to appoint the JNC Members' Panel, and all the Panel's subsequent proceedings, were "unlawful and/or in breach of contract and/or in breach of natural justice ... and/or in breach of ... the Code of Conduct".
Lengthy particulars were then given. The next paragraph alleged that "the workings of the JNC Panel have demonstrated unfairness, breach of natural justice and prejudice". Further particulars were then given, and it was alleged that Mrs Laird was suffering and would suffer loss and damage, and should have an injunction.
The return date was 11 June 2004. CBC wrote to Mrs Laird on 4 June to inform her that the council would meet on the evening of 11 June to consider again the appointment of a DIP and also to consider whether Mrs Laird should be suspended in accordance with the 2001 Regulations (cited above), and inviting any written representations.
On 10 June 2004 Mrs Laird signed a lengthy witness statement with a 268 page exhibit. The matter was then argued inter partes before HHJ Havelock-Allan QC on 11 June 2004. He refused the injunction, ordered Mrs Laird to pay the costs (since recovered) of the hearing on a full indemnity basis and gave further directions for trial.
Mrs Laird then applied for a stay of her claim for three months on medical grounds. On 17 September 2004 Judge Havelock-Allan QC refused that application, which was opposed, ordered Mrs Laird to pay costs (since recovered) of the hearing, this time on the standard basis, and gave updated directions for trial.
On 29 September 2004 Mrs Laird applied to have the directions "put back" indefinitely for a psychiatric report. After a telephone hearing on 1 October 2004, Judge Havelock-Allan QC ordered that a 21 day postponement of each deadline in the directions order would be permitted provided a psychiatric report was submitted to the court by 13 October. He ordered Mrs Laird to pay the costs (since recovered) of the telephone hearing, on the standard basis.
On 19 October 2004 Mrs Laird made a further application for a stay "for an indefinite period", again on medical grounds. Judge Havelock-Allan QC dismissed that application at a further telephone hearing on 22 October 2004. He ordered that CBC's costs (since recovered) be in the case, and fixed the trial of the action for 15-16 March 2005.
On 3 December 2004 Mrs Laird amended her claim to add a claim for damages. On or about 15 December 2004 CBC served its defence. On 28 January 2004 Mrs Laird discontinued the claim.
Given that the claim was discontinued rather than dismissed this is not a case of cause of action or issue estoppel. However, it is potentially a case of abuse of process. In these proceedings Mrs Laird makes a number of claims premised on the setting up and conduct of the JNC proceedings. These are all claims which were or could have been made in the earlier court proceedings.
In the circumstances CBC contends that it would be an abuse of process for Mrs Laird now to be allowed to pursue the following pleaded contentions in her defence in the current proceedings:
(1) The allegation that the JNC Panel "was set up wrongfully and in breach of duty by the Council and to investigate unfounded complaints. Further, the JNC Panel was itself tainted by at least an appearance of bias."
(2) The further allegation that "the DIP was set up as a consequence of the Council's wrongs and breaches of duty....".
(3) The allegation that the chain of causation (in respect of the council's claim for the costs of the appointment of the DIP) was broken by establishing a tainted JNC Panel.
(4) The allegations that Mrs Laird has suffered loss and damage by reason of breaches of the DDA, the Health and Safety at Work Act 1974 and the Human Rights Act 1998 by reason of matters involving the JNC Panel and proceedings.
There is considerable force in CBC's contention. However, it is right to point out that:
(1) Mrs Laird is defending, not claiming;
(2) All the evidence has been heard and the matters argued out;
(3) The main reason why Mrs Laird discontinued her claim was illness;
(4) CBC was not then claiming against Mrs Laird. If CBC had been doing so then all matters would have had to have been heard together. It is potentially unfair that Mrs Laird should be disadvantaged by the fact that CBC had not yet investigated and formulated its claims
In these unusual circumstances I am satisfied that it is not an abuse of process for Mrs Laird to be allowed to rely on her complaints concerning the JNC process and proceedings, which complaints I have in any event dismissed.
The employment tribunal claim
On 1 November 2005 CBC wrote to inform Mrs Laird's solicitors that it was assessing her application for an ill health pension and would be obtaining medical evidence in the usual way. Her solicitors responded saying that an employment tribunal claim had been issued but she would consent to a stay. An employment tribunal has no jurisdiction to award a pension or enhanced ill health pension, nor to order employer pension contributions to be paid.
Disputes over whether a local government employee is entitled to an early ill health pension are determined under the statutory scheme which includes recourse to the Pensions Ombudsman and/or, ultimately, the Secretary of State or the Administrative Court on a judicial review. Such disputes are not the province of an employment tribunal.
In the tribunal claim, issued on 7 November 2005, Mrs Laird claimed wrongful constructive dismissal, unfair dismissal and disability discrimination. The allegation of disability discrimination was that CBC treated her contract as frustrated and failed to consult her about ill health retirement. The claim also included a claim for failure to credit Mrs Laird with pension contributions in respect of her role as returning officer.
CBC disputed the claim in all respects. A stay was agreed. It did not admit that Mrs Laird was under a disability within the meaning of the DDA. The question what amounts to such a disability is exclusively one for the employment tribunal, where a claim in that tribunal is brought.
On 23 March 2006 CBC wrote to Mrs Laird's solicitors informing them that the council had instructed the administering authority (Gloucestershire County Council- "GCC") to release an ill health pension for Mrs Laird, and that the council had "now done all in its power to ensure that the pension is paid". It was then paid from late March or early April 2006, backdated to 10 August 2005.
However, Mrs Laird's solicitors wrote to the employment tribunal on 20 April 2006 making clear that she was still pursuing three other heads of alleged claim, including statutory compensation and contractual notice pay. These were consequent on the claims for alleged wrongful constructive dismissal and unfair dismissal.
Particulars were sought by CBC and two interim hearings by telephone were held, on 18 May 2006 and 26 October 2006. At the second of these, the claim was dismissed. CBC's application for costs was dismissed. Costs do not normally follow the event in employment tribunal proceedings.
In these circumstances, CBC submits that there is a cause of action estoppel in respect of all issues pleaded in the employment tribunal claim. In addition, following the approach of Lord Bingham in Johnson v. Gore-Wood it would be an abuse of process for Mrs Laird now to be allowed to pursue any contention made in that claim.
In consequence, CBC submitted that the following pleaded contentions in her defence in the current proceedings are not open to Mrs Laird:
(1) The allegation that Mrs Laird's sickness absence from 2 June 2004 to the end of her employment on 9 August 2005 was
"due to the conduct of the Council, including its various breaches and contraventions of [various statutes]. Further, the Council were then actually or potentially liable to make adjustments in favour of [Mrs Laird] pursuant to the DDA and failed to do so."
(2) The allegation disputing that the contract of employment was frustrated and purports to plead wrongful dismissal and constructive dismissal, and a failure to make reasonable adjustments under the DDA.
(3) The raising of disputes relating to Mrs Laird's pension and to rely on them as acts of harassment under the Protection from Harassment Act 1997.
In so far as Mrs Laird was seeking to reopen a claim determined by the employment tribunal I would be inclined to accept CBC's case. However, Mrs Laird is not pursuing a disability discrimination claim or a wrongful or unfair dismissal claim of the nature advanced before the employment tribunal, and I am not satisfied that the claim made, at least as presented at trial, does reopen the employment tribunal claim, or that it does so in a sufficiently clear or discrete way to found an estoppel or constitute an abuse of process.
Loss and Damage; Remoteness; Causation; Quantum; Principles Applicable
The next issue raised in the list of issues is:
(8) What loss and damage has been suffered by CBC and whether such losses are recoverable against Mrs Laird, including issues of:
(a) Remoteness and legal causation/scope of the duty/tort
(b) Duty to act reasonably in mitigation;
Again this issue only arises if my finding on liability is overturned.
There was no substantial difference between the parties about the principles of law applicable to determine the measure of damages. Mrs Laird accepts for present purposes that damage need not be foreseeable if the tort is deceit or "deemed deceit" under the Misrepresentation Act 1967. CBC accepts that damage must be foreseeable if the tort is common law negligence.
Whilst recognising that this Court is bound by the Court of Appeal decision in Royscot Trust Ltd v Rogerson [1991] 2 QB 297 to hold that the measure of damages for misrepresentation under section 2(1) of the 1967 Act is that for fraud rather than that for negligent misrepresentation, Mrs Laird contends that this was wrongly decided and reserves the right so to argue should this case go further.
In my judgment, if and when the Royscot Trust Ltd v Rogerson decision falls for reconsideration by a higher court, there is a real possibility of it being reversed. In particular:
(1) The rationale of there being a special rule for damages in fraud is one of morality and deterrence – per Lord Steyn in Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254 at 280. Such considerations do not apply, or at least do not apply to anything like the same degree, in cases of mere negligence.
(2) It can be said to be anomalous and unsatisfactory for there to be major differences in the damages recoverable for negligent misrepresentation under section 2(1) of the 1967 Act and for negligent misrepresentation at law.
(3) The wording of section 2(1) – "if the person making the representation would be liable to damages in respect thereof had the representation been made fraudulently, that person shall be so liable notwithstanding that the representation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up until the time that the contract was made that the facts represented were true" – does not necessarily compel the conclusion that the liability in damages for misrepresentation under section 2(1) is to be the same as that for fraud. These words can be construed as meaning no more than that whereas before the 1967 Act there would only be a liability in damages for pre-contractual misrepresentation if the misrepresentation was made fraudulently, now there is also to be liability where the misrepresentation is made negligently. It can be considered as referring to the existence of liability rather than its extent.
(4) There is strong, if not unanimous, academic criticism of the decision – see, for example, Chitty on Contracts Vol 1 at 6-070; McGregor on Damages (17th edn.) at 41-045-6; Treitel on The Law of Contract (12th edn.) at 9-063; (1991) 107 LQR 547.
I shall therefore address the issue of foreseeability to cover this possibility as well as to deal with the case in negligence.
Measure of damages for deceit
In Smith New Court Securities Ltd v Citibank NA [1997] AC 254, HL, per Lord Browne-Wilkinson at 264-5 (and see also the discussion at 262-5) held as follows:
"First, the measure of damages where a contract has been induced by fraudulent misrepresentation is reparation for all the actual damage directly flowing from (i.e. caused by) entering into the transaction. Second, that in assessing such damages it is not an inflexible rule that the plaintiff must bring into account the value as at the transaction date of the asset acquired: although the point is not adverted to in the judgments, the basis on which the damages were computed shows that there can be circumstances in which it is proper to require a defendant only to bring into account the actual proceeds of the asset provided that he has acted reasonably in retaining it. Third, damages for deceit are not limited to those which were reasonably foreseeable. Fourth, the damages recoverable can include consequential loss suffered by reason of having acquired the asset."
Measure of damages under the Misrepresentation Act 1967 s.2(1)
The measure of damages in an action under section 2(1) of the Misrepresentation Act is the same as in an action for fraudulent misrepresentation, i.e. deceit: Royscot Trust Ltd v Rogerson [1991] 2 QB 297, CA, per Balcombe LJ at 306-7; per Ralph Gibson LJ at 308-9.
Measure of damages for negligence
The measure of damages in an action for negligence is limited to losses that are reasonably foreseeable.
Reduction for alleged failure to mitigate loss
CBC accepted that a victim of fraud or negligence may not recover damages that were avoided or could have been avoided by the taking of reasonable steps. But "the standard is not a high one, since the defendant is a wrongdoer" - Chitty on Contracts Vol 1 at 26-104. Further:
"The law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to him has acted reasonably in the adoption of remedial measures, and he will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken" (ibid., citing from the speech of Lord Macmillan in Banco de Portugal v. Waterlow [1932] AC 452, at 545).
Quantum of damage
Expenditure caused by the tort is recoverable, with interest, on application of the above principles: see McGregor on Damages, 17th ed. at 2-030 to 2-031, 2-049 to 2-051, 17-012 to 17-018 (and corresponding passages in 4th Supplement, August 2007). In deceit and under the 1967 Act, it is recoverable whether or not it is foreseeable; in negligence, it is recoverable if foreseeable.
The cost of staff time devoted to investigations and addressing the consequences of a tort can be recoverable: Aerospace Publishing Ltd and another v Thames Water Utilities Ltd [2007] Bus LR 726, CA , per Wilson LJ at paras 73-87; R+V Versicherung AG v Risk Insurance Solutions SA (No3) [2006] EWHC 42 (Comm), per Gloster J at paras 54-78; R+V Versicherung AG v Risk Insurance Solutions SA (No.4) [2006] EWHC 1705 (Comm), per Tomlinson J at paras 8-14.
Mrs Laird contends that this principle only applies in relation to a profit making body whose function is to generate revenue, so that it can be established that staff have been diverted from revenue generating activities. Whilst it is correct that these cases did all involve such bodies and that there are statements made in them which support such an approach, I do not consider that the principle is so limited. In particular, if it would not have been unreasonable to employ outside persons to perform the work done by staff, and costs have been saved by having that work done by staff, then such costs should be recoverable on mitigation principles.
Mrs Laird further contends that these costs have nothing to do with the alleged misrepresentations and are not costs of investigating or mitigating the tort. However, on CBC's case the consequence of the tort was the employment of Mrs Laird and the disputes which followed from that employment, and these costs can properly be regarded as addressing the consequences thereof.
The staff time authorities also show that the obligation on the claimant is not to prove to a nicety the precise amount of time and tasks done by employees in consequence of the tort. It is sufficient if the claimant proves significant disruption to the employer's business or activities and there is evidence of the activities undertaken by employees in the course of that disruption.
Loss and Damage: Expenditure Incurred (Except Pension)
The next issue is:
(8) What loss and damage has been suffered by CBC and whether such losses are recoverable against Mrs Laird, including issues of:
...
(c) Entitlement to recovery of the costs of the grievance and JNC procedures; the reasonableness and justification of them;
If liability is for common law negligence, these losses must be foreseeable to be recoverable. CBC's submission is that they were foreseeable because Mrs Laird had experience of a similar history of conflict when employed at the CIH. She had emerged from that experience with a compromise agreement which included payment to her of compensation (£35,250) and legal costs (£14,000 in total).
However, I am not satisfied on the evidence that there is any similar history of conflict as CBC alleges. As set out in paragraphs 65 and 66 above, the background to Mrs Laird's departure from CIH was that she had been whistleblowing. She had raised issues concerning the approval of projects without proper authorisations and this had resulted in a dispute with the CIH Board. There is no proper evidence that Mrs Laird's personality was responsible for that or indeed any other dispute. At the time that she entered the employ of CBC Mrs Laird therefore had no reason to believe that her employment was likely to engender conflict, still less conflict on the scale that then ensued. She had had a long and generally successful employment history. Although she was a forceful and demanding personality, so are many chief executives, and there was no particular reason to suppose that this would be problematical. I am not therefore satisfied that it was reasonably foreseeable at the time that the alleged misrepresentations were made that Mrs Laird's employment would lead to conflict and costs such as those claimed, which costs, moreover, would not ordinarily be recoverable against an employee. I am not therefore satisfied that the losses claimed were reasonably foreseeable. I shall accordingly address the losses claimed under this heading on the assumption that reasonable foreseeability does not need to be established and that the deceit damages rules apply.
The council's claim under this heading is as follows:
(1) External legal advice: £96,385.56
(2) Costs of the DIP: £15,775.00
(3) Additional professional support: £175,379.64
(4) Dr Aylard's report (4 May 2005): £1,800.00
(5) Recovering deleted emails: £4,375.00
(6) Administrative costs: £10,486.61
(7) Management time: £228,585.72
External legal advice
The cost of external legal advice claimed by CBC relates to advice received in connection with (i) Mrs Laird's grievance (ii) the JNC panel process and (iii) the DIP's investigation.
(1) Veale Wasbrough: these solicitors were instructed by agreement between Mrs Laird, Cllr McKinlay and Mr Ford to advise on issues arising from Mr Webster's complaint and his compromise agreement: see Cllr McKinlay's letter of 2 October 2002 to Mrs Laird. They produced a written report dated 26 November 2002. These costs were the consequence of Mr Webster's unjustified complaints. They were not the responsibility of or caused by Mrs Laird.
(2) David Fletcher of counsel: he was instructed in relation to various matters concerning the correct process for appointing and conducting the JNC process. He was asked to look at points raised by Mrs Laird herself, notably the question who should appoint the JNC panel; whether absence of an appraisal meant that the JNC process would be stultified and whether Mr Ford was obliged to prepare a "section 5 report" arising from the provisional offer of about £63,000 to Mrs Laird in March 2003; to which his answer was, again, negative. Save to the extent that these costs were increased by reason of Mr Fletcher's failure to advise correctly initially that the council had to appoint the JNC Panel, I accept that these costs were reasonably incurred, are sufficiently causally connected to the tort and are recoverable.
(3) Peter Oldham of counsel: only £458 is claimed although he charged more than that. He was separately instructed by Mr Perry and Mr Ford to advise on the role and responsibility of the chief finance officer, Mr Perry. I accept that these costs were reasonably incurred, are sufficiently causally connected to the tort and are recoverable.
(4) Wiggin & Co, solicitors: they were appointed to advise on issues relating to possible publication of an article in the Echo following the overheard conversation between Cllr McKinlay and Ms Fallon. These costs were incurred as a consequence of Cllr McKinlay's carelessness. That carelessness was not caused by Mrs Laird. These costs are irrecoverable.
(5) Melanie Tether of counsel : she advised and represented the council at Mrs Laird's grievance hearing, and attended part of it. There is no evidence that objection was taken to her presence at the hearing. Her particular remit was "duty of care" issues, and in that context she advocated and cross-examined on the point that mediation was not a contractual entitlement of Mrs Laird. I accept that these costs were reasonably incurred, are sufficiently causally connected to the tort and are recoverable.
(6) Nabarro Nathanson, solicitors: they were instructed in about April 2004 and advised on the question of declaring or not declaring personal or prejudicial interests under the code. This advice has not been disclosed and so it is not possible to determine whether it was necessary to obtain such advice or whether, as Mrs Laird claimed, it simply confirmed that her position on this issue. I am not in a position to determine whether these costs were reasonably incurred and are recoverable and therefore do not so find.
(7) Alistair McGregor QC: he advised on and around 19 March 2004 in relation to the question of suspension of Mrs Laird. He attended the full council meeting on 19 March 2004 and advised against suspension. I accept that these costs were reasonably incurred, are sufficiently causally connected to the tort and are recoverable.
(8) Tim Kerr QC: advised on numerous issues from about September 2003 until 2006; also appeared at various hearings and telephone hearings, and obtained costs orders against Mrs Laird. The present claim excludes costs recovered under those orders and in respect of matters within the scope of the litigation which gave rise to them. Subject to satisfactory proof that such costs have been excluded, I accept that these costs were reasonably incurred, are sufficiently causally connected to the tort and are recoverable.
(9) Harini Iyengar of counsel: she was instructed by CBC to peruse and sift the contents of Mrs Laird's email account to ensure that emails that CBC should not see would not be seen by officers or members and would not be used. I accept that these costs were reasonably incurred, are sufficiently causally connected to the tort and are recoverable.
Costs of the DIP investigation
The amount claimed, £15,775, are the fees charged by Mr Lynch for the work he did in his capacity as DIP. He wrote upwards of 20 reports before reluctantly abandoning his investigation. I do not accept Mrs Laird's contention that CBC should have accepted that the DIP procedure could not continue prior to Mr Lynch's determination to that effect. I accept that these costs were reasonably incurred, are sufficiently causally connected to the tort and are recoverable.
Additional professional support
These are as set out below:
(1) SOLACE Enterprises (Patrick Brady): Mr Brady's services were engaged because of the dispute with Mrs Laird. They were reasonable value for money at £600 per day (only when working), despite Mrs Laird's suggestion to the contrary. I accept that these costs were reasonably incurred, are sufficiently causally connected to the tort and are recoverable.
(2) Tribal GWT (Tim Rothwell): Mr Rothwell was needed to provide additional human resources support to the council because of the dispute with Mrs Laird. He played a significant role in 2003 and 2004 including the delicate negotiations with Mrs Laird over the problem of conditions attaching to her willingness to attend a medical assessment and/or a stress risk assessment. I do not accept that this work could and should have been done by Ms Pitman. Mr Rothwell performed a valuable role and Mrs Laird was far more willing to deal with him than with Ms Pitman. I accept that these costs were reasonably incurred, are sufficiently causally connected to the tort and are recoverable.
(3) Equilibrium Consulting, United Bristol Healthcare and Dr L. Horner Baggs: These persons and bodies were appointed to carry out stress risk assessments of various staff and occupational health work in respect of Mrs Laird. These were not risk assessments carried out as a matter of course. They were made necessary by the stresses caused by the dispute with Mrs Laird. I accept that these costs were reasonably incurred, are sufficiently causally connected to the tort and are recoverable.
(4) Employers' Organisation (Martin Coopey): Mr Coopey's services were obtained in the spring of 2004 at the request of Mrs Laird and her solicitors because of Mrs Laird's complaint that the JNC process needed independent oversight and because of her attack on the impartiality of Mr Brady. He produced a report which was used in the JNC process.
(5) Cash Friday (additional locum support): Ms Farooqi needed additional locum support because of the time she was having to spend on the dispute. CBC accepted that this could involve an element of double counting given that there is also a claim by reference to the time she spent on the dispute and no satisfactory basis has been put forward for determining the extent of such double counting. This claim has not been proven.
Recovering deleted emails
Following the work done by Mr Thompson over the weekend of 20-21 March 2004 on the council's personal computer used by Mrs Laird, professional support from Vogon International Limited was engaged to recover deleted emails from Mrs Laird's inbox, at a cost of £4,375.00. Given that the exercise revealed little or nothing I am not satisfied that it was necessary or reasonable to incur these costs.
Dr Aylard's first report
The cost of Dr Aylard's first report (£1800) was paid in full by CBC. The cost was not split evenly between CBC and Mrs Laird, even though Dr Aylard was then instructed jointly by them. This is because the report was obtained at the direction of the DIP. I accept that these costs were reasonably incurred, are sufficiently causally connected to the tort and are recoverable.
Administrative costs
Administrative costs in the sum of £10,486.61 are claimed. These relate to additional stationary, couriers, and a stenographer for the grievance hearing. The claim is confined to items in the Schedule of Loss requisitioned for matters arising from the employment of Mrs Laird and thus requisitioned against the "dispute" cost code. The detailed facilities, services and other things supplied were explained by Ms Farooqi in evidence. In the light of Ms Farooqi's evidence I accept that these costs were reasonably incurred, are sufficiently causally connected to the tort and are sufficiently proven to be recoverable.
Management time
CBC puts its claim in two alternative ways. First, on the basis of "estimated time from year to year" costs; alternatively on the basis of "actual time" costs.
The estimated costs were based on a guess-estimate in December of one year as to what might be the corporate time in the next year. The only relationship to the previous year was that the relevant person might (but might not) have brought into account the amount of corporate time which had been spent in the previous nine months of the current financial year. On the other hand they might have considered what the new year would have in store. They were also based on deducting a fixed percentage in relation to what would have been the figure for corporate time otherwise, which is necessarily a guess-estimate. In addition, not all of the relevant persons were called to justify the exercise.
Whilst sympathetic to CBC's position and mindful of the fact that significant management time was spent dealing with the disputes with Mrs Laird I find that the guess-estimation involved in CBC's approach is too great to accept that the claim has been proven. I am, however, prepared to accept CBC's alternative approach based on actual costs derived from documents produced at the time and explained and supported by Ms Farooqi's evidence.
I therefore accept most but not all of CBC's claims under this heading. I have not sought to quantify the resulting claim but will do so if it becomes necessary and cannot otherwise be agreed.
Mrs Laird's Ill Health Pension
The next damages issue is:
(8) What loss and damage has been suffered by CBC and whether such losses are recoverable against Mrs Laird, including issues of:
...
(c) Entitlement to recovery of the costs of the ill-health pension and the basis for calculating such loss (and including if and to what extent any transfer value from Mrs Laird's previous entitlements should be taken into account);
CBC claims that the cost to it of Mrs Laird's ill health pension flowed directly from the tort (whether negligence or deceit), i.e. by Mrs Laird withholding from the council her true medical history. The incurring of that expenditure (which is being paid progressively) is matter of factual history, not expert evidence. The calculation by the administering authority and scheme actuary of the amount charged to the council was done by applying actuarial principles, but the charging of the resulting cost to the council is a matter of fact. The claim made is for £449,885.66.
If foreseeability is required, CBC submits that the cost to it of the ill health pension is a foreseeable consequence of Mrs Laird's negligent failure to disclose her medical history. She had experience in local government and of the Local Government Pension Scheme, of which she was already a longstanding member. She is always equipped with advice on legal matters where her legal rights are concerned. She cannot have been unaware that ill health retirement with early and enhanced pension rights is a feature of local government service.
Again, in so far as foreseeability is required, I am not satisfied that CBC has made out its case. There is no doubt that Mrs Laird had suffered from earlier depressive episodes and that in consequence she had had to take time off work (two months in 1997 and two weeks in 2001). It was therefore clearly foreseeable that she might have time off work as a result of her vulnerability to depression. However, the claim is not for time off work, it is for the cost of being permanently unable to work. In my judgment that is not merely a difference in degree, it is a difference in kind. There was nothing in Mrs Laird's prior history to suggest that she would have to seek ill health retirement and I have set out earlier my findings as to what her actual and reasonable understanding of her medical condition. She was an ambitious high achiever who clearly intended and contemplated working for many further years. I do not consider that ill health retirement would reasonably have been considered as even a remote possibility at the time that the alleged misrepresentations were made and she entered CBC's employment.
I shall accordingly address the losses claimed under this heading on the assumption that reasonable foreseeability does not need to be established and that the deceit damages rules apply.
As to quantification of CBC's loss: the claim is based on a calculation by the administering authority of the cost to the council of the difference between the cost of early retirement benefits as actually granted and the cost of early retirement on voluntary terms (i.e. not in ill health) as would be available to any member under the Local Government Pension Scheme.
CBC's case was supported by the evidence of Mr Marshall and the expert evidence of Mr Dick Crease, the actuary instructed by CBC to report on the correctness or otherwise of the calculation. Mr Crease concluded that the amount of £449,885.66 requested by the administering authority from the council "is below the true market value by at least £250,000".
Mrs Laird submits that CBC's claim is contrary to the provisions of the Pensions Act 1995 dealing with the inalienability of pensions. However, CBC is not seeking forfeiture of Mrs Laird's pension. Nor is it seeking to do one of the acts prima facie prohibited by section 91(1) of the 1995 Act. The claim in relation to Mrs Laird's pension is for damages comprising the additional costs which CBC has been, and will be, required to pay to GCC. CBC does not seek to prevent GCC from paying Mrs Laird her pension and does not seek such relief in these proceedings. Whether Mrs Laird pays any damages awarded out of pension receipts or from other resources is a matter of indifference to CBC.
I accept that CBC is not seeking to do an act prohibited by the 1995 Act, although the effect of its damages claim will be similar. However, I accept Mrs Laird's submission that she has effectively "earnt" her statutory entitlements, and which include her potential right to an ill health retirement pension, by the totality of her local government service, the vast majority of which was prior to her employment by CBC. Further, Mrs Laird has effectively "paid" for her potential right to an ill health retirement pension (or at least the vast majority of it) by the provision of the transfer value of £249,000 which was transmitted to the GCC fund.
I also agree with Mrs Laird that this could lead to unjust results as she would have had close to the same entitlement if the transfer from the RCT scheme to the GCC scheme had not taken place. The scheme of the statutory structure is that the employee carries with them a bundle of rights against the scheme. There is force in the submission that it would be unfair for the employee to find in these circumstances that they effectively face a financial remedy equivalent to their entitlement when the vast majority of that entitlement is derived from their previous employment.
In my judgment, the vast majority of the ill health retirement pension cost claimed by CBC is not attributable to any wrong done by Mrs Laird, but rather to her accrued entitlements due to her prior local government service and her decision to transfer her accrued entitlements to the GCC fund. These are essentially independent matters or res inter alios acta and it would be wrong in principle and in justice for Mrs Laird to be effectively deprived of the fruits of her historic entitlement.
It may be that CBC could mount a claim for that part of the ill health retirement cost which related to Mrs Laird's employment at CBC, but no such claim has been advanced or proven. I therefore reject CBC's claim under this heading.
Credit for Benefits Allegedly Conferred on the Council by Mrs Laird
The next and final issue is:
(d) Whether Mrs Laird can rely on alleged financial benefits to CBC deriving from her employment in relation to (i) the Local Authority Housing Grant, (ii) ALMO funding, (iii) savings from restructuring, (iv) the "Save a Pound scheme, (v) Car Parking charges, and/or (vi) the Brewery Development, and, if so, whether CBC would have been (and to what extent) better or worse off financially had it not employed Mrs Laird and instead (and if so when) employed someone different.
Where a defendant in a deceit claim, or in a negligence claim, contends that the claimant must give credit against its losses for financial benefits which are alleged to have resulted from the tort, the evidential burden rests on the defendant to show that the claimant has received the benefit: Midco Holdings Ltd v Piper [2004] EWCA Civ 476 per Tuckey LJ at paras 22-6. In order to establish that the claimant received a benefit it is necessary to show that the same or equivalent benefit would not have otherwise have been obtained, and I reject Mrs Laird's contention that there is a shifting evidential burden in relation to that issue.
In Komercni Banka AS v Stone & Rolls Ltd [2003] 1 Lloyd's Rep 383 Toulson J considered the difficult question of the scope of the matters which may be taken into account as off-setting benefits. Having referred to Lord Reid's statement in British Transport Corporation v Gourley [1956] AC 185 at p214 that it excludes matters which are "completely collateral" he stated as follows:
"The question whether an alleged benefit should or should not be taken into account cannot be determined by mere application of the "but for" test. Where the wrongful conduct consists of causing the victim to enter into a venture or transaction which he would not otherwise have entered into, and the wrongdoer alleges that the victim has received a subsequent benefit which he would not have received but for entering into the venture or transaction, it seems to me that the question to be asked is whether the receipt of the benefit was not merely a result of the venture or transaction, in a historical sense, but was part of the complex of obligations and benefits intrinsic, i.e. belonging naturally, to the venture or transaction." Komercni Banka per Toulson J at para 167.
CBC submits that in the present case the relevant venture or transaction is the appointment of Mrs Laird as managing director, not merely the appointment of a managing director, and that financial benefits which it is the job of a managing director to deliver, as part of normal performance of his or her contractual duties, are not generally to be regarded as being intrinsic to the appointment of Mrs Laird.
Intrinsic benefits to an appointment would be if, for example, in a commercial context an appointee brought with them a list of client contacts – i.e. benefits that come with the appointment itself rather than the performance of duties thereafter.
I agree with CBC that benefits which are obtained as a result of the performance of Mrs Laird's duties as managing director should be regarded as being collateral to her appointment. Those are benefits which derive from the performance of her employment and have been paid for by way of her salary.
Any other approach leads to the need to embark on the speculative and unsatisfactory evidential exercise carried out in this case whereby one inquires into what benefits were conferred through Mrs Laird alone, whether any such benefits would not have been procured by another managing director, and whether another managing director would have procured comparable benefits. This is a necessarily speculative exercise and one which is inherently difficult of proof.
Even if Mrs Laird's claim was open to her in law, I am satisfied that the evidential difficulties raised by the claim mean that it has not been proved in fact. In particular, even if Mrs Laird could show that only she could have and did obtain a particular benefit for CBC, she cannot show that no other managing director would have procured a comparable benefit.
For example, the most likely alternative managing director was Mrs Garner, the other favoured candidate at the time of Mrs Laird's appointment. Mrs Garner was an executive of proven calibre, who has held the chief executive post at a large Welsh unitary authority, Wrexham County Borough Council, since May 2003. Her particular speciality was transport, whereas Mrs Laird's was housing. Whilst it may be that Mrs Laird's housing knowledge enabled her to obtain benefits that Mrs Garner would not have done, Mrs Garner's transport knowledge may equally have enabled her to obtain benefits that Mrs Laird would not have done.
Further, in the present case the claim is for unique benefits which would be unmatched by comparable benefits, even though Mrs Laird was off sick, from 30 July 2003 to 9 December 2003, and from 2 June 2004 to 9 August 2005.
Although consideration will be given to each of the alleged benefits claimed by Mrs Laird, my overall conclusion is that, save in two cases, Mrs Laird does not come close to proving that the benefits decisively derived from her performance as managing director. Whilst Mrs Laird made a contribution to the securing of the benefits in question, she did so in conjunction with others and, save in two cases, not in circumstances where it can be said that no benefit would have been secured without her. In any event in every case it has not been shown that no equivalent benefit would have been secured by an alternative managing director.
Local authority social housing grant ("LASHG")
Mrs Laird claims that CBC received sums totalling about £1.45 million in March 2003 and that it was only through her actions that this was possible.
Mrs Laird submits that these monies were received due to her successful lobbying using her high-level Housing Corporation and Government contacts, and also due to CSL's preparedness to execute very substantial contracts at short notice without usual safeguards and to persuade the other parties to do so. She submits that an alternative managing director would not have taken either of these two essential steps.
CBC accepted that Mrs Laird played her part in the favourable outcome, but not that she alone secured it. CBC submits that had it not been for the lobbying efforts of others in the political sphere, such as Cllr McKinlay's and the local MP's lobbying through the Local Government Association, the transitional arrangements might have been non-existent or less favourable than they were.
However, such lobbying was directed towards transitional relief and not, as Mrs Laird was lobbying for, LASHG underspend for the 2002-3 financial year. Further, such CBC lobbying was at regional level, whereas Mrs Laird was lobbying at national level and it is the national level which takes decisions in relation to the allocation of underspend.
I accept on the evidence that the grant received by CBC reflected underspend for the 2002-3 financial year and is not the transitional relief for which Cllr McKinlay and others had been lobbying. This is consistent with the grant consisting of the provision of such a large amount of monies at the end of the financial year on condition that they be spent at very short notice. I also accept that it was Mrs Laird's knowledge, experience and contacts that led to the offer of this grant.
I do not accept, however, that the offer having been made, no other managing director would have taken all steps necessary to ensure that it was secured through prompt agreement to exchange of contracts on the Sochi Court project.
I therefore accept that this is a benefit which was procured by Mrs Laird, but not that it has been proven that no comparable benefit would have been obtained by another managing director during the full period of Mrs Laird's employment.
Funding for the Arm's Length Management Organisation ("ALMO")
Mrs Laird claimed credit for receipt by CBC of a sum in the region of £26 million by way of funding for the ALMO, Cheltenham Borough Homes ("CBH").
The claim as originally made was for the entire benefit, but during the course of the trial it was narrowed to being a claim the funding would have been received about two years after it was actually received, i.e. that CBC would have lost the use of the £26 million for a couple of years or so, and not the £26 million itself.
The Housing Inspectorate carried out an indicative inspection of the council's housing management function from around early November 2002. The primary point of contact between the Inspectors and CBC was Mr Davies, from whom I heard evidence.
Mr Davies had a "one to one" meeting with Paddy Mooney (the lead inspector) on 14 November 2002. The inspectors had found that 12% of the properties concerned (a bit more than 400 out of 3,500 properties) had not had their annual gas safety service done. Mr Mooney informed Mr Davies that while in a number of areas the service was two or three star the gas servicing issue would "cost you a star", i.e. limit CBC to one star. Although other weaknesses were identified this was, at the very least, a major factor in the Inspectors' decision to grade the council's service as "fair" "one star" at the November 2002 inspection.
The inspectors presented their draft findings on 11 December 2002. The inspectors graded CBC as one star and uncertain prospects of improvement. The latter rating was largely attributable to the weakness of the Best Value Review (conducted by the former Chief Executive's department) and concern about CBC's ability to handle two major projects – the creation of the ALMO and the restructuring - at the same time.
Mr Huckle, Mr Davies and Mrs Laird were among those who attended the meeting with the inspectors at which the draft findings were presented. Mrs Laird spoke first and there was a general discussion about the improvement plan that needed to be put in place to which a number of people contributed.
Throughout 2002 Mr Davies had been working with the consultants Ernst & Young on the council's application under section 27 of the Housing Act 1985 to the Secretary of State to create an ALMO. Mr Davies and his team provided the information that Ernst & Young used to draft the application. Mrs Laird was not involved in that process.
The section 27 application was a substantial document running to 351 pages, including a CBH Delivery Plant running to 149 pages.
The section 27 Application was not available to the Inspectors when they conducted their inspection and presented their draft findings. The full draft report was sent out late by Mr Mooney on 23 December 2002 with the council given until 20 January 2003 to respond. Mrs Laird claimed that the reason given by Mr Mooney was cover for the real reason for the extension to the council's time for a response, namely her successful covert lobbying of Mr Mooney. She said that during this time she had discussions with Mr Mooney and the Inspectors. However, no one else at CBC was aware of any such discussions and there are no file notes substantiating such discussions.
Following the presentation of the draft findings under the leadership of Mr Davies and Mr Huckle an Improvement Plan was drafted and sent to the Inspectors under cover of a letter from Mr Huckle on 20 January 2003. Mrs Laird was involved in that letter but did not take part in the detailed work that went into preparing the Plan. A substantial amount of documentation was sent as well, including the section 27 Application.
The final report by the Inspectors was issued in March 2003 awarding one star promising prospects of success. The provision of the detailed CBH Delivery Plan contained within the section 27 application and the Improvement Plan had served to allay the concerns that had led the Inspectors initially to grade the service as uncertain prospects of success.
From 1 April 2003 CBH went live and Mr Davies became Chief Executive of CBH .
CBH is prospering at present under the leadership of Mr Davies and his team and has been rated as excellent with excellent prospects of improvement – the only ALMO so graded in the South West.
On the evidence I accept that Mrs Laird played a role in ensuring that in the improvement of the position between the draft and the final report of the inspectors that enabled the ALMO to go ahead. However, the detailed work was done by others and I am not satisfied that her role was critical to the improved prospects obtained or that she is solely or primarily responsible for the ALMO grant or its timing.
Efficiency savings from the restructuring
Mrs Laird did not invent the restructuring policy which she implemented. She implemented Phase 1, which went live on 29 April 2002, as it was her job to do. Cllr Smith's regime planned it and consulted on the budget for it from December 2001. The cabinet model of governance was adopted in October 2001. Mr Lawrence Davison, agreed to step down as Chief Executive as the first step in the restructuring and the Directors Messrs. Cliff Ride, Paul Fry and Tony Morgan had already indicated that they were willing to take redundancy before Mrs Laird arrived.
It is clear that the restructuring policy which Mrs Laird implemented did lead to costs savings. However, it does not follow that she is responsible for that benefit.
In the first place, there is no reason to believe that another managing director could not have achieved equivalent or even greater savings.
Mrs Laird's main point in that regard was that the appointment of another managing director would have involved delay and therefore deferred the benefit of such savings.
I find that if Mrs Laird had been rejected on medical grounds another managing director would have been put in place as soon as possible. That is likely to have been Mrs Garner who I find would have been in place by May 2002. Even if it had been someone else the appointee is likely to have been in place by July 2002.
This may have caused a slight delay in the implementation of the restructuring, but Mrs Garner or an alternative managing director may have found room for additional savings.
In any event, in the intervening period CBC could, in principle, have made the savings some other way, for example by increasing council tax by more than it did, or increasing car parking charges by more than it did. These would have been political and financial decisions to be taken by the regime in power at the time, in the light of the financial position, as reported to them.
In any event there is an artificiality about equating savings with benefits in the context of local council services. If, for example, more money was spent on staff, the staff might, in principle, deliver more for the council in financial terms than under the restructured staff configuration devised by Mrs Laird and the Conservative administration. Even if they did not, Cheltenham's taxpayers might, in principle, have had a better service delivered.
For all these reasons I reject Mrs Laird's claim that credit must be given for the "benefits" or accelerated "benefits" of restructuring.
Nor do I accept that Mrs Laird has proved that she uniquely conferred any related benefits due to there being a procurement officer or a "change in culture". Mrs Garner or any other managing director may have conferred the equivalent or better.
The "save a pound" initiative
Mrs Laird claims credit for the savings resulting from her "Save a Pound" management initiative in December 2002. This was a scheme whereby members of staff were invited to come up with cost saving initiatives. Mr Sheldon accepted that the "target savings generated from the exercise were £70,000". He did not accept that any further savings in the following financial year were identified, but Mrs Laird claimed that credit for a recurrent saving should be given.
The savings through the initiative were achieved by such things as (i) removing an ISDN line used only twice a year (£650); (ii) sending all non-urgent post second class; (iii) no longer supplying free newspapers to senior managers; (iv) abolishing free lunches for in house meetings; (v) using the electronic diary and calendar facilities on council personal computers thereby saving the cost of paper diaries, and the like.
I accept that the "save a pound" initiative was a particular scheme of Mrs Laird's and that another managing director is unlikely to have come up with precisely the same idea.
However, that does not mean that Mrs Garner or a different appointee would have not have come up with different ways of making savings by adjusting the council's administrative practices. Mrs Garner, for example, might have taken a similar approach to Mrs Laird and advocated ruthless cost cutting. Had she done so, she might have cut the council's administrative expenditure on post, newspapers, lunches and the like, either more than Mrs Laird did or less than Mrs Laird did. One will never know and because one will never know Mrs Laird simply cannot prove that this was a unique benefit, the equivalent of which would never have been procured by any other managing director.
Car parking charges
Mrs Laird claims that she was responsible for £318,000 of extra income generated through increased car parking charges for 2002/3. Her evidence was that there was a problem in agreeing the way forward on this issue at the time of her appointment and that she was responsible for knocking heads together and procuring agreement.
It is not entirely clear on the evidence what the "problem" was in relation to car parking charges for the forthcoming year and Mr Ride could not recollect any particular problem or meeting being held with Mrs Laird to sort it out. He also pointed out that the increased income achieved was not out of line with that achieved in previous years and that it had already been publically budgeted for.
Given that increased income of £325,000 from car parking had been identified in the draft budget put out to the public in December 2001 I am satisfied that some way of ensuring that income was achieved would have been agreed upon prior to the February 2002 budget regardless of Mrs Laird's input. She may well have helped achieve a satisfactory resolution but this would have had to be and would have been achieved without her.
The brewery site development
Mrs Laird also claimed responsibility for benefits allegedly obtained in respect of the old Whitbread's Brewery site development. Her case is that she was able to intervene and to resolve a dispute between the council's planning officers and the developers Salmon Harvester thus saving the council the costs of a planning appeal and procuring benefits from the development.
It is questionable whether this is a "benefit" at all. As CBC submits, planning powers exist for public good, not for a council's financial gain. A planning authority has a duty to abide by national and local planning policy. In making its decisions a planning authority has to weigh up potentially competing considerations – the local environment, traffic levels, economic benefits and amenity for neighbours and the community.
Planning decisions are not about maximising the revenue to the local authority. Indeed a planning authority may well conclude that the benefit to the local community of declining a development which cannot be quantified in pounds and pence outweighs any financial gain.
The first benefit CL claims is saving CBC the costs of defending what she alleges was a hopeless planning decision on appeal. This is not borne out by the facts.
When outline planning consent was granted in 1999 night club use had been specifically excluded from the outline planning permission granted by CBC on 24 June 1999. When the matter was considered by the Secretary of State on "call in" in 2000 night club use was not considered.
The opening hours imposed by the Secretary of State also effectively precluded nightclub use as, except for the cinema, use after midnight was precluded .
For that reason instead of seeking approval of reserved matters Salmon Harvester made a fresh planning application on 18 March 2002.
When the matter came before the planning committee on 10 October 2002 the officer recommendation was refusal because of the nightclub use.
When a duplicate application was made on 28 October 2002, the officer recommendation was again to refuse. The duplicate application again suggested a nightclub.
Berwin Leighton Paisner wrote on behalf of Salmon Harvester to Mr Ford challenging the view of the council's officers that a nightclub was not included in D2 use and indicating the possibility that they would draw the letter to the attention of the inspector in support of an application for costs on the grounds that the council was acting unreasonably.
On 12 December 2002 the Planning Committee unanimously resolved to refuse permission.
Costs are only available against a party to a planning appeal if they act unreasonably. It is unlikely that the council would have been deemed to be acting unreasonably in the circumstances had it resisted the appeal given that it was at worst unclear at the time whether nightclub use fell within D2 and there was a recent Planning Inquiry in Walsall that had held that it did not.
The fact that Salmon Harvester dropped the nightclub proposal which they had so aggressively pursued rather suggests that they knew they were not on particularly solid ground. Indeed, they floated this as a possibility as early as 4 March 2003. Mr Noel's evidence was that before the refusal of permission Salmon Harvester had been confrontational, but after they were co-operative. Mr Crohill gave evidence that the refusal of permission itself was the likely reason for the change of stance by Salmon Harvester on the nightclub as the nightclub was the primary reason for refusal.
Mrs Laird claimed that she took overall responsibility for the Brewery site and personally suggested major revisions. However, I accept the evidence of Mr Noel and Mr Crohill as to the respective roles of Mrs Laird and other officers. Mrs Laird was approached by Salmon Harvester and set in motion a series of meetings between them and council officers, primarily Mr Grahame Lewis and Mr Crohill who then negotiated the revisions in the scheme. Mrs Laird attended a couple of meetings.
As Mr Crohill stated, a "familiar planning process" was followed where an unsuccessful major developer approached the most senior officer in the organisation to progress matters. There is nothing to suggest that any other competent chief executive could not have done the same, namely, set in train negotiations between the unsuccessful developers and planning officers.
Mrs Laird stated that she held negotiations with Salmon Harvester which other officers were not aware of. She has provided no corroborative evidence of this, such as notes of those other meetings. The letters that are in the bundle between Mrs Laird and Salmon Harvester do not suggest that anything particularly significant was taking place behind the scenes and not in front of other officers at the minuted meetings.
I accept that the Old Brewery negotiation was a "collective effort", in which Mrs Laird played a part, but most of the negotiation was done by Messrs Crohill and Lewis.
In relation to the other items claimed (or possibly claimed) under this head:
(1) The sums paid under the section 106 agreement to the council and GCC are to pay for mitigation of the impacts of the development, on eg. traffic, parking, etc, and there is, therefore, no net benefit to CBC.
(2) Under the section 106 agreement the Northern Relief Road sum was paid to GCC, not CBC, and therefore cannot be set off against the damages payable to the council.
(3) Mrs Laird claims an alleged benefit in terms of a community space, but has not been able to establish that this was ever taken up.
(4) Mrs Laird also claims benefits from the Council Tax payable on the residential units. The idea of residential accommodation was raised as early as 17 September 2001, long before Mrs Laird joined CBC.
Conclusion
For the reasons set out above CBC's claim fails and is dismissed. I further hold that Mrs Laird has not established any entitlement to damages in respect of her contingent counterclaim.
It is over eight years since Mrs Laird joined CBC and much of the intervening period has been spent in bitter dispute before various tribunals, at much personal and financial cost. I very much hope that a line can now finally be drawn, allowing Mrs Laird to get on with her life and CBC to get on with the business of governing Cheltenham.
CHELTENHAM BOROUGH COUNCIL ~v~ CHRISTINE SUSAN LAIRD
Appendix
Abbreviations and Dramatis Personae
Abbreviations
CBC Cheltenham Borough Council. English local authority in Gloucestershire with Cabinet government; elections every 2 years; Conservative control 2000 – 2002, Liberal Democrat control 2002 – 2004, hung but with Liberal Democrat Cabinet and some Conservative committee chairs 2004 – 2006, hung but Conservative Cabinet 2006 – April 2008, Liberal Democrat control from May 2008 onwards
RCT Rhondda Cynon Taff County Borough council
SWRA South West Regional Assembly Provincial Employers Local Government Organisation, a regional arm of the National Employers Organisation for Local Government
NJC National Joint Committee – a committee comprising representatives of local authorities, usually Chief Executive Officers, the National Employers Organisation for Local Government and national trade unions, including Unison and GMB, to agree nationally binding terms and conditions for the employment of lower tier (clerical administrative and junior managers) in local government.
JNC Joint Negotiating Committee, a small committee of Chief Executive Officers and representatives from the National Employers Organisation for Local Government responsible for determining jointly the pay and conditions of higher tier employees in Local Government. Has two sub-groups, being: one for determining the pay and conditions of chief executives; and one for determining the pay and conditions for chief officers (first and senior tier employees)
DIP Designated Independent Person under the statutory procedure to determine whether any and if so what disciplinary action should be taken by a Local Authority against a Chief Executive Officer, and including as to whether a suspension should continue
ESO Ethical Standards Officer
Cllr Councillor
CIH The Chartered Institute of Housing. Employer of Christine Laird from 1994 to 1998
SRC Structural Review Committee of Cheltenham Borough Council in 2001/2 charged with working in relation to the structure of the Council and whose responsibilities included the assessment process for the Managing Director post. Included the leaders of all four party groups (Liberal Democrat, Conservative, Labour, and People Against Bureaucracy)
SSSC Staff and Support Services committee of Cheltenham Borough Council. Chaired by Cllr Duncan Smith until May 2002. From May 2002-2006 was chaired by Cllr McKinlay, and from 2006 -2008 by Cllr Duncan Smith
JNC Panel A Panel of Cheltenham Borough Council under the nationally agreed procedure to determine whether there was a case against Mrs Laird to merit investigation by a Designated Independent Person
Grievance Panel A panel committee of Cheltenham Borough Council set up to consider Mrs Laird's grievances
Unison One of 3 trade unions with recognised negotiating rights at Cheltenham Borough Council. Was the union to which Mr Ford, Mr Webster and Mrs Watson belonged
ALACE Association of Local Authority Chief Executives, non political trade union and staff side negotiating element of the Joint Negotiating Committee. Mrs Laird was a member from 2002 onwards
Solace Society of Local Authority Chief Executives, Professional society for actual and aspiring Chief Executive Officers of local authorities and of which Mrs Laird had been a member since 2000.
SBE Standards Board for England.
GCC Gloucestershire County Council
GCOHS Gloucestershire County Occupational Health Services
LASHG Local Authority Social Housing Grant, a development grant administered by the Housing Corporation and given to housing associations that can be converted into a grant for local authorities to administer in special circumstances
ALMO Arm's Length Management Organisation
HR Human Resources
Legislation
1967 Act Misrepresentation Act 1967
1974 Act Health and Safety at Work Act 1974
1980 Act Limitation Act 1980
1989 Act Local Government and Housing Act 1989
DDA Disability Discrimination Act 1995
1997 Act Protection from Harassment Act 1997
HRA Human Rights Act 1998
2000 Act Local Government Act 2000
Dramatis Personae
Cllr McKinlay Cllr Andrew McKinlay; member of the Chartered Institute of Housing, Liberal Democrat Councillor at Cheltenham Borough Council from well before 2000 onwards, Leader of the Liberal Democrat Group from early 2002 until 2006, and Leader of the Council from May 2002 until 2006; Chair of the Staff and Support Services Committee from May 2002 until June 2004.
Cllr Stuart-Smith Cllr James Stuart-Smith; Liberal Democrat Councillor at Cheltenham Borough Council from at least 2001, Deputy Leader of the Council and Liberal Democrat Group from May 2002 until resignation in May 2004
Cllr Duncan Smith Conservative Cllr at Cheltenham Borough Council. Council Leader from Oct 2001 – May 2002 and then from May 2006 – 2008. Chaired the appointment panel in December 2001/January 2002 for post of Managing Director, also known as the Structural Review Committee. Chaired the staff and support services committee from April 2002 – May 2002 and then from 2004 after the council became hung
Cllr Driver Barbara Driver; Conservative Councillor at Cheltenham BC, member of Conservative Cabinet from October 2001-May 2002
Cllr Martin Hale Labour Councillor at Cheltenham Borough Council. Married to Cllr Diana Hale, the other Labour Councillor during that period
Cllr Diana Hale Labour Councillor at Cheltenham Borough Council. Married to Cllr Martin Hale, the other Labour Councillor during that period. Member of the Grievance Panel and of the JNC Panel
Cllr Hay Rowena Hay; Liberal Democrat Councillor at Cheltenham Borough Council from 2002 onwards. From 2002 onwards was a member of the Cabinet.
Cllr Garnham Robert Garnham; Conservative Councillor at Cheltenham Borough Council from at least 2000. Chair of Planning committee at Cheltenham Borough Council from 2002 onwards. Member of Staff and Support Services committee from 2002 onwards. Deputy Mayor in 2004. Mayor in 2005
Cllr Seacome Diggory Seacome; Conservative Councillor at Cheltenham Borough Council. Chair of Licensing committee from 2002 onwards and chair of the JNC Panel from December 2003
Cllr Lloyd Clive Lloyd; Liberal Democrat Councillor at Cheltenham Borough Council from at least 2000 until 2006. Mayor between 2001 – 2002.
Cllr Jordan Steve Jordan; Liberal Democrat Councillor at Cheltenham Borough Council from at least 2000 onwards. Member of Cabinet (held the Support Services post). Elected Leader of Liberal Democrat group in August 2007 and in 2008 became Council Leader
Cllr Godwin Leslie Godwin; Councillor at Cheltenham Borough Council from at least 2000 onwards. Leader of independent coalition of councillors that called themselves "People against Bureaucracy". Member of Structural Review Committee in 2001/2 and then member of the Staff and Support Services committee. Previously was the personnel manager at Smiths Industries
Cllr Melville-Smith John Melville-Smith; Conservative Councillor at Cheltenham Borough Council from at least 2001 onwards until 2004. Member of Cabinet until May 2002. Local solicitor. Chair of the JNC Grievance Panel
Cllr Morris John Morris; Liberal Democrat Councillor at Cheltenham Borough Council
Cllr Fidgeon David Fidgeon; Liberal Democrat Councillor at Cheltenham Borough Council from 2002 to 2004 when became member of Cabinet (post "Built Environment and Democracy"). Was the parliamentary assistant to Nigel Jones MP.
Cllr Ledeux Janice Ledeux; Liberal Democrat Councillor at Cheltenham Borough Council from at least 2001 onwards. Member of JNC panel.
Cllr Britter Nigel Britter; a Liberal Democrat Councillor at Cheltenham Borough Council elected in 2002. A vice-chair of the Scrutiny committee. A member of the Grievance Panel
Cllr Jones Robert Jones; a Liberal Democrat Councillor at Cheltenham Borough Council, elected in 2002. A member of the JNC Panel
Mr Ryley Kim Ryley; Chief Executive of Rhondda Cynon Taff County Borough Council from 2000 until 2006
Mrs Watson Karen Watson; Personal Assistant to the Managing Director and Council Leader of Cheltenham Borough council. In post until April 2002, then on maternity leave, and returned in November 2002. In April 2003 was transferred to the Comprehensive Performance Assessment unit.
Mr Webster John Webster; Head of Service (community development) and Unison management representative at Cheltenham BC in 2001. Requested and was granted early retirement in April 2002. Elected as a Liberal Democrat Councillor in May 2004 and thereupon appointed to Cabinet. Currently Deputy Leader of the Liberal Democrat group and Deputy Leader of Cheltenham Borough Council since May 2008
Ms Pitman Joanne Pitman; In 2001 appointed and in 2002 physically joined the Cheltenham Borough Council as Head of Service (Human Resources). In October 2002 was appointed as Assistant Director HR by Liberal Democrat administration. Left Cheltenham Borough Council in about 2006
Mr Ford Gerald Ford, a solicitor. From at least 2001 onwards has been the Monitoring Officer of Cheltenham Borough Council. From at least 2001 was Head of Service (Legal Services), and in August 2002 was appointed as Assistant Director (Legal Services) by the Liberal Democrat administration. He retired in April 2005
Mr Huckle Christopher Huckle; Director of Commercial and Support Services with Cheltenham Borough Council from at least 2001 until April 2002 (and including with responsibility for Human Resources and Legal Services). In April 2002 was appointed as Group Director Social and Community Services
Miss Gunn Katherine Gunn; Acting Press officer Cheltenham BC in 2002
Mr Perry David Perry; Section 151 officer at Cheltenham Borough Council from at least 2001 onwards. Head of Service (Finance) at Cheltenham BC from at least 2001 until April 2002. In April 2002 appointed as Group Director (Economy & Business Improvement) by members in 1st stage of restructuring
Mr Sheldon Mark Sheldon; Chief Accountant at Cheltenham Borough Council from at least 2000 onwards, and in October 2002 appointed Assistant Director (Financial Services) by the Liberal Democrat Cabinet
Ms Fallon Marie Fallon; In April 2002 was appointed as Group Director (Environment) at Cheltenham Borough Council. Left the council's employment at some point in 2005/6
Mrs Robinson Rebecca (Becky) Robinson; Acting Personal Assistant to Managing Director and Leader of Cheltenham Borough Council from March 2002 until autumn 2002 (while Karen Watson went on maternity leave). Became Personal Assistant to Managing Director from April 2003
Mr Redman Michael Redman; Head of Service (Private Sector Housing) from at least 2001 onwards at Cheltenham Borough Council and in 2002 became an Assistant Director (Regeneration)
Ms Farooqi Sarah Farooqi; Solicitor in Cheltenham BC's legal team appointed as Deputy Monitoring Officer of Cheltenham Borough Council
Mr Peter Lewis Solicitor at Cheltenham Borough Council from at least 2001 onwards, redesignated as Head of Legal Services from 2002 onwards
Mr Patrick Brady Former retired Chief Executive Officer and Monitoring Office of a local authority in Derbyshire.
Mr Coopey Human Resources consultant recommended by the National Employers' Organisation for Local Government to the JNC Panel as someone with experience of operating JNC procedure
Mr Thompson Adrian Thompson; an administrator in central services.
Ms Houlden Bryony Houlden; Chief Executive of South West Employers Organisation and former civil servant.
Mrs Garner Isobel Garner. Candidate for post of Managing Director with Cheltenham Borough Council in 2001/2, employed at that time by Oxford City Council
Timothy Kerr QC A barrister retained in August 2004 through Mr Ford
Mr Penn Richard Penn; ALACE "consultant", former Chief Executive Officer of Bradford Metropolitan Council and Staff Side Joint Secretary of the Joint Negotiating Committee
Mr Nigel Jones Liberal Democrat Member of Parliament for a Cheltenham constituency.
Mr Rothwell Tim Rothwell; Human Resources Consultant with GWT Tribal, appointed initially at Christine Laird's behest to support Ms Pitman, and who thereafter took a role in the JNC Panel procedure
Dr Philipp Consultant Occupational Health Physician, Bristol NHS
Dr Dedman Consultant Psychiatrist at Priory Hospital in Bristol to whom Mrs Laird was referred by Dr Mulrenan
Mr Laird Hugh Laird; husband of Mrs Laird | 2 |
Ranganath Misra, J. This appeal is by special leave. The appellants are residents of four villages being Bhota, Hatera, Morsu Garla and Dhamani Chambala within Hamirpur District of Himachal Pradesh. These villages are inhabited by agriculturists and have rural set up. They used to be parts of Gram Panchayats duly companystituted under the relevant statute prevalent within the State. An attempt was made to companystitute a numberified area as provided under Section 256 of the Himachal Pradesh Municipal Act, 1968 by including portions of these four villages for such purpose. Initially the Sub Divisional Officer of the area reported against such a move by saying that the villages were inhabited by agriculturists, the population was small, panchayats were already functioning in the area and there was number sufficient number-agricultural activity in the area which would justify these villages to companye under a numberified area but later the State Government decided to companystitute a numberified area within the meaning of Section 256 of the Act and on 31-3-1982 such a numberification was published. Petitioners thereupon challenged the validity of the numberification by filing an application under Article 226 of the Constitution before the High Court. That application has been summarily dismissed and thereupon with leave from this Court, the present appeal has been filed. Several affidavits have been filed on either side in support of the respective stands. There cannot be any serious dispute to proposition that whether a particular area would be declared as numberified area or number under the Act is ultimately an administrative decision. Section 256 of the Himachal Act provides Constitution of numberified area. 1 The State Government may, by numberification, declare that with respect to some or all of the matters upon which a municipal fund may be expended under Section 51, improved arrangements are required within a specified area, which nevertheless, it is number expedient to companystitute as a municipality. An area in regard to which a numberification has been issued under Sub-section 1 is hereinafter called a numberified area. No area shall be made a numberified area unless it companytains a town or bazar and is number a purely agricultural village. The decision of the State Government that a local area is number an agricultural village within the meaning of Sub-section 3 shall be final, and a publication in the Official Gazette of a numberification declaring an area to be a numberified area shall be companyclusive proof of such decision. Though detailed guidelines are number indicated in the section yet from the provisions companytained therein it is clear that purely agricultural villages are number to be included in a numberified area and there must be a town to form the nucleus of a numberified area. It is number disputed that these four villages from out of which portions have been taken out to companystitute the numberified areas was already within Gram Panchayats duly companystituted under statute. Once these areas are companystituted into a numberified area under the municipal Act, the areas number included in the numberified area would necessarily be taken out from the jurisdiction of the Gram Panchayats. The villagers who were elected to the Gram Panchayats and were holding office would, as a companysequence of the Constitution of the numberified area, cease to be in office so far as the Gram Panchayats are companycerned. Chapter XII of the Municipal Act dealing with numberified areas provides that once a numberified area is companystituted, taxes would be imposed and it has number been disputed before us that the rates of such taxes would involve higher incidence and the people living within the area would be subjected to higher tax burden. From an agricultural society, the inhabitants of the area will have to switch over into a semi-urban companymunity. There has been a serious dispute as to whether there is really a town or bazar in existence within the area. Undoubtedly the reports in the record indicate that there are some shops and a good number of passenger buses pass through this area. Shops are found even in agricultural villages. Location of a few shops may number amount to a bazar and location of a bazar may number bring a town into existence These are factual aspects which require companysideration before the State Government companyld companye to the companyclusion that the area in question by the tests indicated in Section 256 of the Act, qualified to be companystituted into a numberified area. We had called for the record dealing with the Constitution of this numberified area and after Mr. Thakur. learned Counsel for the State produced the record companynsel for the appellants was given inspection thereof. We have also seen some of the papers in that record There does number appear to have been companysideration of the requirements indicated in Section 256 of the Act for finding out whether the portions of these villages should have been companystituted into a numberified area. Appellants companynsel has raised a more serious issue namely denial of an opportunity of being heard before the numberified areas has been companystituted Since Section 256 of the Act requires certain aspects to be satisfied before a numberified area can be companystituted, factual determination had to be made as to whether those statutory companyditions were satisfied Ours is a democratic polity. At every level, from the villages up to the national level democratic institution have been introduced The villages are under Gram Panchayats, urban areas under Municipalities and Corporations, districts are under Parishads for the State the is a Legislature and for the entire companyntry, we have the Parliament People residing within Gram Panchayats have their electoral rights to exercise and in exercise of such rights, they have elected their representatives. Citizens of India have a right to decide, what should be the nature of their society in which they live-agrarian, semi-urban or urban Admittedly, the way of life varies, depending upon where one lives Inclusion of an area companyered by a Gram Panchayat within a numberified area would certainly involve civil companysequences. In such circumstances it is necessary that people who will be affected by the change should be given an opportunity of being heard, otherwise they would be visited with serious companysequences like loss of office in Gram Panchayats. an imposition of a way of life, higher incidences of tax and the like. Reliance was placed on two decisions of this Court in support of the appellants stand that natural justice required an opportunity of being heard to be extended to the people of the area before the administrative decision to companystitute the numberified area was taken The first is the case of S.L. Kanpoor V Jagmohan and Ors. 1. 1980 4 SCC 379. That was a case where the companymittee companystituted under the Municipal Act was superseded. This Court held that where the administrative action entails civil companysequences, observance of natural justice would be warranted and unless the law excludes the application of natural justice it should be taken as implanted into the scheme. The other is the case of Slate of Orissa v Sridhar Kumar Mallik and Ors 2. 1985 3 SCC 697. where the validity of the action taken under Section 417-A of the Orissa Municipal Act in companystituting a numberified area was being examined. The Court, referring to the statutory scheme, found The extension of the Orissa Municipality Act to an area other than a municipality is a matter of serious moment to the residents of the area. It results in the provision of amenities and companyveniences necessary to civil life and their regulation by a local body. But the Act also provides for the imposition of taxes of different kinds on the residents. The tax structure does number embody an integrated unified impost expressed in a single tax measure. Different kinds of taxes are companytemplated by the Act. The scheme set forth in Chapter XXX-A of the Act intends that before the Government extends the operation of the Act to an area under a municipality it must afford an opportunity to the local residents to object to the proposed action. The objections are submitted to the District Magistrate, who forwards them along with his views to the State Government. The State Government must take into companysideration all the material before it and decide thereafter what should be the precise area to which the Act should be extended, and indeed whether all the provisions of the Act or only certain specified provisions should be so extended. The possibility of some only of the provisions of the Act being applied to the numberified area is evident from the terms in which the grant of power has been companyferred on the State Government. Sub-section 1 of Section 417-A specifically envisages that when issuing the numberification companytemplated therein the State Government must decide whether administrative provision needs to be made for all or any of the purposes of the Act in the area proposed to be numberified. Unless the proposal formulated in the proclamation made under Sub-section 1-a of Section 417-A is precise and clear, and indicates with sufficient accuracy the area intended to be numberified, and further indicates whether the administrative provision is proposed for all the purposes of the Act or only some of them, and if only some of them then which of them, it will number be possible for the residents to properly avail of the right companyferred on them by the statute to make their objections to the proposal of the State Government. We do number see how it can be otherwise It is a fact that the Orissa Act provides in clear terms a right of hearing whereas Section 256 of the Himachal Act makes numbersuch provision but the settled position in law is that where exercise of a power results in civil companysequences to citizens, unless the statute specifically rules out the application of natural justice, the rules of natural justice would aply. We accept the submission on behalf of the appellants that before the numberified area was companystituted in terms of Section 256 of the Act, the people of the locality should have been afforded an opportunity of being heard and the administrative decision by the State Government should have been taken after companysidering the views of the residents. Denial of such opportunity is number in companysonance with the scheme of the Rule of law governing our society. We must clarify that the hearing companytemplated is number required to be oral and can be by inviting objections and disposing them of in a fair way. | 7 |
LORD JUSTICE HENRY:
This is an appeal from the judgment of Mr Justice Hooper refusing the
appellants', Liverpool City Council, application for judicial review to quash
the report of the respondent ("the Commissioner") dated the 20th May 1997. In
that report she found maladministration on the part of the applicant in two
respects. First, it was found that seven councillors voted in favour of the
Liverpool FC's proposals (to erect an extension to a stand overshadowing the
houses of the inhabitants of Anfield Road) without declaring their interest as
season ticket holders or regular attenders, in breach of the disclosure rules
set out in the National Code of Local Government Conduct ("the Code"), issued
jointly by the Secretary of State for the Environment, The Secretary of State
for Scotland and the Secretary of State for Wales (who I will collectively
refer to as the Secretaries of State) under the provisions of the Local
Government and Housing Act, 1989. Second, the Commissioner found that:
"The use of the system of agreed voting in relation to a planning application
operated by both the main political parties [Labour, in power, and the Liberal
Democrats] before the matter was considered in committee was maladministration
in this case."
I adopt with gratitude Mr Justice Hooper's introductory analysis of the
facts.
"In 1995 Liverpool City Football Club sought planning permission to erect an
extension to an existing stand at the Anfield Road end of the football stadium.
The extension would have raised the height of the roof to some 15.8 metres and
permitted the football club to provide additional seated accommodation. In
1964 and in 1994 somewhat similar applications had been refused.
Following positive reports from the Development Control Sub-Committee (19/9/95)
and the Planning and Transportation Committee (22/9/95), on 11th October 1995
the full Council resolved to grant planning permission subject to a section 106
agreement. That planning permission was finally granted on 25th February
1997.
On 24th October 1995 the Anfield Road Residents Group wrote to the Commissioner
asking her to investigate the grant of planning permission. In the letter the
Group wrote:
`The most obvious aspect of this affair is of course that if any other large
company in the entertainment industry wanted to erect a 52 foot wall in front
of people's homes their plans would have been summarily dismissed; why should
it be any different for Liverpool Football Club plc.'
The letter went on to say:
`We hope that when you have looked into the matter you will agree with us that
the councillors' and planning officers' actions have been both improper and
suspect.'
The Commissioner found maladministration in two respects. She found that six
councillors were Liverpool City Football Club season ticket holders and one was
a regular match attender. She found that none of the seven had declared an
interest, which, in her view, ought to have been done. She also concluded that
support for a football club of the kind demonstrated by these seven councillors
was such that:
`... a reasonable member of the public would have felt that it might have been
a substantial influence on the way in which councillors voted.'
Secondly, she found that some of the councillors voted as they had done:
`... out of a misplaced loyalty to their political party.'
Three councillors of the ruling Labour group had said during the investigation
that:
`... they voted for the application at the Council meeting but would have voted
against if there had been a free vote.'
Another Labour councillor:
`... who had spoken against the proposal said that she absented herself during
the voting at the Council meeting but would have voted in accordance with the
requirements of the whip if she had voted at all.'
A Labour councillor who had voted for the application said that he did so
partly because that was the view of the Labour Group:
`He says that he would never now vote against the view of the Group (having
done so once before) even though he understands that a councillor who did so on
a planning issue would not be subject to any Party discipline.'
A Liberal Democrat councillor who had felt that the proposed stand was
acceptable had nevertheless voted against it `with a heavy heart' because he
was unwilling to take sides against his group.
Labour councillors had voted for the application and none against. 30 Liberal
Democrat councillors had voted against the application with only three in
favour. Both main political parties discussed the application prior to the
meetings of the Sub-Committee, the Committee and the Council. According to the
Commissioner:
`There is a general expectation amongst both parties that each councillor will
vote in accordance with the view expressed by the majority at the group
meeting.'
The Commissioner concluded:
`The patterns of voting show that the decision on whether to grant planning
permission was heavily, and perhaps decisively, influenced by a sense of party
loyalty whether or not councillors had a well founded fear of disciplinary
actions which might follow a decision to vote against party preference. Such
considerations cannot be material to the consideration of a planning
application and serve to make subsequent debate in the Council chamber or
Committee room meaningless. I consider that the use of the system of agreed
voting in relation to a planning application operated by both the main
political parties before the matter was considered in committee was
maladministration in this case'."
Maladministration is not defined by statute. Lord Denning MR adopted (see
R -v- Local Commissioner for Administration for the North and North
East Area of England ex parte Bradford Metropolitan City Council [1979] 1
QB 287 at 311H) a passage from the 4th Edition of Professor Wade's book on
Administrative Law:
"It will cover `bias, neglect, inattention, delay, incompetence, ineptitude,
perversity, turpitude, arbitrariness and so on'. It `would be a long and
interesting list', clearly open-ended, covering the manner in which a
decision is reached or discretion is exercised; but excluding the
merits of the decision itself or of the discretion itself. It follows
that `discretionary decision, properly exercised which the complainant dislikes
but cannot fault the manner in which it was taken, is excluded': see Hansard,
734 HC Deb, col. 51.
In other words, if there is no maladministration, the ombudsman may not
question any decision taken by the authorities. He must not go into the merits
of it or intimate any view as to whether it was right or wrong. This is
explicitly declared in section 34(3) of the Act of 1974. He can inquire
whether there was maladministration or not. If he finds none, he must go no
further. If he finds it, he can go on and inquire whether any person has
suffered injustice thereby."
But the Commissioner did not find that the maladministration had caused
injustice to the complainants because she concluded that, given the fact that
there was a properly made recommendation to grant from the Head of Planning,
had the application been properly considered, approval would have been given.
So the Commissioner made findings of maladministration in relation to the seven
councillors' failure to disclose private interests, and as to the voting
disciplines of the Labour and the Liberal Democrat parties on this issue. By
way of relief, under section 30(3A) of the Local Government Act, 1974 ("the
Act") she found that the seven councillors were in breach of the Code, and
named them accordingly.
The Local Government Ombudsman (as the Commissioner is colloquially called)
is a creature of Part 3 of the Act. Section 26 of that part of the Act deals
with matters subject to investigation, and sections 28, 29, 30 and 31 deal with
the procedure in respect of investigations, the powers of the Commissioner in
carrying out such investigations, and reports on the investigations. Section
26 of the Act is the principal section:
"Matters subject to investigation
Subject to the provisions of this Part of this Act where a written complaint is
made by or on behalf of a member of the public who claims to have sustained
injustice in consequence of maladministration in connection with action taken
by or on behalf of an authority to which this Part of this Act applies, being
action taken in the exercise of administrative functions of that authority, a
Local Commissioner may investigate that complaint.
...
A Local Commissioner shall not conduct an investigation under this Part of this
Act in respect of any of the following matters, that is to say:
any action in respect of which the person aggrieved has or had a right of
appeal, reference or review to or before a tribunal constituted by or under any
enactment;
any action in respect of which the person aggrieved has or had a right of
appeal to a Minister of the Crown; or
any action in respect of which the person aggrieved has or had a remedy by way
of proceedings in any court of law.
Provided that a Local Commissioner may conduct an investigation notwithstanding
the existence of such a right or remedy if satisfied that in the particular
circumstances it is not reasonable to expect the person aggrieved to resort or
have resorted to it.
...
In determining whether to initiate, continue or discontinue an investigation, a
Local Commissioner shall, subject to the preceding provisions of this section,
act at discretion; and any question whether a complaint is duly made under
this Part of this Act shall be determined by the Local Commissioner."
Miss Frances Patterson QC, for Liverpool drew our attention to three issues
or areas of concern to her clients, arising from the Commissioner's report.
First, the finding that the seven councillors were in breach of the Code in
their failure to disclose a private interest (paragraphs 7 - 15). Second,
whether the Commissioner's investigation should have been commenced or
curtailed having regard to section 26(6) of the Act (paragraphs 16 - 20).
Third, the finding that both of the major local parties (Labour, the
controlling party, and Liberal Democrat) imposed voting disciplines on the
votes for this planning application which amounted to maladministration
(paragraphs 21 - 28).
In her approach to these issues, Miss Patterson did not (in her presentation
to this Court) seek to set the Commissioner's report aside, nor to quash the
finding of maladministration which it contained. Instead, by way of relief,
she sought various wide-ranging declarations. We are invited in this case to
go much further than is necessary to judge the legality and procedural
regularity of the Commissioner's actions. We decline that invitation. It is
generally dangerous for a court to go further than the issues before it
require, and we are satisfied that it would be here.
Maladministration: the seven councillors' failure to declare a private
interest
The principal complaint under this issue relates to the test setting the
threshold for a declaration of interest by a councillor. The Commissioner
proceeded with the test as set out in the Code. The Secretaries of State
referred to above together issued the Code of recommended practice as regards
the conduct of members of [local] authorities. This code was issued in 1990,
and we are told it has not been revised. Before coming into effect, a draft of
it was laid before and approved by each House of Parliament. All councillors
are required on accepting office to declare that they will be guided by the
Code. The introduction to the Code states:
"The Code represents the standard against which the conduct of members will be
judged, both by the public, and by their fellow councillors. The local
ombudsman may also regard a breach of the code as incompatible with good
administration, and may make a finding of maladministration by the council in
these circumstances."
The disclosure requirements as to personal interests are as follows:
"If you have a private or personal interest in a question which councillors
have to decide, you should never take any part in the decision, except in the
exceptional circumstances described below. Where such exceptional
circumstances do permit you to participate, you should never let your interest
influence the decision.
...
It is not enough to avoid actual impropriety. You should at all times avoid
any occasion for suspicion and any appearance of improper conduct.
Disclosure of pecuniary and other interests
The law makes specific provision requiring you to disclose both direct and
indirect pecuniary interests (including those of a spouse with whom you are
living) which you may have in any matter coming before the council, a committee
or a sub-committee. It prohibits you from speaking or voting on that matter.
Your council's standing orders may also require you to withdraw from the
meeting while the matter is discussed. You must also by law declare certain
pecuniary interests in the statutory register kept for this purpose. These
requirements must be scrupulously observed at all times.
Interests which are not pecuniary can be just as important. You should not
allow the impression to be created that you are, or may be, using your position
to promote a private or personal interest, rather than forwarding the general
public interest. Private and personal interests include those of your family
and friends, as well as those arising through membership of, or association
with clubs, societies and other organisations such as the Freemasons, trade
unions and voluntary bodies.
If you have private or personal non-pecuniary interests in a matter arising at
a local authority meeting, you should always disclose it, unless it is
insignificant, or one which you share with other members of the public
generally as a ratepayer, a community charge payer or an inhabitant of an
area.
Where you have declared such a private or personal interest, you should decide
whether it is clear and substantial. If it is not, then you may continue to
take part in the discussion and vote on it. If, however, it is a clear and
substantial interest, then (except in the special circumstances described
below) you should never take any further part in the proceedings, and should
always withdraw from the meeting whilst the matter is being considered. In
deciding whether such an interest is clear and substantial, you should ask
yourself whether members of the public, knowing the facts of the situation,
would reasonably think that you might be influenced by it. If you think so,
you should regard the interest as clear and substantial."
The crucial words are those underlined in paragraph 11.
The application of the test was in paragraph 86 of the report, that
paragraph reflecting, as one would expect, the test itself:
"Support for a football club engenders a particularly intense type of loyalty
which goes some way beyond a preference for one supermarket over another. I am
in no doubt that a reasonable member of the public would have felt that it
might have been a substantial influence on the way in which the councillors
voted. The reasonable person would have had that view confirmed on seeing that
the only members of the main opposition party who voted in favour of the
application were holders of season tickets. Thus I conclude that the seven
councillors identified in this report did have a clear and substantial
interest. None of them declared an interest and therefore never went on to ask
themselves the relevant question. Season ticket holders or regular match
attenders should in my view not only have declared an interest, but also left
the meeting. I consider that there was maladministration here ...."
and then she went on to name the councillors in question. In her reference to
the "main opposition party", she was referring to the Liberal Democrats. The
Liberal Democrats had taken a caucus decision to oppose the grant of planning
permission to Liverpool Football Club. The three councillors who defied the
caucus decision and voted in support the club's application were all undeclared
season ticket holders.
So she found that seven councillors who should not have taken part in the
decision in fact did take part, without having disclosed their interest.
Miss Patterson's elaborate attack on the test of when an interest should be
disclosed founds on the case of R -v- Gough [1993] AC 646. In
Gough, in the context of the examination of a juror's conduct in a
criminal case, the Court was presented with two conflicting lines of authority.
The finding in Gough is analysed in a decision of this Court presided
over by the Lord Chief Justice (Locabail (UK) Limited -v- Bayfield
Properties Limited (17th November 1999). For present purposes it is simply
necessary to say that the two competing tests were whether there was "... a
reasonable apprehension or suspicion of bias" or "... a real danger or
possibility of bias". The former test accords with the Code (and was clearly
the test used by the Commissioner). The latter test is the one approved by
their Lordships in Gough, and is now binding on all subordinate courts.
It is not disputed that the more stringent test (ie, that with the lower
threshold for disclosure) is the test to be found in the Code.
Miss Patterson concedes that the Commissioner, insofar as she was applying
the words of the Code and the test there laid down, reached a decision which a
reasonable Commissioner could reach. But she suggests that if the less
stringent legal test had been used, the Commissioner's finding might have been
different. However, she does not ask this Court to quash the finding of
maladministration and order for the naming of the councillors. That she
regards as history, and looks to the future in the declarations she
formulates.
We note from R -v- Bow Street Magistrates, ex parte Pinochet (No 2)
[1999] 2 WLR 272 and Locabail (UK) Limited (above) that the Gough
formulation of the test has not been accepted in a number of common law
jurisdictions and that there has been debate in those authorities as to whether
the semantic difference between those two tests is likely to make any (and if
so what) difference in practice. Thus Lord Hope in ex parte Pinochet at
page 290:
"Although the tests are described differently, their application by the
appellate courts in each country is likely in practice to reach results which
are so similar as to be indistinguishable."
Given the "... particularly intense type of loyalty" engendered by
Liverpool Football Club, I am not persuaded that the answer to the disclosure
question would have been different had the test been "... a real danger or
possibility of bias". In either event, season ticket holders and other regular
attenders should in my judgment have declared their interest, and it was
maladministration not to.
Those are my views. I do not consider there to be a misdirection, still
less a material misdirection. But if it were to be found that the Commissioner
had misdirected herself in this regard, in my judgment the correct remedy for
this court would be to send the matter back to her to consider how she would
have judged the named counsellors' failure to disclose when measured against
the Gough test.
The judge saw no good reason why the Commissioner, where the statutory
concern was maladministration, should not follow the Code guidance as to what
constituted a breach of the Code, and the Code recognised the Commissioner's
power to find that a breach of the Code was maladministration.
Maladministration comes in many guises, and while there is a substantial
element of overlap between maladministration and unlawful conduct by councils
or officers or councillors in local government, they are not synonymous.
Section 26 and Section 34(3) limit the Commissioner's powers to the
investigation of maladministration. She was ruling on maladministration and I
do not see how it can be an error of law in the circumstances to apply the
Secretaries of States' Code. This after all was the same test that all
councillors had, on election, declared they would be bound by. If and when the
Secretaries of State feel they should revise the Code, they will do so.
Meanwhile, no-one is inviting the Court to strike down the relevant paragraphs
of that Code as unlawfully applying too stringent a test of disclosure. And
while the Code is there, the Commissioner must take account of it. The
Commissioner has not made a finding of unlawfulness (for which she would have
no legal mandate) but has made a finding of breach of the Code and
maladministration, which findings were well within her discretionary powers.
There was nothing wrong with her approach to the issue of maladministration.
Miss Patterson reminded us of R -v- Secretary of State for the
Environment, ex parte Kirkstall Valley Campaign [1996] 3 AER 304. Sedley
J, when dealing with questions of conflict of interest said:
"Although in the nature of things it will ordinarily be for members ... to make
up their minds in the first instance, whether they have got it right will
always be a question of law."
Mr Ash QC for the Commissioner points out that that unimpeachable statement
was made in context of whether there was "... in law a margin of appreciation
..." within which members may "... make up their minds about conflicts of
interest ..." but it lends no support to the proposition that the Commissioner
is obliged to apply or have regard to the legal test of bias (which extends far
beyond questions of local government) when performing her statutory function of
investigating breaches of the Code and maladministration.
The Council's skeleton argument impliedly asserts that the Commissioner
"slavishly adhered" to the Code. I see no evidence of that. The Commissioner
dealt with the Code in paragraph 8 to 15 of her report. There is nothing to
suggest that her approach to the Code can be properly criticised.
Next, a general point is made as to the relationship between an
investigation carried on by the Commissioner, and a legal action against the
council and/or its councillors and officers. For this we must go to section 26
of the Local Government Act, 1974, set out in paragraph 3 hereof. This was the
statutory introduction of the local government ombudsman scheme. It was at a
time when judicial review (as we know it today) was in its infancy: three
years before Order 53 (Applications for Judicial Review) became law. Section
26(1) sets out the trigger for investigative action: a complaint of injustice
in consequence of maladministration. Sub-section 6) imposes limits when the
Commissioner should not investigate such complaints. In particular, the
Commissioner should not investigate
"(c) ... any action [taken] in respect of which a person aggrieved has or had a
remedy by way of proceedings in a court of law."
Judicial review would be such a remedy. But that embargo is subject to an
important proviso, which the Commissioner here applied and to which we must
come.
What may not have been recognised back in 1974 was the emergence of
judicial review to the point where most if not almost all matters which could
form the basis for a complaint of maladministration are matters for which the
elastic qualities of judicial review might provide a remedy. In that
situation, the proviso in sub-section 6) becomes of greater importance:
"Provided that a Local Commissioner may conduct an investigation
notwithstanding the existence of such a right or remedy if satisfied that in
the particular circumstances it is not reasonable to expect the person
aggrieved to resort or to have resorted to it."
Here, the letter of complaint initiating the investigation by the Anfield
Road residents was long and detailed. It was a letter of complaint inviting an
investigation complaining of council actions that were "improper and suspect".
Nothing in the letter indicated that the residents were contemplating judicial
review proceedings. The judge found that there was not sufficient information
in the letter to found judicial review. But, given the growth of judicial
review, I suspect that any experienced public lawyer would be confident of
being able to put together a challenge by way of judicial review to the voting
procedures and the naming of councillors.
In her affidavit the Commissioner deals with the difficulty of applying
sub-section (c):
"However, the availability of judicial review is less certain. I am aware that
from time to time the Courts have widened or narrowed the availability of that
remedy, and I bear in mind that the requirement to obtain leave to move for
judicial review necessarily restricts the availability of that remedy. On the
other hand I am aware of an argument that nearly all actions which could amount
to maladministration ... could also be the subject of an application for leave
to move for judicial review: for example an allegation about the wrongful
allocation of a council house. My understanding, however, is that
maladministration and illegality are different concepts, although there is an
overlap, and it is only where there is that overlap that Section 26(6)(c) comes
into play.
...
The complainants were complaining about a planning decision in favour of the
Liverpool Football Club in circumstances where certain councillors who had been
involved in that decision were strong supporters of that club. Prima facie
therefore, the complaint presented itself as a possible breach of the Local
Government Code of Conduct, a matter placed by Parliament under Section 30(3A)
of the Act within the purview of the Local Commissioners rather than the
courts."
Section 30(3A) reads:
"Where the Local Commissioner is of the opinion-
that action constituting maladministration was taken which involved a member of
the authority concerned, and
that the member's conduct constituted a breach of the National Code of Local
Government Conduct,
then, unless the Commissioner is satisfied that it would be unjust to do so,
the report shall name the member and give particulars of the breach."
Later she was to add:
"In relation to the complaint, the subject of this application, I was simply
looking at an alleged breach of the Code of Conduct, and not considering
whether the approval complained of had been obtained through bias, using that
word in the sense it has been considered over the years by the courts."
Indeed, on those grounds she did not consider that sub-section (c) was a bar to
her proceedings. I am not sure that she was right in that conclusion. If
wrong, she would have had to consider the proviso. And this she addressed in
her affidavit:
"Had I been advised that judicial review was potentially available to the
complainants her, I would have gone on to consider whether I should exercise my
discretion under the proviso to Section 26(6) to investigate the complaint. It
is my belief that in that event I would have exercised discretion in favour of
the complainants because I believe in the particular circumstances of this case
it would have been unreasonable to expect the complainants to have been
required to resort to the remedy of judicial review. This is because I
understood the complainants to be a group in modest housing, who would have
been unlikely to have had the means to pursue that remedy from their own
resources, particularly having regard to the uncertainty of the remedy; it
seems to me that it is by no means certain that judicial would be appropriate
for maladministration where it related to a breach of the Code of Conduct.
Further I would have particularly had in mind that it would have been very
difficult, if not impossible, for the complainants to obtain the necessary
evidence to support such an application. Much of the evidence upon which I
relied in my report was not available in documentary form, but emerged during
interviews with the members concerned. The complainants however do not have
the investigatory powers given to the Commissioner by the Act and thus that
evidence would have been unobtainable by them."
In my judgment this was a clear case for the application of the proviso.
Serious allegations of maladministration had been made. Such allegations could
best be investigated by the resources and powers of the Commissioners, with her
powers to compel both disclosure of documents, and the giving of assistance to
the investigation. The Commissioner was in a position to get to the bottom of
a prima facie case of maladministration, and the ratepayers would be unlikely
to have reached that goal, having regard to the weaknesses of the coercive fact
finding potential of judicial review. As she found, it would be very
difficult, if not impossible, for the complainants to obtain the necessary
evidence in judicial review proceedings. Additionally, the complainants were a
group in modest housing, unlikely to have the means to pursue the remedy. The
Commissioner was clearly right to use the proviso to continue with her
investigation. This case is a good example of a case where the Commissioner's
investigation and report can provide the just remedy when judicial review might
fail to; and can reach facts which might not emerge under the judicial review
process.
Finally, the third main issue, party loyalty, and the parties' voting
disciplines. The line is clear - a local authority councillor is entitled to
give weight to the views of party colleagues, but should not abdicate
responsibility by voting blindly in support of party policy or party whip (see
R -v- Waltham Forest LDC [1988] QB 419). See too paragraph 4 of the
Code:
"Whilst you may be strongly influenced by the views of others, and of your
party in particular, it is your responsibility alone to decide what view to
take on any question which the councillors have to decide."
As is made clear in this judgment, if the Code is less permissive than the
law, it is the Code which councillors should use for guidance. In some
planning applications, particularly those with resource implications, party
policy will be a material consideration, but in certain planning applications
(and I would have thought this was one) would be outside party policies, and it
is hard to see how then "heavy and perhaps decisive pressure" at the
pre-meeting caucus would be a "material consideration" to be taken into account
when exercising the Section 70 powers to determine planning applications under
the Town & County Planning Act, 1990.
The block voting Labour controlled Liverpool at this time, with the Liberal
Democrats the second party. Both parties, as is not uncommon in local
government, were in the habit of meeting privately prior to the Council Meeting
and agreeing how to vote. Here it was agreed by Labour that they would vote
for the club being granted planning permission, and by the Liberal Democrats to
oppose it. Forty-one Labour councillors voted for the application, and none
against. Thirty Liberal Democrat councillors voted against the application,
and three for. All those three Liberal Democrats who defied the party
arrangement to vote for Liverpool Football Club were undeclared season ticket
holders at Anfield. Of the "others", two voted for and two against.
The Commissioner's findings were in her important paragraph 84, which for
convenience of reference, I repeat:
"The patterns of voting show that the decision on whether to grant planning
permission was heavily, and perhaps decisively, influenced by a sense of party
political loyalty whether or not councillors had a well-founded fear of
disciplinary action which might follow a decision to vote against party
preference. Such considerations cannot be material to the consideration of the
planning application and serve to make subsequent debate in the Council Chamber
or Committee Room meaningless. I consider that the use of the system of agreed
voting in relation to a planning application operated by both the main
political parties before the matter was considered in committee was
maladministration in this case."
Here the Commissioner was clearly greatly influenced by what she discovered
in the course of her investigation. She was informed by councillors J, K and M
that they would have voted differently had it been a free vote. Councillor F
informed the Commissioner that he would never vote against the view of the
Labour group, and Councillor P voted in accordance with the Liberal Democrat
party line, against the development, even though he felt the proposed stand was
acceptable.
The Council attack on paragraph 84 on semantic grounds. The submission
is:
- the Code permits a councillor to be "strongly influenced" by the views of
others, and his party in particular;
- "strongly" means the same as "heavily",
- heavy influence was here permissible,
- however, if that influence were decisive that would be maladministration,
but
- the finding was only that "perhaps" there had been such decisive
influence.
To so construe paragraph 84 is to take it entirely out of context. The
question to be answered by the Commissioner (who had interviewed the
councillors) was whether there was maladministration in the vote on this issue,
and what led up to it. Here there was heavy and perhaps decisive pressure
imposed by a sense of party loyalty. Such party pressure served to make the
subsequent debate in committee meaningless. It was out of place in this
application. This planning application deserved a proper debate and not a
foregone conclusion.. To use procedures to deny both the Anfield Road
residents and the football club a meaningful debate is to deny a transparent
democratic decision.
There was ample evidence on which the Commissioner could conclude that the
system of agreed voting in the circumstances was maladministration in this
case. The line is precisely that set out in paragraph 84. Where the party
political influence is decisive, it is clear that an immaterial consideration
has been taken into account on the facts of this particular application.
Accordingly, the challenge to the Commissioner's investigation, report and
findings fail. It has not been shown that she went outside the generous ambit
of the discretion given to her and in my judgment this appeal should be
dismissed.
LORD JUSTICE CHADWICK:
By its notice of appeal the Liverpool City Council seeks an order of
certiorari to quash the report dated 20 May 1997 in which the respondent, the
Local Commissioner for Administration in the North and North East of England,
found maladministration on the part of the Council. At the hearing of the
appeal, Ms Patterson QC did not pursue that relief. Nor did she ask us to make
the declarations which had been sought in the notice of appeal in the following
terms: (i) that the respondent exceeded her powers in reporting adversely to
the Council in respect of her investigation, (ii) that the report and/or the
findings of maladministration made therein were void and/or of no effect and/or
made without jurisdiction, and (iii) that any personal interest on the part of
a councillor was not such as to disqualify him from the decision making
process. The relief which she eventually sought, formulated in the course of
her submissions, was this:
"1) A declaration that the respondent, in investigating a complaint
notwithstanding the availability of a remedy by way of proceedings in any court
of law, in the exercise of her discretion under section 26(6) of the Local
Government Act 1974, failed to have regard to [and follow] a relevant
consideration, namely the legal principles relevant to that remedy.
2) A declaration that the respondent, in investigating a complaint
notwithstanding the availability of a remedy by way of proceedings in any court
of law, in the exercise of the discretion under section 26(6) of the Local
Government Act 1974, failed to have regard to [and follow] a relevant
consideration, namely the legal principles relevant to influence of
considerations of party political loyalty.
3) A declaration that the respondent, in investigating a complaint
notwithstanding the availability of a remedy by way of proceedings in any court
of law, in the exercise of the discretion under section 26(6) of the Local
Government Act 1974, failed to have regard to [and follow] a relevant
consideration, namely the legal principles relevant to allegations of bias."
Section 26 of the Local Government Act 1974 gives power to a Local
Commissioner (appointed under section 23 of that Act) to investigate complaints
of maladministration. The condition precedent to the exercise of that power is
that the complaint should by made in writing by or on behalf of a member of the
public who claims to have sustained injustice in consequence of
maladministration in connection with action taken by or on behalf of an
authority to which Part III of the Act applies, being action taken in the
exercise of administrative functions of that authority - see section 26(1).
Section 26(6) imposes a limitation on the power: a Local Commissioner shall not
conduct an investigation under Part III of the Act in respect of ". . . (c) any
action in respect of which the person aggrieved has or had a remedy by way of
proceedings in any court of law". But that limitation is, itself, subject to
the qualification set out in the final paragraph of section 26(6):
"Provided that a Local Commissioner may conduct an investigation not
withstanding the existence of such a . . . remedy if satisfied that in the
particular circumstances it is not reasonable to expect the person aggrieved to
resort or have resorted to it."
It is clear, therefore, that before commencing to investigate a complaint
made under section 26 of the Act, a Commissioner ought to address the question
whether the complainant (or person aggrieved) has or had some remedy by way of
proceedings in any court of law - in particular, ought to consider whether the
complaint could be made the subject of proceedings for judicial review.
Consideration of that question does not, as it seems to me, involve any
exercise of discretion. The existence, or otherwise, of an alternative remedy
is a question of law. But, if the Commissioner reaches the conclusion that
there is a remedy by way of proceedings in a court of law, then he must go on
to consider whether, in the particular circumstances, it is not reasonable to
expect the person aggrieved to resort (or to have resorted) to such
proceedings. That does involve an exercise of discretion. It is for the
Commissioner to decide whether or not he is satisfied that it is not reasonable
to expect the person aggrieved to pursue the alternative remedy.
There is, therefore, potential for two grounds of challenge to the conduct
of an investigation in circumstances in which it is said that the complainant
has or had a remedy by way of proceedings in a court of law. First, it may be
said that the Commissioner failed to address the question whether there was an
alternative remedy; or, having addressed that question, reached the incorrect
conclusion that there was not. Second, it may be said that the Commissioner,
having identified the existence of an alternative remedy, failed to address the
question whether it was reasonable to expect the person aggrieved to have
resort to it; or, having addressed that question, reached a conclusion which
was, itself, Wednesbury unreasonable.
It is not clear to me how either of those two grounds of challenge can be
advanced in support of the first (or, indeed, any) of the declarations now
sought on behalf of the Council. A complaint that, in conducting an
investigation "notwithstanding the availability of a remedy by way of
proceedings in any court of law" in the exercise of her discretion under
section 26(6) of the 1974 Act, the Commissioner failed to have regard to "the
legal principles relevant to that remedy" does not, as it seems to me, contain
within it an allegation that the Commissioner failed to appreciate that there
was a remedy by way of proceedings in a court of law. Nor does it contain
within it an allegation that the Commissioner erred in deciding, as a matter of
discretion, to conduct the investigation notwithstanding the existence of an
alternative remedy. The criticism implicit in the declarations now sought is
not that the Commissioner should have declined to conduct, or to continue with,
an investigation. The criticism is that, having properly decided to conduct the
investigation, the Commissioner applied the wrong principles when reaching her
conclusions on the questions which she had to decide in the course of that
investigation.
Nevertheless, the skeleton argument submitted on behalf of the Council
identifies, as one of the issues which are said to arise on this appeal:
"Issue 3. The learned judge erred in holding, contrary to the authority of R
v Commissioner for Local Administration, ex p Croydon L.B.C. [1989] 1 All
ER 1033, that the Respondent could have regard to the likely success of an
application for judicial review in determining whether to exercise her
discretion to investigate or continue to investigate a complaint and/or in
determining whether there was an alternative remedy available to the local
residents making the complaint to the Respondent."
That part of the decision of the Divisional Court in ex parte
Croydon on which reliance is placed is found in the judgment of Lord
Justice Woolf (with whom Lord Justice Hutchison agreed) at page 1044d-f of the
report. Lord Justice Woolf pointed out that the question for the Commissioner,
under section 26(6)(c), was not whether proceedings in a court of law - and, in
particular, proceedings by way of application for judicial review - would
succeed. The relevant question was whether a court of law was an appropriate
forum for investigating the subject matter of the complaint. But Lord Justice
Woolf went on to observe, at page 1045e-f, that even if that question was
answered in the affirmative - as, having regard to the increasing readiness of
the courts to entertain applications for judicial review, it commonly would be
- the Commissioner retained his discretion to apply the proviso to section
26(6) and "unless he exercises this discretion unlawfully the courts will not
and cannot interfere with his decision".
I find it difficult, for the reasons which I have sought to give, to
understand how it can be said that the issue identified as "Issue 3" in Ms
Patterson's skeleton argument arises in the context of the relief which she now
seeks on behalf of the Council. But, if the issue does arise, then the point is
met by the clear indication in paragraph 9 of the Commissioner's affidavit of
20 November 1997 (to which Lord Justice Henry has referred) that - had she been
advised that judicial review was available to the complainants in the present
case - she would have gone on to consider whether she should, nevertheless,
conduct an investigation into the complaint in the exercise of her discretion
under the proviso; and would have decided to do so. I agree with Lord Justice
Henry that there can be no doubt that the Commissioner would have been entitled
to take that decision.
I turn, therefore, to the criticism which does underlie the first (and, I
think, also the second and third) of the declarations now sought: that, having
decided to conduct an investigation notwithstanding the availability of a
remedy by way of judicial review proceedings, the Commissioner ought to have
applied the same principles in reaching her conclusions as the court would have
applied if it had been considering whether to grant that remedy. This criticism
finds expression in the first issue identified in Ms Patterson's skeleton
argument:
"Issue 1. The learned judge erred in concluding that, in investigating
complaints of maladministration, when the subject matter of the complaint
overlapped a complaint of unlawfulness, the Respondent did not have to take
into account and/or follow and/or set out her reasons for not following the
legal principles relevant to a complaint of unlawfulness."
In my view the answer to that criticism is that already given by Lord
Justice Henry. Although there is a substantial element of overlap between
maladministration and unlawful conduct in the context of local government, the
concepts are not synonymous. There will be cases of maladministration which do
not involve unlawful conduct. As Lord Denning, Master of the Rolls, observed in
R v Local Commissioner for Administration for the North and North East Area
of England, ex parte Bradford Metropolitan City Council [1979] 1 QB 287, at
page 311H - quoting from the debate on the Bill which was enacted as the
Parliamentary Commissioner Act 1967 - "It [maladministration] will cover `bias,
neglect, inattention, delay, incompetence, ineptitude, perversity, turpitude,
arbitrariness and so on.' It `would be a long and interesting list' clearly
open-ended, covering the manner in which a decision is reached or
discretion is exercised; but excluding the merits of the decision itself
or of the discretion itself." So there is no reason in principle why the
considerations which determine whether there has been maladministration should,
necessarily, be the same as those which determine whether there has been
unlawful conduct. The Commissioner's power is to investigate and report on
maladministration; not to determine whether conduct has been unlawful. So there
is no reason why, when exercising the power to investigate and report, (which
has been conferred on him by the 1974 Act) he should, necessarily, be
constrained by the legal principles which would be applicable if he were
carrying out the different task (for which he has no mandate) of determining
whether conduct has been unlawful.
Nor is there any reason why the position should be otherwise if,
notwithstanding the availability of a remedy by way of proceedings in a court
of law, the Commissioner decides, in the exercise of his discretion under the
proviso to section 26(6), to conduct an investigation into a complaint of
maladministration. The availability of the alternative remedy requires him to
consider whether to proceed with the investigation. The fact that, if the
complainant were left to pursue the alternative remedy, a court would or might
apply legal principles to the determination of the question which would be
before it - namely, whether the conduct complained of was unlawful - which
differed from those which the Commissioner would regard as applicable in an
investigation into the complaint which is before him, is a matter which the
Commissioner may (and, in my view, should) take into account in deciding
whether he should proceed with the investigation. But, if he does decide to
proceed with the investigation, then he must give effect to that decision. He
must proceed on the basis that he is investigating a complaint of
maladministration under the powers conferred upon him by statute. He is not
acting as a surrogate of the court in determining whether there has been
unlawful conduct.
Section 31(1) of the Local Government and Housing Act 1989 gave power to
the Secretary of State to issue a code of recommended practice ("the National
Code of Local Government Conduct") for the guidance of members of local
authorities. Section 31(4) required that the code should not be issued unless a
draft had been laid before and approved by a resolution of each House of
Parliament. Section 31(7) provided that the form of declaration of acceptance
of office, to be made by a councillor upon election under section 83 of the
Local Government Act 1972, might include an undertaking by the declarant to be
guided by the National Code in the performance of his functions. Section
32(1)(b) of the 1989 Act introduced into the 1974 Act a new subsection (section
30(3A) of the 1974 Act) in these terms:
Where the Local Commissioner is of the opinion -
that action constituting maladministration was taken which involved a member of
the authority concerned, and
that the member's conduct constituted a breach of the National Code of Local
Government Conduct,
then, unless the Local Commissioner is satisfied that it would be unjust to do
so, the report shall name the member and give particulars of the breach."
The introduction to the National Code issued by the Secretary of State
pursuant to the power conferred by the 1989 Act contains the following
paragraph:
"The Code represents the standard against which the conduct of members will be
judged, both by the public and by their fellow councillors. The local ombudsmen
may also regard a breach of the Code as incompatible with good administration,
and may make a finding of maladministration by the council in these
circumstances."
As envisaged by section 31(7) of the 1989 Act, the Code provides that all
councillors are required on accepting office to declare that they will be
guided by the Code. That obligation was made statutory on 3 May 1990 by the
Local Elections (Principal Areas) (Declaration of Acceptance of Office) Order
1990 (S.I. 1990 No. 932).
The position, therefore, is that the National Code is issued under the
authority of Parliament, and with the concurrence of both Houses of Parliament.
The Local Commissioner must have regard to it where an action constituting
maladministration involves a member of the authority concerned; because, if
that member's conduct constituted a breach of the National Code, he must be
named unless the Commissioner is satisfied that it would be unjust to do so.
The Code contemplates that a breach may itself be treated as an incident of
maladministration. Members of local authorities are required by statute to
declare - and, in practice, do declare - that they will be guided by it. It is
pertinent to have these considerations in mind when addressing the second issue
identified in Ms Patterson's skeleton argument:
"Issue 2. The learned judge erred in finding that the Ombudsman was bound to
apply the National Code of Local Government Conduct without giving any or any
proper consideration as to whether the Respondent had a discretion as to
whether to apply the Code where:
the Code no longer reflected the correct legal test of bias (and hence when
local authority members had to declare their personal interests); and
the application of the Code acted as an unlawful fetter on the discretion on
the part of the Respondent."
Those parts of the Code directly relevant to the declaration of a member's
non-pecuniary interest- and his subsequent participation in any vote which
might affect that interest - are contained in paragraphs 9, 10 and 11. They are
set out in the judgment of Lord Justice Henry and it is unnecessary to rehearse
them. It is sufficient to indicate that I agree with his view that the crucial
words are those in the two final sentences of paragraph 11:
... In deciding whether such an interest is clear and substantial, you should
ask yourself whether members of the public, knowing the facts of the situation,
would reasonably think that you might be influenced by it. If you think so, you
should regard the interest as clear and substantial.
Ms Patterson submitted that that test is more stringent than the test of
apparent bias now applied in the courts. She referred us to R v Gough
[1993] AC 646. The distinction, as Lord Justice Henry has pointed out in
his judgment, is between "a reasonable apprehension or suspicion of bias" and
"a real danger or possibility of bias"; although it is pertinent to keep in
mind the observation of Lord Hope of Craighead in R v Bow Street
Magistrates, ex parte Pinochet (No 2) [1999] 2 WLR 272, at page 290, that
the application of either test to particular facts is likely to produce the
same result.
The Commissioner applied the "reasonable apprehension" test. That, as it
seems to me, is plainly the test that was envisaged by the Code. I reject the
submission that the Commissioner misdirected herself. In my view she was
correct to accept and adopt the guidance provided by the Code. The Code set out
the test by which the members of the authority had declared themselves willing
to be guided. That was the test by which they had been told, in the
introduction to the Code, their conduct would be judged. That was the test
which the Commissioner had to apply when deciding whether section 30(3A) of the
1974 Act required the members in question to be named. There was, to my mind,
no reason why the Commissioner should have directed herself that, in
investigating maladministration, she must discard the test provided by the Code
in favour of some other test which might be applied by the courts in
determining unlawfulness. In my view the criticism which underlies the third of
the declarations now sought is ill-founded.
The criticism which underlies the second of the declarations now sought
finds expression in the issues identified as "Issue 4" and "Issue 5" in Ms
Patterson's skeleton argument:
"Issue 4. The learned judge erred in finding that the legitimate influence of
party politics in regard to planning applications is different from other areas
of local authority administration.
Issue 5. The learned judge erred in finding that decisions on planning
applications cannot be heavily influenced as opposed to determined by
considerations of party political loyalty."
The National Code gives recognition to the legitimate influence of party
political considerations in the context of local government decisions.
Paragraph 4 contains the following guidance:
"Whilst you may be strongly influenced by the views of others, and your party
in particular, it is your responsibility alone to decide what view to take on
any question which councillors have to decide."
In my view that reflects the position in law, as expressed by Lord Justice
Russell in R v Waltham Forest London Borough Council, ex parte Baxter and
others [1988] 1 QB 419, at page 428G-H:
"Party loyalty, party unanimity, party policy, were all relevant
considerations for the individual councillor. The vote becomes unlawful only
when the councillor allows those considerations or any other outside influences
so to dominate as to exclude other considerations which are required for
balanced judgment. If, by blindly toeing the party line, the councillor
deprives himself of any real choice or the exercise of any real discretion,
then his vote can be impugned and any resolution supported by his vote
potentially flawed."
The Code recognises that party loyalty may be a legitimate consideration;
but the weight to be given to that consideration in relation to any particular
decision must be a matter for the individual councillor and must depend on the
nature of the decision to be taken. As Lord Justice Henry has pointed out,
there may well be planning applications which have important resource or
environmental consequences. In those cases the policy objectives of the party
to which the member adheres are engaged and may properly be given very
substantial weight by the member when reaching his decision as to how to cast
his vote in Council. But many, if not most, planning applications will not be
of that nature. The Commissioner clearly thought that the application in
relation to the Anfield Road stand fell into the latter class. It is impossible
to say that she was wrong to take that view. It is equally impossible to say
that, holding that view and in the light of the evidence which she had heard
from the members themselves in the course of her investigation, she was not
entitled to reach the conclusion that, in the present case, real or perceived
party constraints had gone far beyond what was permissible - both under the
Code and under the general law. She was plainly entitled to hold that those
constraints had been productive of maladministration.
For those reasons, and for the reasons given by Lord Justice Henry with
whose judgment I agree, I am not persuaded that it would be appropriate to make
any of the declarations now sought. The appeal must be dismissed.
LORD JUSTICE MAY:
For the reasons set out by my Lords, Lord Justice Henry and Lord Justice
Chadwick, I would agree that this appeal must be dismissed.
Order: Appeal dismissed: with costs, to be assessed if not agreed:
permission to appeal to the House of Lords refused.
(Order does not form part of approved judgment). | 7 |
COURT OF APPEAL FOR ONTARIO
CITATION: Orfus Estate v. The Samuel and Bessie
Orfus Family Foundation, 2013 ONCA 225
DATE: 20130410
DOCKET: C54532
Laskin, Sharpe and Epstein JJ.A.
BETWEEN
Myer Botnick as an Executor named in the Last Will
and Testament of Bessie Orfus, and Elaine Orfus and Rachel Wardinger,
personally and as Executors named in the Last Will and Testament of Bessie
Orfus
Applicants (Respondents/ Appellants
by way of cross-appeal)
and
The Samuel and Bessie Orfus Family Foundation,
Carrie Heather Orfus- Gelkopf, Michael Abraham Orfus, Shayna Hyla Orfus,
Sharon Gerstein
, The Childrens Lawyer, Mitchell
Gerstein and Yisraella Shira Gelkopf
Respondents (
Appellant
/
Respondent by way of cross-appeal
)
Richard B. Swan and Emrys Davis, for the
appellant/respondent by way of cross-appeal
Clare Burns and Mandy L. Seidenberg, for the
respondents/appellants by way of cross-appeal
Heard: June 7 and June 15, 2012
On appeal from the judgment, dated September 30, 2011,
with reasons reported at 2011 ONSC 3043, and on cross-appeal from the costs
endorsement, dated November 14, 2011, of Justice Michael A. Penny of the
Superior Court of Justice.
Laskin
J.A.:
[1]
The main issue on this appeal is whether the motion judge erred by
granting summary judgment dismissing Sharon Gersteins challenge to the
validity of two wills and a codicil made by her mother, Bessie Orfus. Sharon
contends that her challenge should have been determined after a trial.
A.
overview
[2]
Bessie Orfus died in 2009, at the age of 98. She left an estate of
nearly $20 million, largely derived from the successful real estate business of
her husband, Samuel Orfus, who had predeceased her. Samuel and Bessie Orfus
had three children: a son, Howard, who died in 1997, and two daughters, Sharon
Gerstein, the appellant, and Elaine Orfus, one of the respondents and estate
trustees.
[3]
Elaine lived with her mother. According to everyone but Sharon, Elaine
was, in the motion judges words, a supportive, caring daughter. Sharon
lived next door but was estranged from both her mother and sister. She
communicated with them rarely, if at all.
[4]
In May 2004, Bessie Orfus made two wills. She left Sharon shares in
three private Orfus companies but removed her as an executor and treated her
less generously than Elaine.
[5]
In November 2004, Sharon began oppression proceedings in respect of the
Orfus companies. She sued, among others, both her sister and her mother. On
November 17, 2004, all parties consented to or said they did not oppose the
winding up of the Orfus companies. As a result of the wind up, Sharon was to receive
$9 million. Less than a month later, on December 13, 2004, Bessie Orfus made a
codicil to her two wills in which she cut Sharon out of her estate, save for a
nominal $1,000 bequest.
[6]
After Bessie died, Sharon gave notice of an objection to both the two
wills and the codicil. She claimed that her mother lacked testamentary
capacity, did not know and approve of the contents of the wills and codicil,
and was unduly influenced by Elaine to sign the documents. The respondent
trustees moved for summary judgment to set aside the notice of objection and
for a declaration that the wills and codicil were valid.
[7]
The motion record was substantial: 20 witnesses gave evidence;
examinations of the witnesses yielded over 1,700 pages of evidence; and the
exhibits took up approximately 5000 pages. The motion was argued over three
days. In lengthy and thorough reasons, the motion judge, Penny J., granted
summary judgment dismissing Sharons objection. He held that there were no
genuine issues requiring a trial. He concluded that Bessie Orfus had
testamentary capacity in May and December 2004, that she knew and approved of
the contents of her two wills and codicil, and that the execution of her
testamentary documents was not procured by Elaines undue influence. However,
he also concluded that Sharon had reasonable grounds to challenge her mothers
testamentary capacity and therefore made no order for costs.
[8]
Sharon appeals the granting of summary judgment. The respondents seek
leave to appeal the motion judges refusal to award them their costs.
[9]
On her appeal, Sharon Gerstein makes four submissions. Her first and
main submission is that the motion judge erred by granting summary judgment
instead of ordering a trial of the issues. The motion judge decided this case
before the release of our courts judgment in
Combined Air Mechanical
Services Inc. v. Flesch
, 2011 ONCA 764, 108 O.R. (3d) 1. Sharon submits
that on the full appreciation test set out in
Combined Air
, summary
judgment was not appropriate.
[10]
Second,
Sharon submits that the motion judge erred in ruling inadmissible two voicemail
messages left by Dr. Silberfeld, an expert capacity assessor. Dr. Silberfeld
met Bessie Orfus in 2004 and said that he had the impression she lacked
testamentary capacity. The motion judge ruled that his two voicemail messages
did not meet either the test for the admission of hearsay or the test for the
admission of expert evidence, largely because they were not reliable. Sharon
says that the motion judges ruling is wrong in law.
[11]
Third,
Sharon submits that the motion judge erred by ruling inadmissible her evidence
about her relationship with her mother and about her mothers lack of
sophistication in business matters. The motion judge ruled Sharons evidence about
her relationship with her mother inadmissible because it was not corroborated,
as required by s. 13 of the
Evidence Act
, R.S.O. 1990 c. E.23. He
also referred to s. 13 in rejecting Sharons evidence about her mothers
business acumen. Sharon says that her evidence on both matters was
corroborated.
[12]
Fourth,
Sharon submits that the motion judge erred in finding that Bessie Orfus knew
and approved of the contents of her codicil. Sharon says that there was no
evidence to support this finding.
[13]
The
respondents seek leave to appeal the motion judges costs order on two
grounds. First, they submit that although Sharon may have had reasonable
grounds to begin her will challenge, the motion judge erred by failing to find
that she did not have reasonable grounds to pursue it, in the face of the
evidence produced on the motion. Second, they submit that the motion judge erred
by failing to give effect to their offer to settle.
[14]
For
the reasons that follow, I would dismiss Sharon Gersteins appeal and refuse
the respondents request for leave to appeal the motion judges costs order.
B.
summary of the relevant facts
[15]
In
his reasons, the motion judge set out the factual background to this dispute.
I will summarize only those facts necessary to give a context to the issues on
appeal.
(1)
Bessie Orfus character and independence in 2003-2004
[16]
The
critical period in this litigation was 2003-2004. The uncontradicted evidence
before the motion judge was that in this period, despite her age, Bessie Orfus
was independent, self-sufficient, socially active, and strong-minded. She swam
at least three times a week; she stayed alone in Florida for periods of a week
or so; she took taxi cabs by herself; she spoke to her best friend almost
daily; she visited other friends, went to charity events, musicals, theatre,
and the movies; and she consulted with counsel alone about her wills.
[17]
Bessies
long-time cleaning lady said that she had a strong mind, her own mind. Her
family doctor testified that Bessie was always engaged during her appointments
with him. Her dentist said that Bessie was very independent. She wanted to do
things for herself with no help from anyone. The motion judge fairly concluded
at para. 27 of his reasons, that [u]ntil the end, Bessie appears to have been
a woman of strength and determination.
(2)
Bessies relationship with Elaine
[18]
Elaine
lived at home with her mother and looked after her. Undoubtedly the two had a
close relationship and cared deeply about each other. As Bessie got older,
Elaine became her primary caregiver. She drove her mother to her medical
appointments, to Baycrest for swimming, to the hairdresser, to do household
errands, and to shop for clothes.
[19]
In
her eulogy at Bessies funeral, Bessies granddaughter and Howards daughter,
Carrie, paid tribute to Elaine with these words: Elaine deserves special
recognition as she has been my Bubis primary caregiver all these years and has
done so much to help her live the great and long life that she did.
(3)
Bessies relationship with Sharon
[20]
Sharon
is Bessies oldest child. She married Marvin Gerstein, a paediatrician at Sick
Childrens Hospital. They had one child, a son Mitchell, who apparently did
not work and for ten years did not speak to his grandmother.
[21]
Sharons
husband died in 1984 but left her and her son very well-off. Sharons parents
were also very generous to her. For example, they gifted Sharon the lot on
which she and her husband built their home. This lot was right next door to
the house where her parents and later Bessie and Elaine lived.
[22]
Indeed,
Sharon lived next door to her mother and Elaine for 35 years. Yet despite
living next door, for many years Sharon did not even speak to her mother. In
Bessies words, her relationship with Sharon was not good; Sharon was
indifferent to her.
[23]
Although
Sharon did not work outside the home, she apparently did nothing to care for
her mother. In the critical period of 2003-2004, Sharon admitted that she did
not take her mother to medical appointments or shopping or swimming or to get
groceries or to do errands. As the motion judge aptly observed, at para. 73 of
his reasons: Sharon had an entirely different relationship with Bessie than
did Elaine.
(4)
The medical evidence on Bessies testamentary capacity
[24]
On
the key question of Bessies testamentary capacity in 2004, the motion judge
had the evidence of four doctors: Dr. Colla, Dr. Dombrower, Dr. Shulman, and
Dr. Silberfeld.
(i)
Dr. Colla
[25]
Dr.
Colla had been Bessies family doctor for nearly 14 years. He saw Bessie on
June 1, 2004, the day after she signed her two wills, and on November 25, 2004,
two and a half weeks before she signed her codicil. Dr. Colla testified that
he had no cognitive concerns about Bessie on either occasion.
(ii)
Dr. Dombrower
[26]
Dr.
Dombrower was a geriatrician at Baycrest. He assessed Bessie in the morning of
May 31, 2004, the day she signed her two wills. In Dr. Dombrowers opinion,
Bessie Orfus had testamentary capacity.
[27]
As
part of his assessment, Dr. Dombrower conducted a Mini Mental Status
Examination. Bessie scored 25 out of 30. According to Dr. Dombrower this
score showed only mild cognitive impairment. In his written report, Dr.
Dombrower concluded:
Despite this mild cognitive impairment, it is my opinion that
this lady is capable to make a Will or change her Will. There is no question
in my mind that she currently exhibits the capacity to understand the purpose
of a Will and the consequences of making one and not making one. She provided
to me very reasonable explanations as to why certain assets were being divided
up unequally. I do not believe that there is coercion. I asked Elaine to
leave the room for a part of the assessment. And while Mrs. Orfus did confide
in me that occasionally Elaine and she argue, there is clearly no verbal or
physical abuse and she tells me that she has decided to change her Will on her
own behalf.
(iii)
Dr. Shulman
[28]
Dr.
Shulman, another expert capacity assessor, was retained by Sharon to review Dr.
Dombrowers report. He did not meet with or assess Bessie himself and had no
independent evidence of her capacity.
[29]
Dr.
Shulman did not criticize Dr. Dombrowners administration of the Mini Mental
Status Examination. However, he did criticize other aspects of Dr. Dombrowers
assessment, which the motion judge summarized, at para. 137 of his reasons:
Dr. Shulman went on to cite several specific concerns with Dr.
Dombrower's assessment: the assessment was conducted partly in the presence of
Bessie's daughter Elaine, who appeared to be an active participant. In
the circumstances Dr. Dombrower was not able to establish Bessie's independence
of thought from her daughter Elaine; Bessie did not appear to recall that
she had executed prior wills and codicils; Dr. Dombrower did not have the root
wills to review with Bessie; there was no review of the nature and extent of
Bessie's assets which were very substantial and detailed; the description of
the family history did not make it clear whether the information came from
Bessie herself or from Elaine
[30]
However,
because Dr. Shulman never met or assessed Bessie Orfus, the motion judge held,
at paras. 115 and 218 of his reasons, that at most Dr. Shulmans evidence
showed that Dr. Dombrowers report might have been more comprehensive:
[
115
] Sharon points to evidence
concerning meetings with Bessie, Elaine and the lawyers to the effect that
Elaine did most of the talking and that most of the information about Bessie's
assets, family relationships and will instructions came from Elaine, not from
Bessie herself. The principal lawyer involved in drafting the 2003 and
2004 wills was Schoenroth, who admitted that she should have contacted Bessie
directly but it was complicated and I was trying to move things along so that I
could come up with a draft before she [Bessie] left for Florida.
[218] Dr. Dombrowers report, while perhaps not conclusive of
Bessies capacity, is some evidence to be considered, in the context of all of
the evidence, including the observations of Schoenroth, Lawrie and Dr.
Colla. In the absence of any contrary report from another assessor, I
fail to see how Dr. Shulmans criticism of Dr. Dombrowers report creates a
triable issue about Bessies capacity. Dr. Shulman is simply in no position to
comment on Bessies capacity at all.
(iv)
Dr. Silberfeld
[31]
Dr.
Silberfeld met with Bessie Orfus on May 11, 2004. Both after that meeting and
two days later, he telephoned Bessies lawyer, Lorna Shoenroth, and left her
two voicemail messages. In the first of these messages, he said that he had
the impression that Bessie Orfus was not capable of making her December 2003
wills but may be capable of making a codicil. In a second voicemail message,
Dr. Silberfeld offered to meet with Bessie Orfus again, but another meeting
never took place.
[32]
The
motion judge ruled that the two voicemail messages were inadmissible because
they were not reliable either as hearsay evidence or as expert opinion
evidence. Dr. Silberfeld had no files, no notes, and no recollection of
meeting with Bessie Orfus. Thus, he could give no evidence about what led him
to his impression that Bessie Orfus did not have testamentary capacity. The
motion judges ruling is one of Sharons grounds of appeal, and I will discuss
it later in these reasons.
(5)
The 2004 wills and the evidence of Bessies lawyers on her testamentary
capacity
[33]
Bessie
Orfus signed her two wills, a primary will and a secondary will, on May 31,
2004 in front of her two lawyers from Aird & Berlis, Lorna Schoenroth and
Barbara Lawrie. Each lawyer testified that in her opinion, Bessie Orfus had
testamentary capacity when she signed the two wills. Three important
considerations give some context to these opinions.
[34]
First,
Bessie met three times with Schoenroth, Lawrie or both, in the absence of
Elaine. These meetings took place on November 20, 2003, December 8, 2003, and
May 31, 2004. Each meeting lasted between 20 minutes and two hours. At each
meeting, Bessie confirmed her testamentary instructions. Bessie told her
lawyers that she was leaving less to Sharon because she did not see Sharon much
and because Sharon was taken care of. The trial judge accepted Bessies
explanation. He found that Sharon held shares in the Orfus companies, received
a $70,000 annual salary from these companies, had a beneficial interest in her
husbands $3 million estate, and had received from her parents the lot her
house was built on.
[35]
Second,
Bessies lawyers prepared a chart of her assets and their values. Bessie
looked at the chart and acknowledged that the items and figures were accurate.
[36]
Third,
although the two wills themselves were complicated documents, Schoenroth
prepared a simple language memorandum of Bessies proposed dispositions.
Schoenroth and Lawrie reviewed the memorandum with Bessie before she signed her
wills, and Bessie initialed each page and then signed her name at the end of
the memorandum. She gave understandable and compelling reasons for her
dispositions:
I have left the largest portion of my estate to Elaine since we
are very close, she works hard managing the Orfus companies and she takes good
care of me. Sharon and her son, Mitchell, were well taken care of financially
by Sharons late husband. Carrie was also taken care of financially by her
late father, my son, Howard, in his will and she is in financially comfortable
circumstances. I have given Carrie significant funds as a gift in the past and
I have made a significant loan to her which she has repaid. Recently I have
had little contact with Carrie or her children. I have decided to leave the
assets that I would otherwise have left for Carrie to her children, in trust.
[37]
Schoenroth
and Lawrie still had some doubts whether Bessie knew the nature and the extent
of her assets. Nonetheless, each was of the opinion that Bessie had
testamentary capacity on May 31, 2004. Schoenroth explained why she held that
opinion in a passage from her evidence relied on by the motion judge, at para.
164 of his reasons:
She knew the value of her home. She knew she had a
cottage. She knew she had bank accounts. She did not understand the
complex structure of this partnership of companies that were owned by a variety
of family members in percentages that go to the third digit. She did not
understand that. She understood that she had wealth. She
understood, cash-wise, what people were getting, roughly, if the estate was worth
18 million, which is what I was trying to work with. But she did not
understand what the shares were worth. I still felt she had the capacity
to sign the will.
[38]
Lawrie
wrote a lengthy memorandum of her and Schoenroths meeting with Bessie on May
31, 2004. In that memorandum, Lawrie too states her opinion that Bessie had
testamentary capacity:
Lorna spent much of the time reviewing with Bessie Orfus the
provisions of the Wills, changes made from previous Wills, and, in that
connection, Bessie's relationships with her children, grandchildren and
great-grandchildren. I took 10 pages of handwritten notes, which are included
for the file. During the meeting, I formed the view that that Mrs. Orfus did
have testamentary capacity, and therefore it was appropriate to have her sign
her Wills. The purpose of this memorandum is to set out why I believe that Mrs.
Orfus had testamentary capacity
[39]
In
finding that Bessie Orfus had testamentary capacity when she signed her two
wills on May 31, 2004, the motion judge relied on the opinions of Schoenroth
and Lawrie. He summed up his assessment of the evidence from the doctors and
the lawyers, at para. 219-220 of his reasons:
[
219
] Thus, even if Dr. Dombrowers
report is held not to be conclusively determinative of Bessie's capacity and is
accorded limited weight, this still leaves, as the best evidence of Bessies
cognitive function, Schoenroth and Lawries evidence about their meeting
with Bessie on May 31 and Dr. Collas notes of his June 1 meeting with Bessie.
Dr. Colla, I note, primarily practiced with geriatric patients. All of
that evidence is consistent with Bessie having had testamentary capacity on
that day.
[
220
] And, most importantly, none of that
evidence is contradicted, other than by Sharon's bald assertion that her mother
never had capacity to make a will dealing with the Orfus Companies because she
did not understand the corporate structure of her husbands real estate
business. Dr. Shulmans report is insufficient to demonstrate that a
trial is required on the issue of Bessies testamentary capacity.
(6)
The oppression litigation
[40]
In
November 2003, Carrie and her step-mother began oppression proceedings
concerning the Orfus companies against Bessie, Elaine, Sharon, and others. In
February 2004, Sharon withdrew her support of Bessie in that litigation.
Instead, she sought to be bought out of the Orfus companies in the motion
judges words, at para. 281 of his reasons, thus hastening the dismantling of
all that Samuel, Bessies husband of 50 years had built.
[41]
In
November 2004, Sharon started her own oppression proceedings against Bessie and
others. On December 14, 2004, Sharon obtained an order for the winding up of
the Orfus companies. Bessie consented to the order. Sharon never claimed or
suggested to the court that Bessie lacked the capacity to give her consent. As
a result of the winding up of the Orfus companies, Sharon received $9 million.
(7)
The codicil
[42]
On
December 13, 2004 the day before the winding up order was made in the
oppression litigation, Bessie signed a codicil to her will. As I said in the
overview, in that codicil Bessie cut Sharon entirely out of her will except for
a nominal $1,000 bequest.
[43]
The
codicil was prepared by the respondent, Myer Botnick, a solicitor who had known
Bessie for many years, and his associate Aaron Mitnick. They received their
instructions from Elaine. Neither met with Bessie before December 13, and
neither has any recollection of the meeting with Bessie at which she signed the
codicil. Whether, in these circumstances, the motion judge erred in finding
that the codicil was valid is a separate ground of appeal, which I discuss
later in these reasons.
C.
the appeal
First Issue Did the motion judge
erred in granting summary judgment instead of ordering a trial of the issues
[1]
[44]
Our
new Rule 20, the summary judgment rule, came into effect on January 1, 2010.
Rule 20.04(2) now provides:
20.04 (2) The court shall grant summary judgment if,
(a) the court is satisfied that there is no
genuine issue requiring a trial with respect to a claim or defence; or
(b) the parties agree to have all or part of the
claim determined by a summary judgment and the court is satisfied that it is
appropriate to grant summary judgment.
20.04 (2.1) In determining under clause (2) (a)
whether there is a genuine issue requiring a trial, the court shall consider
the evidence submitted by the parties and, if the determination is being made
by a judge, the judge may exercise any of the following powers for the purpose,
unless it is in the interest of justice for such powers to be exercised only at
a trial:
1. Weighing the evidence.
2. Evaluating the credibility of a deponent.
3. Drawing any reasonable inference from the evidence.
Oral Evidence (Mini-Trial)
20.04 (2.2) A judge may, for the purposes of
exercising any of the powers set out in subrule (2.1), order that oral evidence
be presented by one or more parties, with or without time limits on its
presentation.
[45]
The
new Rule 20 gave judges expanded powers on motions for summary judgment. The
motion judge decided this case under the new Rule 20. However, he decided it
on September 30, 2011, about two months before this court released its decision
in
Combined Air
.
[46]
By
the time the motion judge decided this case, there was a good deal of
jurisprudence from trial judges on how the new Rule 20 was to be interpreted.
But in
Combined Air,
at para. 35, we said that our decision marks a
new departure and a fresh approach to the interpretation and application of the
amended Rule 20. The motion judge, therefore, did not have the benefit of
this fresh approach.
[47]
As
a benchmark, we set out a full appreciation test for deciding whether a trial
is required in the interest of justice. Under the full appreciation test, the
motion judge must ask: can the full appreciation of the evidence and issues
that is required to make dispositive findings be achieved by way of summary
judgment, or can this full appreciation only be achieved by way of a trial?.
See
Combined Air,
at paras. 50-51. The question whether there is a
genuine issue requiring a trial is a legal determination, reviewable on a
standard of correctness.
[48]
Sharon
submits that the full appreciation of the evidence and issues in this case
could only be achieved at a trial. In making this submission she relies on the
following passage from
Combined Air,
at para. 51:
In cases that call for multiple findings of fact on the basis
of conflicting evidence emanating from a number of witnesses and found in a
voluminous record, a summary judgment motion cannot serve as an adequate
substitute for the trial process. Generally speaking, in those cases, the
motion judge simply cannot achieve the full appreciation of the evidence and
issues that is required to make dispositive findings. Accordingly, the full
appreciation test is not met and the interest of justice requires a trial.
[49]
Sharon
says that credibility lay at the heart of this dispute and that the motion
judge was required to make highly contested findings of fact on a record replete
with conflicting evidence. Thus, he could not fairly decide this case by
summary judgment.
[50]
I
do not accept Sharons submission. Although the motion judge did not have the
benefit of
Combined Air
, I am satisfied that his appreciation of the
evidence enabled him to decide by summary judgment the issues relating to
Bessie Orfuss testamentary dispositions. The interest of justice did not
and does not now require a trial.
[51]
As
I said in the overview, the record on the motion was substantial, even
voluminous an exhibit book of 5,000 pages and 1,700 pages of transcripts of
evidence. And many witnesses 20 gave evidence either by affidavit or by
oral examination under rule 39.03. However, the size of the record, standing
alone, or even the number of witnesses, standing alone, is not a sufficient
reason to send a case to trial. The motion judge has to consider whether the
record and the issues require the making of difficult credibility assessments or
many findings of fact that are highly disputed because conflicting or
contradictory evidence. If so, then a trial is the appropriate procedure. If
not, then summary judgment may be appropriate.
[52]
Here,
I do not think that this large record with its numerous witnesses yielded the
kind of case that we said in
Combined Air
required a trial. This is
not a case where many witnesses said one thing and many other witnesses said
something else. Of the 20 witnesses who gave evidence, only three were
proffered by the appellant: Dr. Silberfeld, Dr. Shulman, and Sharon Gerstein
herself. Dr. Silberfelds voicemail messages were ruled inadmissible; but even
if they were admissible, he had no memory of his meeting with Bessie Orfus.
Dr. Shulman criticized some aspects of Dr. Dombrowers capacity assessment, but
he never met Bessie Orfus or had any direct knowledge of the matters in issue.
[53]
Sharon
Gerstein was the sole fact witness for the appellant. However, as she hardly
saw her mother, she knew little if anything about her mothers capacity. Some
of her evidence was not admissible because it was not corroborated. And
virtually all of her evidence was inconsistent with the testimony of the 17
witnesses who gave evidence for the respondents.
[54]
Thus,
the motion judge was not required to make contested findings of fact on
conflicting evidence. The motion judges task was to assess the evidence in
the record and decide whether sufficient evidence existed to show whether Bessie
Orfus had testamentary capacity and knew and approved of the contents of her
testamentary instruments. The motion judge was as well positioned as a trial
judge to undertake that assessment.
[55]
This
was also not a case where credibility was genuinely in issue.
·
Bessie Orfuss credibility was of course not in issue because she
was no longer alive.
·
Sharon Gerstein had virtually no relationship with her mother and
therefore no evidence to give about her mothers testamentary capacity.
·
Dr. Dombrowers credibility was not in issue. Although aspects of
his assessment were criticized, his credibility was not. Moreover, he is now
dead, so at a trial only a transcript of his evidence would be available.
·
The two Aird & Berlis lawyers, Lorna Schoenroth and Barbara
Lawrie, were the sole surviving witnesses to the two wills. Their evidence was
consistent: despite some concerns, they both were of the opinion that Bessie
Orfus had testamentary capacity. Although Schoenroth may be criticized for
trying to bury Dr. Silberfelds voicemail messages, no evidence was led to
impugn either her credibility or Lawries credibility on the key issue of
Bessie Orfuss testamentary capacity.
[2]
·
Dr. Shulmans credibility was not in issue. His evidence,
understandably, was given less weight because he had not seen Bessie Orfus and
could give no direct evidence of her capacity.
·
Dr. Silberfelds credibility was not in issue because he had no
memory or notes of his meeting with Bessie Orfus.
·
Botnicks and Mitnicks credibility were not in issue because neither
had any memory of the meeting at which Bessie Orfus signed her codicil.
·
Elaine Orfus, alone, could give evidence about what occurred when
her mother signed the codicil to her will.
[56]
As
this summary shows, the motion judge was not required to make and he did not
make findings of credibility that affected his determination of the issues
relating to the validity of Bessie Orfuss two wills and codicil.
[57]
An
examination of the evidence relating to the question whether Bessie Orfus had
testamentary capacity in May 2004 when she made the two challenged wills shows
why it would not be in the interest of justice to order a trial. The potential
evidence on her capacity comes from Dr. Dombrower, Dr. Shulman, Dr. Silberfeld,
Dr. Colla, Lorna Schoenroth, and Barbara Lawrie.
[58]
Dr.
Dombrower is now dead; Dr. Shulman did not see Bessie Orfus; Dr. Silberfeld
remembers nothing; and Dr. Colla, Schoenroth and Lawrie are consistent in their
opinion that Bessie Orfus had testamentary capacity. Indeed, the two lawyers
gave evidence uncontradicted evidence that they met alone with Bessie Orfus
three times and that she independently expressed her dispositive wishes wishes
that she confirmed by signing a plain language memorandum on May 31, 2004. How
then, I ask rhetorically, can it be in the interest of justice to order a
trial? The simple answer is that it is not in the interest of justice to do so.
[59]
Sharon,
however, points to what she alleges is significant evidence contradicting the
motion judges finding that Bessie Orfus knew the value of her assets. Sharon
contends that this is one example of an important issue for which there is
contradictory evidence, which should be resolved at a trial. I disagree.
[60]
The
concern about Bessies knowledge of her assets and their value comes from the
evidence of Schoenroth and Lawrie. However, a competent testator does not have
to know the precise make up of her estate. She only need know in a general way
the nature and extent of her property. See
Re Schwartz,
[1970] 2 O.R.
61 (C.A.), at p. 78, Laskin J.A. dissenting on other grounds. In this case,
the lawyers showed Bessie Orfus a chart of her assets, which she acknowledged
accurately represented their value.
[61]
In
finding that Bessie knew the value of her estate, the motion judge relied on
her acknowledgment of the accuracy of the chart as well as on her ability to
enumerate real estate values. In doing so, he rejected Sharons claim that her
mother was passive and that thus her acknowledgement should carry no weight.
As Bessie would not be available to testify, a trial judge could hardly be in a
better position to make this finding.
[62]
I
am thus satisfied that the motion judge had a full appreciation of the
evidence and the issues needed to decide this case by summary judgment. I
would not give effect to this ground of appeal.
Second Issue Did the motion judge
err by ruling inadmissible Dr. Silberfelds two voicemail messages?
[63]
When
Lorna Schoenroth began preparing Bessie Orfus 2003 wills, she worked at the
law firm of Margaret OSullivan, a senior estate practitioner. Schoenroth then
moved to the Aird & Berlis law firm, where she continued to work on
Bessies wills. In February 2004, OSullivan wrote to Schoenroth and raised
concerns about the preparation of the 2003 wills. She recommended that Bessie
undergo a testamentary capacity assessment and that Schoenroth prepare new
wills. Schoenroth followed her advice.
[64]
Schoenroth
arranged for Bessie Orfus to see Dr. Silberfeld, an experienced capacity
assessor, whom OSullivan had recommended. Bessie met with Dr. Silberfeld on
May 11, 2004, just weeks before she signed her 2004 wills. After the meeting,
Dr. Silberfeld telephoned Schoenroth and left a voicemail message in which he
said that he had the impression Bessie did not have testamentary capacity.
The full text of his message is as follows:
Hello, its Dr. Silberfeld calling. Ive had the opportunity
to meet Mrs. Orfus for the first time and its my impression that today she
would not be capable of giving her December Will, of making her December Will
that is, and perhaps you and I should speak about this. She may be capable of
making a Codicil, which I think sounded to me like it might perhaps do the job,
and we could have a look at that. 416.482.1477.
[65]
Two
days later, Dr. Silberfeld telephoned Schoenroth again and left anther
voicemail message in which he cast further doubt on Bessies capacity. The
text of the second message is as follows:
Hello, its Michel Silberfeld returning your call. I can start
by saying yes, youre right that Mrs. Orfus did know her relationships, that
she had right, but that was almost the only thing that she had right. Except a
crude knowledge of her physical assets, she knew very little about the rest.
So, there were just a number of things. Now if what youd like to do is spend
some time educating her with respect to the Will and then send her to see me,
youre right we should co-ordinate that. Next week Thursday Im travelling, so
thats not going to work. Probably the best time would be the following week
May 25
th
at a quarter to six again if you could co-ordinate your
efforts that way, then lets make a tentative over the phone suggestion that
well try to do it again at that time. Now, of course, theres no guarantee
that Im going to give the answers that you want, and I think that if youre
really searching hard for the answers that you want, then maybe your best
approach might to look around for an assessor who will give you the results
that you want, I know that that can happen sometimes just by shopping around.
So, let me know how you want to proceed and Ill be happy to help in any way I
can.
Schoenroth was sufficiently troubled by Dr.
Silberfelds messages that she took steps to bury them a process the motion
judge aptly characterized as flawed.
[66]
Dr.
Silberfeld kept no file of his meeting with Bessie Orfus and no notes of that
meeting. Seven years later when he gave evidence on the summary judgment
motion, he had no memory of the meeting at all or what he did that led to his
impression of Bessies lack of capacity. Nonetheless, Sharon sought to tender
Dr. Silberfelds two voicemail messages as opinion evidence of her mothers
lack of testamentary capacity. The motion judge ruled the voicemail messages
inadmissible, either as hearsay that was both unnecessary and unreliable or as
expert evidence that did not meet the test in
R. v. Mohan
, [1994] 2
S.C.R. 9. Sharon submits that he erred in his ruling. I do not think that he
did.
[67]
Dr.
Silberfelds voicemail messages are out-of-court statements that were not
subject to contemporaneous cross-examination. They are, therefore, hearsay: see
R. v. Khelawon
, 2006 SCC 57, [2006] 2 S.C.R. 787. Whether looked at
under the principled approach to the admission of hearsay evidence or under the
Mohan
test for the admission of expert opinion evidence, to be
admissible the two messages had to meet the requisite reliability criterion.
[68]
The
motion judge ruled, at para. 206, that the two messages did not meet the
reliability criterion for the admission of hearsay:
Perhaps more importantly, the transcripts of the voicemail
messages are not reliable because, while I accept there is no reason to doubt
that the voicemail messages were left and were accurately transcribed, Dr.
Silberfeld admits to having no recollection of meeting Bessie, no recollection
of the interview or what he did during the interview, and to having no notes,
no file and no independent memory of anything, including leaving the
voicemails.
[69]
More
significantly, however, the motion judge recognized that Sharon principally
sought to rely on Dr. Silberfelds voicemail messages as expert opinion
evidence showing her mothers lack of testamentary capacity. The motion judge
rejected that basis of admissibility because as opinion evidence the two
messages lacked reliability. He explained in some detail why he reached that
conclusion, at para. 209:
In my view, even if Dr. Silberfeld's impressions could be
said to be relevant to the issue of testamentary capacity, the reliability of
those impressions is fatally undermined by the total absence of any evidence,
or even recall, of what he did to form that impression. In the absence of
a reliable scientific foundation for the proffered opinion evidence, the
opinion itself necessarily lacks reliability. In fact, the text of Dr.
Silberfelds voicemails themselves suggest he did not conduct the scientific
inquiry necessary to form a proper opinion. Rather, he formed an impression
before
engaging in the necessary analysis, and passed that impression
on to Schoenroth so that she could decide whether, in light of his
impression, a proper analysis should even be undertaken. Dr. Silberfeld
concedes that he did not definitively conclude that Bessie lacked testamentary
capacity. His message confirms he was prepared to meet with Bessie again
once she had refreshed herself about her assets and that she might, in any
event, have capacity to execute a codicil without any further education.
There is, of course, in law no different standard for capacity to execute a
codicil as opposed to a will because codicils effectively republish the
subsisting will.
[70]
I
agree with the reasons given by the motion judge at para. 209 and, therefore, would
not interfere with his ruling that Dr. Silberfelds voicemail messages were
inadmissible. Accordingly, I would not give effect to this ground of appeal.
Third Issue Did the motion judge
err by ruling inadmissible Sharons evidence about her relationship with her
mother and her mothers lack of sophistication in business?
[71]
Section
13 of the
Evidence Ac
t states:
In an action by or against the heirs, next of kin,
executors, administrators or assigns of a deceased person, an opposite or
interested party shall not obtain a verdict, judgment or decision on his or her
own evidence in respect of any matter occurring before the death of the
deceased person, unless such evidence is corroborated by some other material
evidence.
[72]
At
para. 15 of his reasons, the motion judge summarized the content of s. 13 and
its rationale:
Section 13 of the
Evidence Act
requires that there be
corroboration of material facts alleged by an opposite or adverse party of any
matter occurring before the death of the testator. This requirement exists to
address the obvious disadvantage faced by the dead: they cannot tell their side
of the story or respond to the livings version of events:
Burns Estate v.
Mellon
(2000), 48 O.R. (3d) 641 (C.A.).
[73]
The
motion judge relied on s. 13 to exclude Sharons evidence about her
relationship with her mother and referred to s. 13 when discussing Sharons
evidence that her mother was unsophisticated in business. Sharon submits that
the motion judge erred because on both matters her evidence was corroborated.
I do not accept Sharons submission.
(a)
Sharons relationship with her mother
[74]
Sharon
swore in her affidavit that after she had a falling out with Elaine she had
difficulty continuing her relationship with her mother. But she maintained
that she continued to speak and meet with her mother outside of Elaines
presence. She also claimed that she had an excellent relationship with her
mother. Numerous witnesses testified otherwise. Nonetheless, Sharon contends
that Bessies granddaughter, Carrie, corroborated her evidence. I do not think
that she did, at least in the relevant period.
[75]
Carrie
did testify she was aware that her grandmother would motion to Sharon through a
window to come and visit her. But Carrie admitted that she had not seen Bessie
do this between September 2003 and May 2004. Therefore, she does not
corroborate Sharons testimony during the critical time period.
(b)
Bessie Orfuss alleged lack of sophistication in business
[76]
Sharon
testified that her mother was not sophisticated in business matters and did not
have the capacity to understand complex documents like wills. Although the
motion judge referred to s. 13 in connection with Sharons evidence on her
mothers business acumen he did not rely on it. Instead, he considered Sharons
testimony and rejected it. In doing so, he relied on the evidence of Dr.
Dombrower, Lawrie, and Schoenroth specifically their dealings with Bessie in
connection with the 2004 wills. This evidence was essentially uncontradicted.
[77]
I
would not give effect to this ground of appeal.
Fourth Issue Did the motion judge
err in finding that Bessie Orfus knew and approved of the contents of her
codicil?
[78]
Elaine
Orfus contacted the respondent Botnick and asked him to prepare the codicil.
She then relayed her mothers instructions to him. She said that she chose
Botnick because her mother knew and liked him and because he was less expensive
than Aird & Berlis.
[79]
Botnick
and his associate Mitnick did not speak to Bessie Orfus about her codicil.
They did not have a copy of the 2004 wills that the codicil was intended to
amend. And although they met with Bessie Orfus on December 13, 2004 so she
could sign the codicil, neither Botnick nor Mitnick has any recollection of the
meeting.
[80]
The
motion judge recognized that the execution of the codicil raised concerns. And
he excluded Elaines evidence about its execution because her evidence was not
corroborated. Although on appeal, the respondents for the first time sought to
argue that Elaines evidence was corroborated, I would not interfere with the
motion judges holding that it was not.
[81]
Still,
despite the seeming paucity of the evidence surrounding the execution of the
codicil, the motion judge found that Bessie knew and approved of its contents
and had testamentary capacity when she signed it. He wrote, at para. 230:
There is no doubt that the process followed to prepare and
execute the Codicil raises many questions and provides few answers.
Importantly, however, there is no evidence that Bessies capacity changed between
May 31 and December 13, 2004, the date on which the Codicil was signed.
There is no evidence of any medical event that occurred in Bessie's life in the
intervening six and one half months that could have affected her
cognition. Indeed:
(a) on November 5, 2004, Sharon issued her
oppression application against her mother and did not seek the appointment of a
litigation guardian;
(b) on November 25, 2004, Dr. Colla saw Bessie
and had no cognitive concerns about her;
(c) on December 14, 2004, the court entered an
order in the oppression proceeding in which Bessie was a party for the
liquidation and wind-up of the Orfus Companies. Bessie did not oppose
this order;
(d) during the winter of 2004, Bessie remained in
Florida on her own for periods of a week or so at a time;
(e) on June 22, 2005, some six months after the
execution of the Codicil, Dr. Colla saw Bessie and had no cognitive concerns
about her; and
(f) in August 2004 and 2005, Dr. Colla certified
to Baycrest that there were no neurological issues with Bessie so that she
could participate in the swimming program there.
[82]
Sharon
submits that the motion judge erred in making this finding. She argues that
the respondents had the onus to prove that Bessie knew and approved of the
contents of her codicil and that in the absence of any evidence from Botnick
and Mitnick they failed to do so.
[83]
This
is the most difficult issue on the appeal. Admittedly, Bessie Orfus duly
signed her codicil. And, ordinarily on proof of due execution, it will be presumed
that the testator knew and approved of the contents of the testamentary
instrument and had testamentary capacity. But that presumption will not apply
where suspicious circumstances are present: see
Vout v. Hay
, [1995] 2
S.C.R. 876, at p. 889. Here, the motion judge correctly found that suspicious
circumstances existed. They existed because Elaine provided all the
instructions for the codicil to Botnick and because she benefited from the
codicil by receiving half the assets that had been designated for Sharon under
the 2004 wills.
[84]
Thus,
the estate trustees could not rely on the presumption. They had to prove on a
balance of probabilities that Bessie Orfus knew and approved of the contents of
her codicil, indeed that she had testamentary capacity. The motion judge found
that they met their burden, and I am not persuaded that he erred in making that
finding.
[85]
As
the motion judge noted, no evidence was led that Bessie Orfus lacked
testamentary capacity in December 2004 or that her cognitive abilities had
changed in any way between May and December 2004. In addition to this
negative evidence, however, there are two cogent pieces of positive evidence
that reasonably support the motion judges finding.
[86]
The
first and most important piece of evidence is Sharons stance in the oppression
litigation she commenced against her mother and others. In that litigation,
Sharon never alleged or told the court that her mother was a party under
disability. Instead, she accepted her mothers consent to the winding-up of
the Orfus companies, from which she received a $9 million payout.
Significantly, the winding-up order was made on December 14, 2004, one day
after Bessie Orfus signed her codicil.
[87]
The
second piece of evidence that supports the motion judges finding is the
testimony of Dr. Colla, who had been Bessie Orfus family doctor for 14 years.
Dr. Colla saw Bessie just a few weeks before she signed the codicil. He
testified that when he saw her he had no concerns about her cognitive
capacity.
[88]
For
these reasons, the motion judge did not err in finding that Bessie knew and
approved of the contents of her codicil and had testamentary capacity when she
signed it. I would not give effect to this ground of appeal.
D.
the cross-appeal on costs
[89]
In
McDougald Estate v. Gooderham
(2005), 255 D.L.R. (4th) 435 (Ont. C.A.),
this court said that the costs rules in civil litigation apply to estate
litigation unless one or more public policy considerations come into play. Gillese
J.A. set out these policy considerations, at para. 78:
The practice of the English courts, in estate litigation, is to
order the costs of all parties to be paid out of the estate where the
litigation arose as a result of the actions of the testator, or those with an
interest in the residue of the estate, or where the litigation was reasonably
necessary to ensure the proper administration of the estate. See
Mitchell
v. Gard
(1863), 3 Sw. & Tr. 275, 164 E.R. 1280 and
Spiers v.
English,
[1907] P. 122. Public policy considerations underlie this
approach: it is important that courts give effect to valid wills that
reflect the intention of competent testators. Where the difficulties or
ambiguities that give rise to the litigation are caused, in whole or in part, by
the testator, it seems appropriate that the testator, through his or her
estate, bear the costs of their resolution. If there are reasonable
grounds upon which to question the execution of the will or the testators
capacity in making the will, it is again in the public interest that such
questions be resolved without cost to those questioning the wills
validity.
[90]
The
motion judge found that Sharon had reasonable grounds to challenge her mothers
testamentary capacity to make the 2004 wills and codicil.
[91]
The
motion judge also discounted an offer to settle made by the respondents about
seven months before the motion was heard. He was not persuaded that the
judgment obtained by the respondents bettered their offer, but even if it did,
he would have exercised his discretion to order otherwise under rule 49.10(1).
Therefore, the motion judge ordered no costs of the motion in effect each
side had to bear its own costs.
[92]
The
respondents do not have a right to appeal costs. They must first obtain the
leave of this court to do so. They properly acknowledge that this court rarely
grants leave to appeal costs orders. Costs orders are an exercise of judicial
discretion. A party seeking to appeal a costs order must make out a strong
case that the judge made a reviewable error in the exercise of this discretion.
[93]
The
respondents submit that the motion judge made two errors in the exercise of his
discretion, either of which warrants leave being granted. First, they submit
that though Sharon may have had reasonable grounds to launch her will
challenge, those reasonable grounds evaporated once the evidence unfolded and
the motion judge erred by failing to so find. Second, they submit that their
offer to settle was a proper Rule 49 offer, which the motion judge should have
given effect to because the result the respondents obtained was more favourable
than their offer. If leave to appeal costs is granted, the respondents seek
substantial indemnity costs of $397,062.25 or partial indemnity costs of
$250,000.
[94]
I
would not grant leave to appeal costs. In my opinion, the motion judge did not
commit a reviewable error in the exercise of his discretion.
(a)
The application of
McDougald Estate v. Gooderham
[95]
At
paras. 8 and 9 of his costs endorsement, the motion judge set out why he found
Sharon had reasonable grounds to challenge the validity of Bessie Orfus wills
and codicil:
I concluded, in effect, that while there was smoke, there was
no fire. However, I do not think it can be said that there were no
reasonable grounds for Sharon to raise these challenges to Bessies capacity.
Bessie lived with Elaine. There were, as I found in my Judgment, suspicious
circumstances surrounding the execution of the Codicil. Questions were raised,
even by Bessies lawyers, about her capacity in relation to understanding the
full extent of her assets. The process followed by Aird & Berlis
concerning Bessies testamentary capacity and, more specifically, the attempts
to protect the 2004 Wills against the very type of challenge that was
ultimately made, was flawed.
The fact that Sharon was unsuccessful cannot mean that it was
unreasonable for her to have raised these questions. Obviously, there must be
something more. I am, however, not satisfied that there was enough of this
something more to warrant the conclusion that Sharons challenge to the 2004
Wills and Codicil was unreasonable.
[96]
Of
the considerations the motion judge referred to in para. 8, the fact that
Bessie lived with Elaine was the sole consideration known by Sharon when she
launched her challenge. The other considerations only became evident as the
evidence unfolded. Thus, I am satisfied that the motion judge considered
whether Sharon had reasonable grounds both to launch her challenge and to pursue
it. He found that she did. He did not err in making this finding.
(b)
The respondents offer to settle
[97]
The
respondents offered to settle the litigation on the following terms:
·
Sharon would agree that the two wills were valid and would not
litigate their validity.
·
Sharon could proceed to trial on the question whether the codicil
was valid.
·
Sharon would pay the respondents costs on a partial indemnity
basis up to the date of the offer.
·
Sharon would pay the respondents costs on a substantial
indemnity basis after the date of the offer.
Sharon did not accept the offer to settle.
[98]
The
motion judge did not give effect to the offer. He said at paras. 11 to 12 of
his endorsement:
I am not sure it is correct to say that the applicants received
a judgment better than this offer. I say this because, in effect, all that was
offered to Sharon was a chance to attack the Codicil which, in light of my
Judgment, would not have been successful.
In any event, even if it could be said that the judgment was
better than the offer, it is not, in my view, the sort of offer which, in the
circumstances of this case, should attract liability for substantial indemnity
costs. Even if I agreed with the applicants about the status of the offer,
therefore, I would have ordered otherwise under Rule 49.10.
[99]
I
am inclined to agree with the motion judge that because of the costs component
of the offer, the respondents did not obtain a result more favourable than
their offer to settle. However, even if that is not correct, the motion judge
did not err in the exercise of his discretion by invoking the proviso in rule
49.10, unless the court orders otherwise.
[100]
For these
reasons, the respondents have not persuaded me that they have a case to appeal
the motion judges costs order. I would deny leave to appeal.
E.
conclusion
[101]
I conclude that
the motion judge did not err by:
(a) granting
summary judgment;
(b) ruling
inadmissible Dr. Silberfelds two voicemail messages;
(c) ruling
inadmissible Sharon Gersteins evidence about her relationship with her mother
and rejecting her evidence about her mothers lack of sophistication in
business matters; and
(d) finding
that Bessie Orfuss knew and approved of the contents of her codicil.
[102]
I would,
therefore, dismiss Sharon Gersteins appeal.
[103]
I also conclude
that the motion judge properly applied this courts decision in
McDougald
Estate v. Gooderham
on costs in estate matters and that he properly
discounted the respondents offer to settle. Accordingly, on the respondents
cross-appeal of the motion judges costs order, I would deny leave to appeal.
[104]
The parties may
make brief submissions in writing on the costs of the appeal and the
cross-appeal within 15 days of the release of these reasons.
Released: Apr. 10, 2013 John
Laskin J.A.
JL I
agree Robert J. Sharpe J.A.
I
agree Gloria Epstein J.A.
[1]
Summary judgment is available in will challenge cases. See, for example,
Smith Estate v. Rotstein
, 2011 ONCA 491,
106 O.R. (3d) 161.
[2]
See paragraph 65 of these reasons.
| 5 |
Hearing date: 14 November 2013
HIS HONOUR JUDGE SYCAMORE:
This is a rolled up hearing of an application for judicial review by which the claimants, LH and CM, each appearing by their Litigation Friends, seek to challenge the decisions of the defendant, Shropshire Council:
i) (the first claimant) to close Hartley's Day Centre in Shrewsbury, a centre for adults with a learning disability,
and
ii) (the second claimant) according to the claimants' skeleton argument, is against a wider general decision to refuse to consult the users of 16 other centres in the County that may be closed down in the future. The second claimant attends one of those centres at Church Stretton (comprising Mayfair and Oak Farm).
Both claimants have learning disabilities. The first claimant is 63 and her litigation friend is her sister. The second claimant is 43 and her litigation friend is her father.
In summary, the claimants say that the defendant has failed to lawfully consult on the closure of Hartley's Day Centre and that the failure to consult before closing other day centres is similarly unlawful.
I summarise the procedural history as follows:
(i) the application was lodged on 11 October 2013 in London.
(ii) on 11 October 2013 His Honour Judge Thornton QC, sitting as a Judge of the High Court, considered the application for interim relief on the papers. He directed an oral hearing and also required that a meeting take place "to discuss the claimant's situation, her revised care plan and all other relevant matters in an attempt to provide sufficient reassurance and explanation to the claimant, her litigation friend and other family members, so as to enable the judicial review proceedings to be compromised or withdrawn."
(iii) on the 15 October 2013 the oral hearing for interim relief was heard in London by His Honour Judge Keyser QC, sitting as a Judge of the High Court. The judge dismissed the first claimant's application for interim relief with costs and gave directions for the rolled up hearing, including a direction that it should be heard in Manchester.
(iv) on 23 October 2013, by a consent order, the defendant provided an undertaking in respect of Hartley's Day Centre, including an undertaking, pending the rolled up hearing, not to close the centre.
The matter was listed for hearing on 14 November 2013. On 5 November 2013 the claimant issued an application to add a further ground of challenge, relating to the defendant's Delegated Decision Making Protocol. I refused that application on 14 November 2013, having heard submissions from both parties.
The hearing proceeded on the basis of two grounds of challenge:
(i) in respect of the form of the consultation undertaken by the defendant and as to whether this was sufficient to meet the requirements of lawful consultation; and
(ii) that the defendant failed to comply with its Public Sector Equality Duty (PSED).
I deal first with the question of permission. In respect of the first claimant I am satisfied that there is an arguable case and I grant permission. Although the defendant resists on the basis, inter alia, that the claimant failed to act promptly, I am satisfied, given that the proceedings were issued within 3 months of the decision and the explanation given by the claimant's solicitors, particularly in relation to funding issues, that, notwithstanding what the defendant says it cannot be said that the first claimant did not act promptly.
As to the claim brought on behalf of the second claimant, in my judgment, the application is premature. There has not been a decision to close, nor is the defendant planning to close Church Stretton, the centre which is attended by the second claimant. The argument advanced on behalf of the second claimant in the claimants' skeleton argument, on which counsel relied at the hearing, is in very general terms. It is said it is that is of vital importance to the second claimant to establish the principle that she must be consulted before the day centre she attends is closed. The defendant explicitly denies that it must so consult. The skeleton argument goes on to say, given that there is already a judicial review on foot challenging the defendant's approach to consultation, it is appropriate for the court to consider the wider issue raised ie wider than just relating to Hartley's. It seems clear, says the claimant, from what the defendant has said there is a high likelihood of further closures and another family should not have to come back to court in the future to establish this basic point. It is said in the skeleton argument that another judicial review claim has been filed and the determination of the 2nd claimant's claim will wholly or largely determine the other judicial review claim. It is said the defendant has shown that it is capable of acting with very great haste in the closure of facilities where it wishes to do so.
The defendant's evidence, taken from the statements of Stephen Chandler, the Director of Adult Services of the defendant, of the 28 October 2013 and 11 November 2013, and in particular, exhibit SC/8 to the first of those statements, is to the effect there are no plans to close Church Stretton although a different service provider may operate the service in the future, with the defendant remaining as Commissioner of Services. Should the position change and a contrary decision be made, then that would be the appropriate time for challenge. Absent any decision in respect of Church Stretton, the second claimant's challenge is premature and/or academic and permission is refused.
The claimants sought to argue that as their solicitors are also instructed by other service users in judicial review proceedings, the outcome of this case would be largely determinative of those other claims. I disagree. This hearing is concerned with the specific circumstances of the two claimants. I have already determined that permission is refused in respect of the second claimant and will now consider the merits of the first claimant's application in respect of which permission has been granted.
The essential issue between the parties is as to the extent of consultation. The defendant's consultation was concerned with the future of day services generally within the county. The claimant maintains that the consultation was taken at too high a level of generality and that it should have been extended to the inclusion of representations on the closure of specific day centres and the timing of such closures.
Hartley's Day Centre has now effectively closed as no users are attending although I am informed that notice period under the lease does not until a date in December 2013. The first claimant had been attending for over 11 years. Until January 2013, she attended four days a week. Since January 2013, when her care package was amended, she was, until closure, attending on Tuesdays and Wednesdays only and attending other centres on the other days. The numbers attending had reduced significantly by the time the decision was made to close it on 1 August 2013.
I will be considering the nature and content of the consultation. It is the case that the claimant challenges some of what is said by the defendant as to what occurred and what was said by the defendant and respondents in the course of the consultation. The claimant sought to argue that I should not adopt the approach urged upon me by the defendant that, where in judicial review proceedings, there is a conflict of fact, the court should proceed on the basis that it should not generally interfere with a public authority's assessment of the evidence or facts. Although the claimant referred to two authorities to be found in Fordham's Judicial Review Handbook sixth edition at 17.1.4 and 17.3.7, R (Gentle) v London Borough of Newham (1994) 26 HLR 466 and R Hendry v Leeds City Council (1994) 6 (Admin) LR 439, I am not persuaded that it is appropriate to depart from the established principle that where there is no reason to doubt the defendant's version of the facts, as is the case here, the proper course is to proceed on the basis that the defendant's evidence is correct.
As to the applicable legal framework in relation to the duty to consult, the claimant's submission was that a Wednesbury approach was inappropriate, arguing that the duties were of procedural fairness and that the defendant was wrong to say that the nature and extent of the consultation was a matter for it. In (AK) Iran v Secretary of State EWCA Civ 941, at paragraph 25 per Sedley LJ:
"I say 'right' rather than 'entitled' because what fairness requires is in principle a matter of law once the facts are established. A reviewing or appellate court is not confined to the bare rationality of the decision."
and R v MMC ex parte Stagecoach Holdings Ltd The Times 23 July 1996 QBD Collins J summarised in the Times report as follows:
"The key sentence was that in which the judge applied the Wednesbury test (referring to the judgment of Macpherson J in R v MMC ex parte Matthew Brown Plc [1987] 1 WLR 1235). His Lordship respectfully disagreed with that approach. Natural justice or fairness was a requirement that the common law through the judges grafted onto the statutory provisions which gave power to persons or bodies which could adversely affect individuals. It was for the court in any given case to decide what fairness required."
Conversely, says the defendant, where there is no statutory duty to consult but the public authority chooses to do so, the nature and extent of the consultation is a matter for it–and referred to R (H) v Birmingham City Council EWHC 3754 (Admin) His Honour Purle QCat paragraph 14:
"The defendant council chose to carry out public consultations in relation to the FASBC review. It was not under any obligation to do so and, subject to the limits of rationality, the extent of the consultation process was a matter for it …."
and at paragraph 23:
"The real issue in this case is whether or not the defendant council was justified in treating the consultation process which they undertook as being limited to, and I use this as shorthand, processes and accessibility to the system rather than outcomes."
and as to the applicability of the Wednesbury test (R Wainwright)) v LB of Richmond upon Thames [2001] EWCA Civ 2062, Clarke LJ at paragraph 11:
"11. They do not, however, provide a complete answer to the question which arises for decision in this case. Thus, they do not address the question what is the necessary extent of the notification or consultation required in order to discharge the duty. As McCullough J pointed out, all will depend upon the circumstances. For example, a national project with wide implications for society as a whole will require far more extensive consultation than the installation of a pedestrian and cycle crossing. Provided that the notification and consultation satisfy the principles set out above, it appears to me that council must have a comparatively wide discretion as to how the process is carried out. The council cannot be in breach of duty unless the extent of the consultation process was such as to be outside the ordinary ambit of its discretion. In short, in order to be unlawful the nature and extent of the process must be so narrow that no reasonable council, complying with the principles set out above, would have adopted it."
For my part that represents the correct approach which in turn has to be determined by the particular circumstances and subject matter. I agree with counsel for the defendant that the duty does not extend to consulting on what is not viable and that the burden is on the claimant to demonstrate what the decision-making approach was unfair, not for the defendant to disprove.
In considering whether a procedure is unfair it must be judged in the light of practical realities, see Bushell v Secretary of State for the Environment [1980] AC 75 at page 95:
"What is fair procedure is to be judged not in the light of constitutional fictions as to the relationship between the minister and the other servants of the Crown who serve in the government department of which he is the head, but in the light of the practical realities as to the way in which administrative decisions involving forming judgments based on technical considerations are reached."
Finally, when considering the legal framework for consultation, I remind myself that consultations in respect of changes in health or social services provisions should not be technical or legalistic. The consulting body must decide what information to provide to consultees - see R v Copsur v Dorset Health care University NHS Foundation Trust and NHS Dorset His Honour Judge Keyser QC, at paragraph 51:
"51 (1) …. the authorities on the lawful requirements of consultation do not have the effect of imposing on the decision maker a requirement to provide the consultees all of information that would be material to the decision making process.
(2) There is also a practical consideration. If the purpose of the consultation is not to turn service users into surrogate decision-makers but to obtain input from them as people liable to be effected by any changes to the provision of services, is by no means obvious the process is well served by an overly technical or legalistic approach. The nature and purpose of the consultation cannot be ignored and the judicial decisions on lawful consultation do not require that they be so ….
(8) ….The nub of the claimant's case, as advanced before me, was not that the results of the consultation had been ignored but that insufficient information had been provided to service users to enable them to engage in the process in a meaningful way. I reject that criticism. In my judgment the defendant provided sufficient information about the proposals, to enable service users to make informed responses in respect of the range and delivery of services and the effect of the proposed alterations on them and other service users."
The claimant's case in relation to consultation in essence is that the process which preceded the closure of Hartley's did not satisfy the requirements of lawful consultation and maintains that the duty extended to consultation in respect of a decision to close an individual centre and that as a small and limited class of persons affected by the decision, users of Hartleys had a legitimate expectation they would be consulted prior to any decision to close it. The claimant relies on evidence from a number of individuals, including users stating that they did not know or were not told that centres would close.
On behalf of the claimant criticism is made of the general nature of the consultation and the lack of invitation for representations on proposals to close specific centres. In particular, it is said there is no reference to this in the consultation presentation material.
As I have already indicated, where there is a conflict of fact in this case, I proceed on the basis that the defendant's evidence is correct.
The defendant's case is that the consultation was a high level and appropriate exercise on the future of day care services in its area and that the public did understand that Day Centres would close. What people were telling the council was, in terms, not to do it.
By way of illustration from the evidence I refer to the Power Point presentation prepared by the defendant for the meetings which took place at the Day Centres. For example, one of the questions in that presentation was:
"Can I go back to the day centre if things don't work out? Answer: this may not be possible but we will help you to find something that works better."
Also, I mention the feedback from various consultation events in 2011 and 2012 from which it is clear that the defendant was aware that people were aware of potential Day Centre closure plans and were expressing concern.
By way of illustration on 29 July 2011 one participant said:
"My son's independence is going to shrink without the day centres. I am happy with what we currently have. My worry is around when the day services are gone."
On 4 August 2011 another participant:
"This is a time of anxiety, especially regarding closures of day centres. Change always creates fear. The council should support people through the changes."
Another:
"The table agreed that personalisation will lead to greater choice and control for adults. People like the idea of being able to stay at home with support rather than going to a day centre (or at least to have the option)."
On 24 August 2011:
"Many were particularly complimentary about Mayfair Centre in Church Stretton. Day centres offer consistent support and reassurance to parents that a child's need are met all day."
In 25 April 2012:
"The day centre is important so that I can meet my friends. I like the routine of the day centre. What would happen if day services weren't here?"
The 30 April 2012:
"Please do not close my day centre, I need the respite as a family member and my daughter needs the interaction. The day centre is part of my son's life. He doesn't want to do other activities so I want to pay for the support he needs to be at the day centre."
The 11th May 2012:
"Is this the end of the Bradbury Centre? Don't want day centre to close. Will personalisation mean that service users have to go to day care less often and therefore the centre will have to close? Attending the day centre is important to me as it gives my wife a break from caring for me."
Essentially, what was being said at those meetings was the same as what is said in the claimants' witness statements. As such no new point is identified which the defendant ought to have taken into account and which would have led to a different conclusion. It would, says the defendant, have been disproportionate to consult in respect of Hartley's as contended for by the claimant and not in relation to other specific changes. In any event Hartley's was significantly underused by the time of the decision and proper arrangements had been made for all the individuals affected, including the first claimant, following individual needs assessments.
In my judgment the challenge under this ground must fail. First, this was about the council's consultation in respect of delivery of day centre services generally in the County, and reconfiguration. It has to be distinguished from the type of proposal which would result in the withdrawal of services entirely. It is clear from an analysis of the feedback from the various consultation events at which the defendant engaged with relevant groups that there was no misapprehension about the fact that some day centres would close and that members of the public expressed their views about those proposals, to which the defendant had regard when making its decision. The nature and scope of the consultation, a matter for the defendant, was in my judgment, appropriate against the background of both the subject matter and those affected.
There is no evidence to support the argument for legitimate expectation. No express representation was made by the defendant in respect of further consultation in relation to any individual centre; indeed, as is pointed out on behalf of the defendant, it is impossible to separate the interests of the users of Hartley's from all the other users of social services in the area.
There was no justification to involve those users in a more detailed and, necessarily, costly consultation than other users. In summary, against a background in which a need for modernisation of service provision had been identified and an extensive consultation with all users as to potential closure of day centres had been undertaken, there cannot be said to have been any legitimate expectation of further individual consultation in respect of each individual day centre as to its future. Such a consultation in any event would have been disproportionate and inappropriate. I reject the claimant's argument based on the lawfulness of the consultation.
I deal now with the Public Sector Equality Duty challenge. It was agreed that the defendant was under a duty to have regard to the matters set out in section 149 of the Equality Act 2010 when exercising its functions. The defendant did carry out an equality impact assessment (EIA). The claimant's case is that the EIA is inadequate and suggests that the EIA was a rear-guard action by the defendant to justify a decision already made. Both parties agreed that the decision of the Court of Appeal in R (Bracking) v Secretary of State for Work and Pensions [2013] EWCA Civ 1345 correctly defines the relevant legal framework. It is important to keep in mind that this case is concerned with the reconfiguration, not withdrawal of services within the county. Bracking was concerned with a challenge to the decision of the Secretary of State for Work and Pensions to close the Independent Living Fund. This would have led to withdrawal of that benefit. As McCombe LJ made clear in Bracking, the 2010 Act imposes a heavy burden upon public authorities in discharging the PSED and in ensuring that there is evidence available, if necessary, to demonstrate the discharge.
The equality impact needs assessment (EINA) was completed by the defendant on 24 July 2013. The decision was made on 1st August 2013. In considering this aspect of the challenge I have considered the requirements set out in the documented process, namely a two-stage process which involves, first, an initial assessment and preliminary consultation. The documentation explains that in relation to the various protected characteristic groups, which includes disability and age, if there is either a Significant (High) negative impact or a Significant (High) positive impact in respect of any of the protected groups than a full ENIA is required. If the impact is medium or low then only a Part 1 initial assessment is required.
In this case the impact was found to be low in most categories but medium in the following:
"Disability Medium. The existing in-house day services support adults with learning disabilities who will be supported to access alternative means of support using personal budgets.
Age. Medium. Most day services are for people aged 18 to 65. There are also day services for over 65. All age groups will be supported through personal budgets to choose alternative provision and support."
Those findings were developed in the Full EINA section of the form although, as I have indicated, there was no requirement for a full EINA as there were no findings of Higher Impact. The form accurately records that there had been consultation in 2011 and 2012, as was the case, and that there was ongoing Individual Service consultation from August 2013.
The claimant maintains that the lack of consultation bears directly on this exercise and that it amounts to a box ticking exercise and is not evidence based. I have already indicated my findings in respect of the consultation, which I do not consider to be lacking. In my judgment, a reading of the EIA and the Council Report, which included the information from the 2011 and 2012 consultations, demonstrates the defendant took an appropriate analysis in reaching its conclusions on Impact and complying with its duties under section 149. It had appropriate and adequate information to reach the conclusions it did in respect of impact on the protected groups and reached conclusions which were open to it on the available evidence. I reject the claimant's argument based on PSED.
For the reasons which I have given this claim for judicial review is dismissed.
MR AUBURN: I am grateful for the judgment.
HIS HONOUR JUDGE SYCAMORE: I understood from an e-mail yesterday that you wanted to deal with consequential matters in writing by 4 o'clock on Friday. If you prefer to deal with them now, I have no difficulty with that.
MR AUBURN: I am sorry, I did not see that.
HIS HONOUR JUDGE SYCAMORE: It came from your clerk on behalf of all parties Counsel, I think, are from the same chambers.
MR AUBURN: It is not something I am aware of.
HIS HONOUR JUDGE SYCAMORE: Somebody thought they were looking after your interests. I am not sure I have the print of the email to hand.
MR AUBURN: Not that I am aware.
MR TARBURY: My Lord, I am only aware that submissions on costs had to be made by Thursday. I do not know about any other relief issues.
MR AUBURN: Very well.
HIS HONOUR JUDGE SYCAMORE: The e-mail did not specifically refer to costs but if you are both in a position to deal with matters today that would be preferable.
MR AUBURN: The (inaudible) standard we can deal I would be grateful.
HIS HONOUR JUDGE SYCAMORE: Yes.
MR AUBURN: Those that I wanted to deal with (i) appeal; (ii) we ask for detailed assessment of the (inaudible) funded costs and (iii) I want to ask you to make an order in relation to the transcript.
Dealing with the first matter, we seek permission to appeal the refusal of the application for judicial review in respect of the first claimant, and if it is necessary to apply to your for permission in respect of the second claimant.
HIS HONOUR JUDGE SYCAMORE: In respect of the second. Do you not have to make your application to the Court of Appeal?
MR AUBURN: I think that is why ... completely clear, which is why I wanted to mention more out of an abundance of caution, in light of 52.15.4, entirely clear --
HIS HONOUR JUDGE SYCAMORE: Let me look.
MR AUBURN: 52.15.4 which says --
HIS HONOUR JUDGE SYCAMORE: Let me get the page. Let me have a look. 52.15 subparagraph 4.
MR AUBURN: Yes, the White Book, which says that the substance of the application is an application to appeal albeit it is refusal of permission. Though the rule it is said it seems to indicate you apply to Court of Appeal, I wanted to make sure that we are not struck out in any way by applying to you, that is sort of thing. That is the emerging second point. I can develop the submission if you want. I was to leave it at that.
In relation to the first claimant, who applied for permission to appeal (inaudible), the application for judicial review we rely on both grounds. In relation to merit, in that there is a real prospect of the notwithstanding your judgment, the Court of Appeal may take a different view. This is a straight matter of law, albeit in a factual context but nonetheless a matter of law as to the requirements of the lawful consultation and there is an issue as to whether that includes informing consultees of what sentence (inaudible) may enclose. We say that that as well as other matters involved as well as the issue of whether the test for the national extent of consultations is a Wednesbury one, or simply a matter of the court determine requirements, matters of Australian law on which the Court of Appeal take a different view, judgment.
I also apply on the basis these are matters of real wider importance, wider importance both to others within the borough, who will be affected by the possibility of closures without what we say is consultation today on enclosure the centre and indeed outside the borough as to the way in which that case closures such as this are managed. Because we know that in these times, unfortunately, there are closures in other parts of the country and it is a matter of real importance that we all know how, what requirements of the (inaudible) in relation that matter generally. So that is the application to appeal. I can leave that there and deal with the other two matters deal.
HIS HONOUR JUDGE SYCAMORE: Yes I will hear from Mr Tarbury.
MR TARBURY: My instructions are to be only here to take a note of your judgment I am afraid. I am not fully briefed to resist an application for permission to appeal. I can ring and find out.
HIS HONOUR JUDGE SYCAMORE: I do not really think it is essential to delay matters for you to take instructions. As I indicated at an earlier stage, I take the view the first claimant's application is concerned with the particular circumstances of this case. I have explained that in my judgment. I am not satisfied, having listened to the submissions by Mr Auburn that there is either a real prospect of success or any other compelling reason why the appeal should be heard. So I refuse the application for permission to appeal in respect of the first claimant.
I am asked to consider the position of the second claimant in respect of whom I have refused permission. It seems to me that it is a matter properly for the Court of Appeal but, I observe that had it been a matter in respect of which permission to appeal fell to be considered by me then for the same reasons I would have refused permission.
The other matters relate to detailed assessment. I am perfectly content to make that order in the usual way.
MR AUBURN: I am very grateful.
The last matter is the transcript of the judgment be prepared as soon as possible.
MR AUBURN: In the terms of the order but I am asked to say to you that what would be very helpful to aid expedition of the transcript, is I am sure you would any way, what is important to the transcribers is the recording is delivered to the transcribers as soon as possible.
HIS HONOUR JUDGE SYCAMORE: I cannot direct that, but I agree it will be helpful to have the transcript prepared as soon as possible.
What about defendant's costs. Are you instructed to make an application for costs on the usual basis not to be enforced without leave?
MRTARBURY: I am not I am afraid. I can find out. I imagine they will be seeking --
HIS HONOUR JUDGE SYCAMORE: Mr Auburn, if I stand the matter down for a short time, for a phone call that would save written submissions. I suspect that if that application is made you probably will not be in a position to resist it.
I would have anticipated an application in the usual way for the defendant's costs not to be enforced without leave given that the claimants have public funding.
MR AUBURN: I assume so.
HIS HONOUR JUDGE SYCAMORE: If we can deal with that today it is probably better from everybody's point of view, and you can leave knowing exactly what the order is going to be.
MR TARBURY: I am already aware and I am told by Fennella Morris QC that submissions on costs are expected by Thursday, by tomorrow.
HIS HONOUR JUDGE SYCAMORE: I will rise for 15/20 minutes and if the matter can be resolved then all the better. If it cannot, then I will have to deal with it on written submissions.
(Short Adjournment)
MR AUBURN: My Lord, the defendants confirm that they do seek these costs and we do not resist the application, with the usual wording of being publicly funded.
HIS HONOUR JUDGE SYCAMORE: Thank you - so order.
I am not sure it is necessary to record in the order that I would like the transcript to be dealt with as soon as possible.
MR TARBURY: My Lord, we have had that before in other cases and the purpose is obviously that if we are making an application to the Court of Appeal, then obviously benefit from having a transcript as soon as possible. I can show you another recent order.
HIS HONOUR JUDGE SYCAMORE: I am not going to make a great issue of it. I am not sure the extent to which it could be enforced against anybody.
MR TARBURY: Thank you my Lord.
HIS HONOUR JUDGE SYCAMORE: The defendant has no objection to this I take it.
MR TARBURY: No.
HIS HONOUR JUDGE SYCAMORE: Very well, if it helps I am not sure to what extent it will assist.
MR AUBURN: From experience it does help in discussions with the transcribers in relation to their priorities and whether they produce a transcript.
HIS HONOUR JUDGE SYCAMORE: Very well I make an order in these terms. Thank you both for your assistance. | 2 |
LORD JUSTICE CHADWICK: This is an appeal from an
order made on 18 April 2006 by Mr Anthony Elleray QC, sitting as a deputy
judge of the High Court in the Chancery Division, in proceedings brought
by the appellant, Mr Leslie Goodchild, to set aside two transfers of property,
known as the Orchard, Mill House, Bledlow in Buckinghamshire. The first of
those transfers is dated 15 February 2001 and was made by the appellant by way
of gift to his great nephew, the first respondent,
Mr Shane Bradbury. The second transfer is dated 5 June 2001 and was
made by Mr Shane Bradbury to the second respondent, Mr Stephen Hillier,
for a consideration of £1,800.
The basis of the appellant's claim was that the
first transfer was procured by the exercise of undue influence and so should
be set aside in equity; and that the subsequent transferee, Mr Hillier, took
his transfer with notice that the first transfer was liable to be set aside
because he knew all the facts.
The appellant was born on 5 May 1923, so he was some
77 years of age when he executed the first transfer in February 2001. He
brings these proceedings by his litigation friend, a solicitor to whom he gave
an enduring power of attorney in February 2003. In March 2003, that power was
registered on the basis of the attorney's belief that the appellant was then
becoming incapable of managing his affairs.
The appellant was one of the four children of his
parents. His brother was killed in the last war; one sister, Mrs Ivy Bradbury,
died in 1988; and the other, Miss Doris Goodchild, died in 2002. Mrs
Ivy Bradbury was the grandmother of Mr Shane Bradbury. There are two other
grandchildren, Alicia and Tracey, the sisters of Shane. Alicia Bradbury is the
co-attorney of the appellant.
The appellant inherited Mill House Farm from his
father, who died in the late 1940's. His sister Doris inherited a neighbouring
farm, Pitch Green Farm. The appellant lived with his sister at Pitch Green
Farm until the early 1970s, when he moved to Mill House, although he continued
thereafter to take his meals at Pitch Green Farm. It was clear that there was
a very close – although, it seems, often stormy -- relationship between the
appellant and his sister. Miss Doris Goodchild moved to live with him in Mill
House in the mid- 1980s. She remained there until 1998.
As I have said, Mrs Ivy Bradbury died in 1988. She
was survived by her husband, Mr Arnold Bradbury. At or about the time of
his grandmother's death, Mr Shane Bradbury moved in to live with his
grandfather at a house known as Hill View, which was also in the
neighbourhood. Mr Shane Bradbury moved from Hill View to live with the
appellant at Mill House soon after Miss Doris Goodchild had moved out. She
went to a nursing home in 1998. The appellant and Mr Shane Bradbury then lived
together at Mill House from 1998 until the beginning of 2003. The appellant
then moved out of Mill House and went to live at Hill View, which had become
vacant on the death of Mr Arnold Bradbury at the beginning of that February
2003.
The property, which was the subject of the two
transfers dated respectively 15 February and 5 June 2001, is a plot of one
acre or thereabouts adjacent to Mill House, which, at the time of the first
transfer, was in the ownership of the appellant as part of
Mill House Farm. The circumstances in which the first transfer was
executed were described by the judge at paragraphs 66 to 69 and 72 to 75 of
his judgment. After referring, at paragraph 62, to the fact that, in August
1999, Mr Shane Bradbury brought his future wife, now Mrs Vikki Bradbury, to
live at Mill House and that, by the Autumn of 2000, they had decided to marry,
the judge went on to say this:
"66. The planned wedding was the catalyst for the gift of the
Orchard by Les to Shane as a wedding present. Mr Hiller became involved.
As he has pleaded and asserted, Les in telling him of the gift said 'The
field was no good to me and I have got enough land, boy." Mr Hiller tells
me he acted in effect for Les and Shane in arranging the transfer of the
Orchard. As he saw it, Shane was no more able than Les, to arrange a legal
matter such as a transfer of land.
"67. Following a phone call, on 30 October 2000, Mr Hiller
wrote to Blaisers Mills Winter Taylors ('Blaisers'), High Wycombe
solicitors. He wrote, 'Uncle Les wishes to transfer over one acre of land
to my friend Shane as a wedding gift at the start of December latest'. He
enclosed the deed which Les and Shane had given him. It is not obvious why
Blaisers were chosen by Mr Hillier. They had not acted for him before. If
they had acted for Les, that had been well in the past.
"68. At Blaisers, the file was handed to an assistant
solicitor Mr Seager. On 6 November 2000 Mr Hillier visited him. Mr
Hillier again said that the matter was a wedding gift. He told Mr Seager
that Shane would probably try to build a house on the land. Mr Seager
noted the need for a site meeting to decide matters such as access and
covenants restrictive of building. He identified the need for a plan.
"69. The site meeting took place on 13 November 2000. Mr
Seager's unchallenged account of it is backed by his attendance note. He
was met outside the farmhouse by Les, Shane and Mr Hillier. Mr Seager took
Les into the sitting room by himself. He describes his having to fight for
Les's attention over the sound of the television, which was on. His
meeting alone with Les he thinks took two minutes. He was satisfied that
Les knew what he was doing from his own free will and that duress was not
involved. Mr Seager then walked the Orchard with Shane and Mr Hiller. They
returned to Les. Mr Seager repeated the need for a plan, which Mr Hillier
was to arrange. Upon access, Les recalled some past discussions with the
County Council concerning a possible separate access, a matter which Mr
Hillier was to check: otherwise there would have to be shared access along
the Mill House drive. Les was noted as saying that it would be possible to
get two houses on the Orchard, subject to planning. Mr Seager noted the
need for restrictive covenants against nuisance and annoyance and
industrial use.
…
"72. On 5 December 2000, Mr Seager wrote a retainer letter to
Les at Mill House, setting out his fees. He commented on the need for
better plans dealing with the access. On 7 and 12 of December 2000, Mr
Hillier made further telephone calls to Mr Seager. On 18 December 2000 Mr
Hillier obtained better plans from surveyors which he had retained for the
purpose and which he sent to Seager on 22 December 2000. The marriage in
the meanwhile had taken place.
"73. On 1 January 2001, Les countersigned a copy of the
retainer letter. On 8 January 2001, Mr Seager wrote to Les c/o Mr
Hillier at Mr Hillier's address enclosing a draft transfer. He drew
attention to clause 13.5 which restricted residential development to two
houses. On 12 January 2001, Mr Hillier reported that the restrictive
covenant should increase the limit to six dwellings and informed Mr Seager
of an approximate value of the Orchard of £1,800. On 17 January 2001,
Mr Seager sent Les again c/o Mr Hillier an amended copy of the draft
transfer. He sought specific confirmation that Les was happy that the
restrictive covenant should be limited to six houses. He was to receive a
letter signed by Les to that effect on 24 January 2001, the letter being
written for Les by I think Mr Hillier. In fact Les had suffered a stroke
at the Red Cross on 15 January 2001 and was in hospital. He
presumably signed that confirmatory letter there.
"74. On 25 January 2001, Mr Seager wrote again to Les, this
time at Mill House, chasing a signed copy of the plan that was to be
incorporated in the transfer. The letter observed that the covenant
limiting residential use to six houses 'could obviously have an impact on
the value of Mill House Farm itself'.
"75. On 9 January 2001, Les signed a cheque for Blaisers'
fees. On 19 February 2001, Mr Seager confirmed to Shane and Les that
he had completed the transfer which he had dated 15 February 2001 saying
he would complete the transfer for Shane."
The judge does not refer, in those paragraphs, to the occasion on which the
appellant signed the transfer; but it is clear that he must have done so at
some point between 17 January 2001, when the amended draft transfer was
sent by Mr Seager, and 15 February 2001, the date which Mr Seager
inserted in the transfer. As I have indicated, on 15 January 2001 the
appellant had suffered a stroke and was in hospital.
It can be seen from the judge's description of the
circumstances in which the first transfer was executed by the appellant, that
the second respondent, Mr Hillier, was closely involved in the process
throughout. The judge described Mr Hillier as an intelligent and
business-minded man. The judge found that the sale of the property from Mr
Shane Bradbury to Mr Hillier had been agreed between them before the first
transfer. The judge made^ the following findings at paragraphs 78 and 79:
"78. I have no doubt that in conversations over that
Christmas, the question was raised between Mr Hillier and Shane as to the
value of the Orchard, hence the £1,800 figure given by Mr Hillier to Mr
Seager. Importantly where this trial is concerned, I have no doubt of the
following. Shane had no money or the possibility himself of developing the
Orchard. Both Shane and Mr Hillier knew that Shane wanted the gift to
realise some cash, and always intended to sell the Orchard, Mr Hillier
offering what Shane then thought was a fair value.
"79 … I have little doubt but that Mr Hillier was investing in
what he hoped one day would prove a profitable plot of land. Further, I
consider that throughout the arrangement of the transfer of the Orchard to
Shane as a wedding gift, the understanding between Shane and Mr Hillier
was that for cash Shane would sell on the Orchard to Mr
Hillier."
The judge found that, on 27 February 2001, Mr Hillier instructed solicitors
to prepare a transfer of the property from Mr Shane Bradbury to himself at a
consideration of £1,800, and that second transfer was registered on 14 June
2001.
As I have said, the appellant continued to live at
Mill House until February 2003 when, after the death of his brother-in-law,
Mr Arnold Bradbury, he moved to Hill View. On 19 February 2003 he
appointed a solicitor and his great niece, Alicia, as his attorneys. These
proceedings were commenced in August 2004. They came for trial before the
deputy judge over four days in December 2005. The appellant did not give
evidence at the trial - it being accepted that by then he was too frail to
attend court. The judge admitted his written evidence contained in the
statement signed and dated April 2004. The judge heard oral evidence from
members of the family, and from Mr Shane Bradbury and Mr Hillier. He accepted
that all witnesses were seeking to give an honest account of the facts as they
saw them, and acquitted Mr Shane Bradbury and Mr Hillier of conscious
wrongdoing.
After reminding himself of the principles to be
applied in a case where a claimant seeks to set aside a transaction on the
grounds of alleged wrongdoing, and having referred, in particular, to the
decision of the House of Lords in Royal Bank of Scotland v Etridge
[2001] UK HL 44, [2002] 2 AC 773,
the judge made the following findings. First, that by 2001 the appellant
reposed trust and confidence in his great nephew, Mr Shane Bradbury,
such that Mr Shane Bradbury was in a dominant position. The judge's findings
are set out at paragraph 124 to 128. I need only read the last sentence of
paragraph 128:
"128. …it does appear to me that the relationship between Les
and Shane can properly be described as one of trust and confidence, and
one in which Shane had an ascendancy, with potential for
abuse."
Second, that the gift of the property known as the
Orchard was not explicable by the relationship of great uncle and great nephew
-- notwithstanding that the great nephew was providing some care -- and was
not explicable by the marriage of Mr Shane Bradbury in December 2000. The
judge's reasons for that conclusion are set out at paragraphs 129 to 134 of
his judgment. The judge observed that the transfer of the Orchard had the
effect of substantially reducing the value of Mill House -- a reduction that
went well beyond the value of the Orchard as agricultural land, which was the
basis of the prise for which Mr Shane Bradbury was to sell it to Mr Hillier.
The judge said this at paragraphs 133 and 134:
"133. But objectively, the transfer of the Orchard is not, in
my judgment, readily explicable by the relationship of Les and Shane at
Mill House. It substantially damaged the residual value of Mill House in
that the drive was to be shared with a site, which appeared to have a
potential, subject to planning permission, for up to six houses. It was
not simply in the context of the disposal of a field for which Les no
longer had a need, as he had indicated to Mr Hillier. Further and perhaps
even more pertinently it was of no real benefit to Shane. It was fanciful
to suppose that Shane would be in any financial position or have the nouse
to develop a home for himself on the Orchard, or otherwise to ensure its
successful development of residential profit. Les had no reason to suppose
for example that Shane would even extract the value of the Orchard as
accommodation land. I do not think that Les any more than Shane had any
proper concept of the value of the Orchard. The objective reality was that
subject to Shane winning the lottery, the Orchard would immediately be
realised for cash."
Those conclusions led the judge to find, at
paragraph 135, that the appellant had established sufficient to shift the
evidential burden to Shane as the donee of the property. It was for Mr Shane
Bradbury to support the gift by showing that it was made after full, free and
informed thought, as the judge directed himself. That phrase, which, I think,
originates in Zenick v Heinemann, was taken by the judge from the
judgment of Sir Martin Nourse in Hammond v Osborne [2002] EWCA Civ 885, at paragraph 29; a decision in this court which post-dates the
decision of the House of Lords in Etridge.
Third, Mr Hillier had notice of the relationship
of trust and confidence which led to potential for abuse, and of the
circumstances in which the gift was made. The judge explained why he reached
that conclusion in paragraphs 136 to 138. He said this:
"137. I consider that Mr Hillier, whom I have noted to be an
intelligent business minded man, would have realised that the selling of
the Orchard would have an adverse financial effect on Mill House because
of the sharing of the drive and the potential for neighbouring houses on
the other side of the drive. Further, I have noted that Mr Hillier's view
that Shane was no more able than Les to arrange the transfer of the land
and so he stepped in, as he told me, in effect as agent for both Les and
Shane.
"138. In those circumstances I consider Mr Hillier had full
notice of the matters from which undue influence can be presumed. Moreover
on the particular facts of this case, and the involvement of Mr Hillier in
arranging the gift to Shane I consider that he was privy to the facts
material to the presumption of undue influence."
Fourth, that the appellant received no advice from
Mr Seager, the solicitor, which would support a conclusion that the gift made
by the first transfer was made after full and informed thought. At paragraph
143 the judge said this:
"143. … Although Mr Seager was an independent solicitor, I do
not consider in the circumstances that his evidence shows that the gift
was the result of full, free and informed thought. Brief reference almost
as an afterthought in the letter of 25 January 2001 to the possible impact
of the gift on the value of Mill House does not of itself suggest that Les
had any such impact in mind or the need to seek independent financial
advice relating to it."
Nevertheless, having made those findings, the
judge came to the conclusion that the gift was not, in fact, the product of
undue influence; and so refused to set aside the first or the second
transfers. He reached that conclusion on the basis of two paragraphs in the
appellant's witness statement of April 2004. Those paragraphs -- paragraphs 19
and 22 --were in these terms:
"19. In late 2000, Shane announced he was going to marry Vikki
and I thought it would be a nice idea to give him an acre of land as a
wedding present. I don't think Shane didn't put me under any pressure at
all to give him the land. I was conscious of the fact that he was my
family and I wanted to give him a wedding present.
…
"22. However I also understand that within two months of that
on 5 June 2001, Shane sold the land to Stephen Hillier who was a
Developer. Shane told me he sold the land although he didn't say how much
for. However I wasn't concerned because it was up to him to do what he
wanted with it once I had given it to him."
In that context, the "two months of that" is two months from the completion
of the first transfer. The judge commented at paragraph 144 of this judgment
that:
"144. Les as the Claimant says that he does not think that
Shane put him under any pressure to make the gift."
The judge then went on, at paragraph 145, to say
this:
"145. I suspect that from the independence of life at Hill
View, Les might now think, if questioned, that the gift was a mistake,
particularly if directed to full and informed views as to the effect on
the value of Mill House and the want of any real benefit beyond a modest
sum of cash from Shane. But that is speculation. The claimant in a
presumed undue influence case does not have to give evidence of actual
pressure or as to what he would have done if fully informed. But in this
case, and most unusually, the Claimant states that he was not put under
any pressure at all. In those circumstances, I should not speculate as to
what Les might have done if fully informed as to the objective problems
with the gift. Further, I do not need evidence that the gift was the
result of full and informed thought, when it is clear on the Claimant's
own evidence that it was the result of free thought, in the context of
being unpressured, and thus that Mr Seager had been right in his
assessment."
That paragraph represents a marked shift from the
direction which the judge had given himself earlier in the judgment when --
after considering cases of Inche Noriah v Shaik Allie Bin Omar [1929]
AC 129/155, Hammond v Osborne [2002] EWCA Civ 85(20) and (60) and Jennings v Cairns [2003] EWCA Civ 1935(35) -- he had said the evidential burden on the donee would be to
show that the gift was not explicable only on the basis of the presumed undue
influence; in particular, it was for Mr Shane Bradbury to show that the
appellant had made the gift after full free and informed thought. When the
judge came to address the matter at paragraph 145, he no longer thought that
full or informed thought was a necessary ingredient for the purpose of
rebutting the presumption. But he went on to say that, if he had been
satisfied that the gift was the product of undue influence, he would have set
the first transfer aside; and by reason of:
"My notice considerations as well against Mr Hillier as
against Shane."
The appellant was granted permission to appeal by
this court (Lloyd LJ), on 16 August 2006. The grounds of appeal are
put succinctly under two heads. First, that the judge was wrong to find that
the evidence of the claimant, contained in a draft witness statement, that he
did not think that the first defendant put him under any pressure to make the
gift was capable of rebutting the presumption of undue influence which he
found had arisen; and second, in holding that the court did not need to find
evidence that the gift was the result of full and informed thought when the
claimant gave evidence that he did not think he was pressurised. The reference
there to "a draft witness statement" is explained by the fact that the
statement which the appellant signed in April 2004 had been sent to him in the
form of a draft for approval. It was signed in the form of the draft with the
various comments, incident to the draft, unanswered and unaddressed.
On analysis the two grounds which are set out in
the appellant's notice are, I think, really two sides of the same coin. The
issue can be put in this form. In circumstances where the judge had held: (i)
that the relationship between donor and donee was such that the donee was in
position to dominate the will of the donor; (ii) that the gift was not
explicable on the grounds of natural affection which the donor could be taken
to have for the donee and; (iii) that the donor did not, in fact, receive the
advice that he would have needed in order to give full and informed
consideration to the consequences of the gift which he was making, is it
sufficient to rebut the presumption that the gift was the result of undue
influence bearing on the mind of the donor that the donor states that he was
not put under any pressure by the donee?
In addressing that issue, it is important to have
in mind these matters, which were the subject of findings by the judge:
(1) The appellant was not able to look after himself in his
own home. He had, as the judge found, no domestic skills at all. He needed
someone to look after him on a day-to-day basis -- paragraph 53.
(2) The appellant was very anxious not to be moved into a
nursing home or care home where he could be looked after professionally.
He had visited his sister Doris in a nursing home to which she had in
moved in 1998 and had expressed a strong dislike of it -- paragraph
43.
(3) Mr Shane Bradbury and his future wife Victoria were the
only persons who were in a position to and were willing to look after the
appellant in his own home, Mill House -- paragraph 55.
(4) The appellant had strong motives for doing whatever he
thought he needed to do in order to ensure, so far as he could, that Mr
Shane Bradbury and his new wife remained at Mill House -- paragraph 61.
(5) There was every reason why the appellant should give Mr
Shane Bradbury a generous wedding gift, but;
(6) Mr Shane Bradbury's need was for cash and it was obvious
that he would sell land given to him in order to raise cash -- paragraph
133; and
(7) There was no reason why the appellant should wish to give
Mr Shane Bradbury a generous wedding gift in a way which would cause him
detriment by way of a devaluation of his property which was out of all
proportion to the benefit which would be conferred on Mr Shane
Bradbury.
In the context of that final point it is pertinent
to have in mind the evidence of the valuer, Mr Conie, to which the judge
refers at paragraphs 116 to 121 of his judgment. It was Mr Conie's view that
the effect of the transfer of the Orchard was to devalue the Mill House by
some 10 per cent to 15 per cent. It is not difficult to see why he took
that view. A glance at the site plan, annexed to the transfer shows that the
Orchard would be extremely attractive as accommodation land to a prospective
purchaser of Mill House. Further, loss of the Orchard without an adequate
covenant restrictive of building would expose the occupier of Mill House to a
serious loss of privacy if the Orchard was subsequently developed and the
access to the Orchard, if developed, would have to be over the driveway to
Mill House. It is also plain that the Orchard, which is in the centre of the
village and surrounded by dwelling houses, is prima facie a site ripe
for development -- it provides an obvious opportunity for in-filling.
The effect of the transfer, therefore, was not
only seriously to devalue Mill House -- on Mr Coney's figures, by at
least £45,000 -- but also to hand to the donee (or to Mr Hillier as the person
who had purchased the land from the donee for £1,800) a property ripe for
development for which a speculative developer might, on Mr Conie's evidence,
have been prepared to pay as much as £100,000, although perhaps subject to
some option arrangement. Further, even without planning consent, the Orchard
would, on Mr Conie's evidence, be worth not less than £10,000 as accommodation
land to a purchaser in the village. No doubt there are circumstances in which
an elderly man without children would wish to benefit the grandchild or
grandchildren of his sister at the expense of his own estate by a transfer of
value out of his estate, which would increase in value in the hands of the
transferee; but that is not the explanation given for this transfer. It was to
be a wedding present, valued at agricultural land value; and in any event
there was no reason why the appellant should wish that only Mr Shane Bradbury
should benefit out of his estate, rather than the three grandchildren of Mrs
Bradbury.
This was a transaction which no one with proper
regard for his own interests would enter into without careful and informed
thought as to its wider effect. It is that feature which gives rise to the
presumption which the judge correctly identified: that, when making the gift,
the appellant was responding to some pressure or influence which caused him to
act without proper regard to his own interests and in a manner that no-one who
was not under pressure or influence would act.
The judge said, in paragraph 145, that the
appellant had stated that he was not put under any pressure at all. That is
not a fair reading of paragraph 19 of the witness statement. What the
appellant actually said was: "I do not think Shane did not put me under any
pressure at all to give him the land". Accepting that there is an unintended
double negative in that sentence, nevertheless, all that the appellant can be
taken to be saying is that Shane did not, himself, put pressure on the
appellant to make the transfer. That would be consistent with a finding that
Mr Shane Bradbury did not ask for a transfer of the land. It has not been
suggested that he did. But the fact that the donee has not asked for the gift
is not a complete answer to an assertion that the gift was the product of
undue influence; see Hammond v Orchard, particularly at paragraphs 25
and 32.
Hammond v Orchard was a case in which the
donee, Mrs Osborne was given all of the deceased's investments, an amount
equivalent in value to some £395,000. She had not asked for the gift. In the
course of his judgment, Sir Martin Nourse said this at paragraph 32:
"Even if it is correct to say that Mrs Osborne's conduct was
unimpeachable and that there was nothing sinister in it, that would be no
answer to an application of the presumption. As Cotton LJ said in
Allcard v Skinner, the court does not interfere on the ground that
any wrongful act has in fact been committed by the donee, but on the
ground of public policy which requires it to be affirmatively established
that the donor's trust and confidence in the donee has not been betrayed
or abused."
That passage was adopted by Arden LJ in
Jennings v Cairns [2003] EWCA Civ 1935 (40). She said:
"The fact that the conduct of a person exercising influence is
unimpeachable is not by itself an answer to a claim in undue influence,
though the presumption of undue principle can be rebutted in many
ways."
The circumstances that the donor is vulnerable --
in the sense that the relationship between the donor and the donee has
potential for abuse -- and that the gift is one which is not to be explained
by the ordinary considerations by which men act lead, as a matter of public
policy, as Sir Martin Nourse pointed out in Hammond v Osborne, to the
need for the donee to show that the donor really did understand and intend
what he was doing. That is why it is necessary to show that the gift was made
after full free and informed consideration. A gift which is made without
informed consideration by a person vulnerable to influence, and which he could
not have been expected to make if he had been acting in accordance with the
ordinary motives which lead men's actions, needs to be justified on the basis
that the donor knew and understood what he was doing. In this case, that
requirement was not met. It was no answer for the judge to say, as he did in
paragraph 145 of his judgment, that full and informed consent had become
irrelevant in the light of the appellant's statement at paragraph 19 of his
witness statement of April 2004.
For those reasons I would allow the appeal and set
aside the first transfer. In those circumstances, like the judge, I would set
aside the second transfer, that is to say the transfer to Mr Hillier also.
Mr Hillier, as second respondent, seeks to rely on
a respondent's notice, for which he needs permission to file out of time. The
two grounds on which he seeks to uphold the judge's decision are these. First
that he, Mr Hillier, did not in law have constructive notice of any
impropriety committed by the first defendant, whether presumed or otherwise;
and, second, that the transaction was not explicable only on the basis that
undue influence had been exercised to procure it -- it was explicable on the
basis that the gift was made in contemplation of marriage.
In my view there is nothing in either of those
points. They are so devoid of merit that I would not give permission to file
the respondent's notice out of time. The transaction was not explicable on the
basis of a gift made in contemplation of marriage for the reasons which I have
already explained. If the appellant wanted to give to his great nephew a sum
of £2,000 or thereabouts as a wedding gift, the transfer of the Orchard was a
quite remarkable, extraordinary and inappropriate way of seeking to do that.
The marriage does not provide the explanation for the gift, in the form in
which it was made. Secondly, the question is not whether the second defendant
had notice of impropriety on the part of the first defendant; the question is
whether Mr Hillier had notice of the facts which give rise to the
vulnerability of the first transfer to being set aside on an application based
on allegations of undue influence.
In the light of the judge's findings at paragraphs
137 and 138 of his judgment, to which I have already referred -- and the
facts on which those findings were made -- it is, to my mind, quite impossible
to suggest that Mr Hillier did not have full notice of all the matters which
lead to the conclusion that the first transfer was a transaction which was
vulnerable for being set aside. He knew all the facts because he was
instrumental in procuring the transaction in the form that it took.
For those reasons I would set aside both
transfers.
LORD JUSTICE MAY: I agree that this appeal should
be allowed for the reasons which Chadwick LJ has given.
The deputy judge held that there was a
relationship between Les and Shane where Les reposed trust and confidence in
Shane. Les was therefore vulnerable to being exploited or, as the deputy judge
put it, there was a potential for abuse. This is not challenged in this court.
The judge also found that the gift of the Orchard
was not objectively readily explainable by the relationship between them, or
as Lord Scott put in it Etridge, it could not be explained by reference
to the ordinary motives by which people are accustomed to act. This was in my
judgment a finding well open to the judge on the evidence and I would reject
Mr Levinson's and Mr Beaumont's submissions to the contrary. It was to be a
wedding gift certainly and its value in the hands of Shane was £1,800. But
objectively that was not its value. Giving away the Orchard had the obvious
effect of diminishing the value of Mill House substantially: The evidence
suggested that this may have been in the order of £45,000. In addition the
Orchard had an obvious development hope value: you only have to look at the
plan attached to the transfer to see this. The same is an obvious inference
from the terms of the restrictive covenant not to build more than
six houses on it. Les himself seems to have had some idea that there was
a developer around, see for instance paragraph 20 of his witness statement,
but the deputy judge found and was entitled to find that neither Les nor Shane
had any proper concept of the value of the Orchard. So this was a wedding
present with a price tag prejudicial to Les well in excess of £50,000.
Thus there was a presumption of undue influence,
the effect of which was that explained by their Lordships in Etridge.
Did the evidence relied on by the defence sufficiently rebut the presumption
so that the eventual finding should be that either there was no influence or,
if there was, that it was not such that Les did not act of his own full, free
and properly informed will?
The defendant's case here was very simple. It was
that Les's own statement in paragraph 19 in particular of his witness
statement by itself established that there was no influence. The judge agreed
with this in a single paragraph of his judgment, paragraph 145, which
reads as follows:
"I suspect that from the independence of life at Hill View,
Les might now think if questioned that the gift was a mistake,
particularly if directed to full and informed views as to the effect on
the value of Mill House and the want of any real benefit beyond a modest
sum of cash to Shane."
That is speculation. The claimant in a presumed
undue influence case does not have to give evidence of actual pressure or as
to what he would have done if fully informed. But in this case, and most
unusually, the claimant states that he was not put under any pressure at all.
In those circumstances, I would not speculate as to what Les might have done
if he had been fully informed as to the objective problems with the gift.
The paragraph in the witness statement was not by
any means the only evidence upon which the critical question had to judged. It
is true that the deputy judge carefully and fully set out the facts in the
earlier part of his judgment, but the terms of the short paragraph 145 of the
judgment to my mind clearly show that the judge regarded paragraph 19 of the
witness statement as by itself decisive without the need to evaluate that
evidence together with other plainly relevant evidence. In my view, this was
an error by the deputy judge such that this it is for this court to make its
own evidential evaluation on this point.
The witness statement was made in the
circumstances which Chadwick LJ has described, when Les was aged 80, and
critically after the registration of his enduring power of attorney. He was
regarded then as unable to manage his affairs. Les was unable to come to court
to give evidence at the trial. The very circumstances in which the statement
was made and put in evidence meant that its evidential reliability needed
careful consideration in the light of other evidence. The fact that Les may
have thought it would have been a nice idea to give Shane an acre of land as a
wedding present and that he did not think that Shane put him under any
pressure was of course to be taken into account. But on the evidence as a
whole it was nothing like dispositive of the question whether Les was
influenced to do so by Shane, with or without the help of Mr Hillier, and by
facts and circumstances arising out of their relationship. Indeed the
narrative facts given by the judge and summarised by Chadwick LJ lead me to
the clear conclusion that, in giving Shane the Orchard, Les was plainly
influenced to do so by Shane and by Mr Hillier on behalf of Shane and that the
influence arose from Shane's dominant position in their relationship.
In reaching that conclusion, I give full
evidential weight to paragraph 19 of Les's witness statement. But to take but
one specific point, and there are others, Les was clearly influenced by Shane
through Mr Hillier to agree to the restrictive covenant permitting the
building of as many as six dwelling houses on the Orchard.
I have so far addressed the question of influence
alone because this is the main way in which the first respondent at least
seeks to uphold the judge's decision. Once it is seen that the only proper
finding on the evidence as a whole is that the gift was made under Shane's
influence, there is no difficulty on the facts of this case in finding that
Les did not make the gift after full, free and informed thought. It is quite
clear that Les had little or no idea of the value of what he was giving away,
nor did he receive any proper advice in this respect.
I consider therefore that the only proper
conclusion on the evidence was that the transfer of the Orchard to Shane was
the product of undue influence. Put another way, there was a presumption of
undue influence, which the evidence relied on by the defendant, including
paragraph 19 of Les's witness statement, did not displace.
I agree with Chadwick LJ for the reasons he has
given, that we should not give leave to rely on the proposed respondent's
notice.
LADY JUSTICE SMITH: I agree with both judgments
and have nothing to add.
Order: 1) Refused. 2) Appeal allowed. | 7 |
Opinion of Mr Advocate General Ruiz-Jarabo Colomer delivered on 18 June 1996. - Criminal proceedings against X. - Reference for a preliminary ruling: Procura della Repubblica presso la Pretura circondariale di Torino and Pretura circondariale di Torino - Italy. - Directive 90/270/EEC on the minimum safety and health requirements for work with display screen equipment - Definition of worker - Eye and eyesight tests - Definition of workstation for the purposes of Articles 4 and 5 - Extent of the obligations laid down in Articles 4 and 5 - Joined cases C-74/95 and C-129/95.
European Court reports 1996 Page I-06609
Opinion of the Advocate-General
1 The present references for a preliminary ruling have been joined by the Court of Justice after being received from the Procura della Repubblica (Office of the Public Prosecutor) to the Pretura Circondariale (District Magistrate's Court), Turin, Italy, and the Giudice per le Indagini Preliminari (Magistrate in charge of Preliminary Enquiries) of the same Pretura Circondariale.
2 The questions from the Magistrate have been referred only as an alternative, should the Court of Justice find that those referred by the Public Prosecutor are inadmissible.
Inadmissibility of the questions from the Procura della Repubblica
3 I shall begin by pointing out that the Italian Public Prosecutor's Office is not a court or tribunal authorized to make use of Article 177 of the EC Treaty and therefore the questions which he wishes to refer to the Court in this case must be ruled inadmissible.
4 The Court has defined the term `court or tribunal' for the purpose of Article 177 of the EC Treaty by specifying the criteria which a forum of that kind should satisfy: it must be established by law, have a permanent existence, exercise binding jurisdiction, be bound by rules of adversary procedure and apply the rule of law. The Court has extended those criteria, pointing out in particular the need for the court or tribunal in question to be independent. (1)
5 Although the Italian Public Prosecutor's Office may at times have been able to perform functions characteristic of examining magistrates in addition to its own as a State office responsible for instituting criminal proceedings, (2) this was not the case at the time in question (April 1995).
6 Here, the Italian Public Prosecutor's Office is a party in the criminal proceedings, authorized as a public body which institutes criminal prosecutions. Therefore it does not decide cases but brings them before the competent court or tribunal.
7 In the present case, therefore, at least two of the basic requirements of the Court of Justice for the admissibility of the questions referred are not met:
(a) the Public Prosecutor's Office is not a court or tribunal with binding jurisdiction since it is not even a court or tribunal having iurisdictio in the strict sense;
(b) the Public Prosecutor's Office does not decide after hearing the parties in an adversary procedure, but is itself a party in that procedure.
8 In fact, the part played by the Public Prosecutor's Office in the preliminary investigations which have given rise to the questions referred was to request the Magistrate, by application of 11 April 1995, to order an immediate expert's report, which only he could do, (3) as is clear from the Magistrate's order of 18 April 1995.
9 Therefore it is clear that the function of the Public Prosecutor's Office in these preliminary investigations is merely that of a party requesting the Magistrate to obtain evidence. This function is not of a judicial nature and consequently does not permit questions to be referred to the Court of Justice. (4)
10 A ruling that the questions submitted by the Public Prosecutor's Office are inadmissible will furthermore assist in clarifying the term `court or tribunal' used in Article 177 of the Treaty, which in certain cases should perhaps be interpreted more rigorously by the Court of Justice. (5)
Questions referred by the Giudice per le Indagini Preliminari
11 The questions raised by the Magistrate have arisen in the course of preliminary investigations of a criminal nature against persons unknown, which began after an investigation by inspectors of the Unità Sanitaria Locale (Local Health Authority), Turin, into the use of visual display screens at the headquarters of Telecom Italia.
12 The Public Prosecutor's Office, acting on the presumption that the legislation for the protection of workers using display screens had been contravened, requested the Giudice per le Indagini Preliminari to obtain the evidence which I mentioned above.
13 The Magistrate considers that, before deciding on the application by the Public Prosecutor's Office for an immediate expert's report, it is necessary to ascertain whether an offence may be supposed to have been committed here, in particular any offence under Articles 50 to 59, Title VI, of Legislative Decree No 626 of 19 September 1994 (6) concerning the use of equipment fitted with display screens.
14 Therefore the Magistrate considers it necessary to seek a preliminary ruling from the Court on various questions concerning the interpretation of Council Directive 90/270/EEC of 29 May 1990 on the minimum safety and health requirements for work with display screen equipment (fifth individual Directive within the meaning of Article 16(1) of Directive 87/391/EEC) (`the Directive'). (7)
15 The questions from the Magistrate are worded as follows:
`Of particular importance is the interpretation of Article 2(c) regarding any worker who "habitually uses display screen equipment as a significant part of his normal work" in order to ascertain whether that provision excludes the specific situations described above (use throughout the working week but not always for four consecutive hours daily, or use in excess of four consecutive hours, but not throughout the working week: for example, use for several consecutive hours on every day but one of the working week).
Having regard to Article 55 of Legislative Decree No 626/94 providing for periodic medical examinations only in the case of workers classified as fit subject to certain reservations and workers who have reached 45 years of age, which appears to provide for specialist checks only after the initial medical examination and for further ophthalmological examinations only if the worker so requests, and given that the Public Prosecutor's Office has requested the Magistrate to assess whether Telecom workers are granted sufficient breaks and are subject to adequate health controls, a preliminary ruling is also needed with regard to the scope of Article 9(1) and (2) of Directive 90/270/EEC in order to ascertain whether Article 9(1) provides for an "appropriate eye and eyesight test" for all workers, or only for certain categories (possibly by reference to personal data), and whether Article 9(2) requires the ophthalmological examination not only after the initial medical examination, but also after periodic examinations.
Lastly, since the technical investigations have disclosed the possibility of problems related to lighting and microclimatic conditions, in view of which it is necessary to assess whether any offences have been committed, and given that Article 58 of Legislative Decree 626/94 requires workstations to be brought into conformity with the minimum requirements set out in Annex VII - which, containing only one paragraph, lays down rules in respect of the equipment used - the question is whether Articles 4 and 5 of Directive 90/270/EEC call for compliance with those requirements in the case of all workstations (Article 2(b)) or only in the case of those used by workers as defined in Article 2(c) and, in particular, whether such compliance must also extend to the minimum requirements set out in Sections 2 (Environment) and 3 (Operator/Computer Interface) of the Annex to the directive.'
Contrast between the Directive and the national legislation defining punishable offences
16 As I have said, the domestic measure applicable to the present case is Legislative Decree No 626 of 19 September 1994 which, according to the order for reference, `implements Directive 90/270/EEC'.
17 The Directive in turn meets the requirements of Article 118a of the Treaty, under which the Council is to adopt, by means of directives, minimum requirements designed to encourage improvements, especially in the working environment, to ensure a better level of protection of workers' safety and health.
18 Specifically, it is an individual directive within the meaning of Article 16(1) of Council Directive 89/391/EEC of 12 June 1989 on the introduction of measures to encourage improvements in the safety and health of workers at work. (8)
19 A reading of the questions from the national court shows, in my opinion, in spite of certain statements apparently to the contrary, that the national court's purpose is not so much to obtain an interpretation of the Directive, but to show the points on which the Legislative Decree differs from the Directive and to ask what effect this may have.
20 The three questions submitted start from a common assumption: the contrast between the Directive and the Legislative Decree, the provisions of which are said to differ partly in respect of the following points:
(a) the term `worker who habitually uses display screen equipment';
(b) the persons to whom eye and eyesight tests apply, and the circumstances in which they are compulsory;
(c) the scope of the minimum requirements of the Annex with regard to the workstations to which it refers.
21 I shall now examine each of these three points, in respect of which the national court sets out the national rule (Articles 51, 55 and 58 of the Legislative Decree) and immediately compares it with the requirements of the Directive.
22 With regard to the first point, Article 51(c) of the Legislative Decree defines a worker for the purpose of Title VI as any person `who systematically and habitually uses display screen equipment for at least 4 consecutive hours daily, discounting the breaks referred to in Article 54, throughout the working week'.
23 On the same point Article 2(c) of the Directive defines a worker as `any worker as defined in Article 3(a) of Directive 89/391/EEC who habitually uses display screen equipment as a significant part of his normal work'.
24 It follows that the Italian `definition' of protected worker is more restrictive than the Community definition. The Legislative Decree excludes numerous employees, who, according to the Directive, should be included, from the category of `workers' for the purposes of its Title VI - with the result that their health at work is not protected under the Decree.
25 This applies in particular to workers who use video terminals for, say, three-and-a-half hours daily throughout the week, or even for more than four hours daily but not every day of the working week.
26 Such persons, as the Commission and the Austrian Government point out in their observations, should come within the ambit of the Directive because a significant part of their normal work is done in front of display screens. Nevertheless, the Legislative Decree excludes them from the protective measures laid down by Title VI because they are not deemed to be `workers' for the purposes of that Title.
27 On the second point (health monitoring), Article 55 of the Legislative Decree requires periodic medical examinations only in the case of workers classified as `fit subject to certain reservations' and workers who have reached 45 years of age. In addition, according to the national court, it `appears' to provide for specialist checks only after the initial medical examination, and for ophthalmological examinations only if the worker so requests, provided he suspects, and a doctor confirms, that his sight has deteriorated.
28 On the same question Article 9 of the Directive provides as follows:
`1. Workers shall be entitled to an appropriate eye and eyesight test carried out by a person with the necessary capabilities:
- before commencing display screen work,
- at regular intervals thereafter, and
- if they experience visual difficulties which may be due to display screen work.
2. Workers shall be entitled to an ophthalmological examination if the results of the test referred to in paragraph 1 show that this is necessary.'
29 Once again, the Italian provision appears to restrict the protection of health at work as required by the Directive because, while under the latter all workers within its ambit are entitled to periodic examinations of their eyes and eyesight, the Legislative Decree does not confer this right on all workers, but only on certain categories.
30 Finally, regarding the third point, Article 58 of the Legislative Decree provides that workstations must meet the minimum requirements of Annex VII, which consists of only one paragraph and lays down provisions concerning installations or equipment with video terminals.
31 On this point the Directive clearly requires employers to take appropriate steps to ensure that workstations meet the minimum requirements laid down in the Annex, (9) which relate not only to equipment (10) (paragraph 1), but also to the environment of the workstation (11) (paragraph 2) and the `operator/computer interface' (12) (paragraph 3).
32 As on the other two points which I have already examined briefly, here again the Directive seems to be more rigorous than the Italian Legislative Decree which, once again, lowers the minimum level of requirements for health at work laid down by the Directive.
33 Whereas the Directive lays down certain minimum requirements concerning workstations incorporating video terminals, their environment and the computer programmes, the Legislative Decree confines itself to the first of those three aspects and omits the requirements for the other two. (13)
34 The conclusion from all this - I venture to say that it was anticipated by the national court when making the reference - would be a possible finding that the Italian authorities have failed to implement the Directive properly, by lowering the minimum level of protection of health at work required by Community law. (14)
35 As I shall show below, such a conclusion would however be irrelevant in the context of criminal proceedings with the purpose of establishing whether the employer in question has incurred criminal liability by contravening Italian legislation, not Community law.
36 The interpretation and application of national law are tasks for the domestic courts exclusively. Without wishing to interfere with their jurisdiction in this respect, I think it necessary to point out that, to obtain a ruling on the existence of the offence the suspicion of which has given rise to the preliminary investigations, the Italian court cannot take into account rules of law outside its own criminal law, if such rules bring to light conduct - as in this case - which is incompatible with the health of workers and does not comply with the Community rules, but is not punishable under national law.
37 The conduct of an Italian employer who does not adopt protective measures - say, with regard to eyesight examinations or the minimum requirements concerning the workstation environment - in relation to certain employees who are within the definition of protected `workers' under the Directive, but who are excluded from that category under the Legislative Decree, would not be punishable.
38 Undeniably, proper implementation of the Directive requires protection for those persons and the Italian State must ensure that it is provided. But if national law does not include a particular kind of conduct among the relevant types of offence, neither the implementation nor the interpretation of the Directive can be sufficient to justify a criminal penalty in such cases. (15)
39 Article 89 of the Legislative Decree lays down penalties of fine and imprisonment for `any offence under Article 58' committed by employers or managers of an enterprise. Article 90 lays down penalties of the same kind for `non-compliance with the minimum requirements referred to by Article 55, paragraphs 1, 3 and 4, and Article 58' if it is attributable to the persons in charge of the enterprise.
40 Therefore, by the combined effect of its various provisions, the Italian Law defines quite precisely the conduct which it seeks to punish by fine and imprisonment; any other specific types of conduct relating to the safety and health at work of video terminal workers fall outside the scope of the criminal provisions.
41 That being the statutory reality - which may be the result of a conscious decision or of a mere lacuna - it cannot be rectified by means of an interpretation of the Legislative Decree which makes it say more than it does, albeit in order to bring it into conformity with the Directive. (16)
42 Perhaps these observations necessitate a rather more detailed examination of the relationship between the implementation of the directives and national criminal law.
Effect of directives on the interpretation of national criminal law
43 The starting point for my reasoning is the overriding principle of legality in criminal law (nullum crimen, nulla poena sine lege), with its corollary that an extensive interpretation to the disadvantage of the defendant is prohibited. I think no one will now deny that this is a principle common to the constitutional traditions of all the Member States.
44 It is, furthermore, a principle which must be upheld in accordance with Article 7(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms (Rome Convention of 4 November 1950): `No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed'. (17)
45 The Italian criminal courts must, in accordance with that principle, apply national legislation defining punishable offences (crimes and serious, minor or petty offences) according to its own terms, and criminal liability cannot be incurred in respect of conduct which, although it ought to have been made a statutory offence, has not in fact been made an offence in Italy.
46 The fact that a State has not thus defined conduct which, under Community law, ought to be considered unlawful could at the most give rise to an assumption that the State has failed to fulfil its obligations, (18) in respect of which an action could be brought by the Commission or another Member State under Articles 169 or 170 of the Treaty, but it does not allow citizens of that State to be prosecuted for acts which, though unlawful under Community rules, are not punishable under national law.
47 This reasoning has been approved by the Court in successive judgments which show that Community directives which have not been incorporated into national law cannot be relied upon as against individuals, specifically in the criminal field.
48 In Case 152/84 Marshall v Southampton and South-West Hampshire Area Health Authority (19) the Court stated that a directive may not of itself impose obligations on an individual and a provision of a directive may not be relied upon as such against such a person.
49 In the Pretore di Salò judgment, cited above, the Court stated that `a directive which has not been transposed into the internal legal order of a Member State may not therefore give rise to obligations on individuals either in regard to other individuals or, a fortiori, in regard to the State itself'.
50 In the Pretore di Salò case the national court asked whether the Italian legislation in force at that time concerning the protection of water from pollution was consistent with the principle and quality objectives laid down by a Community directive. (20) The question was deemed necessary for the purpose of a possible prosecution in respect of conduct which was not punishable under domestic law but which could be unlawful from the viewpoint of the Directive.
51 The Court's reply in that case was that a directive cannot, of itself, and independently of a national law adopted by a Member State for its implementation, have the effect of determining or aggravating the liability in criminal law of persons who act in contravention of the provisions of that directive. Consequently the Court refused to compare the internal measure with the Community directive, which was the main object of the reference.
52 In Kolpinghuis Nijmegen (21) the Court repeated that a directive cannot, of itself and independently of a national law adopted for its implementation, have the effect of determining or aggravating the liability in criminal law of persons who act in contravention of the provisions of that directive. (22)
53 In this way the Court's case-law respects the protection afforded to citizens of the Member States by the principle of legality in criminal law. As a fundamental right of the individual, that principle gives all persons the legal certainty that their conduct will lead to criminal liability only if it contravenes a national provision which defined it beforehand as an offence of that kind.
54 In the judgments cited above the Court therefore chose to consider the principle of legality in criminal law as an inherent limit to the effectiveness of Community directives.
55 Can that case-law, which refers to situations where a directive has not been incorporated in national law, be extended also to cases where the directive has already been implemented?
56 In my opinion, the answer must be in the affirmative if the consequences of applying or interpreting the directive would either give rise to criminal liability on the part of the person concerned or aggravate such liability, in cases where that would not otherwise occur.
57 It has already been observed that, in the legal systems of the different Member States, the principle of legality plays a key part in criminal law which extends not only to the prior definition of offences (lex previa) but also to the interpretation thereof (lex certa).
58 The legal basis for the imposition of penal sanctions must thus be clear and unequivocal, that is to say, unambiguous. No doubt a criminal provision also requires interpretation by the courts, but they are not permitted to fill any lacunae in the definitions of offences by resorting to an extensive interpretation.
59 It is clear that where national legislation has been introduced in implementation of a directive, it is a general requirement of Community law that national courts must in principle interpret their national legislation in the light of the directive. (23)
60 If such interpretation results in determining or aggravating the liability of the person concerned, in cases where that would not otherwise occur, a conflict arises between two principles: the prohibition of extensive interpretations in the criminal law and the obligation of national courts to interpret their own law in conformity with directives.
61 This conflict was resolved by the Court in paragraphs 12 and 13 of the Kolpinghuis Nijmegen judgment cited above as follows:
- on the one hand, it is true that, in applying the national law and in particular the provisions of a national law specifically introduced in order to implement a directive, national courts are required to interpret their national law in the light of the wording and the purpose of the directive in order to achieve the result referred to in the third paragraph of Article 189 of the Treaty;
- however, the obligation on the national court to refer to the content of the directive is limited by the general principles of law which form part of Community law and in particular the principles of legal certainty and non-retroactivity.
62 National criminal law must therefore be construed in accordance with the principles and criteria of interpretation specific to that field of law, a marked feature of which is the concern for safeguards, outstanding among them being the principle of legal certainty - in the form, in the criminal field, of the principle of legality.
63 The principle of legal certainty, when understood in this way, precludes resorting to a Community directive in order to extend the definition of an offence, to the disadvantage of the accused, to situations different from those which strictly match the definition of the punishable acts given by national criminal law. (24)
64 All this has nothing to do with the converse situation where the application of Community law leads to the result that conduct which is classified as an offence by national law is not unlawful. In such a case the primacy of Community law means that the internal criminal provision is inapplicable and for that reason it cannot legitimately constitute a basis for criminal liability. (25)
Application of the principle of legality in criminal law to the present case
65 Examination of the present case shows clearly that interpretation of the Directive, as requested by the Italian court, could never reduce any hypothetical criminal liability, quite the contrary.
66 I have already explained the difference between the Directive and the Italian Legislative Decree, which lowers the minimum level of protection for health at work required by the Directive.
67 What the national court really wishes to know is not so much the interpretation of certain provisions of the Directive, which are clear enough, but whether the Directive permits the exclusion from its ambit of certain situations for which the Legislative Decree does not provide a penalty, either by not defining them as offences or by defining the elements of the offence in different terms from those of the Directive.
68 The interpretation of the provisions of the Directive to which the national court's questions refer follows from the terms of the questions themselves, and all the parties which have submitted observations agree in that regard:
(a) The phrase `worker who habitually uses display screen equipment as a significant part of his normal work' (Article 2 of the Directive) applies to persons who habitually work in front of such screens for four hours a day, even if not every day of the working week. It may also apply to persons working in front of such screens every day of the week, but not necessarily for four consecutive hours, and it is for the national court to assess in each case whether the time spent by a given worker in front of the equipment in question is `significant'.
(b) The eye and eyesight tests apply to all workers covered by the Directive, and mean both the test before commencing display screen work and the test at regular intervals thereafter (Article 9(1) of the Directive). The ophthalmological examination referred to in Article 9(2) may be shown to be necessary in any of the three situations referred to in Article 9(1).
(c) Articles 4 and 5 of the Directive refer expressly to the `workstations' defined in Article 2(b) and require compliance with all the minimum requirements set out in the Annex in relation to the equipment, environment and operator/computer interface.
69 If, in the context of this case, the Court of Justice were to consent to examine the Italian law by comparison with the Directive and if it were to make a formal finding that the latter does not permit the definition of `worker who habitually uses display screen equipment' to be restricted or the ophthalmological examinations to be limited, or the minimum requirements to be reduced to only one instead of the three paragraphs in the Annex, there would still be no question that conduct complying with the Legislative Decree could not be the subject of a prosecution.
70 In other words, although the Legislative Decree excludes a criminal penalty for conduct which, on a correct interpretation of the Directive, would be contrary to Community law, this fact cannot make persons who have complied with the domestic measure guilty of an offence, however inadequately the Directive may have been implemented.
71 It follows that the Court need not give a detailed reply on each of the articles of the Directive referred to in the question, in the manner requested by the national court. On the contrary, it is sufficient to take one more step on the same lines as the Pretore di Salò and the Kolpinghuis Nijmegen judgments.
72 The Court established in those judgments that directives could not create or aggravate criminal liability where they had not been implemented in national law, and the same principle must be extended to situations where there is defective implementation, that is to say, where domestic law has already been adapted. (26)
73 Where the national law which has been adopted in order to implement the directive omits to define as a punishable offence certain conduct which ought to have been penalized (27) or defines the elements of the offence in different terms from those of the Directive, the legal reasoning underlying those judgments also applies to situations of this kind.
74 The legal reasoning being the same, the conclusion must also be the same: no one may be punished by virtue of an extensive interpretation of national criminal law to bring it into conformity with a Community directive, or for acts which are not punishable under national law.
75 In these cases too, the principle of legality in criminal law forms the same insuperable barrier to the effectiveness of directives and to the need to interpret national law in conformity with them.
76 This does not arise from any imaginary supremacy of national criminal law (which the Member State in question will have to amend when its failure to comply with Community law has been proved), but from compliance with one of the principles common to the constitutional traditions of the Member States, which is at the same time a fundamental right of the citizens of those States and a basic principle of Community law itself.
77 In any case, if the Court considers it appropriate to provide the national court with the detailed interpretation of each of the paragraphs of the Directive referred to in the questions, in my opinion the reply should be in the terms I have set out above.
Conclusion
78 In accordance with the foregoing, I propose that the Court reply as follows:
(1) The questions referred by the Procura della Repubblica presso la Pretura Circondariale, Turin in Case C-74/95 are inadmissible because they have not been submitted by a court or tribunal authorized to do so under Article 177 of the EC Treaty.
(2) The interpretation of Council Directive 90/270/EEC of 29 May 1990 on the minimum safety and health requirements for work with display screen equipment cannot determine or aggravate the criminal liability of persons who infringe its provisions if a Member State's national law adopted to implement the directive either omits to define certain conduct as a punishable offence or defines the elements of an offence in different terms from those of the Directive.
(3) In the alternative:
(a) The phrase `worker who habitually uses display screen equipment as a significant part of his normal work' (Article 2 of Directive 90/270/EEC) applies to persons who habitually work in front of such screens for four hours a day, even if not every day of the working week. It may also apply to persons working in front of such screens every day of the week, but not necessarily for four consecutive hours, and it is for the national court to assess in each case whether the time spent by a given worker in front of the equipment in question is significant.
(b) The eye and eyesight tests apply to all workers covered by the Directive, and mean both the test before commencing display screen work and the test at regular intervals thereafter (Article 9(1) of Directive 90/270/EEC). The ophthalmological examination referred to in Article 9(2) may be shown to be necessary in any of the three situations referred to in Article 9(1).
(c) Articles 4 and 5 of Directive 90/270 refer expressly to the `workstations' defined in Article 2(b) and require compliance with all the minimum requirements set out in the Annex in relation to the equipment, environment and operator/computer interface.
(1) - See Case C-393/92 Municipality of Almelo and Others v Energiebedrijf IJsselmij [1994] ECR I-1477, paragraph 21; Case 61/65 Vaassen v Beambtenfonds voor het Mijnbedrijf [1966] ECR 261; Case C-24/92 Corbiau v Administration des Contributions [1993] ECR I-1277; and Case 338/85 Pardini v Ministero del Commercio con l'Estero [1988] ECR 2041.
(2) - This was the case at the material time in Case 14/86 Pretore di Salò v Persons Unknown [1987] ECR 2545. At that time the functions performed by the Pretore were both those of a public prosecutor and those of an examining magistrate. The Pretore carried out preliminary investigations in his capacity as public prosecutor and, where they disclosed no grounds for continuing the proceedings, made an order accordingly in the place of an examining magistrate. Therefore the Court of Justice found that the Pretori were judges who, in proceedings such as those in which the questions referred to the Court in that case were raised, combined the functions of a public prosecutor and an examining magistrate. Accordingly requests for a preliminary ruling from the Pretori were admissible because such requests were from `a court or tribunal which has acted in the general framework of its task of judging, independently and in accordance with law, cases coming within the jurisdiction conferred on it by law, even though certain functions of that court or tribunal in the proceedings which gave rise to the reference for a preliminary ruling are not, strictly speaking, of a judicial nature'.
(3) - In its written observations, the Commission points out that Article 392 of the (Italian) Code of Criminal Procedure allows both the Public Prosecutor and the person who is the subject of investigations `to request the Magistrate to order expert evidence or a judicial inspection in relation to persons, things or places whose status is subject to inevitable alteration'.
(4) - The Italian Public Prosecutor's Office likewise has no standing to refer questions of unconstitutionality to the Italian Constitutional Court, as that court has ruled in its judgment of 9 April 1963 and its order of 22 January 1979.
(5) - The Court has on occasions accepted preliminary references from administrative authorities whose independence was doubtful and whose decisions furthermore were open to review by genuine courts. This occurred in Joined Cases C-260/91 and C-261/91 Diversinte and Iberlacta v Administración Principal de Aduanas [1993] ECR I-1885, with regard to a Spanish financial administrative tribunal, which was an organ of the tax authorities and was not of a judicial nature.
(6) - Gazzetta Ufficiale della Repubblica Italiana No 265, 12 November 1994, Supplemento Ordinario No 141.
(7) - OJ 1987 L 156, p. 14.
(8) - OJ 1989 L 183, p. 1.
(9) - Articles 4 and 5 of the Directive refer respectively to workstations first put into service after 31 December 1992, which must meet the requirements from the outset, and workstations already in service on 31 December 1992, which must be adapted to comply with the requirements within a maximum of four years.
(10) - The minimum requirements in this paragraph relate to the display screen, the keyboard, the work desk or work surface and the work chair.
(11) - This paragraph of the Annex contains minimum requirements concerning the environment of the work station: space requirements, lighting, reflections and glare, noise, heat, radiation and humidity.
(12) - This paragraph of the Annex sets out a number of ergonomic requirements which the employer must take into account in designing, selecting, commissioning and modifying software and in designing tasks using display screen equipment.
(13) - This omission was pointed out by Silvia Bertocco in her work La sicurezza del lavoratore nelle fonti internazionali del lavoro. Il recipimento dalla direttiva CEE 89/391 nell'ordinamento nazionale, 1995, p. 127, in which she states that `the Legislative Decree concerning safety is a detailed, complex legislative measure which has the technical defect of cumbersome language and is not improved by certain errors of substance such as the absence of two paragraphs in Annex VII: a) the ergonomic requirements concerning the work environment and the operator/computer interface, as set out in paragraphs 2 and 3 of the Annex to Directive 90/270, have been omitted ... '.
(14) - For that to be true in the strictest sense desirable, an action would have had to be duly brought against the Italian Republic (which furthermore has not appeared in these proceedings upon a reference) for failing to fulfil its obligations. The Court of Justice has consistently held that, within the scope of application of Article 177 of the Treaty, it has no jurisdiction to rule on the compatibility of national measures with Community law.
(15) - This does not mean that, in other than a purely criminal context, the application and interpretation of the Directive does not entail any consequences. Thus, with regard to the employment and social security aspects, workers could, even against their own State, claim the measures of protection which the Directive is intended to guarantee.
(16) - In no way, moreover, does the Directive require compliance to be secured by means of criminal penalties.
(17) - In its judgment of 25 May 1993 Kokkinakis v Greece (A 260-A 1993) the European Court of Human Rights points out that Article 7(1) of the Convention is not limited to prohibiting retrospective application of criminal law to a defendant: it also enshrines the general principle that crimes can be defined and penalties prescribed only by law, as well as the principle that the criminal law cannot be interpreted extensively to the disadvantage of the defendant - by way of analogy, for example.
(18) - For this the elements referred to by the Court of Justice in Case C-36/94 Siesse v Director da Alfândega de Alcântara [1995] ECR I-3573, paragraph 20, must be present: `it is settled case-law, confirmed in Case C-382/92 Commission v United Kingdom [1994] ECR I-2435, paragraph 55, and Case C-383/92 Commission v United Kingdom [1994] ECR I-2479, paragraph 40, that where Community legislation does not specifically provide any penalty for an infringement or refers for that purpose to national legislation, Article 5 of the Treaty requires the Member States to take all measures necessary to guarantee the application and effectiveness of Community law. For that purpose, while the choice of penalties remains within their discretion, they must ensure in particular that infringements of Community law are penalized under conditions, both procedural and substantive, which are analogous to those applicable to infringements of national law of a similar nature and importance and which, in any event, make the penalty effective, proportionate and dissuasive.'
(19) - [1986] ECR 723, at p. 737.
(20) - Directive 78/659/EEC of 18 July 1978 on the quality of fresh waters needing protection or improvement in order to support fish life (OJ 1978 L 222, p. 1).
(21) - Case 80/86 [1987] ECR 3969.
(22) - In that case the Netherlands court asked whether a national authority could rely as against nationals of the same State on a provision of a directive in a case which was not covered by the State's own legislation or implementing provisions.
(23) - The Court made a statement to this effect in Case 14/83 Von Colson and Kamann v Land Nordrhein-Westfalen [1984] ECR 1891, adding that `the Member States' obligation arising from a directive to achieve the result envisaged by the directive and their duty under Article 5 of the Treaty to take all appropriate measures, whether general or particular, to ensure the fulfilment of that obligation, is binding on all the authorities of Member States including, for matters within their jurisdiction, the courts'. The same line is taken in the judgment in Case C-106/89 Marleasing v Comercial Internacional de Alimentación [1990] ECR I-4135.
(24) - Advocate General Jacobs takes the same view in his Opinion in Joined Cases C-206/88 and C-207/88 Vessoso and Zanetti [1990] ECR I-1461, paragraphs 25 and 26: `that rule must, in my view, be qualified in criminal proceedings where the effect of interpreting national legislation in that way [in the light of the directive] would be to impose criminal liability in circumstances where such liability would not arise under the national legislation taken alone. The reason for that qualification is that an extensive interpretation of penal legislation runs counter to the fundamental principle of legality (nullum crimen, nulla poena sine lege). ... I do not consider that national courts are required, as a matter of Community law, to interpret domestic legislation in the light of the wording and purpose of directives where the result would be to impose criminal liability which would not otherwise arise. It is for the referring courts to consider whether the national legislation at issue here can be interpreted consistently with the relevant directives, without resorting to an extensive interpretation which would be contrary to the principle of legality.'
(25) - The most recent cases examined by the Court in this connection are Joined Cases C-358/93 and C-416/93 Ministerio Fiscal v Bordessa and Others [1995] ECR I-361. The Spanish court submitted a question on the compatibility with Community law of a national law which required prior administrative authorization for capital transfers and laid down penalties for non-compliance. The Court replied that Articles 1 and 4 of Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty (OJ 1988 L 178, p. 5) preclude the export of coins, banknotes or bearer cheques being made conditional on prior authorization and that Article 1 in conjunction with Article 4 of Directive 88/361 may be relied on before national courts and render inapplicable rules which conflict with those provisions.
(26) - This may also serve to avoid the proliferation of preliminary references of this kind in relation to criminal proceedings similar to those in the present case. There are at present pending before the Court a number of cases - Case C-168/95 and Joined Cases C-304/94, C-330/94, C-342/94 and C-224/95 - all seeking a preliminary ruling on questions concerning the effect of various directives on the environment in certain criminal proceedings before Italian courts. The opinion of Advocate General Elmer delivered on 14 March 1996 in the first of those cases repeats once again the reasoning of the Pretore di Salò judgment.
(27) - In the sense referred to by the judgments cited in footnote 18. | 6 |
W I T H CIVIL APPEAL NO. 1387 OF 2006 B. SINHA, J Shahaji Law College, Kolhapur, is affiliated to Shivaji University, Kolhapur. The institution is under the companytrol of the Government of Maharashtra. It started five year law companyrse in the year 1983-84. The department of Political Science is said to be one-man department. Shashikant S. Pujari Respondent No.1 was appointed as a part time lecturer. Allegedly, a teacher would be companysidered to be a full timer, if he has a workload of 12 teaching periods per week subject to his making good the shortfall by taking additional lectures. Respondent was appointed on Clock Hour Basis CHB . He was selected through Local Selection Committee of the College. Following chart would show the nature of post, period of working and process of selection. So far as the Respondent is companycerned Nature of Post Period of Working Selection through Local Selection Committee of College whether approved by University Clock Hour basis CHB 1.8.1983 to 30.4.1984 Selection by LSC of College- University granted approval 1.5.1984 to 30.6.1984 61 days break in service Break number companydoned by University Full Timer though workload of Part Timer only 1.7.1984 to 15.4.1985 Selection by LSC of College and approval by University. 16.4.1985 to 15.7.1985 91 days break in service Not companydoned by University Full Timer though workload of Part Timer only 16.7.1985 to 30.10.1985 Selection by LSC of College and approval by University 1.11.1985 to 30.8.1986 295 days break in service Not companydoned by University. Part Timer 1.9.1986 to 15.4.1987 Selection by LSC of College but numberapproval from University. 16.4.1987 to 30.6.1987 76 days break in service Not companydoned by University Part Timer 1.7.1987 to 30.6.1992 Selection by LSC of College but numberapproval from University. 1.7.1992 to 31.10.1992 115 days break in service. Not companydoned by University. Part Timer 1.11.1992 to 31.1.1993 Selection by LSC of College but numberapproval from University. 1.2.1993 to 19.6.1995 2 years and 139 days break in service. During this period one Mr R.A. Patil was appointed by University Selection Committee on Clock Hour Basis. Not companydoned by University. Part Timer 20.6.1995 to till date Selection by LSC of College but numberapproval from University. Qualifications for companylege lecturers were set out in a G.R. dated 31.01.1983, which is in the following terms College Lecturers a. good academic record with at least second class C in the seven point scale Masters degree in relevant subject from an Indian University or equivalent degree from a foreign university and b. an M. Phil degree or a recognized degree beyond the Masters level or published work indicating the capacity of a candidate for independent research work. Provided that if the Selection Committee is of the view that the research work of a candidate as evident either from his published work is of a very high standard, it may relax any of the qualifications prescribed in a above. Provided further that, if a candidate possessing the qualifications as at b above is number available or number companysidered suitable, the companylege on the recommendation of the Selection Committee may appoint a person possessing a companysistently good academic record on a companydition that he will have to obtain an M. Phil degree or a recognized degree beyond the masters level within eight years of his appointment failing which he will number be able to earn future increments till he obtains that degree or gives evidence of equivalent published work of high standard. It is stated at the Bar that a person is treated to be Second Class C who has obtained 55 of the marks. The question which arises for companysideration is as to whether Respondent satisfied the criteria of having a second class Masters Degree and, thus, companyld have been companysidered for regular appointment. Respondents services were approved as a temporary teacher in 1983-84 by the Selection Committee as he is said to have taught in four periods per week. Allegedly, he was taking twelve periods per week, break-up whereof is as under 4 periods per week First Year LL.B. Class 8 periods per week Second Year LL.B. Class The Selection Committee in its meeting held on 29.09.1986 adopted a resolution, the relevant provisions whereof are as under The University Selection Committee held its meeting on Sunday, 29th June, 1986 to appoint Lecturer at Shahaji Law College, Kolhapur, in the premises of Shahaji Law College, Kolhapur in the subject of Politics. Following Selection Committee members were present for the said meeting Designation Name Signature President, Council of Education Kolhapur Shri Ratanapppanna Kumbhar Sd - Vice Chancellor, Nominee Shri P.R. Mundragi Sd - University Subject Expert Dr. K.K. Kavalekar Sd - Representative of Joint Director for Higher Education Absent Principal of the College Prin. D.B. Kurane Sd - To appoint part time teacher in Politics the Committee interviewed candidates and selected following candidates preferentially Shri Pujari, Shashikant Shankarrao Mrs. Patil Bharti Tukaram The College appointed Respondent as a full-time lecturer for two years for 1985 and 1986 subject to the companydition that he must acquire Phil. Degree in six years. There exists a companytroversy as to whether the University had approved the same or number. Indisputably, he obtained a M. Phil. Degree on 26.01.1986 on the basis whereof he companytended that he fulfilled the companyditions precedent for his appointment on a regular basis. According to Respondent, even the University Selection Committee found him qualified. On or about 19.09.1991, the University Grants Commission revised the qualifications in the following terms Lecturer ARTS, SCIENCES, SOCIAL SCIENCES, COMMERCE, EDUCATION, PHYSICAL EDUCATION, FOREIGN LANGUAGES AND LAW Good academic record with at least 55 marks or an equivalent grade at Masters degree level in the relevant subject from an Indian University or an equivalent degree from a foreign university. Candidates besides fulfilling the above qualifications should have cleared the eligibility test for Lecturers companyducted by UGC, CSIR or similar test accredited by the U.G.C. However, the Government of Maharashtra issued a letter on 18.06.1994, inter alia, stating The University Grants Commission, vide its letter No.1-11/87 CPF PS , dated 28th October, 1991, numberified the revised minimum qualifications required for the recruitment of teachers in Universities Colleges. The revised qualifications for appointment to the post of lecturer in University College only is as follows if He possesses a Good Academic Record with at least 55 marks or a equivalent grade at Masters Degree Level in the relevant subject and, He should have cleared the eligibility test for lecturership companyducted by the UGC CSIR or a similar test accredited by the University Grants Commission. It has been brought to the numberice of the Commission that the teachers appointed prior to revision of pay scales are number companysidered eligible for post of lecturer in other College or University as they do number fulfill the above revised prescribed qualifications. The Commission has examined the matter and it has been decided that the revised qualifications are number applicable to the teachers who were in service as Lecturers prior to revision of pay scales. The lecturers who were in service prior to revision of pay scales and fulfilling the qualifications prescribed were in permanent position may be companysidered eligible for applying to the post of lecturer in other College or University. On or about 30.06.1997, a direction was issued by the University to companysider twelve periods per week as a relevant criterion for recruitment of a full time lecturer. The State Government also issued an order on 17.03.1998, inter alia, stating While appointing lecturer at University and affiliated companyleges the work load is taken into account. The lecturer having 12 or more period work load, will be appointed as a full time lecturer. The educational qualifications Eligibility numberms are decided by University Grants Commission they are applicable to full time part time lecturers. Respondent is said to have been assigned duties to frame question papers and examination of answer books. A purported approval was granted to Respondent to work as full-time lecturer with effect from 1983-84. A companymunication to that effect is said to have been made on 04.01.2001. The Managing Committee allegedly found him qualified. By reason of an order dated 22.10.2002, the Management Council, however, declined to accept the recommendations of the Managing Committee, opined that Respondent was number qualified, stating It is clarified in respect of item No.3 of the recommendation that the opinion has been given by the Dy. Registrar to implement the decision of Management Council made on 30.10.2000. In this, there is numbercontradiction. In this respect Shri S.S. Pujari has filed a writ petition in the Honble High Court at Mumbai for grant of approval to him as a full time teacher since 1984-85. The Committee appointed by Management Council has recommended to grant the approval to Shri Pujari as a full time teacher from June 1999. Shri Pujari has served from 1983, but for this there was numberapproval from the University, hence it would be proper to take decision about the approval. Along with this breaks in service of Shri Pujari has number been companydoned. After companysidering the other matters, the report of the companymittee appointed by Management Council is for companysideration in respect of approval of Shri S.S. Pujari. RESOLUTION The resolution of Management Council dated 30.10.2000 giving full time approval to Shri Pujari is cancelled. The report submitted by Shri M.J. Mohite and Prin. P.R. Karanjikar Enquiry Committee is taken numbere of. Shri Pujari does number bear the required eligibility for the post of teacher hence he should number be given approval as a teacher. The University also opined that Respondent was number qualified to be a full-time teacher pursuant whereto or in furtherance whereof, Respondent No.2-College asked him to refund all amounts paid to him since June 1999. A writ petition was filed by Respondent before the High Court. A statement was made before the High Court on behalf of Respondent No.2- College that the post of full-time lecturer on the basis of the numberms set up by the University and the State had fallen vacant from June 1999. Inter alia, relying on or on the basis of the said statement, the High Court opined We are, however, of the view that the alternate submission which has been urged on behalf of the Petitioner has to be accepted and the Petitioner is entitled to the companyferment of the status of a full-time Lecturer with effect from June, 1999. At the outset, it would be worthwhile to reiterate that this was in fact, the plea of the First Respondent-College. The plea found favour with the two member Committee appointed by the University Whereas the State of Maharashtra preferred a special leave petition questioning the grant of relief, Respondent has preferred a petition for grant of special leave companytending that he was entitled to the benefit of a full-time lecturer from 1983 and number from June 1999. We may place on records that the Respondent No.2-College has number preferred any special leave petition as it is of the view that whereas from June 1999 it is for the State Government to make reimbursements of payment towards salaries, but in the event, the appeal preferred by Respondent Civil Appeal No. 1387 of 2006 is accepted, the College will have to bear the same. The State, inter alia, companytends that No approval having been given after 31.10.1985 in regard to appointment of Respondent by Shivaji University, his companytinuation therein was illegal. There having been several breaks in services of Respondent and such breaks having number been companydoned, the High Court erred in passing the impugned order, particularly in view of the fact that even the University had number companydoned the breaks during the period from 01.02.1993 to 19.06.1995 i.e. for the period of two years 139 days. The Local Selection Committee although appointed Respondent again on 20.06.1995, but numberapproval therefor having been granted by the University as it was companysidered to be a fresh appointment, the question of his eligibility was required to be companysidered having regard to the educational qualifications laid down by UGC in 1991. The impugned judgment is number sustainable in view of Section 26 1 e read with Section 14 of the University Grants Commission Act, 1956 for short, the Act and Regulation 2 of the Qualifications which required of a person to be appointed to the teaching staff of a University and Institutions affiliated to it Regulation, 1991, numberperson shall be appointed to a teaching post in affiliated companylege of any recognized University, if he does number fulfill the required qualification specified in the schedule-I, which for a lecturer in Political Science is as under a good academic record with at least 55 marks in Master Degree and b candidate should have cleared eligibility test of Lecturer NET companyducted by UGC or SET companyducted by State Govt. Indisputably, Respondent having obtained 51 marks in M.A. and having cleared the said examination, was number eligible to companytinue as full-time lecturer since 19.09.1991. Respondent having number fulfilled the requisite qualifications companyld number have been directed to be appointed as a full-time teacher. The companytentions of Respondent , on the other hand, are Having obtained a second class Masters Degree and having been appointed on a specific companydition which he had fulfilled, the impugned order passed in the writ petition was legal. Respondent being a full-time lecturer from 1984 onwards, status given to him as a full-time lecturer only from 1999 is wholly wrong as he became entitled thereto from 1984 Respondent being companyered by G.R. dated 31.01.1983, in terms whereof the requirement was to have the minimum of 50 marks in A., which he possessed, qualification of 55 marks in M.A. and passing of NET SET examinations companyld number have been given a retrospective effect. G.R. dated 18.06.1994 must be read with G.R. dated 22.12.1995 and the letter dated 21.03.1997 which clearly show that the teachers appointed by Local Selection Committee prior to the pay revision of 19.09.1991 were exempt from 55 qualifying marks and NET SET examinations. The University having approved the recruitment of a person cannot be permitted to resile therefrom as he had been granted full-time status with effect from 1983-84. The Managing Committee companyld number have taken a different view from the resolution of the Management Council resolution dated 30.10.2000 granting approval of full time with effect from 1983-84 and the letter of the University informing the College dated 04.01.2001. In any event, there was numberbasis for the Managing Council to depart from its earlier resolution dated 30.10.2000. Respondent No.2 itself having recommended that Respondent No.1 be appointed as a full-time lecturer in Political Science with effect from June, 1999, the State should number have filed this special leave petition. The fact of the matter as numbericed hereinbefore is number much in dispute. The companye question, however, is as to whether G.R. dated 28.10.1991 companyld be given a retrospective effect. We would deal with the said question, a little later. We may at the outset, numbere that companycededly Respondent obtained 51 marks in his Masters Degree. The question with regard to retrospective effect of the said resolution will have to be answered having regard to the fact situation obtaining herein. If prior to October 1991, Respondent was validly appointed, he companyld justifiably companytend that the 1991 Regulation companyld number have been given a retrospective effect. With a view to examine the said question, we may numberice the following provisions of the Act. Section 14 of the Act reads as under Consequences of failure of Universities to companyply with recommendations of the Commission. If any University grants affiliation in respect of any companyrse of study to any companylege referred to in sub-section 5 of section 12A in companytravention of the provision of that sub-section or fails within a reasonable time to companyply with any recommendation made by the Commission under section 12 or section 13, or companytravenes the provisions of any rule made under clause f or clause g of sub-section 2 of section 25, or of any regulation made under clause e or f or clause g of section 26, the Commission, after taking into companysideration the cause, if any, shown by the University or such failure or companytravention, may withhold from the University the grants proposed to be made out of the Fund of the Commission. Section 26 1 e reads as under Power to make regulations. The Commission may, by numberification in the Official Gazette, make regulations companysistent with this Act and the rules made thereunder, e defining the qualifications that should ordinarily be required of any person to be appointed to the teaching staff of the University having regard to the branch of education in which he is expected to give instructions The companyleges affiliated to University are bound by the Regulations. The Regulations have force of law. Terms and companyditions of services of an University Employee as also the employees of companyleges affiliated to it are governed by statutory regulations. Regulations in terms of the provisions of the Act were framed in 1991 known as The University Grants Commission Qualification required of a person to be appointed to the teaching staff of a University and Institutions affiliated to it Regulation, 1991. Regulation 2 provides for the essential qualifications. Statute 195 1 of the Shivaji University provides for companyposition of duly companystituted University Selection Committee for Teachers. Statutes 195 3 d and 195 3 e read as under The Selection Committee shall interview and adjudge the merits of each candidate in accordance with the qualifications advertised, and recommend to the Vice-Chancellor the names arranged in order of merit of the persons, if exceeding one, whom it recommends for appointment to the posts advertised giving reasons for the order of preference. If numberperson is selected, a report to that effect be made. The Committee will have the right to recommend only one name if others are number found suitable for recommending a panel. The recommendations of the Committee shall be subject to the approval of the Vice-Chancellor. The Governing Body shall appoint from amongst the persons so recommended and approved by the Vice- Chancellor the Principal or the number of teachers required to fill in the posts advertised. Such appointment shall be strictly according to the order of merit prepared by the Selection Committee and approved by the Vice-Chancellor. Provided that, where the Governing Body proposes to make an appointment otherwise in accordance with the order of merit arranged by the Selection Committee, it shall record its reasons in writing and submit them to the Vice-Chancellor, who may approve the proposal or return into the Governing Body for reconsideration. After reconsideration, if the Governing Body desires to pursue its Original Proposal, it shall refer the matter again to the Vice-Chancellor for his decision which shall be final. Respondent was appointed on Clock Hour Basis through the Selection Committee. There exists a dispute as to whether it is one-man department or number. It is also in dispute as to whether the workload was divided or number. It is number denied and disputed that prior to June 1999 there had been workload of a full-time post of teacher. It is furthermore number in dispute that Respondent was number appointed by a duly companystituted University Selection Committee. The Government Resolution dated 31.01.1983 to which reliance has been placed by Respondent reads as under The qualifications prescribed by the University Grants Commission and accepted by the Government of India are applicable as a companydition precedent to the teachers becoming eligible for the revised scales have, inter alia, been mentioned in para V of Government Resolution, Education Youth Services Department No. USG-1180/129387/XXXII Cell , dated 25th October, 1977. The question of relaxation of the companydition regarding companysistently good record and B at the Masters degree precedent to the eligibility of the revised University Grants Commission recommended scales was under companysideration of the Government of India for some time past. The Government of India, Ministry of Education Culture, New Delhi in their letter dated 4th November, 1982 have since companymunicated that the question regarding relaxation of minimum qualifications has since been reviewed by them and that the revised minimum qualifications recommended by the University Grants Commission for teaching posts in Universities and Colleges will companytinue to be operative as in the past. The University Grants Commission has since revised the qualifications for the University and College teachers suitably. In view of the decision taken by the Government of India, Government is pleased to direct in partial modification of the orders companytained in para V of Government Resolution, Education Youth Services Department No. USG-1177/129387/XXXII Cell , dated 25th October, 1977 that the revised qualifications prescribed by the University Grants Commission and accepted by the Government of India as shown in Appendix A of this Government Resolution shall be applicable as a companydition precedent to the teachers becoming eligible for the revised scales. Orders companytained in Government Resolution dated 25.10.1977 mentioned above should be treated as modified to the extent indicated in para 1 above. The Universities should be requested to initiate action to amend the existing statutes in the matter framed under the relevant provisions of the respective Universities Acts of 1974 with a view to implementing the scheme of revision of scales of pay of their own teachers as well as of teachers in Colleges affiliated to them in the light of the provisions companytained in this Government Resolution. On that date, Respondent was number in service. If on that date he was number in service, the question of his being duly selected by the University Selection Committee on permanent basis would number arise. He, furthermore, was number even found suitable. The purport relaxation granted in terms of the G.R. in regard to the qualifications of the teacher was in relation to those who were already in service in permanent position duly selected by the University Selection Committee prior to revision of pay scales. It was, therefore, number applicable to the case of Respondent. Prior approval, moreover, of the State Government in terms of Section 8 1 a of the Act was a pre-requisite. The relaxation of NET SET examinations in terms of the GR dated 22.12.1995 was granted to the lecturers, who had got more than 55 marks at Masters Degree passed M. Phil. Examination before 31.12.1993 submitted their Ph.D. thesis and who were appointed through companypetent proper Selection Committee companystituted by University. It is in that view of the matter numberrelaxation about percentage of the marks obtained by Respondent in Masters Degree was available to him, as he had number submitted his Ph.D. thesis. He, it will bear repetition to state, was also number appointed on permanent post by the University Selection Committee. We may also numberice the Government Circular dated 11.01.1996, which is in the following terms While discussing the problems of teachers, MFCTO brought it to the numberice of the Government that, if between two full time services of a teacher, there is a part time service, his full time services are number companysidered in companynting the total period of service. As a result while giving him the benefit of Career Advancement Scheme, he is number given the benefit of his former full time services. If the break between his two full time services is companydoned and his services are treated as companytinuous, he gets the benefit, due to him, after retirement. In order to remove this discrepancy, the Government is issuing the order that if the part time services occur or fall between two full time services, such services should be treated as a technical break and subject to the following terms and companyditions, the benefit of such services should be given to the lecturers. Between two full time services, maximum six breaks amounting to the maximum period of two years should be companysidered as acceptable. No break out of these six breaks should be more than the period of one year. Respondent companyld number take any benefit of the said circular letter also, inter alia, for the reason that he had number been appointed by duly companystituted University Selection Committee. Another question which was relevant but had number been companysidered by the High Court was that having regard to the breaks in service, he companyld have been appointed only as a freshly recruited teacher. At one point of time, the College and the University might have companymitted mistake in treating him as a full-time teacher, but such mistakes companyld have been rectified, if they were apparent on the face of the records. Moreover, the order impugned in the writ petition, in our opinion, cannot be said to be wholly arbitrary and unreasonable so as to warrant interference by a superior Court. The eligibility criteria cannot be relaxed unless there exists a specific provision therefor. A person can avail the benefit of relaxation numberification only when he companyes within the purview thereof and when he satisfies the companyditions specified therein. It has been companytended that the University had number given any approval as regards his appointment as part-time teacher in Political Science, as he did number receive a companyy therefor. If there had been numberapproval to his appointment after 30.10.1985, the decision of the University Managing Council on 30.10.2000 cannot be faulted. Condonation of breaks in his service was also imperative in nature which had number been given. The Council of Education of the College by a companymunication dated 03.05.2000 stated The Principal Shahaji Law College has sent proposal for approval of Prof. S.S. Pujari as a full time teacher a number of times from 1983-84 onwards, but the approval was refused by the University Authorities on the ground that he does number fulfil the required educational qualifications University letter No.5980 dated 05.09.1985 No.11228 dated 10th May 1996, No.12929 dated 3rd January 1998, letter from Joint Director of Higher Education, Kolhapur letter No. 10493 dated 25.06.1997 . It clearly shows that, there was numberdefault on the part of the companylege. Hence, the question of payment of fine does number arise. In these circumstances, the decision taken by the University Authorities in respect of grant of approval to Prof. S.S. Pujari as a full time teacher Political Science since 1983-84 onwards is number companyrect and legal and hence is liable to be cancelled. University authorities have taken the decision in companynection with the letter from Shahaji Law College dated 23rd September 1999. According to the above mentioned letter dated 4th January, 2001, we are taking necessary steps to appoint Prof. Pujari as a full time teacher Political Science from June 1999 subject to the approval of the Joint Director of Higher Education, Kolhapur. Under the circumstances, as mentioned above, I request your honour to issue fresh order to that effect. I am enclosing herewith some of the relevant zerox companyies of the letters received from University and Joint Director E. , Kolhapur for favour of information and early action. Emphasis supplied If that is so, the High Court must be held to have companymitted an error in arriving at the said decision. We may also numberice that he was found unsuitable, as being number possessed of the requisite qualifications. Respondent might have been appointed by the College, but the State while undertaking to bear the financial burden of payment of salaries and other remunerations to teachers of a College are number bound thereby. It is entitled to companytend that all appointments must be in accordance with the Statute. See A. Umarani v. Registrar, Cooperative Societies and Others 2004 7 SCC 112 Mahendra L Jain and Others v. Indore Development Authority and Ors. | 4 |
Thursday, 1st November 2001
LORD JUSTICE SIMON BROWN: These are three renewed applications by Czech Roma for permission to appeal to this court against the Immigration Appeal Tribunal's determination of 9th March 2001 dismissing each of their appeals, and two linked appeals, against previous individual decisions by special adjudicators dismissing their appeals against the refusal of asylum by the Secretary of State. The IAT's determination, I may note, extends to 61 very closely printed pages equivalent to a substantially longer transcript in the usual form. It followed a two-day hearing at which all the parties were represented by counsel.
I refused an application initially on the documents in July in these terms:
"I have found the IAT's enormously thorough and conscientious determination entirely convincing, not least in its resolution of the apparent conflict between earlier Tribunal decisions - the only reason why leave to appeal to the IAT was given in the first place.
I am not at all persuaded by the grounds of (or skeleton argument advanced upon) the applicant's proposed further appeal. They are, I think, effectively refuted in the reasons given by Mr Barnes"
- he was the Vice-President of the Tribunal sitting on these cases -
"on 7th May 2001 when refusing this application on behalf of the IAT. This reasoning is to my mind unaffected by the subsequent decisions of the Court of Appeal in Katrinak and in Harakel, both of which turned on the individual facts of those cases (and in the former case on essentially procedural questions)."
The reasons to which I there referred (specifically in the case of Amoz Puvoza) were these:
"The Tribunal notes the assertions of fact contained in paragraphs 1 to 3 but the claim of fact made in paragraph 4 is not accepted."
That was a reference to Mr Glen Hodgetts's skeleton argument which in paragraph 4 had included the assertion that the Czech State is basically unable to protect its citizens. The quotation continues:
"What are recorded are unrelated incidents which form no part of any pattern of violence specifically and coherently directed against the applicant. Paragraph 5 sets out the issues to the Tribunal."
The principal issue before the Tribunal was whether there is a future underlying risk of persecution if the appellant was returned, and whether the Czech State could offer the appellant practical protection from the risk of violent attack pursuant to the legal framework adumbrated in Horvath, and now further explained by the Court of Appeal in Noune, 6th December 2000.
The quotation continues:
"The Tribunal notes that its views as to the earlier claims as to the effect of non-criminal discriminatory actions are not the subject of the grounds of appeal. The underlying assumption of the grounds appears to be that for Roma as a whole in the Czech Republic the state fails to meet its duty of protection of its citizens from the criminal activities of non-state agents. For the reasons explained in the determination the Tribunal found on the evidence that as a matter of fact this failure was not made out. The draftsman of the grounds, however, seeks to elevate the exception to the norm.
In the view of the Tribunal of paragraphs 6 to 15 of the grounds do not raise properly arguable issues of law but amount to a disagreement with the factual findings of the Tribunal. The Tribunal merely analyses the evidence in accordance with the approach set out in paragraphs 138 to 140 of the determination. That approach was not arguably incorrect. What the grounds significantly fail to deal with is the general conclusion of the Tribunal, expressed at paragraph 157 of the determination. Those findings were determinative of this appeal because in the context of them the applicant fails to establish that the protection available to her is not to be regarded as at a proper level.
Insofar as the grounds purport to raise issues of law, the legal principles are established by the House of Lords' decision in Horvath v Secretary of State for the Home Department [2000] Imm AR 552, and the grounds raise no issue which in the view of the Tribunal has any real prospect of success."
- and I just read paragraph 157 which is there referred to, although of course it has to be seen in the context of this enormously thorough determination as a whole:
"157. The issue of whether the harm feared by Roma is part of a co-ordinated plan on the part of the skinheads does not in our view raise any issues relevant to these appeals. That there is some loose organisation of the skinheads we do not doubt but, bearing in mind the relative numbers of skinheads in comparison with the Roma population, the attacks are in general terms random, clearly frequently opportunistic and primarily carried out by strangers to the victim. It might be that an individual claimant who could show that he was being so targeted to the knowledge of the state authorities, and that they had failed in their specific duty to him (compare the circumstances in Osman) would be entitled to invoke the principle of surrogacy because of a failure in the state system specific to that claimant, but it is not, on the facts we have found, an argument which can be successfully advanced in putting forward a general claim to persecution as a class."
The applications for leave in the other two cases, I note, were out of time, but Mr Barnes indicated that he would in any event have refused those applications for broadly the same reasons as he gave in Ms Puzova's case.
When I refused leave in these cases I directed that any renewed applications should come before a court consisting of two Lords Justices; that was to ensure that before permission to appeal was finally refused two of us were of the same view. We are; and I observe in passing that it was Schiemann LJ who presided in this court and gave the leading judgment in Noune - the case which it is suggested, certainly by Miss Webber, is authority for a contrasting approach to the Horvath principle, but which I for my part do not read in that way.
Having spent a great deal of time in advance of today's hearing reading not merely the very long IAT determination and the very full and helpful skeleton arguments (four in all, since fresh counsel are now instructed respectively for Ms Puzova and the other two applicants) but also certain of the other voluminous papers in the court's papers, and having listened this morning to Mr Blake QC and Miss Webber, although we necessarily had to confine their arguments into a comparatively short hearing, I for my part am not persuaded, nor I understand is my Lord, that there will be any realistic prospect of success upon these proposed appeals. That is all I intend to say. To deal with the individual arguments advanced would really be quite impracticable in the circumstances of this particular case within the compass of any reasonably succinct judgment.
I would accordingly dismiss these applications.
LORD JUSTICE SCHIEMANN: I would also dismiss the applications. I echo what was said by Lord Justice Brook in Josef Koller v Secretary of State for the Home Department [2001] EWCA 1267, where he said:
"In a branch of jurisprudence which is fact-rich, it was very much a matter for this expert tribunal (which must be receiving many applications from unhappy Roma people from central Europe) to apply the principles they have been told to apply by the House of Lords in Horvath."
In my judgment this case does not raise any point fit for a further appeal, which will be a third appeal to this court. There does not appear to have been a mistake of law in the judgment of the tribunal. Nor has there been a procedural mistake.
In those circumstance, I also, would dismiss all three applications.
(Applications dismissed; costs to be assessed in accordance with Community Legal Service Regulations). | 7 |
Mr. Justice Longmore.
DRY DOCK 7 This is a case about the insurance of a floating dry dock; the dock was built as long ago as 1916 and spent most of its life in Sweden but was bought by the Southampton company of Kirkaldy and Sons Ltd {"Kirkaldy") in 1997. Kirkaldy were a company whose main business was blasting and painting of vessels; they wished to expand their business in south-west England by purchasing their own dry dock and setting it up in Portland, Dorset in competition with ship repair and maintenance companies in Southampton. They obtained insurance for 12 months at Lloyd's with the Coffey and Cox Syndicates on 22 July 1997. It was agreed the risk would incept on 28 July while the dock was expected to be still in Sweden. On 12 August 1997 the dry dock began its voyage under tow and it arrived in Portland on 21 August 1997. Thereafter work was carried out to prepare the dry dock for her final mooring place at Portland. There was stormy weather over the week-end of 8-9 November 1997 but that blew itself out; on the morning of 10 November 1997 mariners in a neighbouring vessel heard a loud noise. That was the noise of one of the dry dock's cranes falling from the top deck on to the pontoon deck. Thereafter the dock sunk at her moorings and could not be raised even by the best efforts of salvors. She became a total loss and the port authority required the wreck to be removed.
The dry dock was insured against both total loss with a valuation of £600,000 and for wreck removal; in order to recover for a total loss Kirkaldy (to whom I shall now refer as "the Owners") had to prove a loss by perils insured against (such as peril of the seas) whereas to recover the expenses incurred by virtue of the removal of the wreck, they only had to show an accident or occurrence during the period of insurance which gave rise to
"10.2.
4. expenses of the removal of the wreck of the Vessel from any place .... occupied by the Assured."
Owners began by suing underwriters for both total loss and wreck removal expenses. But on the 7th day of the trial (25 January 1999) they accepted that they could not prove a loss by perils of the seas or any other peril insured against. The claim as finally formulated in final speeches was, therefore, solely a claim for wreck removal expenses in the sum of £1,000,000, the limit of liability for that particular cover provided in the insurance.
The risk was placed by Lloyd's brokers Swire Blanch pursuant to the terms of a permanent open cover for port risks agreed between their predecessors and the underwriters in January 1997. The open cover was not initially used, but, when the first business (which was Dry Dock 7) became available, it was agreed it would incept on 28 July 1997. The open cover had a limit of £500,000 on any one vessel, so Swire Blanch had to present this declaration for signature to both syndicates. When it was scratched on 22 July 1997 by Mr. Walker of the Coffey Syndicate and Mr. Shrimpton of the Cox Syndicate it was contemplated that the vessel would be towed first to Southampton for work to be done on her and later to Portland. In fact plans changed with the result that the vessel was towed direct from Sweden to Portland but that was only decided after 22 July 1997. The clause of the declaration on which underwriters have relied for their defence in this action reads:-
"Towage of vessel to be undertaken by TSA Tugs Ltd. Towage approval survey - applies to both tows - and condition survey to be performed by Surveyor Peter Curtiss and all recommendations complied with prior to sailing." [The part between the parenthetical dashes was added by Mr. Walker in his pen; the rest of the clause was in type]
Underwriters defence to the claim is that Mr. Peter Curtis (to give him his accurate spelling) performed neither a towage survey nor a condition survey and that the contract of insurance came to an end at latest when the vessel sailed. Alternatively they say that Owners failed to disclose that the vessel was unseaworthy at the time of the contract and that they justifiably avoided the contract of insurance.
Witnesses.
I heard evidence of fact on behalf of the Plaintiffs from Mr. David Figgins, the managing director of and majority shareholder in Kirkaldy, the owning company, from two gentlemen whose services he used for the purpose of deciding whether to buy the Dry Dock, Mr. Alan Vincent and Mr. David Bailey. Mr. Vincent was a friend and Mr. Bailey, an employee, was a marine electrical engineer and more knowledgeable than Mr. Figgins about technical matters to do with ships and docks. I also heard from Mr. Nother who rode on the tow between Sweden and Portland and from Mr. Curtis, the surveyor nominated in the insurance contract. For the defence, I heard from Mr. Walker and Mr. Shrimpton, and also Mr. Tate, Mr. Walker's deputy on the underwriting box. There was little dispute about the essential facts. I read certain statements under the Civil Evidence Act. I had marine engineering expert evidence from Mr. Hart of Aquarius International Consultants for the Plaintiff and Mr. Waite of the Salvage association for the Defendants; I also heard expert underwriting evidence from Mr. Richard Outhwaite and Mr Geoffrey Luben.
The Facts.
Once Mr. Figgins decided he would like his company to acquire a dry dock, he went to look at two available dry docks, one in Copenhagen and the other (the one he eventually bought) at Falkenburg near Gothenburg in Sweden. He took with him Mr. Bob Middle and Mr. Vincent and they decided that the dock at Falkenburg was much the better value. They visited Falkenburg on 6 March 1997 and spent much of the day looking over the dock. It was made clear by Falkvarv AB, the Sellers, that the dock would have to be purchased on an "as is" basis and that the buyers would have to conduct their own inspection of the vessel and decide according to their own judgment whether it was suitable for their purposes. They together examined a number of parts of the dock as follows:-
(1) The surface of the pontoon deck, including the keel blocks;
(2) The inner wing walls of the dock, above the pontoon deck;
(3) The port outer wing wall from the quayside;
(4) The starboard outer wing wall by looking down from the companionways;
(5) The upper deck on each wing wall;
(6) The safety deck (or, as it was sometimes called, the machinery deck) on each wing wall;
(7) The internal wing walls of tank Nos. 3 fore and aft, on port side down to a level about 5 feet above the pontoon deck;
(8) The cranes which were operated for their benefit;
(9) The pipework, the ballast valves and their control arms.
The inspection was both visual and with hammer testing. They did not see inside the tanks under the pontoon deck or the starboard wing tanks, nor any of the port wing tanks apart from Nos. 3 fore and aft.
As a result of this inspection, they became aware that there was some thinning or wastage of steel and some corrosion, particularly in and around the wind and water line. They concluded, however, that the dock was essentially sound in areas which they had seen and which they considered important. There were some holes in the safety deck but not (through Inbro Citygate Insurance Brokers Ltd.) to procure insurance with the Royal Insurance group did not bear fruit; he then obtained an introduction (through personnel at TSA Tugs Ltd.) to Mr. Richard Ellis of Everard Insurance Brokers Ltd. ("Everards"). Everards were not themselves Lloyd's Brokers but knew that Mr. Adrian Walker of the Coffey Syndicate was prepared to write dry dock risks. They accordingly instructed the firm of Swire Blanch Ltd. to obtain quotes and Mr. Jon Suckling of that firm obtained two quotes, one from the Coffey Syndicate which required surveys to take place but not as a pre-condition to inception of the risk and one from another syndicate which required surveys to take place before the risk could incept at all. On 16th July Mr. Figgins indicated that he preferred the Coffey Syndicate's quote and Richard Ellis then sought to find a surveyor to satisfy insurers' requirements. It was he who heard about Peter Curtis (probably from Mr. Middle). Mr. Ellis then telephoned Mr. Curtis and asked if he would inspect the dock to approve it for towage to England. Mr. Curtis agreed and after some further discussion with insurers (via Mr. Suckling) Mr. Curtis was written into the contract of insurance as the nominated surveyor. Mr. Ellis then faxed Mr. Curtis on 18 July 1997 in these terms:-
Further to our telephone conversation on the afternoon of 16th July, I confirm that I have been instructed by Mr. David Figgins, Managing Director of J Kirkaldy & Sons, to place insurance on the above and that you are his nominated Surveyor to carry out the Underwriters required Towage Approval Survey and Condition Survey. Any recommendations you make must be complied with prior to sailing. We are advised that the inception date of the cover will be 28th July and we understand that it is the Owners intention for the survey to be carried out around that date with any work required being carried out within the following 7 days. Thereafter the vessel will sail weather permitting.
The slip was then scratched on 22 July 1997 and the contract of insurance with the term I have already quoted was then in place with the risk incepting on 28th July.
Mr. Curtis flew out to Falkenburg with Mr. David Bailey on 28 July and inspected the dock on 29 July and for a short while on 30 July before flying home. There was a ship ("MADZY") on the dock when he arrived which left the dock on the evening of 29th July. They were met by the dock manager Mr. Johansen who gave them a general tour and then left them to their own devices. Mr Curtis then began his inspection; sometimes Mr. Bailey was with him while at other times Mr. Bailey was looking round by himself. Mr. Curtis could not satisfactorily examine the pontoon deck due to the presence of the MADZY but inspected the following parts of the dock:-
(1) The inner wing walls port and starboard; this was done from the pontoon deck;
(2) The port outer wing walls; this was done from the quayside. The starboard outer wing wall was not inspected since it was on the seaward side;
(3) Some of the port side internal wing tanks down to the internal water line; the tanks he inspected were the port side tanks Nos. 3 fore and aft. The tanks had a walkway which he utilised.
in areas which caused them alarm. Mr. Vincent noted an area of heavy corrosion in the after part of the vessel but did not regard that as of fundamental concern.
Someone at Falkenburg told Mr. Figgins and Mr. Vincent that the dock had a leak and that the dock required pumping every 2 days or so, for about 10-15 minutes. That did not cause them any surprise in a structure that was already 80 years old. Neither of them asked the Sellers what the source of the leak was but Mr. Vincent thought it could be attributed to a leaking gland which he had noticed on one of the pump valves. They also learned that the Sellers had had no programme of planned maintenance - there was no requirement that the dock be classed and it was not classed in fact - but repaired as and when they found it to be necessary, Mr. Figgins was satisfied that the dock would serve his purposes and on 27 March 1 997 he made a contract to buy it "as is" at Falkvarv for the sum of £180,000. He then set about arranging for it to be towed to England and for it to be covered by insurance. On 9th July a contract with TSA Tugs Ltd. was made for towage of the dock from Falkenburg to Portland by the tug TOWING WIZARD.
As far as insurance was concerned, Mr. Figgins relied heavily on Mr. Tony Symons of Paul Jones Insurance Services Ltd. His initial efforts
From this walkway he climbed out towards the walls, using frames or cross-bracings; he also descended ladders alongside the pump shafts down to within about 2 feet of the water in the bottom tanks. Mr. Curtis asked Mr. Johansen whether the dock needed to be pumped and was told that pumping was required for 15 minutes or so every other day. He observed that the pumps were not in use during the day he inspected the vessel or that part of the following day when he was present. He assumed, therefore, that the leak was not serious and that there was nothing which affected the seaworthiness of the dock. Mr. Curtis did not examine
(1) the bottom tanks underneath the pontoon deck;
(2) the starboard wing tanks;
(3) the port side wing tanks apart from No. 3 fore and aft where, however, the ballast pipes were to be found;
(4) the cranes, although they were being used while he was conducting his inspection.
He observed some localised wastage of steelwork in the shell plates and the frames. Overall he was satisfied with what he found and did not think it necessary to examine tanks other than those he inspected.
He did make certain recommendations which are set out in his written evidence to the court (B/102-3); in particular he required doubler plates to be fitted in way of the wind and water line on the inner wing walls wherever he had made chalk marks. He then returned from Sweden to the United Kingdom on 30 July 1 997 together with Mr. Bailey.
He revisited the dock on 10 August 1997 to ensure that his recommendations had been complied and to approve the tug and its towing equipment. He was satisfied that his recommendations had been complied with and he returned to the United Kingdom together with Mr. Figgins and Mr. Bailey who had both arrived in Sweden to see the tug set off with the dry dock in tow.
In his written evidence Mr. Curtis said that he considered his instructions amounted to a requirement for an inspection (or survey) for towage approval only. He also said that his understanding of the words "and Condition Survey" in the context of a Towage Approval Survey was not significantly different to his understanding of the instructions given to him over the telephone by Mr. Ellis on 1 6 July.
"i.e. the sole purpose of my instructions was to attend for towage approval of the dock from Falkenburg to Southampton and to assess the condition of the dock to undergo the towage intended only."
Mr. Curtis drew up a report of his inspection of the dry dock and dating it 11 August 1997, sent it to Everards under cover a fax sheet of 13 August entitled "Re Towage of Floating Dry-dock Sweden to Portland (Dorset)". The relevant content of the fax was
".......herewith towage condition details for the above......"
Everards faxed that on to Swire Blanch whose Matthew Pike then took it to Mr. Walker's box on 14 August. Mr. Walker was away on holiday but his deputy Mr. Tate read Mr. Curtis's report at Mr. Pike's request and, then, also at Mr. Pike's request, signed the Everard's fax, "Noted and Agreed". Owners subsequently paid the premium charged by Mr. Walker of £8250, being 1 % (£6000) for 12 months cover and .375% (£2,250) for (as it turned out) a single tow.
On 21 August 1997 the dock arrived at Portland and made fast to the Outer Coaling Pier. In September two dumb barges were added to the cover; so was a workboat in October.
After the sinking on 10 November, Everard's suggested that an underwriter's surveyor should attend. After some hesitation, underwriters decided to use Peter Curtis since he knew about and had inspected the dock. Divers were in attendance and Mr. Curtis tried unsuccessfully to raise the dock by running the pumps. He decided to invite tenders from salvors for raising the dock and reporting on the damage: he later recommended that a tender from Smit Tak should be accepted. Meanwhile the Owners declared an actual or constructive total loss on the basis that a divers' survey showed that the dock had broken her back. Underwriters declined to accept notice of abandonment but agreed to put Owners in the same position as if a Writ had been issued and asked for curtain further information such as evidence that the vessel had been certified to comply with Harbour Authority Regulations and what, if any, preparations for heavy weather Owners had made in respect of the dry dock. Underwriters agreed to bear the cost in the first instance of Smit Tak raising and recovering the wreck and also instructed the Salvage Association to survey the dock, to determine the cause of the sinking and advise on the prospects of repair. Underwriters wanted to instruct the Salvage Association as fully as possible and asked Mr. Curtis for his condition survey on the telephone. It then became clear there was no condition survey separate from the towage approval survey. On 13 December Smit Tak had begun work (including diving and patching, and also pumping operations) but by 7th January 1998 decided that it was no longer feasible to raise the dock by pumping and patching. In the event the dock had to be cut up on the sea bed before it would be removed; this was done not by Smit Tak but by Scaldis B.V. between 20 April and 21 August 1998 at a cost greater than the limit of £1,000,000 contained in the policy. Mr. Marshall and Mr. Waite surveyed the dock at various stages between 3rd March and 22nd June on behalf of underwriters and they made various reports. Meanwhile on 24 December 1997 underwriters had asserted that no condition survey had been performed and that there was a breach of warranty on the part of the Owners with the result that there was no insurance in place.
The reports of Mr. Waite and Mr. Marshall of the Salvage Association on the state of the dock at the time of the sinking were not seriously disputed. They concluded, and I find, that there was extensive and debilitating corrosion and that there were four areas where ingress to the pontoon deck could have occurred as a result of the wasted condition of the dock. Those areas were (I summarise pages 32-37 of the Salvage Association Report dated 12 October 1998):-
(1) The bottom shell plating. These were specific areas where the bottom shell was not watertight viz. the troughs below the bottom, the port forward areas of No. 7 port tank along the bilge, the No. 6 starboard wing tank, No. 11 port tank and No. 8 starboard centre tank. The ability of the dock to withstand hydrostatic loads in these areas was compromised.
(2) The outer wing walls of the structure. Here the plating was heavily wasted by corrosion between the 2nd and 4th seams (above the height of the pontoon deck). Once the pontoon deck was immersed, the watertight integrity of the dock was compromised.
(3) The pontoon deck plating. This had been subject to severe corrosion over previous years, but obviously corroded and perforated plates had been doubled and, sometimes, trebled. This corrosion is not surprising on a dry dock and, since it occurred in a readily visible area, had been largely remedied. When, however, the dock was immersed, substantial hydrostatic loads had to be borne by the pontoon deck and it is an open question whether the corrosion present would impair the watertight integrity of the dock.
(4) The internal bulkheads. Photographs showed that a number of bulkheads were severely and extensively corroded. When the dock was ballasted, water could therefore migrate to a space adjacent to the space being ballasted. A "free surface effect" could occur which would affect the stability of the dock.
(5) Internal stiffeners. Many internal stiffeners were severely corroded below the level of 4 metres above the pontoon deck. That seriously affected local strength as well as the overall strength of the dock.
The importance of this is that underwriters argued that these defects were present in Sweden, were not noticed or commented on by Mr. Curtis and would have been revealed if a condition survey had been carried out. My finding is that these defects were substantially present before the dock left Sweden. Mr. Curtis did not appreciate the degree of wastage in the bottom shell plating, the outer wing walls, the internal bulkheads and the internal stiffeners because he did not examine them in any detail. Whether the wastage would have been revealed on a condition survey depends on the nature of the condition survey carried out.
The Issues.
(1) Alleged breach of the term relating to the condition survey.
(i) What type of condition survey did the policy require?
(ii) Was the condition survey of the required type carried out?
(iii) If it was not carried out, is there a breach of the term of the policy?
(iv) Does that constitute a breach of warranty so that the insurance contract was discharged?
(2) Alleged breach of the term relating to the towage Approval Survey.
(3) If there was any such breach as alleged was that breach waived by insurers or they are estopped from relying on the breach?
(4) Non-disclosure of the of the fact that the dock had a leak at the time the insurance contract was made on 22 July 1997.
(1) (i) Type of Condition Survey required by the policy.
The term "condition survey" is not a term of art. The question of its meaning in this particular insurance contract is thus a question of construction of the contract on which I would not normally expect to hear evidence going beyond the matrix of the contract, save for any evidence legitimately called to identify the proferor of the phrase "condition survey" for the purpose of the contra proferentem principle. This last evidence was not controversial since Mr. Walker accepted (and indeed alleged) that the requirement for a condition survey was something that was added to the brokers' original draft at his own insistence. If, therefore, there is any ambiguity about the expression, it is to be resolved against him and in favour of the insured.
As far as the matrix of the contract is concerned, I find that both Mr. Ellis of Everard's and Mr. Suckling of Swire Blanch (the Lloyd's brokers) were acting on behalf of the assured in the usual way in their dealings with Mr. Walker of the Coffey Syndicate and Mr. Shrimpton of the Cox Syndicate. Both the brokers and the underwriters were experienced in marine insurance and were operating in a market where the concept of a "condition survey" had a relevant history. Before 1991 it was not commonplace for marine underwriters to require a condition survey for the purposes of a hull and machinery policy; they would normally rely on a vessel being in class as a sufficient protection for their interests. Condition surveys were, however, by no means unknown. The Salvage Association (which was generally regarded in the market as acting on insurers' behalf) were from time to time asked to perform them and, in the booklet they issued in 1979 for surveyors employed by the Association, there was a section devoted to such surveys as well as a section devoted to what were called "warranty surveys". There was also a section dealing with "voyage and towage approval surveys". It was, however, more common in the years before 1991 for P & I Clubs to require a condition survey as shown by the introductory series of definitions to a number of articles collected in a booklet entitled The Nautical Institute on the Work of a Nautical Surveyor published in 1989 and publicly available thereafter. This defines a condition survey as
"A survey of a vessel's machinery and/or hull in particular, or generally, and of the equipment on board to establish the condition and, perhaps, fitness to trade of the vessel. Often required by Protecting and Indemnity (P & I) Clubs, prior to a vessel being entered with the Club, or at regular intervals during entry, or alternatively at the time any Vessel reaches a predetermined age - sometimes 16 years."
After 1989 various problems emerged in the market in relation to losses of bulk carriers (including tankers); hull and machinery underwriters also took advantage of a certain hardening of the market in their favour and started to require a structural condition survey by the use of a structural condition warranty clause. The Joint Hull Committee issued a notice (JH 722) in December 1991 with the aim of setting a faster pace than had previously prevailed towards improving safety; it stated that independent surveys of suspect vessels were the only practical answer and that the Salvage Association was currently drawing up a set of Guidelines for the performance of what the Committee called "Structural Condition Surveys". The notice continued
"The survey will be very thorough and will entail the vessel being empty of cargo and available for a period of at least three days, but probably longer depending on the condition of the vessel.
The survey will concentrate on the likely vulnerable areas of the structure of the vessel and will include thickness gauging of hull plates and frames. Nevertheless the surveyor will not neglect the other requirements of a normal condition survey .....
In order to incorporate Underwriters requirements within the policy conditions the attached Structural Condition Warranty has been drawn up with the help and advice of the Technical and Clauses Committee."
A draft of a clause expressly called "Structural Condition Warranty" was indeed attached; that requires a Structural Condition Survey to be carried out by the Salvage Association after cargo has been completely discharged. Any recommendations are to be complied with and such compliance has to be certified by the Salvage Association.
On the evidence before me there was in 1991 no lesser standard warranty relating to a "condition survey" as such but underwriters began to call for condition surveys with the option for the attending surveyor to recommend an upgrade to a structural condition survey. An appropriate clause was produced in 1993 by the Joint Hull Committee in the following terms :-
"CONDITION SURVEY WARRANTY (JH 115)
Warranted vessel be subject to a Condition Survey, at owner's expense, by the Salvage Association within thirty days and all recommendations complied with.
It being understood that the surveyor's recommendations may include the necessity that this survey be upgraded to a Structural Condition Survey (JH 722) as per warranty attached."
This form of warranty was then amended in March 1994 to enable underwriters to receive a copy of the Salvage Association's recommendations and/or reports (JH 115A).
JH 722 contemplated that the association would issue Guidance Notes in relation to structural condition surveys for both their own and non-Association surveyors. What in fact happened was that the Association did produce Guidance Notes but they were private to Salvage Association surveyors and were not to be released either to shipowners or non-Association surveyors. There were, however, complementary notes for shipowners in relation to preparations required for a JH 722 survey. Once JH 115 had come into regular use, underwriters inclined to prefer it to JH 722 and in July 1994, the Salvage Association issued a new set of Guidance Notes to their own surveyors for, as they described them, "Condition surveys other than JH 722". Again they were not publicly available.
It is against this background that the words "Towage approval Survey - applies to both tows - and condition survey to be performed by Surveyor Peter Curtiss and all recommendations complied with prior to sailing" fall to be construed. It is at once apparent that none of the standard forms approved by Joint Hull Committee was being used, that there is no reference to a structural condition survey and that the survey is to be performed by a nominated surveyor who is not expressed to be a member or employee of the Salvage Association. (As a matter of fact, Mr. Curtis was not an employee of the Salvage Association and did not get any Guidance Notes, although he had done occasional damage surveys at the Association's request in the past).
Mr Teare Q.C. for the Owners submitted that the expression 'condition survey' had no fixed or uniform meaning; that it could mean
(1) that the condition of the dock was to be surveyed for the purposes of the tow;
(2) that a survey of the condition of the dock (including its machinery and equipment) was to be earned out as far as possible with a noting of areas which were inaccessible, without any expression of judgment by the surveyor as to the reasonableness of the risk to the assured by underwriters;
(3) that the condition of the dock was to be surveyed and the surveyor was to exercise a judgment as to whether the dock was fit to operate as a floating dry dock.
He submitted that all these view were reasonable and possible, that Mr. Curtis had adopted the first construction as correct (with Owners' expert Mr. Hart adopting the second and Insurers' expert Mr. Waite adopting the third), that the clause was ambiguous and that the ambiguity should be resolved against the insurer and the first possible construction was the correct one for this case. What was not reasonable or possible was insurers' pleaded construction which amounted to a full structural condition survey which was precisely what the clause did not require.
Mr. Reeder Q.C.. for Insurers submitted that one must have regard to the purpose for which the survey of the condition was required. The towage approval survey was a survey to approve the vessel as fit to be towed; the condition survey could not relate to towage but must relate to suitability (viz. seaworthiness) for the remainder of the risk while the dry dock was in use in port after the comparatively short period of the tow. Mr. Reeder did not support his pleaded case in its extreme form but did submit that, if the surveyor felt that he could not do an adequate condition survey without e.g. inspecting and ultrasonically testing every tank (which would mean that each tank would have first to be cleaned in readiness) then the dock owner would have to do whatever was required.
It will be noted that both sets of submissions fasten on the purpose of the condition survey in order to ascertain what is contractually required. In my judgment they are right to do so, because unless one can focus on its purpose it is not all easy to judge what is required. Once one accepts that it is necessary to consider the purpose of the survey, it must follow that the purpose of the condition survey must be some purpose in addition to the survey for towage approval purposes - otherwise there would be little point in requiring a condition survey in addition to a towage approval survey. It is, of course, true that it may be necessary to inspect and form an opinion about various aspects of the condition of the vessel for the purposes of giving towage approval; if so, that would all be part of a towage approval survey. The requirement for a condition survey in the present case must, however, be a requirement for some purpose in addition to the purposes of towage approval. That purpose can only relate to the requirement for cover of 12 months by way of port risks. This is all the more likely if (as I find) both the broker, Mr. Suckling, and the leading underwriter, Mr. Walker, knew that the vessel was not classed, albeit that there was a warranty that it was or would be certified to be in accordance with Harbour Authority Regulations.
I conclude, therefore, that term "condition survey" in the declaration scratched by Mr. Walker and Mr. Shrimpton meant a survey of the condition of the vessel for the purposes of determining whether it was seaworthy for a 1 2 months port risks cover.
(1) (ii) Was a Condition Survey of the required type carried out?
The only possible answer to this question is that it was not. Mr. Curtis has always accepted that he did not carry out a survey to assess the seaworthiness of the vessel as an operating dry dock during the period of cover. I have already quoted from his written evidence to the effect that he assessed the condition of the dock only to determine whether it was suitable to undergo the intended towage.
In his written evidence Mr. Curtis accepted that he had not done what he called "a full structural condition survey" and stated that he had not been instructed to do so. Insofar as this implies that there is no intermediate stage between a survey of the condition of the dry dock for the purposes of towage and a full structural condition survey of the dry dock, I do not consider that correct because JH 115 contemplates just such an intermediate stage. But, whatever the position as to that, he accepted in his cross-examination that if he had been doing a condition survey for port risks cover, he would have done his survey completely differently because he would then have considered that a structural survey (including ultrasonic testing) was necessary,
Mr. Teare submitted that, because Mr. Curtis assessed the condition of the dry dock for the purpose of the intended towage, he had done a condition survey of the kind required by the terms of the declaration. This submission might have some substance if what was done by way of surveying the ship for the purposes of granting towage approval would inevitably be the same as what would be done by way of surveying for the purposes of spending a year in port operating as a dry dock. But the expert evidence was that a surveyor would, in fact, do at least some different work for each of the requirements. The most obvious difference between the towing of a dry dock and its operations is that one would not expect to ballast for a tow when the dry dock will be towed high in the water. While operating in port as a dry dock, on the other hand, it will often be necessary to sink the dry dock by ballasting it, so that a ship can be positioned on her, and then raise the dock by deballasting it, so that the ship can be repaired and then sink the dock again so that the repaired vessel can float off. A surveyor inspecting the dry dock to satisfy himself that it can operate safely in port will have to consider likely hydrostatic forces and the ability of the dry dock to withstand them in a way that a surveyor inspecting the dry dock for towage purposes will not. Mr. Curtis himself agreed that this was the position.
Owners then argued that (1) Mr. Curtis understood his instructions as being to survey the condition of the dry dock for the purpose of towage (2) that his instructions were in the same terms as the policy requirement (3) that such an understanding was not an unreasonable one (4) that the policy requirement was therefore ambiguous and {5) that the policy should, therefore, be construed against the underwriter.
This argument falls down both at stage (2) and stage (4). It is true that the terms of Mr. Ellis's written fax of 18th July instructed Mr. Curtis to "carry out the Underwriters required Towage Approval Survey and Condition Survey". But Mr. Curtis gave evidence that in prior telephone conversations Mr. Ellis had talked only of a Towage Approval Survey. I do not make any positive finding about that partly because I do not need to and partly because Mr. Ellis was too ill to give evidence. (I received his statement in evidence without objection but he was never cross-examined). It is also the case that the heading of Mr. Ellis's fax read: "J. Kirkaldy & Sons - Towage of Floating Drydock From Sweden to Southampton Water" thus giving sole emphasis to the towage aspect of the matter. Mr. Curtis never saw the insurance terms and so was never in a position to consider the meaning of the survey clause as part of the insurance. Whether his understanding of his instructions was reasonable or unreasonable is not, therefore, a relevant inquiry for me to make; something can obviously be said on both sides about that.
But the argument also breaks down at stage (4).-Even if it were right to say that Mr. Curtis's understanding of his instructions was reasonable (or not unreasonable) and that those instructions tallied precisely with the wording of the contract of insurance so that his understanding amounted to a reasonable (or not unreasonable) interpretation of the insurance wording, it does not follow that the wording is ambiguous so as to require reliance on what I will call the contra proferentem doctrine. There must be a true ambiguity before one can resort to the rule; it would be wrong to create an ambiguity in order to resort to the rule, see Cole v Accident Insurance (1889) 5 TLR 736, 737 per Lindley and Bowen L.JJ. Similarly it is wrong to use one person's view (however informed he may be) to say that a term is ambiguous when, in truth, it is not. As DuParcq J. said in Passmore v Vulcan Boiler & General Insurance Co. (1936) 54 Lloyd's LR. 92, 93
"If, looking at the policy, the meaning appears to be clear, there is no room for the application of that doctrine."
As I read this dictum, it is for the judge to decide whether there is any ambiguity and then apply the doctrine. The fact that a surveyor or even an insurance expert may take a different view of construction does not mean that there is any ambiguity which requires resolution by any doctrine of law.
Mr. Teare further relied on the fact that there was no statement of the purpose of the condition survey and that since both the condition survey and the towage approval survey had to be performed at the same time viz. "prior to sailing" (with the result that, if the warranty was not complied with, the contract would, on sailing, be discharged) both surveys must have had the same purpose viz. to assess fitness for the tow. This reads too much into the fact that it must have been contemplated that both surveys were to be done at the same time. It was also pointed out that the surveyor in Sweden could not know anything about the conditions under which the dry dock would have to operate at Portland. But the fact that insurers did not require (as they might have done) an operational survey to bo performed before the dry dock began operations in Portland does not mean that they only wanted the condition survey to relate to the dock's suitability for tow. Rather the contrary.
The expert underwriters agreed that most underwriters would regard the tow as more risky than the operations in port. It does not follow, to my mind, that the requirement for a condition survey in the contract related only to the tow. The most that could be said to follow is that the condition survey may have been required for both the tow and for port purposes.
Finally it was said that insurers were content to accept the risk of why the dry dock while in Sweden without a condition survey (which was only required prior to sailing and there was, therefore, no reason
why the dry dock while in Sweden without a condition survey (which was only required prior to sailing) and there was, therefore, no reason why they should not be prepared to accept the risk of the dry dock while in Portland likewise without a condition survey done for that purpose but only done for the purpose of the towage. This is not a convincing argument since the parties all thought that the dock would not be operating as a dry dock while in Sweden and would only be there for a short time (during survey and compliance with any recommendations) before sailing to England.
I conclude therefore that what was required by the policy was a survey of the condition of the dry dock with a view to assessing its seaworthiness as an operating dry dock during the period of cover and not merely assessing its suitability for the tow. To my mind this is consistent with the conclusion reached by Colman J. in the case of a yacht insurance with the clause "Subject to survey including valuation by independent qualified surveyor" in Zeus Tradition Marine v Bell (judgment delivered 30 October 1998). He held that what was there required was that:-
"(i) a survey of the vessel should have been conducted for condition and value by an independent surveyor and
(ii) a condition survey should have been satisfactory in the sense that it gave rise to no defects or recommendations in respect of seaworthiness or passenger safety."
(1) (iii) Was there a breach of the policy?
Mr Teare argued that there was no breach of the policy even if a condition survey of the required type was not done. He submitted
(A) that, on the true construction of the terms of the declaration, the parties had agreed to leave it to Mr. Curtis, as the nominated surveyor, to decide what he should do by way of conducting the towage approval survey and the condition survey and that included deciding how he should interpret his instructions; if therefore he had not performed the required type of survey, that did not constitute a breach of condition
(B) that, as a matter of market practice, the nominated surveyor was regarded as acting on behalf of underwriters and that, if there was a failure on the part of Mr. Curtis to do a condition survey of the required type, that failure occurred while he was acting "for" underwriters who could not complain that the requirement of a condition survey was not satisfied.
(A) "Leaving it" to the surveyor.
It is not uncommon for parties to a contract to agree to leave the performance of an obligation under the contract to a third party. When what is left to a third party is a survey, that will require the third party to exercise his skill and judgment in the execution of his task; he may have to exercise his discretion or his judgment in deciding what parts of the vessel to examine, what testing to do and many other matters. It may be that, in such cases, the parties do not intend that a court should examine minutely or at all the decisions made by a surveyor in the course of his survey in order to determine whether the survey was defective (when judged by an objective standard) or indeed whether it was so defective as not to amount to a survey at all. Mr. Teare submitted that it was no part of the court's function to second-guess what the surveyor does or to compare what he does to any objective standard. Mr. Reeder's final resting-place on this aspect of the case was that for a surveyor to fail to do something essential for the purpose of a survey will vitiate the survey to such an extent that it will not constitute a survey at all, while doing something essential in the wrong way will not mean that no survey at all is done. Mr. Reeder's submission opens up almost as many questions as it resolves - how does one decide what is "essential" for the purposes of a survey?
In what is a difficult area, it is appropriate to obtain assistance from those cases where parties to a contract have agreed that relevant decisions in the course of a contract are to be made by a third party such as an expert of one kind or another e.g. a valuer or independent chartered accountant. A surveyor whose duty is to examine a piece of property, make any necessary recommendations and ensure such recommendations are complied with is not, of course, quite the same as an expert entrusted with making a final decision but the analogy is a moderately close one at any rate where the expert is not acting as an arbitrator. This area of the law has been somewhat beset with (1) the difficulties that can arise if the expert makes a mistake of law and (2) a consideration of the question whether a question of construction is a question of law, but the current state of the law seems to be that if a decision is left to an expert and that decision requires the solution of a question of construction the court will not examine the question of construction for itself. The way it was put by Knox J. in Nikko Hotels (UK) Ltd. v M.E.P.C. Plc. [1991] 2 E.G.L.R. 103 was as follows:-
"If parties agree to refer to the final and conclusive judgment of an expert an issue which either consists of a question of construction or necessarily involves the solution of a question of construction, the expert's decision will be final and conclusive and, therefore, not open to review or treatment by the courts as a nullity on the ground that the expert's decision on construction was erroneous in law, unless it can be shown that the expert has not performed the task assigned to him. If he has answered the right question in the wrong way, his decision will be binding. If he has answered the wrong question, his decision will be a nullity in that case."
After making allowance for the context of the accountant being required in the Nikko case to make a final decision which would bind the parties (which is not, at any rate expressly, paralleled in the clause which I have to construe), I think that the approach of Knox J. can afford useful guidance in this case. The passage I have cited has been followed by the Court of Appeal in both The Glacier Bay [1996] 1 Lloyd's Rep. 370, 377-8 per Neill L.J. and Brown v G10 Insurance [1998] Lloyd's I & R Reports 201, 209 per Chadwick L.J.
This approach enabled Mr. Teare to submit that, when Mr. Curtis misinterpreted his instructions, he was making a decision on a question of construction which was within the ambit of what the parties agreed that he should do and that, therefore, there was no breach of the clause in the insurance contract.
That does not seem to me to be correct. Mr. Curtis did not in the present case answer the right question in the wrong way. He did not ask the right question at all or, to use Knox J's phrase, he answered the wrong question. He answered the question whether the condition of the dry dock was fit for towage across the North Sea; he never answered the correct question viz. whether the condition of the dry dock was suitable for coverage for 12 months under a port risks policy. I do not consider that the fact that Mr. Curtis decided that all he needed to do was a towage approval survey means that there is no breach of the terms of the declaration of insurance.
Acting "for" underwriters.
On this question I heard expert evidence from Mr. Outhwaite for the Owners and Mr. Luben for the insurers both experienced marine underwriters (although Mr. Outhwaite has now retired). This evidence became admissible by virtue of Owners' plea (para 8.5 of Amended Reply) that it was usual or customary underwriting practice to regard surveyors, nominated in the insurance contract to carry out towage approval, condition or other surveys, as acting on behalf of and with the authority of underwriters. On the evidence I was not able to conclude that there was any such usual or customary practice as regards non-Salvage Association surveyors. Of course, in one sense a nominated surveyor, although paid by the vessel's owners (as he was in this case), is looking after underwriters' interests, because the underwriters do not wish to insure a vessel which has not passed whatever type of survey it is that the underwriters require; but it is a far cry from that to say that underwriters' accept responsibility for anything and everything done by the surveyor named in the insurance contract. Mr. Outhwaite did not suggest in his oral evidence that underwriters would be liable if the nominated surveyor damaged the ship and he was quite clear that, if no condition survey of the kind required by the contract was done, the terms of the insurance were not complied with. It would be odd indeed if the surveyor were to have authority to vary the contract of insurance.
I conclude therefore, that the condition of the declaration requiring the performance of a condition survey was not complied with and that, to that extent, there was a breach of the terms of the contract of insurance.
(1) (iv) Breach of warranty.
Mr Teare accepted that the term requiring performance of towage approval and condition surveys was a warranty and that non-compliance with that warranty discharged the contract. The slight curiosity is that the term is contained in the declaration under the head "Conditions" while there is a separate head for "Warranties". Normally that might lead to the conclusion that the survey term was not a warranty in the technical marine insurance sense. But that is not a matter of any consequence since the "Condition" only makes sense if it is construed as a condition precedent to insurers' liability - in other words insurers are not liable unless the relevant surveys have been performed. As Lord Goff of Chieveley said in The Good Luck [1992] 1 A.C. 233, 263A "fulfilment of the warranty is a condition precedent to the liability of the insurer."
(2) Towage Approval Survey.
I permitted insurers to make a late amendment to their Points of Defence to allege that no towage approval survey had been performed, despite the fact the insurers' solicitors had expressly accepted in January of 1998 that there had been just such a towage approval survey.
At first sight the allegation is a little surprising because there is no dispute that (whatever else he may or may not have done) Mr. Curtis at least purported to perform a towage approval survey. He even provided a report (not required by the clause) which said in the final sentence:-
"it is considered that the floating dry dock has been properly prepared and is fit for towage from Falkenburg to Portland."
The dry dock, of course, survived the tow without damage.
Mr. Reeder alleged that the towage approval survey was nevertheless defective because Mr. Curtis failed to do any testing for strength which was an essential part of a proper towage approval survey. This had the merit of being consistent (as an allegation) with the way that Mr. Reeder put the insurers' case as set out in (1) (iii) (A) above. But I have rejected that way of putting the case as being capable of proving a breach of the survey clause in the declaration. In this respect Mr. Curtis answered the right question - he conducted a towage approval survey as required.
In case I am wrong about that I should say whether testing for strength is an essential part of a towage approval survey. On this I had the expert evidence of Mr. Hart for the Owners and Mr. Waite of the Salvage Association for the insurers. They both agreed that it was an important part of any towage approval survey of a dry dock to test it for its ability to withstand environmental loads during the course of the tow, particularly longitudinal bending movements imposed by sea swell and waves. For this purpose it would be necessary to do theoretical calculations on the basis of the as-built drawings of the dry dock, if available, or (if not available) on the basis of a mid-ship section modulus which would have to be built for the purpose. Mr. Curtis did consider the wave strengths likely to be encountered in an August crossing of the North Sea but did not do any theoretical calculations. He was not given any drawings to enable him to do such calculations nor did he make (or cause to be made) a mid-ship section modulus. When asked how he was satisfied the dock would survive the tow he said "I just had a feeling it would". He took a calculated risk and got away with it. On the expert evidence I am satisfied that it is not good practice to do a towage approval survey without doing theoretical stress calculations. Unfortunately neither expert was asked in terms whether such theoretical calculations were an "essential" part of a towage approval survey because Mr. Reader had not by that stage formulated his statement of principle.
Mr. Reeder also submitted that Mr. Curtis never did a survey which would establish that the dry dock had sufficient strength in fact, because he did not enter a sufficient number of tanks and inspect in each tank. He only entered two of the port side wing tanks and did not examine the starboard wing tanks at all nor the bottom tanks below the pontoon deck (because there was a vessel on the pontoon deck during his survey). Mr. Curtis was again criticised for failing to examine a sufficient number of tanks for the purpose of his towage approval survey. Adopting the language of Knox J. in Nikko, it seems to me that examining an insufficient number of tanks is doing the right thing in the wrong way or to an insufficient extent rather than failing to do something essential to the concept of a towage approval survey.
The small number of tanks examined is, however, relevant to the question of doing stress calculations. If the position is that (for whatever reason) only a small number of tanks can be examined, it becomes all the more important to do stress calculations; conversely, stress calculations may be less important if an examination of a large number of tanks is enough to show that the dry dock is sufficiently strong to withstand a contemplated towage.
If, therefore, Mr. Reeder's test were the right test in law I would conclude in this case that, in the light of Mr. Curtis's ability to enter and examine only the port side wing tanks, stress calculations were essential and that a failure to do such calculations was a failure to do an essential part of a towage approval survey.
As it is, however, my view is that Mr. Curtis did, in fact, do a towage approval survey. The fact that such a survey can be criticised is nothing to the point. There is, therefore, no breach of the survey clause in the contract of insurance in this particular respect.
(3) Waiver/Estoppel
Mr. Teare submitted that if no condition survey had been performed with the result that the contract of insurance was discharged on sailing, the contract came back into effect as a result of Mr. Tate's noting and agreeing of Mr. Curtis's report on 14 August while Mr. Walker was away on holiday. It was pointed out that, after that, insurers accepted premium and agreed to add dumb barges and a workboat to the policy. In these circumstances it was said that insurers knew there had been no condition survey and, having expressed no concern at these differing stages, they represented that its absence did not matter. They were therefore estopped from now asserting that it did matter and from relying on the fact that the contract was discharged at the time of sailing. As I have already indicated Mr. Walker did not know the position until about 15 December when either he or Mr. Tate telephoned Mr. Curtis and asked for a copy of the Condition Survey and Mr. Curtis said he had not done one.
Section 33 of the Marine Insurance Act provides for the insurer to be discharged from liability as from the date of breach of warranty. It is therefore, apparent that no question of election arises although by Section 34 (3) the insurers may waive the breach. Since the breach of warranty does not give rise to any election by the insurer e.g. to choose to keep the contract on foot, the doctrine of waiver by election has no application. The Owners must rely on the doctrine of waiver by estoppel, see Clarke, Law of Insurance Contracts 2nd ed. para 20-7A, MacGillivray, Law of Insurance. 9th ed. paras 10-96 to 10-98. Owners must, therefore, show a representation by words or conduct that insurers would not rely on the requirement of a condition survey.
It seems to me that the Owners cannot show this. The mere fact that Mr. Tate read Mr. Curtis's Towage Approval Survey and wrote "Noted & agreed" on Everard's fax beneath Everard's words:-
"We attach for your records, copy of fax from surveyor re towage approval."
cannot be the equivalent of saying 'we accept that the absence of a condition survey doesn't matter'. Neither can any later conduct by the insurers be so construed. The clause did not require the survey or surveys to be shown to underwriters; no insurer (let alone his deputy) can be expected to carry in his mind all the terms of all the insurances currently operative. It will only be if the insurer (or his deputy) addressed his mind to the question of the absence of a coalition survey that any unequivocal representation could begin to arise. As it is, once underwriters became aware that Mr. Curtis had not done a condition survey, they were quick to say that there was no cover.
Non-Disclosure.
In the light of my decision on breach of warranty, underwriters do not need the defence. I should, however, make some short findings. The original allegation related to the condition of the vessel as a whole but Mr. Reeder soon appreciated that Kirkaldy could not be expected to be aware of deficiencies that even the surveyor did not find. Of course Mr. Curtis only examined the dry dock, in any event, after the insurance contract had been concluded and Mr. Reeder accepted that he could only rely on matters shown to Mr. Figgins at the time when the contract was made. He accordingly applied for leave to amend to allege that Owners had not disclosed the fact (known to them) that the dry dock leaked from an unknown source and required to be pumped about every 2 days for about 10-20 minutes. I gave leave. This was the only allegation pursued in Mr. Reeder's final address.
I have already found that when Mr. Figgins went to look at the dock in March 1997 he and Mr. Vincent were informed that there was a leak and that the dock required pumping every 2 days or so for about 10 -15 minutes. They were not surprised at this information relating to such an old dry dock. The question is whether this was material to be disclosed; if this leak meant that the dry dock was or might be unseaworthy, that would normally be a matter which required disclosure. But underwriters were obviously not relying on what the insured did or did not disclose to them in this respect because they required both a towage approval survey and a condition survey. If the condition survey was required for the purpose of determining whether the vessel was fit for 12 months cover in port, then it seems to me self-evident the warranty of the condition survey rendered it superfluous to disclose matters which would be found and, if necessary dealt with by way of recommendation; on this basis, however, the underwriters are in any event not liable in this case.
The same considerations apply even if (contrary to my view) Mr. Teare were correct that the required condition survey was only to see if the dry dock was fit for towage; indeed the presence of a leak and the possible resulting unseaworthiness were, if anything, more material to the tow across the North Sea than to use in port. Once again the underwriter who stipulated for a condition survey relies on the surveyor rather than the assured to deal with any unseaworthiness of the vessel and so it was, in my view, unnecessary to disclose the existence of the leak by reason of the warranty as to a survey by an independent surveyor. Section 18 (3)(d) of the Marine Insurance Act applies. In fact, of course, Mr. Curtis was told that the vessel did require pumping 1 5 minutes or so every other day. He assumed it was not serious; Mr. Figgins can hardly be criticised for taking the same view. This was certainly the view of Mr. Outhwaite (whose evidence on this aspect of the matter I preferred to that of Mr. Luben) and even Mr. Walker said he would not expect an owner to put forward his own opinion on the condition of the dock in general (or, I infer) on the question whether the dock was seaworthy. I also consider that if the broker had mentioned a leak which required attention for 10 -15 minutes every 2 days Mr. Walker would still have written the risk, relying on the surveyor to deal with it as he thought right.
In these circumstances I do not consider that a defence of nondisclosure is available to the insurers, but they are entitled to decline liability due to the absence of a condition survey. There will, therefore, be judgment for the Defendant.
In many ways I am sorry to reach that conclusion. Mr. Figgins has no experience himself of the marine insurance market and will, no doubt, feel he has been let down by his advisers. But sympathy for the Owners cannot divert me from applying what seems to me the right construction of the contract which has been made with marine underwriters on his behalf. | 2 |
Lord Justice Thorpe:
Mr James Turner QC leading Mr Robertson appeals the decision of Parker J that the child of the family with whom she was concerned was habitually resident in this jurisdiction at the time, namely end of September 2007, when the father removed the child from London to his home in Belgium without the mother's consent and at a time when he was able to gain possession of the child. The judgment below was given on 30 July 2008 and the appeal was listed in this court in December 2008. We adjourned to enable the parties to pursue the possibility of compromise with the aid of mediation. Sadly, that desirable objective escaped them and we today resume the hearing of the contested appeal.
There are in fact two appeals: the father's appeal against the finding that his daughter was habitually resident here on the date of her removal to Belgium, and a cross-appeal by the mother to the judge's findings in relation to consent and acquiescence. The judge herself granted permission to appeal on both points, and in relation to the issue of habitual residence I stress that she said this:
"My decision in respect of habitual residence is extremely finely balanced and it may be that the father will wish to appeal it, particularly in relation to his argument in respect of the centre of interest test. It may be that I am found to be wrong on that point."
With that introduction I turn to the history of the family. The only child is Z and she is now three and a half years of age. The parties to the appeal, Z's parents, are in their late 30s or perhaps now just in their early 40s. The father was born in Belgium and is Belgian through and through. The mother was born in Australia and is Australian through and through. They met in 2003 and began a relationship in 2004 which matured into co-habitation in the autumn of that year and engagement in December of that year. The marriage was celebrated a year later on 3 December 2005 in Australia. Married life thereafter was unsettled. Plainly there was a tension between Europe and Australia and, within Europe, a tension between Belgium and England. It is not hard to see from the mother's point of view that she would as an Australian find living in London easier than in the father's home village some 40 minutes drive north of Brussels.
Another factor that introduced uncertainty was the father's career. He sought job opportunities globally but not essentially in Belgium. The majority of the family life following Z's birth in Australia on the 14 December 2005 was spent in Belgium, either with the paternal grandmother or in an adjacent property. Indeed, on 1 February 2007 the father signed a three year lease on a two bedroom flat in his home village, and most of their worldly possessions were installed there. In the following month, March 2007, the father took a job, of two to three months' duration with possible extension, in Belfast. It was the first time that the father's work had taken him away from the mother and the family. He lived the first month in a hotel but at the end of that month he was able to move into a flat provided by the employer. That enabled mother and Z to join him in Belfast. Their arrival was on 8 April. About a month later the father secured a two year work contract for a company in London. It was on 20 May 2007 that the family's sojourn in Belfast came to an end and naturally they returned to the home in the Belgium village. The London contract commenced on 10 June 2007. For the first six weeks the father developed something of a routine, returning to Belgium on the Eurostar for weekends and lodging during the working week in London in the home of a friend.
This was obviously far from ideal, and to their considerable good fortune the father received the invitation of a friend to house sit a home in Wandsworth whilst his friend was employed on a filming project in Canada. The arrangement was absolutely ideal given that the Wandsworth home was an attractive home and fully equipped for a family with a young child. Another huge advantage of the Wandsworth home was that as house sitters they were required to pay nothing but the immediate expenses of occupation. How long was this arrangement to last? It was undoubtedly of indefinite duration given that the owner was uncertain as to the duration of the Canadian project, but the anticipated duration was within the bracket three to nine months and the father's expectation was that he would enjoy the occupation of the home for the mid point in the bracket, some six months. Accordingly mother and Z joined the father in the Wandsworth home and thereafter the only journeys to Belgium were either to inspect the home in the village, or to take Z to stay with her granny. One such stay began on 1 September and Z was with her grandmother for two weeks before another visit from her parents returned her to London. Sadly for all, the Canadian project collapsed and on 14 September an e-mail was received from the owner saying that he would be returning on 29 September unless he obtained alternative work abroad.
The premature collapse of the house sit was confirmed by a second e-mail of 22 September in which it was confirmed that he would be returning on 30 September and accordingly the exit had to be achieved on or before 29 September. It seems that this unfortunate destruction of the family plan either coincided with or precipitated the breakdown of the marriage. There was no concerted attempt to overcome the setback by a search for alternative affordable accommodation. Each made unilateral plans for the future of Z that did not allow for rental cohabitation. The father made arrangements for Z's return to Belgium, well knowing that the mother was not prepared to give Belgium any further trial. The mother made independent arrangements with the aid of her brother to return with Z to Australia. These unilateral arrangements were only symbols of the discord between them. Neither as spouses nor as parents were they able to meet the misfortune by any discussion or concerted effort. The father pre-empted the situation by removing Z from the Wandsworth home on the afternoon of 28 September at a time when the mother was having a bath.
There followed a period of agitation and uncertainty during which there was some exploration of reconciliation that did not endure for long. It is unnecessary to detail the movements of the parents and Z in that interval before the issue of divorce proceedings in this jurisdiction on 19 January. The mother's petition on allegations of conduct was swiftly followed by an application for permission to relocate permanently with Z to Australia. The father's counter was the originating summons of 11 February under the Hague 1980 Abduction Convention. So Parker J records at the outset of her judgment that she was conducting the final hearing of the originating summons under the Hague Convention; alternatively an application by the father under the inherent jurisdiction of the High Court.
As Mr Setright QC who appears for the mother today leading Mr Harrison submits, an unusual feature of the case before the judge below was extensive oral evidence. He said that each of the parents gave evidence for something over a day. The judge's judgment of some 33 pages is comprehensive and careful. She reviewed the authorities on the issue of habitual residence, consent and acquiescence. In the area of habitual residence it is common ground in this court that her review of the authorities is skilful and not open to criticism; that is, the authorities as they stood in July 2008. Mr Turner had amongst his submissions pressed that the judge should decide the issue of habitual residence not on the application of the traditional tests formulated in a number of cases crossing a variety of fields of law, but should consider a centre of interest test. The judge rejected that submission, as I have already recorded. It was to enable Mr Turner to deploy that argument in this court that she granted permission. Fortunately we do not have to grapple since in the intervening six months since this case arrived in our court there has been an important decision, namely the decision of the European Court of Justice in the case of C (reference C-523/07). It is common ground that the essence of the decision of the European Court is to be found in paragraph 44 of the judgment. It is also common ground that the European Court did not favour a centre of interest test but a fact-based enquiry broadly akin to the approach of the authorities in this jurisdiction. So the scope of this appeal has been much reduced by the helpful decision of the European Court.
Mr Turner no longer can argue the centre of interest alternative, although he has pointed out that the decision in C is strictly taken on a reference that requires the construction of an application under Article 8 rather than Articles 10 and 11 of the Regulation Brussels II Revised. We also have had our attention drawn to the reported decisions in the case of Re: P-J [2009] EWCA (Civ) 588. That case was before the President at first instance and he specifically considered the judgment of Parker J in our case and approved her approach. That I glean from paragraph 22 of the judgment of Ward LJ, who presided when the case of P-J came to this court on 23 June 2009. In paragraph 22 he said of the President:
"Finally he dealt with a submission that because of Article 3 of Brussels II revised, the phrase "habitually resident" had to be construed for the purposes of the Hague Convention in the autonomous way in which it was construed for the purposes of Brussels II revised. Mrs Justice Parker in Re: S [2008] EWHC 1873 (Fam) did not agree since she concluded that the concept of habitual residence had developed its own autonomous Hague Convention meaning broadly equating with the concept of ordinary residence and there was no reported authority, either European or domestic, in which the "centre of interest" test had been held to apply for present purposes. The President was of the view that Parker J was right to take the view which she did."
Thus Mr Turner has no ground for manoeuvre other than to argue that the judge's impeccable direction as to the law did not prevent her from erroneously applying those principles of law to the facts of the present case. Mr Setright of course has argued the contrary, and our only task is to decide which of these submissions is correct. The choice is a fine one, since with the judge I would agree that the applications of the law to the facts results in an extremely finely balanced conclusion. Mr Turner has sought to argue that in these cases it is permissible and indeed it is important to ask the question: where is the child's real home? He says that that approach draws its validity from the speech of Baroness Hale of Richmond in the House of Lords in the case of Re: J [1990] 2 AC 562. To that I would say the case of Re: J was decided in an allied but distinct area of law. The case involved a Saudi family, and the father's application for the return of the child could only be brought under the court's inherent jurisdiction, and it was within that sphere that the House of Lords considered how to approach the resolution of such a different case.
In his judgment in this court, Ward LJ in paragraph 26 set out the principles firmly established from previous authority. The fourth such principle as he defines it is as follows:
"The test is not where the 'real home' is: this was rejected by Lord Scarman at p. 348G. There is a distinction to be drawn between being settled in a new place or country and being resident there for a settled purpose which may be fulfilled by meeting a purpose of short duration or one conditional upon future events."
He went on to site from my judgment in the case of in Al Habtoor v Fotheringham [2001] 1 FLR 952 and to conclude that the distinction between real home and acquiring habitual residence which permits a stay of comparatively short time was important to maintain the proper distinction between the concepts of habitual residence and domicile. Mr Turner has laid greatest stress on the fact that the family maintained their home in the Belgium village, the home that was the nearest to permanency of any the family had ever occupied. He of course makes the point that they had not relinquished possession, that their worldly goods remained there and that from time to time the father returned there to check that all was well. So, says Mr Turner, that retention makes it impossible to assert that they ever lost or abandoned their habitual residence in Belgium, the existence of which was not in any doubt or question in May 2007. Mr Turner continues that if they have not abandoned or terminated their habitual residence in the Belgium village, they cannot have acquired habitual residence in London since it is impossible within the canon of the Abduction Convention for a child to have two habitual residences simultaneously as opposed to alternating.
That submission I do not accept as Mr Turner would have me accept it. It seems to me that the reality of the life of this family is comparable to the life of any family where the breadwinner's career and his necessity to make provision for his family carries him abroad for indefinite periods depending on the nature of the work contract that from time to time he is able to secure. In such circumstances the family's principal home where the bulk of their worldly goods is stored is a constant, but the constancy of that primary home does not prevent the acquisition of habitual residence in the work country if the other elements within the defined principles of acquisition are satisfied. So in the end we have to consider the facts as the judge found them to be, and whether it was open to her to conclude that those facts were sufficient to satisfy the tests set out in the authorities that she had so ably reviewed. It is necessary to read into this judgment what it was that she found and the important paragraph of her judgment is paragraph 103 sub-paragraph (ix).
"By the time the family went to the Wandsworth flat in July 2007 the mother had communicated to the father her deep unhappiness in Belgium and he knew it. When she came to London to join him he knew that she wanted to stay. He arranged for her to join him with that knowledge. By the time they were asked to leave the Wandsworth house the father knew that she would not go back to Belgium. The father had a longstanding connection with England and he was by then two months into a two year contract with Digi-guys. From the father's point of view it made perfect sense that, rather than commuting back and forth via Eurostar or car each weekend and living in the digs and Hackney, he should have a family life with his wife and child. The Wandsworth house-sit was hoped by both of them to be of between 6-9 months duration. Had it not been prematurely brought to an end it would have continued for as long as possible. If the owners had decided to extend their stay it is highly likely, bearing in mind the mother's feelings, and that [Z] was not at school, that it would have continued. There was no pressing need to go back to Belgium. It was not a 'holiday'."
In her conclusions on the core question of habitual residence I likewise read into this judgment paragraphs 105 to 108 inclusive:
"105. I accept that the father does not regard himself as habitually resident here. Applying the EU test it may be right that he resides or stays here, but not habitually so. But I consider that he is to be regarded for the purposes of these proceedings as habitually resident in England up until November 2005. His own statements seem to suggest that he regarded himself as being settled here; for instance, the statement in the December 2004 email that he is 'original Belgian living in England for 5 years now'. But if so, he must have ceased to be habitually resident here, probably when he went to Australia in November 2005, certainly at some point after his return to Belgium. I note also that in the tax form filled in during May 2007 he described himself as 'resident' here. I accept that when he filled out the mother's part of the form ticking the box to show her as resident here, but then crossed it out, it is likely that this was because he made a mistake and then corrected it. After all, at that time the mother was not resident here and could not be described as such. At that time there were no obvious issues as to where they were resident or habitually resident which affected [Z]. When the mother filled in the subsequent form on 11 October 2007 describing herself as resident at the Holland Park address and the father tippexed it out, there was indeed such an issue: it shows that the mother presented herself as resident in England, but no more. this was filled out when the parties were in Belgium after the father had moved [Z] back to Belgium.
106. The father's connection with this country is very substantial. It is longstanding, and the connection (tax payments etc) have legal as well as practical affect. In my view it is an important part of the factual analysis of where [Z] is habitually resident that the father has such a connection with England, and that he has a job in London. The reality is that for practical purposes he has, and has had for substantial periods in the past, two centres of interest. Thus when the mother and [Z] came to England on 28 July 2007 they came to join him and to have a family life together there. Lord Slynn's test is not exhaustive, 'Bringing possessions, doing everything necessary to establish residence before coming, having a right of abode, seeking to bring family, 'durable ties' with the country of residence or intended residence, and many other factors have to be taken into account', but they fulfilled a number of important aspects of his suggested criteria: they all had a right to live here, they had a home to go to, albeit a temporary one, they brought as much as they needed, there was nowhere to bring their other possessions, the father's connection with this country has been demonstrably durable and became so again when he took up employment here. The most important countervailing factor is the fact that they did not pack up the home in Belgium, but in the context of this case this is not in my view determinative. It seems to me to be artificial in the extreme to say that the family was not habitually resident here fairly swiftly since the father had been employed here since early June 2007 under a two year contract. Once his family joined him he was very obviously residing here with them. He stopped making the weekend trips to Belgium because his family were in London. After July 2007 the trips back to Belgium were not for the purpose of residing there but for visiting their flat and taking [Z] to visit her grandmother. In my view they had clearly shifted their base.
107. Was the period of 7-8 weeks long enough to establish residence in the context of this case? In the context of the understanding that they would be in England to pursue family life, I consider that it was. 'The requisite period is not a fixed period. It may be longer where there are doubts.' They came here to be here for between 3 and 9 months. The father thought that it would be six. They were not expecting the owner of the Wandsworth house to require them to leave on 28 September. It was a shock to both and they were unprepared for it. It is also of some significance that England was one of the places, and an obvious place, for them to be living. The father's five year plan may have been his ambition at the outset but it was not realistic once it became apparent that he had to get work wherever he could. The only issue about being in England was affordability. The EEA entry permits, which had been renewed whilst the family were in Belgium, were an obvious necessity to give them flexibility for the family either to visit or live here.
108. When they came here in July 2008 it was on the basis that they would be here for as long as living accommodation could be found for either of them both that was affordable. The mother was determined not to go back to live in Belgium and I find that she told the father this and that he knew this. Whatever the father's hopes and plans for the future, the reality is that by 28 September [Z] had lost her habitual residence in Belgium and was habitually resident in England. In the context of this case it does not seem to me undermine that finding that the family had kept the Belgian flat, that their possessions remained there, that they spent two weekends there, that the father's car was registered in Belgium, or that the mother was registered there to live and to vote. I have come to the conclusion that the only answer to the question as to where they were living, where the family were based as part of their settled order of life, as at the end of September 2007, was England. Therefore, at the point where she was removed to Belgium, [Z] was habitually resident in England. It is accepted on behalf of the father, and in any even I would find, that his unilateral actions cannot change that, and that if this is the finding, she remains habitually resident here."
We can draw from those paragraphs the reality that when father, mother and child arrived in Wandsworth, they came here with the right to live, they brought with them as much as they essentially needed and they were here as a united family within the location of the father's work contract for an indefinite period which might have its termination at the completion of the contract or earlier if accommodation of the family within this location ceased to be affordable. The judge found that they came here for between three and nine months, the father thinking it would be six. They were unprepared for the notice to terminate the licence and they were shocked by it. The only issue about continuing location in this jurisdiction was affordability. When they came here in July 2008 it was on the basis that they would be here for as long as living accommodation could be found for them both that was affordable. The mother was determined not to go back to live in Belgium, and the judge found that she told the father that and that he knew it. There is in all these cases some tension between the intention of the parties, the point of arrival and the duration of the subsequent period that the court has to label as being either habitual or not.
On the judge's findings there can be no doubt at all that at the point of arrival there was a common intention that the family would be united here in London so long as that could be maintained. The authorities make it plain that intention is not sufficiently dominant to enable the element of habitual to be established without some appreciable period. A more recent authority recognises that the length of that appreciable period will be variable depending on all the circumstances of the case. It may have to be long; it may be short. Mr Turner is entitled to submit that the high water mark for the person asserting habitual residence is the period envisaged by Butler-Sloss LJ in the case of Re: N [1995] 2 FLR 23O. Perhaps some four weeks will be just enough. Here he says there is no case on the authorities where as brief a period as six weeks has been held sufficient without some extremely forceful supporting considerations such as emigration. That may well be, but here we are considering, in the context of a Europe that is rapidly creating its own family law through Regulation, a family that has moved only across one European border in pursuit of the right of citizens to work anywhere within the member states of Europe. Given the judge's findings of fact, I conclude that she was entitled, clearly recognising the balance to be extremely fine, to conclude that it came down in favour of habitual residence as at the material date.
Mr Setright emphasises that she was uniquely well placed to make the findings of fact which she did, having heard extensive oral evidence, and I do not consider that the authorities, properly construed as she did, prevented her conclusion.
So for those reasons I would dismiss this appeal.
Lord Justice Wall:
I agree. In my judgment Parker J's decision comprises the application of well known authority to the particular facts of the case before her. I say well known for the reasons given by my Lord; namely, they are not only succinctly and carefully analysed by the judge, but more recently in this court in the case of P-J, my Lord Thorpe LJ has repeated a summary of them. The critical question, it seems to me, is the one which the judge poses in paragraph 107 of her judgment which my Lord has read into his:
"Was the period of 7-8 weeks long enough to establish residence in the context of this case? "
The judge held that it was, and although I agree with the fact that the case is finely balanced, the conclusion which the judge reached was in my view permissible on the facts as she found them to be, notably of course in the paragraphs to which my Lord has referred. In paragraph 108 she summarised her view by saying:
"When they came here in July 2008 it was on the basis that they would be here for as long as living accommodation could be found for either of them both that was affordable."
That in my judgment is a finding or conclusion which the judge was plainly entitled to reach on the material before her, and for the reasons my Lord has given it follows in my view that the appeal must be dismissed.
Lord Justice Moore-Bick:
I agree that the appeal should be dismissed for the reasons given my Lord Thorpe LJ.
Order: Appeal dismissed | 3 |
Arising out of S.L.P. C No.15507 of 2005 With CIVIL APPEAL NOs. 5824 2006 Arising out of SLP C Nos. 14260-14261 of 2005 Dr. ARIJIT PASAYAT, J. Leave granted. Challenge in these appeals is to the order passed by a Division Bench of the Guwahati High Court , Aizwal Bench at Aizwal. By the order dated 18.2.2002, the appeal filed by the appellant was dismissed for default after hearing learned companynsel for the respondent. Applications filed for restoration of the appeal after companydonation of delay in presentation of the same also stood dismissed. Though the orders challenged in the appeals related to restoration of the appeal dismissed for default, it was felt that numberuseful purpose would be served by remitting the matter back to High Court for companysideration on merits. The main ground taken by the appellant before the High Court was that it had numbernotice of the transfer of the case from the Guwahati Bench to the Aizwal Bench and therefore, there was numberappearance. This plea was turned down by the High Court on the ground that sufficient numberice was given to the appellant. Considering the long passage of time and, as agreed to by learned companynsel for the parties, the appeals are taken up for disposal on merits of the facts involved. Background facts in a nutshell are as follows One Zoremsangi, who was member of the Indian Information Service under the Central Government and working under the Ministry of Information and Broadcasting, Government of India lost her life in a road accident on 8.7.1997. She was travelling from Mumbai to Pune by a bus belonging to the appellant-Maharashtra State Road Transport Corporation hereinafter referred to as the Corporation . A Claim Petition was filed by her mother who is respondent herein. In the Claim Petition it was stated that she was aged about 31 years and 2 months at the time of accident and was drawing monthly salary of Rs.6,500/-. Her pay was revised as per the recommendation of the Fifth Pay Commission and the scale of pay was Rs.8,000-275-13,500/- and on that basis her total emoluments would be Rs.9,340/- with effect from 1.1.1996 i.e. effective date fixed by the Fifth Pay Commission. The claimant made a claim of Rs.15,00,000/-. Pursuant to the numberice the appellant entered appearance and took the preliminary stand that the application was number maintainable and there was numbercause of action. On the basis of the pleadings several issues were framed. Motor Accidents Claims Tribunal, Aizwal in short the Tribunal companysidering the material on record awarded companypensation of Rs.12,00,000/- and granted interest at the rate of 15 from the date of judgment till realization. This sum of Rs.12,00,000/- was fixed on the following basis Income of the deceased Rs.1,12,080/- per annum Rs.9,340 x 12 According to the Schedule Rs.40,000/- annual income Total Compensation is Fixed at Rs.6,40,000/- Therefore Rs. 6,40,000 x 112.080 40,000 Rs.17,93, 280/- Deducting one third expenses if she still alive as per numbere under the Schedule. - Rs. 5,97,760/- Rs.11,95,520/- Funeral Expenses. Rs. 2,000/- Loss of estate. Rs.2,500/- Total companypensation due to the claimant is Rs.12,00,020/- One month time was granted to satisfy the Award. The appellant filed an appeal which was originally heard by the Guwahati Bench, and was subsequently transferred to the Aizwal Bench. The Award was questioned by the appellant before the Guwahati Bench where the same was registered but the same was transferred to the Aizwal Bench. As numbered above, taking into account the number-appearance of the companynsel at the time of hearing, the application was dismissed. The applications for restoration and for companydonation of delay in filing the said application were dismissed. Therefore, these appeals are filed. Learned companynsel for the appellant has submitted that the High Court ought to have numbericed that the case was transferred from the Guwahati Bench to the Aizwal Bench and therefore, there was numberappearance on the date fixed. The High Court should number have summarily dismissed the appeal particularly when it was numbered in the order that the learned companynsel for the respondent was heard. High Court did number take numbere of the fact that the claimant was the mother, who is the wife of the Chief Secretary of the State. There was numberaverment in the Claim Petition that the respondent was dependant on the deceased. On the companytrary, she being the wife of the Chief Secretary by numberstretch of imagination be treated as having any dependency on the income of the deceased. A multiplier of 17 applied is clearly was on higher side. Learned companynsel for the respondent on the other hand submitted that numberplausible reason was shown to the High Court for the number-appearance on the date fixed and therefore, belated applications for restoration and companydonation of delay for presentation of the application were rightly rejected. So far as the plea of dependency is companycerned, it is stated that this aspect was number raised before the Tribunal and on the companytrary the only ground raised was that numberpart of the cause of action arose within the jurisdiction of the Tribunal. Few facts need to be numbered. Father of the deceased was number the claimant and it was only the mother. There was numbermaterial adduced before the Tribunal to show any dependency on the income of the deceased. The multiplier of 17 appears to have been taken on the basis of the age of the deceased. The interest rate of 15 is fixed also on the higher side. It is fairly a settled position in law that while parents are the claimants, the age of the deceased is number relevant and it is the age of the claimants which would determine the multiplier to be adopted. On that score it is clear that the Tribunals assessment of the quantum of Award was incorrect. See Jyoti Kaul and Ors. v. State of M.P. and Anr. 2002 6 SCC 306 , National Insurance Co. Ltd. v. M s. Swaranlata Das and Others 1993 Supp 2 SCC 743 and C.K. Subramania Iyer and Ors. v. T. Kunhikuttan Nair and Six Ors. 1969 3 SCC 64 . Deceased was the only daughter of her parents and was number staying with her parents and there is numbermaterial to show that she was companytributing to the household expenses. Taking into account the age of the claimant and the monthly income as numbericed by the Tribunal, a total sum of Rs.5,00,000/- shall be payable by the appellant to the respondent as Award. This quantum is fixed taking into account the age of the claimant, income of the deceased and other relevant factors like loss of love and affection, mental shock etc. Interest is fixed at the rate of 7.5 from the date of claim till payment. It is stated that a total sum of Rs.10,00,000/- has been paid to the respondent. If any further amount is to be paid on the basis of the direction as companytained above, the same shall be paid within three months from today. | 7 |
1995 1 Suppl. SCR 19 The Judgment of the Court was delivered by SEN, J. M s. Shiv Shankar International, 69/10, 72 Canning Street, Calcutta, imported the following four companysignments of Zip Rolls from Singapore and filed four Bills of Entry in the Customs House, Calcutta, as follows - 1 8,00,000 yards of Zip Roll No. 5 CF type per vessel John Everett, Rot No. 692/89, Line No. 196, declared C.I.F value Rs. 3,06,941.52 against B E No. 236 dated 20.11.89. 2 7,60,000 yards of Zip Roll No. 5 CF type per vessel John Everett, Rot No. 692/89, Line No. 197, declared C.I.F. value Rs. 2,91,594.44 against B E No. 1237 dated 20.11.89. 3 8,00,000 yards of Zip roll No. 5 CF type per vessel Calabar, Rot No. 687/89, Line No. 323, declared C.I.F. value Rs 3,06,911.52 against B E No. 1654 dated 28.11.89. 4 8,00,000 yards of Zip roll No. 5 CF type per vessel Calabar, Rot No. 687/89, Line No. 324, declared C.I.F. value Rs 3,06,941.52 against B E No. 1655 dated 28.11.89. The goods were detained by the Directorate of Revenue Intelligence, Calcutta, on the basis of information that the importer was misdeclaring the companyntry of origin of the imported goods and was under-invoicing the value of the goods. Sanjay Chandiram, Proprietor of M s. Shiv Shankar International, was summoned to appear for the further investigation on 8.12.89. Chandiram did number appear before the Customs authority pursuant to the summon, but moved the High Court by way of writ petition challenging the validity of the proceedings. There were various companyrt proceedings. Ultimately, the matter reached this Court. By an order dated 3.1.90, the Customs authority was directed to issue a show cause numberice within four weeks and to companyplete adjudication proceedings within a further period of three weeks thereafter. A show cause numberice was issued by the Assistant Director, D.R.I., Zonal Unit, Calcutta, to the importer and also to M s. N.N. Bose and Nephew, their Clearing Agents. It was alleged in the show cause numberice, inter alia- 1 that the said M s. S.S. International have produced forged companyntry of origin certificates declaring the said goods under import to be of DRI Korea Origin 2 that these certificates do number show the details of shipment such as marks and numbers, vessel name, weight, Bill of lading particulars, etc. 3 that the importers have produced these certificates with the intention of misleading Customs authorities regarding the real companyntry of origin of the goods under import so that they companyld get their goods assessed at a very low value of US 2.28 C.I.F. per 100 yards 4 that the importers have tried to evade duty to the tune of Rs. 1,24,62,949.53 by rnisdeclaring companyntry of origin as DPR Korea and by claiming assessment on lower value 5 that the importers have produced import licences to companyer importation of goods valued Rs. 11,29,426 whereas they have imported goods worth Rs. 75,40,386 6 that thus they have imported goods valued Rs. 64,10,989 without the companyer of any valid import licence 7 that they have manipulated import documents, submitted forged and incorrect certificates of origin, wilfully misdeclared value did number submit the original companyies of certificates of origin when asked to an thereby did number also company operate in the investigation 8 that the claim of the importers to have purchased the goods from M s. Greenland Textiles Pte. Ltd., Singapore, who in turn claim to have purchased the same from M s. Korea Building National Exp. and Imp. Corporation are number acceptable as there are only 2 dealers in DPR Korea Zip rolls in Singapore for South East Asia and Far East, namely, M s. D N Textiles and General Exporters and M s. Multimill Impex Singapore Pte. Ltd. who have been authorised by Korea Namyang Trading Corporation DPR Korea . 9 that on a reference to the Commercial Section, Embassy of the DPR Korea in the Republic of Singapore, the certificates of origin produced by the importers and purported to have been issued by the Korea Foreign Commodity Inspection Committee, Pyongyang, Korea, have been found to be incorrect and forged 10 that the goods under import have been imported number in numbermal exportworthy packing but only in plastic bags without showing any marks and numbers and other usual particulars such as traders name, companyntry of origin etc. The importer was directed to show cause why the imported goods should number be companyfiscated under Section lll d and m of the Customs Act, 1962 read with Imports and Exports Control Act, 1947 and the Imports Control Order 55. Importer was also asked to show cause why penal action should number be taken under Section 112 of the Customs Act and extra duty to the tune of Rs. 1,24,62,949.53 should number be realised from them on the basis of the ascertained value of goods of Japanese origin. After hearing the importer and companysidering the evidence and materials on record, the Assistant Collector held- The prices are definitely very low companypared to the prices numbermally numbericed for zipper rolls. This claim of lower price is due to the fact that the goods are reported to be of North Korean origin. In effect, if it is proved that the goods are of North Korean origin, the Department may have to accept the low price of US 2.28 per 100 yards. However, if it is companyclusively proved that the goods are number of North Korean origin, then the prices declared are definitely low and should be revised, The Assistant Collector companysidered the evidence on record, in particular a letter issued by the North Korean Embassy, New Delhi, dated 20th February, 1990 to the effect that the certificates allegedly issued by North Korean Embassy at Singapore, furnished by the importer, were incorrect or forged. The Assistant Collector came to the companyclusion that the importer had made elaborate arrangements to produce invalid and forged companyntry of origin certificates in companylusion with M s. Greenland Textiles. They had attempted to indicate that I he goods were of North Korean origin and they had declared a very low value of the goods. It was held by the Assistant Collector, Since the companyntry of origin claimed by them as of North Korea has been proved to be incorrect and false, the obvious companyclusion is that the price declared by them is also incorrect and proved to be a very low price. There was also another curious factor. The importer had submitted only companyies of the companyntry of origin certificates issued to M s. Greenland Textiles by the North Korean suppliers. Customs House and the Directorate of Revenue Intelligence repeatedly asked the importer to produce the original certificates. The importer, however, pleaded that original certificates had been sent back to the Singapore suppliers and numberhing but the photocopies companyld be produced. No explanation was given as to why the companyntry of origin certificates had to be sent back to the Singapore suppliers. These certificates had to be given to the importer. The Collector of Customs thereafter went into the question of what should be proper value of the Zip Rolls imported by the appellant for determination of Customs Duty. Prices of similar goods of Japanese, Taiwanese and South Korean origin were taken into companysideration. It has been stated that these are the companyntries from which Zip Rolls are usually purchased in the international trade. It was found that the prices of South Korean Zip rolls were the lowest. Since there was numberclear evidence of the companyntry of origin of imported goods, the importer was given the benefit of the lowest price quoted by South Korean exporters. In the absence of any other evidence, the South Korean price of US 5.97 per 100 yards was adopted for arriving at the value of the Zip Rolls imported by the appellant. Various companysequential orders levying duty and penalty were passed. On appeal, the Customs, Excise Gold Control Appellate Tribunal CEGAT , after the review of the facts, came to the companyclusion that the certificates of origin, furnished by the appellant, were number genuine. It also came to the companyclusion that we are of the view that the goods are number imported from DPR Korea. Thereafter, CEGAT posed the question What should be the asses-sable value as the companyntry of origin from which the goods are imported is number ascertainable? After referring to Section 14 of the Customs Act, which lays down that the value of the imported goods shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale 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, CEGAT came to the companyclusion that since the companyntry of origin of the goods was number known, the price must be arrived at according to the Customs Valuation Determination of Price of Imported Goods Rules. Thereafter, CEGAT heldthe Department was number sure about the companyrect companyntry of origin of the impugned goods and the Department was also number sure as to what should be the companyrect price of the goods. That is why it was alleged in the show cause numberice that the price should be determined on the basis of the value of the goods of Japanese origin or Taiwan origin or South Korean origin. Further, there is numberallegation in the show cause numberice that the impugned goods are companyparable in quality with the goods of Japanese or Taiwan or South Korean origin, number has the companylector given any such finding in his order. He has also number stated under which clause of section 14 of the Customs Act or under which Rule of the Valuation Rules he has determined the value for the assessment. The Tribunal came to the companyclusion that if the transaction value was available i.e. the price actually paid or payable was available, then the assessable value had to be determined by accepting the price actually paid or payable unless it was found to be number genuine. The Tribunal companycluded- Since there is numberevidence of companytemporary imports of companyparable goods at higher rate and since there is numberevidence that the appellants have remitted to the supplier any amount clandestinely more than the amount they have actually paid transaction value under Rule 4 is available and, therefore, it has to be accepted. It is difficult to companyprehend how the CEGAT, after companying to the companyclusion that certificates of origin furnished by the appellant were number genuine and after upholding that we are of the view that the goods are number imported from DPR Korea, companyld companye to the companyclusion that the declared price of importer which was the market price of DPR Korea, should be accepted as the transaction value of the goods. CEGAT failed to appreciate that Rules 3 and 4 companyld number be applied in the facts of this case. The importer had declared that the goods were of North Korean origin and a price of US2,28 per 100 yards was shown as the price paid for the imported goods. This was the price prevalent in North Korea and was very much lower than the price of Zip Rolls imported from Japan, Taiwan and South Korea. CEGAT in its order has relied on Rule 3 and Rule 4, but failed to appreciate that these Rules are number applicable in the facts of this case. Rules 3 and 5 of the Customs Valuation Determination of Price of Imported Goods Rules 1988 are a under.- 3, Determination of the method of valuation.- For the purpose of these rules, the value of the imported goods shall be the transaction value if the value cannot be determined under the provisions of clause i above, the value shall be determined by proceeding sequentially through Rules 5 to 8 of these rules. Transaction value.- l The transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these rules. The transaction value of imported goods under sub-rule 1 above shall be accepted. These rules are based on the assumption that the price actually paid or payable for the goods has been genuinely disclosed by the importer. But, if the certificates of origin of the goods have been found to be false, the value declared in the invoices cannot be accepted as genuine. The importer had represented that the goods were of North Korean origin and had provided documents to justify its claim. The price of the goods that was declared, was the market price of DPR Korea. But, the documents produced by the appellant to support its companytention that the goods were of North Korean origin, were found to be forged. The Tribunals finding is that the goods were number imported from DPR Korea. If that be the finding, as a logical companyollary, it follows that the price of the goods cannot be the price which was payable in or equivalent to the price in the North Korean market. The purchase value declared by the importer cannot be accepted as genuine under these circumstances. Section 14 of the Customs Act lays down that the value of the imported goods shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale in the companyrse of international trade, If the goods are number of North Korean origin, then there is numberpoint in finding out the price of .such goods in DPR Korea. Once the Tribunal came to the finding that the goods were number imported from DPR Korea, the only way to ascertain the value of She goods was to find out the price at which such or like goods are ordinarily sold or offered for sale in the companyrse of international trade. This is precisely what the Collector of Customs did in this case. He found out the prices of similar Zip Rolls of Japanese. Taiwanese and Sough Korean origin. These arc the companyntries from which the Zip Rolls are generally purchased in international trade. It was found that amongst these, the prices of South Korean Zip Rolls were the lowest. The Collector, therefore, took the South Korean prices as the value of the goods. The Tribunal clearly misread Rule 3. This is number a rule of invariable application regardless of the circumstances it cannot be applied when forged documents arc produced to show the place of origin of the goods. The irresistible companyclusion from the facts found in this case is that the real value of the imported goods has number been shown in the invoices. Therefore, the value of the imported goods, as declared by the importer cannot be taken as the transaction value. The Tribunal also observed that there was numberfinding by the Collector that Zip Rolls imported by other parties from Japan, South Korea or Taiwan were identical in all respects. Therefore, these goods companyld number valued on the basis of price of the goods of South Korean, Taiwanese or Japanese origin. In the facts of this case, this reasoning cannot also be sustained. What the Collector has done is to reject the North Korean price or the imported goods declared by the importer in the invoices because the goods were found number to be of North Korean origin. He had thereafter taken into companysideration the prices of similar goods of three other companyntries - Japan, Taiwan and South Korea - and has taken the lowest amongst these as the value of the goods imported. Under Rule 8 of the Customs Valuation Rules, 1988, the value of the imported goods may be determined using reasonable means companysisted with the principles and general provisions of these rules and sub-section 1 of Section 14 of the Customs Act, 1962 52 of 1962 and on the basis of data available in India. This is a residual rule to be resorted to when valuation cannot be made under any of the other foregoing rules. We arc unable to uphold the reasoning of the Tribunal that since there is numberfinding by the Collector of Customs that the Zip Rolls purchased form South Korea, Japan or Taiwan are identical in all respects with what has been falsely declared to be Zip Rolls of North Korean origin, Rules 3 and 4 must be applied. In our view, the Tribunal has overlooked number only Rule 8 but also Section 14 of the Act which provides that the value of the imported goods shall be deemed to be the price at which such or like goods are ordinarily soldin the companyrse of international trade We are of the view that in the facts of this case, the order passed by CEGAT was clearly erroneous. It took numbere of the fact that the certificates of origin produced by the importer were number genuine and companyld number be relied upon and yet came to the companyclusion that the price of the goods must be of the same place of origin as was claimed by the importer. This appeal, therefore, is allowed. The order under appeal passed by CEGAT is set aside. | 4 |
Mr Justice Henderson:
Introduction
In 1996 the claimant, Mr Simon Winters, became the Chief Executive of the United Kingdom branch of a prominent Jewish charity known as the JNF Charitable Trust ("the JNFCT") or, more simply, the Jewish National Fund ("the JNF"). He continued to hold that post until at least June of this year, when his present solicitors, George Davies LLP, wrote to the then President of the JNF, Mrs Gail Seal, on 25 June claiming that his position as Chief Executive had been undermined by changes being made to the management structure of the JNF, and that the JNF had fundamentally breached his contract of employment. On 27 June a reply to this letter was sent by the JNF's regular solicitors, Mishcon de Reya ("Mishcons"), denying that the JNF had acted in breach of Mr Winters' contract of employment and informing him that the JNF had decided to suspend him from his duties with immediate effect. The letter went on to explain that the suspension was in connection with various allegations of financial misconduct in his role as Chief Executive, and that the purpose of the suspension was to enable the JNF to carry out an investigation into those allegations, and also into two other matters concerning the establishment of an Israeli charity, Nes Eretz Israel, and the bugging of the office of the new Chairman of the Trustees of the JNF, Mr Samuel Hayek. The investigation was being conducted in conjunction with a team of forensic accountants, and was expected to take no more than three weeks. Mr Winters was told that the investigation and any subsequent disciplinary procedures would be handled in accordance with the JNF's disciplinary code. The letter concluded:
"Following the conclusion of the investigation, a decision will be made as to whether a disciplinary hearing should be convened. Our client believes that the allegations are so serious that, subject to the findings of the investigation, one potential outcome of the disciplinary hearing will be dismissal."
On 1 July 2008 Mr Winters' solicitors sent a letter of complaint to Mishcons, alleging that it was improper for Mishcons to act for the JNF in relation to the employment dispute with Mr Winters. The letter asserted that Mr Winters was a client of Mishcons, and that Mishcons had advised him in the past about the same or substantially similar matters to those in relation to which they were now acting against him. They claimed that Mishcons were in possession of confidential information about Mr Winters, and that four named individuals at Mishcons had advised Mr Winters in his personal capacity, namely Dr Anthony Julius, Mr Daniel Naftalin, Mr Daniel Morrison and Ms Victoria Pigott. The letter referred to and set out "a selection of written advice given by various partners and a consultant at your firm (Mr Julius)", and said:
"It is impossible to see how your firm considered that it was entitled to act against a client that it had acted for, in circumstances where not only does your firm have confidential information but some of that information relates to actions taken upon your advice. We appreciate that these are very serious allegations. We assure you that they are not made lightly."
An undertaking was sought that Mishcons would cease acting for the JNF immediately.
On 4 July Mishcons responded, saying that at all times they had acted for the JNF and not for Mr Winters, with the sole exception of an occasion when Mr Winters instructed Mr Morrison at the same time as the JNF instructed him to discover the author of certain letters defamatory of Mr Winters. It was said that those instructions were given by Mr Winters "in order to have the nexus to obtain the information". Subject to that exception, Mishcons maintained that the claim they had acted for Mr Winters in his personal capacity:
"… depends on a very unbalanced representation of the evidence. The emails and the excerpts are taken out of context and do not represent the true nature of the relationship this firm had with Mr Winters, which was not one of client and solicitor."
The writer went on to say that he was unable to find any confidential information which Mishcons had obtained from Mr Winters which was relevant to the current issue. In conclusion, he said he could see no reason why Mishcons could not continue to act for the JNF.
Following some further debate in correspondence, Mishcons refused to give the undertaking sought and on 16 July Mr Winters issued a claim form and an application notice for an interim injunction. His claim was described on the claim form as being "for a threatened breach of confidence" by Mishcons, and the injunction which he sought was to prevent Mishcons from acting for the JNF against him "in relation to [his] employment by the JNF and the termination thereof", together with other relief as set out in the draft order annexed. The application was supported by Mr Winters' first witness statement dated 16 July. On 22 July witness statements in answer were filed by Dr Julius and by three partners of Mishcons, Mr Libson, Mr Morrison and Mr Naftalin.
On 23 July the application came on for hearing before Blackburne J, with a one hour time estimate. In their skeleton argument for Mishcons, counsel then instructed (Mr Vernon Flynn QC and Mr James Collins) argued, among other things, that Mr Winters had failed to identify in his evidence any information allegedly provided by him to Mishcons which was confidential to him, as opposed to confidential to the JNF. In the event, the application for an interim injunction was not pursued, and directions were instead given by consent for a speedy trial of the action on 3 and 4 September, without service of any particulars of claim, defence or reply, and with a timetable for the service of further evidence in August.
Further evidence for Mr Winters was then filed, mainly comprising his second and third witness statements dated 1 August 2008. His third witness statement was confidential, and was served subject to undertakings restricting its circulation to certain named individuals within Mishcons. In it he describes certain information which he alleges that he imparted in confidence to Dr Julius at a time when Dr Julius was acting for him personally. Mr Winters also relies on a short witness statement dated 5 August 2008 by an Israeli lawyer, Mr Dror Zamir.
The written evidence was then completed by the service of witness statements in reply from Mr Naftalin and Dr Julius.
The hearing of the action took place before me on 3, 4 and 5 September 2008, and lasted for a full three days, the two-day time estimate having proved seriously inadequate. I heard oral evidence from all of the witnesses on each side, and detailed submissions on the facts and the law from leading counsel (Mr Alastair Wilson QC, leading Mr Jeremy Reed, for Mr Winters, and Mr Justin Fenwick QC, leading Mr James Collins, for Mishcons).
Since one of Mr Winters' prime objects in this litigation is to preserve the confidentiality which he says attaches to the material contained in his third witness statement, and to prevent the risk of its being used against him by the JNF in the context of the employment dispute, I acceded to applications made on his behalf that I should hear the relevant part of his oral evidence, and the relevant parts of counsels' closing submissions, in private. For the same reason, I will deal with those parts of the evidence, and the submissions relating to them, in a confidential appendix to this judgment, circulation of which will be restricted to counsel on both sides, to Mr Winters and his solicitors, and to the named individuals at Mishcons who have been permitted to see his third witness statement.
With this introduction, I shall now fill in some uncontroversial background before moving on to my assessment of the witnesses and my findings of fact about the relationship between Mr Winters and Mishcons. In the light of my findings of fact, I will then consider the relevant legal principles and state my conclusions.
Background
The JNF is an unincorporated association with objects which are charitable under English law. Its affairs are run by a board of Trustees. The JNF was founded over a hundred years ago as a vehicle for collecting money for charitable purposes in Palestine, which was then part of the Ottoman Empire, with a particular view to the establishment there of a Jewish homeland. Over the years, individual autonomous branches of the JNF grew up in many different countries, but it is only the UK branch with which the present case is directly concerned. There is also a Scottish branch, which as I understand it was a subsidiary part of the UK organisation at the dates when it features in the present story, although steps are now under way for the formation of an autonomous Scottish branch.
In Israel there is an associated charity which is usually called KKL, an abbreviation of the Hebrew Keren Kayemeth Le'Yisrael. KKL was often (although not exclusively) used as the vehicle through which the JNF's funds were applied for charitable purposes in Israel. Unfortunately, however, disputes arose between the JNF and KKL, including in particular an intellectual property issue about who had the right to the name JNF. Underlying this dispute, there were also disagreements about how JNF monies should be distributed. There came a time when the JNF decided to stop using KKL to distribute its funds in Israel, and this ultimately led to a rupture from the KKL. Major litigation ensued, in which Herbert Smith acted for KKL and Mishcons acted for the JNF. Legal fees approaching £4m had been incurred by the two charities by the time that a draft settlement was reached in or about February 2008. This settlement involved a stay of the litigation, but I was told that the settlement is still not final and the litigation is currently dormant rather than finally resolved. As part of the terms agreed in February, steps were taken to give KKL nominees a majority on the JNF's Board of Trustees and Mr Hayek was appointed as Chairman of the Board.
Mr Winters' role as chief executive was a full-time one, and from 1996 onwards he was employed and paid by the JNF. He was not himself a Trustee, in accordance with the standard practice that paid employees of charities should not themselves be Trustees of the organisation that employs them. In his first witness statement Mr Winters describes his task as being to maintain and enhance the flow of money into the JNF, and to ensure that the money was used to fulfil the JNF's charitable objectives. He describes how the JNF is a powerful force in the life of many British Jews, and how almost since its inception Jewish families were encouraged to have in their home a "Blue Box" for collecting money for the JNF, which is kept prominently on display. He says that in his view "most British Jews would have an instinctive feeling of warmth towards JNF". The income of the JNF did not come only from the Blue Boxes, and in common with other major charities they ran numerous functions and cultivated wealthy donors. It was part of Mr Winters' job to keep such donors, as he termed it, "on our side".
As I have already said, Mishcons acted for the JNF throughout the dispute with KKL, and still do so. According to the undisputed evidence of Dr Julius, Mishcons have represented the JNF since October 2005, and although the majority of the work carried out for them over the last three years has been in relation to the dispute with KKL, Mishcons have also advised the JNF on several ancillary matters. Mr Winters himself agreed in cross examination that Mishcons "were the company lawyers", and that whenever the JNF wanted lawyers they would turn to Mishcons, and in particular to Dr Julius.
Between October 2005 and February 2008, Dr Julius would take instructions on behalf of the JNF from Mrs Gail Seal (the President), Mr Winters in his capacity as Chief Executive, Mr David Kibel (the Treasurer), and Mr Harvey Bratt (a lawyer who worked in the JNF in various capacities, and acted informally as their in-house lawyer). Dr Julius also dealt with the Trustees from time to time, and attended several board meetings. Since February 2008, when Mr Hayek became Chairman, he has taken his instructions from Mr Hayek on behalf of the JNF.
In cross examination Dr Julius described his role as being "really as client partner… a manager of the relationship with JNF". Where there was work to be done that could or should be performed by somebody other than himself, he would introduce the client to those lawyers "and then let them get on with it".
The witnesses
The four witnesses for Mishcons are all partners (or, in the case of Dr Julius, a consultant and former partner) of the firm. I have no hesitation in accepting their evidence on questions of fact, and I have no doubt that they all did their best to assist the court when they gave their oral evidence.
I was in particular impressed by the way in which Dr Julius gave his evidence. He was very careful to give nuanced and appropriately qualified answers to the questions put to him in cross-examination, when he felt that a simple yes or no answer would run the risk of over-simplification, and in general his evidence appeared to me to combine complete candour with thoughtful objectivity to a rare degree. It is easy to understand why the JNF should hold him in such high regard as an adviser, and equally easy to understand Mr Winters' initial dismay at the prospect that Dr Julius and his firm would now be acting against him in the context of the employment dispute, when he has had the benefit, directly or indirectly, of wise advice given by Dr Julius over the last three years (and whatever the precise capacity may have been in which he received that advice).
By contrast, I regret to say that I found Mr Winters' evidence, both written and oral, to be highly unsatisfactory in a number of respects. The assertions which he makes are often imprecise, partial or exaggerated, and sometimes demonstrably false. There were times in cross-examination when he seemed to shift his ground as each new point was put to him, and on at least two occasions I found his evidence simply incredible. I will come to these occasions in more detail when I set out my findings of fact, but at this stage I will give a few examples of the kind of inaccuracies which lead me to treat his evidence with very considerable caution.
I begin with a relatively trivial example. In paragraph 26 of his first witness statement, Mr Winters refers to discussions which he says he had with Dr Julius in the context of some proposed libel proceedings in late July 2006 (what I call below "the first proposed libel proceedings"). He then says this:
"I cannot now recall all the details of what we discussed, though I am sure he must have full notes of our conversations: he always seemed to make full notes of conversations when we were together, and I assume he did so to when we discussed matters on the telephone."
In cross-examination, however, Mr Winters accepted that he had never actually seen Dr Julius make notes, and maintained that what he meant to say was that Dr Julius had an assistant who made notes at their meetings. When asked to specify an occasion when this had happened, he replied (transcript, day 1, page 145):
"I don't actually remember an occasion where there was somebody making notes in our office… I can't think of a date that that… happened."
Accordingly, the picture presented to the court, in the evidence in support of Mr Winters' application for an interim injunction, of Dr Julius making full notes of their discussions, simply evaporated into thin air when it was tested in cross-examination.
A much more serious example is to be found in paragraph 25 of the same witness statement, where Mr Winters says, again with reference to the first proposed libel proceedings, that Mishcons acted for him personally "and they were compromised on the advice of Anthony Julius who obtained an apology for me". It emerged in cross-examination, however, that the proposed libel proceedings never progressed beyond the sending of a letter before action, to which no response was received from any of the recipients, who simply ignored it. The threatened proceedings were never even begun, let alone compromised, nor did Dr Julius obtain an apology for Mr Winters. The only letter of apology that Mr Winters had received was some months earlier, from one Mark Lovatt, as I shall explain in due course; but that apology pre-dated the commencement of the alleged personal retainer, which Mr Winters agreed had begun on or shortly before 31 July 2006, and was not in any sense obtained for Mr Winters by Dr Julius. It followed rather from the unmasking of Mark Lovatt as the sender of certain defamatory letters to the Jewish press under the pseudonym of Anthony Jacobs. Mark Lovatt was the son of one of the Trustees of the JNF, Stanley Lovatt, who agreed to resign, and tendered an apology to the JNF, after he had been confronted with the evidence of his son's conduct at a meeting attended by Dr Julius. However, that was an apology to the JNF, not to Mr Winters; and Dr Julius' involvement in obtaining it had been on behalf of the JNF alone.
When these points were put to Mr Winters in cross examination, it is fair to say that he was left floundering and completely unable to explain what he had meant by the statement in paragraph 25 of his witness statement. The most charitable construction that I can place upon it is to say that this part of his evidence was prepared with culpable haste and carelessness, even though it lies at the heart of his complaint against Mishcons. Furthermore, the same paragraph contains further exaggerations which seem calculated to give an inflated impression of Dr Julius' involvement on Mr Winters' behalf. Mr Winters says that he recalls having numerous conversations with Dr Julius about the issues involved, and was speaking to him "on an almost daily basis over the phone". In cross-examination, however, these numerous conversations on an almost daily basis were whittled down to only "four or five" conversations relating to the proposed libel proceedings, and Mr Winters admitted that most of his conversations with Dr Julius had in fact been to do with other JNF matters. The result is that this paragraph of his statement gives a highly misleading and exaggerated picture of Dr Julius' involvement in the first proposed libel proceedings.
The final example which I will give at this stage is an error of omission rather than commission. In paragraph 31 of his first statement Mr Winters refers to a second libel matter ("the second proposed libel proceedings") which arose in February 2007, in relation to letters written to the Jewish press by a prominent businessman and former JNF patron, Mr David Lewis. Mr Winters says that he again took advice from Dr Julius about whether he should bring libel proceedings in his personal capacity:
"I spoke to Dr Julius on the phone, and there were emails between Dr Julius and myself in which I said what I was thinking of doing, and he advised me. This was between late February 2007 and mid-April 2007. These emails were between me and Anthony Julius. Those emails were not copied to the trustees of JNF because it was my libel claim, not JNF's."
What this evidence signally fails to mention, however, is that Mr Winters had in fact instructed a different firm, namely his present solicitors, George Davies LLP, to act for him in relation to this matter. Moreover, when asked by Mishcons in correspondence in July 2008 to give details of the matters in which they have acted for Mr Winters, George Davies LLP declined to do so on the basis that the information was privileged, and the request "had no relevance to our client's complaint about your firm". It was only in the course of Dr Julius' cross-examination, on the morning of day 3, that the court was finally informed by counsel for Mr Winters, having taken instructions from Mr Lewis of George Davies LLP, that Mr Lewis was instructed by Mr Winters shortly after the offending article appeared in the Jewish Telegraph in Manchester on 23 February 2007. Mr Lewis explained that he and Mr Winters had met for the first time in April or May 2006, in connection with a car rally in June 2006 in which they both participated, and that they had met again at a reunion in the summer. A friendship between them developed, and when Mr Lewis read the article in the Jewish Telegraph on 23 February 2007, which said that an unnamed senior person within the JNF was being investigated, he rang Mr Winters to see if he knew who the individual was that the article referred to. It turned out to be Mr Winters himself, as a result of which Mr Lewis was instructed to act on his behalf.
On any view of the matter, it seems to me that this information is highly material to Mr Winters' claim that Dr Julius acted for him personally in relation to the second proposed libel proceedings, and he ought to have referred to it in the evidence in support of his application for an injunction. Furthermore, although Mr Winters had an opportunity to rectify this omission when he served his second round of evidence in early August, he failed to take advantage of it.
The only other witness who gave evidence on behalf of Mr Winters was Mr Zamir, who is an advocate with a firm of advocates and notaries in Tel Aviv, Israel. Although he speaks fairly fluent English, he had the assistance of an interpreter to help with technicalities. I found him a reliable and helpful witness, but his evidence did not appear to me to provide any support for Mr Winters' case. His short witness statement suffers from various inaccuracies, no doubt due to language difficulties, which were clarified in cross examination. His evidence amounted to little more than saying that he had been asked by Mishcons to assist them in preparing a response to the Charity Commission when they investigated the JNF, and that he had also been asked to deal with allegations that the Israeli charity, Nes Eretz Israel, had been established in a way that breached UK charity law. He gave evidence of his understanding that when, as a lawyer, you represent a charity, you also look after the interests of the charity's officers; and when he was working with Mishcons, he thought that they were similarly engaged in trying to clear the individuals involved, including in particular Mr Winters, as well as the JNF itself. I do not doubt that this was Mr Zamir's perception of his role, but I agree with the submission of counsel for Mishcons that it is irrelevant, because it does nothing to establish what the actual position was as between Mr Winters and the firm.
The facts in detail
I will now make my detailed findings of fact, concentrating in particular on the occasions when Mr Winters alleges that Mishcons were acting for him in his personal capacity, either alone or jointly with the JNF. At an early stage in his cross-examination, Mr Winters was asked to clarify what those occasions were. With the benefit of hindsight, it is perhaps regrettable that the contentions on this critical issue had not been defined in statements of case before the hearing. In any event, Mr Winters' clarification was to the following effect:
i) With regard to the Lee & Allen report and their investigation of the "dossier", Mishcons were acting for the JNF alone.
ii) In relation to the obtaining of information about the identity of Anthony Jacobs, Mishcons were acting for the JNF and Mr Winters jointly.
iii) In relation to the first proposed libel proceedings, Mishcons were acting for Mr Winters alone, over a period of several months.
iv) In relation to the Charity Commission investigation of the JNF, Mishcons were acting for the JNF and Mr Winters jointly.
v) In relation to the second proposed libel proceedings, Mr Winters retained George Davies LLP, but Mishcons also acted for him personally when Dr Julius advised him to drop the case, although Mr Winters accepted that Mishcons were also acting for the JNF at the same time.
In addition, it is clear from Mr Winters' written evidence, and later passages in his cross-examination, that he also alleges Mishcons acted for him personally in relation to a proposed variation of his contract of employment in or about November 2007.
(1) The "dossier" and the Lee & Allen report
In November 2005, and again in February 2006, letters were published in the Jewish Chronicle and the Jewish Telegraph purportedly written by a man called Anthony Jacobs. Copies of the letters were not in evidence, but it is common ground that they were critical of the management of the JNF and (at least prima facie) defamatory of Mr Winters. Unsurprisingly, the publication of these letters caused concern both to the JNF and to Mr Winters in his personal capacity. It soon became clear that Anthony Jacobs was not the real name of the sender of the letters, and the JNF were anxious to discover his true identity. A particular concern was that the writer might have been a disgruntled or disloyal employee, in which case disciplinary and contractual issues would arise.
In February 2006 a detailed dossier containing allegations of internal accounting irregularities by Mr Winters in his role as Chief Executive was presented to the Treasurer of the JNF, David Kibel, and the Vice-President, Jeffrey Zinkin. The dossier was presented to them by Harvey Bratt, but its compilation had largely been the work of David Pollock, the Financial Controller of the JNF. It contained allegations going back over a period of at least two years, none of which had been raised or discussed with Mr Winters at the time. The allegations were mainly concerned with Mr Winters' expenses, and irregularities relating to Gift Aid. The dossier was prefaced with short statements signed by two employees, Vicky Morris and Sue Spector, on 20 February 2006, referring to conversations in which Mr Winters had instructed them, when they received cash from various events, not to pay it in but to give it to him, "saying that we could then claim Gift Aid". Vicky Morris' statement then continues:
"My response – brilliant – He then tells me to keep it hush, hush, and told me not to tell anyone. I asked why we had to keep it quiet, as getting gift aid would be advantageous to JNF – he informed me that it was complicated, and basically did not give me any answer."
Section F of the dossier describes a particular incident which took place on 12 January 2005, and is headed "Gift Aid kept in his Charity Account". It alleges that on that date an employee came into the office with £600 in cash which had been given to her by a donor for six places at the JNF Business Breakfast. She gave this amount to another employee, who in turn asked Sue Spector to pay it in. However, Mr Winters then asked Sue Spector for the cash, and gave her a cheque for £1,500 to cover it. His stated reason for doing this was so that he "could play around with the Gift Aid", and he then gave instructions how the proceeds of the cheque were to be divided. The allegation then continues as follows:
"Simon then gave the £600 cash to Hilary [another employee] and asked her to pay it into his personal Charity Account. Hilary warned Simon that he should not be paying cash into his Charity Account as he is not paid in cash and he would [be] liable to Income Tax. He told Hilary not to worry about it.
Simon then received a Gift Aid tax refund of £169.24 from the Inland Revenue as a result of the £600 deposit. Although a voucher for £600 was issued by Simon on 12th January in favour of JNF, it was paid in as an entry under Simon Winters for the 2005 car rally. The extra £169.24 has to this date never been returned to JNF. Also since Simon Winters is a higher rate tax payer he would have received an additional tax rebate of £138.46."
Documents were then attached, evidencing the payments into and out of Mr Winters' Charity Account.
The dossier was initially investigated by Mr Kibel and Mr Zinkin, and they then passed it on to the President of the JNF, Gail Seal, when she returned from holiday a few days later. Mr Winters was summoned to a meeting to discuss the matter, and while he was able to explain some of the matters, there were others which he could not. The decision was taken to suspend him, and the JNF sought advice from Mishcons. Dr Julius advised that there needed to be an external investigation, and arranged for a specialist forensic accountant, Mr Tim Allen of Lee & Allen, to be appointed with immediate effect to perform this task.
Lee & Allen were engaged by Mishcons on Monday 27 February 2006. Mr Allen set to work at once, and an emergency meeting of the JNF Board was convened on 2 March which he attended together with Dr Julius in order to present his initial findings. The Trustees present at the meeting included the President, the Vice-President (Stanley Lovatt), Mr Kibel and Mr Zinkin. At the meeting the President explained the background, and then handed over to Dr Julius who introduced Mr Allen. Mr Allen reported on the work he had done. He said he had gone through everything in minute detail, and had spoken to all parties involved so that he could close down each complaint. He was satisfied that "everything had been solely to do with JNF business", although controls were weak with regard to Mr Winters' expenses and in cash receipting. He said it was important that accounting procedures should be tightened up, but "there was absolutely no evidence of any fraud". The Trustees then put various questions to Mr Allen, and according to the minutes of the meeting he agreed on two occasions that the matter had the appearance of a witch-hunt. In response to a question from Mr Kibel about Gift Aid donation issues, Mr Allen said "he could only find one, but nothing to worry about".
The result of the meeting was that the Trustees passed a unanimous resolution completely exonerating Mr Winters of all the accusations against him, and accepting the verbal report given to them by Mr Allen. The first person to shake Mr Winters' hand after the meeting was Stanley Lovatt, who said he had been responsible for Mr Winters being chosen in the first place, and had always known he would be exonerated. Mr Winters' suspension had lasted for no more than a few days, and he then resumed his duties.
In due course Lee & Allen produced a formal written report to the Trustees, which is dated June 2006. The Gift Aid allegations are dealt with in sections 3.2 and 3.7 of the report. In paragraph 3.2.4 they recorded their understanding (clearly correct) that Gift Aid cannot be claimed on admission fees, or on cash donations in respect of which the individual donor has not filled in a Gift Aid declaration. With regard to the allegations in the statements of Vicky Morris and Sue Spector, they said in paragraph 3.2.5:
"No specific work was performed in respect of these particular allegations as they were of a generic nature and did not refer to specific sums of money… The use of cash from events was discussed with [Mr Winters] in this context."
With regard to the allegations in section F of the dossier, Lee & Allen described the work which they had performed and their conclusion in the following terms:
"Work Performed
3.7.2 We have been advised by Mr Kibel that following this specific issue being pointed out to [Mr Winters], he repaid £310.00 to the JNF to cover both the £169.24 'basic rate' tax refund plus £138.46 relating to the higher rate tax element which [he] would be eligible to personally reclaim (which totals £307.70…). We were advised not to investigate this issue further as it had been resolved.
3.7.3 No other similar instances were noted in the dossier. It would therefore appear to be an isolated incident.
Conclusion
3.7.4 This would appear to be an isolated incident and the cost to the JNF/benefit to [Mr Winters] has been accounted for."
In a later section of their report, Lee & Allen recommended (see paragraph 4.2.3) that all JNF personnel involved in handling and recording donations should be provided with a written policy which sets out the Gift Aid rules and explains that under no circumstances should attempts be made to "convert" ineligible donations into eligible ones, for example by misrepresenting their source.
Mr Winters accepted in cross examination that Mishcons were acting for the JNF alone in relation to his suspension and the investigation of the irregularities which were the subject of the Lee & Allen report. It is clear that he was right to accept this, and there is in my judgment no question of Mishcons having acted for Mr Winters, either alone or jointly with the JNF, in relation to those matters. Equally, there could be no question of Mr Winters asserting any claim to confidentiality as against the JNF with regard to the contents of the dossier or the Lee & Allen report, even though those documents were no doubt confidential as against the outside world until their disclosure in evidence in the present proceedings.
(2) The disclosure of the identity of Anthony Jacobs
Once Lee & Allen had given their oral report to the emergency Board meeting on 2 March 2006, and Mr Winters had been reinstated, the JNF was able to turn its attention to trying to discover the identity of Anthony Jacobs. The letters which he had sent to the Jewish Chronicle and the Jewish Telegraph were four in number, and had all been sent by email from the same account. They referred to the dispute with KKL, and appeared to leak information that could only have been known to those who were employed by, or were Trustees of, the JNF. The partner in Mishcons who dealt with the matter was Mr Morrison, who had considerable experience of making Norwich Pharmacal applications to discover the identity of wrongdoers. When it became clear that an application of this nature might be necessary, the matter was referred to him within Mishcons by Dr Julius, or possibly by the Head of Litigation, Mr Libson.
Some headway had already been made by Mr Winters, who obtained copies of the emails from the Jewish Telegraph. A firm of computer forensic specialists was instructed to analyse the header information on the emails, as a result of which four Internet Protocol (IP) addresses were retrieved, three of them owned by a provider called GlobalNet and the remaining one being owned by another provider called TurboDial.
At about this stage, a meeting took place between Mr Morrison, Mr Winters and Gail Seal at Mishcons' offices. Mr Morrison was concerned that, in order to mount a successful Norwich Pharmacal application, it would be necessary to show the existence of an underlying cause of action. He was not sure that the material in the published letters was cogent enough to justify the inference that an insider had leaked information, thereby giving rise to a cause of action by the JNF against him. However, the letters were also obviously defamatory of Mr Winters. It was accordingly agreed at the meeting that Mr Winters would, if necessary, lend his name to the proposed proceedings. Mr Morrison thought that his meeting with Mr Winters and Gail Seal would not have lasted for more than an hour at the most, because the proposed application was a reasonably straightforward one, and the part of the conversation which related to Mr Winters lending his name probably lasted for no more than five minutes.
Following the meeting, Mishcons wrote to both GlobalNet and TurboDial on 31 March 2006. Each letter began as follows:
"We act for the JNF Charitable Trust. Our client is a registered charity… which was incorporated in 1939 to promote exclusively charitable projects in Israel. We also act for its Chief Executive, Simon Winters."
The letter went on to explain that its purpose was to seek information about the identity of Anthony Jacobs, and particulars were given of the IP addresses from which the relevant emails had been sent. The letter asked for disclosure of the name of the registered holder of the addresses, and said that an application would be made to the court for an appropriate order if they were not prepared to disclose the information voluntarily.
The terms of these letters reflected an email which Mr Morrison had sent to Mr Winters on the previous day, presumably shortly after their meeting. The email had said:
"Dear Simon,
A short note on our approach to open up the ISPs and to find out who is the 'real Anthony Jacobs'…
We will write to the ISPs concerned stating that we act for you and JNF in an action for deformation. We tell them that we want disclosure of the name of the account holder for the ISP address. The ISP may want us to get a court order… and therefore we may have to prepare a short application to the Judge for an Order."
He then gave an estimate of the costs involved, saying that the costs would be minimal (£500-£1,000) if the information was provided without the need for a court order, but if an order proved necessary the likely costs would then be in the region of £3-5,000.
In the event, GlobalNet agreed to provide the information requested, without opposition, provided that a court order was obtained. Accordingly, on 27 April 2006 a claim form was issued in the Queen's Bench Division of the High Court, and a consent order was made by Master Ungley. The only claimant named in the proceedings was the JNF, no doubt because it was known that the application would be unopposed. This fact strongly reinforces Mr Morrison's evidence that Mr Winters had only agreed to lend his name to the proceedings if it was necessary to do so.
On the following day, 28 April, GlobalNet responded to the order and disclosed the identity of the sender of the emails as Mark Lovatt. The associated account details included his address and telephone number in Glasgow. This information was forwarded by Mishcons to Mr Winters on the same day.
Now that the identity of Anthony Jacobs had been established, this particular matter was at an end and no further work was performed on it by Mishcons. They had, however, omitted to send a formal retainer letter to the JNF at the start of the matter, and on 9 May this omission was rectified when Mishcons sent a retainer letter to Mr Winters and asked him to sign it on behalf of the JNF. The letter was headed "JNF Charitable Trust – Disclosure of ISP Information", and at the end of the letter the intended signatory was designated as "Simon Winters for and on behalf of JNF Charitable Trust". There was no suggestion anywhere in the letter that Mishcons had also acted for Mr Winters in his personal capacity, and no retainer letter was ever sent to him separately. Similarly, when Mishcons submitted their invoice on 25 May, the accompanying narrative identified the client as "The Trustees of the JNF Charitable Trust". Mr Winters sent the bill down to the accounts office for payment, and it never crossed his mind that he should pay any part of it personally; nor was any such suggestion made by the Trustees.
In both his written and his oral evidence, Mr Morrison stoutly maintained that Mishcons' only retainer in relation to this matter was by the JNF, and that the firm never acted for Mr Winters in his personal capacity. I can understand why Mr Morrison took this view, not least because it appears to be confirmed by the retrospective retainer letter which Mr Winters signed on behalf of the JNF, and by the fact that the JNF paid for all of the work done by Mishcons. Nevertheless, the fact remains that Mr Winters (as I have found) agreed to lend his name to the proceedings if necessary, and the whole point of his doing so was that he had a separate cause of action in defamation which could be used to provide the foundation for a disclosure application. Furthermore, Mishcons' letters of 31 March 2006 to the two internet service providers said in terms that the firm "also" acted for Mr Winters. Any reasonable recipient of those letters would have assumed that Mishcons meant what they said, and I would be very reluctant to reach a conclusion which entailed that this statement, unqualified and in the present tense, was untrue. The correct analysis, in my judgment, looking at the matter objectively, is that Mishcons did indeed agree to act for Mr Winters in his personal capacity, but only to the limited extent that it might prove necessary to use his name and separate cause of action for the purpose of obtaining disclosure of the identity of Anthony Jacobs. In other words, it was an ancillary and secondary retainer, which in the event had virtually no independent life of its own because GlobalNet was prepared to cooperate in submitting to an order for disclosure. Given the ancillary and evanescent nature of the retainer, and given that both the JNF and Mr Winters had a common interest in ascertaining the identity of Anthony Jacobs, no possibility of any conflict of interest arose before the separate retainer came to an end. The precise date when the retainer terminated does not matter, but in my view it probably terminated on 28 April, when the disclosure details were forwarded to Mr Winters, and at the very latest when the JNF paid Mishcons' invoice for the work done for them. Furthermore, there is no suggestion by Mr Winters that he imparted any confidential information to Mishcons in the course of this retainer. For all practical purposes, therefore, it can in my judgment be ignored.
(3) The first proposed libel proceedings
I now move on to the first proposed libel proceedings. The discovery of the author of the Anthony Jacobs letter understandably caused anger within the JNF. Mark Lovatt was the son of Stanley Lovatt, who was himself one of the Trustees, and who had joined in the unanimous vote of the Board to reinstate Mr Winters. The JNF sought advice from Dr Julius, and on 16 May 2006 he sent an email to Gail Seal, which he copied to Mr Winters and Harvey Bratt. In this email Dr Julius reviewed the possible courses of action open to the JNF, and appended draft letters to be sent to Stanley Lovatt's lawyers and to Mark Lovatt. The nub of Dr Julius' advice was that Stanley Lovatt should be expelled, but no useful purpose would be served by the JNF suing him in Scotland. Dr Julius added:
"It is open to both you and Simon [i.e. Mr Winters] to sue father and/or son personally. I would recommend caution, however."
In cross-examination Dr Julius agreed that the possibility of the JNF bringing defamation proceedings in its own name was never considered for more than a moment. Apart from the cost and risk involved, it would be an unwelcome distraction from the main task of addressing the KKL litigation. However, there was a lot of reluctance within the JNF to accept Dr Julius' advice, because of the amount of hostility and bad feeling which the episode had engendered. Stanley Lovatt was, or at least considered himself to be, a wealthy and influential member of the Scottish Jewish community, as well as being the Vice-President of the JNF. The disclosure of his apparent disloyalty had therefore been a very considerable shock. Despite his advice to the JNF, however, Dr Julius did not agree that if either Gail Seal or Mr Winters wanted to start libel proceedings themselves, that would be a matter for them and not for the JNF. He said (transcript, day 2, page 94):
"No, it was very much a matter for the JNF. And I considered it to be a very important aspect of my representation of JNF to advise, when my advice was sought, individuals who were thinking about proceedings, in their own name, in relation to matters that had a bearing on JNF."
The letter which Dr Julius had drafted was presumably sent to Mark Lovatt, and on 26 May Mark Lovatt emailed a letter of apology to Mr Winters. He offered his unreserved apologies for what he had done, and claimed that his father had not been involved. Stanley Lovatt had meanwhile resigned from the Board of Trustees, having been confronted with the matter at an interview with Dr Julius at the JNF headquarters. In his letter Mark Lovatt said that his father's resignation from the Board was completely unrelated to anything he had done. Mr Winters did not believe this, because it seemed obvious to him that only his father could have been the source of the information on which the defamatory letters were based. The fact that Stanley Lovatt had agreed to resign when confronted with the matter appeared to corroborate this inference.
On 7 June Mr Winters forwarded Mark Lovatt's email of apology to Dr Julius, and also to Shimon Cohen who was a publicity adviser retained by both the JNF and Mishcons; he was also a personal friend of Mr Winters. Dr Julius replied on the same day, saying:
"We ought to discuss this, both from the JNF's point of view, and your own."
On 15 June Mr Winters sent a non-committal reply to Mark Lovatt's email of apology, saying that he had only just returned from the JNF Car Rally and had "a mountain of operational issues" to deal with before he could turn his attention to the matter. Mr Winters forwarded a copy of this reply to Dr Julius, who replied on the same day with the comment: "good letter". In view of Mr Winters' absence on the Car Rally, it seems to me unlikely that any significant discussions had taken place between him and Dr Julius between 26 May and 15 June. There is equally nothing in the documentary record to indicate that there was any further significant contact between them from 16 June until mid-July, and I infer that if they discussed the matter at all during this period, it was only on a passing and informal basis. In his written evidence Mr Winters said that he and Dr Julius did discuss the libel matter in detail following Dr Julius' email to him of 7 June, but the only conversations of which Mr Winters gives any details took place towards the end of July, and Dr Julius himself had no recollection of any conversations between them over the intervening period. Given the lack of precision in Mr Winters' evidence, the lack of any documentary corroboration, and his tendency to exaggerate his evidence, I am not prepared to accept that any detailed discussions took place between him and Dr Julius with regard to the libel matter until late July.
The reason why the matter came to life again in late July is that a faction in the Glasgow office of the JNF had circulated in Glasgow, and also sent to the editor of the Jewish Chronicle in London, a letter which was highly critical of Mrs Seal and the JNF leadership. A watered down version of this letter was apparently printed by the Jewish Chronicle, but on 14 July a copy of the unabridged original was sent to Mr Winters in confidence by a Mr A Soudry, and on the same day Mr Winters forwarded it to various recipients, including Shimon Cohen, Mrs Seal and Dr Julius. The unabridged letter did not refer to Mr Winters by name, but it did mention that "[e]arlier this year a question as to the propriety of a senior head office executive arose in London". The letter said that a group of head office workers had reported certain possible breaches of procedure to Mrs Seal, who had then decided to appoint a company of forensic accountants to investigate. The result of the investigation was unknown to the writer of the letter, although Lee & Allen's report had of course been received by the Trustees in June.
The continuing dissension within the Glasgow office was obviously a matter of concern to the JNF leadership, and they sought advice from Dr Julius on how to respond to it. On the afternoon of 31 July, Mrs Seal emailed to Dr Julius and Mr Winters a draft letter that she proposed to send to the members of the Glasgow Committee, and about an hour later, at 4.25 pm, Dr Julius replied to Mrs Seal and Mr Winters saying "I think this is perfect". It is clear from this exchange of emails that Dr Julius was acting on behalf of the JNF, and that Mr Winters knew this to be the case.
On the very same day, by an email timed 4.01 pm, Mr Winters sent to Dr Julius, and copied to Shimon Cohen, drafts of letters to be sent by himself to the members of the Glasgow Committee, to Stanley Lovatt and to Mark Lovatt, saying "I await your comments/changes". Each draft letter took the form of a letter before action, threatening defamation proceedings. Reference was made to the earlier investigation of Mr Winters' conduct and to his unanimous exoneration by the Board, followed by the uncovering of the identity of Anthony Jacobs. The draft letter to the Committee Members then continued as follows:
"Your Chairman Stanley Lovatt has sold you his version about what happened and you have not only agreed to back him but written to our donors justifying your actions.
Up until now I have kept my dignity and not reacted to your below the belt strategy.
There are arguments in communities, there are arguments in business, but your public accusations about me in the press exceed all normal boundaries and it is with regret that I am giving you notice that I will be suing you in an English court.
The top libel lawyer in the UK, Mr Anthony Julius, was so outraged by your agenda that he has very generously agreed to represent me, free of charge.
He has reassured me that I have a negligible chance of losing and therefore, you will be hearing from Mishcon De Reya, in due course.
It is most regrettable that you have forced me to act in this way but your actions have left me with no choice. Please address any further correspondence to my lawyer."
Half an hour later, at 4.36 pm, Dr Julius emailed amended drafts of the letters back to Mr Winters. The amendments did not alter the substance or general tone of the drafts, but improved the wording in a number of respects and made it read more cogently. The only alterations which Dr Julius made to the paragraphs which I have quoted were to omit the words "by your agenda" in the penultimate paragraph, and to replace the words "free of charge" with "on a 'no win, no fee' basis", so that the first sentence of that paragraph now read:
"The top libel lawyer in the UK, Mr Anthony Julius was so outraged that he has very generously agreed to represent me, on a 'no win, no fee' basis."
The letters were then sent out by Mr Winters, in the form of the amended drafts, on 2 August.
In his first witness statement Mr Winters said that Dr Julius had outlined the gist of a letter which he should send to various people, including Stanley Lovatt and Mark Lovatt, in the course of one of their telephone conversations towards the end of July. He then composed draft letters as suggested, and these were the drafts which he emailed to Dr Julius on 31 July. In his second witness statement, Mr Winters gave a more circumstantial account of the background to the sending of the letters. He said that Dr Julius continued to advise him on the libel claim, after the identity of Anthony Jacobs had been uncovered, and was happy to act for him personally. They had numerous conversations, some about JNF matters but others about his personal affairs. When they discussed his personal situation, Mr Winters always made sure that he was on his own with the door shut, or called Dr Julius from his car. Once the JNF had decided, on Dr Julius' advice, that it was not going to pursue a libel claim of its own, it was only Mr Winters who intended to pursue such a claim. In the course of their discussions, he disclosed the matters referred to in his third confidential witness statement. Having discussed those matters, Dr Julius agreed to act for him on what he called a "no win, no fee" basis. Dr Julius advised him that he would be liable for the other side's costs if he lost, but unless there were any skeletons in his cupboard he could not see how he could lose. Dr Julius then asked him if there were any skeletons in his cupboard, and in particular whether there was anything over and above the matters that had come out in the dossier and the subsequent Lee & Allen investigation. Mr Winters says that he and Dr Julius spoke "on an almost daily basis" at this time, and one of the matters they discussed was who he should sue for libel. Dr Julius gave him robust advice, to the effect that he should send letters to Mark Lovatt, Stanley Lovatt, and each member of the Glasgow Committee. He said it would be best if the initial letter were sent by Mr Winters, even though he would draft it. As Mr Winters had never pursued a libel case before, and had no idea where to begin when drafting a letter of claim, "Dr Julius more or less dictated the letter to me over the telephone".
For his part, Dr Julius had no recollection of these alleged conversations, but says he recalls being "slightly embarrassed" by the language of the draft letters sent to him by Mr Winters. In paragraph 27 of his first witness statement, he says:
"Trying the best I can to remember what happened that day two years ago, I think that I was much more concerned with the correspondence between [Mrs Seal] and Mr Lovatt and felt that Mr Winters could be left to say what he wanted (within reason – I would not have wanted him to write anything that was prejudicial to my client)."
Dr Julius went on to say that his firm rarely acts on a "no win, no fee" basis, and "It would here have been as a service to JNF rather than for Mr Winters personally".
It is interesting to note how Mr Winters' account of Dr Julius' involvement in the drafting of these letters developed from outlining the gist of the letter, in his first witness statement, to more or less dictating it over the telephone, in his second witness statement signed some two weeks later. In my judgment this is symptomatic of Mr Winters' tendency to exaggerate and embellish his evidence. Furthermore, despite the detailed account given in his second witness statement, Mr Winters accepted in cross examination that his alleged personal retainer of Mishcons only started on 31 July (transcript, day 1, pages 118-119). When asked how long the retainer lasted, Mr Winters could say no more than that he discussed the matter "several times" with Dr Julius after 31 July, and then "it just kind of drifted to one side" (ibid, page 120). I find, in the circumstances, that although there was probably some telephone contact between Mr Winters and Dr Julius shortly before 31 July, Dr Julius did no more than suggest the outline of the letters which Mr Winters wished to send, and indicate that there was no objection from the JNF's point of view if the letters were sent. He also agreed that, if matters reached the stage where proceedings were commenced, Mishcons would be willing to act for Mr Winters personally on a no-win, no-fee basis. I am unable to accept Mr Winters' evidence that the letters were virtually dictated to him by Dr Julius, and I can well believe that Dr Julius found the reference to himself as "the top libel lawyer in the UK" rather embarrassing, although he allowed it to stand in the amended draft because it was, after all, Mr Winters' letter and not his own.
Dr Julius' perception of the situation, as he explained in cross-examination, was that the draft letter was an aggressive and angry one, but if Mr Winters understandably wished to "sound off" it would not damage the interests of the JNF if he did so, and it might even help if he was writing in this angry fashion at the same time as Mrs Seal was sending a more emollient letter to the members of the Glasgow Committee. Dr Julius described this as "a carrot and stick" approach, but accepted it was entirely possible that he had not explained his thinking to Mr Winters on 31 July. One reason why Dr Julius took a relatively relaxed attitude to the sending of the letters by Mr Winters was that he did not take Mr Winters' threats of legal action seriously. He saw it as "a spasm of anger", which lanced the boil in the sense that the pressure to do something was then relaxed. His recollection is that the "threat of libel proceedings was, so to speak, a dead letter from the moment that it was sent", and once the letters had been sent on 2 August that was effectively the end of the matter. Dr Julius has no recollection of the "several conversations" referred to by Mr Winters, and thought the matter was never sufficiently animated to go to sleep.
I have already commented earlier in this judgment on the wholly misleading and inaccurate statement in paragraph 35 of Mr Winters' first witness statement, where he said that the proposed libel proceedings were compromised on the advice of Dr Julius who obtained an apology for him.
Against this background, two questions seem to me to arise. The first question is whether a separate retainer ever came into existence between Mr Winters and Mishcons in relation to the proposed libel proceedings. The second question is whether, in connection with the proposed libel proceedings, he ever disclosed to Dr Julius the alleged confidential information referred to in his third witness statement.
So far as the first question is concerned, there can be no doubt (and Dr Julius rightly accepted) that a separate retainer would have come into existence if the threatened proceedings had progressed beyond Mr Winters' letters before action, and if Mishcons had begun to act for him in the manner contemplated in the letters. However, the letters do not say that Mishcons were acting for him at the time when they were written, but rather that Dr Julius had generously agreed to represent Mr Winters on a no win, no fee basis. An agreement to act in the future is not the same thing as an existing retainer. Furthermore, had matters progressed to the stage of a formal retainer one would expect a client letter to have been sent by Mishcons to Mr Winters and the necessary paperwork to have been completed for a conditional fee agreement. On the other hand, Dr Julius took it upon himself to amend the draft letters, at a time when there was no question of the JNF itself initiating libel proceedings, and he did not strike out or amend the passages at the end of the letters which represented that he had told Mr Winters that he had a negligible chance of losing, and which referred to Mishcons as "my lawyer". The matter is finely balanced, but looking at the question objectively I conclude that a retainer did, just, come into existence on or very shortly before 31 July, and that it continued in existence, although in a virtually moribund state, until the matter petered out, probably a month or two later. The inchoate nature of the retainer is brought out by the fact that neither Mishcons nor Mr Winters took any steps to formalise it in writing. Furthermore, I am satisfied that it was perceived on both sides as involving no conflict of interest at that stage with the JNF, for which (as Mr Winters well knew) Dr Julius was acting at the same time, both in relation to the ongoing litigation with KKL and in relation to the particular problems posed by the unrest in Glasgow. Dr Julius appreciated that a time could come in the future when the interests of the JNF and Mr Winters would no longer necessarily coincide, but no such question arose at that stage. If it had, a solicitor as experienced as Dr Julius would hardly have agreed to review and amend Mr Winters' draft letters to the Lovatts and the Glasgow Committee on the same afternoon as he was approving the letters to be sent by Mrs Seal to the Committee on behalf of the JNF. Moreover, there was no reason to suppose that a conflict was at all likely to arise in the foreseeable future, given Dr Julius' view, which events proved to be correct, that nothing would come of the threatened libel proceedings.
I now come to the second question identified above: did Mr Winters in fact disclose to Dr Julius the information described in his confidential third statement? Given the adverse view which I have formed of the credibility of much of Mr Winters' evidence, and given his failure to identify any confidential information allegedly imparted to Mishcons in his first witness statement, I have not found this an easy question to determine. Nevertheless, I am prepared to accept, on the balance of probabilities, that Mr Winters did indeed give this information to Dr Julius on or around 31 July 2006, in the context of his proposed libel proceedings. It would be natural for any prudent and competent solicitor, who was discussing contemplated libel proceedings with a client, to warn him of the risks involved, and to ask if he had any skeletons in the cupboard which might come to light if the matter progressed. I do not think that Dr Julius would have been happy to review the draft letters, and give his blessing to Mr Winters sending them, unless he had taken this elementary precaution and satisfied himself that the information disclosed by Mr Winters was innocuous. I will discuss this aspect of the matter more fully in the confidential appendix to my judgment, but I will say at this point that in my judgment nothing disclosed by Mr Winters to Dr Julius either alerted him, or should have alerted him, to the existence of any conflict of interest between Mr Winters and the JNF, or otherwise made it improper for Dr Julius to continue acting for them both.
(4) The Charity Commission Investigation
On 19 September 2006, Stanley Lovatt returned to the attack. He wrote to the Charity Commission in London, setting out his version of events and enclosing a copy of the dossier which Lee & Allen had investigated. He said that neither the dossier nor Lee & Allen's report had been made available to him in his capacity as Joint National Vice President, despite several requests, but a copy of the dossier had arrived suddenly at his home (he did not say how) on 1 September. He referred to the letters sent to the press by his son, and said this had been done without his knowledge. He offered to make himself available should the Charity Commission wish to take any further statements from him.
Ten days later, on 29 September, the Charity Commission wrote separately to each of the Trustees informing them that a serious complaint had been made to the Commission, and asking them to discuss the matter and provide a collective response on behalf of all the Trustees. The letter went on to say that the allegations concerned the conduct of Mr Winters, and summarised the main allegations in the dossier, including the allegation that Mr Winters had contravened the Gift Aid rules by replacing cash sums with cheques from his own charity account, and that he had claimed higher rate tax relief on those sums. The letter continued:
"Documentary evidence has been provided in relation to the above allegations. We have been informed that these issues have been raised with the Trustees and that a forensic accountant was employed by the Charity, which resulted in Mr Winters being cleared of any misconduct. However it has been suggested that the remit of the forensic accountant and the written report produced were not circulated to all the Trustees.
I would be grateful for the Trustees' comments on the concerns raised above and confirmation on what action has been taken. Please clarify the remit of any forensic accountant employed and provide a copy of the report that was produced."
The Trustees were requested to provide a response by 13 October 2006.
This was obviously a matter that needed to be taken seriously, and the JNF turned, as usual, to Mishcons to act for them. On 13 October Mishcons wrote to the Charity Commission, confirming that they acted for the JNF and were responding to the Commission's letter of 29 September on behalf of all the Trustees. The letter referred to Mr Allen's investigation of the complaints in the dossier, and the report which he had given of his findings at the Board meeting on 2 March. A copy of Lee & Allen's subsequent written report was enclosed for the Commission to review. The Commission were asked to treat it as privileged and confidential, and not to disclose it to any third party, including the complainant. Various comments of an adverse nature were then made about the conduct of Stanley Lovatt.
Over the next six months the Charity Commission continued to investigate the matter, and correspondence passed between them and Mishcons. It is unnecessary for me to review the course of the investigation in any detail. The upshot was that on 27 March 2007 the Commission wrote to Mrs Seal to inform her that all the relevant evidence had been considered in detail, and although there were some areas relating to governance that required review, the Commission had found no evidence of mismanagement or misconduct by the Trustees, and no proof of deliberate criminal activities by any JNF employees. The letter made a number of recommendations, and pointed out some shortcomings in the manner in which the Trustees had dealt with the allegations in the dossier. However, the Commission said they were satisfied that appropriate management and financial controls were now in place, and they had therefore decided to close the case.
It is common ground that Mishcons acted for the JNF throughout this investigation. Mr Winters maintained that they were also acting for him personally, but in my judgment he was unable to produce any solid evidence to support this assertion. No support for the contention is to be found in any of the documents, although the investigation lasted for a full six months. It seems to me inconceivable that Mishcons would not have entered into a separate formal retainer agreement with Mr Winters, if they were indeed acting for him personally throughout this period. It is of course true that the investigation concerned him personally, in the sense that it was his conduct which had been under scrutiny when Lee & Allen were called in to investigate the dossier; and if the Trustees' handling of that complaint were now found to be at fault, Mr Winters' personal conduct could be expected to come under scrutiny again. However, that does not lead to the conclusion that Mishcons were therefore acting for him in his personal capacity at the same time as they were acting for the JNF. It merely reflects the fact that both the JNF and its Chief Executive, Mr Winters, had a common interest in satisfying the Charity Commission that the matter had been appropriately dealt with by the Trustees, and proper steps had been taken to prevent any recurrence of the irregularities identified in the Lee & Allen report. As Dr Julius said in cross-examination, the main focus of the Charity Commission's investigation was on the adequacy of the JNF's response to the dossier, rather than on the truth or otherwise of the underlying allegations. Mr Winters was potentially in the firing line, in his personal capacity, if the Trustees' response was found to have been inadequate; but that stage was never reached, because Mishcons succeeded in persuading the Commission that, subject to various minor criticisms, the matter had been properly dealt with. Dr Julius was of course concerned for Mr Winters in the context of his overall representation of the JNF, and was also concerned for him as a friend and as a matter of ordinary compassion; but that is not the same thing as saying that Dr Julius was acting for him personally, either separately or jointly with the JNF.
At one point in his cross-examination Dr Julius drew an analogy with acting for newspapers in libel cases, which I found illuminating. He said (transcript, day 3, page 7):
"Rarely is it the company that holds the newspaper that's sued. It's the editor, it's the journalist. One is acting for the journalist, one is acting for the editor but one is acting for them in the context of one's overall representation of the newspaper title. Sometimes there are also insurers involved. There is therefore a plurality, even, on occasion, a diversity of interests being represented and its one of the things that solicitors simply have to learn to manage in a sensitive way."
Those comments were in fact made in the context of the first proposed libel proceedings, where I have held that, for a short period, a separate retainer did come into existence; but the general message seems to me valuable for its recognition of the pragmatic approach that solicitors often have to adopt in acting for large organisations. Another way of making the same point is to say that the court should in my judgment be slow to infer the existence of a separate retainer where a firm is already acting for an organisation as a whole, and the matter in which they are acting also involves the interests of a senior officer of the organisation. In the case of the Charity Commission investigation, I am satisfied that no such inference should be drawn.
(5) The second proposed libel proceedings
Mr Winters described this matter in paragraph 31 of his first witness statement as follows:
"A second libel matter arose in late February 2007. This was in relation to letters that David Lewis had written to the Jewish Chronicle. Again, I took advice from Anthony Julius… about whether I should bring libel proceedings in my personal capacity. I spoke to Dr Julius on the phone, and there were emails between Dr Julius and myself in which I said what I was thinking of doing, and he advised me. This was between late February 2007 and mid-April 2007. These emails were between me and Anthony Julius. Those emails were not copied to the Trustees of JNF because it was my libel claim, not JNF's."
I have already drawn attention to the fact that, in giving this evidence, Mr Winters completely failed to mention that he instructed his present solicitors, George Davies LLP, to act for him in relation to the matter. This omission, and Mr Winters' failure to rectify it in his second statement, is important for two reasons. First, it provides a graphic illustration of the unreliability of much of his evidence. Secondly, it shows that when Mr Winters considered his personal interests to be affected, he did not hesitate to instruct separate solicitors. In the circumstances, any suggestion that Dr Julius was also acting for Mr Winters personally in relation to this matter faces obvious difficulties. The most that Mr Winters can point to by way of documentary support is an exchange of emails between himself and Dr Julius on 16 April 2007. Mr Winters referred to a suggestion that he should issue a letter before action, and asked Dr Julius "what do you think?", to which the answer came 20 minutes later:
"Dear Simon – I think it would be a mistake for you to sue. Best – Anthony."
When asked in cross examination whether this was the total extent of Dr Julius' advice to him in relation to the matter, Mr Winters said that later down the line, after George Davies LLP had been instructed, Dr Julius suggested that he drop the matter. I accept that Dr Julius may well have given advice to this effect, in an informal manner; but in a context where Mr Winters had his own solicitors acting for him, both when the exchange of emails took place in April and when the subsequent oral advice was given, I find it impossible to conclude that any separate retainer had come into existence. As a matter of friendship and concern for his well-being, and because of his role as Chief Executive of the JNF, Dr Julius was prepared to give Mr Winters the benefit of his advice, on an informal basis, when specifically asked to do so; but Mr Winters should have realised that the giving of such advice formed part of Dr Julius' general client management role on behalf of the JNF, or at the highest was given as a favour on a basis of friendship. He cannot sensibly have supposed that he was getting the benefit of a second and separate retainer for free, at a time when George Davies LLP were already acting for him.
There is, in any event, no suggestion that, even if Mishcons were in some way acting for Mr Winters at this stage, any further confidential information was disclosed to them by him. Thus this episode can for all practical purposes be disregarded, apart from the light which it throws on the reliability of Mr Winters' evidence.
(6) The employment advice
In paragraph 42 of his first witness statement, Mr Winters alleged that Mishcons gave advice to him in his personal capacity in November 2007 in relation to a proposed variation of his contract of employment. He said that Mrs Seal sent him and Harvey Bratt a "draft addition" to their contracts of service, and although it appeared to be entirely favourable to them, she recommended that they take their own independent legal advice, and said that if he took such advice from Mishcons then the JNF would pay for it. Mr Winters went on to say that towards the end of the month he had a detailed discussion with Daniel Naftalin, a partner in Mishcons' Employment Department, about the alteration to his contract. He professed to be unable to remember the details of what he said to Mr Naftalin, or what advice Mr Naftalin gave to him, but said he was certain that this advice was being given to him, and was not advice to the JNF.
In his written evidence in answer, Mr Naftalin said that in early November 2007 he was instructed on behalf of the JNF to discuss the possibility of amending the contracts of employment of Mr Winters and Mr Bratt by insertion of a five year term. He was told that this was at the request of the Trustees, in order to protect and compensate Mr Winters and Mr Bratt in the event that the JNF lost its litigation with KKL. He said his initial advice was that this would be inconsistent with good corporate governance, and possibly the rules of the Charity Commission, but he would discuss the issue with Dr Julius. This he then did, and Dr Julius strongly agreed with his view that any such change to the contracts of employment would be inadvisable. Dr Julius also suggested that, if possible, third party guidance should be found which would give that message to Mr Winters, without Mishcons themselves needing to deliver it and therefore appear to pass judgment on a suggestion which had come from the Trustees. To that end, Mr Naftalin instructed a colleague, Laura Penny, to research the subject and draft a memorandum. She duly prepared a memorandum, which Mr Naftalin discussed with Dr Julius after his return from a visit to Israel on 15 November. Dr Julius' view was that it would be better just to send to Mr Winters the relevant guidance from the Charity Commission on duties of trustees, and the provisions in the Companies Act 2006 regarding termination payments for loss of office. Mr Naftalin then did this on 23 November, under cover of an email which read as follows:
"Further your query of a couple of… weeks back, and prior to discussing this with you in detail, I thought I would email you certain extracts on the Charity Commission's Guidance on Trustees and Governance, and a summary of recent changes to the Companies Act, which together give some guidance about what is best practice in this area and what considerations to bear in mind."
Mr Naftalin went on to say in his statement that the advice which he gave on this issue was always based on instructions given on behalf of the JNF. He said he had never been asked to advise Mr Winters personally, and would have declined to do so if asked.
In his witness statement in reply, Mr Winters stood by what he had said in his first statement. He said in terms: "I specifically asked Mr Naftalin to act for me personally, and he agreed to do so". He said he had made it clear to Mr Naftalin that the JNF had agreed to pay Mishcons to give him personal advice, and this had been authorised by Mrs Seal. He said he was concerned to protect his position, but wanted to do so in a legitimate manner. He thought it would be beneficial to him if the JNF had to give him longer notice before dispensing with his services, and Mrs Seal had agreed, but thought it was important that he obtain independent advice on the subject. That was why she said that the JNF would pay for it if he took such independent advice from Mishcons. Mr Winters said that he explained all this to Mr Naftalin. He was adamant, however, that he never said anything about wanting a five year term:
"I did not say that, and it is not true. I wanted advice about increasing a 6 month period to a 1 year notice period."
This acute conflict of evidence was explored in cross-examination of both Mr Naftalin and Mr Winters. Before the date of the hearing, Mr Naftalin had also filed a second witness statement, to which he exhibited a contemporary handwritten note of a telephone conversation which he had with Mr Winters on 7 November 2007. The note was written in his day book while the conversation was taking place, and it matched a time recording entry for the same date, the narrative for which read "Telephone call advice to JNF". The note in the day book is headed with Mr Winters' telephone number, and immediately beneath it there is a reference to an apparently unrelated matter. Mr Naftalin explained that he had probably taken two messages off his voicemail, and he then returned the call to Mr Winters. The note then refers to "Harvey & Gail", which Mr Naftalin agreed probably indicates that Mr Bratt and Mrs Seal had suggested that Mr Winters should call him. The note then records that, if the JNF lost the cases, the Trustees wanted to protect [Mr Winters and Mr Bratt] by compensating them greatly if KKL took over, and that the Trustees wished to put a contract in place. This was followed by a reference to "5yr service contract", with an arrow and then the word "compensate". Thus far, as Mr Naftalin explained, the note evidently records what he was told by Mr Winters. The remainder of the note then indicates the initial advice which he gave, with references to "penalty clause", "CC [i.e. Charity Commission] guidance", and "Good corporate governance".
In my judgment this contemporary note makes it abundantly clear that the suggestion made by the Trustees, probably at the request of Mr Winters and Mr Bratt, was that they should be given five year service contracts, with a view to entitling them to very substantial compensation should their contracts be terminated following a victory by KKL in the litigation. I am unable to accept Mr Winters' evidence that he said nothing about a five year term, and am driven to conclude that here at least he was not being frank with the court. It was suggested to Mr Naftalin in cross examination that there might have been some misunderstanding, and that possibly the suggestion of a five year term had emanated from Mr Bratt rather than Mr Winters. Mr Naftalin was confident that he had not misunderstood the position, and in my view he was right when he said in answer to one question:
"I have not one element of doubt in my mind that the sole purpose of the conversation was to discuss whether we could increase the term of [Mr Winters'] contract to 5 years."
The request was a discreditable one, coming from the Chief Executive of a major charity, and it is perhaps unsurprising that Mr Winters should now seek to disown it, even though it had the initial support of the Trustees. I am, however, satisfied that when Mrs Seal asked Mr Winters and Mr Bratt to discuss the matter with Mishcons, she intended them to do so on behalf of the JNF, with a view to finding out whether the proposal was acceptable from a legal point of view. I am unable to accept Mr Winters' evidence that he was told to seek independent advice, and I find it significant that the entry on Mr Naftalin's time sheet refers to "advice to JNF". Here too I am regretfully driven to conclude that Mr Winters has not told the truth to the court.
Discussion
I have found that Mishcons acted for Mr Winters in his personal capacity for two brief periods only, the first in March/April 2006 in connection with the action taken to discover the identity of Anthony Jacobs, and the second beginning in late July 2006 and continuing for a month or two thereafter in connection with the first proposed libel proceedings. Each retainer was closely linked with a contemporary retainer of Mishcons by the JNF, in circumstances where there was no perception on either side of any conflict of interest between the JNF and Mr Winters. Mr Winters accepted that the first retainer was a joint one. The second retainer was in my judgment a separate one, but so closely linked with the retainer of Mishcons by the JNF relating to the ongoing litigation with KKL and the troubled affairs of the Glasgow branch of the JNF that no question of privilege or confidence as between Mr Winters and the JNF could reasonably have been seen as arising at that stage, at any rate in relation to matters of common interest to Mr Winters and the JNF.
It is in my judgment clear that in circumstances where there is a joint retainer, or where the same solicitors act for two clients in related matters in which they have a common interest, neither client can claim legal professional privilege against the other in relation to documents which come into existence, or communications which pass between them and the solicitors, within the scope of the joint retainer or matter of common interest concerned. The principle was stated as follows by Bridge LJ. in CIA Barka de Panama SA –v- George Wimpey & Co Limited [1980] 1 Lloyd's Rep 598 at 615:
"As regards the claim for legal professional privilege, it seems to me that the general principle underlying several authorities to which our attention has been called by Mr Lincoln, can be accurately stated in quite broad terms, and I would put it in this way. If A and B have a common interest in litigation against C and if at that point there is no dispute between A and B then if subsequently A and B fall out and litigate between themselves and the litigation against C is relevant to the disputes between A and B then in the litigation between A and B neither A nor B can claim legal professional privilege for documents which came into existence in relation to the earlier litigation against C."
I should add that only documents were in issue in that case, but the same principle must apply to communications of all kinds passing between A and B and their lawyers.
It is not suggested that Mr Winters imparted to Mishcons any information which he now wishes to keep confidential from the JNF in the course of the first retainer which I have identified. The information which he wishes to protect, and to prevent the JNF from using against him in the forthcoming employment proceedings, is the information described in his confidential third statement. I have found, albeit with some hesitation, that Mr Winters did impart this information to Dr Julius on or around 31 July 2006: see paragraph 63 above. However, I have also found that no reasonable expectation of confidence arose in respect of that information as between Mr Winters and the JNF, for whom Dr Julius was also acting at the same time. This principle was indeed recognised by Mr Winters himself in an important passage in his cross- examination, when he was asked about one of the matters described in his third statement which he said he had disclosed to Dr Julius in the context of the Charity Commission investigation, as well as in the context of the first proposed libel proceedings. It was of course Mr Winters' case that Dr Julius was also acting for him personally at the time of the Charity Commission investigation, under a joint retainer; so from his point of view the position was not materially different from the earlier occasion when he had first given the information to Dr Julius. The cross-examination then proceeded as follows:
"Q. So, during the time that Dr Julius was acting in relation to the Charity Commissioners, you passed on to him some of the material which you now identify as confidential?
A. I think I may have repeated it.
Q. Right. Again, don't tell me what it is, but is it one of the matters which are included in your third witness statement?
A. Yes.
…
Q. …Now, you knew, did you not, at the time that Mishcons were acting in relation to the Charity Commissioners that they were acting both on your behalf and on behalf of JNF, as you saw it?
A. Yes.
Q. And you therefore realised, did you not, that anything which you were saying to Dr Julius was a matter which was not confidential between yourself and JNF, because you were both his clients, as you saw it, and he had a duty to protect their interest? Do you agree?
A. Yes."
Mr Winters went on to say that he also felt that Dr Julius was looking out for his interests, but agreed that he never imparted any information to Dr Julius on the express footing that it was to be confidential between him and Dr Julius and was not to go back to the JNF. He also agreed that he would have expected Dr Julius to tell him to seek separate advice if Dr Julius felt that the information was something which might give rise to a conflict of interest between him and the JNF. The examination then continued:
"Q. You told him these things believing that they were matters which would not harm you with JNF and which, if necessary, could be passed on to JNF without damage to yourself. That's right, isn't it?
A. Yes.
Q. You would have expected him to understand those matters in exactly the same way?
A. Yes.
Q. That is to say: Don't pass them on unless it's relevant because it's confidential and embarrassing, but to the extent you feel you need to, then of course you must.
A. I think that's what was in my mind at the time, yes."
Since I have found that Mishcons were acting for the JNF alone during the Charity Commission investigation, no question of confidence as between Mr Winters and the JNF could have arisen in respect of the information which he gave to Dr Julius in the course of and for the purposes of that investigation. However, the principles which Mr Winters accepted in the passages from his cross-examination which I have quoted do in my judgment apply to the earlier occasion when Dr Julius was, as I have found, also acting for him personally and he disclosed the material referred to in his third statement.
The primary argument advanced before me by counsel for Mr Winters was based on alleged misuse of confidential information, and the principles enunciated by the House of Lords in Bolkiah –v- KPMG [1999] 2 AC 222. The facts of the Bolkiah case are well known. KPMG had acted as the auditors of the Brunei Investment Agency ("the BIA") since its establishment in 1983. The function of the BIA was to hold and manage the general reserve fund and the external assets of the Government of Brunei. In 1996 Prince Jeffrey Bolkiah, who was then the Chairman of the BIA, was involved in major litigation relating to his financial affairs and he retained KPMG to provide forensic accounting services and litigation support. In the course of that work KPMG performed many tasks of a kind usually undertaken by solicitors, and were given access to highly confidential information concerning the extent and location of Prince Jeffrey's assets. The litigation was settled in March 1998, and thereafter KPMG undertook no further work for Prince Jeffrey, who ceased to be their client. At about the same time, he was removed from his position as Chairman of the BIA. In June 1998 the Government of Brunei appointed a finance task force to conduct an investigation into the activities of the BIA during the period when Prince Jeffrey had been its Chairman. The BIA retained KPMG to investigate the whereabouts of certain assets which were suggested to have been used by Prince Jeffrey for his own benefit. They took steps to protect his confidentiality by ensuring that there was no overlap between the personnel who had worked for Prince Jeffrey in the past, and those who were now engaged in investigating his conduct, and appropriate "Chinese walls" were erected within the firm. Against this background, Pumfrey J. granted an injunction restraining KPMG from continuing to act for the BIA, on the basis that although KPMG had an honest intention not to disclose confidential information, the barriers which they had established were inadequate to deal with the problems of inadvertent disclosure. The Court of Appeal disagreed and discharged the injunction, but the House of Lords unanimously restored the decision of Pumfrey J.
The leading speech was delivered by Lord Millett, and his discussion of the law begins at page 233H. He referred to the decision of the Court of Appeal in Rakusen –v- Ellis, Munday & Clarke [1912] 1 Ch 831 as being authority for two propositions: first, there is no absolute rule of law in England that a solicitor may not act in litigation against a former client; but secondly, the solicitor may be restrained from acting if such a restriction is necessary to avoid a significant risk of the disclosure or misuse of confidential information belonging to the former client. The Bolkiah case was of course concerned with the duties of an accountant, not a solicitor; but it was common ground that an accountant who provides litigation support services of the kind which KPMG provided to Prince Jeffrey must be treated in the same way as a solicitor: see 234B-D. Lord Millett then went on to consider the basis of the jurisdiction, and affirmed that where the court is being asked to intervene on behalf of a former client, "the court's intervention is founded not on the avoidance of any perception of possible impropriety but on the protection of confidential information" (234G). Lord Millett then explained that the position is different where the court's intervention is sought by an existing client, because a fiduciary (such as a solicitor) cannot act at the same time both for and against the same client, and his firm is in no better position. The disqualification in such a case has nothing to do with the confidentiality of client information, but is based "on the inescapable conflict of interest which is inherent in the situation" (235A).
Lord Millett then continued as follows at 235C:
"Where the court's intervention is sought by a former client, however, the position is entirely different. The court's jurisdiction cannot be based on any conflict of interest, real or perceived, for there is none. The fiduciary relationship which subsists between solicitor and client comes to an end with the termination of the retainer. Thereafter the solicitor has no obligation to defend and advance the interests of his former client. The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence.
Accordingly, it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own. Although the burden of proof is on the plaintiff, it is not a heavy one. The former may readily be inferred; the latter will often be obvious. I do not think that it is necessary to introduce any presumptions, rebuttable or otherwise, in relation to these two matters. But given the basis on which the jurisdiction is exercised, there is no cause to impute or attribute the knowledge of one partner to his fellow partners. Whether a particular individual is in possession of confidential information is a question of fact which must be proved or inferred from the circumstances of the case."
In the light of this statement of the law, Mr Alistair Wilson QC for Mr Winters rightly accepted that it is an essential precursor to invoking the Bolkiah jurisdiction to establish that Mishcons were in possession of information which was confidential to Mr Winters and to the disclosure of which Mr Winters had not consented. However, in view of the findings of fact which I have made it is clear, to my mind, that Mr Winters' case breaks down at this preliminary stage. The information which he disclosed to Dr Julius in July 2006 was not confidential as between himself and the JNF, although it was no doubt confidential as against the rest of the world. In the absence of any confidentiality attaching to the information as between Mr Winters and the JNF, he cannot now invoke the Bolkiah principle in order to prevent Mishcons from acting against him. There is no general principle which prevents a solicitor from acting against a former client after the relationship between them has terminated. As Lord Millett said at 235C, the "only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence".
Counsel for Mr Winters sought to circumvent the problem that there was no confidence as between him and the JNF in two ways. First, it was argued that no reliance could be placed upon Mr Winters' position as Chief Executive of the JNF as imposing upon him an obligation to disclose the relevant information to the JNF in any case. An equivalent point was taken by KPMG in the Bolkiah case, and was dismissed by the House of Lords on the ground that it was premature to take the point at that stage in the proceedings: see the speech of Lord Millett at 239E-G. Secondly, it was argued that no reliance could be placed on the principle that there can be no confidence as between joint clients of the same solicitors, because at the time when the relevant information was disclosed to Dr Julius by Mr Winters, Mishcons were acting for him alone, and the JNF had decided against taking libel proceedings itself. Furthermore, even if the disclosure was made at a time when Mishcons were acting for the parties jointly, they should have appreciated the possibility of a conflict of interest between Mr Winters and the JNF, and advised him to seek separate legal representation before taking detailed instructions from him. In particular, it was argued that Dr Julius should have given this advice to Mr Winters before asking him whether he had any skeletons in his cupboard. Because no such warning was given, it is now too late to speculate what Mr Winters would have decided to do had be been so warned, and the only way to protect him now against the disclosure of the information to the JNF (assuming it has not already occurred) is for Mishcons to cease to act for the JNF.
In my judgment there is no substance to these arguments. With regard to the first argument, the facts are entirely different from those of the Bolkiah case. In the present case, there is no dispute that Mr Winters was the Chief Executive of the JNF at the material time, and he knew that Mishcons were acting for the JNF. Furthermore, he accepted in cross-examination, as I have already explained, that Dr Julius would in certain circumstances be bound to disclose to the JNF the information which he disclosed to him. In Bolkiah, on the other hand, the question whether Prince Jeffrey was liable to account to the BIA and to provide them with the information which they were seeking had yet to be considered, and the answer to it was not obvious. As Lord Millett said at 239F: "This may or may not be true, for the information which the BIA is seeking to obtain would appear to go far beyond what a recipient of proper payments would be bound to disclose".
With regard to the second argument, it is true that the JNF had decided against taking libel proceedings itself, but the situation is not one where Mishcons were acting for Mr Winters alone at the time when the allegedly confidential information was disclosed. As I have found, Mishcons were also acting at the same time for the JNF in relation to the closely related matter of how to deal with the dissension in the Glasgow Committee, and Dr Julius was, as Mr Winters well knew, advising on the letters to be sent to the Committee by Mrs Seal at the very same time as he was reviewing the draft letters to be sent by Mr Winters. Furthermore, I regard the suggestion that Dr Julius should have advised Mr Winters to seek separate representation before asking him whether he had any skeletons in his cupboard as wholly unrealistic. As Dr Julius explained in cross examination, the possibility of a conflict of interest arising between Mr Winters and the JNF was at that stage a remote one, particularly as Mr Winters' conduct had been examined by Lee & Allen and he had been exonerated by the Trustees. The settlement of the KKL litigation still lay well in the future, and there was no reason to suppose that Mr Winters' tenure as Chief Executive of the JNF was in any way precarious. To say that Dr Julius should not have acted for him merely because a time might come when his interests would diverge from those of the JNF is in my judgment like saying that a solicitor should not act for a happily married husband and wife merely because a time may come when the marriage breaks down and they divorce.
Since Mr Winters' case based on misuse of confidential information falls at the first hurdle, it is unnecessary for me to go on to consider whether the other requirements which would entitle the court to intervene are also satisfied. I can also deal very briefly with two alternative arguments which were advanced on Mr Winters' behalf.
The first argument was that the court should intervene in exercise of its common law power to supervise the conduct of solicitors. It was submitted that this power is well-established, and that Lord Millett cannot possibly have meant to sweep it aside, or leave no scope for its operation, when he said that the "only duty" owed by a solicitor to a former client is a duty to preserve confidential information. The submission was buttressed by reference to a valuable discussion of the subject by Charles Hollander QC and Simon Salzedo in the third edition (2008) of their book "Conflicts of Interest" and the Australian and New Zealand authorities therein referred to, including in particular the decision of the New Zealand High Court in Raats v Gascoigne Wicks [2006] NZHC 598. The general conclusion of the learned authors, following their review of the relevant material, is that there may be scope for the court to exercise its traditional jurisdiction over the conduct of solicitors in certain cases which are not covered by the Bolkiah principle, and that one of the types of case in which it may be appropriate for the court to intervene is where a solicitor seeks to act for one of two former joint clients against the other. Such cases are likely to be exceptional, but Commonwealth jurisprudence recognises the existence of such a jurisdiction "and gives effect to it where the fair-minded observer would think that the administration of justice required the solicitor not to act" (paragraph 5-018 on page 99).
I am prepared to assume, without deciding, that there may be rare circumstances in which the court will intervene, in exercise of its general jurisdiction over solicitors as officers of the court, notwithstanding that there is no risk of misuse of confidential information. However, the facts of the present case seem to me far removed from a situation where it would be appropriate for the court to exercise any such jurisdiction. The employment dispute between the JNF and Mr Winters has nothing in common with the two matters in which Mishcons briefly acted for Mr Winters, and is much more closely akin to the investigation of Mr Winters' conduct by Lee & Allen, when Mishcons were acting for the JNF alone. The present case is therefore not one in which Mishcons have "changed sides" in any objectionable sense, and in the absence of any risk of misuse of confidential information I can see no good reason why Mishcons should now be prevented from acting for the JNF in relation to the employment dispute. There is a public interest in clients being able to retain the solicitors of their choice, and they should only be prevented from doing so on solid grounds. This public interest was recognised by Neuberger J, as he then was, in Halewood International Ltd v Addleshaw Booth & Co [2000] 1 PNLR 298 at 301. The Court of Appeal has also emphasised the need for the court to be satisfied that there is a real risk of disclosure of confidential information, and not merely a fanciful or theoretical one, in cases where the Bolkiah principle is invoked: see Koch Shipping Inc v Richards Butler [2002] 1 PNLR 603. The need for a relatively robust and commonsense approach is in my judgment even more necessary if the case is one which is not covered by the Bolkiah principle. The English rules of professional conduct for solicitors do not prevent a solicitor from acting against a former client in a situation where the solicitor's duty of confidentiality to the former client is not put at risk: compare rule 3.03 of the Solicitors' Code of Conduct 2007. The English rules appear to be less stringent in this respect than those in New Zealand which were considered by the High Court in the case of Raats, and in my view an English court should be very slow to intervene to prevent a solicitor from acting in circumstances where he is not prevented from doing so by the Code of Conduct.
The final argument advanced on behalf of Mr Winters was to the effect that Mishcons were acting in breach of the rules of professional conduct which were in force when they acted for Mr Winters, and such breach not only exposes them to possible disciplinary proceedings before the Solicitors' Disciplinary Tribunal but is also actionable at the suit of the client. Accordingly, so the argument runs, the court can intervene at the suit of the client to prevent the solicitor from taking advantage of the breach. This argument was only faintly advanced by counsel for Mr Winters, and I have no hesitation in rejecting it. There is no authority to support the argument that a breach of the professional conduct rules by a solicitor gives rise to a private law right enforceable by the client, whereas there are long-established disciplinary procedures for dealing with solicitors who fail to comply with the rules. The rules made by the Law Society acting in its public capacity take effect as a form of delegated legislation: see Swain v The Law Society [1983] AC 598 at 608 per Lord Diplock. It is therefore a question of construction whether they create rights in private law which are enforceable at the suit of a client. In the absence of any authority on the point, I would be reluctant to hold that any such private law rights are created. However, it is unnecessary for me to express a concluded view on the question, and I prefer not to do so, because Mr Winters has failed to persuade me that Mishcons breached the rules in any relevant respect when they acted for him on the two brief occasions which I have identified. In particular, I do not consider that there was at those times any significant risk that the duties owed by Mishcons to Mr Winters might conflict with the duties which they owed to the JNF: see rule 3.01(2)(a) of the Solicitors' Code of Conduct 2007, which re-enacted similar provisions which had been in force since 2004.
Conclusion
For the reasons which I have given, this action must in my judgment be dismissed. | 2 |
2002 3 SCR 936 The following Order of the Court was delivered by BANERJEE, J. Leave granted A significant departure from the regular numberm in the matter of pronouncement of judgment is the key factor in the present appeal. Mentioned hereinbefore a significant departure in the matter of pronouncement of judgment-but what is it so significant so as to warrant interference of this Court under Article 136 of the Constitution-Before adverting to the same, however, a brief factual reference would be companyvenient and necessary for appreciation of such a departure-against an order of acquittal recorded by 3rd Additional Sessions Judge, Muzaffarpur in Sessions Trial No. 258 of 1992, a revisional application stands filed before the High Court of Judicature at Patna recording therein that on appreciation of evidence the order, as passed by the learned Sessions Judge, was totally perverse on the face of the judgment. It is on the basis aforesaid, the learned Single Judge in the revisional application in his judgment impugned before this Court in three different settings in the body of the judgment stated Be it what it may, I am number going into the merit of the case in depth but on perusal of the impugned judgment particularly paragraph 30 and the material on records, I also hold that reasonings of acquittal given by the learned Sessions Judge are definitely number proper and justifiable on the face of it and if number justifiable then it may go to the extent of perversity. But in the present case I find that four eye witnesses to the occurrence were found to be present at the scene of occurrent and their presence at the scene of occurrence companyld number be disbelieved by any plausible or companyent reasons and then discarding the evidence of eye witnesses has been done by the learned Court below on a weak and meek reasons then definitely this Court can interfere as the impugned judgment would affect in the system of delivering justice. In that way, without forming an opinion regarding the fate of the case I find that the impugned judgment should number be sustained and must be set aside and the matter be quashed for further companysideration in the light of the observation made above. In that way, the impugned judgment is hereby set aside and the matter is sent back to the Court below for writing a fresh judgment by giving proper judicial mind to the evidence on record. Emphasis Supplied Opposite party Nos. 2 to 4 are hereby directed to appear before the learned Court below on 2nd August, 2001 and they should be allowed to go on bail to the satisfaction of the learned Sessions Judge and then an opportunity be given for further argument to both the parties writing a fresh judgment on the materials on record. It is this direction as numbericed hereinbefore, for writing out a fresh judgment by giving proper judicial mind to the evidence on record and which stands very strongly criticised by the learned senior advocate, Mr. S.B. Sanyal, appearing in support of the appeal and we do find some justification in regard thereto. Before delving on to the principal issue as regards the departure and as stated above it would be companyvenient to numbere that in companynt 1, paragraph 30 of the trial Courts judgment has been drawn attention of and for companyvenience sake para 30 is reproduced hereinbelow for its true scope and effect. The said paragraph 30 reads as below - Now on the companyl companysideration of entire facts, evidence oral and documentary and argument of both the sides, I reach on the following companyclusion - That according to P.W.5 and P.M. Report Ext. 2 I find that the doctor companyducted post mortem at 11 a.m. on 7.10.91 and had written in the end of post mortem report that the victim died within 24 hours from the time of companyduction of post mortem report. This means that the story of prosecution that Ram Binod was caught and shot on 6.10.91 and soon he died is number a fact, because according to medical finding Ram Binod Singh was alive till 10.59 p.m. on 6.10.91 and in such a case the entire story of prosecution becomes unreliable. As such, the Court has numberalternative than to declare that the prosecution has number succeeded to prove the case against the accused persons under Section 302/34 of the I.P.C. Further I find that all the witnesses, P.Ws. 1, 2 and 3 are related and P.W. 4 is the informant himself. The independent witnesses Madan Singh, Rambabu Singh, Raj Kishore Thakur were number examined and numberexplanation was given. Chargesheet witnesses Radha Mohan Singh, Sudistha Singh and Madan Singh were number examined and numberexplanation during argument was placed by the learned Addl. P.P. Chargesheet witness Radha Mohan Singh has deposed for the defence as D.W.7 and supported the defence version of the accused person i.e. occurrence took place at other place by other person and the dead body was brought by Rickshaw and on company to the bathan of Raghubansh Singh. The prosecution has miserably failed to establish the P.O. for the P.O. place darwaja of Raghubansh dean of Ranghubansh and bathan and shan of raghubansh were used. Each places possess different boundaries and distance from one another. The prosecution has further failed to establish the weapons used in inflicting wound on the deceased. For arms words nalkatua, deshi revolver, revolver and nalkatua gun were used by different persons. Each weapon differs from one another. Had the P.Ws. actually seen the occurrence, the O. and weapons used companyld number have been deposed differently. The stained soil with blood seized by the I.O. was number produced to be marked as material exhibits. The I.O. P.W.7 has number seized the company and the sand smeared with blood, which were companycrete and strong proof of murder. The accused have succeeded to establish through informatory petition Ext. D the suspicion on the part of informant and witnesses and others and also Jagannath Choudhary was a witness in a case against Sudhistha while Chandra Prakash is son of Sudistha, Ramesh too is inimical with the accused persons. Thus, it companyes to finding that previous enmity has played great part in implication of the accused persons while the prosecution has totally failed to prove charge against the accused persons. The prosecution story as told by Ramayan Singh is itself unbelievable because if the accused persons will catch Ram Binod from back and front portion, numberfiring on Binod can be done because in such circumstances, Ram Binod will number remain like statute, but to save himself, he will try his best to be immune and thus all the four might be in an inconsistent position, so a fire on Binod companyld injure any accused. According to the I.O. in his case diary he opined companytact shot of Ram Binod, which is the case of prosecution to, but P.W. answered that the shot of firing might have been done with a distance of 6 to 7 feet away. This also falifies the prosecution case. According to some of the P.Ws. Ram Binod received fire wound. When he was freed by accuses persons he fell down on the surface and died soon. When his body was kept on a company, his pulse beat stopped, but according to W.7 the nature of injury is such that victim might have remained alive for 3 to 4 hours. This also falsify the prosecution story. P.Ws. 1, 2, 3 and 6 had number seen the alleged story of snatching watch and money of Ramayan by Bhav Chandra Choudhary alone or in companybination with his brother Chunchun and father Jagannath. So, the motive behind such murder by the alleged accused is number brought before the Court. According to 1966 BI, JR page 786 to 790 statement made under Section 164 cannot be used as a substantive evidence. It can be used to cross-examine the persons who made it. In this case P.W. 1 and P.W. 2 have companytracted such statement, such statements Exts. 7 to. 7/3 have been recorded number in accordance with law and are defective. It is on the basis aforesaid that the learned Sessions Judge thought it fit to acquit the accused upon recording a finding to that effect. The second companynt as numbericed above, if read with companynt 3 , the order impugned cannot but be stated to be a mockery of justice delivery system. Writing of a fresh judgment by giving proper judicial mind to the evidence on record has been the observation of the High Court - and what would be the companysequences - would the learned trial Judge be ever able to apply the judicial mind in the matter of dispensation of justice - We are afraid, our answer cannot but be in the negative. Let us number, however, companycentrate ourselves on to the procedural aspect of the matter - and it is in this aspect of the matter, Section 401 be companysidered at the initial stage. The Section reads as below High Courts powers of revision - 1 In the case of any proceeding the record of which has been called for by itself or which otherwise companyes to its knowledge, the High Court may, in its discretion, exercised any of the powers companyferred on a Court of Appeal by Section 386, 389, 390 and 391 or on a Court of Session by Section 307 and, when the Judges companyposing the Court of revision are equally divided in opinion, the case shall be disposed of in the manner provided by Section 392. No order under this section shall be made to the prejudice of the accused or other person unless he has had an opportunity of being heard either personally or by pleader in his own defence. Nothing in this section shall be deemed to authorise a High Court to companyvert a finding of acquittal into one of companyviction. Where under this Code an appeal lies and numberappeal is brought, numberproceeding by way of revision shall be entertained at the instance of the party who companyld have appealed. Where under the Code an appeal lies but an application for revision has been made to the High Court by any person and the High Court is satisfied that such application was made under the erroneous belief that numberappeal lies thereto and that it is necessary in the interests of justice so to do, the High Court may treat the application for revision as a petition of appeal and deal with the same accordingly. More than four decades ago, this Court in K. Chinnaswamy Reddy v. State of Andhra Pradesh and Anr., AIR 1962 SC 1788 very succinctly formulated the extent of jurisdiction by the revisional Court upon reliance on two oftcited decisions of this Court as mentioned therein in the manner following The extent of the jurisdiction of the High Court in the matter of inferring in revision against an order of acquittal has been companysidered by this Court on a number of occasions. In D. Stephens v. Nosibolla, 1951 SCR 284 AIR 1951 SC 196, this Court observed - The revisional jurisdiction companyferred on the High Court under S.439 of the Code of Criminal Procedure is number to be lightly exercised when it is invoked by a private companyplainant against an order of acquittal, against which the Government has a right of appeal under s.417. It companyld be exercised only in exeptional cases where the interests of public justice require interference for the companyrection of a manifest illegality or the prevention of a gross miscarriage of justice. This jurisdiction is number ordinarily invoked or used merely because the lower Court has taken a wrong view of the law or misappreciated the evidence on record. Again in Logendrathan Jha v. Shri Polailal Biswas, 1951 SCR 676 AIR 1951 SC 316, this Court observed - Though subs-s. 1 of S.439 of the Criminal Procedure Code authorises the High Court to exercissd in its discretion any of the powers companyferred on a Court of appeal by S.423, yet sub-S. 4 specifically excludes the power to companyvert a finding of acquittal into one of companyviction. This does number mean that in dealing with a revision petition by a private party against an order of acquittal, the High Court can in the absence of any error on a point of law reappraise the evidence and reverse the findings of facts on which the acquittal was based, provided only it stops short of finding the accused guilty passing sentence on him by ordering a re-trial. These two cases clearly lay down the limits of the High Courts jurisdiction on interfere with an order of acquittal in revision in particular, Logendranath Jhas case 1951 SCR 676 AIR 1951 SC 316 stresses that it is number open to a High Court to companyvert a finding of acquittal into one of companyviction in view of the provisions of S.439 4 and that the High Court cannot do this even indirectly by ordering retrial. What had happened in that case was that the High Court reversed pure findings of facts based on the trial companyrts appreciation of evidence but formally companyplied with sub-s. 4 by directing only a retrial of the appellants without companyvicting them, and warned that the companyrt retrying the case should number be influenced by any expression of opinion companytained in the judgment of the High Court. In that companynection this companyrt observed that there companyld be little doubt that the dice was loaded against the appellants of that case and it might prove difficult for any subordinate judicial officer dealing with the case to put aside altogether the strong views expressed in the judgment as to the credibility of the prosecution witnesses and the circumstances of the case in general. It is true that it is open to a High Court in revision to set aside an order of acquittal even at the instance of private parties, though the State may number have thought fit to appeal but this jurisdiction should in our opinion be exercised by the High Court only in exceptional cases, when there is some glaring defect in the procedure or there is a manifest error on a point of law and companysequently there has been a flagrant miscarriage of justice. Sub-section 4 of S.439 forbids a High Court from companyverting a finding of acquittal into one of the companyviction and that makes it all the more incumbent on the High Court to see that it does number companyvert the finding of acquittal into one of companyviction by the indirect method of ordering retrial, when it cannot itself directly companyvert a finding of acquittal into a finding of companyviction. This places limitation on the power of the High Court to set aside a finding of acquittal in revision and it is only in exceptional cases that this power should be exercised. It is number possible to lay down the criteria for determining such exceptional cases which would companyer all companytingencies. We may however indicate some cases of this kind, which would in our opinion justify the High Court in interfering with a finding of acquittal in revision. These cases may be where the trial companyrt has numberjurisdiction to try the case but has still acquitted the accused, or where the trial companyrt has wrongly shut out evidence which the prosecution wished to produce or where the appeal companyrt has wrongly held evidence which was admitted by the trial companyrt to be inadmissible, or where material evidence has been overlooked either by the trial companyrt or by the appeal companyrt or where the acquittal is based on a companypounding of the offence, which is invalid under the law. These and other cases of similar nature can properly be held to be cases of exceptional nature, where the High Court can justifiably interfere with an order of acquittal and in such a case it is obvious that it cannot be said that the High Court was doing indirectly what it companyld number do directly in view of the provisions of S.439 4 . We have therefore to see whether the order of the High Court setting aside the order acquittal in this case can be upheld on these principles. A perusal of the judgment of the High Court shows that the High Court has gone into the evidence in great detail so far as the case against the appellant was companycerned. In our opinion, the High Court should number have death with evidence in such detail when it was going to order a retrial, for such detailed companysideration of evidence, as pointed out in Logendranaths case, 1951 SCR 676 AIR 1951 316 amounts to loading the dice against the appellant, when the case goes back for retrial. If the matter stood at this only, we would have numberhesitation in setting aside the order of the High Court directing retrial but there is one important circumstance in this case to which the High Court has adverted in passing, which, in our opinion, was sufficient to enable the High Court to set aside the acquittal in this case. It would then have been unnecessary to companysider the evidence in that detail in which the High Court has gone into it, and thus load the dice against the appellant, when the case goes back for retrial. That circumstance is that the Assistant Sessions Judge had admitted in evidence that part of the statement of the appellant in which he stated that he would show that place where he had hidden the ornaments and relying on it he held that the appellant was in possession of the seventeen ornaments, he had dug out from the garden which he owned along with others. The Sessions Judge however held that part of the statement of the appellant where he stated that he had hidden the ornaments was inadmissible in evidence. The same applies to the case against the other accused, who had stated that he had given one ornament to Baba Sab and would get it recovered from him. Though the Sessions Judge has number in specific terms ruled out that part of the other accuseds statement where he said that he had given the ornament to Baba Sab, he did number companysistently with what he said with respect to the appellant, attach importance to this statement of the other accused. If therefore this part of the statement of the appellant and the other accused which led to discovery of ornaments is admissible, it must be held that the appeal companyrt wrongly ruled out evidence which was admissible. In these circumstances, the case would clearly be companyered by the principles we have set out above in as much as relevant evidence was ruled out as inadmissible and the High Court would be justified in interfering with the order of aquittal so that the evidence may be re-appraised after taking into account the evidence which was wrongly ruled out as inadmissible. It seems that the High Court was companyscious of this aspect of the matter, for it says in one part of the judgment that the only possible inference that companyld be drawn was that the appellant was in possession of stolen goods before they were put in that secret spot, as admitted by the appellant in his statement part of which is admissible under S.27 of the Indian Evidence Act. If the High Court had companyfined itself only to the admissibility of this part of the statement, it would have been justified interfering with the order of acquittal. Unfortunately, the High Court went further and appraised the evidence also which it should number have done, as held by this Court in Longendranaths case, 1951 SCR 676 AIR 1951 SC 316 . However, if admissible evidence was ruled out and was number taken into companysideration, that would in our opinion be a ground for interfering with the order of acquittal in revision. Incidentally the object of the revisional jurisdiction as envisaged under Section 401 was to companyfer upon superior criminal companyrt a kind of paternal or supervisory jurisdiction, in order to companyrect miscarriage of justice arising from misconception of law, irregularity of procedure, neglect of proper precautions of apparent harshness of treatment which has resulted on the one hand in some injury to the due maintenance of law and order, or on the other hand in some underserved hardship to individuals. See in this companytext the decision of this Court Janata Dal v. H.S. Chowdhary and Ors., 1992 4 SCC 305 . The main question which the High Court has to companysider in an application in revision is whether substantial justice has been done. If however, the same has been an appeal, the applicant would be entitled to demand an adjudication upon all questions of fact or law which he wishes to raise, but in revision the only question is whether the companyrt should interfere in the interests of justice. Where the companyrt companycerned does number appear to have companymitted any illegality or material irregularity or impropriety in passing the impugned judgment and order, the revision cannot succeed. If the impugned order apparently is presentable, without any such infirmity which may render it companypletely perverse or unacceptable and when there is numberfailure of justice, interference cannot be had in exercise of revisional jurisdiction. While it is true and number well-settled in a long catena of cases that exercise of power under Section 401 cannot but be ascribed to be discretionary - this discretion, however, as is popularly informed has to be a judicious exercise of discretion and number an arbitrary one. Judicial discretion cannot but be a discretion which stands informed by tradition, methodised by analogy and disciplined by system - resultantly only in the event of a glaring defect in the procedural aspect or there being a manifest error on a point of law and thus a flagrant miscarriage of justice, exercise of revisional jurisdiction under this statute ought number to be called for. It is number to be lightly exercised but only in exceptional situations where the justice delivery system requires interference for companyrection of manifest illegality or prevention of a gross miscarriage of justice. In Nosibolla Logendranath Jha and Chinnaswamy Reddy supra as also in Thakur Das Thakur Das Dead by Lrs. v. State of Madhya Pradesh and Anr., 1978 1 SCC 27 this Court with utmost clarity and in numberuncertain terms recorded the same. It is number an appellate forum wherein scrutiny of evidence is possible neither the revisional jurisdiction is open for being exercised simply by reason of the factum of another view being other wise possible. It is restrictive in its application though in the event of there being a failure of justice there can said to be numberlimitation as regards the applicability of the revisional power. The High Court possesses a general power of superintendence over the actions of companyrt subordinate to it. On its administrative side, the power is known as the power of superintendence. On the judicial side, it is known as the duty of revision. The High Court can at any stage even on its own motion, if it so desires, and certainly when illegalities or irregularity resulting in injustice are brought to its numberice call for the records and examine them. This right of the High Court is as much a part of the administration of justice as its duty to hear appeals and revisions and interlocutory applications - so also its right to exercise its powers of administrative superintendence. Though however, the jurisdictional sweep of the process of the High Court, however, under the provisions of Section 401 is very much circumscribed, as numbericed hereinbefore. Having regard to the aforesaid, we do feel it expedient to record that in the companytextual facts presently under companysideration before this Court, the High Court cannot but be said to have exceeded its revisional jurisdiction in setting aside the order of acquittal. | 4 |
JUDGMENT OF THE COURT (First Chamber)
11 July 2013 ( *1 )
‛Failure of a Member State to fulfil obligations — Transport — Development of the Community’s railways — Directive 91/440/EEC — Article 6(3) and Annex II — Directive 2001/14/EC — Article 14(2) — Independence of the body to which the exercise of essential functions is entrusted’
In Case C-412/11,
ACTION under Article 258 TFEU for failure to fulfil obligations, brought on 5 August 2011,
European Commission, represented by J.-P. Keppenne and H. Støvlbæk, acting as Agents, with an address for service in Luxembourg,
applicant,
v
Grand Duchy of Luxembourg, represented by C. Schiltz, acting as Agent,
defendant,
THE COURT (First Chamber),
composed of A. Tizzano, President of the Chamber, A. Borg Barthet (Rapporteur), E. Levits, J.-J. Kasel and M. Berger, Judges,
Advocate General: N. Jääskinen,
Registrar: A. Calot Escobar,
having regard to the written procedure,
after hearing the Opinion of the Advocate General at the sitting on 13 December 2012,
gives the following
Judgment
By its application, the European Commission seeks a declaration from the Court that, by failing to adopt the measures necessary to ensure that the entity entrusted with the exercise of essential functions referred to in Article 6(3) of and listed in Annex II to Council Directive 91/440/EEC of 29 July 1991 on the development of the Community’s railways (OJ 1991 L 237, p. 25), as amended by Directive 2007/58/EC of the European Parliament and of the Council of 23 October 2007 (OJ 2007 L 315, p. 44) (‘Directive 91/440’), and Article 14(2) of Directive 2001/14/EC of the European Parliament and of the Council of 26 February 2001 on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure (OJ 2001 L 75, p. 29), as amended by Directive 2007/58, be independent of the undertaking that provides railway transport services, the Grand Duchy of Luxembourg has failed to fulfil its obligations under those provisions.
Legal context
European Union law
Three directives were adopted in February 2001 with a view to revitalising rail transport by gradually opening it up to competition at European level, namely, Directive 2001/12 of the European Parliament and of the Council of 26 February 2001 amending Directive 91/440 (OJ 2001 L 75, p. 1), Directive 2001/13/EC of the European Parliament and of the Council of 26 February 2001 amending Council Directive 95/18/EC on the licensing of railway undertakings (OJ 2001 L 75, p. 26) and Directive 2001/14 (together ‘the first railway package’).
Directive 91/440
Article 6(3) of Directive 91/440 provided:
‘Member States shall take the measures necessary to ensure that the functions determining equitable and non-discriminatory access to infrastructure, listed in Annex II, are entrusted to bodies or firms that do not themselves provide any rail transport services. Regardless of the organisational structures, this objective must be shown to have been achieved.
Member States may, however, assign to railway undertakings or any other body the collecting of the charges and the responsibility for managing the railway infrastructure, such as investment, maintenance and funding.’
Annex II to Directive 91/440 read as follows:
‘List of essential functions referred to in Article 6(3):
—
preparation and decision-making related to the licensing of railway undertakings including granting of individual licenses,
—
decision-making related to the path allocation including both the definition and the assessment of availability and the allocation of individual train paths,
—
decision-making related to infrastructure charging,
—
monitoring observance of public service obligations required in the provision of certain services.’
Directive 2001/14
Article 14(1) and (2) of Directive 2001/14 stated:
‘1. Member States may establish a framework for the allocation of infrastructure capacity while respecting the management independence laid down in Article 4 of Directive [91/440]. Specific capacity-allocation rules shall be laid down. The infrastructure manager shall perform the capacity-allocation processes. In particular, the infrastructure manager shall ensure that infrastructure capacity is allocated on a fair and non-discriminatory basis and in accordance with Community law.
2. Where the infrastructure manager, in its legal form, organisation or decision-making functions is not independent of any railway undertaking, the functions referred to in paragraph 1 and described in this chapter shall be performed by an allocation body that is independent in its legal form, organisation and decision-making from any railway undertaking.’
Article 29 of that directive provided:
‘1. In the event of disturbance to train movements caused by technical failure or accident the infrastructure manager must take all necessary steps to restore the normal situation. To that end he shall draw up a contingency plan listing the various public bodies to be informed in the event of serious incidents or serious disturbance to train movements.
2. In an emergency and where absolutely necessary on account of a breakdown making the infrastructure temporarily unusable, the paths allocated may be withdrawn without warning for as long as is necessary to repair the system.
The infrastructure manager may, if it deems this necessary, require railway undertakings to make available to it the resources which it feels are the most appropriate to restore the situation to normal as soon as possible.
3. Member States may require railway undertakings to be involved in assuring the enforcement and monitoring of their own compliance of the safety standards and rules.’
Luxembourg law
The Law of 22 July 2009 on railway safety (Mémorial A 2009, p. 2465) relating, inter alia, to the establishment of the Administration des Chemins de Fer (‘the ACF’) provides that the latter is responsible for the essential functions of allocation of capacity (allocation of train paths) and levying of charges.
The Law of 11 June 1999 on the railway infrastructure and its use (Mémorial A 1999, p. 1794), as amended by the Law of 3 August 2010 (Mémorial A 2010, p. 2194), provides:
‘The task of allocating railway infrastructure capacity shall be entrusted to an allocation body whose function shall be performed by the [ACF].’
The Network Reference Document of 23 December 2010 (‘the NRD’) provides in Item 4.8.2, entitled ‘Traffic management in the event of disruption’:
‘Operational regulation shall be carried out by the duty office of [the Network Management Service (‘the NMS’) of the Luxembourg National Railway Company (‘the CFL’)]. Its principles and procedures shall apply to all traffic if one train is unable to keep to the timetable originally scheduled. Except in cases of doubt, a new train path shall not be assigned for a late train that same day. The duty office shall in no circumstances assign the new path. If necessary, its role shall be limited to the function of intermediary for a new order from the UI [Infrastructure user] to the [ACF].’
Item 4.8.3 of the NRD provides:
‘If the disruption and the corresponding corrective measures affect only one railway undertaking without interfering with the infrastructure capacity reserved by the other railway undertakings, the corrective measures shall be put in place in consultation with the railway undertaking concerned.
Where the disruption and the corresponding corrective measures affect more than one railway undertaking, the [ACF] shall seek to put corrective measures in place as early as possible and in consultation with all the railway undertakings concerned.’
Item 4.8.4 of the NRD provides:
‘In the event of unforeseen disruption of rail traffic due to a technical failure or an accident, the infrastructure manager shall take all the measures necessary to ensure that the situation is restored to normal. In particular, it shall apply the procedure of the RGE [General Technical Operating Rules] laid down in the event of incidents and accidents.
In the event of an emergency and where absolutely necessary, in particular in the event of an accident or defect rendering the infrastructure temporarily unusable or for any other circumstances preventing the use of the infrastructure under normal safety conditions, the train paths allocated may be withdrawn without notice during the time necessary for facilities to be restored or until the cause of the stoppage of trains no longer exists.
The [ACF] shall assign alternative capacities corresponding as closely as possible to the specifications of the railway undertakings concerned.
If it considers it necessary, the infrastructure manager may require the railway undertakings to make available to it the means which it considers most appropriate in order to restore the situation to normal as soon as possible or to implement its own rescue or lifting methods. The resulting costs are to be borne by the party responsible for the disruption.’
Pre-litigation procedure
By letter of 26 June 2008, the Commission sent the Grand Duchy of Luxembourg a letter of formal notice to comply with the directives of the first railway package. That Member State replied to that letter on 27 August 2008.
By letter of 9 October 2009, the Commission sent a reasoned opinion to the Grand Duchy of Luxembourg in which it stated that the measures that that Member State had adopted in order to transpose Article 6(3) of and Annex II to Directive 91/440, and Article 14(2) of Directive 2001/14 were insufficient as regards the independence of bodies to which essential functions are entrusted. In that reasoned opinion, the Commission also complained that that Member State had failed to take the measures necessary to fulfil its obligations relating to charging for access to the railway infrastructures under Article 11 of Directive 2001/14 and Article 10(7) of Directive 91/440. Furthermore, it alleged that the Grand Duchy of Luxembourg had failed to fulfil the obligations imposed on Member States by Article 30(1) and (4) and (5) of Directive 2001/14 concerning the rail regulatory body.
By letters of 24 December 2009 and 29 March 2010, the Grand Duchy of Luxembourg replied to the reasoned opinion by sending the Commission the text of the Grand Ducal Regulation of 27 February 2010 on the performance scheme for the rail network.
By letter of 15 April 2010, the Commission sent a request for information to the Grand Duchy of Luxembourg, to which the latter replied on 26 April and 16 August 2010.
By letter of 25 November 2010, the Commission sent an additional reasoned opinion to the Grand Duchy of Luxembourg by which, in the light of developments in the national regulatory framework since the reasoned opinion was sent on 9 October 2009, the Commission restricted the scope of the failure to fulfil obligations to Article 6(3) of and Annex II to Directive 91/440 and Article 14(2) of Directive 2001/14 relating to the independence of the entity responsible for essential functions, namely, the ACF. The Commission therefore called on the Grand Duchy of Luxembourg to take the measures necessary to fulfil its obligations within two months from the receipt of the further reasoned opinion.
By letter of 3 February 2011, the Grand Duchy of Luxembourg replied to the further reasoned opinion.
Not being satisfied with the Grand Duchy of Luxembourg’s reply, the Commission decided to bring this action.
The action
Arguments of the parties
The Commission claims that Directive 91/440 requires the functions of allocating railway capacity, in particular, to be undertaken by independent bodies. Annex II, second indent, to that directive provides that essential functions include ‘decision-making related to the path allocation including both the definition and the assessment of availability and the allocation of individual train paths’. Therefore, Annex II does not distinguish between different means of allocating train paths. In so far as the organisation of train paths falls within the operational regulation of traffic and is closely linked to it, operational regulation is included in the essential functions and should therefore be carried out by an entity independent from the railway undertaking.
According to the Commission, although the ACF which undertakes the allocation of train paths is in fact an entity independent of the CFL, the fact remains that certain essential functions regarding that allocation are entrusted to the latter.
The Commission takes the view, in the light of the information provided by the Grand Duchy of Luxembourg that, in the event of disruption of traffic, the allocation of train paths is still carried out by a department of the CFL, namely, the SGR, which is not independent of the parties that operate rail transport services.
The Commission takes the view that, in the event of disruption of traffic, the normal timetable set by the ACF can no longer be observed, given that the times laid down in the timetable have already passed and it becomes necessary to reallocate timetables for operators awaiting their turn. It takes the view that such re-assignment necessarily constitutes allocation of train paths. However, under Luxembourg law, this can be done only by the traffic management carried out by the CFL, thereby giving the CFL a role in railway capacity allocation, contrary to the requirements laid down in Directive 2001/14.
The Commission considers that the performance of the essential function of allocating train paths requires the CFL to be subject to the requirements of independence laid down by the first railway package. However, no measure to ensure such independence has been implemented within the CFL to separate, from the point of view of law, organisation or decision-making, the parties responsible for the essential functions from those which manage rail transport services. Those functions should therefore be transferred to the ACF.
The Commission submits that Article 29 of Directive 2001/14 is not a lex specialis derogating from the general rule. According to Article 14(2) of that directive, the obligation of independence which is imposed on the allocating entity is applicable to all the functions referred to in Article 14(1) and described in Chapter III of that directive, including Article 29 thereof.
In its reply, the Commission claims that the amendments introduced by the NDR, adopted after the expiry of the period prescribed in the reasoned opinion, are not sufficient to put an end to the failure to fulfil obligations.
In its defence, the Luxembourg Government takes the view that, even though the national legislation in force was consistent with the wording and the spirit of Directive 2001/14, it was nevertheless adapted after the present action was brought in such a way as to eliminate any doubt as to possible non-conformity with European Union law. Thus, the network statement was amended to the effect that, in the event of disruption, the reallocation of train paths is also transferred to the ACF, the SGR no longer being involved, which guarantees fair and non-discriminatory access to the infrastructure.
In its rejoinder, that Member State claims that the network statement was amended again, with effect from 1 January 2012, and that it now satisfies the Commission’s requirements, by providing that, in the event of unforeseen disruption, new train paths are to be allocated by the ACF.
Findings of the Court
By its single complaint, the Commission alleges that the Grand Duchy of Luxembourg has failed to fulfil its obligations under Article 6(3) of Directive 91/440, read in conjunction with Annex II thereto, and Article 14(2) of Directive 2001/14 as, in Luxembourg, although the ACF is a body that is independent of the CFL, which, in turn, manages the infrastructure and operates the rail services, the CFL is nonetheless responsible for certain essential functions relating to the allocation of train paths, the latter are still responsible for certain essential functions regarding the allocation of train paths given that, in the event of traffic disruption, the reallocation of train paths is entrusted to a department of the CFL, namely, the SGR, which is not independent in its legal form, organisation or decision-making functions.
As a preliminary point, it must be observed that the Grand Duchy of Luxembourg contends that the transposition of Directive 2001/14 has been fully carried out since the adoption of the NDR which entered into force on 1 October 2011 and was amended on 1 January 2012.
According to settled case-law, the question whether a Member State has failed to fulfil its obligations must be determined by reference to the situation obtaining in the Member State at the end of the period laid down in the reasoned opinion and the Court cannot take account of any subsequent changes (see, in particular, Case C-48/10 Commission v Spain [2010] ECR I-151, paragraph 30, and Case C-206/10 Commission v Germany [2011] ECR I-3573, paragraph 25).
Therefore, since the NDR and the amendments to it were adopted after the period prescribed by the Commission in its additional reasoned opinion of 25 November 2010 had expired, they cannot be taken into account in the examination by the Court of the merits of the present action for failure to fulfil obligations.
As to the substance of the case, it must be recalled that Directive 91/440 initiated the liberalisation of rail transport by seeking to ensure fair and non-discriminatory access to the infrastructure for rail undertakings. In order to ensure such access, the first paragraph of Article 6(3) of Directive 91/440 provides that Member States must take the measures necessary to ensure that the functions determining equitable and non-discriminatory access to infrastructure, listed in Annex II, are entrusted to bodies or firms that do not themselves provide any rail transport services and that, regardless of the organisational structures, this objective must be shown to have been achieved.
Under Annex II to Directive 91/440 the preparation and decision-making related to the licensing of railway undertakings, decision-making related to the path allocation including both the definition and the assessment of availability and the allocation of individual train paths, decision-making related to infrastructure charging and monitoring observance of public service obligations required in the provision of certain services are essential functions within the meaning of Article 6(3) thereof.
In that connection, it must be recalled that, in the event of disruption to the service or danger, the adoption of measures necessary for restoring normal operating conditions, including the withdrawal of train paths, is not a matter of train path allocation (see, Case C-473/10 Commission v Hungary [2013] ECR, paragraphs 56 and 59).
Article 29 of Directive 2001/14 provides for the adoption of the measures necessary to address a situation in which train movements have been disrupted as a result of technical failure or accident and, where absolutely necessary, an emergency on account of a breakdown making the infrastructure temporarily unusable (Commission v Hungary, paragraph 57).
It must be stated that that provision concerns specific measures which must be taken when train movements have been disrupted in order to restore, for safety reasons, normal operating conditions, which is not the case with the other provisions in Chapter III of Directive 2001/14 which relate to the establishment of the working timetable and the ad hoc allocation of individual train paths. Measures adopted under Article 29 of that directive cannot therefore be regarded as directly concerning the essential function of allocating capacity or train paths for the purpose of Article 14(2) thereof, a function which must be entrusted to an independent allocation body. Rather, Article 29 deals with ad hoc measures which must be adopted in an emergency to deal with a specific situation and ensure that rights to capacity in the form of train paths may in fact be exercised by the operator holding such rights, in accordance with the working timetable (Commission v Hungary, paragraph 59).
Therefore, the adoption of such measures falls within traffic management and is not subject to the requirement of independence, so that an infrastructure manager which is simultaneously a railway undertaking may be entrusted with such functions.
However, as the Advocate General observed, in point 24 of his Opinion, which refers to points 67 and 44 respectively of his Opinion in Commission v Hungary and Case C-627/10 Commission v Slovenia [2013] ECR, although the withdrawal of train paths in the event of disruption of traffic is not regarded as an essential function, their re-allocation must be regarded as part of essential functions which may be exercised only by an independent manager or allocation body since, unlike traffic management, which does not involve taking decisions within the meaning of Annex II to Directive 91/440, the reallocation of train paths entails adopting decisions relating to train paths.
In the present case, in Luxembourg the allocation of rights to specific capacity in the form of train paths is an essential function entrusted exclusively to an allocation body, namely, the ACF. Under the relevant provisions of Luxembourg law, in the event of traffic disruption, or where absolutely necessary in an emergency or for other circumstances preventing the use of the infrastructure under normal safety conditions, the infrastructure manager, the CFL, is to adopt the measures necessary to restore normal operation and the train paths allocated may also be withdrawn during the time necessary to repair the system or until the cause of the disruption is removed. In that case, it is for the ACF to reallocate train paths.
Furthermore, item 4.8.2.of the NDR states that if one train cannot keep to the timetable originally scheduled, the duty office of the SGR is not to reallocate a train path in any circumstances.
Therefore, it is clear from that legislation that no reallocation of train paths is made and that, if that proves necessary, it is done by the ACF.
In those circumstances, it cannot be held that Luxembourg legislation on railways is incompatible with the requirements of Article 6(3) of Directive 91/440 and Article 14(2) of Directive 2001/14, in that it allows the SGR, which is part of the CFL, to adopt the measures necessary to restore normal traffic in the event of disruption of traffic or danger.
In the light of the above considerations, the Commission’s action must be dismissed.
Costs
Under Article 138(1) 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 Grand Duchy of Luxembourg has applied for costs and the Commission has been unsuccessful, the latter must be ordered to pay the costs.
On those grounds, the Court (First Chamber) hereby:
1.
Dismisses the action;
2.
Orders the European Commission to pay the costs.
[Signatures]
( *1 ) Language of the case: French. | 6 |
MR JUSTICE JACK: On 6th January 2009, at the Crown Court at Kingston-upon-Thames, the appellant, Mark Constantine, pleaded guilty to two counts of making indecent photographs of children. On 6th March he was sentenced by His Honour Judge Samuels QC to a community order with a requirement of three years' supervision and attendance on a sex offender programme. On 20th March the case was again before His Honour Judge Samuels and a Sex Offence Prevention Order was made under section 104 of the Sexual Offences Act 2003. The terms of the order prohibiting him from certain conduct was in these terms:
"(i) not to possess a personal computer save at place of work;
(ii) not to access internet including World Wide Web save for purpose of access to e-mail and at place of work;
(iii) not to possess a mobile phone capable of accessing the internet."
The order was of indefinite length; that is to say, it would last until an application was successfully made to have it set aside.
The appeal is against the second paragraph of the order and also against the indefinite length of the order. The meaning of paragraph 2 is not wholly clear, but it was intended by the judge, and has been understood by those representing the appellant, as preventing him from using internet at work save for the purposes of e-mail.
The facts relating to the offending were that on 5th March 2008 the police executed a search warrant at the appellant's home address and seized his two computers. They were examined and found to contain 18 indecent images of children. One was at level 5, three were at level 2 and 14 at level 1. It was also found that a programme called Window Washer had been installed on the computers to over-write material on the hard drive so that it could not be seen what had previously been downloaded onto the hard drive.
The appellant is now aged 36. He had one relevant and important previous conviction. On 27th May 2005 he had been sentenced to a three year community rehabilitation order on eight counts of taking indecent photographs of children.
There was a psychiatric report before the sentencing court. It stated that the appellant did not suffer from mental illness, but did suffer from a general type of personality order as a result of which he had great difficulty in relating to others. It stated that he would require treatment for at least 12 months.
There was also a pre-sentence report, which recommended a community order with requirements of supervision and a programme of treatment and also prohibited activity order. That was followed by the judge.
In discussion with counsel prior to the making of the order on 20th March 2009, the judge refused to accept that the appellant would lose his job if he could not have full access to the internet at work. He stated that an employer should not take that attitude. We were told that the appellant is no longer in his job, but that the circumstances in which it ended were unclear.
The order was made under section 104(1)(b) of the Sexual Offences Act 2003. That provides that the court may make an order if:
"... it is satisfied that it is necessary to make such an order, for the purpose of protecting the public or any particular members of the public from serious sexual harm from the defendant".
Section 107(2) is also relevant. It provides that:
"The only prohibitions which may be included in the order are those necessary for the purpose of protecting the public or particular members of the public from serious sexual harm from the defendant."
So the requirement that any prohibition must be necessary is contained in both sections.
The case of Collard [2004] EWCA Crim 1664, [2005] 1 Cr App R(S) 34 related to restraining orders under section 5A of the Sex Offenders Act 1997. That provision was not materially different to the present provisions. Collard has now been applied by this court in a number of cases arising under section 104. In Collard, as in Beaney [2006] EWCA Crim 1792, [2004] 2 Cr App R(S) 82, it was said that the harm in these situations is to the children who are abused in the taking of the photographs which may later be downloaded. It was stated in Collard that where the court makes an order, its terms should be tailored to meet the danger which the offender presents: "It must not be oppressive, it must be proportionate". The court then referred to the very wide use made of the internet for all kinds of purposes, both in employment and domestically and socially.
We do not consider that in the circumstances of this case it was necessary to prohibit the appellant from using the internet at work for the purposes of his work. We say that in the knowledge of the defendant's previous conviction and his use of Windows Washer. In the modern world there is commonly a need for persons who have office jobs to make use of computers and of the internet in the course of their work. Here the appellant needed to do so. Also, it is evident that the risk of an employee downloading indecent images when he is at his place of work is a much lower risk than the risk that he may do so at his home. We do not consider here that it was necessary, or to use the word from Collard "proportionate", to prohibit the appellant from making use of a computer and the internet during his employment.
Mr Joyce submitted that paragraph 2 should be amended to read: "Not to access the internet, including the World Wide Web, save for work purposes at place of work". We accept that amendment as being appropriate.
We turn to the length of the order. The judge made an order that was of indefinite length, that is that any time after five years from it being made it is open to the offender to apply to the court to have the order set aside, but otherwise it remains in force. He may apply within five years but the order may not be discharged unless the chief officer of police for the area in which he resides consents: section 108(6).
In view of the previous conviction and in view of the use of Window Washer, we think that an order of some substantial length would certainly be required. Mr Joyce suggested to us that a five year order would be appropriate. We think that it is plain that such an order would be much too short. If an order were to be made for a period, it would have to be an order of some really quite substantial length to take the appellant to an age at which one could feel some confidence that this sort of offending was unlikely. If an order was made in such terms, for example that it should last for 20 or 30 years, that might make it more difficult for the appellant to apply to the court and to satisfy the court that his circumstances had changed and now the order was unnecessary. That is because the court to whom he applied might say that the Court of Appeal thought that an order of that length was necessary and decline to interfere with it, rather than looking at the particular circumstances at the time. We therefore do not propose to interfere with the order made by the judge that the order should be of indefinite length.
The appeal will be allowed to amend paragraph 2 of the order as we have stated. | 5 |
Sweeney J:
Introduction
In October 2013 the Claimant/Respondent (hereafter "the Respondent"), a social housing provider with charitable status, began a possession claim in the Chelmsford County Court against the Defendant/Appellant (hereafter "the Appellant") who is one of its tenants. On 28 April 2014 the Respondent failed to attend a Directions Hearing before HHJ Lochrane, who thus dismissed its claim with costs. On 9 June 2014 the judge granted the Respondent relief from those sanctions pursuant to CPR 3.9, including re-instating the claim. This is an appeal against that decision. Permission was granted, out of time, by Spencer J on 10 October 2014. In consequence the trial, which was otherwise due to commence 27 October 2014, has been adjourned pending the outcome of the appeal.
At the hearing below on 9 June 2014 the leading authority in relation to the then relatively recently amended provisions of CPR 3.9 was correctly recognised to be Mitchell v News Group Newspapers [2013] EWCA Civ 1537 ("Mitchell"). It is, nevertheless, common ground that the appeal must be decided in accordance with the subsequent clarification and amplification of Mitchell in the conjoined appeals in Denton v TH White Ltd [2014] EWCA Civ 906 ("Denton, Decadent & Utilise").
CPR 3.9 provides that:
"(1) On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need –
(a) for litigation to be conducted efficiently and at proportionate cost; and
(b) to enforce compliance with rules, practice directions and orders.
(2) An application for relief must be supported by evidence."
There are two, overlapping, Grounds of Appeal - namely that the judge:
(1) Misdirected himself by failing to properly apply CPR 3.9.
(2) Took into account irrelevant considerations.
During the course of the hearing I was also referred to a number of other authorities in which the approach to relief from sanctions after the implementation of the Jackson reforms (including the amendment of CPR 3.9) was considered. They included, in chronological order: Murray & Stokes v Neil Dowlman Architecture Ltd [2013] 3 Costs LR 460 ("Murray"); Durrant v Chief Constable of Avon & Somerset Constabulary [2013 EWCA Civ 1624 ("Durrant"); R (Royal Free London NHS Foundation Trust) v Secretary of State for the Home Department [2013] EWHC 4101 (Admin) ("Royal Free"); Associated Electrical Industries Ltd v Alstom UK [2014] 3 Costs LR 415 ("Associated Electrical"); Chartwell Estate Agents Ltd v Fergies Properties SA [2014] 3 Costs LR 588 ("Chartwell"); and Yeo v Times Newspapers Ltd [2014] EWHC 2853 (QB) ("Yeo").
Whilst I have considered all the authorities, I bear in mind that at [24] of the judgment in Denton, Decadent & Utilise, the Court of Appeal expressed the hope that the guidance that it went on to give as to the three stages by which a judge should address an application for relief from sanctions would avoid the need in future to resort to earlier authorities.
In granting permission to appeal, Spencer J observed that the permission was not lightly given in relation to what was a case management decision but that, even applying the more nuanced approach required by Denton, Decadent & Utilise, it was arguable that, at the second stage, there was no good reason for what was a serious or significant breach, and that it was also arguable that the judge's approach, at the third stage, to "all the circumstances of the case" was impermissibly broad.
Outline facts
In November 2002 the Appellant was granted a tenancy of 17 Ploughman's Lane, Great Notley, Braintree, Essex by the Respondent.
In October 2011, following alleged incidents of an anti-social nature, the Respondent applied for an injunction against the Appellant. On 9 November 2011 the Appellant formally undertook not to cause any further nuisance or annoyance to her neighbours. That undertaking was later extended to 31 December 2012.
The Respondent asserts that, nevertheless, incidents of anti-social behaviour continued. In particular, in May 2013 the Appellant was arrested for a racially aggravated public order offence against a neighbour, and was convicted of that offence on 9 August 2013. In addition, in September 2013 the Appellant was arrested for another public order offence – to which she pleaded guilty on 16 October 2013.
In the meanwhile, on 23 August 2013, the Respondent had served a Notice of Seeking Possession on the Appellant. As already touched on, possession proceedings were commenced in October 2013. Directions up to the listing questionnaires stage were made without a hearing on 30 December 2013, and a Defence was filed by the solicitors then representing the Appellant on 31 January 2014.
By an Order dated 12 February 2014 (which HHJ Lochrane made of his own motion after perusing the file) the possession claim was listed for directions "on the same day as the Children Act 1989 proceedings CM13P01378 on 28 April 2014…" (emphasis as in the order itself). The Children Act proceedings, which related to two of the Appellant's children who were living with her, had been brought by their father, and also involved the local authority. Those proceedings had been triggered, to some extent, by the allegations made by the Appellant's neighbours. The judge's purpose in ordering that both cases be listed on the same day was so that the hearings in them could take place one after the other, and that each could be managed so as to ensure that they could be dealt with at "more or less the same time in the hope that it would render the matter somewhat less complex" – with the eventual result of the possession claim being known prior to the determination of the Children Act proceedings. That purpose was not, however, made clear in the Order. Nevertheless, the Order did make clear that it was made of the court's own motion, and that either party could, within seven days, apply to vary it or set it aside. Neither did.
However, the Respondent's in-house solicitor, who was conscious of the Respondent's limited means, could see no purpose in a Directions Hearing on 28 April. Accordingly, on 14 February 2014 the Respondent wrote to the Appellant's then solicitors indicating that it considered that there was no need for the hearing on 28 April, and that (if the Appellant's then solicitors were happy for it to do so) it proposed to write to the court to say so, and to indicate that it would wait for the case to be listed for trial after 28 March 2014. The Appellant's then solicitors replied that same day to the effect they did not want to write to the court to seek to vacate the hearing on 28 April until it was clear how long the trial would need to be listed for, that it would be better to wait a little over a month until the evidence was in before formally agreeing the time estimate, and that there was plenty of time before 28 April to agree an Order.
On 27 March 2014 the Respondent sent a Listing Questionnaire to the court indicating that the possession claim was ready for trial, and that the Respondent did not believe that any further directions were necessary. The Respondent also paid all requisite court fees. The Appellant failed to file a Listing Questionnaire, as required, on 28 March 2014, which was just prior to her then solicitors ceasing to act for her. Neither party complied with the court's direction for witness statements to be served on 14 March 2014.
On 16 April 2014, the Respondent wrote to the court noting that the matter had been listed for directions on 28 April 2014. The letter stated that "….We are uncertain why this matter has been listed for directions when both parties have already complied with directions given in December 2013…..", and asked for urgent confirmation that the parties did not need to attend the hearing and that the case would urgently be listed for trial. On three occasions thereafter the Respondent telephoned the court for a response, but all without success.
In the week of 21 April 2014 the Appellant's now solicitors (who had taken over her case on 28 March 2014) were informed that the Appellant's public funding certificate had been transferred to them. On Thursday 24 April 2014 they wrote to the Respondent indicating that they had just been instructed, and that the fee-earner dealing with the matter was on annual leave, and requested the Respondent's consent for the Directions Hearing to be adjourned. The Respondent replied that same day indicating that it did not believe that any further directions were required before trial, attaching its letter to the court of 16 April 2014 in relation to the proposed Directions Hearing, and stating that the court had just telephoned to say that the file was being sent to the judge that same day. Later that day the Appellant's now solicitors wrote urgently to the court stating they had been informed by the Respondent of the Respondent's letter of 16 April asking for the hearing on 28 April to be vacated, and of the fact that the file was being considered by a judge. The Appellant's solicitors indicated that the case papers had only just been received and stated that, given that the relevant fee earner was away until 28 April 2014, that it agreed with the request that the Directions Hearing be vacated (although it did not agree that the only direction required was for a trial date) and asked that it be adjourned to the first open date after 14 days in order to allow the Appellant to apply for an extension of time to file a Listing Questionnaire, and for the parties to agree such directions as may be needed to save time and expense for the court and the parties. The Appellant's solicitors copied the letter to the Respondent.
On Friday 25 April 2014 the Respondent telephoned the court again and was "again informed that no further action had been taken" – i.e. that the Directions Hearing was still going to be listed on 28 April. The Respondent's solicitor nevertheless genuinely believed that the matter would not be dealt with on that date (due to the fact that the court had been informed that no directions were required, and that the Appellant's new solicitors had also written to the court asking for the hearing to be vacated) and so decided not to attend and not to instruct anyone else to do so. She did not inform either the court or the Appellant that no-one would be attending on behalf of the Respondent.
The Appellant also contacted the court on Friday 25 April to try to establish whether the court required the parties to attend on 28 April. No response was obtained other than an indication that the file was before the judge and that the case was still in the list for 28 April. In those circumstances those representing the Appellant instructed counsel to attend the hearing.
As a result of the Respondent's non-attendance at the hearing before HHJ Lochrane on Monday 28 April 2014 he was not able to manage the Children Act proceedings and the possession claim in the way that he had intended. During the hearing in relation to the possession claim he made reference to having read the file and to being aware that both sides had tried to avoid the hearing. In the result, he dismissed the claim with costs – but with permission to apply to vary or set aside within seven days from the date of service of the Order. Hence, by a written application dated 6 May 2014 (which was within the time limit) the Respondent applied for the claim to be reinstated.
The hearing on 9 June 2014
As already indicated, Mitchell was correctly recognised to be the leading authority, and argument was advanced on both sides in relation to it – albeit that other authorities were also cited.
In his judgment HHJ Lochrane set out the background, including the lack of clarity as to the reason for the Order that he made on 12 February; the measure of sympathy that he had for the Respondent in consequence; and the fact that the result had accrued to the Appellant's advantage in that the Children Act proceedings were now going to be concluded prior to the possession claim and would thus involve the assumption that the Appellant would continue to live at 17 Ploughman's Lane and that, if the Children Act proceedings were resolved in her favour, then she would be able to rely in the possession claim on the fact that the children were living with her. The judge then continued:
"12. So the claimant seeks relief from sanctions and I remind myself, as Ms Blackmore for the defendant has helpfully reminded me and provided a bundle containing materials, that the overriding objective now requires that in applying the rules I must attempt to deal with cases justly and at proportionate cost, in the context also of saving expense and, importantly, allotting appropriate share of the court's resources and enforcing compliance with the rules, practice directions and orders. And Part 3.9 - as now amended following the reforms initiated by Jackson LJ – requires me in respect of any application for relief from sanctions imposed for failure to comply with any rule, practice direction or court order to consider all the circumstances of the case so as to enable the court to deal justly with the application, including the need for litigation to be conducted efficiently and at proportionate cost and to enforce compliance with the rules practice directions and orders. I am well aware of the authorities which make it plain that those two specific requirements are to be seen as the primary focus of the court before consideration of the rest of the circumstances of the case.
13. Ms Blackmore submits to me it is correct that this cannot be described as a "trivial" breach; the order was specifically disobeyed and disobeyed in the context of the claimant simply assuming that that the court would go along with its suggestion, which it turns out has cost it dear. I suspect that it is not a mistake that the Claimant (or its employees) will take (sic) again. The lack of resources too is not an issue, it seems to me, as the authorities make plain. The inability of the Claimant to marshal its resources sufficiently to deal appropriately and efficiently with its cases is not an excuse that will assist it.
14. Nevertheless, it does seem to me that there is some merit in considering this application for relief from sanctions. The bottom line of course remains that these cases need to be dealt with justly and the reality is that if this action remains dismissed there is nothing to stop Home Group re-issuing and, indeed, if it were doing its duty to its other residents it would seem to me that it is imperative that it re-issues to have these matters litigated.
15. The impact of the continuing dismissal of this claim does not necessarily impact against the claimant itself. The force of failure to address the possession issues really falls on a collection of thoroughly innocent parties, theoretically, those neighbours who are, at least allegedly, significantly inconvenienced (if found proven) by Ms Matrejek's relatively appalling behaviour. So consideration of the justice of the case, it seems to me, needs to look very carefully at what can be achieved for the real victims of this process if the allegations are found proven – that is the neighbours and not the claimant.
16. Further expense and delay would clearly be involved in the re-issue of the proceedings and, as Ms Brazier for the claimant rightly points out, would also impact on the public purse in the sense that Ms Matrejek would not need to go through the process of obtaining Legal Aid covering her defence in that way. So it seems to me that for the purposes of justice there is some considerable force in thinking carefully about allowing relief from sanction and that applies too in the context of ensuring that that as far as possible, given what has occurred already, the litigation should be conducted efficiently and at proportionate cost. It would be thoroughly inefficient, it seems to me, to put the claimant in a position of having to re-issue and attract yet further additional costs in the protection of the interests of the other occupants of its properties.
17. The importance of course is that the claimant has failed to comply with an order of the court somewhat deliberately and the mitigation, it seems to me, that can arise in respect of that is limited to the perhaps explicable misunderstanding of the court's purpose and the fact that the order was made without greater elaboration of the court's purpose and in the absence of the parties themselves at the time, Nonetheless one cannot ignore of course that no query was raised and it seems to me that without too much effort it should have been relatively clear to the educated observer that the court had some particular interest in mind.
18. Anyway, it seems to me on balance, applying the various provisions, it is appropriate in the circumstances to allow relief from this sanction and to reinstate the possession claim with a view to having (it) heard over three days before me at the end of October. So the matter will be reinstated. The order for costs of 28 April will be varied to the extent that the claimant will pay the defendant's costs of that hearing and the claimant will pay the defendant's costs of this application and this hearing. Those will be the subject of assessment if not agreed."
The judge refused the Appellant's immediate application for permission to appeal – stating that there must be appropriate occasions for relief from sanctions, and that he had applied the terms of the rules and taken into account the authorities. In his brief written reasons he said:
"Applicant's default was a misguided attempt to save costs based upon an apparent misunderstanding of an earlier court order which was, on one reading, potentially partially valid. The Applicant's default had affected the course of the litigation but that was to the significant advantage of the Respondent in the circumstances. The otherwise innocent neighbours allegedly adversely affected by the Respondent's behaviour would be deprived of a hearing within a reasonable time if the Applicant was required to start again. While the fault was not trivial, there was just about a reasonable excuse and the justice of the case required the reinstatement of the claim. The Respondent had no realistic prospect of succeeding in any appeal against a case management decision in the court's discretion".
In the result the judge also ordered that the case be fixed for trial on 27 October 2014, and gave the parties permission to rely on evidence filed to date.
The Appellant's arguments
Ms Blackmore pointed out that significant changes to the CPR had come into effect on 1 April 2013. In particular:
(1) CPR 1.1 was amended to include reference to the need for matters to be dealt with "at proportionate cost" (CPR 1.1(1)).
(2) CPR 1.1(2) was amended to include specific reference to the need to enforce compliance with court orders rules and practice directions.
(3) CPR 3.9 was amended so that the nine particular circumstances that a court was required to consider when deciding whether to grant relief from sanctions were removed and concentration placed instead on the need for the court to consider all the circumstances of the case so as to enable it to deal justly with the application, including the need (a) for litigation to be dealt with justly and at proportionate cost and (b) the need to enforce compliance with rules practice directions and orders.
Ms Blackmore submitted that the effect of the judgment in Denton, Decadent & Utilise is as follows:
(1) The guidance in Mitchell at [40] & [41] (that relief would be granted if the default is trivial provided that an application is made promptly, or if there is good reason for failure to comply) remains substantially sound [24].
(2) A judge should address an application for relief from sanctions in three stages:
(i) To identify and assess the seriousness and significance of the "failure to comply with any rule, practice direction or court order" which engages rule 3.9(1).
(ii) To consider why the default occurred.
(iii) To evaluate "all the circumstances of the case so as to enable [the court] to deal justly with the application including [factors (a) and (b)] [24].
(3) The focus of the court's enquiry should be upon whether the breach has been "serious or significant" rather than trivial [26].
(4) It is not the case that if there is a serious or significant breach and there is no good reason for that breach, the application for relief from sanction will automatically fail [31].
(5) The court must consider the effect of the breach in every case. If the breach has prevented the court or the parties from conducting the litigation, or other litigation, efficiently and at proportionate cost, that will be a factor weighing in favour of refusing relief [34].
(6) The court must always bear in mind the need for compliance with rules practice directions and orders, because the old lax culture of non-compliance is no longer tolerated [34].
(7) The more serious or significant the breach, the less likely it is that relief will be granted unless there is a good reason for it [35].
(8) It is always necessary to have regard to all the circumstances of the case [36].
(9) Factor (a) and factor (b) in CPR 3.9 must always be given particular weight because anything less will inevitably lead to the court slipping back to the old culture of non-compliance [38].
(10) It is unacceptable for a party to try to take advantage of a minor inadvertent error, as it is for rules, orders and practice directions to be breached in the first place [43].
(11) Judges must ensure that directions that they give are realistic and achievable [44].
(12) The practice of giving pre-eminence to the need to decide the claim on the merits should have disappeared following the Woolf reforms, and there is certainly no room for it in the post Jackson era [81].
Ms Blackmore further pointed out that in the first of the three conjoined appeals in Denton, Decadent & Utilise the court had made clear that whilst the breach was serious, and there was no good reason for it, it was still necessary for the judge to undertake the third stage and to consider all the circumstances of the case – but giving particular weight to factors (a) and (b) in CPR 3.9 in the process. In that case the court decided, significantly asserted Ms Blackmore, that the judge had fallen into error by giving pre-eminence to the need to decide the claim on the merits.
Ms Blackmore also drew particular attention, in chronological order, to:
(1) Durrant in which, at [44], the Court of Appeal concluded that the judge had placed too much weight on the potential effect on the careers and reputations of individuals and the police force if the officers concerned were unable to give evidence, and on the public interest in scrutinising the actions of police officers which, the court decided, were considerations that did not carry much weight in determining whether to grant relief from the sanction for non-compliance.
(2) Associated Electrical in which at [47] Andrew Smith J held that although, as between the parties, it was disproportionate to strike out a claim for late service of particulars, the emphasis in Mitchell on enforcement of the CPR to encourage procedural discipline led to the conclusion that the claim should be struck out and the extension of time refused.
(3) Yeo in which Warby J concluded that, though relief should not be granted lightly, it would be in that case because the breach was the result of an error, rather than a deliberate decision, and (once noticed) it had been promptly rectified, and its impact had been negligible.
Ms Blackmore also pointed out that, prior to the amendment of CPR 3.9, a finding that a failure to comply with a rule, practice direction or order was intentional was a significant factor which made the granting of relief from sanctions less likely – see e.g. Tam Insurance Services Ltd v Kirby [2009] EWCA Civ 19.
As to the general merits of the appeal, Ms Blackmore submitted that:
(1) Having failed to obtain authorisation not to attend the hearing on 28 April 2014, the Respondent decided, unilaterally, not to attend the hearing in any event. It did not inform the court, or the Appellant's solicitors; it simply did not turn up – whereas all other parties in the two proceedings did attend. Albeit that the Respondent is a charity and short of funds, the breach was thus a deliberate flouting of the court's order and the judge found (in the language of Mitchell) that it was "not trivial". In the language of Denton, Decadent & Utilise, it was clearly a serious and significant breach, and there was no good reason to excuse it.
(2) The judge's comments, variously in argument and in his judgment on 9 June 2014, to the effect that the Respondent had "decided" not to attend; that the breach had been committed in "the tenuous hope" that all would be well; that the order had been "specifically disobeyed"; that the Respondent had failed to comply "somewhat deliberately"; that the Respondent's mitigation was "limited"; and that "without too much effort it should have been relatively clear to the educated observer that the court had some particular interest in mind", all had to be contrasted with judge's written statement of reasons for refusing permission to appeal in which he said that the Respondent had "just about a reasonable excuse".
(3) Moreover the Respondent had not asserted that it had misunderstood the purpose of the order of 12 February 2014 – it had clearly understood that it was supposed to attend – why else all the efforts to seek excusal from attendance?
(4) The Respondent's failure to attend on 28 April 2014 had had significant effects for the administration of justice and the other litigants – the court was unable to case manage as it had wanted to and its purpose in that regard was entirely frustrated; the trial date was almost certainly delayed; and other court users were inconvenienced.
As to Ground 1 (failing to properly apply CPR 3.9), Ms Blackmore submitted that:
(1) The judge decided that the breach was not trivial, and that the Respondent had no good reason for it. Following Denton, Decadent and Utilise it was appropriate for him to consider all the circumstances of the case, but he had to do so in a proper way – not one involving a review of the correctness of his decision to impose the sanction in the first place.
(2) The correct starting point was that the sanction was properly imposed (Mitchell [45]) – were it otherwise the judge should have considered the application under CPR 3.1(7), which he declined to do (thus confirming that he considered that his sanction had been properly imposed), and the Respondent had not sought to appeal against that decision.
(3) When the judge imposed the sanction on 28 April 2014 he was well aware of the circumstances of the case, and thus the likely impact of the sanction on the neighbours should have been considered by him as part of the determination of the appropriate sanction, as should the possibility of the Respondent seeking to re-issue proceedings (see Durrant at [44]). Hence those matters should have been given little if any weight in the consideration of all the circumstances of the case, yet they were key in the decision to grant relief – which thus involved an impermissible review of his decision to dismiss the claim or the taking into account of irrelevant considerations.
(4) The judge clearly gave inappropriate pre-eminence to the need to decide the claim on the merits – thereby adopting the approach that was criticised in Denton, and contrary to the decision in Associated Electrical that once there had been a breach and a sanction imposed proportionality between the parties was not a primary issue.
(5) The judge failed properly to consider the need for litigation to be conducted efficiently and at proportionate cost. It was irrational for him, as part of his consideration of factor (a), to consider the fact that the Respondent might bring fresh proceedings - which was not asserted by the Respondent, and which (in light of Janov v Morris [1981] 1 WLR 1389) could readily be argued to be an abuse of process. It was similarly irrational to take into account both that the neighbours' expectations would be disappointed and that the Respondent would incur further costs by bringing new proceedings. Equally, in considering factor (a), the judge failed to take into account, properly or at all, that court time had been wasted, that the conduct of the litigation had been significantly disrupted, that the proceedings would be protracted if they were reinstated, and that the conduct of the Children Act proceedings had also been disrupted. Alternatively, when considering factor (a) he had regard to irrelevant considerations and failed to have regard to relevant considerations.
(6) The judge failed to give particular importance to or particular weight to factor (b) which, given the need to give particular importance to it (Denton, Decadent & Utilise at [38]) and the fact that the Respondent's breach was deliberate and very serious was startling and indicated that he had not considered factor (b) properly or at all.
(7) Given that a lack of prejudice is no longer a reason to grant relief in respect of a failure to comply with a valid order (see Royal Free and Murray at [19]) it was wrong for the judge to take into account that the Appellant might benefit from the delay and inconvenience resulting from the Respondent's deliberate breach. In any event there was no certainty that the appellant would, in fact, benefit at all – and thus it was either irrational to take it into account or irrelevant.
(8) The judge was also wrong to consider fairness as between the parties- whether because it was irrelevant or because he gave it too much weight.
(9) The appeal was broadly analogous with the first appeal in Denton, Decadent & Utilise. Faced with a serious and significant breach and no good reason for it, the judge should have been alive to the likelihood that relief ought to be refused, albeit that he still needed to carry out the third stage of his determination. Factor (a) militated heavily in favour of refusing relief, and factor (b) should also have strongly militated in favour of refusal. The only matters that the judge found to balance on the other side were matters that he should not have taken into account (Durrant at [44]). Relief ought to have been refused.
As to Ground 2 (taking into account irrelevant considerations) Ms Blackmore submitted that:
(1) The judge should not have given much, if any, weight to any difficulty or inconvenience to the neighbours.
(2) There was no evidence, and the Respondent did not assert, that it had not properly understood the order of 12 February 2014. The purpose of the order was perfectly clear on its face – namely for the parties in both the possession claim and the Children Act proceedings to attend on the same day for directions – that was all that the parties needed to know. It was perfectly plain that the Respondent understood that – otherwise it would not have sought the court's permission not to attend. Whilst it was not entirely clear as to the extent to which this issue affected the judge's decision, save in relation to whether the Respondent had a good reason for not attending, he mentioned lack of proper understanding a number of times and plainly considered it to be important.
Ms Blackmore also pointed out that the Respondent had failed to comply with the requirement in Spencer J's order of 10 October 2014 that it serve its skeleton argument by 4pm on Tuesday 21 October 2014.
The Respondent's arguments
Miss Brazier pointed out that, in the preponderance of the cases cited above, the court was concerned with an Unless Order, or with a sanction automatically applied by the Rules, and that in only two of the cases - Associated Electrical (in which the action was in its early stages) and Decadent (in which the appeal was allowed) – was the net result the end of the case. Having drawn my attention to [58] and [59] of the judgment in Chartwell, and to various aspects of the partially dissenting judgment of Jackson LJ in Denton, Decadent & Utilise, Miss Brazier submitted that although HHJ Lochrane did not have the benefit of the latter judgment at the time that he made his decision he had, in effect, applied the three stage process given that:
(1) He identified and assessed the seriousness / significance of the failure to attend the Directions Hearing – concluding that, as a result, the court had been unable to manage the possession claim and the Children Act matter in the sequence that he had envisaged and within "any short space of time". As part of that assessment he had been entitled to conclude that there had been no prejudice to the Appellant in consequence – indeed that the outcome appeared to be to the Appellant's advantage.
(2) He identified that the failure to attend had occurred because the court's rationale for listing the two matters was not "terribly" or "entirely" clear on the face of the Order - which had been made in the absence of the parties; and because the Respondent had not understood the purpose of the linked directions – which misunderstanding was "perhaps explicable". He concluded that the Respondent had attempted to alert the court and had obtained the agreement of the other side to vacate the hearing with a view to saving costs, and that no response had been received by the Respondent from the court.
(3) He had properly considered all the circumstances of the case – including factors (a) and (b).
Miss Brazier further submitted that the Grounds of Appeal were, as a whole, misconceived. In particular:
(1) The judge had, in fact, adopted the correct approach.
(2) He had declined to review, under CPR 3.1(7), the legitimacy of his decision to dismiss the claim.
(3) He was entitled to consider as part of "all the circumstances of the case", the Appellant's neighbours (whose position was significantly different to that of the police officers in Durrant, and who the judge was entitled to conclude were at risk of further anti-social behaviour).
(4) In any event, the transcript showed that he had had CPR 3.9(a) and (b) at the forefront of his mind - including the consequences of the issue of fresh proceedings, which included the likelihood of the Appellant raising the issue of abuse of process and the consequent time and expense involved in what would amount to further satellite litigation.
(5) By reference to [62] of the judgment in Chartwell, the judge's conclusion that relief from sanctions could properly be granted was within the ambit of his discretion (which was a wide one given that the sanction was not pre-prescribed) and there is no rule, even in cases involving serious or significant breach lacking good reason, that relief from sanction must be refused.
(6) Whilst lack of prejudice to the other party alone is insufficient to justify the granting of relief from sanctions, the judge was entitled to take it into account not only at the first stage but also as part of all the circumstances of the case at the third stage of his considerations.
(7) No trial date was lost or moved in consequence of the Respondent's failure – whereas the appeal had further delayed the case proceeding to trial.
Miss Brazier also pointed out that the application for relief from sanctions had been made in good time on 6 May 2014.
During the course of her submissions Miss Brazier apologised for the late service of the Respondent's skeleton argument (which lateness, as indicated above, the Appellant had relied upon in argument). It transpired that, albeit that the ultimate responsibility to ensure service in time was the Respondent's, a significant part of the cause was an emergency in Miss Brazier's personal life. I did not seek details during the hearing, and nor did the Appellant. The late service had no effect on the conduct of the proceedings. In any event, I do not hold it against the Respondent.
The Appellant's reply
Ms Blackmore underlined, amongst other things, that:
(1) Whilst Associated Electrical and Decadent were argued to be the only cases at first instance to result in the end of the claim, that would have been the practical effect of the sanction in Chartwell too – and in that case the refusal of the appeal against the grant of relief was based on its particular facts (both sides had been at fault) and, even then, the outcome was said by Laws LJ at [66] to be an unusual one.
(2) Whilst Decadent was relied upon by the Respondent, the circumstances of that case were very different.
(3) In this case the judge specifically found (see his written reasons for refusing permission to appeal) that the default was "not trivial", there was no appeal by the Respondent against that finding, and the Respondent had clearly failed in its duty under CPR1.3 to help the court below.
(4) Durrant had not been overruled or distinguished in Denton, Decadent & Utilise, and it was clear that factor (a) required consideration of other court users but not third parties like the neighbours – whose position should have been considered prior to the imposition of the sanction in the first place.
(5) In any event, the Appellant was not aware of any allegations made by neighbours since the start of 2014.
(6) The Respondent's predicament was entirely the result of its own actions and whilst it may have been a harsh or tough decision to dismiss the claim it had not, given the nature of the breach, been outwith the judge's discretion.
The merits
This case provides a reminder of the advantage of the purpose of court orders (particularly those made in the absence of the parties) being made clear, of the need for parties to comply with court orders (however much they may have misgivings about them) whilst they still apply, and for all the known circumstances to be considered with care when imposing sanctions.
The starting point is that the application for relief was made in good time.
The hearing below on 9 June 2014 took place at a time when Mitchell was recognised to be the leading authority. It is clear from [3] & [38] of the judgment in Denton, Decadent & Utilise that Mitchell was misunderstood and misapplied by some courts, that some judges were approaching applications for relief upon the incorrect basis that, unless a default could be characterised as trivial or there was a good reason for it, they were bound to refuse relief and that was leading to decisions that were manifestly unjust and disproportionate. The purpose of the judgment in Denton, Decadent & Utilise was to provide clarification and amplification in certain respects, and thus a more nuanced approach to relief from sanctions.
Whilst HHJ Lochrane did not have the benefit of the judgment in Denton, Decadent & Utilise, I accept that I must apply it when considering his decision.
The judge clearly proceeded upon the requisite basis that the sanctions had been properly imposed and had complied with the overriding objective. It equally seems to me that he did, in effect, carry out the three stage approach required by Denton, Decadent & Utilise.
As to the first stage, and albeit against the background that the Respondent believed that all that was left to do in the possession claim was to fix the trial date, the Respondent decided not to attend the Directions Hearing on 28 April when it was required to attend, failed to warn the Appellant or the court that it was not going to do so, and did not attend as required. As he made clear in his written reasons for refusing permission to appeal the judge found that the default was "not trivial". The Respondent does not appeal against that finding. Whilst there was no prejudice to the Appellant, whose own case was in some disarray at that time (and who wanted an adjournment), I nevertheless proceed upon the basis that, in the terms of Denton, Decadent & Utilise, this was a serious or significant default – albeit one which was plainly not, because of its particular circumstances, at the top end of the scale.
As to the second stage, during the course of his judgment the judge carefully examined why the default had come about. He accepted that the Directions Order which provided for the linked directions hearings had not necessarily explained "terribly clearly" the court's thinking (albeit that it should have been reasonably clear that there was at least some intention to link the two matters for some reason), and underlined that there had been no application made to vary that order (albeit, I would add, that that was against the background the parties had identified a possible way ahead without the need for such an application). He found that it was apparent that the Respondent did not understand the purpose of the linked directions process, and had attempted to alert the court and to obtain the Appellant's agreement to vacate the hearing with a view to saving costs – which was laudable. He noted that the Appellant did not understand the purpose of the linked directions hearing either, and had some interest in the matter not going ahead on 28 April 2014. The direct cause of the default had been the Respondent's decision, having written to and contacted the court without response, not to send representation "in the somewhat tenuous hope" that all would be well. It was therefore, he concluded, a failure to comply with an order of the court "somewhat deliberately", with the mitigation being limited to the "perhaps explicable misunderstanding of the court's purpose and the fact that the order was made without greater elaboration of the court's purpose and in the absence of the parties themselves at the time". Summarising the position in his written reasons for refusing permission to appeal the judge recorded that the Respondent's default was "a misguided attempt to save costs upon an apparent misunderstanding of an earlier court order which was, on one reading, potentially partially valid" and that "…..there was just about a reasonable excuse…".
The judge was in the best possible position to assess the nature and effect of the Order that he had made of his own motion on 12 February 2014. He was also entitled to conclude that the Respondent did not understand the purpose of the linked directions (albeit that it plainly understood that it was required to attend). Equally, see [29](2) above, I see no necessary inconsistency between the judge's comments in argument and in his ruling, and his ultimate conclusion that the Respondent had "just about a reasonable excuse". It seems to me that that was a conclusion that he was entitled to reach.
Against the background of the judge's finding, in effect, that the failure was serious and significant (albeit plainly not, in my view, at the top end of the scale), and that there was just about a reasonable excuse, the third stage required an evaluation of "all the circumstances of the case so as to enable [the court] to deal justly with the application". It is clear from [12] of his judgment that he did give particular weight to factors (a) and (b) in CPR 3.9. However he was also entitled to take into account all the other circumstances – including the overall position in relation to the Appellant's case, the lack of prejudice to the Appellant, the rights of the alleged victims, and the limited extent to which court time had been lost.
I reject Miss Blackmore's arguments that the judge erred in various respects in his approach to factors (a) and (b), that he gave too much or too little weight to other circumstances, and that he took into account irrelevant considerations.
Whilst it is clear that, unlike factors (a) and (b) none of the other circumstances carried particular weight, it seems to me that, against the background of my findings in relation to stages 1 & 2, and albeit that the judge was aware of a number of the other circumstances when he imposed the sanction in the first place, on the particular facts of this case the combination of all the circumstances was capable of carrying sufficient weight to justify the judge's conclusion, in the exercise of his discretion, that the just outcome of the application was to grant relief on the terms that he did. It must, of course, be remembered that this was the exercise of discretion in the context of a case management decision and that such decisions are not lightly to be interfered with – see e.g. Mannion v Ginty [2012] EWCA Civ 1667 (quoted at [52] in Mitchell).
In the result, and although the balance was a fine one, it seems to me that the judge was entitled, in the exercise of his discretion, to come to the conclusion that he did.
Conclusion
For the reasons set out above, this appeal is dismissed. I will deal with any consequential applications administratively. | 3 |
Case C-3/09 Erotic Center BVBA v Belgische Staat (Reference for a preliminary ruling from the hof van beroep te Gent) (Sixth VAT Directive – Article 12(3)(a) – Annex H – Reduced rate of VAT – Concept of ‘admissions to a cinema’ – Individual cubicles for watching films on demand) Summary of the Judgment Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Member States’ option of applying a reduced rate to certain supplies of goods and services (Council Directive 77/388, Annex H, Category 7, first para.) The concept of admissions to a cinema, referred to in the first paragraph of Category 7 in Annex H to Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, as amended by Directive 2001/4, must be interpreted as not covering the payment made by a customer so that he may watch on his own one or more films, or extracts from films, in a private space, such as an individual viewing cubicle.
In addition to the fact that the concept of admissions to a cinema must be interpreted in accordance with the usual meaning of those words, the various events and facilities listed in the first paragraph of Category 7 in Annex H to that directive have in particular the common feature that they are available to the public on prior payment of an admission fee giving all those who pay it the right collectively to enjoy the cultural and entertainment services characteristic of those events and facilities.
(see paras 16-17, 19, operative part)
JUDGMENT OF THE COURT (Eighth Chamber) 18 March 2010 (*)
(Sixth VAT Directive – Article 12(3)(a) – Annex H – Reduced rate of VAT – Concept of ‘admissions to a cinema’ – Individual cubicles for watching films on demand) In Case C‑3/09, REFERENCE for a preliminary ruling under Article 234 EC from the hof van beroep te Gent (Belgium), made by decision of 23 December 2008, received at the Court on 8 January 2009, in the proceedings
Erotic Center BVBA v Belgische Staat, THE COURT (Eighth Chamber), composed of C. Toader, President of the Chamber, K. Schiemann (Rapporteur) and P. Kūris, Judges, Advocate General: Y. Bot, Registrar: K. Malacek, Administrator, having regard to the written procedure and further to the hearing on 28 January 2010, after considering the observations submitted on behalf of: – Erotic Center BVBA, by J. van Besien, advocaat, – the Belgian Government, by M. Jacobs, acting as Agent, – the European Commission, by D. Triantafyllou and W. Roels, acting as Agents, having decided, after hearing the Advocate General, to proceed to judgment without an Opinion, gives the following Judgment 1 This reference for a preliminary ruling concerns the interpretation of the concept of ‘cinema’ in Category 7 in Annex H to Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1), as amended by Council Directive 2001/4/EC of 19 January 2001 (OJ 2001 L 22, p. 17) (‘the Sixth Directive’).
2 The reference was made in the course of proceedings between Erotic Center BVBA (‘E. Center’) and the Belgische Staat (Belgian State) concerning the possible application of a reduced rate of value added tax (‘VAT’) on the amounts received by E. Center for the use of individual cubicles for watching films located on the premises of that company.
Legal context European Union legislation 3 Article 12(3)(a) of the Sixth Directive provides:
‘The standard rate of [VAT] shall be fixed by each Member State as a percentage of the taxable amount and shall be the same for the supply of goods and for the supply of services. …
… Member States may also apply either one or two reduced rates. These rates shall be fixed as a percentage of the taxable amount, which may not be less than 5%, and shall apply only to supplies of the categories of goods and services specified in Annex H.’
4 Annex H to the Sixth Directive, entitled ‘List of supplies of goods and services which may be subject to reduced rates of VAT’, sets out various categories. Category 7 of that annex is worded as follows:
‘Admissions to shows, theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events and facilities.
Reception of broadcasting services.’ National legislation 5 The first indent of Article 1 of Royal Decree No 20 of 20 July 1970, fixing the rates of value added tax and classifying goods and services according to those rates (‘Royal Decree No 20’) provides that VAT is levied at the reduced rate of 6% for goods and services designated in Table A of the annex to that decree.
6 The following services are listed in Table A thereof, under Heading XXVIII:
‘Granting the right of admission to establishments for culture, sports or entertainment, as well as granting the right to make use thereof, with the exception of:
(a) granting the right to make use of automated recreation devices; (b) providing movable goods.’ The dispute in the main proceedings and the question referred for a preliminary ruling 7 On 15 September 2004, the tax authorities carried out an audit on the premises of E. Center concerning the application of the provisions relating to VAT for the period from 1 January until 30 June 2004. Following that audit, those authorities drew up an official report on 9 November 2004 imposing a revised tax assessment and fine on E. Center on the ground that it had incorrectly applied the reduced rate of VAT of 6%, instead of the standard rate of 21%, to the income received from the provision of cubicles for watching films. The amounts of EUR 48 454.36 and EUR 4 840 were thus charged to E. Center, corresponding respectively to the VAT which was thus allegedly evaded and to a fine.
8 After a writ of execution for those amounts had been served on E. Center on 24 December 2004, the latter lodged an application dated 22 March 2005 with the Rechtbank van eerste aanleg te Brugge (Court of First Instance, Bruges) seeking to have that writ of execution set aside. As that application was dismissed by judgment of 10 September 2007, E. Center brought an appeal against that decision before the hof van beroep te Gent (Court of Appeal, Ghent).
9 Before that court, E. Center claims that the cubicles for watching films at issue are covered by the category ‘establishment for culture, sports or entertainment’ as referred to in Heading XXVIII of Table A in the annex to Royal Decree No 20, because, in particular, such cubicles must be classified as a ‘cinema’ as referred to in Category 7 in Annex H to the Sixth Directive, as has moreover already been held by the Dutch courts. According to E. Center, the number of seats, the type of film shown or the method of projection used are, in particular, irrelevant for the purposes of such a classification.
10 The Belgian Government, on the other hand, is of the opinion that the services provided in those cubicles are covered by the concept of ‘automated recreation devices’ as referred to in Heading XXVIII, since the films are started by inserting coins into a device with the possibility of switching from one film to another. In the opinion of the Belgian Government, such cubicles cannot be classified as a ‘cinema’ since they are not spaces in which a group of people can together watch the same film, started without any intervention by the audience, which has paid for admission in advance.
11 The referring court argues that, by adopting Heading XXVIII of Table A in the annex to Royal Decree No 20, the Belgian legislator made use of the possibility envisaged by Article 12(3)(a) of the Sixth Directive in conjunction with Category 7 in Annex H thereto, with the result that Heading XXVIII must be interpreted as covering cinemas within the meaning of Category 7. That court considers that the need to interpret the national legislation in a way which is consistent with the Sixth Directive and with the uniform concepts specific thereto implies that, if the cubicles at issue must be considered to be cinemas within the meaning of that directive, they cannot be classified as automated recreation devices as referred to in Heading XXVIII and the reduced rate of 6% would have to be applied to them.
12 In those circumstances, the hof van beroep te Gent decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling:
‘Should a cubicle consisting of a lockable space where there is room for only one person and where this person can watch films on a television screen for payment, where this person personally starts the film projection by inserting a coin and has a choice of different films, and during the time paid for can continually modify his choice of projected films, be regarded as a “cinema” as referred to in the Sixth … Council Directive …, Annex H, Category 7 …?’
Consideration of the question referred for a preliminary ruling 13 As is apparent from its wording, the first paragraph of Category 7 in Annex H to the Sixth Directive relates to the ‘admissions’ to various cultural events and facilities listed therein (see Case C-109/02 Commission v Germany [2003] ECR I‑12691, paragraph 25), including in particular ‘cinemas’.
14 In the absence of a definition in the Sixth Directive of the concept of admissions to a cinema referred to in Category 7 in Annex H, that concept should be interpreted in the light of its context within the Sixth Directive (see, to that effect, Case C-83/99 Commission v Spain [2001] ECR I-445, paragraph 17).
15 In that regard, and as has previously been noted by the Court, it follows from Article 12(3)(a) of the Sixth Directive that the application of either one or two reduced rates of VAT is an option accorded to the Member States as an exception to the principle that the standard rate applies. Moreover, according to that provision, the reduced rates of VAT may be applied only to supplies of the goods and services specified in Annex H to that directive. It is settled case-law that provisions which are in the nature of exceptions to a principle must be interpreted strictly (see, inter alia, Commission v Spain, paragraphs 18 and 19 and the case‑law cited).
16 It follows in particular that the concept of admissions to a cinema must be interpreted in accordance with the usual meaning of those words (see, to that effect, Commission v Spain, paragraph 20, and Commission v Germany, paragraph 23).
17 Furthermore, and as was stated by the Belgian Government and the European Commission, the various events and facilities listed in the first paragraph of Category 7 in Annex H to the Sixth Directive have in particular the common feature that they are available to the public on prior payment of an admission fee giving all those who pay it the right collectively to enjoy the cultural and entertainment services characteristic of those events and facilities.
18 It follows from the above that the concept of admissions to a cinema within the meaning of the first paragraph of Category 7 in Annex H to the Sixth Directive cannot, in light of the usual meaning of that term and the context of the provision within which it is included, be interpreted as meaning that it covers the payment made by a customer so as to be able to watch on his own one or more films, or extracts from films, in private cubicles such as those in issue in the main proceedings.
19 Therefore, the answer to the question referred for a preliminary ruling is that the concept of admissions to a cinema referred to in the first paragraph of Category 7 in Annex H to the Sixth Directive must be interpreted as meaning that it does not cover the payment made by a customer so as to be able to watch on his own one or more films, or extracts from films, in private cubicles such as those in issue in the main proceedings.
Costs 20 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (Eighth Chamber) hereby rules: The concept of admissions to a cinema referred to in the first paragraph of Category 7 in Annex H to Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, as amended by Council Directive 2001/4/EC of 19 January 2001, must be interpreted as meaning that it does not cover the payment made by a customer so as to be able to watch on his own one or more films, or extracts from films, in private cubicles such as those in issue in the main proceedings. [Signatures]
* Language of the case: Dutch. | 7 |
WITH CIVIL APPEAL NO.171 OF 1985 O R D E R The numberification under Section 4 1 of the Land Acquisition Act, 1894 for short, the Act was published on March 8, 1957 for planned development of Delhi. The lands acquired for the development are 8.40 acres out of which the land of appellants are small in extent. In Justice A.S. Bhandari vs. Union of India, LPA No.81 of 1979 decided on May 1, 1980, the Division Bench of the High Court determined the market-value at Rs.10 per square yard, i.e., Rs.10,000/- per bigha. The appellant, aggrieved by that, filed this appeal. The only question is whether it is a fit case to enhance the companypensation to Rs.12/- per square yard, i.e., Rs.12,000/- per bigha as claimed by the appellant. Sri Juneja, learned companynsel appearing for the claimants companytended that the lands in Justice Bhandaris case are brick-kiln land while the lands of appellant are agricultural lands. Therefore, the appellants are entitled to higher companypensation. It is further companytended that the numberification under Section 4 1 was quashed in subsequent proceedings which was ultimately upheld on November 8, 1968. No further numberification under Section 4 1 was published. Had it been so published, further increase of the companypensation at Rs.12/- per square yard would be just and fair companypensation. Having given companysideration to the companytention of Shri Juneja, we find it difficult to accept the same. On the facts, evidence relied in Justice Bhandaris case is a sale deed of 560 square yards in which admittedly the market-value was fixed at Rs.12/- per square yard. Since it is a small extent of land, which formed the basis of the case to determine companypensation at Rs.10/- per square yard, the same price would number companymend when large extent of land is offered for sale to a willing purchaser. | 4 |
CRIMINAL APPELLATE JURISDICTION Criminal Appeal NO 246 of 1976. Appeal by Special Leave from the Judgment and Order dated 5-12-1975 of the Delhi High Court in Criminal Appeal No. 111 of 1974 . L. Kohli and R.C. Kohli, for the appellant. L. Sanghi and M.N. Shroff, for the respondent. The Judgment of the Court was delivered by GOSWAMI, J.--This appeal by special leave is directed against the judgment of the Delhi High Court companyfirming the companyviction of the appellant under section 302/34, Indian Penal Code, and sentence of imprisonment for life. Ashok Kumar aged about 17 years and his younger brother, Vijay Kumar, below the age of 16 years were chargesheeted for an offence under section 302/34 IPC for causing the death of Rajinder Kumar aged about 23 years. Vijay Kumar was sent for trial under the Children Act,. 1960, and is number, therefore, before us. In June 1971 Jai Bhagwan, father of the accused, had companyplained to the police against the deceased, Rajinder Kumar, alleging that he had kidnapped his daughter, Saroj Kumari. It is said that Saroj Kumari was recovered from the companypany of Rajinder Kumar at Ahmedabad and Rajinder Kumar was charged for offences under sections 366 and 376, Indian Penal Code, and the case was pending on the date of occurrence. The prosecution case is that on May 22, 1973, Hukum Chand PW 1 , father of the deceased, Rajinder Kumar, was companying back from the Fountain in Chandni Chowk on H.C. Road and took a turn towards right leading to Mor Sarai when. he saw the accused, Ashok Kumar, and his brother, Vijay Kumar, having surrounded his son Rajinder Kumar. He also saw that Ashok Kumar caught hold of the hand of Rajinder Kumar while his younger brother stood behind him in front of the gate of Mor Sarai. Having seen this he walked quickly and when he was at a distance of four or five paces from them he heard Ashok Kumar and his brother, Vijay Kumar. telling Rajinder Kumar that they would avenge the kidnapping of their sister numbermatter whether the companyrt might punish him or number. Hukam Chand then saw both the brothers taking out their knives. Accused Ashok Kumar struck a blow on the left cheek of Rajinder Kumar. Vijay Kumar struck one blow on Rajinder Kumar which was warded off by him as a result of which his right forearm was struck by the knife on the back of his palm. Rajinder Kumar tried to run away but was pursued by the two brothers and was overpowered. They then gave several blows on the back of his waist, on left abdomen and on the right thigh. As a result of these blows Rajinder Kumar fell down on the footpath on the side of the quarters of Mor Sarai. Accused Ashok Kumar ran away towards the station along with his brother. Hukam Chand sent for a taxi and took Rajinder Kumar in it to the Irwin Hospital where he was examined by Dr. U. Kaul PW 12 who found the following injuries on his person -- Stab wound 4 x 2 left inter scapular region with surrounding surgical emphysema. Stab left lumber region 2 x 2. Stab left thigh 2 x 1. Stab left cheek 2 x 2. Stab left hand 4 x 1 on the dorsum. Constable, Vijay Kumar, PW 7 who was on duty at the Irwin Hospital informed the Police Station, Kotwali, about the admission of Rajinder Kumar in the Hospital. Constable, Ram Saran PW 14 made an entry in the daily diary about the report received from the irwin Hospital. He sent a companyy of this report to S.I. Dewan Singh PW 20 who proceeded to the Hospital. When PW 20 arrived. Rajinder Kumar was number in a position to make a statement and he recorded the statement of Hukam Chand Ex. PW 1/A at about 8.40 P.M. which is the first information report registered under section 307/34 IPC. According to the Doctor the punctured injury at the left inter scapular region was sufficient to cause his death in the ordinary companyrse of nature. On the death of Rajinder Kumar at 11.35 P.M., the same night, the section under which the case was registered was altered to section 302 IPC and investigation proceeded accordingly. Names of Ashok Kumar and Vijay Kumar appeared in the first information report, as the assailams. The first information report also disclosed that there was another person, Mohar Singh PW 2 with Hukam .Chand. The accused, Ashok Kumar, was arrested on May 25, 1973, near Jat Dharamshala in Jamuna Bazar. It is said that on the following day Ashok Kumar made a statement before Inspector Sardar Singh, Station House Officer, P.S. Kotwali, Delhi PW 21 in pursuance of which on May 28, 1973, a blood stained knife Ex. P-7 was recovered. Evidence was also led by the prosecution to prove recovery of a shirt and pantaloons having stains of blood although these had already been washed from the person of the accused, Ashok Kumar, when he was arrested on May 25, 1973. The serological report showed the origin of these stains as human blood. At the trial number only Hukam Chand gave evidence as an eye witness, but Mohar Singh PW 2 , Rajinder Kumar Jain PW 3 and Puran Singh PW 4 were also produced as eye witnesses. While PW 1, Hukam Chand, companytinued to tell his melancholy story, PWs 3 and 4 did number support the prosecution and were accordingly declared hostile. It was shown in the companyrse of their cross-examination that they had earlier during the investigation made statements as eye witnesses to the occurrence. The statements of PWs 3 and 4 which were recorded in the companymitting companyrt were transferred to the record during the trial under section 288, Criminal Procedure Code. In the companymitting companyrt these witnesses had stated that they had seen the accused assaulting the deceased with a knife. P.W. 2, Mohar Singh, was number examined before the companymitting companyrt. The accused denied the charge and stated that he was arrested by the police in Agra on May 24, 1973, and number on the following day at Jat Dhararashala as alleged by the prosecution. After examining the evidence of the defence witnesses as well as the station diary entries about the departure of the Head Constable. Manohar Lal and Constable Balbir Singh, to outside districts the Sessions Judge held that it was number at all improbable that the two policemen accompanied by Jai Bhagwan went to Agra and brought the accused from there. The Sessions Judge also did number rely upon the disclosure statement made by the accused and also ignored the recovery of the knife as being in pursuance of that disclosure statement. The Sessions Judge observed that it was very unusual in a murder case that recovery of the offending weapon was so belated. The trial companyrt companyvicted the accused on the testimony of Hukam Chand PW 1 and accepted the evidence of PWs 3 and 4 recorded in the companymitting companyrt. Referring to PWs 3 and 4, the trial companyrt observed as follows -- I treat the evidence of PW 3 Rajinder Kumar Jain and PW 4 Puran as substantive evidence under section 288 Cr. P.C. I find abundant companyroboration thereof in the testimony of PW 1 Hukam Chand. This evidence treated as substantive evidence under section 288 Cr. P.C. taken into companysideration with the testimony of PW 1 Hukam Chand provides a companyplete picture by ocular evidence of what happened to the victim Rajinder Kumar on that fateful evening at the hands of Ashok accused and his brother Vijay. I accept this part of the testimony. With regard to the evidence of PW 1 the trial companyrt observed as follows -- In the case before me Hukam Chand is a father of the deceased. He admits the enmity on the part of the accused towards the deceased. He mentioned the name of the accused in the FIR and gave companyplete sequence of events. He did number lose any time. He had numbertime to manufacture things so as to be incorporated in the report. This is a strong circumstance in favour of the prosecution in this case. The High Court, as stated earlier, companyfirmed the companyviction by accepting the testimony of Hukam Chand as well as the statements made by PWs 3 and 4 before the companymitting companyrt in which they had clearly supported the prosecution case. Since the accused had opportunity to cross examine the PWs 3 and 4 in the companymitting companyrt the fact that he had number actually cross-examined these witnesses is of numberconsequence. Apart from that during the Sessions trial their explanation was that they had made the statements before the companymitting companyrt under the threat of the police. This explanation had been rejected by both the companyrts. Mr. Kohli submits that PWs 3 and 4 were number mentioned in the first information report although PW 1 mentioned,. therein, at threeplaces about the presence of Mohar Singh PW 2 who was number even examined before the companymitting companyrt. Since PW 2 denied having seen the occurrence, his evidence is of numberassistance and the fact that he was companytradicted by his previous statement made before the police only dubs him as an unreliable witness. So far as PWs 3 and 4 are companycerned, we do number see much force in the companytention that their names were number mentioned in the first information report. It is possible that even if they had seen the occurence from some other point, PW 1 hastening away to the Hospital might number have, numbericed them. Besides, when S.I. Diwan Singh PW 20 went to the place of occurrence with PW 1 Hukarn Chand at about 9.45 P.M. the same night he found a large crowd there. PW 20 stated that he recorded at that time the statements of Mohar Singh PW 2 , Rajinder Kumar Jain PW 3 and Puran Singh PW 4 . The omission of the names of PWs 3 and 4 in the first information report lodged at 8.45 P.M. cannot, therefore, be of much significance to reject their testimony on that score. Next, Mr. Kohli submits that the statements of PWs 3 and 4 recorded in the companymitting companyrt and transferred under section 288, Criminal Procedure Code, is inadmissible and should number be acted upon, since numberspecific portion of their companytradictory statements had been put to them in the companyrse of their cross-examination by the public prosecutor. We find that after drawing the attention of these two witnesses to their companytradictory statements recompanyded by the police with regard to their having seen the assault which they denied, the entire respective statements recorded by the companymitting magistrate in Hindi were read out to the witness who did number deny to have made the same but only explained that they had deposed in that manner under threat and pressure from the police. Section 288, Criminal Procedure Code, which provides for transfer of evidence recorded in the companymitting companyrt under certain circumstances, is subject, inter alia, to the provisions of section 145 of the Evidence Act, and the provisions of the latter section have been substantially companyplied with in this case. Under the circumstances there is numberlegal infirmity about the transfer of the deposition of the two witnesses to the record of the Sessions Court under section 288, Criminal Procedure Code, and it was a legitimate use of discretion by the Sessions Judge in adopting this companyrse. Their evidence recorded in the companymitting companyrt is substantive evidence in this case and is clearly admissible. Rajinder Kumar Jain PW 3 had written an inland letter which the Inspector General of Police received on January 18, 1974, companyplaining about the police torture in threatening him to give evidence in the companyrt. He was examined before the Sessions Judge on January 19, 1974, when he, for the first time, denied in companyrt to have seen the occurrence. He had been examined in the companymitting companyrt on November 21, 1973, about six months after the occurrence when he had made numbercomplaint about police torture and gave evidence as an eye witness to the occurrence. The trial companyrt was, therefore perfectly justified in number accepting the belated explanation of PWs 3 and 4 about police threat under which alone they stated that they had supported the prosecution case. Although the High Court was number prepared to accept the defence case about the arrest of the accused in Agra, it is number necessary to pursue the matter further. It is also number necessary to deal with .the recovery of the knife and the blood stained clothes about which the High Court was number prepared to accept the reasons given by the Sessions Judge for discarding that evidence. We agree with the Sessions Judge that it was unusual for the police to delay recovery of the blood-stained knife in a murder case. But since the two companyrts have relied upon the evidence of the three eye witnesses, it is number necessary to companysider whether the High Court was right in differing from the views of the trial companyrt in the matter of the recovery of the knife and the clothes. After having perused the entire evidence, we see numberreason to interfere with the companyviction in this case. In the result the appeal is dismissed. | 7 |
SECOND SECTION
CASE OF BULUT v. TURKEY
(Application no. 49892/99)
JUDGMENT
STRASBOURG
22 November 2005
FINAL
22/02/2006
This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision.
In the case of Bulut v. Turkey,
The European Court of Human Rights (Second Section), sitting as a Chamber composed of:
MrJ.-P. Costa, President,MrA.B. Baka,MrR. Türmen,MrK. Jungwiert,MrM. Ugrekhelidze,MrsA. Mularoni,MrsE. Fura-Sandström, judges,and Mrs S. Dollé, Section Registrar,
Having deliberated in private on 3 November 2005,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 49892/99) 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, Hüseyin Bulut (“the applicant”), on 1 March 1999.
2. The applicant was represented by Mrs Y.İ. Koluaçık, a lawyer practising in Malatya. The Turkish Government (“the Government”) did not designate an Agent for the purposes of the proceedings before the Court.
3. On 27 January 2004 the Court declared the application partly inadmissible and decided to communicate the complaint concerning the applicant’s right to a fair hearing 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 Second Section.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
5. The applicant was born in 1952. He was detained in Burdur prison at the time of lodging his application.
6. On 28 March 1994 an arrest warrant was issued in respect of the applicant.
7. On 14 April 1994 the public prosecutor at the Malatya State Security Court filed an indictment, accusing the applicant together with two other co‑accused of membership of an illegal armed organisation, namely the Marxist-Leninist Communist Party. The public prosecutor requested that the applicant be convicted and sentenced under Article 168 § 2 of the Criminal Code and Article 5 of Law no. 3713.
8. On 19 October 1995 the Malatya State Security Court decided to separate the proceedings in respect of the applicant as he could not be found.
9. On 30 August 1996 the applicant was arrested and taken into custody by the police. On 6 September 1996 he was interrogated by two police officers.
10. On 10 September 1996 he was brought before the public prosecutor and the State Security Court. He denied his statements made in police custody.
11. On 30 October 1996 an additional indictment was submitted by the public prosecutor at the Istanbul State Security Court.
12. On 20 January 1998 the Malatya State Security Court, composed of two civilian judges and a military judge, convicted the applicant under Article 168 § 2 of the Criminal Code and Article 5 of Law no. 3713, and sentenced him to twelve years and six months’ imprisonment.
13. On 2 March 1998 the applicant appealed against the judgment of the Malatya State Security Court.
14. On 7 December 1998 the Court of Cassation held a hearing and on the same day upheld the above judgment.
II. THE RELEVANT DOMESTIC LAW
15. The relevant domestic law and practice in force at the material time are outlined in the judgments of 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
16. The applicant complained that he had been denied a fair hearing on account of the presence of a military judge on the bench of the Malatya State Security Court which tried and convicted him. He claimed that in refusing his request for the examination of the signature on the deposition, and in relying on the statements of witnesses whom he did not confront, the court violated his right to a fair hearing. He relied on Article 6 of the Convention, which in so far as relevant reads as follows:
“In the determination of ... any criminal charge against him, everyone is entitled to a fair and public hearing ... by an independent and impartial tribunal established by law.”
A. Admissibility
17. The Government argued under Article 35 § 1 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 non-exhaustion of domestic remedies. They maintained that the applicant had not invoked this complaint before the domestic courts.
18. The Court reiterates that it has already examined and rejected this preliminary objection of the Government in similar cases (see Vural v. Turkey, no. 56007/00, § 22, 21 December 2004, Çolak v. Turkey (no. 1), no. 52898/99, § 24, 15 July 2004, and Özel, cited above, § 25).
19. In view of the above, the Court rejects the Government’s objection in the present case.
20. In the light of its established case law (see, amongst many authorities, Çiraklar 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 raises 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
21. 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 v. Turkey, no. 59659/00, §§ 35-36, 6 February 2003).
22. As to the instant case, the Court considers that the Government have not submitted any facts or convincing 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 he 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).
23. 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
24. Having regard to its finding of a violation of the 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 it (see, among other authorities, Incal, cited above, § 74).
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 Court points out that under Rule 60 of the Rules of Court any claim for just satisfaction must be itemised and submitted in writing together with the relevant supporting documents, failing which the Chamber may reject the claim in whole or in part.
27. In the instant case, on 21 June 2004, the applicant was requested to submit his claims for just satisfaction. He did not submit any such claims within the specified time‑limit.
28. In view of the above, the Court makes no award under Article 41 of the Convention.
29. Nevertheless, the Court considers that where an individual, as in the instant case, has been convicted by a court which did not meet the Convention requirements of independence and impartiality, a retrial or a reopening of the case, if requested, represents, in principle an appropriate way of redressing the violation (see Öcalan v. Turkey, no. 46221/99 [GC], § 210, ECHR 2005‑...).
FOR THESE REASONS, THE COURT UNANIMOUSLY
1. Declares the remainder of 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;
Done in English, and notified in writing on 22 November 2005, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
S. Dollé J.-P. CostaRegistrarPresident
| 3 |
SYED SHAH MOHAMMED QUADRI, J. The petitioner seeks review of our order dismissing L.P. C No.203 of 2002 in limine on January 21, 2002. In the academic year 2000-2001 the petitioner took admission in B.D.S. in M.M. College of Dental Science and Research Mollana Ambala but subsequently she withdrew from the companyrse. However, she appeared in the entrance examination of MBBS BDS companyrses in Haryana for the academic year 2001-02 and secured 37th rank. According to her she was entitled to admission in MBBS companyrse in the Rohtak Medical College, Rohtak. In view of clause 18 of the Information Brochure of Kurukshetra University, Haryana, for MBBS BDS Entrance Examination for short, the Information Brochure she apprehended that she would number be companysidered for admission to the MBBS companyrse so she filed writ petition Civil Writ Petition No.11443 of 2001 challenging validity of clause 18 of the Information Brochure and seeking a mandamus to the respondents to permit her to companypete for admission to MBBS companyrse ignoring the said clause. By order dated November 8, 2001, the Division Bench of the High Court of Punjab and Haryana at Chandigarh upheld the validity of the said clause and negatived her claim for admission to MBBS companyrse. She unsuccessfully challenged validity of the said order of the High Court in the aforementioned special leave petition which was dismissed by our order, number under review. It is submitted by Mr.K.V.Viswanathan, the learned companynsel for the petitioner, that clause 18 of the Information Brochure cannot be so interpreted as to debar her from seeking admission to the companyrse for all time to companye and if the order is number reviewed she would be precluded from seeking admission in the MBBS companyrse forever which is an unintended punishment. Mr.Sanghi would companytend that clause 18 bars a student who has taken admission in one companyrse, to seek admission in another companyrse. It will be useful to refer to clause 18 which reads as under The candidates already admitted in any Medical Dental Colleges will number be companysidered eligible for admission to the Course. A plain reading of the afore-mentioned clause shows that a candidate who was already admitted in a medical or dental companylege would be ineligible for admission in the other companyrse. The said clause at times will operate harshly as in the case of the petitioner but it is meant to ensure that a candidate who has already secured admission should number abandon the studies after the companymencement of that companyrse to seek admission in another companyrse which is in public interest, for otherwise it would result in the wastage of the seat in the companyrse in which he has taken admission and further such a change would deprive another eligible candidate from seeking admission to the other companyrse. Obviously, the intention of the companycerned authority in framing clause 18 appears to be to ensure that a candidate who has already secured admission with his free will in any companyrse MBBS or BDS should companyplete that companyrse and should number change his mind in midstream. It, therefore, follows that the bar is intended to be operative during the period of the companyrse in which a candidate has taken admission. After companypleting that companyrse or in the event of abandoning the companyrse MBBS BDS and number studying for the numbermal period 4 years/5 years as the case may be the candidate would become eligible after the end of such period of the companyrse to seek admission in the companyrse of his choice provided other companyditions of admission are satisfied. | 4 |
COURT OF APPEAL FOR ONTARIO
CITATION:
R. v. Nguyen, 2013 ONCA
51
DATE: 20130128
DOCKET: C53636
MacPherson, Cronk and Pepall JJ.A.
BETWEEN
Her Majesty the Queen
Respondent
and
Nhu Van Nguyen
Appellant
Joanne Park, for the appellant
Amber Pashuk, for the respondent
Heard and released orally: January 18, 2013
On appeal from the sentence imposed on March 11, 2011 by
Justice Gregory A. Pockele of the Ontario Court of Justice, sitting without a
jury.
ENDORSEMENT
[1]
The appellant pleaded guilty to theft of hydro, possession of marijuana
for the purpose of trafficking, and production of marijuana. The appellant was
a so-called gardener in a large residential marijuana grow operation in
London. There were more than 1200 marijuana plants and a hydro by-pass in the
residence; the street value of the plants was about $1.2 million.
[2]
The trial judge sentenced the appellant to 15 months imprisonment, less
two months credit for pre-trial custody. The appellant appeals on two principal
bases.
[3]
First, the appellant contends that the trial judges reasons demonstrate
a reasonable apprehension of bias in two respects: (1) he referred to his
personal experience with marijuana grow operations near his own residence in
London; and (2) he discussed general deterrence in the context of a specific
ethnic group.
[4]
We do not accept the first component of this submission. There was
nothing wrong with the trial judges observations about the prevalence of
marijuana grow operations in his community and the need for denunciation.
Indeed, in
R. v. Nguyen
, [2007] O.J. No. 291, at para. 2, this court
endorsed a similar observation by a different trial judge:
The trial judge... pointed to the substantial number of these
marijuana grow house operations in the rural community of Prescott and Russell
where he served as the administrative judge.
[5]
On the second point, we agree that, against the backdrop of no evidence
in the record, the trial judge should not have said that [t]o a certain
extent, there is an ethnic element in that certain groups of new Canadians, or
Canadian citizens sharing cultural and ethnic heritage, appear before the court
in unusual numbers charged with marijuana production. There is no place in the
Canadian criminal justice system for this type of negative and stereotypical
comment.
[6]
Second, the appellant submits that the trial judge erred by not imposing
a conditional sentence.
[7]
We disagree. A complete answer to this submission is this courts
decision in
R. v. Song
, [2009] O.J. No. 5319 where, at para. 9, the
court said that only in rare cases involving large-scale commercial marijuana
grow operations should a conditional sentence be imposed. This case is not one
of those rare cases. The trial judge fairly assessed the various factors and
imposed a custodial sentence that defence counsel conceded was within the appropriate
range. We agree with that concession.
[8]
However, in our view, the trial judge also made a calculation error in his
reasons for sentence. Very near the end of those reasons, he said:
I personally feel this is a matter which requires a sentence of
approximately 18 months in custody. I also believe that anybody entering an
early guilty plea should receive a reduction of 20 to 30 percent.
[9]
In the next sentence, the trial judge continued: The prosecution has
asked for 15 months, and that is a number I cannot argue with. He then used 15
months as the foundation for the sentence he imposed. However, deductions of both
20 per cent and 30 per cent from 18 months would reduce the sentence below 15
months, to 14.4 and 12.6 months respectively. The mid-point of the trial
judges reduction for a guilty plea, 25 per cent, would generate a starting
point of 13.5 months.
[10]
In
these circumstances, we regard an appropriate sentence as 10 months
imprisonment, less credit of two months for pre-trial custody. The appeal is
allowed accordingly.
J.C.
MacPherson J.A.
E.A.
Cronk J.A.
S.E.
Pepall J.A.
| 0 |
Judgment of the Court (Fourth Chamber) of 11 March 1986. - Conegate Limited v HM Customs & Excise. - Reference for a preliminary ruling: High Court of Justice, Queen's Bench Division - United Kingdom. - Restrictions on imports - Grounds of public morality. - Case 121/85.
European Court reports 1986 Page 01007
Swedish special edition Page 00505
Finnish special edition Page 00527
Summary
Parties
Subject of the case
Grounds
Decision on costs
Operative part
Keywords
1 . FREE MOVEMENT OF GOODS - DEROGATIONS - GROUNDS OF PUBLIC MORALITY - PROHIBITION ON THE IMPORTATION OF GOODS CONSIDERED TO BE INDECENT OR OBSCENE - PERMISSIBILITY - CONDITION - PROHIBITION ON THE MANUFACTURE AND MARKETING OF THE SAME GOODS ON THE NATIONAL TERRITORY - DIFFERENCES IN THE LAWS IN FORCE IN THE TERRITORY OF THE SAME MEMBER STATE - OVERALL ASSESSMENT
( EEC TREATY , ART . 36 )
2 . INTERNATIONAL AGREEMENTS - AGREEMENTS OF THE MEMBER STATES - AGREEMENTS CONCLUDED PRIOR TO THE EEC TREATY - ARTICLE 234 OF THE TREATY - OBJECT - SCOPE - JUSTIFICATION OF RESTRICTIONS IN INTRA-COMMUNITY TRADE - NOT ACCEPTABLE
( EEC TREATY , ART . 234 )
Summary
1 . A MEMBER STATE MAY NOT RELY ON GROUNDS OF PUBLIC MORALITY WITHIN THE MEANING OF ARTICLE 36 OF THE EEC TREATY IN ORDER TO PROHIBIT THE IMPORTATION OF CERTAIN GOODS ON THE GROUND THAT THEY ARE INDECENT OR OBSCENE WHEN ITS LEGISLATION CONTAINS NO PROHIBITION ON THE MANUFACTURE AND MARKETING OF THE SAME GOODS ON ITS TERRITORY .
THE QUESTION WHETHER SUCH A PROHIBITION EXISTS IN A STATE COMPRISED OF DIFFERENT CONSTITUENT PARTS WHICH HAVE THEIR OWN INTERNAL LEGISLATION CAN BE RESOLVED ONLY BY TAKING INTO CONSIDERATION ALL THE RELEVANT LEGISLATION . ALTHOUGH IT IS NOT NECESSARY , FOR THE PURPOSES OF THE APPLICATION OF ARTICLE 36 , THAT THE MANUFACTURE AND MARKETING OF THE PRODUCTS WHOSE IMPORTATION HAS BEEN PROHIBITED SHOULD BE PROHIBITED IN THE TERRITORY OF ALL THE CONSTITUENT PARTS , IT MUST AT LEAST BE POSSIBLE TO CONCLUDE FROM THE APPLICABLE RULES , TAKEN AS A WHOLE , THAT THEIR PURPOSE IS , IN SUBSTANCE , TO PROHIBIT THE MANUFACTURE AND MARKETING OF THOSE PRODUCTS .
THAT IS NOT THE CASE OF RULES UNDER WHICH SUCH GOODS MAY BE MANUFACTURED FREELY AND MARKETED SUBJECT ONLY TO AN ABSOLUTE PROHIBITION ON THE TRANSMISSION OF SUCH GOODS BY POST , A RESTRICTION ON THEIR PUBLIC DISPLAY AND , IN CERTAIN AREAS , A SYSTEM OF LICENSING OF PREMISES FOR THE SALE OF THOSE GOODS TO CUSTOMERS AGED 18 YEARS AND OVER .
2 . ARTICLE 234 OF THE EEC TREATY MUST BE INTERPRETED AS MEANING THAT AN AGREEMENT CONCLUDED PRIOR TO THE ENTRY INTO FORCE OF THE EEC TREATY MAY NOT BE RELIED UPON IN ORDER TO JUSTIFY RESTRICTIONS ON TRADE BETWEEN MEMBER STATES . THAT PROVISION , WHICH IS INTENDED TO ENSURE THAT THE APPLICATION OF THE TREATY DOES NOT AFFECT EITHER THE DUTY TO OBSERVE THE RIGHTS OF NON-MEMBER COUNTRIES UNDER AN AGREEMENT PREVIOUSLY CONCLUDED WITH A MEMBER STATE , OR THE OBSERVANCE BY THAT MEMBER STATE OF ITS OBLIGATIONS UNDER THAT AGREEMENT , CONCERNS ONLY THE RIGHTS AND OBLIGATIONS ESTABLISHED BETWEEN THE MEMBER STATES AND NON-MEMBER COUNTRIES .
Parties
IN CASE 121/85
REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE HIGH COURT OF JUSTICE FOR A PRELIMINARY RULING IN PROCEEDINGS PENDING BEFORE THAT COURT BETWEEN
CONEGATE LIMITED
AND
HM CUSTOMS AND EXCISE
Subject of the case
ON THE INTERPRETATION OF ARTICLES 36 AND 234 OF THE EEC TREATY ,
Grounds
1 BY AN ORDER OF 30 NOVEMBER 1984 , WHICH WAS RECEIVED AT THE COURT ON 29 APRIL 1985 , THE HIGH COURT OF JUSTICE , QUEEN ' S BENCH DIVISION , REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY A NUMBER OF QUESTIONS CONCERNING THE INTERPRETATION OF ARTICLES 36 AND 234 OF THE EEC TREATY IN ORDER TO ENABLE IT TO ASSESS THE COMPATIBILITY WITH COMMUNITY LAW OF CERTAIN PROVISIONS OF DOMESTIC CUSTOMS LEGISLATION .
2 THOSE QUESTIONS WERE RAISED IN PROCEEDINGS CONCERNING THE SEIZURE BY THE UNITED KINGDOM CUSTOMS AUTHORITIES OF VARIOUS CONSIGNMENTS OF GOODS IMPORTED FROM THE FEDERAL REPUBLIC OF GERMANY BY CONEGATE LIMITED ( HEREINAFTER REFERRED TO AS CONEGATE ). IN THE COURSE OF AN INSPECTION AT THE AIRPORT WHERE THE CONSIGNMENTS ARRIVED , CUSTOMS OFFICIALS DISCOVERED THAT THE GOODS CONSISTED ESSENTIALLY OF INFLATABLE DOLLS WHICH WERE CLEARLY OF A SEXUAL NATURE AND OTHER EROTIC ARTICLES . THEY CONSIDERED THESE GOODS TO BE ' INDECENT OR OBSCENE ' ARTICLES WHOSE IMPORTATION INTO THE UNITED KINGDOM IS PROHIBITED UNDER SECTION 42 OF THE CUSTOMS CONSOLIDATION ACT 1876 .
3 FOLLOWING A COMPLAINT LAID BY THE CUSTOMS AUTHORITIES , THE UXBRIDGE MAGISTRATES COURT ORDERED THE FORFEITURE OF THE GOODS . THAT DECISION WAS UPHELD BY THE SOUTHWARK CROWN COURT . CONEGATE APPEALED BY WAY OF CASE STATED AGAINST THE CROWN COURT ' S DECISION TO THE HIGH COURT , CONTENDING THAT IN THE PARTICULAR CIRCUMSTANCES THE FORFEITURE OF THE GOODS IN QUESTION CONSTITUTED AN INFRINGEMENT OF ARTICLE 30 OF THE EEC TREATY WHICH COULD NOT BE JUSTIFIED ON GROUNDS OF PUBLIC MORALITY WITHIN THE MEANING OF ARTICLE 36 OF THE TREATY .
4 IN SUPPORT OF ITS VIEW , CONEGATE SUBMITTED THAT ALTHOUGH IN ITS JUDGMENT OF 14 DECEMBER 1979 ( CASE 34/79 HENN AND DARBY ( 1979 ) ECR 3795 ) THE COURT RECOGNIZED THAT THE PROHIBITION ON THE IMPORTATION OF GOODS MIGHT BE JUSTIFIED ON GROUNDS OF PUBLIC MORALITY AND THAT IN PRINCIPLE IT WAS FOR EACH MEMBER STATE TO DETERMINE THE REQUIREMENTS OF PUBLIC MORALITY IN ITS TERRITORY , THE OPERATION OF SUCH A PROHIBITION NEVERTHELESS CONSTITUTED A MEANS OF ARBITRARY DISCRIMINATION , WITHIN THE MEANING OF THE SECOND SENTENCE OF ARTICLE 36 , WHERE A LAWFUL TRADE IN THE SAME GOODS EXISTED IN THE MEMBER STATE CONCERNED . CONEGATE ARGUED THAT THAT WAS THE CASE IN THE UNITED KINGDOM WHERE THE MANUFACTURE AND THE MARKETING OF EROTIC ARTICLES WAS NOT SUBJECT TO A GENERAL PROHIBITION , UNLIKE THE PUBLICATION AND MARKETING OF OBSCENE PUBLICATIONS , WHICH WAS AT ISSUE IN THE ABOVE-MENTIONED JUDGMENT OF 14 DECEMBER 1979 .
5 IN THAT RESPECT CONEGATE POINTED OUT THAT THE MANUFACTURE OF THE ARTICLES IN QUESTION IN THESE PROCEEDINGS WAS SUBJECT TO NO RESTRICTION UNDER UNITED KINGDOM LAW , WHILST THE MARKETING OF THE GOODS WAS SUBJECT ONLY TO PROHIBITIONS REGARDING THEIR TRANSMISSION BY POST AND THEIR DISPLAY IN PUBLIC PLACES . OTHER RESTRICTIONS WERE IN FORCE IN CERTAIN OF THE CONSTITUENT PARTS OF THE UNITED KINGDOM . THUS , IN ENGLAND AND WALES THE LOCAL AUTHORITIES MIGHT CHOOSE WHETHER TO LEAVE DISTRIBUTION UNRESTRICTED OR TO LIMIT THE POINTS OF SALE BY ALLOWING DISTRIBUTION ONLY FROM AUTHORIZED SEX SHOPS .
6 THE HIGH COURT TOOK THE VIEW THAT THE DISPUTE RAISED A PROBLEM OF INTERPRETATION OF COMMUNITY LAW . IT THEREFORE STAYED THE PROCEEDINGS AND REQUESTED THE COURT TO GIVE A PRELIMINARY RULING ON THE FOLLOWING QUESTIONS :
' ( 1 ) WHERE CERTAIN ARTICLES ARE SUBJECT TO A NATIONAL ABOSLUTE PROHIBITION ON IMPORTATION INTO A MEMBER STATE FROM ANOTHER MEMBER STATE , ON THE GROUNDS THAT THEY ARE INDECENT OR OBSCENE , IN ORDER TO CONSTITUTE WITHIN THE MEMBER STATE OF IMPORTATION AN ABSENCE OF ' ' LAWFUL TRADE ' ' IN THE ARTICLES IN QUESTION , AS REFERRED TO IN CONSIDERATIONS 21 AND 22 OF THE JUDGMENT OF THE EUROPEAN COURT OF JUSTICE IN CASE 34/79 HENN AND DARBY ( 1979 ) ECR 3795 :
( A ) IS IT SUFFICIENT THAT THESE ARTICLES MAY BE MANUFACTURED AND MARKETED WITHIN THE MEMBER STATE OF IMPORTATION , SUBJECT ONLY TO
( I ) AN ABSOLUTE PROHIBITION ON THEIR TRANSMISSION BY POST
( II)A RESTRICTION ON THEIR PUBLIC DISPLAY AND
( III)A SYSTEM OF LICENSING OF PREMISES FOR THEIR SALE TO CUSTOMERS AGED 18 YEARS AND OVER , IN CERTAIN AREAS OF THE MEMBER STATE AND WHICH LICENSING SYSTEM IN NO WAY AFFECTS THE SUBSTANTIVE LAW ON INDECENCY OR OBSCENITY IN THAT MEMBER STATE ;
OR
( B)IS IT NECESSARY THAT THERE BE AN ABSOLUTE PROHIBITION ON THEIR MANUFACTURING OR MARKETING WITHIN THE MEMBER STATE OF IMPORTATION?
( 2)IF THERE IS A ' ' LAWFUL TRADE ' ' WITHIN A MEMBER STATE OF IMPORTATION IN ARTICLES SUBJECT TO A NATIONAL ABSOLUTE PROHIBITION ON IMPORTATION FROM ANOTHER MEMBER STATE , ON THE GROUNDS THAT THEY ARE INDECENT OR OBSCENE , IS THE MEMBER STATE OF IMPORTATION , IN SUCH CIRCUMSTANCES , JUSTIFIED ON THE GROUNDS OF PUBLIC MORALITY UNDER ARTICLE 36 OF THE EUROPEAN ECONOMIC COMMUNITY TREATY , IN PROHIBITING THE IMPORTATION FROM ANOTHER MEMBER STATE , OF SUCH ARTICLES , ON THE BASIS THAT THEY ARE INDECENT OR OBSCENE , OR DOES SUCH A PROHIBITION CONSTITUTE A MEANS OF ARBITRARY DISCRIMINATION OR A DISGUISED RESTRICTION ON TRADE BTWEEN THE MEMBER STATES?
( 3)DOES THE PROHIBITION ON THE IMPORTATION OF INDECENT OR OBSCENE ARTICLES BY SECTION 42 OF THE CUSTOMS CONSOLIDATION ACT 1876 CONSTITUTE A MEANS OF ARBITRARY DISCRIMINATION OR A DISGUISED RESTRICTION ON TRADE WITHIN THE MEANING OF ARTICLE 36 OF THE EUROPEAN ECONOMIC COMMUNITY TREATY IN SO FAR AS IT APPLIES TO ARTICLES PROHIBITED UNDER THAT ACT BUT NOT PROHIBITED UNDER THE OBSCENE PUBLICATIONS ACT 1959?
( 4)NOTWITHSTANDING THE ANSWERS TO THE QUESTIONS ABOVE , IF , ACTING IN ACCORDANCE WITH ITS INTERNATIONAL OBLIGATIONS UNDER THE GENEVA CONVENTION 1923 FOR THE SUPRESSION OF TRAFFIC IN OBSCENE PUBLICATIONS AND THE UNIVERSAL POSTAL CONVENTION ( RENEWED AT LAUSANNE IN 1974 , WHICH CAME INTO FORCE ON 1 JANUARY 1976 ) A MEMBER STATE IMPOSES AN ABSOLUTE PROHIBITION ON THE IMPORTATION FROM ANOTHER MEMBER STATE OF ARTICLES WHICH ARE CLASSED AS INDECENT OR OBSCENE , IS SUCH A PROHIBITION THEREBY CONSISTENT WITH ARTICLE 234 OF THE EUROPEAN COMMUNITY TREATY?
'
7 OBSERVATIONS WERE SUBMITTED BY CONEGATE , THE UNITED KINGDOM AND THE COMMISSION .
THE FIRST QUESTION
8 CONEGATE REFERS TO ITS SUBMISSIONS BEFORE THE NATIONAL COURTS AND ARGUES THAT , INASMUCH AS IT PROHIBITS IN GENERAL TERMS THE IMPORTATION OF INDECENT OR OBSCENE ARTICLES , SECTION 42 OF THE CUSTOMS CONSOLIDATION ACT 1876 IMPOSES A RESTRICTION WHICH IS MORE SEVERE THAN THAT ARISING UNDER THE LEGISLATION APPLICABLE TO THE TRADE IN THOSE PRODUCTS IN THE DIFFERENT PARTS OF THE COUNTRY , SUCH AS ENGLAND AND WALES . THAT OBSERVATION APPLIES A FORTIORI TO THE SITUATION IN NORTHERN IRELAND WHERE THE LEGISLATION IMPOSES NO RESTRICTIONS ON THE MARKETING OF THE PRODUCTS IN QUESTION OTHER THAN THOSE CONCERNING THEIR TRANSMISSION BY POST AND DISPLAY IN PUBLIC .
9 THE UNITED KINGDOM NOTES IN THE FIRST PLACE THAT THE FIRST QUESTION AS FORMULATED BY THE HIGH COURT CORRECTLY STATES THE POSITION REGARDING THE RESTRICTIONS ON THE MARKETING OF INDECENT OR OBSCENE ARTICLES EXISTING IN ENGLAND , WALES AND NORTHERN IRELAND , BUT FAILS TO TAKE INTO ACCOUNT THE MORE RIGOROUS RESTRICTIONS APPLYING IN SCOTLAND AND THE ISLE OF MAN . IN SCOTLAND THE APPLICABLE LEGISLATION PROHIBITS THE DISTRIBUTION OF ' OBSCENE MATERIAL ' WITH A VIEW TO ITS EVENTUAL SALE ; ' MATERIAL ' IS DEFINED AS INCLUDING , INTER ALIA , REPRESENTATIONS AND MODELS . HOWEVER , THE COURTS HAVE NOT YET RULED ON WHETHER THE EXPRESSION ' OBSCENE MATERIAL ' COVERS PRODUCTS SUCH AS THOSE IMPORTED BY CONEGATE . ON THE OTHER HAND , SUCH PRODUCTS CLEARLY COME WITHIN THE SCOPE OF ' INDECENT OR OBSCENE REPRESENTATIONS ' , WHOSE MANUFACTURE AND DISTRIBUTION IS PROHIBITED UNDER THE LEGISLATION APPLICABLE IN THE ISLE OF MAN . IN THE UNITED KINGDOM ' S VIEW , A STATE WHICH IS COMPRISED OF DIFFERENT CONSTITUENT PARTS AND WHICH ALLOWS DIFFERENCES TO SUBSIST IN THE LEGISLATION APPLICABLE THERETO BUT WHICH NEVERTHELESS HAS A COMMON CUSTOMS REGIME , MUST OF NECESSITY BRING THAT REGIME INTO LINE WITH THE MOST RIGOROUS INTERNAL RULES .
10 THE UNITED KINGDOM ADDS THAT , TAKEN AS A WHOLE , THE PROVISIONS APPLICABLE IN THE DIFFERENT PARTS OF THE UNITED KINGDOM REFLECT AN APPROACH WHICH IS UNCOMPROMISING IN ITS HOSTILITY TO THE MARKETING OF INDECENT ARTICLES . IN THAT CONNECTION IT IS RELEVANT TO NOTE THAT THE UNITED KINGDOM LEGISLATION HAS BEEN MADE STRICTER IN RECENT YEARS , IN PARTICULAR WITH REGARD TO PORNOGRAPHIC PHOTOGRAPHS , THE CONDITIONS FOR THE AUTHORIZATION OF SEX SHOPS AND THE WAY IN WHICH OBSCENE MATERIAL MAY BE DISPLAYED IN PUBLIC . THE UNITED KINGDOM CONSIDERS THAT ACCORDINGLY , IN SUBSTANCE , THE CRITERIA DO NOT DIFFER ACCORDING TO WHETHER THE PRODUCTS CONCERNED ARE DOMESTIC OR IMPORTED .
11 THE COMMISSION MAINTAINS IN THE FIRST PLACE THAT THE EXPRESSION ' LAWFUL TRADE ' WHICH APPEARS IN THE JUDGMENT OF 14 DECEMBER 1979 , CITED ABOVE , TO WHICH THE FIRST QUESTION REFERS , DOES NOT MEAN LEGITIMATE OR RESPECTABLE BUSINESS . IT SIMPLY REFERS TO ALL TRADE WHICH IS LAWFUL IN THE MEMBER STATE CONCERNED . IN THE COMMISSION ' S VIEW THAT IS THE CASE FOR THE GOODS IN QUESTION IN THIS INSTANCE , SINCE THE RESTRICTIONS DESCRIBED BY THE HIGH COURT IN ITS FIRST QUESTION DO NOT CONSTITUTE AN ABSENCE OF LAWFUL TRADE IN THOSE ARTICLES .
12 THE COMMISSION ARGUES IN ADDITION THAT , ALTHOUGH IN THE PRESENT STATE OF DEVELOPMENT OF COMMUNITY LAW MEMBER STATES ARE FREE TO ESTABLISH THEIR OWN STANDARDS CONCERNING PUBLIC MORALITY , THAT FREEDOM IS SUBJECT TO THE PRINCIPLE THAT MEMBER STATES MAY NOT APPLY CONDITIONS TO IMPORTS WHICH ARE STRICTER THAN THOSE APPLICABLE TO THE MANUFACTURE AND MARKETING OF THE SAME PRODUCTS WITHIN THEIR TERRITORY .
13 THE COURT WOULD OBSERVE THAT THE FIRST QUESTION RAISES , IN THE FIRST PLACE , THE GENERAL PROBLEM OF WHETHER A PROHIBITION ON THE IMPORTATION OF CERTAIN GOODS MAY BE JUSTIFIED ON GROUNDS OF PUBLIC MORALITY WHERE THE LEGISLATION OF THE MEMBER STATE CONCERNED CONTAINS NO PROHIBITION ON THE MANUFACTURE OR MARKETING OF THE SAME PRODUCTS WITHIN THE NATIONAL TERRITORY .
14 SO FAR AS THAT PROBLEM IS CONCERNED , IT MUST BE BORNE IN MIND THAT ACCORDING TO ARTICLE 36 OF THE EEC TREATY THE PROVISIONS RELATING TO THE FREE MOVEMENT OF GOODS WITHIN THE COMMUNITY DO NOT PRECLUDE PROHIBITIONS ON IMPORTS JUSTIFIED ' ON GROUNDS OF PUBLIC MORALITY ' . AS THE COURT HELD IN ITS JUDGMENT OF 14 DECEMBER 1979 , CITED ABOVE , IN PRINCIPLE IT IS FOR EACH MEMBER STATE TO DETERMINE IN ACCORDANCE WITH ITS OWN SCALE OF VALUES AND IN THE FORM SELECTED BY IT THE REQUIREMENTS OF PUBLIC MORALITY IN ITS TERRITORY .
15 HOWEVER , ALTHOUGH COMMUNITY LAW LEAVES THE MEMBER STATES FREE TO MAKE THEIR OWN ASSESSMENTS OF THE INDECENT OR OBSCENE CHARACTER OF CERTAIN ARTICLES , IT MUST BE POINTED OUT THAT THE FACT THAT GOODS CAUSE OFFENCE CANNOT BE REGARDED AS SUFFICIENTLY SERIOUS TO JUSTIFY RESTRICTIONS ON THE FREE MOVEMENT OF GOODS WHERE THE MEMBER STATE CONCERNED DOES NOT ADOPT , WITH RESPECT TO THE SAME GOODS MANUFACTURED OR MARKETED WITHIN ITS TERRITORY , PENAL MEASURES OR OTHER SERIOUS AND EFFECTIVE MEASURES INTENDED TO PREVENT THE DISTRIBUTION OF SUCH GOODS IN ITS TERRITORY .
16 IT FOLLOWS THAT A MEMBER STATE MAY NOT RELY ON GROUNDS OF PUBLIC MORALITY IN ORDER TO PROHIBIT THE IMPORTATION OF GOODS FROM OTHER MEMBER STATES WHEN ITS LEGISLATION CONTAINS NO PROHIBITION ON THE MANUFACTURE OR MARKETING OF THE SAME GOODS ON ITS TERRITORY .
17 IT IS NOT FOR THE COURT , WITHIN THE FRAMEWORK OF THE POWERS CONFERRED UPON IT BY ARTICLE 177 OF THE EEC TREATY , TO CONSIDER WHETHER , AND TO WHAT EXTENT , THE UNITED KINGDOM LEGISLATION CONTAINS SUCH A PROHIBITION . HOWEVER , THE QUESTION WHETHER OR NOT SUCH A PROHIBITION EXISTS IN A STATE COMPRISED OF DIFFERENT CONSTITUENT PARTS WHICH HAVE THEIR OWN INTERNAL LEGISLATION , CAN BE RESOLVED ONLY BY TAKING INTO CONSIDERATION ALL THE RELEVANT LEGISLATION . ALTHOUGH IT IS NOT NECESSARY , FOR THE PURPOSES OF THE APPLICATION OF THE ABOVE-MENTIONED RULE , THAT THE MANUFACTURE AND MARKETING OF THE PRODUCTS WHOSE IMPORTATION HAS BEEN PROHIBITED SHOULD BE PROHIBITED IN THE TERRITORY OF ALL THE CONSTITUENT PARTS , IT MUST AT LEAST BE POSSIBLE TO CONCLUDE FROM THE APPLICABLE RULES , TAKEN AS A WHOLE , THAT THEIR PURPOSE IS , IN SUBSTANCE , TO PROHIBIT THE MANUFACTURE AND MARKETING OF THOSE PRODUCTS .
18 IN THIS INSTANCE , IN THE ACTUAL WORDING OF ITS FIRST QUESTION THE HIGH COURT TOOK CARE TO DEFINE THE SUBSTANCE OF THE NATIONAL LEGISLATION THE COMPATIBILITY OF WHICH WITH COMMUNITY LAW IS A QUESTION WHICH IT PROPOSES TO DETERMINE . THUS IT REFERS TO RULES IN THE IMPORTING MEMBER STATE UNDER WHICH THE GOODS IN QUESTION MAY BE MANUFACTURED FREELY AND MARKETED SUBJECT ONLY TO CERTAIN RESTRICTIONS , WHICH IT SETS OUT EXPLICITLY , NAMELY AN ABSOLUTE PROHIBITION ON THE TRANSMISSION OF SUCH GOODS BY POST , A RESTRICTION ON THEIR PUBLIC DISPLAY AND , IN CERTAIN AREAS OF THE MEMBER STATE CONCERNED , A SYSTEM OF LICENSING OF PREMISES FOR THE SALE OF THOSE GOODS TO CUSTOMERS AGED 18 YEARS AND OVER . SUCH RESTRICTIONS CANNOT HOWEVER BE REGARDED AS EQUIVALENT IN SUBSTANCE TO A PROHIBITION ON MANUFACTURE AND MARKETING .
19 AT THE HEARING , THE UNITED KINGDOM AGAIN STRESSED THE FACT THAT AT PRESENT NO ARTICLES COMPARABLE TO THOSE IMPORTED BY CONEGATE ARE MANUFACTURED ON UNITED KINGDOM TERRITORY , BUT THAT FACT , WHICH DOES NOT EXCLUDE THE POSSIBILITY OF MANUFACTURING SUCH ARTICLES AND WHICH , MOREOVER , WAS NOT REFERRED TO BY THE HIGH COURT , IS NOT SUCH AS TO LEAD TO A DIFFERENT ASSESSMENT OF THE SITUATION .
20 IN REPLY TO THE FIRST QUESTION IT MUST THEREFORE BE STATED THAT A MEMBER STATE MAY NOT RELY ON GROUNDS OF PUBLIC MORALITY WITHIN THE MEANING OF ARTICLE 36 OF THE TREATY IN ORDER TO PROHIBIT THE IMPORTATION OF CERTAIN GOODS ON THE GROUNDS THAT THEY ARE INDECENT OR OBSCENE , WHERE THE SAME GOODS MAY BE MANUFACTURED FREELY ON ITS TERRITORY AND MARKETED ON ITS TERRITORY SUBJECT ONLY TO AN ABSOLUTE PROHIBITION ON THEIR TRANSMISSION BY POST , A RESTRICTION ON THEIR PUBLIC DISPLAY AND , IN CERTAIN REGIONS , A SYSTEM OF LICENSING OF PREMISES FOR THE SALE OF THOSE GOODS TO CUSTOMERS AGED 18 AND OVER .
21 THAT CONCLUSION DOES NOT PRECLUDE THE AUTHORITIES OF THE MEMBER STATE CONCERNED FROM APPLYING TO THOSE GOODS , ONCE IMPORTED , THE SAME RESTRICTIONS ON MARKETING WHICH ARE APPLIED TO SIMILAR PRODUCTS MANUFACTURED AND MARKETED WITHIN THE COUNTRY .
THE SECOND AND THIRD QUESTIONS
22 IN THE LIGHT OF THE REPLY GIVEN TO THE FIRST QUESTION , THE SECOND AND THIRD QUESTIONS NO LONGER CALL FOR AN ANSWER .
THE FOURTH QUESTION
23 CONEGATE , THE UNITED KINGDOM AND THE COMMISSION ALL TAKE THE VIEW THAT THE FOURTH QUESTION IS NOT RELEVANT TO THE SOLUTION OF THE DISPUTE IN THE MAIN PROCEEDINGS . THE GENEVA CONVENTION OF 1923 CONCERNS ONLY OBSCENE ' PUBLICATIONS ' , WHICH ARE NOT AT ISSUE IN THESE PROCEEDINGS , WHILST THE UNIVERSAL POSTAL CONVENTION CANNOT APPLY TO IMPORTED GOODS WHICH WERE NOT SENT BY POST .
24 THE COMMISSION ALSO DREW ATTENTION TO THE FACT THAT THE COURT HAS CONSISTENTLY HELD THAT IN PROTECTING ' THE RIGHTS AND OBLIGATIONS ' DERIVING FROM AGREEMENTS CONCLUDED PRIOR TO THE TREATY , ARTICLE 234 OF THAT TREATY CONCERNS ONLY THE RIGHTS AND OBLIGATIONS ESTABLISHED BETWEEN MEMBER STATES AND NON-MEMBER COUNTRIES . SUCH AGREEMENTS CANNOT THEREFORE BE RELIED UPON IN ORDER TO JUSTIFY RESTRICTIONS ON TRADE BETWEEN THE MEMBER STATES OF THE COMMUNITY .
25 THE COMMISSION ' S ARGUMENT MUST BE ACCEPTED . AS THE COURT STATED IN ITS JUDGMENT OF 14 OCTOBER 1980 ( CASE 812/79 ATTORNEY GENERAL V BURGOA ( 1980 ) ECR 2787 ), ARTICLE 234 IS INTENDED TO ENSURE THAT THE APPLICATION OF THE TREATY DOES NOT AFFECT EITHER THE DUTY TO OBSERVE THE RIGHTS OF NON-MEMBER COUNTRIES UNDER AN AGREEMENT PREVIOUSLY CONCLUDED WITH A MEMBER STATE , OR THE OBSERVANCE BY THAT MEMBER STATE OF ITS OBLIGATIONS UNDER THAT AGREEMENT . AGREEMENTS CONCLUDED PRIOR TO THE ENTRY INTO FORCE OF THE TREATY MAY NOT THEREFORE BE RELIED UPON IN RELATIONS BETWEEN MEMBER STATES IN ORDER TO JUSTIFY RESTRICTIONS ON TRADE WITHIN THE COMMUNITY .
26 IN REPLY TO THE FOURTH QUESTION IT MUST THEREFORE BE STATED THAT ARTICLE 234 OF THE TREATY MUST BE INTERPRETED AS MEANING THAT AN AGREEMENT CONCLUDED PRIOR TO THE ENTRY INTO FORCE OF THE TREATY MAY NOT BE RELIED UPON IN ORDER TO JUSTIFY RESTRICTIONS ON TRADE BETWEEN MEMBER STATES .
Decision on costs
COSTS
27 THE COSTS INCURRED BY THE UNITED KINGDOM AND THE COMMISSION , WHICH HAVE SUBMITTED OBSERVATIONS TO THE COURT , ARE NOT RECOVERABLE . AS THESE PROCEEDINGS ARE , IN SO FAR AS THE PARTIES TO THE MAIN PROCEEDINGS ARE CONCERNED , IN THE NATURE OF A STEP IN THE PROCEEDINGS PENDING BEFORE THE NATIONAL COURT , THE DECISION ON COSTS IS A MATTER FOR THAT COURT .
Operative part
ON THOSE GROUNDS ,
THE COURT ( FOURTH CHAMBER ),
IN ANSWER TO THE QUESTIONS SUBMITTED TO IT BY THE HIGH COURT OF JUSTICE BY ORDER OF 30 NOVEMBER 1984 , HEREBY RULES :
( 1 ) A MEMBER STATE MAY NOT RELY ON GROUNDS OF PUBLIC MORALITY WITHIN THE MEANING OF ARTICLE 36 OF THE TREATY IN ORDER TO PROHIBIT THE IMPORTATION OF CERTAIN GOODS ON THE GROUND THAT THEY ARE INDECENT OR OBSCENE , WHERE THE SAME GOODS MAY BE MANUFACTURED FREELY IN ITS TERRITORY AND MARKETED IN THAT TERRITORY SUBJECT ONLY TO AN ABSOLUTE PROHIBITION ON THEIR TRANSMISSION BY POST , A RESTRICTION ON THEIR PUBLIC DISPLAY AND , IN CERTAIN REGIONS , A SYSTEM OF LICENSING OF PREMISES FOR THE SALE OF THOSE GOODS TO CUSTOMERS AGED 18 YEARS AND OVER .
( 2)ARTICLE 234 OF THE EEC TREATY MUST BE INTERPRETED AS MEANING THAT AN AGREEMENT CONCLUDED PRIOR TO THE ENTRY INTO FORCE OF THE EEC TREATY MAY NOT BE RELIED UPON IN ORDER TO JUSTIFY RESTRICTIONS ON TRADE BETWEEN MEMBER STATES . | 6 |
HIS HONOUR JUDGE RICHARD SEYMOUR Q.C.:
Introduction
The defendant, Southend United Football Club Ltd. ("the Club"), carries on business as the operator of Southend United Football Club. The first team of the Club ("the Team") presently plays in Football League One. The home ground ("the Ground") of the Team is at Roots Hall in Southend. As I understand it, there are plans to move from that ground to a new ground at Fossetts Farm in Shoeburyness. However, it seems that it is unlikely that any move will take place before 2010.
The claimant, Seatbooker Sales Ltd. ("Seatbooker"), carried on business as a provider of sports and entertainment ticket reservation systems. It seems that it is in fact insolvent, and may have ceased to trade. However, during its active life what Seatbooker did was to provide software to customers by means of which customers of its customers were able to book seats for events over the internet.
As I understand it, the capacity of the Ground, excluding seats with restricted views and seating, is 10,807. There are about 600 seats with restricted views. It appears that 23 home matches are played at the Ground each year in whatever division of the Football League the Team is for the time being a member. In addition to these 23 matches, which I shall call in this judgment "League Matches", there may be additional home matches, depending upon whether the Team is playing in one of a number of Cup competitions and what success it has achieved in such competitions. In this judgment I shall refer to home matches in addition to League Matches as "Cup Matches", and to League Matches and Cup Matches collectively as "Home Matches".
When there is a Home Match, supporters of the visiting team are allocated an "away" end, in which there is a capacity of 2,056. As I understand it, the sale of tickets for the "away" end at a Home Match is a matter for the visiting team. The tickets are not sold by the Club. There is thus a capacity of 8,751 ordinary seats for occupation by supporters of the Club. Of that total a quantity of seats are assigned to holders of season tickets. It seems that the holder of a season ticket is entitled, by virtue of holding such ticket, to attend all League Matches, but not Cup Matches. In the football season 2005 – 2006 there were 2,939 season ticket holders. That number increased to 5,854 in the football season 2006 – 2007, but fell back to 4,806 in the current season. For each Home Match there is ordinarily available for sale as what are called "match day tickets" the number of seats which is the difference between 8,751 and the then current number of season ticket holders. As I understand it, seats with restricted views or seating are not offered for sale unless all of the other available seats at the Ground have been sold. At present the available number of match day tickets is consequently 3,945. In this judgment I shall refer to the number of tickets available for sale as match day tickets from time to time as "Available Tickets".
There are various methods by which Available Tickets may be sold. They could be purchased from a box office at the Ground, either in advance or on the day of the relevant match. They could be bought over the telephone from the Club. However, the method with which this action is concerned is purchase over the internet.
The football season, it appears, begins at about the beginning of August in each year and continues until about the beginning of the following May. As I understand it, the sale of season tickets takes place essentially between the end of one season, in May, and the commencement of the next season, in August.
The Club first became involved in offering the facility of purchasing Available Tickets over the internet in 2002. By an agreement ("the DF Agreement") in writing signed by Mr. Geoffrey King, Deputy Chairman, on behalf of the Club, on 8 January 2002 the Club retained a company called Data Factors Ltd. ("Data Factors") to provide a number of services described in section 11 of the DF Agreement, but which together included affording potential purchasers of Available Tickets the opportunity of buying over the internet.
Clause 1 of the DF Agreement was in these terms:-
"1. GENERAL
1.1 DFL agrees:
1.1.1 to supply the Customer with the Service described in section 11 for the Minimum Duration;
1.1.2 to furnish the Customer with a non-exclusive, non-transferable license to use the Service upon the terms contained in section 9 below: and
1.2 The Customer agrees:
1.2.1 to be bound by the terms and conditions of this Agreement;
1.2.2 to pay the Initial Fee as defined in section 10;
1.2.3 to pay the Service Fee and Internet Ticket Sales Fee for the Minimum Duration as defined in section 10"
The various definitions contained in clause 1 of the DF Agreement were defined in clause 10 of the DF Agreement as follows:-
"The Initial Fee:- £1,000 plus VAT for implementation of Internet Ticketing
The Service Fee:- £499 plus VAT per month
Internet Ticket Sales Fee:- 10% of each ticket sold on the Internet
The Minimum Duration:- Three years from the date of this Agreement or the date of first live usage of the Service whichever is earlier. "
Clause 6 of the DF Agreement made provision for the termination of the agreement in various events. So far as is presently material, clause 6 was in these terms:-
"Notwithstanding any provisions herein contained, this Agreement may be terminated forthwith by either party by notice in writing from the party not at fault if any of the following events shall occur:-
…
6.3. if the other party shall at any time be in default under this Agreement and shall fail to remedy such default within 30 days from receipt of notice in writing from the first party specifying such default;.
…
6.6 Notwithstanding sections 6.1 to 6.5 above, this Agreement shall continue for the Minimum Duration and thereafter automatically renew for a new duration of one year until or unless the party who wishes not to renew this Agreement provides to the other party a minimum of three months notice in writing"
The effect of the relevant provisions of the DF Agreement as to termination was thus that the agreement was terminable by three months notice to expire on the third anniversary of the agreement or any subsequent anniversary.
Under the DF Agreement the collection of sums due for Available Tickets sold over the internet was a matter for the Club. Data Factors itself had no contact with purchasers of Available Tickets. As between the Club and Data Factors the obligation to pay the Internet Ticket Sales Fee rested on the Club.
The individuals behind Data Factors were a family called Bernstein. Data Factors merged with a company called Seatbooker (UK) Ltd. ("the Original Seatbooker") in about May 2002. The Original Seatbooker was incorporated on 23 January 2001. The individual behind it was Mr. Philip Baldwin. The Original Seatbooker was struck off the register of companies on 14 March 2006 and dissolved on 21 March 2006.
Following the merger of Data Factors and the Original Seatbooker Mr. Pat Bernstein wrote to Mr. King a letter dated 24 May 2002 which included this paragraph:-
"As the final stage of the merger, we are adopting consistent branding across all operational areas, geographical locations and product groups. To reflect the increased breadth of our business, we have adopted the name SeatBooker for both products and operations. As a result, all operating contracts are being transferred to SeatBooker (UK) Ltd. Neither the service nor the people change."
That notification seems to have been treated on both sides as a notification of an assignment of the benefit of the DF Agreement by Data Factors to the Original Seatbooker. Thereafter, so it appears, the Original Seatbooker performed the obligations of Data Factors under the DF Agreement.
By an e-mail dated 8 October 2002 to Mr. King Mr. Clyde Bernstein, acting on behalf of the Original Seatbooker, proposed a reduction in the Internet Ticket Sales Fee payable under the DF Agreement to 8%. That proposal was accepted and was the rate of commission adopted thereafter.
Seatbooker was incorporated on 7 January 2004. It appears that a reason, at any rate, for the incorporation of Seatbooker was that the Original Seatbooker had not prospered financially and was not able to obtain from a bank a merchanting facility, that is to say an account into which payments made by customers by credit card could be deposited. Seatbooker, as a new company, was able to obtain such a facility from HSBC Bank plc ("HSBC") in consideration of provision of a bond in the sum of £50,000 from Mr. Meirion Jenkins. Mr. Jenkins had become involved in the Original Seatbooker in about October 2003. He was instrumental in the incorporation of Seatbooker and became a director of that company. The reason for wanting a merchanting facility was so that the purchasers of Available Tickets, and other tickets offered through Seatbooker, over the internet could pay into the merchanting account, to which I shall refer in this judgment as "the HSBC Account". The benefit of that to Seatbooker was that it would be the initial recipient of sums paid for tickets, and so would be paid sooner and more certainly than under an arrangement such as the DF Agreement the commissions due to it. Under the DF Agreement the original recipient of payment for Available Tickets sold over the internet was the Club, which was then in turn supposed to pay the commissions due, by this stage, to the Original Seatbooker.
Mr. Jenkins met Mr. King at the Great Eastern Hotel, Liverpool Street, London on 25 May 2004. What was said at this meeting was disputed and I shall return to the accounts of Mr. Jenkins and Mr. King concerning it.
Following that meeting Mr. Jenkins caused to be sent to Mr. King a document entitled "Software Sale & Licence Agreement" ("the SSLA"). A version of the SSLA was sent to Mr. King on 27 May 2004 by Samantha Joshi, company secretary, and administrator, of the Original Seatbooker, by facsimile transmission. Mr. Jenkins sent an e-mail dated 28 May 2004 to Mr. King to which, from the contents, it seems he had intended that a version of the SSLA should be attached. However, it appears that the intended attachment was not sent. Mr. King signed the SSLA sent to him by Samantha Joshi and returned it to her by facsimile transmission on 28 May 2004. Mr. Jenkins then signed the SSLA and sent a copy by post to Mr. King under cover of a letter dated 8 June 2004.
Mr. King wrote a letter dated 7 September 2005 to Seatbooker which was in the following terms:-
"RE: Seatbooker Sales Limited Service Agreement
In accordance with Clause 6.3 of the Agreement I write to give you thirty days notice under that clause of the termination of the agreement between Southend United Football Club and Seatbooker Sales Limited."
The SSLA did not contain a clause 6.3. The DF Agreement did contain a clause 6.3 in the terms which I have set out.
Mr. King's letter of 7 September 2005 did not specify any alleged default or require that any such default be remedied within 30 days.
Seatbooker consulted its solicitors, Messrs. Field Fisher Waterhouse ("FFW"), following receipt of Mr. King's letter dated 7 September 2005. FFW responded to that letter in a letter dated 5 October 2005, pointing out that it did not amount to a valid notice. Prior to that FFW had written to the Club a letter dated 27 September 2005, which was in these terms:-
"We act for Seatbooker Sales Limited, with whom you entered into a Software Sale & Licence Agreement ("the Agreement") on 24 May 2004.
Under paragraph 16 of the Agreement you are required "to ensure that no tickets will be sold on the Internet via any other company, service or agent". It has come to our client's attention that you are now offering or making arrangements to offer tickets through tickets.com, one of our client's competitors. We enclose a copy press release taken from your own website showing this. Your client is therefore in breach of Paragraph 16 of the Agreement.
On behalf of our client, we give you notice pursuant to Paragraph 10(b) of the Agreement that our client requires you to remedy your breach within 20 days of the date of this notice. In the meantime, our client reserves all of its rights."
The Club did not reply to that letter. FFW wrote a further letter dated 24 October 2005. That letter referred to the letter dated 27 September 2005, and included this paragraph:-
"In our letter, we gave you notice on behalf of our client pursuant to paragraph 10(b) of the Agreement that our client required you to remedy your breach within 20 days of the date of that letter. You have not done so. In fact, tickets are available for sale on the Internet through tickets.com via a link from your own website. It is our view that your breach is sufficiently serious that our client is entitled to terminate forthwith pursuant to paragraph 10 of the Agreement. In any event, our client has now given the notice required by paragraph 10(b) of the Agreement and that notice has expired. In the circumstances, you are in repudiatory breach of the Agreement and our client hereby terminates the Agreement."
It was not in dispute that, by three agreements each said to have been made as of 1 August 2005, although in fact signed by Mr. King on behalf of the Club on 9 August 2005 and on behalf of Tickets.com Ltd. ("Tickets.com") on 11 August 2005, the Club entered into binding contractual arrangements to obtain a licence to use software provided by Tickets.com for the purpose of selling Available Tickets over the internet. The actual use of that facility seems to have commenced at the end of September 2005.
In this action Seatbooker claimed damages from the Club for alleged repudiation of the SSLA. The matters said to amount to the repudiation were the sending by Mr. King of the letter dated 7 September 2005 and the making of the agreements with Tickets.com to which I have referred to use the software of Tickets.com to sell Available Tickets over the internet.
The principal defence of the Club to the claims of Seatbooker was that the SSLA was not binding upon it, so that it could not have repudiated it. I shall come to consider in detail the nature of the defence of the Club, but first it is convenient to consider the form and material terms of the SSLA.
The form and material terms of the SSLA
The SSLA took the form of a front sheet and three pages of provisions entitled "Seatbooker General Conditions & Licence Agreement No: L/A114" ("the Conditions"). The front sheet was the signature page. At the top of the front sheet were the name "Seatbooker" with a hand, together constituting a logo. There was then a prominent heading, "SOFTWARE SALE & LICENCE AGREEMENT". Below that was a box with three columns. The first column was headed "Agreement No & Date". It was completed to show the number LA114 and the date 26 May 2004. The second column was headed "Customer Name" and was completed with the name of the Club, but without the word "Ltd.". The third column was entitled "Address" and was completed with the address of the Ground. Below the first box were four other boxes. The first of these other boxes also had three columns. The first column was headed "Managed Service" and was completed "Ticket office (hardware as supplied)". The second column was headed "No users", which seems to have been intended as an indication of the number of proposed users, for the number given was "three". The third column was headed "Fee/Qtr" and was completed "£1497 (£499/month)", in other words the monthly rate payable under the DF Agreement as the Service Fee. The third of the five boxes on the front sheet had only two columns, one entitled "Internet Ticketing" and the other entitled "Fee". The columns were completed to show that internet ticketing was to cover "Match tickets" and "Season tickets sale & renewal". The fees were said to be 8% of ticket face value for sale of match tickets and 1% of ticket face value for sale or renewal of season tickets. The rate of fee for sale of Available Tickets was thus the same as that then prevailing under the DF Agreement.
The fourth box on the front sheet of the SSLA was immediately above the last box, which was the signature box. It was in bold, large print. What it said was:-
"The Customer hereby contracts to purchase the products and services listed above according to the terms and conditions on the reverse of this page and the general conditions and licence on the second page of this Agreement."
The last box on the front sheet had space for "Signed for Customer" and "Signed for Seatbooker", with, below each such space, spaces for the name and position of the signatory.
The Conditions were produced in small, but not illegible, print. They were rather densely set out, possibly rather challenging the perseverance of anyone tempted to read the entirety of the Conditions. Moreover, the individual conditions tended to group together somewhat unlikely provisions, such that in order to be able to make a proper assessment of the effect of the SSLA as a whole it was necessary to read the Conditions carefully. For present purposes the following are the most material provisions of the Conditions:-
"1 Introduction
This is an Agreement for the licensing of Seatbooker application software along with the purchase of Seatbooker consulting services and various other associated third party products and services between Seatbooker Sales Ltd. (hereinafter known as Seatbooker) and the Customer referred to on page 1 of this Agreement. In the event of conflict, the order of precedence shall be firstly any attached schedules, secondly the details on the front of page 1, thirdly the conditions on the reverse of page 1 and finally the conditions and licence on this page 2. [There was not in fact a reverse of page 1 and "this page 2" actually ran to three pages] This is not a fixed price contract.
…
It is a fundamental condition of this agreement that neither party has relied on any representations, (other than those specifically stated or referenced in this agreement), from the other in relation to entering into this contract and insofar as any representations (other than fraudulent misrepresentations) have been made then the Customer has waived any rights in respect of these representations.
In signing this Agreement, the Customer acknowledges that Seatbooker's prices are calculated on the assumption that any limitations as to liability contained in this Agreement are reasonable and are accepted in full by the Customer.
2 Term
This Agreement is effective from the date of signing the front page. This Agreement and any License granted may be terminated by the Licensor if the Licensee fails to comply with any of the terms and conditions hereof. Subject to the aforesaid and to the provision of Clause 10 hereof the License granted herein with regard to any Licensed Program shall remain in force until the termination of this Agreement or the Licensee discontinues the use of the Licensed Program on the Designated Equipment. [The term "Licensed Program" was defined for the purposes of the Conditions, but the expressions "Licensor" and Licensee" were not.]
…
10 Termination
The Licensor shall have the right to terminate this Agreement summarily by notice in writing (without prejudice to any remedy it might have against the Licensee for breach of [sic] non-performance of any provision of this Agreement) if the Licensee:
(a) …
(b) Has committed a major breach of its obligation under this Agreement including but not limited to failure to pay any sums which may be due from the Licensee hereunder and in case of a breach capable of remedy has failed to remedy such breach within twenty (20) days of being given notice requiring it so to do;
…
14 General
(a) Entire Agreement. This Agreement constitutes the entire Agreement between the parties and supersedes all the parties [sic] relating to the subject matter of this Agreement except as expressly set forth herein. Any and all modifications of this Agreement shall be made by mutual agreement of the parties and must be in writing signed by a director of Seatbooker. This Agreement shall not be deemed or construed to be modified, amended, rescinded, cancelled or waived in whole or in part except by such written agreement of the parties. …
15 Seatbooker Managed Service
Where a Managed Service fee is shown overleaf, Seatbooker will provide a managed service to operate the system on behalf of the Customer. Under the Managed Service, Seatbooker will provide the Customer access to the Seatbooker suite of programs operated by Seatbooker on a centrally managed server, and, where indicated in this Agreement, on site hardware. The Managed Service is provided subject to the conditions contained in this Agreement and in particular in this clause 15, with the provisions of Clause 15 taking precedence in the event of conflict with any other part of this Agreement.
Seatbooker's responsibilities under the managed service are: To provide the Managed Service in accordance with the current product description: To ensure that the telephone support line is manned by suitably qualified persons: To maintain a log of all calls received, the nature of the problem and how it is resolved and to provide copies to the Customer upon request: To support and maintain its then current release – support and maintenance of earlier releases shall be at Seatbooker's discretion and may involve additional charges: To facilitate daily back-up copies of the Customer's data.
The Customer's responsibilities under the managed service are: To ensure that its staff are trained and proficient in use of the software: to report any malfunction of the software to Seatbooker at the earliest possible opportunity, specifying the nature of the difficulty and co-operate with Seatbooker in investigating the fault and its reproducibiility [sic]: To report any relocation of hardware provided by Seatbooker as part of the managed service: To follow Seatbooker's reasonable directions for the operation of the software and equipment: To return the equipment to Seatbooker upon request or in the event of termination of this Agreement.
Items excluded from the Managed Service: Costs incurred as a result of changes in the location or use of Seatbooker supplied hardware as part of the Managed Service: All site preparation costs, consumables, electrical power, network cabling, communications costs other than between the Customer and the Seatbooker central server, telephone charges and similar, costs associated with credit card transactions.
Seatbooker shall invoice the Customer for the Managed Service Fee. The first three quarters are payable on signature of this Agreement and thereafter payable by standing order quarterly in advance from the first day of the second quarter of the Agreement. The Managed Service Fee shall be adjusted on each anniversary of this agreement so that the proportion which the Fee payable after such anniversary bears to the Fee payable before such anniversary is the same as the proportion which the retail price index for the month immediately preceding such anniversary bears to the retail price index for the same month of the previous year. The Fee payable after the anniversary shall be the adjusted amount. This Agreement for Managed Service comes into force on the date of signature by both parties and continues in force, until terminated by twelve months prior written notice which notice may be given at any time after the fourth anniversary.
16 Seatbooker Internet Ticketing
Where a Fee is shown for Internet Ticketing overleaf, Seatbooker will provide an Internet Ticketing Service, operated on behalf of the Customer. Under the Internet Ticketing Service, Seatbooker will provide the Customer and the Customer's end users access to the Seatbooker suite of programs operated by Seatbooker on a centrally managed server – the Site. The Internet Ticketing Service is provided subject to the conditions contained in this Agreement and in particular in this clause 16, with the provisions of Clause 16 taking precedence in the event of conflict with any other part of this Agreement.
Seatbooker's responsibilities under the Internet Ticketing Service are: To provide the Seatbooker Internet Ticketing Service in accordance with the current product description: To prepare the stadium layout in readiness for implementation on the internet no later than the agreed implementation date subject to the Customer promptly following Seatbooker's reasonable instructions and requests for information: To ensure that the telephone support line is manned by suitably qualified persons: To maintain a log of all calls received, the nature of the problem and how it is resolved and to provide copies to the Customer on request: To support and maintain its then current release. Support and maintenance of earlier releases shall be at Seatbooker's discretion and may involve additional charges: To facilitate daily back-up copies of the data held on the Seatbooker server.
The Customer's responsibilities under the Internet Ticketing Service are: To report any malfunction of the software to Seatbooker at the earliest possible opportunity, specifying the nature of the difficulty and co-operate with Seatbooker in investigating the fault and its reproduciility [sic]: To ensure that no tickets will be sold on the Internet via any other company, service or agent: To follow Seatbooker's reasonable directions for the operation of the software and service and to provide a prompt response to Seatbooker's requests for information: To promptly verify and report any errors, and in any event within 24 hours, in information set up for use on the site by Seatbooker. In all circumstances, where Seatbooker has introduced an error in the site creation or amendment, the Customer's sole and exclusive remedy shall be to have Seatbooker make changes to the Site so as to correct the error. To create appropriate procedures to protect the confidentiality of passwords and operator ID's [sic] and other information handled or transmitted by the service, to ensure appropriate levels of password are set and regularly changed, to ensure that all operators adhere to these procedures and to ensure that Seatbooker is promptly notified of the need to remove access from individuals no longer authorised to access the service: Dealing with enquiries from and all communications with end users who have purchased or wish to purchase tickets using the service including all matters ancillary thereto and setting up events including start times, venues, on sale and closing dates and times, prices etc: Providing appropriate ticket distribution and collection facilities, resources and staff and to maintain procedures for confirming the identity of purchasers and the elimination of undesirable activities: Providing the terms and conditions for matters relating to the purchase of tickets and the venue but not the conditions for purchases from the Seatbooker site.
Items excluded from the Internet Ticketing Service: Costs associated with the Customer's connection to the internet and any costs associated with ticket printing and distribution: All consumables, physical site preparation, electrical power, network cabling, communications costs, ticket printing costs, telephone charges and similar, costs associated with credit card and bank transactions including charge backs whether or not the validity of such charge back has been substantiated.
Seatbooker will collect payment for the ticket from the Customer's end user and remit the net amount due to the Customer within 30 days of the ticket sale. This Agreement for the Internet Ticketing Service comes into force on the date of signature by both parties and continues in force, until terminated by twelve months prior written notice which notice may be given at any time after the fourth anniversary.
17 Software Support and Maintenance
Where Seatbooker is contracted to provide software support and maintenance, including under the Managed Service and Internet Ticketing Service for which the Fees are shown overleaf include support and maintenance, then such support shall comprise the following
Advice by telephone or modem between 0900 and 1700 Monday to Friday (excluding bank holidays) on the use of the Licensed Program.
The correction of malfunctions in the Licensed Program.
…"
Seatbooker's case was that the effect of clauses 15 and 16 of the SSLA, in the light of signature of the SSLA by Mr. Jenkins on behalf of Seatbooker on 8 June 2004, was that the SSLA could not lawfully be terminated by the Club until 8 June 2009. The engagement by the Club of Tickets.com, it was contended, amounted to a breach of the requirement in clause 16 that the Club "ensure that no tickets will be sold on the Internet via any other company, service or agent:". That breach was treated as capable of remedy and a notice was given by FFW in its letter dated 27 September 2005 requiring remedy within twenty days, in accordance with clause 10(b) of the SSLA. That notice was ignored, and so Seatbooker was entitled to terminate the SSLA by the letter dated 24 October 2005 written on its behalf by FFW. In addition, it was said, the terms of the letter dated 7 September 2005 written by the Club amounted to a repudiation of the SSLA by the Club, which repudiation Seatbooker accepted by the letter dated 24 October 2005.
The defences of the Club
The principal defence of the Club, as I have mentioned, was that the SSLA was not binding upon it. The way in which that case was pleaded on behalf of the Club in the Amended Defence and Counterclaim was:-
"10. On 25 May2004, Mr King met Mr Jenkins at the latter's request at the Great Eastern Hotel, Liverpool Street, London EC2. It was SUFC's [i.e. the defendant's] understanding that Mr Meirion Jenkins was a director of Seatbooker UK at that time. Mr Jenkins was a director of Seatbooker Sales Limited from 7 January 2004 to 26 November 2004. Mr Jenkins wished to discuss his concerns about the corporate governance of Seatbooker UK, and indicated that he intended to leave Seatbooker. Mr King took the opportunity to inform Mr Jenkins of SUFC's future ticketing needs and to inquire whether these could be met by Seatbooker UK's systems.
11. Mr King also mentioned to Mr Jenkins restrictions then being imposed upon SUFC by Lloyds Cardnet in respect of income from sales of season tickets, which was not being released in one lump sum to the club, but was being paid out by monthly instalments of 1/23rd. Mr Jenkins therefore offered SUFC the opportunity to use instead Seatbooker UK's credit and debit card merchant number and account for internet sales of season tickets, in addition to the existing service under the DFL Contract [i.e. the DF Agreement]. It was orally agreed between Mr King and Mr Jenkins that where sales of season tickets were effected over the internet by Seatbooker UK, it would charge SUFC 1% of the season ticket price, which sum would be payable by SUFC, not the purchaser ('the Oral Variation'). Mr King and Mr Jenkins agreed that the 8% charge in respect of sales of match day tickets would continue.
12. Mr Jenkins told Mr King that they would need "to add that [i.e. the new service] to the existing contract". He did not suggest and it was never agreed, that a new contract would be entered into between the parties supplanting the DFL Contract, nor that it would be supplemented or varied other than in respect of the addition of the term set out in paragraph 11 above. In particular, it was never suggested to Mr King by Mr Jenkins that:
(a) the DFL Contract would be determined forthwith and superceded [sic] by a completely new contract;
(b) the identity of the party with which SUFC was contracting would change;
(c) the minimum term of the contract would be extended; or
(d) that SUFC would lose its existing express contractual right to determine the contract for breach by the Licensor.
13. On 27 May 2004, Mr King received by fax from one Sam Joshi a document headed 'Software Sale & Licence Agreement'. The fax cover sheet used by Ms Joshi was headed 'Seatbooker' and bore Seatbooker UK's company number. The first page of the document was headed simply 'Seatbooker' and included reference to a Managed Service, at £499 per month, Internet ticketing for match sales at 8% ticket face value and season tickets 1% ticket face value. It referred to conditions on the reverse of the page and upon the second page of the document.
14. Mr King spoke to Ms Joshi and the substance of their conversation is set out on the cover sheet of the fax described in paragraph 16 below.
15. Further, by an email sent at 15:34 on 28 May 2004, from Mr Jenkins to Mr King and headed 'Our meeting 25.05.04: internet season ticketing, loyalty scheme and CRM', Mr Jenkins wrote: 'As discussed, I attach an order for you to sign to include internet season tickets with your existing match day internet and managed service facilities. I would be grateful if you could print and sign 2 copies and post both back to me. …I would also be grateful if you could fax a signed front sheet back to me to save time …". However, to the best of SUFC's knowledge and belief, no document was attached to that email.
16. Mr King signed a copy of the front sheet and faxed it to Ms Joshi at 15.48 on 28 May 2004, under cover of a handwritten fax cover sheet. To the best of SUFC's knowledge and belief the SSLA was signed by Mr Jenkins on or about 8 June 2004.
…
18. The terms of the software sales and licence agreement ('the SSLA') faxed to Mr King by Ms Joshi are significantly different in a number of substantive respects from the terms of the DFL Contract, apart from the term as to season ticket sales. Indeed, the Licensor identified in the SSLA is the Claimant, not Seatbooker UK. The SSLA appears to incorporate the Claimant's standard business terms and conditions. …
19. Mr King did not read the General Conditions of the SSLA prior to signing the front sheet thereof. Instead, he relied upon the Oral Variation and upon the representation made to him by Mr Jenkins that the document was only intended to set out in writing the agreed terms varying the DLF [sic] Contract by adding the new season ticket service to it.
20. Had the Claimant invited SUFC to agree to enter into a contract on the basis of the terms and conditions set out in the SSLA, SUFC would have declined to do so. Further or alternatively, had the Claimant invited SUFC to vary the DLF [sic] Contract by including in it the terms and conditions set out in the SSLA, SUFC would have declined to do so.
21. It is SUFC's primary case that in the light of the said representations made to Mr King by Mr Jenkins, and the terms of the Oral Variation, it was their mutual intention that the only change to the contractual relations between SUFC and Seatbooker UK should be the addition of terms relating to the new season ticket service to the DFL Contract.
22. In the premises, SUFC presumes that the provision by Ms Joshi to Mr King of the draft contract in the form of the SSLA was a mistake, as were Mr King's and Mr Jenkins' signatures of it. In the circumstances, there being a mutual mistake as to the document evidencing the Oral Variation, the SSLA should be (or was liable to be) rectified accordingly.
23. Alternatively, Mr King, but not Mr Jenkins, signed the front sheet of the SSLA under the mistaken belief that it gave effect to the Oral Variation. Mr Jenkins must, however, in all the circumstances, have been aware of Mr King's mistake or become aware of it before he too signed the SSLA on or about 8 June 2004.
24. In the premises, the SSLA was at all material times void, alternatively should be deemed to have been made on the terms of the Oral Variation.
25. Alternatively, Mr Jenkins represented to Mr King at their meeting on 25 May 2004 and/or by his email of 28 May 2004 that the SSLA was no more than 'an order', and it did no more than add the agreed terms relating to the new season ticket service to the DFL Contract.
26. In the circumstances, those representations were untrue, and Mr Jenkins made them negligently, without reasonable grounds for believing them to be true.
27. Mr King relied, as aforesaid, upon those misrepresentations in signing the SSLA on behalf of SUFC (alternatively, he relied upon the first of them in signing the SSLA and upon the misrepresentation in the email as confirming it, at a time when the Claimant had not yet signed the SSLA) on the basis that the SSLA evidenced the Oral Variation. In the premises, the SSLA was void or voidable and the SUFC is (or was) entitled to rescission of the SSLA or to damages in lieu of rescission.
28. SUFC's case is that after May 2004, the DFL Contract continued in effect, as varied by the Oral Variation, alternatively, that such was the contractual position agreed between the parties. At a date unknown to SUFC, Seatbooker UK appears to have assigned its rights and obligations under the DFL Contract as amended to the Claimant, which has since a date unknown to SUFC supplied the services under such contract in place of Seatbooker UK.
…
32. To the extent that the SSLA purported to substitute or vary the DLF [sic] Contract other than as agreed as aforesaid, the Claimant did not give adequate notice to SUFC of the terms of the SSLA. In the premises, SUFC is not bound thereby.
33. Further or alternatively, the terms contained in clauses 2, 7, 9-10, and 12-16 of the SSLA are so unusual, so disadvantageous to SUFC, and so stringent in their nature, that the Claimant was in all the circumstances under a duty specifically to draw them to SUFC's attention. As the Claimant failed to do so, SUFC is not bound thereby."
However analysed from a legal point of view, most of the contentions set out in the passage from the Amended Defence and Counterclaim which I have quoted depended upon the facts of the discussion between Mr. Jenkins and Mr. King on 25 May 2004 being as was contended on behalf of the Club.
Apart from those contentions on behalf of the Club which depended, essentially, upon what had actually been said as between Mr. Jenkins and Mr. King at their meeting on 25 May 2004, the pleaded case of the Club contained averments that it had been entitled to determine any contract with Seatbooker by reason of breaches of such contract on the part of Seatbooker. One version of this contention was based on the proposition that the relevant contract between the parties was the DF Agreement, but there was also a version based on alleged breach of the SSLA. How these allegations were put was:-
"39. On a number of occasions and for periods of time from May 2004 to about September 2005 onwards, the Claimant (alternatively, Seatbooker UK) failed to supply services satisfactory to SUFC. In particular, sums due to SUFC in respect of sales were paid late; by way of example, sums due for sales made during April 2005 were not paid to SUFC until 2 August 2005. Furthermore, from about August 2004 onwards, the Claimant failed to add the 8% commission to the price charged to purchasers of match day tickets, taking instead only a £1.50 administration fee. Nonetheless, the Claimant (alternatively, Seatbooker UK) continued to deduct sums from monies it received on sales of tickets before accounting to SUFC. …
40. By an email dated 14 June 2005, Mr King required the Claimant to pay forthwith to SUFC sums held by the Claimant for ticket sales which were then properly payable and due to SUFC, pursuant to the pre-existing practice of the parties [alleged at paragraph 29 of the Amended Defence and Counterclaim to be to pay within three days of receipt by Seatbooker] or alternatively, pursuant to clause 16 of the SSLA. Such email specified a default on the part of the Claimant and was a notice of such default within the meaning of clause 6.3 of the DFL Contract. Alternatively, SUFC was entitled to serve such a notice to determine the SSLA (if in force) for such breach, by reason of the matters pleaded in paragraphs 21 – 35 above.
41. In the premises, no payment having been made by the Claimant, the DFL Contract (as varied) was determined 30 days after receipt of that email, that is to say, on 13 July 2005.
…
42. It is further admitted and averred that on 7 September 2005, solicitors acting for SUFC wrote [sic – in fact the intended reference was to Mr. King's letter which I have quoted] to the Claimant again giving notice to terminate under clause 6.3 of the DFL Agreement. In the premises, if the DFL Contract (as varied) had not been determined in July as aforesaid, it was determined 30 days after 7 September 2005, namely on 8 October 2005.
43. Alternatively, if any part of the SSLA was in force and bound SUFC, which is denied as aforesaid, then SUFC was entitled to determine the same for breach, in the light of the Claimant's failure to cure the said breach. SUFC repeats paragraphs 32 to 35 above and avers that any implied exclusion of a right on SUFC's part to determine the agreement for breach would be unenforceable. In the premises, if the SSLA had not been determined in July as aforesaid, it was determined 30 days after 7 September 2005, namely on 8 October 2005. "
The meeting on 25 May 2004
Both Mr. Jenkins and Mr. King were called to give oral evidence at the trial.
In his witness statement dated January 2007 Mr. Jenkins gave this account of the meeting on 25 May 2004:-
"13. In May 2004, I had another meeting with Geoffrey King of Southend. Mr King had called and left a message that he wanted a meeting. I e-mailed his PA on 13 May offering some dates and after an exchange of e-mails we settled on 25 May 2004. It is my recollection that he asked for the meeting because he had a couple of things to speak about. I do not think (or cannot recall) that he told me in advance of the meeting what it was he wanted to talk about but it suited me as I needed to see him anyway to explain the matters set out above [essentially the role of Seatbooker and the opening of the HSBC Account]. A copy of my e-mail to Mr King's PA dated 13 May 2004 … states "I had a call from Mr King requesting dates for a meeting".
14. The meeting took place on 25 May 2004 at the Great Eastern Hotel at Liverpool Street in London. During the meeting I made some notes … Mr King wanted to talk about the possibility of Southend selling season tickets on the Internet. The existing Internet sales contract with Seatbooker (UK) Limited was simply for the sale of match day tickets. Until now, sales of season tickets had taken place only through Southend's ticket office but the current arrangements between Southend and its credit card company meant that Southend's cashflow was affected and there were some administrative problems. Mr King explained that under Southend's current arrangements it would only receive payments from the credit card company in instalments.
15. Southend's cashflow problem would be solved if its season tickets could be sold using Seatbooker Sales Limited's merchanting facility. The facility had just come into use for Southend in anticipation of the signature of a new contract for match day tickets and it would be sensible for it to be used also for season tickets. The result would be that Southend would receive lump sum payments in respect of season tickets (rather than small monthly instalments) but that it would receive these lump sums net of Seatbooker Sales Limited's fees.
16. I have seen a copy of the Defence and Counterclaim which states that I asked for the meeting on 25 May 2004 "to discuss [my] concerns about the corporate governance of Seatbooker (UK)" and that I "indicated that [I] intended to leave Seatbooker". This is not correct. I attended the meeting at Mr King's request. I had anticipated that he wanted to enter into a contract for additional services and, as a salesman, I had hoped to make a sale. I cannot think of any reason why I would have made the statements attributed to me in the Defence and Counterclaim. No salesman could make comments such as these and then expect to make a sale. We did discuss the structure of the business. I had told him when we had met in November 2003 that there were to be management and structural changes at Seatbooker (UK) Limited. What I told him in May 2004 was therefore by way of an update on a process he was already aware of. I told him that we had incorporated Seatbooker Sales Limited, which had the merchanting facility, and that it was the intention that clubs, including Southend, would sign new contracts with Seatbooker Sales Limited. Following his comments in relation to season tickets, I was pleased to be able to tell him that we could also arrange for Southend to sell season tickets on the Internet using the merchanting facility. We also discussed other concepts such as a loyalty card scheme and a CRM (Customer Relationship Management) system.
17. The matters discussed above, and which resulted in the signature of a new contract, are not consistent with the allegation that I called the meeting simply to criticise the company and say how much I wanted to leave. On the contrary, I attended the meeting hoping to make a sale which would be in the interests of both parties and left the meeting having done so (subject to contract) and having solved a cashflow problem for Southend.
18. When I left the meeting it had been agreed that Southend would sign a new contract with Seatbooker Sales Limited, that Southend would benefit from Seatbooker Sales Limited's merchanting facility, that Seatbooker Sales Limited would additionally make available to Southend a facility for season tickets to be sold over the Internet (with fees payable to Seatbooker Sales Limited of 1% of the face value of each ticket) and that the existing fee scale on match day tickets would be kept at a per cent of face value. I had not taken a draft contract with me to present to Mr King. This was because I did not know until I met him what services he would require and at what price we would agree. Having agreed these points, I would have expected to then need time to prepare the contract. At then [sic] end of the meeting, we agreed that I would prepare the Software Sale & Licence Agreement ("SSLA") and forward it in due course. …
24. The Defence and Counterclaim then alleges that what I had said to Mr King in the meeting on 25 May 2004 was incorrect. The comments attributed to me appear to be that the documentation I would send would only be intended to vary the existing Data Factors Limited contract. In fact, I see that Southend say that an oral contract was entered into on 25 May 2004 to make this variation and that the paperwork simply reflected that. None of this is correct. I made it clear in the meeting on 25 May 2004 that a new contract was required and that it would be entered into between Seatbooker Sales Limited and Southend. I did not enter into an oral variation agreement with Mr King. That would have been completely at odds with my usual practice (which was to contract in writing) and with my having invested time producing suitable Terms and Conditions for Seatbooker Sales Limited. I did not say to Mr King that the SSLA was simply intended to be a variation of the existing Data Factors Limited Agreement. Again, that would have been at odds with all the work I had been doing with Seatbooker Sales Limited to set up the merchanting facility and move clubs onto it. I can therefore be sure that I did not say what I am alleged to have said and that I did not make any misrepresentations to Mr King.
25. Finally, Southend alleges that either Mr King made a mistake, Mr King and I made a mistake, or Mr King, Sam Joshi and I all made mistakes in producing and signing the SSLA. That is wrong. Following my meeting with Mr King, I sent him the SSLA knowing that it was a new contract between Seatbooker Sales Limited and Southend and knowing that Mr King also understood its purpose. Sam Joshi's function is purely administrative and she would simply have sent to Mr King the documentation I asked her to send."
Mr. Jenkins was cross-examined closely on his account of the discussion with Mr. King on 25 May 2004. He was firm that a new contract was specifically mentioned and that it was specifically agreed that the sale of Available Tickets over the internet should be undertaken with payment being made through the HSBC Account. He said that the only real debate was about the rate of commission to be paid by the Club in relation to the sale of season tickets over the internet. He agreed that he had said to Mr. King something to the effect that, by use of the HSBC Account, the Club would receive payment of the proceeds of sale of season tickets straightaway. However, there was no more definite mention of the time within which Seatbooker would make payment. Equally there was no discussion of the length of the intended new agreement, although he, Mr. Jenkins, had it in his mind that, in consideration for him agreeing to an attractive rate of commission from the point of view of the Club in relation to the sale of season tickets, the Club would accept without substantial demur the standard terms of business of Seatbooker as contained in the Conditions. Mr. Jenkins described the negotiation in relation to the commission to be paid in respect of the sale of season tickets as tough, but the meeting generally as not contentious. He accepted that, contrary to the pleaded case of Seatbooker that the first use of the HSBC Account for the sale of Available Tickets occurred on about 8 May 2004, in fact it seemed that the HSBC Account was not used for the benefit of the Club until about 3 June 2004, and then was used in connection with the sale of season tickets.
Mr. King's account of the meeting on 25 May 2004 was completely different from that of Mr. Jenkins. In his witness statement he said:-
"16. As I recall, Mr Jenkins suggested a meeting, so that he could update me on his progress with dealings at Seatbooker. We met at the Great Eastern Hotel, on 25 May 2004. We spent a lot of time talking about the difficulties he was having bringing Seatbooker into line, and the problems he was having with the directors, who he did not feel recognised the usual standards of corporate governance. There was no question of him mentioning Seatbooker Sales Limited, the Claimant, to me. Nor had I had any other reason to suspect that there was another company involved. The documents we received from Seatbooker from early 2004 and afterwards did undergo a slight change in format, but essentially were headed just "Seatbooker", they did not say "Seatbooker Sales": …
17. Mr Jenkins told me that he intended to leave Seatbooker, because he was unhappy with the way things were moving and did not feel that the directors took much notice of him. We did not talk about much else. I have seen that in paragraph 10 of the Reply and Defence to Counterclaim, the Claimant says that Mr Jenkins was having meetings with Seatbooker's customers around this time to persuade them to execute new contracts with the Claimant. Mr Jenkins had no such meeting with me. As I have explained above, he did not mention the Claimant and he did not ask me to enter into a new agreement with it on SUFC's behalf, nothing at the meeting suggested to me that this was Mr Jenkins' real agenda in meeting with me at that time.
18. Mr Jenkins asked towards the end of our meeting whether there was anything else he (or Seatbooker) could do for SUFC. At that time SUFC was having problems with its merchant facility provider, Lloyds Cardnet. The problem was that when supporters purchased season tickets with a credit card, Lloyds Cardnet would only release the payments to SUFC 1/23 at a time. This was because of a concern they had about the financial state of a number of football clubs, and the risk that if a club became insolvent, the merchant provider would have to reimburse at least a proportion of the season ticket price to the purchaser. A number of clubs had the same problem and I brought the matter up at the quarterly Football League meetings with Tad Detko and Andy Williamson, the Football League's Finance Director and Operations Director. They were aware of the problems we were having. The way we got round it was to explain the situation to fans and ask them to pay by cash or cheque. We had done that for the previous season as well.
19. This was going to be a continuing problem, so when Mr Jenkins asked if there was anything Seatbooker could do to help us, my words were along the lines of "I don't suppose you can help us with this can you?" and explained the situation to him. He said that actually he could, and that SUFC should use Seatbooker's merchant facility. The monies could then be released to SUFC without delay, after the commission had been paid to the credit card company. We did not discuss exactly how rapidly the monies would be paid to us but I assumed it would be three days, which is the standard time for payments to come through a merchant account. I therefore agreed that we would now sell season tickets over the internet through Seatbooker, which would receive 1% commission on sales, to be paid by the Club. No other changes to the contract I had originally negotiated with DataFactors were made, or even discussed at that time, and Seatbooker's 8% commission on match day sales was still going to be paid by the customer. All we discussed, and all that we agreed, was a variation to the agreement I had negotiated carefully with DataFactors, so as to allow for the provision of an extra service. Mr Jenkins said to me something along the lines of "we'll need to add that" (by which he meant the additional service to the existing contract); there was no suggestion that we would enter into a wholly new contract.
…
21. There is a lot of season ticket activity in the period leading up to the start of the season so I wanted to get the new service up and running as soon as possible, to catch those supporters who would only feel able to buy a season ticket by credit card. In terms of new documentation, all I expected to receive was a document showing what Seatbooker would now be doing, and as far as I was concerned that was what was faxed to me by Sam Joshi … The main sheet showed what we had agreed. There would be a managed service fee, and commission on season ticket sales would be 1%, with commission on match day sales at 8%. If we had agreed anything else, I would have expected it to be shown on that page. All I was expecting to see was a record of the new service. There was no need to change any of the other terms of the DataFactors agreement, and I did not agree to any further changes. I did see the document headed Seatbooker General Conditions and Licence but I knew the terms of the DataFactors agreement, which as far as I was concerned remained in full force. No one drew my attention to that document, although I note now that in contrast, when Mr Jenkins was corresponding with Anita Vine about the EPOS system, he specifically referred her to the terms and conditions. The print was so small I could scarcely read it and as Mr Jenkins and I had not discussed any new terms, or an extension of the term of our agreement, I had no reason to believe that it contained a new five year contract or a contract on terms completely different from the agreement with DataFactors.
22. So far as I was concerned, I had no reason to struggle through pages of small print because I knew what had been agreed and it was not that we would sign up to a new contract. I relied upon what I knew had been discussed with Mr Jenkins, which was simply that there would be the specific variation of the existing contract, nothing more. I had no reason to distrust him, or think that he would send me anything other than a document reflecting what had been agreed. I do not know whether the agreement was sent by mistake, or whether the Claimant was negligent in sending something to me which did not reflect our agreement. In addition, Mr Jenkins did not tell me about the existence of Seatbooker Sales Limited, the Claimant, or tell me that we would have to enter into a new agreement with it.
23. If there had been any reference in my meeting with Mr Jenkins to an agreement with a new term, or with different rights of termination, I would have negotiated them and would also have considered taking legal advice. I would certainly not have signed a new five year contract, which is considerably longer than the three year industry standard. I would have waited for the existing one to run out and then re-negotiated. I note at this point that some of the terms of the document which the Claimant refers to as the "SSLA" (Software Sale and Licence Agreement), are so far outside the industry standard that I would be surprised if any club signed up to them. I certainly would not have. …"
It was, I think, quite clear, from the copies of contemporaneous documents to which reference was made during the course of the trial, that Mr. King was in error in his recollection that it had been Mr. Jenkins who had suggested the meeting which took place on 25 May 2004. In an e-mail dated 11 May 2004 to Helen Giles, the club and company secretary of the Club, and an assistant to Mr. King, Mr. Jenkins wrote:-
"I had a call from Mr King requesting dates for a meeting. I only have the Southend number and both of you were out today.
Due to holidays and some overseas business trips, it will be difficult to get out to Southend for a while. I am in London however several times over the next few weeks. If Mr King has any trips planned into town, then hopefully we could make an arrangement to meet."
That message seems to have prompted Helen Giles to telephone Samantha Joshi, for in an e-mail dated 13 May 2004 to Mr. Jenkins Samantha Joshi said:-
"Please call Helen Giles of Southend to arrange a meeting with Geoffrey King wrt [with reference to] to an end of season meeting.
Her number is 01702 304 135."
Mr. Jenkins then in fact sent an e-mail, also on 13 May 2004 to Helen Giles:-
"I had a call from Mr King requesting dates for a meeting. I have called a few times but missed you on each occasion.
Due to holidays and some overseas business trips, it will be difficult to get out to Southend for a while. I am in London however several times over the next few weeks. If Mr King has any trips planned into town, then hopefully we could make an arrangement to meet. Next Tuesday 18th or Tuesday 25th would be good for me anywhere in central London?"
Helen Giles did not get back to Mr. Jenkins until 18 May 2004. In an e-mail of that date she wrote:-
"Geoffrey would be available to meet with you on Tuesday 25 May in London at 10 am at a place of your choosing – preferably not too far from Liverpool Street station.
Could you please let me know whether you are available to meet with him at this time, and if so the venue."
Mr. Jenkins replied later the same day, also by e-mail:-
"OK, let's make the meeting at the Great Eastern Hotel, which is just outside Liverpool Street. I suggest we meet in Reception.
10.00 is possible, but 2.00 would be better for me. If Geoffrey can't do 2.00, then we'll do 10.00."
Initially a meeting at 10.00 a.m. was agreed. However, on 21 May 2004 Helen Giles sent Mr. Jenkins an e-mail changing the time:-
"Sorry it is late notice – Geoffrey has left a message on your voicemail – he would now prefer to meet at 2 pm on Tuesday. Please confirm all okay."
Mr. Jenkins replied the same day:-
"That's fine, 2.00 at the Great Eastern Hotel on Tuesday 25th."
What is, perhaps, noteworthy about the issue of who suggested the meeting is not only that Mr. King was clearly in error in his recollection, but that, notwithstanding that the matter was heavily documented, as I have set out, he did not trouble to seek to refresh his memory from the relevant contemporaneous documentation before making his witness statement. Rather, when challenged about the matter in cross-examination and shown some of the relevant documents, Mr. King asserted that, whatever the documents appeared to show, he was confident that Mr. Jenkins had first approached him, and that approach had put it in his mind to ask Helen Giles to seek to arrange a meeting.
Mr. Jenkins made manuscript notes of the meeting on 25 May 2004. He told me that the notes were made during the meeting, and he was quite firm about that. Mr. King did not recall that Mr. Jenkins had made any notes during the meeting.
The notes made by Mr. Jenkins began with the name of Mr. King, a reference to "Southend" and the date 25 May 2004. There were then three numbered notes. Mr. Jenkins told me in cross-examination that the notes were not intended as a record of the meeting, still less as a verbatim record, but were really to remind him of what had to be done in the light of the discussions. The second numbered note related to a company called Ascent and is not relevant to any issue in this action. The first and third notes were in these terms:-
"1. send order for internet ticket sales
[email protected]
'2004 ticket holders average £280.
2. …
3. practicalities & suggestion on implementing loyalty card system."
Mr. Jenkins told me that the first note reflected the fact that it had been agreed that he would send Mr. King a new contract from Seatbooker. He was challenged that in fact that note did not use the word "contract", but rather the word "order", but Mr. Jenkins maintained that it had in fact been agreed that he would send a new contract.
The cover sheet in respect of the copy of the SSLA sent to Mr. King by Samantha Joshi on 27 May 2004 noted that the subject of the facsimile transmission was "Software Sale & Licence Agreement". The text of the message on the cover sheet was:-
"As requested.
Any problems please call me on the above number."
It was common ground that Mr. King did in fact telephone Samantha Joshi on 28 May 2004 and asked her whether the monthly fee of £499 was in addition to that payable under the DF Agreement or replaced it. It was also common ground that Samantha Joshi told Mr. King that it was not an additional fee.
Although Mr. King telephoned Samantha Joshi after receiving the copy of the SSLA sent by facsimile transmission, it was not suggested that he enquired why the SSLA had been sent to him, why it was described as "Software Sale & Licence Agreement", or why the Conditions were attached to it. The only enquiry he made was about the fee of £499.
On 28 May 2004 Mr. Jenkins sent to Mr. King the e-mail which I have already noted. In it he wrote:-
"Thank you for taking time earlier this week to discuss your IT objectives. In response;
Internet ticketing
As discussed, I attach an order for you to sign to include internet season tickets with your existing match day internet and managed service facilities. I would be grateful if you could print and sign two copies and post both back to me. I will then counter sign and return one copy. Since we have already put matters in hand, I would also be grateful if you could fax a signed front sheet back to me to save time on 0208 880 4041. Please be aware that the season ticket software will provide for renewals and new season ticket sales, but does not include the functionality for the 'you choose' option that Southend currently offer. If you would like this, then we will need a description of the exact functionality required, against which we will need to provide a quotation for bespoke development. Please let me know if you would like to investigate this area.
Loyalty scheme
We currently operate a loyalty scheme for Spurs. If you would like to install a scheme which was the same, or very similar, then the costs would be relatively modest, circa £2000 to £3000 in total. If bespoke changes were needed for Southend, then obviously the costs would be greater. If you would like to consider this, then please let me know and I will arrange for one of my colleagues to provide you with more details of the existing product.
CRM
We would not foresee any difficulties in integrating with the Ascent system. As discussed, I will make contact with Ascent and report back to you on the implications of the work involved."
Again, Mr. Jenkins was challenged that in this e-mail he made no reference to a new contract as such, and only referred to an "order". He said that he had not been writing the e-mail expecting that it would be analysed line by line in legal proceedings, and had written it as a salesman to deal with the substance of what had been discussed between him and Mr. King.
At 15.48 hrs on 28 May 2004 Mr. King sent a facsimile transmission to Samantha Joshi including a cover sheet. The transmission included a version of the front sheet of the SSLA signed by Mr. King. The cover sheet was in a standard printed form used by the Club. It was completed in manuscript by Mr. King. The subject he identified as "Season Ticket – Internet Sales". The material part of the message on the cover sheet read:-
"I confirm our conversation of this afternoon and attach the software sales & licence agreement.
I confirm that the managed service fee was discussed and that we agreed that this was the exist fee and not an additional cost.
It would be good if things could be up and running on Tuesday 1st June 04 as I will then arrange to extend the discount period for one week."
Mr. Jeffrey Jupp, who appeared on behalf of Seatbooker, emphasised the use of the expression "software sales & licence agreement" by Mr. King as indicating clearly, he said, that Mr. King understood correctly that the SSLA was a contract document. Mr. Jupp also emphasised that the discussion concerning the managed service fee indicated that the managed service, previously the subject of the DF Agreement, was now intended to be encompassed within the SSLA. In other words, it was plain, submitted Mr. Jupp, that the SSLA was intended to replace the DF Agreement. Mr. Jupp contended that it was obvious that Mr. King understood perfectly well when he signed the SSLA that it was a contract and that it was to replace the DF Agreement.
Mr. Jenkins counter-signed the front sheet of the SSLA signed by Mr. King. He sent it back to Mr. King under cover of a letter dated 8 June 2004. The covering letter was brief. Mr. Jenkins said only:-
"Thank you for your recent order. Please find enclosed a countersigned copy for your files."
Miss Amanda Michaels, who appeared on behalf of the Club, emphasised the use of the word "order" by Mr. Jenkins in this letter also.
A month after the signature of the SSLA by Mr. Jenkins Mr. King wrote him a letter dated 8 July 2004. What had prompted the letter was a conversation with Mr. Baldwin about monies at that time owing by the Club to Seatbooker. What Mr. King wrote in his letter was:-
"I enclose three cheques in settlement of our outstanding account as agreed with your colleague.
It seems sensible to me as explained in our conversation that we alter the arrangements that exist between us to allow you to deduct the commission at source and pay over the balance to the Club. It would be necessary for you to guarantee that your credit card merchandising supplier would charge no more than the Club's existing one for this, to be fair to us both.
I would be grateful in the circumstances therefore if you would let me have the appropriate contract to complete in order that we may put this in hand before the start of the season."
Miss Michaels relied heavily upon the terms of that letter as indicating that Mr. King did not realise that what he was proposing was already covered by the SSLA, if a valid agreement in the terms of the SSLA had been made, and thus that he had not intended to enter into the SSLA. Mr. Jupp relied equally heavily upon the response by Mr. Jenkins in an e-mail dated 12 July 2004, which drew forth no reply or query or question from Mr. King. The material part of Mr. Jenkins's e-mail was:-
"Thanks for that.
The new contract we put in place recently (which included the season ticket facility) makes provision to operate on the basis you suggest, therefore no new or additional paperwork is necessary."
On 6 July 2005 a meeting took place between Mr. Baldwin, who was chief technical officer of Seatbooker, and Mr. Jit Aujla, commercial consultant, acting on behalf of Seatbooker, and Mr. King, Tracey Copping, Angela Winfield and Kathy Watkins of the Club. The meeting was in fact principally concerned with the question of why it was that sums collected by Seatbooker from customers of the Club purchasing Available Tickets over the internet and making payment via the HSBC Account had not included, in addition to the ticket price and an administration fee of £1.50, an amount of 8% of the ticket price to cover the commission due to Seatbooker. Some attention was given during the meeting to the issue of whose responsibility it was to determine the sums to be charged and to put the relevant details on the computer system. Mr. Aujla made a record of the meeting quite a long time afterwards, at a point at which he was asked to provide documents relevant to this action.
At paragraph 12 of his witness statement made for the purposes of this action Mr. Aujla explained how he first came to raise the issue of contractual responsibility:-
"I had taken a copy of the old Data Factors Limited agreement ("the DFL Agreement") with me, having picked up the wrong document and not the subsequent contract between Southend and Seatbooker ("the SSLA") – a simple error on my part. At the meeting I pointed out to Mr King that clause 16 of the DFL Agreement stated that Southend would be responsible for the maintenance of ticket price details. I said that Seatbooker did not accept liability for any errors made by Southend regarding the maintenance of ticket price details and reiterated that Seatbooker's contract was with Southend and Seatbooker would simply charge the commission rate in accordance with the contract. Southend were responsible for passing the commission charges on to their fans if that is what they wished to do."
At the commencement of his oral evidence Mr. Aujla corrected the reference to clause 16 of the DF Agreement to clause 9.2.3. He said that he had confused the relevant clause number with that to be found in the SSLA.
In his note of the meeting, which he and Mr. Baldwin confirmed in their evidence before me, subject to correction of the number of the clause referred to, was accurate in this respect, Mr. Aujla explained what happened when he made the points set out in paragraph 12 of his witness statement:-
"Geoffrey King opened the meeting by stating that there was a difference between what the club had been charged in commission by Seatbooker and what had been collected from the fans. The reason for this was discussed and established. Mr Aujla then pointed out to Mr King that according to clause 16 in the contract with Southend the club was responsible for maintenance of all ticket price details and that legally we (Seatbooker) were not liable for any errors made in this area. Further, our contract was with the club and not individual fans so we would always charge the club the commission rate as per the contract. What ever [sic] the club chose to pass onto [sic] the fan was there [sic] responsibility. Mr Baldwin then pointed out that in Seatbooker's experience our clients adopted several different strategies for passing on commission charges to their fans ranging form [sic] none to all. At his point Mr King indicated that the contract I was showing to the table was not current and that a new one was in force. Mr Aujla stated that even so the new contract would almost certainly have a similar clause and his point was still relevant. Mr King explained that in his opinion Seatbooker were responsible for the maintenance of the pricing module despite the legal argument. This was negated by both Mr Aujla and Mr Baldwin."
Mr. King was alerted to the point that he was said to have made reference to a new agreement at the meeting of 6 July 2005 by the pleaded case of Seatbooker. He dealt with it in his witness statement at paragraph 43:-
"As a response to our complaint, a meeting took place on about 8 July 2005 between Mr Baldwin and Mr Aujla of Seatbooker, and myself, Tracey Copping, Angela Winfield and Kathy Watkins of SUFC. The purpose of the meeting was to resolve the issue of Seatbooker having withheld the money from us. During the meeting, Mr Aujla started waving around a contract in a DataFactors folder. I remembered that there was another document which gave effect to the amendment agreed with Mr Jenkins, so I said something like "I don't think that's the right document you're waving at me, I think there is a new document". I did not say there was a new contract, just a document showing an amendment. In any case, I was not interested in what the contract said about who was ultimately responsible for the settings on the system. In practice, SUFC could not do it; that was why there was a help desk."
It thus appears that Mr. King accepted that there had been some reference by him at the meeting to the document which Mr. Aujla produced, a copy of the DF Agreement, not being the appropriate one, otherwise there was no point Mr. King making any comment at all. As what was being discussed at the time Mr. King made his comment was the liability under the relevant contract for putting price ticket details on the system, and it was being suggested by Mr. Aujla that that was dealt with by clause 9.2.3 of the DF Agreement, it would seem that it was only necessary or appropriate for Mr. King to have said that there was another document if he supposed that that other document contained material in relation to the issue being discussed. That, of course, was wholly inconsistent with the case of the Club before me, which was that the DF Agreement was that which it had been agreed between Mr. Jenkins and Mr. King at their meeting on 25 May 2004 should continue in effect, subject only to variation to include provision for the sale of season tickets over the internet.
I was very impressed by Mr. Jenkins as a witness. He struck me as very fair and balanced in his evidence. He thought about the questions which he was asked and took trouble to give answers which he considered were accurate. In my judgment the evidence of Mr. Jenkins was supported by the contemporaneous documents to which my attention was drawn. I was also impressed by the evidence of Mr. Baldwin and that of Mr. Aujla. Each, I am satisfied, was doing his best to assist the Court with his recollection of relevant events. In my judgment the evidence of each in relation to contemporaneous events was substantially accurate. In contrast, I was not impressed by Mr. King as a witness. His evidence seemed to me to be at variance from the contemporaneous documents which were put in evidence and his explanations for the divergencies put to him by Mr. Jupp I found by and large implausible. Not the least of these implausibilities was the assertion of Mr. King that what Mr. Jenkins primarily wished to tell him at the meeting on 25 May 2004 was that he, Mr. Jenkins, had concerns about the corporate governance of Seatbooker, and was intending to leave. I accept the contention of Mr. Jupp that it is inconceivable that, if Mr. Jenkins had said any such thing, Mr. King would have contemplated for a moment putting any further business the way of Seatbooker.
In the result I accept the evidence of Mr. Jenkins as to what was discussed and agreed at the meeting on 25 May 2004 in preference to the account of Mr. King. I therefore find that Mr. King did agree that the Club would enter into a new agreement with Seatbooker in place of the DF Agreement. I accept that the use for the purposes of selling Available Tickets and season tickets over the internet of the HSBC Account was discussed and agreed. I reject the suggestion that what was agreed was simply what was characterised in the Amended Defence and Counterclaim as "the Oral Variation". I also reject the suggestion that Mr. King agreed to the making of a new agreement as a result of any misrepresentation on the part of Mr. Jenkins that such was only intended to set out in writing agreed terms of variation adding a season ticket service to the DF Agreement. I am completely satisfied that Mr. King made no mistake in entering into the SSLA. I find that no mistake of any kind was made by anyone in relation to the SSLA.
It is therefore necessary to turn to consider the other lines of defence upon which the Club relied in answer to the claims of Seatbooker.
The other lines of defence of the Club
Some of the alternative grounds of defence relied upon can be dealt with rather summarily. It follows from my conclusion that the SSLA was a valid and binding agreement and replaced the DF Agreement that the Club could not rely upon any provision of the DF Agreement, in particular clause 6.3, as entitling it to determine the SSLA Agreement.
There was a suggestion on behalf of the Club that Seatbooker had been in breach of contract, such that the Club was entitled to determine any relevant contract, by not paying to the Club, within three days of receipt of sums into the HSBC Account, the sums paid in respect of the sales of Available Tickets and season tickets over the internet. How the matter was pleaded at paragraph 29 of the Amended Defence and Counterclaim was:-
"From about October 2004 to March 2005, sales were processed through SUFC's Lloyds Cardnet account, as Seatbooker UK/the Claimant was unable to provide its credit card service, and Seatbooker UK and then the Claimant invoiced SUFC for commission on ticket sales as aforesaid. Otherwise, from late May 2004 to about September 2005, Seatbooker UK/the Claimant collected monies for ticket sales and associated fees directly from the purchasers, and accounted to SUFC for such sales. By the mutual consent of the parties, at all times when Seatbooker/the Claimant was claiming such monies, the net sums due were to be rendered to SUFC within 3 days of receipt. In the circumstances, payments became due on that basis by virtue of the course of dealing between the parties. Alternatively it was an implied term of the Oral Variation that Seatbooker UK/the Claimant would account to SUFC within a reasonable time, such time being 3 days after receipt."
A complete answer to the point was that clause 16 of the SSLA provided for remittance by Seatbooker to the Club of sums arising from sales over the internet within thirty days of the relevant ticket sale.
However, there was in any event, as it seemed to me, no substance of any sort in the complaint. No one contended that it had been agreed expressly that Seatbooker would pay to the Club sums paid into the HSBC Account in respect of the sale of Available Tickets or season tickets of the Club over the internet within three days. What in fact happened, according to the evidence of Mr. Baldwin, which I accept, was that the Club was often, perhaps usually, short of cash, and thus asked to be paid any significant sums received into the HSBC Account as soon as possible. As Seatbooker had in fact received the sums in question it was prepared to assist its customer, the Club, by passing on monies received as soon as it could. That was a matter of goodwill, not a matter of obligation.
The other ground upon which it was contended that the Club was entitled to determine the SSLA merits a little more attention.
It was, I think, common ground, that the intention of the Club in relation to the sale of Available Tickets over the internet was that the purchaser of a ticket would pay not only the face value of the ticket, but also an amount of 8% of the face value of the ticket, representing in fact the commission payable to Seatbooker by the Club in respect of the sale, and an administrative charge of £1.50 per transaction. In order to achieve the result of each of these elements being paid by the purchaser of an Available Ticket it was necessary to enter into the software of the computer by which the operation of the internet purchasing was controlled the elements of the face value of the ticket ("the Price"), the percentage addition to cover the commission ("the Commission Element") and the fixed charge of £1.50 as the administration transaction charge ("the Transaction Charge"). Each of these elements could be put into the software supplied by Seatbooker using particular screens.
Apart from the intended arrangements in relation to the sale of Available Tickets over the internet, it was also intended that in respect of the sale of season tickets over the internet the purchaser would pay the price of the season ticket ("the Season Price") and the Transaction Charge, but nothing else. Again, in order to achieve the result of those elements being paid by a purchaser of a season ticket it was necessary to enter into the software of the computer by which the operation of the internet purchasing was controlled the Season Price and the Transaction Charge. Once more the mechanism for putting these elements into the software was by use of particular screens.
The relevant screens in the software were, first, the "System Parameters" screen, then the "Event Maintenance" screen, in relation to sale of Available Tickets, or the "Season Maintenance" screen, in relation to sale of season tickets.
The Transaction Charge could be entered on the System Parameters screen. The Price, or the Season Price, and any Commission Element, had to be entered on the Event Maintenance screen or the Season Maintenance screen, as the case might require. The Commission Element was entered in a section of the relevant screen entitled "Per Ticket Admin Fee/Availability". A line in that section was designated "Fee Type V or P". "V" indicated value, while "P" indicated percentage. Depending upon whether one chose V or P, the next line, entitled "Fee", would either show a percentage or a cash amount. To enter the Commission Element at 8% in the Event Maintenance screen one therefore clicked on P in the Fee Type V or P line, and then put 8 in the Fee line. The Season Maintenance screen also contained a "Per Ticket Admin Fee/Availability" section identical to that of the Event Maintenance screen. By clicking on V and entering 1.50 one could set up the Transaction Charge for the sale of season tickets. However, in order to have both the Transaction Charge and the Commission Element on the sale of Available Tickets it was necessary to enter the Commission Element in the Event Maintenance screen and the Transaction Charge in the System Parameters screen.
The System Parameters screen also included a facility to set a "Maximum Transaction Charge". If a Maximum Transaction Charge was entered in the System Parameters screen it overrode whatever was the result of what was included in the Event Maintenance screen or the Season Maintenance screen. In other words, if the Event Maintenance screen was set to include the Price and the Commission Element, and the System Parameters screen was set to include the Transaction Charge, but the Maximum Transaction Charge was also set, the maximum which could be charged in respect of a sale of an Available Ticket would be whatever was the setting of the Maximum Transaction Charge. Setting the Maximum Transaction Charge was one way of ensuring that only a single Transaction Charge was levied on a sale of season tickets, even if more than one season ticket was bought.
It was common ground, as I understood it, that how the software supplied by Seatbooker was set from about August 2004 until about the beginning of July 2005 was such that the Commission Element was not added to the Price and the Transaction Charge on sales of Available Tickets to purchasers over the Internet.
The case for the Club was that it was the fault of Seatbooker that the Commission Element was not recovered from purchasers of Available Tickets. Miss Michaels did not commit herself definitely as to what precisely was the fault for which it was said that Seatbooker was responsible. How she put the matter at paragraph 27 of her written closing submissions was:-
"SUFC accepts its obligations under both contracts to input prices, fixtures and similar details onto the program. But SB's obligation was to provide a system which was fit for purpose and to provide adequate and effective help to SUFC in getting the system to run properly. A help line which cannot resolve a problem with the system is by definition not providing the promised service."
As I understood it, it was common ground that the reason why purchasers of Available Tickets over the internet were not charged the Commission Element was that the Maximum Transaction Charge had been set at £1.50. It was suggested that it was someone on behalf of Seatbooker who had set up, or advised on the setting up of, the relevant software in the first place and that this person should have ensured that the elements of cost desired by the Club be included. If that person had failed to achieve what was desired, by setting the Maximum Transaction Charge at £1.50 or advising that it be so set, then that was the fault for which Seatbooker was being held responsible. There was actually no evidence that anyone on behalf of Seatbooker had set up the software in the first place, and, by clause 16 of the SSLA, contractually the responsibility for setting prices and so forth was that of the Club. The highest that the evidence that Seatbooker may have advised on how the system be set up, and that such might have included setting the Maximum Transaction Charge at £1.50, was an internal e-mail dated 1 June 2004 between Mr. Brett Rookyard, a member of the telephone help line staff of Seatbooker, and Mr. Alex Hayward. In that e-mail Mr. Hayward responded to an enquiry from Mr. Rookyard as to how the system needed to be set up in order to limit to one Transaction Charge a sale of any number of season tickets. Mr. Hayward suggested two methods, one of which Mr. Rookyard told me in his evidence involved fixing the Maximum Transaction Charge. However, Mr. Rookyard's evidence was that it was not he who set up the system, or advised on how it be set up, so as to include a Maximum Transaction Charge of £1.50.
During the trial emphasis seemed to shift rather to the contention that the obligations of Seatbooker under clause 17 of the SSLA to support and maintain its software and to provide a telephone support line had been breached because, so it was contended, the Club had notified the Seatbooker telephone help line of the problem of the Commission Element not actually being collected from purchasers of Available Tickets over the internet from about August 2004, yet the problem was not resolved until sometime in about July 2005. It was common ground that the problem could have been resolved easily. As it seemed that the Event Maintenance screen had been set up properly, but a Maximum Transaction Charge of £1.50 had erroneously been entered in the System Parameters screen so as to override the provision concerning the Commission Element, all that had to happen was to delete from the System Parameters screen the Maximum Transaction Charge setting.
Mrs. Angela Winfield, who is, and was at the material time, employed by the Club as an accounts assistant, gave evidence of complaining about the failure of the software to charge the Commission Element in relation to sales of Available Tickets over the internet. In her witness statement she said:-
"12. From around August 2004, when the changes were first made, I began to notice an apparent error in the way match day tickets were being sold over the internet. 8% on top of face value of each ticket should have been being charged to the customer, but the month end statements I would print off the system showed that the additional charge, marked as "Admin" (which, being a percentage of the ticket value, was never a round number) was not being made. Instead, £1.50 was being charged. ….
13. When I noticed this discrepancy, I, Ms Watkins or sometimes the (then) ticket office manager Marisa Freeman, phoned the Seatbooker support service (usually Mr. Peckston or Mr. Rookyard) to report the problem. They accessed the system remotely and told us that it was fine and the 8% commission charge was in place. I estimate that we called Seatbooker approximately 15 times at (roughly) twice monthly then monthly intervals to enquire about this problem, but as we were extremely short staffed at that time, the calls tailed off to some extent. "
As I have noted, Mr. Rookyard was called to give evidence on behalf of Seatbooker. He did not recall that he had ever received any telephone call from the Club about the issue of the non-charging of the Commission Element. He said that he and Mr. Peckston were the only members of the telephone help line staff of Seatbooker between August 2004 and July 2005. He told me that Mr. Peckston had never mentioned to him any call from the Club about the problem. It appeared that there was a system within Seatbooker of logging any call to the telephone help line and giving the report a number. It did not appear that any number had ever been allocated to the problem of the Club not recovering from purchasers of Available Tickets over the internet the Commission Element. Moreover, although the Club and Seatbooker were in regular e-mail contact about a number of matters in the period August 2004 to July 2005, the first e-mail produced by the Club in relation to the issue of the Commission Element was dated 10 June 2005.
I have mentioned that the terms upon which the HSBC Account was opened included the giving of a bond by Mr. Jenkins. Mr. Jenkins decided at the end of 2004 to leave Seatbooker. Consequently he withdrew his bond. That had the effect that HSBC suspended the availability of the use of the HSBC Account. In order to deal with that problem it was agreed between Seatbooker and the Club that payment for Available Tickets sold over the internet would be made through the merchanting facilities available to the Club, with Seatbooker invoicing the Club for the commission due to it. HSBC was persuaded to re-commence the availability of the HSBC Account in about March 2005.
There was a dispute in relation to whether Seatbooker did in fact issue invoices in respect of the sums which it desired the Club to pay in the period October 2004 to May 2005 earlier than June 2005. Mrs. Winfield accepted that Seatbooker had issued an invoice dated 7 October 2004 in the sum of £408.31, which had been despatched to the Club and was stamped as having been received on 12 October 2004. However, that invoice had not been paid by June 2005. The reason why it had not been paid was, as Mrs. Winfield rather delicately put it, that there was a trend on the part of the Club not to settle its accounts until suppliers pressed for payment. The case for Seatbooker was that it had produced invoices at the end of October 2004 and at the end of each succeeding month up to and including May 2005, and had sent them to the Club, but that the Club had not settled any of them by June 2005. The case for the Club was that none of these monthly invoices was received by it. Mrs. Winfield told me in cross-examination that she had not noticed that she had not received invoices from Seatbooker during this period because she had been so busy.
Mrs. Winfield also told me in cross-examination that her understanding was that it was up to Seatbooker to collect its commissions on sales of Available Tickets from the purchasers of such tickets and that, if it did not, the Club was under no liability to pay any sum by way of commission to Seatbooker.
Because the Club had not paid sums which Seatbooker considered to be due, amounting to some £31,909.91, by the beginning of June 2005, and because by that time Seatbooker was holding sums paid into the HSBC Account sufficient to satisfy that debt, Mr. Baldwin decided to offset the sums due when accounting to the Club. He sent a facsimile transmission dated 9 June 2005 to Mrs. Winfield at 10.39 hrs that day in which he said:-
"A CHAPS payment for £21541.05 has been made into your account it will be present as available funds today.
I have attached a statement showing all outstanding invoices and also a breakdown of merchant transactions.
If you have any queries, please contact me on the numbers below."
The statement attached showed the calculation of the sum of £31,909.91 by reference to the dates and numbers of various invoices.
Tracey Copping, the financial controller of the Club, replied to Mr. Baldwin's facsimile transmission by an e-mail sent at noon on 9 June 2005:-
"Thanks for the fax you sent through this morning. However I have just discussed with Geoffrey King the £31,909.91 you have with held [sic] as 8% commission, this commission is payable by the ticket purchaser and not by ourselves – this is stated within the agreement between Southend United and Seatbooker. Geoffrey has requested that you review the agreement and release the monies."
Mr. Baldwin responded at 3.09 p.m. the same day:-
"During the period oct [sic] 20th 04 to 4th april [sic] 05 the amounts paid into your account (as you were merchanting the monies yourself) gross, included our 8% commission on top of the ticket face values (which are all yours), all we have done in this respect is invoice you for our 8% that has been paid into your account already that you have been "holding" for us for several months:)
The invoices sent to yourselves every month during this period have mostly been left unpaid, as you can see from the list, unless you can tell me otherwise. It makes complete sense to pay you the balance of monies owed in this contra fashion, how else would we realistically get paid for our services?
As Geoffrey pointed out previously, it makes sense for us to bank the monies and pay you the difference, as our account is a client account, whereas with southend's [sic] bank account, whatever is in there just gets spent/allocated. Elsewhere and seatbooker [sic] are left with a mounting debt position at southend [sic] that it inevitably finds hard to service.
If you are querying any of the invoice bills or service charges, I am more than happy to go through them, but there is no other money yet to release to southend [sic] that we have held back, although there were, happily, some sales yesterday and obviously more today, which will come to you in a couple of days."
Tracey Copping, in her turn, replied by an e-mail dated 10 June 2005 which contained the first written reference to the Commission Element not having been received by the Club from purchasers:-
"For the period you are stating we have not received amounts including 8% commission into our account. All that we receive is the ticket price plus £1.50 (postage) as highlighted by the transaction below which you can trace on your system;
…
Please explain where the 8% commission is or advise if the ticket purchaser will be invoiced by yourselves.
We have never received the invoices detailed on your fax of yesterday. They would have been recorded on our purchase ledger as outstanding."
It is interesting that Tracey Copping did not, in this e-mail, contend that Seatbooker had been told before about the non-receipt by the Club of the Commission Element, still less that Seatbooker had been told that on many previous occasions. In fact the point that she was making was misconceived because the transaction of which she set out details in her e-mail was the purchase of a season ticket. That was pointed out by Mr. Baldwin in his response to her e-mail, also dated 10 June 2005. In that e-mail Mr. Baldwin explained that what Seatbooker had charged by way of commission was 1% on sales of season tickets and 8% on sales of Available Tickets.
Mr. King now intervened in the correspondence. In an e-mail dated 13 June 2005 he did contend that Seatbooker had been told previously about the non-receipt by the Club of the Commission Element:-
"I have seen the correspondence between you and Tracey in regard to the £31,909.91 you are holding.
You are aware of course that the 8% charge for match tickets purchased via the web is borne by the purchaser and not the Club. Staff here have previously advised Seatbooker support staff, when setting games up, that the 8% charge was not being recorded but were advised by Seatbooker support staff that matters were in order.
Funds received by the Club have been for full ticket prices plus £1.50 handling charge and did not include the 8%. No invoices have been received from Seatbooker in respect of the 8% charge nor were they anticipated.
My comment about you processing purchases of season tickets through your merchant number was as a result of the Club's merchant restricting the flow of funds to the Club in respect of season tickets sold via credit cards. Seatbooker is entitled to a 1% commission on those sales which is payable by the Club and quite rightly can be deducted at source by Seatbooker.
In the circumstances I should be obliged if you would release the funds due to the Club without further delay. "
Mr. Baldwin replied in an e-mail of 13 June 2005 maintaining that the liability to pay the commission due to Seatbooker was that of the Club and not that of the purchasers of Available Tickets. He also contended that the setting of prices for Available Tickets was a matter for the Club. That drew forth an e-mail dated 14 June 2005 from Mr. King, which was that pleaded at paragraph 40 of the Amended Defence and Counterclaim:-
"Your email of 13 June 05 sent at 16.33 is difficult to believe in view of your email of 9 June 05 sent at 3.09 pm which I would remind you states:
…
This may have been what you thought the position should have been especially as the Club had not changed its protocol on passing the full cost of the service fee to the fans nor had it issued any instructions to Seatbooker to change the basis upon which the charges are made. It must have come as something of a surprise to you yesterday when you checked the position to find that the charges had not been passed on.
The £1.50 administration charge to which you refer is to cover mailing charges and has been in existence ever since we signed up and certainly since 25 April 2003 when it was detailed in an email to me from Clyde Bernstein. In this email he also acknowledges that "the Seatbooker service fee is passed on entirely to the fans". This fact is also acknowledged in various other letters and emails.
I have now had the opportunity of having the match set up data checked and have seen that the 8% service fee has been properly applied but despite this and despite SUFC staff checking the position with your support staff on each occasion the service fee has not been charged out. In the circumstances I can only assume that it is a programming error that occurred following the agreement with Meirion Jenkins in May 04 for Seatbooker to handle the Club's season ticket sales and match day sales through your Merchant Account. It was agreed that payment would be made to the Club net of the 8% service fee on match day sales which was to be collected from the fans and the 1% charge on season ticket sales which was not to be passed on to the fans. It seems that at some stage you had problems, as it eventually transpired with Mr Jenkins, and Seatbooker switched the merchant processing back through Cardnet the Club's merchant.
I find it remarkable that SUFC has not received any invoices from Seatbooker in respect [of] this service fee (commission) despite your assertions that they have been sent. The normal monthly managed service invoice is paid when it is received and normally following a chase from the Club as invariably the invoice is not sent. It is beyond belief that Seatbooker would allow such a balance to build up over such a long period without some call to ask for the account to be settled. We have after all spoken often enough.
I am advised that the total service fees (commission) you are holding for the 04/05 season is £34,409.39 and which in the circumstances should be released to the Club immediately failing which I will refer the matter to the Company's solicitors for collection. I am further advised that there is also due to the Club a further £54,857.89 to cover season ticket sales up to Monday 13th June 2005 which I would request is transferred to the Club's account by close of business tomorrow."
Notwithstanding what was pleaded at paragraph 40 of the Amended Defence and Counterclaim, it does not seem to me that that e-mail can on any view be regarded as specifying a default under either the DF Agreement or the SSLA, or as amounting to a notice of termination of the DF Agreement or the SSLA. It was a straightforward demand for payment and a threat of legal proceedings if payment was not made, no more.
There followed a series of exchanges between Mr. King and Mr. Baldwin ventilating the issues which I have already identified. The detail of those exchanges is not presently material. The exchanges resulted in the meeting on 6 July 2005 to which I have referred earlier in this judgment.
Ultimately, as it seems to me, the issue to which the question of whose fault was the failure of the Club to receive the Commission Element in the period August 2004 to July 2005 gives rise which is relevant to whether the Club has a defence to the claim of Seatbooker, as opposed to a counterclaim, is whether, as at 6 October 2005, the date upon which Mr. King purported to terminate the SSLA by the 30 days notice given by his letter dated 7 September 2005, Seatbooker had repudiated the SSLA by failing to pay sums due, or by breach of some obligation to provide telephone help line services with reasonable skill and care, or reasonably promptly. That is not how the case for the Club had been pleaded, but how the case had been pleaded did not, for the reasons which I have endeavoured to explain, in fact provide any defence to the claims of Seatbooker. However, even taking a generous view of the issues raised by the Amended Defence and Counterclaim, it did not seem to me that the Club had made out any defence.
It was plain, in my judgment, that Seatbooker was entitled to be paid commission at a rate of 8% on sales of Available Tickets over the internet and commission at a rate of 1% on sales of season tickets over the internet. It was not suggested that the sums which Seatbooker retained were not properly calculated. Thus they were due to it from the Club at the date Seatbooker paid the sums which it accepted were due to the Club, after setting off those sums.
The real question was not whether the sums retained were due to Seatbooker, but whether the Club had suffered damage in the identical sums because they ought to have been added to the amounts claimed from purchasers of Available Tickets but had not been. If it were demonstrated that Seatbooker had been in breach of the SSLA in failing to provide telephone help line services with reasonable skill and care, or reasonably promptly, and that such failure had caused the Club damage, Seatbooker was liable in respect of such damage to the Club, and the amount of that damage could be set-off against the damages due to Seatbooker in respect of the wrongful repudiation of the SSLA. However, any such breach on the part of Seatbooker could not have justified the termination of the SSLA on 6 October 2005 by acceptance by the Club of a repudiation on the part of Seatbooker, because it was common ground that the effects of any alleged breach had been remedied in July 2005.
Thus, as it seems to me, the Club has no defence to the claim of Seatbooker that the Club terminated the SSLA wrongfully.
Since there is a counterclaim, not very clearly articulated, for damages for the type of breach which I have been discussing, it is convenient at this stage to indicate my conclusions as to whether there was in fact any breach.
I am not satisfied on the evidence that it was someone on behalf of Seatbooker who set up the software used by the Club in respect of sales over the internet in 2004. Mr. Rookyard denied that he had done so. He impressed me as a straightforward fellow who was doing his best to assist the Court and I accept his evidence without reservation. It was not the obligation of Seatbooker under the SSLA to set up the software in the configuration in which the Club wished to use it, but the obligation of the Club. No one was identified on behalf of the Club as being the Seatbooker person who set up the software. There was no clear evidence that anyone on behalf of Seatbooker had advised that the system should be set up with a Maximum Transaction Charge.
I was not impressed by Mrs. Winfield as a witness. I do not accept that she, or, to her knowledge, anyone else at the Club, had complained to the Seatbooker telephone help line about the non-receipt by the Club of the Commission Element from purchasers of Available Tickets over the internet. That evidence was not supported by any contemporaneous documentation, notwithstanding that there was frequent contact, in particular by e-mail, between the Club and Seatbooker. Given that Mrs. Winfield told me that she believed at the time that the loser, if the Commission Element was not being received by the Club, would not be the Club, but Seatbooker, there is no obvious reason for her to have taken any interest in whether the Commission Element was being received or not. The e-mail dated 9 June 2005 from Tracey Copping to Mr. Baldwin containing the assertion that the Commission Element was payable by the purchaser of an Available Ticket and not by the Club, said to have been sent following a discussion with Mr. King, indicated that Mrs. Winfield was not alone in her view of the significance of non-receipt of the Commission Element by the Club. Mr. King was asked about the e-mail dated 9 June 2005 in cross-examination. He maintained that he knew that it was of importance to the Club to receive the Commission Element in respect of sales of Available Tickets over the internet because of its liabilities to Seatbooker and that Tracey Copping must have misunderstood the position in writing as she did. I do not accept that. I find that the Club, through its relevant officials, was unconcerned about the non-receipt of the Commission Element by the Club because it took the view that the loser would be Seatbooker. During the period from about October 2004 to about March 2005 the Club in any event was receiving the sums raised by sales of Available Tickets on the internet into its own merchant facility, so its net income was unaffected unless, which no one considered was correct at the time, the Club remained liable to pay commission to Seatbooker. It is, moreover, important, as it seems to me, that the problem in relation to the non-receipt of the Commission Element was easy of resolution, as Mr. Rookyard told me, and it simply defies belief that, if it had been reported coherently to the Seatbooker telephone help line at any stage earlier than it was, it would not just have been dealt with. There would have been no reason not to. The resolution did not require any expenditure of money and little expenditure of effort. Mr. Rookyard told me that the issue could have been resolved over the telephone.
Thus I reject the suggestion that Seatbooker was in breach of any relevant term of the SSLA entitling the Club to damages.
The quantum of damages recoverable by Seatbooker
It is material, before coming to consider the facts relevant to the quantum of damages payable by the Club to Seatbooker, to consider the correct approach in law to the assessment of damages.
The only real issue of law relevant to the assessment of damages canvassed before me was whether, having regard to the fact that damages fell to be assessed as at the date of the acceptance of the wrongful repudiation, 24 October 2005, it was appropriate to have regard to matters occurring after that date.
The issue arose because, logically, if the assessment of damages fell to be undertaken as at a particular date, it could be said that the exercise to be undertaken by the Court was to put itself in the position as it was at the relevant date and predict what on the evidence would have happened relevant to the assessment of damages, regardless of what the evidence might establish had actually happened. The view that such was the proper approach was strongly held in some quarters until recently. Indeed, it has only been in the last year that the House of Lords has, by a majority, in Golden Strait Corp. v. Nippon Yusen Kubishika Kaisha [2007] 2 AC 353, finally established the principle that the Court may have regard, in assessing damages, to matters demonstrated to have happened after the date of the breach which are relevant to the assessment of damages. In that case charterers repudiated in December 2001 a charterparty of a ship due to run until mid-2005. A provision of the charterparty gave both parties the right to cancel the charter if war broke out between certain countries, including the United States, the United Kingdom and Iraq. As is notorious, on 20 March 2003 the Second Gulf War began between, on the one hand, the United States and the United Kingdom, and, on the other, Iraq. The issue was whether that fact was to be taken into account in assessing damages. The leading speech for the majority was that of Lord Scott of Foscote. His consideration of the issue, and conclusion, so far as presently material, were:-
"29. My Lords, the answer to the question at issue must depend on principles of the law of contract. It is true that the context in this case is a charterparty, a commercial contract. But the contractual principles of the common law relating to the assessment of damages are no different for charterparties, or for commercial contracts in general, than for contracts which do not bear that description. The fundamental principle governing the quantum of damages for breach of contract is long established and not in dispute. The damages should compensate the victim of the breach for the loss of his contractual bargain. The principle was succinctly stated by Parke B in Robinson v. Harman (1848) 1 Exch 850, 855 and remains as valid now as it was then:
"The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed."
If the contract is a contract for performance over a period, whether for the performance of personal services, or for supply of goods, or, as here, a time charter, the assessment of damages for breach must proceed on the same principle, namely, the victim of the breach should be placed, so far as damages can do it, in the position he would have been in had the contract been performed.
30. If a contract for performance over a period has come to an end by reason of repudiatory breach but might, if it had remained on foot, have terminated early on the occurrence of a particular event, the chance of that event happening must, it is agreed, be taken into account in an assessment of the damages payable for the breach. And if it is certain that the event will happen, the damages must be assessed on that footing. In The Mihalis Angelos [1971] 1 QB 164, 210, Megaw LJ referred to events "predestined to happen". He said that
"if it can be shown that those events were, at the date of acceptance of the repudiation, predestined to happen, then … the damages which [the claimant] can recover are not more than the true value, if any, of the rights which he has lost, having regard to those predestined events."
Another way of putting the point being made by Megaw LJ is that the claimant is entitled to the benefit, expressed in money, of the contractual rights he has lost, but not to the benefit of more valuable contractual rights than those he has lost. In Wertheim v. Chicoutimi Pulp Co [1911] AC 301, 307, Lord Atkinson referred to
"the general intention of the law that, in giving damages for breach of contract, the party complaining should, so far as it can be done by money, be placed in the same position as he would have been in if the contract had been performed"
and, in relation to a claim by a purchaser for damages for late delivery of goods where the purchaser had, after the late delivery, sold the goods for a higher price than that prevailing in the market on the date of delivery, observed, at p308, that
"the loss he sustains must be measured by that price, unless he is, against all justice, to be permitted to make a profit by the breach of contract, be compensated for a loss he never suffered, and be put, as far as money can do it, not in the same position in which he would have been if the contract had been performed, but in a much better position."
31. The result contended for by the appellant in the present case is, to my mind, similar to that contemplated by Lord Atkinson in the passage last cited. If the charterparty had not been repudiated and had remained on foot, it would have been terminated by the charterers in or shortly after March 2003 when the Second Gulf War triggered the clause 33 termination option. But the owners are claiming damages up to 6 December 2005 on the footing, now known to be false, that the charterparty would have continued until then. It is contended that because the charterers' repudiation and its acceptance by the owners preceded the March 2003 event, the rule requiring damages for breach of contract to be assessed at the date of breach requires that event to be ignored.
32. That contention, in my opinion, attributes to the assessment of damages at the date of breach rule an inflexibility which is inconsistent both with principle and with the authorities. The underlying principle is that the victim of a breach of contract is entitled to damages representing the value of the contractual benefit to which he was entitled but of which he has been deprived. He is entitled to be put in the same position, so far as money can do it, as if the contract had been performed. The assessment at the date of breach rule can usually achieve that result. But not always. In Miliangos v. George Frank (Textiles) Ltd. [1976] AC 443, 468 – 469 Lord Wilberforce referred to "the general rule" that damages for breach of contract are assessed as at the date of breach but went on to observe that
"It is for the courts, or for arbitrators, to work out a solution in each case best adapted to giving the injured plaintiff that amount in damages which will most fairly compensate him for the wrong which he has suffered"
and, when considering the date at which a foreign money obligation should be converted into sterling, chose the date that "gets nearest to securing to the creditor exactly what he bargained for". If a money award of damages for breach of contract provides to the creditor a lesser or a greater benefit than the creditor bargained for, the award fails, in either case, to provide a just result.
…
38. The arguments of the owners offend the compensatory principle. They are seeking compensation exceeding the value of the contractual benefits of which they were deprived. Their case requires the assessor to speculate about what might happen over the period 17 December 2001 to 6 December 2005 regarding the occurrence of a clause 33 event and to shut his eyes to the actual happening of a clause 33 event in March 2003. The argued justification for thus offending the compensatory principle is that priority should be given to the so-called principle of certainty. My Lords, there is, in my opinion, no such principle. Certainty is a desideratum and a very important one, particularly in commercial contracts. But it is not a principle and must give way to principle. Otherwise incoherence of principle is the likely result. The achievement of certainty in relation to commercial contracts depends, I would suggest, on firm and settled principles of the law of contract rather than on the tailoring of principle in order to frustrate tactics of delay to which many litigants in many areas of litigation are wont to resort. Be that as it may, the compensatory principle that must underlie awards of contractual damages is, in my opinion, clear and requires the appeal in the case to be dismissed. I wish also to express my agreement with the reasons given by my noble and learned friends, Lord Carswell and Lord Brown of Eaton-under-Heywood, for coming to the same conclusion."
The kernel of the speech of Lord Carswell was at paragraph 63:-
"The point at issue in this appeal has never been considered by your Lordships' House and remains open for decision. Lord Bingham has placed strong emphasis in para 23 of his opinion on the importance of certainty in commercial transactions. I do not wish to cast any doubt upon that, but I have come to the conclusion that Langley J and the Court of Appeal were right in holding that the contingency of the outbreak of war, which had occurred before the damages fell to be considered in the arbitration, could be taken into account. I find myself in agreement with Lord Mance when he said [2006] 1 WLR 533, 544, para 26 that considerations of certainty and finality have in this case to yield to the greater importance of achieving an accurate assessment of the damages based on the loss actually incurred."
Again, the essence of the opinion of Lord Brown of Eaton-under-Heywood was to be found at paragraph 83:-
"In my opinion the owners' argument here seeks to extend the effect of the available market rule well beyond its proper scope and to do so, moreover, at the plain expense of Lord Blackburn's fundamental principle: to restore the injured party to the same position he would have been in but for the breach, not substantially to improve upon it. It is one thing to say that the injured party, mitigating his loss as the breach date rule requires him to do, thereby takes any future market movement out of the equation and to that extent crystallises the measure of his loss; it is quite another to say, as the owners do here, that it requires the arbitrator or court when finally determining the damages to ignore subsequent events (save where the defendants can demonstrate that at the date of breach some suspensive condition would inevitably – and immediately – have operated to cancel the contract). There is no warrant for giving the rule so extended application."
In my judgment, in the light of the speeches in Golden Strait Corp. v. Nippon Yusen Kubishika Kaisha from which I have quoted, the current state of the law is that damages for breach of contract fall to be assessed as at the date of the breach, but that in making that assessment it is appropriate to take into account matters which have occurred and which impact upon the question how valuable the contractual rights lost or broken would have proved to be, but for the breach of contract complained of. That, I think, was not in dispute between Miss Michaels and Mr. Jupp.
Attached to the Amended Particulars of Claim was a Schedule of Loss and Damage. That Schedule was introduced in this way:-
"1. The figures contained within this schedule are provided as an indication of the Claimant's claim. It is based on the information in the possession of the Claimant drawn principally from the actual sales made before the date of the breach and an assessment of the projected sales taking into account the likely growth of internet sales of match-day tickets over the period of the contract assuming that the Defendant's average attendance figures were to remain constant.
2. This schedule as currently drafted does not take account of the following:
2.1 The likely increase in attendance at the Defendant's ground given the current performance of the first team and likely promotion to the Football League Championship division.
2.2 The likely increase in ticket prices which will occur both as a consequence of inflation and as a consequence of promotion.
2.3 The likely increase in attendance once the Defendant completes its planned moved [sic] to a 20,000 seat stadium.
2.4 The accelerated receipt by the Claimant of sums due over the period ending May 2009.
These factors will be accounted for in a revised schedule which will be served once disclosure has taken place and once expert evidence has been obtained."
In fact no revised schedule was prepared until Mr. Jupp delivered his closing submissions, and no expert report was obtained on behalf of Seatbooker, although permission had been given for such evidence. In the result the only evidence of loss adduced on behalf of Seatbooker was that of Mr. Baldwin. Mr. Baldwin did not profess any qualifications or expertise in accountancy or the management of football clubs.
Of the factors listed in paragraph 2 of the Schedule of Loss and Damage, the Team was indeed promoted to the Football League Championship for the football season 2006 – 2007, but it was then demoted for the football season 2007 – 2008 to Football League One. I have already noted that the intended move to a new ground has not yet taken place and is not now expected to take place until 2010. It was common ground that a discount was appropriate in respect of such part of the damages to which Seatbooker was entitled as would not have been payable by the date of the trial if the SSLA had not been terminated. In the event it was agreed that the appropriate discount was 6% from sums found to be due in respect of the football season 2008 – 2009.
The Schedule of Loss and Damage proceeded on the basis that Seatbooker was entitled to compensation at the rate of 8% of the average face value ticket price of Available Tickets which would have been sold over the internet by Seatbooker in the period September 2005 to May 2009. The starting point was the date as from which the Club ceased to sell Available Tickets over the internet using the software supplied by Seatbooker. May 2009 was the end of the football season immediately before the earliest date at which the SSLA could lawfully have been terminated, 8 June 2009. The latter date was during the closed football season. Mr. Baldwin's assessment in the Schedule of Loss and Damage was based on an average ticket price of £17.50, 24 Home Matches per annum, and varying amounts of Available Tickets sold each year, specifically 1,090 per match in the calendar year 2005 between September and December inclusive, 2,000 per match in the calendar year 2006, 3,000 per match in the calendar year 2007, and 3,500 per match thereafter. Mr. Baldwin accepted in cross-examination that his figure of £17.50 had been calculated on the basis of the average price of each ticket, including season tickets, actually sold over the internet during the period the Club was selling tickets using Seatbooker's software. It followed that the figure of £17.50 was excessive as an indication of the average selling price of Available Tickets. However, the result of Mr. Baldwin's calculation of loss from commission on the sale of Available Tickets was £350,000.
Mr. Baldwin's Schedule of Loss and Damage also included an element for loss of sales of season tickets, based on £205 per ticket, and supposed sales of 3,300 in 2006 and of 3,800 in each of 2007 and 2008. A commission of 1% of those supposed sales came to £22,345.
Further, there was a claim for loss of the monthly fees of £499 payable under the SSLA for 45 months, totalling £22,455. That calculation was not in dispute and it was accepted that that amount should be included in the calculation of the damages due to Seatbooker in the event that it succeeded in its claim.
Mr. Baldwin allowed an amount of £1,800 per annum as a saving made by Seatbooker as a result of not having to furnish the services for which the SSLA provided, totalling £6,750 over the period relevant to the assessment of damages. In cross-examination Mr. Baldwin explained that the only real saving as a result of not having to perform the services governed by the SSLA for the Club related to the cost of the link between the Seatbooker server and the equipment installed at the Club.
Permission was given not only to Seatbooker, but also to the Club to adduce expert evidence in relation to quantum. The Club availed itself of that permission, and instructed Mr. Douglas Hall, an accountant, to prepare a report. Mr. Hall was provided with various actual figures of sales of Available Tickets over the internet, of numbers of Home Matches, and of attendance at such matches, to enable him to attempt an assessment of the loss in fact suffered by Seatbooker. Those figures were supplied in two tranches. That had the consequence that Mr. Hall produced a first report, dated 10 January 2008, and then revised some of the figures in that first report in a supplemental report dated 21 January 2008.
Taking into account both League Matches and Cup Matches, the number of Home Matches played at the Ground was 26 in the football season 2002 – 2003, 31 in the football season 2003 – 2004, 29 in the football season 2004 – 2005, 25 in the football season 2005 – 2006, 26 in the football season 2006 – 2007 and an anticipated 30 in the football season 2007 – 2008. The annual average was thus, arithmetically, 27.8.
The total numbers of those attending Home Matches was, in the football season 2003 – 2004 147,255, in the football season 2004 – 2005, 170,626, in the football season 2005 – 2006, 196,855, and in the football season 2006 – 2007, 252,390. However, in the football season 2004 – 2005 a Cup match in fact played at Cardiff was treated as a "home" fixture for the Team and the number attending that match who purchased tickets through the Club, 36,216, was added by Mr. Hall to the numbers attending Home Matches in undertaking his calculations. In the previous year there was also a Cup match in which the Team participated and in respect of which tickets, in fact numbering 34,031, were sold through the Club. Mr. Hall did not include that figure in his calculations because that match was treated as an "away" fixture for the Team. In respect of each of these two Cup matches quite a large number of tickets were sold over the internet using the software supplied by Seatbooker and Seatbooker claimed, and was paid, commission at the rate of 8% on those sales. It was suggested that the relatively high level of internet sales distorted the picture of how many tickets, on average, were sold, or were likely to be sold, by the Club over the internet. However, the fact of the matter is that these were real sales on which Seatbooker made commission. Consequently, in my judgment, in order to assess, as a step on the way to calculating what Seatbooker had lost as a result of the wrongful termination of the SSLA, the percentage of the ticket sales effected by the Club in respect of which Seatbooker is entitled to commission, it is appropriate to bring into account both the numbers of those attending the two Cup matches and the numbers of tickets for those matches sold by the Club over the internet. Thus I adjust the attendance figure of 147,255 for the football season 2003 – 2004 to 181,286 and the attendance figure of 170,626 for the football season 2004 – 2005 to 206,842.
Of those attending Home Matches a considerable number were holders of season tickets. The numbers of season ticket holders were 1,480 in the football season 2003 – 2004, 1,787 in the football season 2004 – 2005, 2,939 in the football season 2005 – 2006, and 5,854 in the football season 2006 – 2007. In the football season 2007 – 2008 4,806 season tickets had been sold. If one assumed that every season ticket holder attended each League Match, which may be a little optimistic, the numbers of Available Tickets sold, plus those sold through the Club for the two Cup matches which I have mentioned, in each of the football seasons from 2003 – 2004 to 2006 – 2007, calculated as the actual numbers attending, less the number of season ticket holders multiplied by the number of League Matches, would be as follows:-
Football Total No. of Assumed No. of
Season Attendance Season Season Other
Ticket Ticket Tickets
Holders Attendance Sold
2003/04 181,286 1,480 34,040 147,246
2004/05 206,842 1,787 41,101 165,741
2005/06 196,855 2,939 67,597 129,258
2006/07 252,390 5,854 134,642 117,748
The figures for Available Tickets sold by the Club over the internet in the football seasons 2003 – 2004 to 2006 – 2007 inclusive were the subject of some debate during the trial. The figures for the seasons 2003 – 2004 and 2004 – 2005, which I accept are accurate, were derived from the invoices rendered by Seatbooker. Those which I accept for the other two seasons came from the "Internet Settlement Reports" of Tickets.com., but were adjusted to correct what Mr. Hall considered, and I agree, to be an overstatement of the figure for the season 2006 – 2007 by 1,000. Other sources suggested somewhat different figures, but I am disposed to accept the Tickets.com figures, with the adjustment which I have mentioned, as accurate for present purposes.
Of the total number of Available Tickets, and tickets relating to the two Cup matches to which I have referred, sold in the football seasons set out in the table in paragraph 124, I find that the number sold over the internet was 11,943 in 2003 – 2004, 20,760 in 2004 – 2005, 9,104 in 2005 – 2006 and 9,044 in 2006 – 2007.
Expressed as percentages of the number of actual sales of Available Tickets for Home Matches, plus the sales of tickets for the two Cup matches in the football seasons 2003 – 2004 and 2004 – 2005 which I have mentioned, the internet sales figures were, for 2003 – 2004 8.11, for 2004 – 2005 12.53, for 2005 – 2006 7.04 and for 2006 – 2007 7.68. Some figures in relation to the sale of Available Tickets over the internet in the current football season were put before me, but for present purposes it does not seem to me that those figures, which related only to League Matches, are particularly helpful.
The percentage of total Available Tickets, and the tickets relating to the two Cup matches, sold in the period 2003 – 2004 to 2006 – 2007 which were sold over the internet varied. The average over the period was 8.84. However, the average of the first two football seasons of the period, 10.32, was higher than the average over the latter two seasons, 7.36. There was vigorous debate before me as to why there should be a difference between the percentage sales made by the Club using the software supplied by Seatbooker, and the percentage sales made using the software supplied by Tickets.com. Miss Michaels submitted that I should find that the internet sales in the season 2004 – 2005 were unusually high because during that season the commission of 8% was not being charged to customers, as had been intended. Had that commission been charged, contended Miss Michaels, that would have depressed the level of internet sales, and that was a matter which I should take into account. Mr. Jupp countered that I should conclude that the levels of sales made by the Club using the software supplied by Tickets.com was depressed as compared with what use of the Seatbooker software would have been able to achieve, if the SSLA had not been terminated, because the Tickets.com software was inferior. Specifically the Tickets.com software did not offer to customers the facility of choosing a specific seat at the Ground when booking over the internet, and that, according to various comments on the ShrimperZone website, attracted adverse notice from fans of the Team. The ShrimperZone website was that of the supporters of the Team. Moreover, contended Mr. Jupp, when Tickets.com took over the supply of software to enable internet sales of Available Tickets the Club did not impose a commission charge of 8% on purchasers. Rather the charge was a flat rate of £1 per ticket sold. That amounted to only a modest increase, if one purchased more than one ticket, over the Transaction Charge which prevailed in the football season 2004 – 2005. In other words, there was not such an increase in price as to amount to a deterrent to purchase over the internet, if the service offered was otherwise thought to be satisfactory. In addition, Mr. Jupp relied upon the fact, which I think in the end was not in dispute, that there was a period between the termination of the use by the Club of the software supplied by Seatbooker and the commencement of the operation of the software supplied by Tickets.com, as the latter software did not seem to start effectively in use until the very end of September 2005.
It was common ground that, in order to assess damages for wrongful termination of the SSLA, one element to be considered was the loss of commission which Seatbooker would have earned in respect of the sale of Available Tickets, and any other match day tickets which the Club might have been able to offer, over the internet between September 2005 and May 2009. It was also common ground that the assessment of that element of loss involved reaching conclusions as to how many tickets would have been sold over the internet and at what prices. In respect of sales of Available Tickets which had actually taken place by the date of the trial I was urged, I think by both sides, to fix on a percentage of the actual sales which I found would have been achieved by the Club using the Seatbooker software and apply, for each relevant football season, an average internet sales price per Available Ticket for that season to the actual number which the percentage represented in order to reach a sum 8% of which was the amount of the commission lost to Seatbooker. For the current football season and the 2008 – 2009 season I was invited to assess the likely total number of sales of Available Tickets, the likely percentage of internet sales, if the SSLA had not been terminated, and the likely average price of such tickets sold over the internet. In principle those approaches seem to me to be appropriate. What I am really seeking to assess is the sum Seatbooker would have received by way of commission on the sale of Available Tickets over the internet if the SSLA had not been terminated and it had continued to offer the services for which the SSLA provided.
In my judgment the best evidence of the percentage of sales of Available Tickets actually made from September 2005 to date which would have been able to be achieved over the internet by use of the software supplied by Seatbooker, but for the termination of the SSLA, is the percentages which were in fact achieved by the Club using that software in the football seasons 2003 – 2004 and 2004 – 2005 – on average 10.32. Mr. Jupp contended that I should at least adopt as my starting point the highest percentage of internet sales achieved by use of the software supplied by Seatbooker in a football season, that is to say the 12.53 achieved in the season 2004 – 2005. He also submitted that I should in fact find that the percentage of internet sales would have increased. However, the only evidence in support of that contention was the belief of Mr. Baldwin that that was what he expected. The actual figures of sales achieved by the Club using the software supplied by Tickets.com did not support Mr. Jupp's contention. It did appear that some fans of the Team had been sufficiently unimpressed by the service supplied by the Club using the software of Tickets.com to record their dissatisfaction on the ShrimperZone website. I take that into account in concluding that it is not appropriate to conclude that the percentage of internet sales would have declined from what use by the Club of the software supplied by Seatbooker on average achieved. However, it is quite a long way from that finding to a finding that actually the percentage of internet sales would have increased, and it does not seem to me that the latter finding is justified. Miss Michaels submitted that I should find that, if the SSLA had continued, the Club would have adopted effectively the policy intended for the 2004 – 2005 football season of passing on to customers the 8% commission charged by Seatbooker for purchases over the internet and that that would have deterred sales. In a sense that submission was another way of putting her submission that I should conclude that the internet sales in the football season 2004 – 2005 were inflated by the commission not being charged, because the focus of attention was what would have been the level of sales if the Commission Element had been passed on to purchasers. Whether there would have been a deterrent effect or not, in my judgment, depends really upon how much the charge in cash would have represented. I shall come shortly to average Available Ticket prices. For the present it is enough to notice that the highest proposed average ticket price put before me was £21. That was suggested as that which might be applicable in the 2008 – 2009 football season if the Team secured promotion to the Football League Championship. 8% of £21 is £1.68. A charge of that magnitude would no doubt deter someone who could avoid it by attending easily at the Ground and buying a ticket there. However, it may not have the same effect on someone who did not have the ability conveniently to visit the Ground to buy a ticket. There was evidence that many Available Tickets were sold over the telephone, and that a charge of £1.50 is, and has for some years been, added to the ticket price as a postage or administration fee in respect of a telephone sale. Supporters of the Club are obviously prepared to accept such a charge, otherwise the Club would not have raised one. Purchase over the internet during the currency of the SSLA had the benefits not only that a ticket could be purchased at any time of day and without having to wait for a telephone call to be answered, but also of choosing one's seat as part of the internet experience. In those circumstances I am not satisfied that making a further charge to cover the 8% commission would have reduced the number of customers who would have purchased on the internet below the average numbers who in fact took advantage of the service offered by use of the software supplied by Seatbooker, or that the numbers who purchased over the internet in the football season 2004 – 2005 were increased because no such charge was made in that season. However, it seems to me that it is appropriate to average the percentages of sales achieved by use by the Club of the software supplied by Seatbooker over the two seasons during which the use of that software continued, rather than to accede to the suggestion of Mr. Jupp that I adopt as my starting point 12.53%. In the first year of sales of tickets over the internet purchasers did have to bear the commission of 8%.
It does not seem to me on the evidence that there is any justification for adopting a different percentage of internet sales of Available Tickets in respect of the calculation of the future losses of Seatbooker from that appropriate in respect of past losses.
While it is appropriate to base a finding as to the number of Available Ticket sales over the internet commission on which was lost by Seatbooker on an average of the percentages of its historical performance, the numbers to which that percentage has to be applied were in part historic and established by evidence, and in part have to be estimated. The evidence showed that the number of persons attending the Ground for Home Matches in the football season 2005 – 2006 after the Club had ceased, at about the end of August 2005, to use the software supplied by Seatbooker, was 171,043, calculated as the figure of 196,855 which I have already set out, less attendance at four matches in August 2005, amounting to 25,812. All of those four matches were League Matches, so that 19 League Matches remained to be played at home at the Ground during that season. Assuming that all of the 2,939 season ticket holders that year attended each of the remaining 19 matches, the number of Available Tickets purchased in the remainder of the 2005 – 2006 football season after the Club ceased to sell Available Tickets over the internet using the software supplied by Seatbooker was 115,202. On the assumption that all of the 5,854 season ticket holders in the season 2006 – 2007 attended all of the League Matches the number of Available Tickets purchased in that season was 117,748.
Up to the date of the end of the trial the Team had played 19 Home Matches in the football season 2007 – 2008. Those matches had been attended by a total of 129,853 people. On average, therefore, 6,834 people attended each match. Mr. Hall, in his first report, made at a time when the most recent Home Match had been that played on 5 January 2008, undertook some calculations on the basis of a total of 122,501 people attending the 18 Home Matches which had taken place by that date. One of his figures was that the average number of persons thus far attending Home Matches in the football season 2007 – 2008 (122,501 divided by 18) was 6,806. I do not think that the attendance at the additional match, which in fact took place on 19 January 2008, renders Mr. Hall's earlier calculations inaccurate in any worthwhile degree, and the points that he made in relation to his earlier calculation are still valid.
At paragraph 6.3.2 of his first report Mr. Hall set out a table showing the actual attendance at Home Matches up to and including the match on 5 January 2008, and comparing it with the actual attendance at Home Matches in the period of the previous season up to 6 January 2007. By that date the Team had played 17 Home Matches, which had been attended by a total of 159,435 people. A remaining nine Home Matches were played in the 2006 – 2007 football season, which were attended by a total of 92,955 people. The average number of attendees at the matches up to 6 January 2007 was thus 9,379, with the average number of attendees at the remaining Home Matches being 10,328. Mr. Hall went on to comment on these figures and their relevance to assessing the numbers of persons likely to attend Home Matches of the Team between now and the end of the 2008 – 2009 football season in May 2009:-
"6.3.3 This shows that in the 2007/08 season SUFC has played 18 home matches, the latest being on Saturday 5 January 2008, which was an FA Cup match. Across those 18 home matches the total attendance has been 122,501, an average per match of 6,806.
6.3.4 To the same point in the 2006/07 season SUFC had played 17 home matches (the last on 6 January 2007 was also an FA Cup match). Across those 17 home matches the attendance had been 159,435, an average per match of 9,379.
6.3.5 In the remainder of the 2006/07 season SUFC had played a further 9 home matches with a total attendance of 92,955 an average of 10,328 per match.
6.3.6 SUFC's average home match attendance in the period to 5 January 2008 has therefore fallen by 27.4% (6,806 compared to 9,379) against the equivalent period in 2006/07.
6.3.7 Were SUFC's average home match attendance in the remainder of 2007/08 to be lower than the equivalent period in the 2006/07 season the average home match attendance would be 7,495 (10,328 – 27.4%).
6.3.8 Allowing for a further 12 matches in the 2007/08 season to a total of 30 (see paragraph 4.1.12 above) the total attendance for the remainder of the season would be 89,938, taking the total attendance for the 2007/08 season to 212,439.
6.3.9 I consider this to be a reasonable basis on which to project the number of home matches that SUFC will play and the home match attendance that it will achieve in the remainder of the 2007/08 season.
6.4.1 I consider it reasonable to project the number of home matches that SUFC will play in the 2008/09 season based on the average number of home matches that took place in the 2002/03 to 2007/08 seasons, as calculated at paragraph 4.1.10 at 27.8.
6.4.2 This average covers a number of years in which the performance of SUFC in various competitions has varied. It is not possible to anticipate SUFC's performance in similar competitions in the 2008/09 season so such an average based on a number of past seasons would in my view be a reasonable basis for such a projection.
6.4.3 I also consider it reasonable to project the attendance that SUFC will achieve at its home matches in the 2008/09 season based on the average attendance for home matches calculated for 2007/08 at paragraph 6.3.2 at 7,081."
The assessment which Mr. Hall made of the likely attendance at Home Matches of the Team in that passage was rather borne out by the fact that the number who attended the match on 19 January 2008 was 7,352, whilst his analysis proceeded on the basis that on average 7,495 people would attend the remaining Home Matches in the 2007 – 2008 football season.
It was, I think, common ground that the number of people who attend particular home football matches tends to reflect how well the home team is doing in various competitions at the relevant time. As I have already remarked, the Team played in the Football League Championship in the season 2006 – 2007, and was then relegated to Football League One for the current season. Thus it seems that it would be expected that the numbers of those attending Home Matches this season would be lower than last season, which is exactly what the figures showed. In my judgment, the approach which Mr. Hall adopted to assessing the likely attendance of people at the remaining Home Matches for the current football season is logical and there is no obvious alternative to it. Thus I accept that it should be supposed that the total number of persons attending Home Matches in the season 2007 – 2008 will be that calculated by Mr. Hall, 212,439. The number of season tickets sold for the current season is 4,806. There remain 10 League Matches to be played. If one assumes that each of the season ticket holders has attended, and will attend, each of the League Matches in the current season, that accounts for 110,538 of the attendances, leaving 101,901 Available Tickets for potential sale over the internet. In fact it appears that only 3,019 Available Tickets have been sold over the internet.
Mr. Hall assumed that the average numbers of those attending Home Matches in the football season 2008 – 2009 would remain as he had calculated for the current season, 7,081 (212,439 divided by 30 matches). It was suggested by Mr. Jupp that that was a pessimistic assumption because there was a chance that the Team would be promoted back to the Football League Championship at the end of the current season. At the end of the trial the Team stood at eighth position in Football League One. I was told that the top two teams at the end of the season are automatically promoted. Apparently the teams which end in the third, fourth, fifth and sixth positions then play against each other for a third promotion place. What was suggested was that the Team might finish within the top six at the end of the season and thus have a chance of the third promotion place. That suggestion was put to Mr. King. He accepted that that was not impossible, but he did not think it likely. It is not the function of the Court to predict the outcome of football matches, but it does not seem to me that there is any reason to suppose that the Team has any serious chance of promotion at the end of the current season. As at the end of the trial the Team had played 26 matches and had 37 points. Two other clubs, Tranmere and Yeovil, also had 37 points, but had played 27 matches, and so occupied, respectively, the ninth and tenth place in Football League One. At the top of the division was Swansea with 50 points, having played 24 matches, followed by Carlisle with 45 points, having played 25 matches. The next four teams were Nottingham Forest with 44 points from 25 matches, Doncaster with 44 points from 26 matches, Leeds with 43 points from 27 matches and Leyton Orient with 43 points also from 27 matches. Walsall stood immediately ahead of the Team with 42 points from 27 matches. The Team was thus six points behind the sixth highest team in the division, but with only one match in hand. Walsall had no matches in hand, but was only one point behind. I conclude that on the balance of probabilities the Team will be playing in Football League One next season.
In the light of that finding I accept the conclusion of Mr. Hall that it is appropriate to suppose, for the purpose of assessing damages, that the sales per Home Match of Available Tickets in the season 2008 – 2009 will be on average the same as he calculated for the current season, 7,081. I also consider it appropriate to calculate the total number of persons likely to attend such Home Matches on the basis of an average number of Home Matches over the period from the commencement of the 2002 – 2003 football season until now, but since one cannot play a fraction of a match, I propose to proceed on the basis that there will be 28 Home Matches in the football season 2008 – 2009. Thus the total number of people attending Home Matches in that season I find will be 198,268. Mr. Hall assumed that the number of season tickets likely to be sold for the next football season would be the same as in the current season, namely 4,806. That assumption follows Mr. Hall's general logic, which I accept, and thus I adopt that figure. On that basis, and continuing my assumption that all season ticket holders will attend all League Matches, I find that the number of Available Tickets potentially able to be sold over the internet in the football season 2008 – 2009 is 87,730 (198,268 – (4,806 x 23)).
The average prices of Available Tickets sold over the internet in the football season 2005 – 2006 after the Club ceased to use the software supplied by Seatbooker Mr. Hall calculated was £13.34. In the following season Mr. Hall calculated the average sale price for such tickets at £17.58. For the football season 2007 – 2008 thus far Mr. Hall calculated the average sale price of Available Tickets over the internet at £14.82. In his calculations he assumed that that average price would continue until the end of the football season 2008 – 2009. I accept his evidence of these average prices and his assumption as to the average price for the future. The only figure Mr. Jupp contested was that for the football season 2008 – 2009. He contended that it should be assumed that the current average ticket price of £14.82 would be increased by 3%, as he contended in line with inflation. There was no evidence that the Club intended to increase the average price of tickets by 3%, or that it had ever increased prices annually in line with inflation. Rather the evidence was that if the Team was promoted to the Football League Championship the Club wished to increase average prices for tickets sold over the internet to £21. However, if that promotion was not achieved, there was no evidence of any intention to increase prices.
The loss which Seatbooker sustained by reason of the wrongful termination of the SSLA in respect of loss of receipt of 8% commission on sale of Available Tickets over the internet in the period from September 2005 to May 2009 falls to be calculated on the basis of 8% of 10.32% (the percentage which I have found of Available Tickets which would have been sold over the internet) of the following attendance figures and average prices:-
Season Attendance Average Price Total
2005 – 06 115,202 £13.34 £1,536,794.68
2006 – 07 117,748 £17.58 £2,070,009.84
2007 – 08 101,901 £14.82 £1,510,172.82
2008 – 09 87,730 £14.82 £1,300,158.60
£6,417,136.84
10.32% of the sum of £6,417,136.84 is £662,248.51. 8% of that is £52,979.88. However, it was common ground that the figure in respect of the season 2008 – 2009 ought to be reduced by 6% to reflect the fact that compensation was being paid now in respect of sums which would not have been paid until during the course of that season, but for the wrongful termination of the SSLA. 10.32% of £1,300,158.60 is £134,176.36. 8% of £134,176.36 is £10,734.10. 94% of the latter figure is £10,090.06. £644.04 therefore falls to be deducted from the sum of £52,979.88, making the total amount of damages in respect of this element £52,335.84.
Turning to the element of loss constituted by inability to sell season tickets over the internet, the evidence was that 33 season tickets out of 1,787 were sold over the internet in the football season 2004 – 2005, the first time season tickets were so sold, and 198 season tickets out of 2,939 were sold over the internet in the football season 2005 – 2006. Thereafter season tickets were not sold over the internet. The evidence was that the time at which season tickets are sold is before the start of the football season in August. The selling of season tickets over the internet in 2004 commenced about the beginning of June. Thus it may be that some season tickets for the football season 2004 – 2005 had already been sold before they became available on the internet. It may also be that the period available to make known the fact that season tickets were available over the internet was limited, and that that hampered sales. However, the ability of purchasers to buy season tickets over the internet was established by the start of the season ticket selling season in 2005 and the full period of the selling season was available for internet sales. The figures show that 1.85% of season tickets for the football season 2004 – 2005 were sold over the internet, and 6.74% of season tickets for the following season were so sold.
Mr. Hall prepared calculations on the basis of assuming that the same percentage of season ticket sales as sales of Available Tickets would have been sold by the Club, but for the wrongful termination of the SSLA. In her closing submissions Miss Michaels queried the logic of that assumption. She submitted, rightly as it seems to me, that the appropriate assumption should be based on the percentage of season tickets sold over the internet of all season tickets sold. As I understood it, she accepted that the percentage sold in the football season 2004 – 2005 could not be considered representative, and thus that the percentage 6.74 should be adopted. I accept that submission. Miss Michaels did not submit that no account at all should be taken of loss of sales of season tickets over the internet because there were in fact no sales after the football season 2005 – 2006, and the Club was not contractually bound to offer season tickets over the internet. Mr. Jupp adopted Mr. Hall's approach of assuming percentages of the same level as those applicable to sales of Available Tickets over the internet, but contended for considerably higher percentages than that which I have adopted.
It appeared to be common ground that the average prices of season tickets sold by the Club were £249 in the football season 2006 – 2007 and £253 in the football season 2007 – 2008. Mr. Jupp contended that it should be assumed that the average price for the football season 2008 – 2009 would be increased by 3%, as he said, in line with inflation. The case for the Club was that it should be supposed that the average season ticket price would not increase for the football season 2008 – 2009. There was no evidence to support an increase in line with inflation and I find that the average season ticket price in the football season 2008 – 2009 will remain as it currently is.
The loss which Seatbooker sustained in relation to loss of commission on season tickets as a result of the wrongful termination of the SSLA was 1% of the value of the lost tickets. Assuming that 6.74% of the actual season tickets sold for the football seasons 2006 – 2007 and 2007 – 2008 would have been sold over the internet, the value of tickets lost in the season 2006 – 2007 was £98,355 (6.74% of 5,854, being 394.56, say 395, multiplied by £249), while the value of the tickets lost in the season 2007 – 2008 was £81,972 (6.74% of 4,806, being 323.92, say 324, multiplied by £253). The loss of commission for these two years was thus £1,803.27. The calculation for the loss for the football season 2008 – 2009 is similar to that for the season 2007 – 2008, but, as already explained, it needs to be reduced by 6% for early payment. Thus the figure for that year is £770.54. The total value of this element of loss is thus £2,573.81.
As I have noted, it was common ground that the value of the element of loss of the monthly fees payable under the SSLA as a result of the wrongful termination of the SSLA was £22,455.
The only other element which needs to be assessed in order to reach a conclusion as to the damages to which Seatbooker is entitled is the costs saved as a result of not having to furnish the services for which the SSLA made provision. The last financial statements of Seatbooker which had been produced were those for the year ended 31 January 2006. Mr. Hall considered the Trading and Profit and Loss Account for the year ended 31 January 2006 included in those financial statements. He found it opaque because of the imprecise descriptions of various elements included in the Cost of Sales, and the uncertain reason for treating "Internet Connectivity – Broadband" and "Credit Card Charges" as Administrative Expenses rather than as part of the Cost of Sales. Mr. Hall, doing the best he could, and noting that the percentage of gross profit shown in the accounts amounted to 83.1%, assumed that perhaps 10% of the sums which were found to be due to Seatbooker in respect of the other elements which I have considered should be treated as having been saved as a result of not having to perform Seatbooker's obligations under the SSLA.
The only evidence called on behalf of Seatbooker as to likely cost savings was that of Mr. Baldwin. He had no role in preparing the Trading and Profit and Loss Account for the year ended 31 January 2006. His awareness of the costs of the business was limited. However, he did tell me that the only costs specific to the service provided to the Club were those of the link between the Club's premises and the server used by Seatbooker. In the Schedule of Loss and Damage which he prepared he assessed the cost savings at a total of £6,750. I accept the evidence of Mr. Baldwin as to the nature of the cost savings made as a result of the termination of the SSLA. In default of more definite information I accept his assessment of the value of the cost savings at £6,750. Although I am sure that Mr. Hall was doing his best to help me in his assessment of cost savings, I am confident that, in the light of the evidence of Mr. Baldwin which I accept, Mr. Hall's assessment was over-stated.
In the result I find that the damages to which Seatbooker is entitled as a result of the wrongful termination by the Club of the SSLA are the sum of £70,614.65, calculated as £52,335.84 in respect of loss of 8% commission on sales of Available Tickets over the internet, plus £2,573.81 in respect of loss of 1% commission on sales of season tickets over the internet, plus £22,455 in respect of loss of the monthly fees of £499, less cost savings of £6,750.
Conclusion
There will be judgment for Seatbooker in the sum of £70,614.65, together with interest, as to which I will hear Counsel.
The counterclaims of the Club, which, with the exception of that based on the withholding of the amount offset by Seatbooker in respect of its commissions on sales of tickets over the internet, were all said to be founded on alleged mistake or misrepresentation, are all dismissed. | 2 |
THIRD SECTION
CASE OF ZAICEVS v. LATVIA
(Application no. 65022/01)
JUDGMENT
(Extracts)
STRASBOURG
31 July 2007
This judgment is final but may be subject to editorial revision
In the case of Zaicevs v. Latvia,
The European Court of Human Rights (Third Section), sitting as a Chamber composed of:
Boštjan M. Zupančič, President,Corneliu Bîrsan,Alvina Gyulumyan,Egbert Myjer,David Thór Björgvinsson,Ineta Ziemele,Isabelle Berro-Lefèvre, judges,and Santiago Quesada, Section Registrar,
Having deliberated in private on 10 July 2007,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 65022/01) against the Republic of Latvia lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a former Soviet Union national and “permanently resident non-citizen” of Latvia, Mr Vasilijs Zaicevs (“the applicant”), on 18 December 2000.
2. The Latvian Government (“the Government”) were represented by their Agent, Mrs I. Reine. The applicant was given leave to represent himself before the Court.
3. The applicant alleged, in particular, that the proceedings which culminated in his being sentenced to three days' detention for contempt of court had breached the fundamental guarantees of Article 6 of the Convention. He further complained, under Article 2 of Protocol No. 7 to the Convention, of the absence in Latvian law of a remedy by which to challenge his conviction.
4. By a decision of 23 November 2006, the Chamber declared the application partly admissible.
5. The applicant, but not the Government, filed further written observations (Rule 59 § 1 of the Rules of Court).
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
6. The applicant, who is not employed, is president of the non‑governmental organisation Aizstāvis, (“Defender”) which is based in Liepāja and the aim of which, according to its articles of association, is to protect the rights of retired, disabled and less well-off persons and other vulnerable categories.
7. On 20 July 2000 Mrs Ņ.L., whom the applicant considers as one of his clients, went to the Liepāja District Court of First Instance in order to obtain a copy of the record of the hearing held a few days previously in her civil case. At Ņ.L.'s request the applicant accompanied her to the office of Judge M.J., who had heard the case in question. However, the judge refused to provide them with the document requested and ordered them to leave her office.
8. As soon as the applicant had left the office, Judge M.J. drew up a regulatory offence report (administratīvā pārkāpuma protokols). This document, which was written entirely by hand, read as follows:
“Liepāja, 20 July 2000
11.30 a.m. Regulatory offence report prepared by Judge [M.J.] of Liepāja District Court concerning Mr Vasilijs Zaicevs ..., of ..., Liepāja. Mr Zaicevs burst into my office without permission, disturbing me at my work, and rudely demanded information to which he was not entitled, thus acting in flagrant breach of the rules [of conduct] within the precincts of a court and displaying a lack of respect.
Vasilijs Zaicevs thereby infringed Article 201-39 of the Regulatory Offences Code.
The offending party is unable to offer an explanation, having left the premises. ...”
9. The same day, Judge M.J. sent an explanatory note to Judge K.S., acting president of the court. The note read as follows:
“On 20 July 2000, at around 11.30 a.m., I was working in my office ..., preparing a judgment in another case. The door of the office opened suddenly and Vasilijs Zaicevs and [Ņ.L.] burst in without permission.
In flagrant breach of the secrecy of deliberations, Vasilijs Zaicevs demanded, rudely and in a loud voice, that I provide him with a copy of the record in the case of [Ņ.L.]. I explained calmly that it was not our practice to provide copies of records. Vasilijs Zaicevs began shouting more loudly, demanding that [Ņ.L.'s] supposed rights be respected. He waved his mobile phone around and threatened to call the public prosecutor's office. As the two [visitors] refused to leave the office, I stood up and went towards the registry office in order to summon a security officer.
Zaicevs' conduct demonstrated a gross lack of respect for the court, in flagrant breach of the rules [of conduct] applicable within the precincts of a court: he not only addressed me in an impolite tone, but also issued threats, entered a judge's office without permission and breached the secrecy of deliberations. ...”
10. Shortly afterwards, a similar account was given in writing by a member of the court's registry who had witnessed the incident.
11. On the following day, 21 July 2000, Judge K.S. ordered the registry to summon the applicant to appear on 25 July in order to determine whether he had been guilty of contempt of court. When the applicant failed to appear at the appointed time, the judge ordered the police to find him and bring him before the court by force. The next day, 26 July 2000, the police officer concerned informed K.S. that the applicant had not been at home and could not be traced.
12. On 2 August 2000 the applicant himself went to the Liepāja District Court in order to represent another person who had been declared a victim in criminal proceedings. After the hearing the court's registrar issued him with a summons (tiesas pavēste) requesting him to appear before the same court on 7 August 2000 in connection with the regulatory offence. According to the applicant, it was only then that he learned of the charges against him. He immediately went to see Judge K.S. and requested leave to consult and make copies of the documents in his file to help him prepare his defence. His request was refused, and the applicant immediately made note of the fact on the summons which he handed back to the registrar.
13. In a letter sent the following day, 3 August 2000, the applicant addressed a complaint to the public prosecutor's office at the Kurzeme Regional Court and the Minister of Justice concerning the refusal by Judge K.S. to allow him to consult the file. He received no reply.
14. On 7 August 2000 Judge K.S. gave the applicant leave to consult the documents in his file and to make photocopies free of charge. According to the explanations furnished by the Government, which were not disputed by the applicant, the file comprised a total of seven one-page documents, as follows: the regulatory offence report, the depositions of the registry official who had witnessed the incident, the depositions of Judge M.J., the order issued by Judge K.S. to the police to find the applicant and bring him before the court by force, the report of the police officer concerned and two summonses to the applicant.
15. On 9 August 2000 Judge A.P., also of the Liepāja District Court, examined the merits of the charge against the applicant. At the hearing, the applicant pleaded not guilty to the regulatory offence. In particular, he contested the account of the facts presented by Judge M.J. The relevant part of the record of the hearing reads as follows:
“... When asked whether he had any specific requests in relation to the case, V. Zaicevs [replied to the court]: 'I would ask you to note that I consulted the seven documents in the file.'
When asked whether he had read the regulatory offence report, V. Zaicevs [replied to the court]: 'I have read the documents, including the regulatory offence report, but do not understand why Article 238 of the R[egulatory] O[ffences] C[ode] was applied. ... I would ask that the lawfulness of applying that provision be reviewed by means of administrative proceedings. ... The report by [Judge M.J.] is dated 20 July, but I did not see it until 7 August.'
When asked whether he had further questions, V. Zaicevs requested that Judge [M.J.] be summoned to the hearing on account of her allegedly unlawful refusal to provide him with copies of the record [in the case of Ņ.L.]. The court explained again why the administrative proceedings had been brought, and stated that Judge [M.J.] would not be given notice to appear as the present proceedings did not concern any failure [on M.J.'s part] to provide the record in question, but related to contempt of court.
V. Zaicevs [stated]: 'I wish to challenge the bench.' The court explained that the R[egulatory] O[ffences] C[ode] made no provision for challenging the judge in this category of cases...”
16. In a final order issued at the end of the hearing on 9 August 2000, Judge A.P. sentenced the applicant to three days' “administrative detention” (administratīvais arests) for contempt of court (necieņa pret tiesu), an offence punishable under Article 201-39 of the Regulatory Offences Code. The judge took the view that the applicant's guilt had been sufficiently proven by the written explanations of M.J. and the member of the registry staff who had witnessed the incident. The Liepāja State Police Directorate (Valsts policija) was instructed to execute the order, which became effective as soon as it was issued.
17. The applicant served his sentence from the afternoon of 9 August until the afternoon of 12 August 2000 in the temporary segregation unit (īslaicīgās aizturēšanas izolators) of the local police station. On 17 August 2000 the deputy head of the police station issued the applicant with a written certificate attesting to his stay in the segregation unit.
18. Between August and October 2000 the applicant wrote several letters to the Prosecutor General's Office criticising the proceedings leading to his conviction. He received no reply.
II. RELEVANT DOMESTIC LAW AND PRACTICE
A. Regulatory offences and penalties
19. Prior to 1944, most offences falling within the jurisdiction of the courts were governed by the 1933 Penal Code (Sodu likums). During the Soviet era, however, the least serious offences were removed from the criminal‑law sphere, reclassified as “regulatory offences” (administratīvie pārkāpumi) and incorporated in a separate code. The new 1998 Criminal Code (Krimināllikums) is based on the same approach, dealing with only the most serious offences (kriminālpārkāpumi). Other offences are governed by the Regulatory Offences Code (Administratīvo pārkāpumu kodekss), which was adopted in 1984 and has undergone numerous amendments.
20. The ne bis in idem rule applies across both categories of offences. Hence, administrative liability can arise only if the facts in question do not fall within the sphere of criminal law (Article 9 of the Regulatory Offences Code). No administrative proceedings may be brought against a person who is already the subject of criminal proceedings concerning the same facts (Article 239, point 8). However, if the criminal case has been discontinued without a decision being given, an administrative penalty may in principle be imposed (Article 37). In a judgment of 3 May 2005 (case no. SKA-106), the Senate of the Supreme Court held that, once it had been enforced, an administrative penalty could not be quashed in favour of a criminal prosecution in relation to the same facts (point 14 of the judgment).
21. The first paragraph of Article 31 of the Regulatory Offences Code reads as follows:
“Administrative detention may be ordered and enforced only in exceptional cases relating to specific categories of regulatory offences and for a period of between one and fifteen days. It shall be ordered by a judge of the court [of first instance].”
Under the terms of the above-mentioned judgment of 3 May 2005, “administrative detention ... by its nature, can be ... equated to a criminal penalty” (ibid.).
22. At the time of the facts dealt with in the present application, the other relevant provisions of the Regulatory Offences Code read as follows:
Article 201-39
“Contempt of court in the form of refusal on the part of a witness, victim or civil party or [their] representatives, a legal representative, expert, specialist, interpreter or participant in a civil case, or any other person, to comply with the orders of the presiding judge by failing to observe the rules during the hearing or by any conduct displaying flagrant disregard for the rules governing the hearing or the court, shall be punishable by a fine of two hundred and fifty latis or a period of administrative detention of up to fifteen days.”
Article 260, first and second paragraphs
“Any person against whom administrative liability [for an offence] is asserted shall have the right to consult all the documents in the case file either in person or through a lawyer, to furnish explanations and to make requests and applications.
Any person against whom administrative liability [for an offence] is asserted shall have the right to attend the hearings in the case, be assisted by a lawyer, submit additional evidence, lodge requests and appeal against the decision taken in the case.”
...
Article 279, second paragraph
“Any order given by a judge of the court [of first instance] ... imposing a penalty for a regulatory offence shall be final and shall not be amenable to appeal ..., except where the law so provides.”
...
Article 287, first paragraph
“Any order given by a judge in a case ... under Article ... 201-39 ... may be set aside or amended either by the same judge on a third-party application by the prosecutor or, irrespective of any third-party application ..., by the president of the higher court.”
Article 291, second paragraph
“Where ... a third-party application has been lodged to set aside a decision imposing a penalty for a regulatory offence, the penalty must be enforced if ... the application ... is rejected.”
...
B. Constitutional Court judgment of 20 June 2002
23. In a judgment of 20 June 2002 in case no. 2001-17-0106, the Constitutional Court (Satversmes tiesa) found the second paragraph of Article 279 of the Regulatory Offences Code to be contrary to the relevant provisions of the Latvian Constitution, Article 6 of the Convention and Article 2 of Protocol No. 7, and declared it null and void ex nunc. The relevant parts of the judgment read as follows:
“...1. ...
In Latvia, as in most post-socialist States, administrative procedure – unlike civil and criminal procedure – is generally characterised by the fact that the court's (judge's) decision in a case concerning a regulatory offence is final and is not amenable to appeal before a higher court. ...
...
6. ...
Cases concerning regulatory offences can ... be divided into [three categories]: (1) those which can be equated to criminal cases, (2) those which can be equated to civil cases and (3) those which do not possess any characteristics enabling them to be equated to another category of cases. Whether or not, in a given case ..., the right to appeal to a higher court is guaranteed by ... the Constitution depends on the category to which the case belongs.
6.1. ... A study of cases concerning regulatory offences governed by the R[egulatory] O[ffences] C[ode] reveals that some offences are punishable by a fine or [a short period of] detention. Both the fine and the detention are of a punitive nature characteristic of the criminal-law sphere; accordingly, these penalties are criminal in nature. The purpose of the Convention requires that such significant penalties be protected [sic] by Article 6 of the Convention and Article 2 of Protocol No. 7.
Similarly, the national legal system places some regulatory offences – for example, drunk driving ..., and most offences against the environment – in both the administrative and the criminal-law categories; if an offence of this kind ... is committed twice during the same year, [the person responsible] incurs criminal liability. Accordingly, in these cases also, the rights of persons punished for a regulatory offence are protected by Article 6 of the Convention and Article 2 of Protocol No. 7.
This leads to the conclusion that ... the Constitution guarantees the right to appeal in cases concerning regulatory offences which possess the characteristics of a criminal case on the basis of one of the criteria referred to above or another criterion.
...
6.3. ... [C]ases with a public dimension, in which priority is given to the interests of society, may not be classified as civil cases for the purposes of the Convention. Examples include decisions relating to tax, immigration and emigration, the issuing of visas or electoral rights. Similarly, offences against the legal system ... which do not possess characteristics bringing them within the criminal sphere, are not covered either by Article 6 of the Convention or by Article 2 of Protocol No. 7. Consequently, national law may define categories of cases concerning regulatory offences which are not amenable to appeal.
...”
III. EXPLANATORY REPORT TO PROTOCOL No. 7 TO THE CONVENTION
24. The relevant paragraphs of the explanatory report to Protocol No. 7 are worded as follows:
“17. This article recognises the right of everyone convicted of a criminal offence by a tribunal to have his conviction or sentence reviewed by a higher tribunal. It does not require that in every case he should be entitled to have both his conviction and sentence so reviewed. Thus, for example, if the person convicted has pleaded guilty to the offence charged, the right may be restricted to a review of his sentence. As compared with the wording of the corresponding provisions of the United Nations Covenant (Article 14, paragraph 5), the word 'tribunal' has been added to show clearly that this provision does not concern offences which have been tried by bodies which are not tribunals within the meaning of Article 6 of the Convention.
...
20. Paragraph 2 of the article permits exceptions to this right of review by a higher tribunal:
- for offences of a minor character, as prescribed by law;
- in cases in which the person concerned has been tried in the first instance by the highest tribunal, for example by virtue of his status as a minister, judge or other holder of high office, or because of the nature of the offence;
- where the person concerned was convicted following an appeal against acquittal.
21. When deciding whether an offence is of a minor character, an important criterion is the question of whether the offence is punishable by imprisonment or not.”
THE LAW
...
II. ALLEGED VIOLATION OF ARTICLE 2 OF PROTOCOL No. 7
50. The applicant also considered that he had been a victim of a violation of his right to appeal in criminal matters as guaranteed by Article 2 of Protocol No. 7, which provides:
“1. Everyone convicted of a criminal offence by a tribunal shall have the right to have his conviction or sentence reviewed by a higher tribunal. The exercise of this right, including the grounds on which it may be exercised, shall be governed by law.
2. This right may be subject to exceptions in regard to offences of a minor character, as prescribed by law, or in cases in which the person concerned was tried in the first instance by the highest tribunal or was convicted following an appeal against acquittal.”
51. The Government submitted that the order of 9 August 2000 fell within the scope of the second paragraph of Article 2, as the applicant had been convicted of “[an offence] of a minor character, as prescribed by law”. In that connection they pointed out that the offence was a regulatory one not classified as criminal by the Latvian legislation as it was much less serious than an ordinary criminal offence. As to the Constitutional Court judgment of 20 June 2002 (see paragraph 23 above), the Government considered that it was not relevant to the instant case.
52. The applicant contended that the impossibility of appealing against the order of 9 August 2000 amounted to a violation of Article 2 of Protocol No. 7.
53. The Court reiterates that the concept of “criminal offence” in the first paragraph of Article 2 of Protocol No. 7, cited above, corresponds to that of “criminal charge” in Article 6 § 1 of the Convention (see Gurepka v. Ukraine, no. 61406/00, § 55, 6 September 2005). Hence, given that it has just found Article 6 to be applicable in the present case ..., the Court must of necessity conclude that Article 2 of Protocol No. 7 also applies.
54. It is not disputed in the instant case that under the second paragraph of Article 279 of the Regulatory Offences Code as it was worded at the material time, the order of 9 August 2000 was not amenable to appeal before a higher court. Furthermore, with regard to possible remedies in the form of a third-party application to the prosecutor or an application to the president of the higher court to have the order set aside, referred to in Articles 287 and 291 of the Code (see paragraph 22 above), the Court considers that these manifestly did not satisfy the requirements of Article 2 of Protocol No. 7 (see, mutatis mutandis, Gurepka, cited above, §§ 60-61, and Grecu v. Romania, no. 75101/01, §§ 83-84, 30 November 2006). The lack of a possibility of appeal will amount to a violation of the above‑mentioned Article unless it is covered by one of the three exceptions referred to in the second paragraph.
55. The Government contended that the offence of which the applicant was convicted was an “offence of a minor character” within the meaning of Article 2 § 2. In that connection the Court has considered the terms of the Explanatory Report to Protocol No. 7, which states expressly that when deciding whether an offence is of a minor character, an important criterion is the question of whether the offence is punishable by imprisonment or not (see paragraph 24 above). In the instant case, Article 201-39 of the Regulatory Offences Code stipulated that the offence in question was punishable by a term of detention of up to fifteen days. Having regard to the aim of Article 2 and the nature of the guarantees for which it provides, the Court is satisfied that an offence for which the law prescribes a custodial sentence as the main punishment cannot be described as “minor” within the meaning of the second paragraph of that Article. As to the classification of the offence in national law, the Court has already pointed out that this has only a relative value. The exception invoked by the Government is therefore not applicable in the present case.
56. Lastly, the Court notes that, in its judgment of 20 June 2002, the Constitutional Court found the second paragraph of Article 279 of the Regulatory Offences Code to be contrary, inter alia, to Article 2 of Protocol No. 7, and declared it null and void. However, this does nothing to alter the situation of the applicant, who was exposed to the full effects of the provision in question and therefore continues to be a “victim” of the alleged violation.
57. Accordingly, there has been a violation of Article 2 of Protocol No. 7.
...
FOR THESE REASONS, THE COURT UNANIMOUSLY
...
1. Holds that there has been a violation of Article 2 of Protocol No. 7;
...
Done in French, and notified in writing on 31 July 2007, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Santiago QuesadaBoštjan M. ZupančičRegistrarPresident
| 1 |
Judgment of the Court (Second Chamber) of 14 December 1965. - André Saudray v Commission of the EEC. - Case 5-65.
European Court reports
French edition Page 01227
Dutch edition Page 01280
German edition Page 01306
Italian edition Page 01190
English special edition Page 00993
Danish special edition Page 00151
Greek special edition Page 00219
Portuguese special edition Page 00269
Summary
Parties
Subject of the case
Grounds
Decision on costs
Operative part
Keywords
++++
PROCEDURE - JUDGMENT GRANTING ANNULMENT - LEGAL EFFECTS - LIMITED TO THE PARTIES AND TO THE PERSONS DIRECTLY CONCERNED BY THE MEASURE ANNULLED - JUDGMENT CONSTITUTING A NEW FACTOR - CONCEPT
Summary
CF . PARAGRAPH 3, SUMMARY IN CASE 28/64 ( 1965 ) ECR 237 .
THE MERE FACT OF THE EXISTENCE OF A SINGLE SECRETARIAT CANNOT ESTABLISH THE LEGAL UNITY OF THE COUNCILS OF MINISTERS OF THE EUROPEAN COMMUNITIES, AS EACH OF THESE COMMUNITIES HAS A SEPARATE LEGAL PERSONALITY AND AS THE TREATIES DID NOT ESTABLISH THE COUNCILS AS A COMMON INSTITUTION .
*/ 664J0028 /*.
Parties
IN CASE 5/65
ANDRE SAUDRAY, AN OFFICIAL OF THE EUROPEAN ECONOMIC COMMUNITY, RESIDING AT OVERIJSE ( BELGIUM ), ASSISTED BY MARCEL GREGOIRE, ADVOCATE OF THE COUR D' APPEL, BRUSSELS, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF TONY BIEVER, 83 BOULEVARD GRANDE-DUCHESSE-CHARLOTTE,
APPLICANT,
V
COMMISSION OF THE EUROPEAN ECONOMIC COMMUNITY, REPRESENTED BY ITS LEGAL ADVISER, LOUIS DE LA FONTAINE, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICES OF HENRI MANZANARES, SECRETARY OF THE LEGAL DEPARTMENT OF THE EUROPEAN EXECUTIVES, 2 PLACE DE METZ,
DEFENDANT,
Subject of the case
APPLICATION FOR ANNULMENT OF THE REFUSAL OF THE DEFENDANT ON 29 OCTOBER 1964 TO CLASSIFY THE APPLICANT IN GRADE A6 WITH EFFECT FROM 1 JANUARY 1962,
Grounds
P.996
I - ADMISSIBILITY
THE DEFENDANT RAISES AN OBJECTION OF INADMISSIBILITY ON THE GROUND THAT THE APPLICATION WAS NOT MADE WITHIN THE PRESCRIBED PERIOD .
1 . THE APPLICATION IS DIRECTED AGAINST THE REFUSAL OF THE PRESIDENT OF THE COMMISSION ON 29 OCTOBER 1964 OF THE COMPLAINT MADE ON THE PREVIOUS 3 AUGUST FOR THE RECLASSIFICATION OF THE APPLICANT IN GRADE A6 AS FROM 1 JANUARY 1962 .
THIS REFUSAL MAY BE REGARDED AS CONFIRMATION OF THE DECISION OF 12 DECEMBER 1962, IN SO FAR AS IT APPOINTED THE APPLICANT TO GRADE B1 .
IT IS TRUE THAT THE APPLICANT MADE NEITHER A COMPLAINT THROUGH OFFICIAL CHANNELS NOR AN APPEAL TO THE COURT AGAINST THIS DECISION WITHIN THE PERIOD LAID DOWN BY ARTICLE 91 OF THE STAFF REGULATIONS .
NEVERTHELESS, THE APPLICANT CITES THE JUDGMENTS OF THE COURT IN JOINED CASES 20 AND 21/63 AND IN JOINED CASES 79 AND 82/63 (( 1964 ) ECR 213 ET SEQ ., 511 ET SEQ .), INFERRING THEREFROM THAT HE COULD HAVE MADE AN APPEAL AGAINST THE ABOVEMENTIONED DECISION .
IN FACT, HE CLAIMS THAT THE COURT CONSIDERED ON THAT OCCASION THAT THE DECISION CONCERNING INTEGRATION MUST BE DISSOCIATED FROM THE RIGHT OF THE SERVANT TO HAVE HIS ADMINISTRATIVE POSITION REGULARIZED .
THE APPLICANT FAILS TO APPRECIATE THAT, AS THESE JUDGMENTS ACCEPTED IN RESPECT OF THE OFFICIALS CONCERNED, HE COULD AT THE TIME HAVE SUBMITTED A REQUEST TO THE DEFENDANT FOR SUCH REGULARIZATION AND COULD HAVE DISPUTED A REFUSAL BEFORE THE COURT .
2 . THE APPLICANT POINTS OUT THAT THE PUBLICATION BY THE DEFENDANT IN 1963 OF THE DEFINITIONS OF THE DUTIES AND POWERS ATTACHING TO EACH BASIC POST - THE DEFINITIONS PROVIDED FOR BY ARTICLE 5(4 ) OF THE STAFF REGULATIONS - CONSTITUTED A NEW FACTOR CAPABLE OF CAUSING THE TIME IN WHICH TO BRING AN APPEAL AGAINST THE PREVIOUS CLASSIFICATION TO START TO RUN AFRESH .
P.997
ALTHOUGH THIS ARGUMENT IS CORRECT IN ITSELF, IT MUST HOWEVER BE STATED FURTHER THAT THE APPLICANT DID NOT DISPUTE THIS CLASSIFICATION EITHER WITHIN THE PERIOD LAID DOWN BY THE AFOREMENTIONED ARTICLE 91, DATING FROM THE SAID PUBLICATION .
IT IS TRUE THAT THE APPLICANT ALLEGES THAT, AS SOON AS THE DEFINITIONS IN QUESTION HAD ENABLED HIM TO DETERMINE THE GRADE TO WHICH HE BELIEVED HIMSELF TO BE ENTITLED, HE HAD ' INCREASED HIS ATTEMPTS TO OBTAIN THAT GRADE BY ALL THE MEANS OPEN TO HIM '.
NEVERTHELESS, THE FACT REMAINS THAT THE COMPLAINT OF 3 AUGUST 1964 WAS THE FIRST COMPLAINT AND THE ONLY ONE DEALING WITH HIS RETROACTIVE RECLASSIFICATION ON INTEGRATION .
THE APPROACHES WHICH HE MADE IN ORDER TO OBTAIN A HIGHER GRADE BY WAY OF PROMOTION OR OF COMPETITION CANNOT BE REGARDED AS SUCH A COMPLAINT, IN VIEW OF THE DIFFERENCES WHICH EXIST BETWEEN THESE TWO GROUPS OF REQUESTS IN RESPECT OF THEIR BASIS AND THEIR POSSIBLE EFFECTS .
3 . ACCORDING TO THE APPLICANT THE ABOVE - MENTIONED JUDGMENTS OF THE COURT ALSO CONSTITUTED NEW FACTORS .
THE ONLY PERSONS CONCERNED BY THE LEGAL EFFECTS OF A JUDGMENT OF THE COURT ANNULLING A MEASURE ARE THE PARTIES TO THE ACTION AND THOSE PERSONS DIRECTLY AFFECTED BY THE MEASURE WHICH IS ANNULLED .
CONSEQUENTLY, SUCH A JUDGMENT CAN ONLY CONSTITUTE A NEW FACTOR AS REGARDS THOSE PERSONS .
IT IS TRUE THAT THE JUDGMENTS IN QUESTION ANNULLED DECISIONS OF THE COMMISSION OF THE EEC REFUSING TO REGULARIZE THE POSITION OF THE PERSONS CONCERNED IN ACCORDANCE WITH THE PRINCIPLE OF THE CORRESPONDENCE BETWEEN DUTIES AND GRADE LAID DOWN IN ANNEX I TO THE STAFF REGULATIONS .
AS THOSE DECISIONS ONLY APPLIED TO THE INDIVIDUAL POSITION OF EACH PERSON CONCERNED, THEY CANNOT DIRECTLY CONCERN THIRD PARTIES, SUCH AS THE APPLICANT .
IN THESE CIRCUMSTANCES, THE JUDGMENTS IN QUESTION CANNOT BE REGARDED, IN RESPECT OF THE APPLICANT, AS NEW FACTORS CAPABLE OF CAUSING THE PERIOD FOR LODGING AN APPEAL AGAINST THE DECISION CLASSIFYING HIM IN GRADE B1 TO START TO RUN AFRESH .
IT FOLLOWS FROM THE FOREGOING THAT THE PRESENT OBJECTION IS WELL FOUNDED AND THAT CONSEQUENTLY THE APPLICATION MUST BE DISMISSED AS INADMISSIBLE .
Decision on costs
THE APPLICANT HAS FAILED IN HIS APPLICATION .
CONSEQUENTLY, IN APPLICATION OF THE COMBINED PROVISIONS OF ARTICLES 69(2 ) AND 70 OF THE RULES OF PROCEDURE, HE MUST BEAR THE COSTS OF THE CASE, WITH THE EXCEPTION OF THOSE INCURRED BY THE DEFENDANT .
Operative part
THE COURT ( SECOND CHAMBER )
HEREBY :
1 . DISMISSES THE APPLICATION AS BEING INADMISSIBLE;
2 . ORDERS THE APPLICANT TO PAY THE COSTS OF THE CASE, WITH THE EXCEPTION OF THE COSTS INCURRED BY THE DEFENDANT . | 5 |
MR JUSTICE OUSELEY: The subject matter of this challenge is a decision by an Inspector appointed by the Secretary of State for Communities and Local Government on an enforcement notice appeal, given by a letter dated 26 November 2010. He allowed the appeal of Pecan Limited against an enforcement notice issued by the London Borough of Southwark on 5 October 2009 in respect of the use of land at County Street in the London Borough of Southwark as a place of worship.
The challenge is brought not by the London Borough of Southwark but by the occupants and owners of an immediately adjoining flat, who had given evidence at the Inquiry into the enforcement notice appeal about the harm to their residential amenity done by the noisy and late hour operation of the place of worship. The proceedings have correctly been brought by them by way of judicial review, since the language of section 289 of the Town and Country Planning Act 1990 is inapt to permit a statutory appeal by adjoining landowners who have no proprietary interest in the land the subject of the enforcement notice.
The appeal was made on grounds A, C, D and G of section 174(2). Ground A seeks the grant of planning permission. Ground C contends that the matters alleged in the notice do not constitute a breach of planning control. Ground D contends that, as at the date when the notice was issued, no enforcement action could be taken in respect of any breach. Ground G seeks an extension of time for compliance with the requirements of the notice.
It is a strange feature, but one that gives rise to no challenge, that Pecan Limited withdrew the ground D appeal, and were unsuccessful in an attempt to reinstate it before the Inspector; but nonetheless, on consideration after the Inquiry of the evidence and the allegations in the enforcement notice, the Inspector reinstated the ground D appeal. No challenge is or can be brought to his power to do so nor, given the opportunity he gave to all the parties to deal with it, to the fairness of his doing so. He then allowed the appeal on ground D, correcting the notice. But he did not go on, having corrected and then quashed the notice, to deal with the ground which sought planning permission. I have no difficulty in understanding why in the particular circumstances of this case the Inspector's consideration of ground C led him to reinstate ground D, which is often closely entwined, and in this case even more so, with ground C.
The terms of the enforcement notice are of some importance. In its original form, the breach of planning control alleged was "the unauthorised change of use of the land from the pre-1994 authorised B1 light industrial use to the currently unauthorised use within use class D1 ... including, but not limited to, a place of worship .... " The Inspector corrected the notice, in his endeavour the better to reflect the intentions of the local authority, so that the allegation of breach read "without planning permission the unauthorised change of use of the land to use as a place of worship with ancillary activities within class D1 of the Town and Country Planning (Use Classes) Order 1987".
The facts are of some significance. It was the local authority's contention that a planning permission had been granted in 1994 for use as a place of worship but that conditions precedent to that planning permission had not been complied with, so that the use as a place of worship was unlawful. The appellants contested that point.
The Inspector reached a conclusion in favour of the local authority in respect of its allegation that the planning permission for use as a place of worship had not been lawfully implemented. The Inspector concluded that the then occupiers had not complied with the three conditions precedent, which amongst other matters concerned a scheme to insulate against the transmission of airborne impact sound.
The local authority contended that the subsequent uses until the start of the use of the land as a place of worship in 2009 had included a use that fell outside the scope of use class D1 in the Use Classes Order. It contended that there had been a mixed class A2 use as an employment agency, or the other provision of professional services, mixed with use as a day centre and for the provision of education. This use was said to have taken place between 2005 and about 2009. There is no issue taken with the Inspector's conclusion that as a matter of fact and degree the use by Pecan Limited from 2005 to 2009 was a D1 use and not a mixed D1 and A2 or some other use falling outside the Use Classes Order. It was in July 2009 that the use by the Recovery Chapel commenced. This was the use of the land as a place of worship which gave rise to the harm to residential amenity and which led to the issuing of the enforcement notice.
Accordingly, it followed in his judgment that as from 1993 (the place of worship use having commenced before the grant of the 1994 permission), right up until the use by the Recovery Chapel, all the uses had fallen within class D1, and that the unauthorised use of the premises for purposes falling within D1 had commenced as far back as 1993.
Accordingly, the issue which the Inspector had to grapple with was this: given that no single purpose falling within D1 had been carried on for a period of 10 years before the issue of the enforcement notice, but that all the uses which had been carried on after the breach of planning control in 1993 had been within class D1, had enforcement action been taken within 10 years of the breach of planning control?
For the purposes of seeing whether the use enforced against was immune or whether enforcement action had been taken in time, the question he had to resolve was whether immunity could only be acquired by one specific purpose within the Use Classes Order being continued in breach of development control for 10 years, or whether a sequence of different D1 uses could acquire immunity such that the one being undertaken at or after the expiry of the 10 years, or was immune from planning control.
In the former case, that is to say where one specific use had been carried on in breach of planning control for 10 years, it was not disputed by Mr Litton QC, who appeared on behalf of the claimants, that a subsequent change of use within class D1 would also be immune from planning control. In the latter case, that is to say where reliance was placed upon a mixture of D1 uses over the period of 10 years, if Mr Litton's arguments were right, no immunity could be thereby conferred at all. If the arguments for Mr Strachan, on behalf of the Secretary of State, are correct, immunity would be conferred after 10 years on any existing or subsequent uses within class D1. Mr Litton's arguments on behalf of the claimant were supported by brief written submissions on behalf of the London Borough of Southwark but they did not take the cudgels up to the extent of being represented to pursue that point. If, of course, Southwark had succeeded in its arguments in relation to the mixed class D1 and A2 use during the late 2000s, the case would have been decided in its favour by the Inspector.
It is perhaps surprising that the issue before me has not arisen, it appears, directly or even very indirectly in the years now in which this structure of the Town and Country Planning Act, not new in 1990, have been in force. It is necessary to set out the statutory structure in order that the competing contentions can be understood. At the heart of the structure of development control is the requirement in section 57(1) that planning permission is required for the "carrying out of any development of land". Development is defined in section 55(1) as including the making of any material change in the use of any buildings or other land. Crucially, section 55(2) defines development further:
"(2) The following operations or uses of land shall not be taken for the purposes of this Act to involve development of the land -
(f) in the case of buildings or other land which are used for a purpose of any class specified in an order made by the Secretary of State under this section, the use of the buildings or other land or, subject to the provisions of the order, of any part of the buildings or the other land, for any other purpose of the same class."
The order referred to is the Town and Country Planning (Use Classes) Order 1987 S.I. 764. Article 3 repeats the effect of section 55(2)(f).
The classes are set out in the schedule to the Order. Some of the classes use the language directly referred to in section 55(2)(f) of identifying a variety of "purposes" within the class.
The classes broadly divide into retail and restaurant; then businesses; then residential, both institutional and dwelling house; and then in part D, with which this case is concerned, non-residential institutions. Class D1 contains a variety of uses ranging from the provision of mental health services; a crèche, day nursery or day centre; use for the provision of education; for the display of works of art; as a museum; as a public library or public reading room; as a public hall; and, at D1(h), for or in connection with public worship or religious instruction; and, finally, as a law court.
The purpose and effect of the Use Classes Order is reasonably well understood by now. It was summarised fairly recently by Sullivan LJ in Tendring District Council, R (on the application of) v Secretary of State for Communities and Local Government [2008] EWHC 2122 (Admin) between paragraphs 16 and 18.
The purpose of the order was not to distinguish between different purposes within the individual classes of the Order but rather it was to group together uses which had similar characteristics for planning purposes so that changing from one to the other was deemed not to be development by material change of use. Some changes within a use class might amount to a material change of use in the absence of section 55(2)(f); but other changes might not; and there were others where there would be considerable doubt as to whether a change amounted to a material change of use. Sullivan LJ pointed out that in the absence of the Order such questions would have to be resolved by a detailed examination on a case-by-case basis. Further, there was the inevitability of overlap between a number of the uses.
I would add it is highly likely that there will be many instances were different uses are combined as one mixed use. Thus, for example, it is not difficult to envisage that although class D1 treats as separate a use for the display of works of art otherwise than for sale or hire, and use as a museum, and use as a public library, and use as a public exhibition hall, every one of those uses could be carried on within the same institution. The provision of a crèche as a non-ancillary part of an educational use is not difficult to envisage either.
Mr Strachan, in my judgment, was right to warn that an effect of the Use Classes Order should not be regarded as undesirable merely because of the possibility that one use within a use class might, in the way it is carried on, or, perhaps inherently, be more problematic from certain planning aspects than another. Whether that is undesirable or not is a matter for the legislature which has decided what groups have sufficiently similar characteristics to be grouped together for the purposes of section 55(2)(f), with what consequences may flow.
I return to the statutory structure and to the enforcement provisions. Section 171A is in the same part of the 1990 Act as those provisions which deal with certificates of lawful use. By section 171A(1) it is a breach of planning control to carry out "development without the required planning permission". The time limits for taking enforcement action in the case of a breach of planning control of the sort involved here is set out in section 181B(3):
"In the case of any other breach of planning control, no enforcement action may be taken after the end of the period of 10 years beginning with the date of breach."
I have already referred to the grounds of appeal against an enforcement notice. They are set out in section 174(2). Grounds C and D are related, as Mr Litton submitted, to the lawful use provisions in section 191 of the Act. The enforcement notice must state by section 173 the matters which appear to the planning authority to "constitute the breach of planning control." The enforcement notice by subsection (3) must specify the steps which the authority requires to be taken, or the activities which the authority requires to cease, for the purposes of remedying the breach by making development comply with the terms of any permission, or by discontinuing any use of the land, or remedying any injury which it has caused.
The interaction between the provisions in relation to certificates of lawful use, development which is immune from enforcement control under section 171B, and the grounds of appeal in section 174(2)(d) are linked. Once development has become immune from enforcement control, it is lawful. Section 191 provides a means whereby a landowner may obtain a certificate as to the lawfulness of what might previously have been unlawful. The certificate evidences, but does not confer, lawfulness. By section 191, if any person wishes to ascertain whether "any existing use of buildings or other land is lawful" he may make an application. By subsection (2):
"For the purposes of this Act, uses and operations are lawful at any time, if -
(a) no enforcement action may then be taken in respect of them (whether because they did not involve development or require planning permission or because the time for enforcement action has expired or for any other reason: ... )"
The first part of subsection (3)(a) parallels section 174(2)(c), and the second part parallels section 174(2)(d).
The provisions of subsection (5) have been prayed in aid by Mr Litton because of section 191(5)(b). In particular, the certificate must "describe the use, operations or other matter in question (in the case of any use falling within one of the classes specified in an order under section 55(2)(f) identifying it by reference to that class)".
There are no prescribed forms for making the application. There is a form published by the Secretary of State as part of Annex 8 to Circular 10/97, "Enforcing Planning Control". I shall have to return to that.
It is crucial to the argument of Mr Litton that section 55(2)(f) should be read as if the word "lawfully" were inserted so that it read: "in the case of buildings or other land which are lawfully used for a purpose of any class specified in an order .... " That exemplifies the case for which he contends. With the insertion of that word, it would be necessary before the Use Classes Order took effect for a use already to have acquired immunity from enforcement control. It is his submission that the only way that a use can acquire immunity, so that the provisions of the Use Class Order bite, is if the same category within a use class has endured for 10 years in breach of planning control (insofar as the 10-year limit applies to that sort of breach). He contends that such an approach is inherent in the benefits which the operation of the Use Class Order confers on a landowner. A landowner should not be entitled to take advantage of those benefits unless the use upon which those benefits hang is itself a lawful or immune use. He also contends that reading section 55(2)(f) in that way fits better with the enforcement and lawful use provisions. He supports his submissions by a reference to commentary in the Planning Encyclopedia and certain court decisions. He also draws attention to adverse effects which would flow to the operation of the planning system were the approach put forward by the Inspector and supported by the Secretary of State to be correct.
I mean no disrespect to the Inspector's analysis of the issue if I do not set it out. It is a clear and cogent analysis of the law which comes to a specific conclusion but it is sufficient to set out paragraph 29, and in particular I draw attention to the last sentence, which is where Mr Litton submits it all begins to go wrong:
"29. The evidence is compelling that notwithstanding the various changes of occupier from September 1998, the activities throughout have been within Class D1. It is also the case that the use has not been the same for any continuous ten year period from December 1993. There have been changes of use in September 2003 and July 2009. It is also possible that the cessation of the nursery use in March 2005 represented a material change in the character of the mixed use. Thus this ground of appeal turns on whether the changes in use which have occurred benefit from the provisions of the Use Classes Order so as not to be development under the 1990 Act and therefore are outside planning control."
I do not accept Mr Litton's submissions. It is, in my judgment, quite clear that the structure of the Act and its language does not permit the interpolation of the word "lawfully", nor of an construction in which a single purpose within a use class has to be undertaken for 10 years before immunity is conferred on uses within that class. The starting point is that section 55(2)(f) does not contain such a word. That is to be contrasted with section 57(4) and (5), dealing with what uses can be resumed after an enforcement notice has been issued or a planning permission for a limited period has expired without a further permission. Subsection (4) refers, in the enforcement notice case, to permission not being required for reversion to use for a purpose for which the land "could lawfully have been used" if the development enforced against had not been carried out. This is in the context of what development requires permission. Subsection (5) deals with the normal use to which land can revert after the expiry of a time limited permission. It specifically excludes from the normal use, a use begun in contravention of planning control.
I accept that there are some instances where courts have implied "lawful" into statutory provisions even where the word "lawful" may also have appeared in other sections of the statute. But in this context, which creates the circumstances in which development is or is not lawful, in my judgment it would be wrong to interpolate the word "lawfully", with such a change to the effect of the provision.
Mr Litton relied on an extract from Bennion on Statutory Interpretation Fifth Edition 2009, which makes the point that it is common for a court to treat the conferring of a right or benefit on a person in certain circumstances as requiring the preconditions for the conferring of that benefit lawfully to have been fulfilled. No authority is needed for that general proposition, but it must yield to the language of the Act. In my judgment, it must yield here.
Mr Litton's submission is that the Use Classes Order confers a right or benefit. I disagree. Whilst it may be beneficial to a landowner, it is not, in my judgment, a right or benefit which is conferred on the landowner. It is simply a definition of development. Parliament has provided that certain activities do not constitute development. The need for activity or buildings to be lawful to benefit from the provisions of the General Permitted Development Order exemplify Mr Litton's proposition, but have no resonance in relation to the Use Classes Order. There, certain activities do not require planning permission although they constitute development: the landowner is entitled, absent any further restriction being imposed, to carry out development without seeking planning permission. That is different from a provision which defines development and treats certain identified matters as not constituting development at all; it is a mere definition section, however much it may benefit those to whom it applies.
Mr Litton submits that this approach would run counter to the enforcement provisions of section 171 onwards. I do not accept that. Crucial to the operation of the enforcement provisions is the concept of the carrying out of development without planning permission. Where the very activity at issue does not involve development at all, it is not possible to turn it into development for the purposes of enabling enforcement action to be taken against it. It may be that in this case the Inspector could have allowed the appeal on his findings under section 174(2)(c) as well as on the grounds that the matters did not constitute a breach of planning control. But certainly he was entitled to conclude that after 10 years of use within class D1 no enforcement action could be taken. The effect of the sequence of changes within class D1 was not that there was a material change of use which had somehow received a statutory sanction. It was that the use that began after the place of worship initially ceased did not constitute development. The subsequent changes did not constitute development. The institution of the place of worship use by the Recovery Chapel did not constitute development.
The position of a local authority seeking to enforce against a sequence of uses all within a particular use class, none lasting 10 years so as to confer, on any view, immunity, but before the expiry of 10 years of unauthorised D1 uses, is not as difficult as suggested. An enforcement notice can properly strike at the existing use being carried on. On the hypothesis that there has been no 10-year use within class D1, the enforcement notice will not be quashed on ground C or ground D and the other unauthorised D1 uses could not lawfully be restarted. Whether it would be advisable for the local authority to state what the breach of planning control was in terms of a breach of planning control from B1 to the sequence of D1 uses culminating in the one struck against is a matter for the local authority. For my part, I see nothing unlawful in that. The point is to convey to the recipient of the notice what is said to be the breach which affects him. There is no difficulty in formulating a notice that strikes at the current activity because of the unauthorised nature of the predecessor D1 uses.
Mr Litton questioned whether such an approach could be right in the light of the comments of Schiemann LJ in the Court of Appeal in Secretary of State for the Environment and Holding v Thurrock Borough Council [2002] JPL 1278, in particular at paragraphs 28 and 61 to 62. I see no difficulty arising out of what was said in that case in relation to active and dormant uses. The enforcement notice of course needs to relate to the use being undertaken which is being struck at and should be expressly referred to, but the reference to a continued active use must be understood as meaning a use which is continued in such a way as to enable the 10-year period to continue running, and not a reference to a use which has stopped to the extent that the 10-year period can no longer run at all.
Mr Litton instances the following as a matter of concern: a use is started within class D1; after 2 years it is changed to a different use within class D1; that change of use does not constitute development. How then, submits Mr Litton, can an enforcement notice strike at it? And, if an enforcement notice cannot strike at it, by some such simple device somebody has been able to obtain the benefit of immunity within a far shorter period than the act contemplates. In my judgment, the answer given by Mr Strachan to that is correct. There is no immunity merely because the change of use does not constitute development. The use remains part of the continuing unauthorised D1 use, and can be enforced against. It has taken a different form. It is no different in concept from a single class D1 purpose being carried on in a different manner akin to an intensification falling short of the material change of use. Far from it being Mr Strachan's submissions which risk adversely affecting the structure of the Planning Act, it is, in my judgment, those of Mr Litton.
The slightly odd position would be arrived at whereby very sharp distinctions would be drawn between not very different situations. Where a specific use, carried on for 10 years, had become immune, but then immediately changed to another purpose within class D1, for example, the quiet crèche yielding to the noisy place of worship on year 10 plus 2 months, the local authority would be unable to do anything about it. It could have prevented that change if it had occurred 3 months earlier. Mr Litton accepts that is consistent with his submissions. What he says his submissions would avoid is to him the troublesome scenario of the use of premises for a variety of inoffensive D1 uses taking place over 10 years but not one of them individually for 10 years, then yielding after 10 years to the noisy and disturbing place of worship, which the local authority cannot control. Had it taken place before 10 years of varying D1 class uses, the local authority could have prevented the noisy change because the D1 use would not have become immune. It seems to me that to draw the sharp distinction inherent in his submission is wrong. His concern that a local authority might not be able to react as the 10-year period ended to a change within the class D1 uses from one which had given rise to no objection to one which did, is a problem which can arise in either situation. The problem of a succession of D1 uses within the 10-year period does not give rise to an enforcement difficulty, for the reasons which I have given.
Additionally, Mr Strachan is right to point to the problem that would be created in relation to uses that had been grouped together for their cognate qualities, possessing the potential for blurring and overlap, if a local planning authority had to decide when a use had become a mix of two or more purposes or categories. This sort of problem is one which the Use Classes Order is designed to eliminate rather than to exacerbate. And, of course, Mr Litton's arguments must, if good, be good in respect of all classes in the Use Classes Order and not just in what may be the more variegated variety in D1.
I see no assistance either for Mr Litton in the commentary to the Planning Encyclopedia at page 38754 from December 2005, which from other authorities it appears was contributed by none other than Dr Malcolm Grant rather than any of the current editors. I do not need to set out what he says save for the fact that he refers to the rights conferred by the Use Classes Order, which is a concept to be wary of in that context. It is to be noted that he says there is no requirement that the rights it confers "should be limited to the cases were the existing use is lawful." He then deals with the position where an existing use is unlawful and specifically grapples with the problem of such a use not constituting development if it is a change within the use class. He contends that it must be possible in respect of such a use, where the use is based upon an unlawful existing use, for enforcement action to be taken in respect of a change within the use class from the existing unlawful use, before a use has become immune. With respect to Mr Litton's submissions, that, in my judgment, is the only way in which that part of the commentary can be read.
Mr Litton also sought assistance from the Certificate of Lawful Use Provisions. I see no support for his arguments there either. The provisions only operate where no enforcement action may be taken or time for enforcement has expired. Yet, on the analysis which I regard as correct, enforcement action could have been taken in this case up until 2004 in respect of the D1 use. And if the local authority had succeeded in showing that there had been a non-wholly D1 use in the late 2000s, it would have succeeded in relation to the most recent use as well.
There is no assistance to be found in the detail in which Circular 10/97 Annex 8 requires an application for a certificate of lawful use to be made. The certificate provisions themselves require both the specific use and, where a use falls within a use class, the use class to be identified. The provisions of the Circular do not assist. Mr Litton referred specifically to paragraphs 8.11, 8.16 and 8.17. The theme of these is that precise details must be provided of the use in respect of which the application is made. The use description must also specify whether the use falls within a use class. The need for a specific description of the use is obvious: the local authority needs to know exactly what it is that is said to constitute the use, so that it can identify whether that use has in fact been carried on or whether it is merely a general or inaccurate description of something that has only recently begun. The need for it to specify the use class is again clear as part of an understanding of what the application is for.
Nothing suggests -- and indeed Mr Litton concedes that it would be unlawful if it did -- that the grant of a certificate of lawful use for use falling within a use class, although specifying clearly what the purpose or the category is, could prevent a change within the use class being lawfully undertaken. For what it is worth -- and I do not regard it as more than an indication of the way the Secretary of State has approached matters -- the published form at the back of Annex 8 in question 10.3 appears to envisage just the sort of circumstance here. It appears to be one of the grounds upon which a certificate of lawful use can be sought, that the use began within the last 10 years as a result of a change of use not requiring planning permission and there has not been a change of use requiring planning permission in the last 10 years. It is obvious that there can be a change of use that does not require planning permission where it does not amount to development, as is the effect of section 55(2)(f). There is nothing in that Circular which, in my judgment, affords any support to Mr Litton's submissions.
Of course, there are, I accept, difficulties that may arise for a local authority were there is a change of use or change of manner of operation of a use but, in my judgment, they do not warrant the interpretation being given to section 52(5) which the claimants must contend for. It would be quite wrong for an event which does not constitute development somehow to constitute the recommencement of the running of the 10-year period. And, if an event that does not constitute development could not do so, what other events that do not constitute development could make the 10-year period start to run again? An intensification of use falling short of a material change of use taking it outside the Use Classes Order could not do so. Local authorities know that uses can spring to life by intensification without amounting to a material change of use. They must know that uses can change within a Use Classes Order following the grant of planning permission to something which, if not free from the conditions of the permission, may nonetheless be quite different in its effect.
Where a local authority is faced with an unauthorised use to which it does not in itself take exception but is aware that a change could take place in its operation, it is for the local authority to take enforcement action; otherwise, if there has been no application for planning permission, the authority is at risk of uncontrolled, undesirable change. The local authority cannot point to an unfortunate consequence of inaction when there is a remedy to prevent this unfortunate consequence in its own hand. The provisions of the guidance of the Secretary of State, which are discouraging to enforcement control where there is no real value to it, must be understood against the fact that this problem exists. It cannot be said that a problem exists and on the other the guidance of the Secretary of State is to do nothing about it.
I recognise that things have in some ways gone wrong with the operation of the planning system, in that unauthorised development took place in 1993 but which only came to light because of the discovery later that the developer had not complied with conditions precedent. I am afraid that it is for the local authority to be astute to police its conditions. This is particularly problematic where such a permission may be on the register of planning permission and so give comfort to the purchasers of neighbouring property that the permission has been implemented, only for it to be found that it has not been. Paradoxically in this case, the appellants before the Inspector asserted, unsuccessfully, that they were bound by that permission. However problematic that may be, this claim must be dismissed.
Accordingly, and for those reasons, I dismiss this claim.
MR STRACHAN: My Lord, I seek an order in those terms, in those circumstances. In addition, my Lord, I seek an order that the claimant pay the defendant's costs. There is a costs schedule.
MR JUSTICE OUSELEY: I do not have it. (Handed). Have you taken note of what Collins J said about the costs of the acknowledgement of service?
MR STRACHAN: My Lord, so far as the costs of the acknowledgement of service, whilst the acknowledgement of service is short certainly, the costs at that point include advising on the case of the client. So although it looks like, if you judge it simply by the length of the acknowledgement of service, it seems costly but when you factor in once you receive the claim, you consider the claim, take advice and speak to the client, the costs, in my submission, are entirely in order.
MR JUSTICE OUSELEY: Does the costs schedule I have here include those costs?
MR STRACHAN: Yes. There is one further addition, my Lord. As you may know, just as when hearings go short we adjust our hourly rate, if it goes slightly longer, I seek the additional costs at the hourly rate, which is a total sum of £600. So, the costs claimed for the whole of today are £13,416.
MR JUSTICE OUSELEY: Mr Litton?
MR LITTON: My Lord, yes. Can I just take you to Collins J's order where, in granting leave -- it is at tab 6 of the bundle.
MR JUSTICE OUSELEY: He expresses himself in trenchant terms at times, and he did on this occasion.
MR LITTON: The unhelpfulness of the acknowledgement of service and the summary grounds which were served then and, as your Lordship has identified, the costs claimed, was ridiculous but then the case management directions, in which you will see the penultimate bullet point he said that the defendant and interested party must serve the skeleton argument not less than 14 days before the date of the hearing of the judicial review. Now, can I just also make this point, my Lord: that the Secretary of State's detailed grounds, which are at tab 8, as we said in our skeleton argument, although they set out the background and the matters relating to the Inspector's report and the like, the submissions comprise three short paragraphs on page 181, and essentially at paragraph 25 it is a repetition of the summary grounds that were criticised by Collins J, mainly that for the reasons the Inspector gave, he got it right. So, although they may have been longer, they are no more helpful than the acknowledgement of service.
MR JUSTICE OUSELEY: I know my judgment has been a bit longer but that is because I have heard more argument. Essentially, the Inspector got it right.
MR LITTON: The Secretary of State has plainly breached the order in relation to the requirement to serve the skeleton argument not less than 14 days; it was served 7 days beforehand and no explanation or apology has been offered in relation to that and the conduct of the parties is a matter which you have to take into account in exercising your discretion as to costs. So, what I would say is that the claimant ought not to pay any of the costs prior to the service of the skeleton argument, where, in effect, for the first time the Secretary of State has set out his case.
My Lord, then in terms of the figures that are contained in the costs schedule, it is not clear from the schedule to what extent the work on documents at 17.1 hours reflects the matters that Collins J was critical of and, in any event, there is time allocated for attendances on clients in the first items at 3.9 hours and then counsel et cetera. So, it is simply not clear to us that there has not been duplication of costs between the advices given by the Treasury Solicitors to their clients and the work done on documents which was, we suggest, at least in part, criticised by Collins J. So, I would ask first of all that there should not be any costs prior to the service of the skeleton argument in breach of Collins J's order and, in any event, there should be an adjustment downward to reflect his observations about the ridiculousness of the costs that were being claimed in relation to the acknowledgement of service.
MR STRACHAN: My Lord, can I just hand you up the claimant's costs schedule because you are being asked to deduct costs and of course you are entitled to see the proportionality of the costs bearing in mind what has been placed -- and the headline figure is in addition to be notified on the CFA, the costs claimed for the presentation of this claim are the sum of £34,000. So the starting point for your assessment, my Lord, is that the costs claimed by the defendant are indeed highly proportionate and indeed considerably lower than the claimant's.
My second point, my Lord: the issue of the detailed grounds; as your Lordship has identified, the Inspector set out in his decision the reasons why, in terms of law, he reached the conclusion he did. The Secretary of State in detailed grounds identified its position that the Inspector's analysis was correct. Indeed, I have appeared, and my learned friend, today to deal with such other arguments but we have followed and adopted the Inspector's conclusions and my learned friend has known and already dealt with the arguments against him as they appeared in the Inspector's decision letter as are reflected in our detailed grounds and of course as are consistently set out in skeleton argument. The skeleton argument also responds to anything the claimant is arguing. As I understand it, the claimant seeks to deprive us of any costs prior to the lodging of the skeleton argument.
MR JUSTICE OUSELEY: I am not going to accede to that. What do you say about the 17.1 hours?
MR STRACHAN: I am instructed that there is no duplication of costs in that respect. My Lord, that includes the advice given by my instructing solicitors to their clients, dealing with the documents; it includes dealing with the claim bundle; dealing with correspondence of the claimants --
MR LITTON: That cannot be right.
MR STRACHAN: Sorry, dealing with the skeleton that they received. So, it is any work done on documents. My Lord, when you compare it, as I have asked you to do so, with the claimant's costs schedule, I submit that it is an entirely modest sum, entirely proportionate in dealing with a case of this kind. It is certainly right, as your Lordship has indicated, that the issue that arose on this appeal is a novel one. There is no authority which raises either way and the Secretary of State has obviously taken it seriously as a point being raised and has taken the benefit of advice both from instructing solicitors and also is represented here today by my learned friend. The claimants, of course, are also represented by leading and junior counsel.
MR JUSTICE OUSELEY: He is not taking issue with two counsel.
MR STRACHAN: My Lord, it is in terms of the work done on documents. It is entirely right, in my submission, that those instructing me should deal carefully with the claim and advise their clients accordingly both on the documents in the files they started with and in the subsequent submissions of skeletons. So the sum of 17.1 hours overall in a claim of this complexity, in my submission, is entirely appropriate. So, my Lord, I do still seek the costs and I just ask you to stand back and look at the proportionality of that sum claimed as compared with the claimant's own costs. Unless I can assist you further on the precise quantum, my Lord, that is the application.
MR JUSTICE OUSELEY: Do you want to reply not on the first point?
MR LITTON: My Lord, simply, really, in terms of the quantum point. 17.1 hours on documents, bearing in mind that it is the claimant who prepared the claim bundle and the claimant who prepared the authority bundle -- correspondence with those who instruct me is separately dealt with under attendances on opponents -- what on earth was the Treasury Solicitor doing spending the best part of 3 days on these documents when in fact one sees from both the summary grounds of defence and then their detailed grounds of defence that their position has been summarised in a paragraph or two: that, essentially, the Inspector got it right. So I do ask the question, how is that they spent 3 days in getting to that conclusion? So I do question the baseline figure in relation to the attendance on documents.
MR JUSTICE OUSELEY: There will be the order for costs in favour of the Secretary of State in the sum of £13,416. I do not accept the suggestion that 7 days late in the production of the skeleton argument, absent any clear disadvantage, should deprive the defendant of costs up to that time. The overall level of costs for this case claimed does not seem to me to be one bit unreasonable. The 17 hours' work done on documents fits readily with the fact that this is a defendant and it is significantly less than the claimant's time. The only matter which requires consideration, in my judgment, is the trenchant terms of Collins J's criticism of the acknowledgement of service; criticism with which I have some sympathy, particularly when this not very helpful document was marked with a claim for over £1,000. But the crucial question to my mind is not whether that document itself was much of a document but whether the hours spent in preparing and arguing this case is a reasonable total. If the hours were spent preparing the case and were reasonable and there has been no duplication and there has been no pointless endeavour in producing the acknowledgement of service and the work would have to have been done anyway, I see no reason to deduct any sum in respect of it, having heard the benefit of Mr Strachan's comment on it. So that order will be made.
MR LITTON: My Lord, I am extremely conscious of the time but I do have an application for leave to appeal. I make it on two bases. First of all, in my submission, your Lordship's judgment is arguably inconsistent with the judgment in the Young case, where there the Court of Appeal had no difficulty in saying in trenchant terms that the starting point reached in relation to the general development order was then in force but was prefaced or was hinged on the use being lawful. So I say that there is authority in respect of which your Lordship's own judgment is inconsistent and that of itself provides a realistic prospect that an appeal might succeed. But, in any event, my Lord, I would also make the application on the basis of a wider public interest because, of course, as your Lordship has observed, and as has my friend, this is the first time that the point has, either directly or indirectly, come before the court notwithstanding the longevity of the legislation. There are significant, in my submission, implications for authorities in terms of how they act where they are faced with the situation of the use within a use class which is not in itself undesirable but which may have other uses within the same use class which may be undesirable.
MR JUSTICE OUSELEY: I appreciate it is not an issue that has been litigated but sometimes that is because in fact there is nothing, on analysis, in it. I do not think the planning encyclopedia commentary could possibly be read in the way you read it. So I do not think that that would have created any sense of anxiety on the part of local authorities, that they could not act after there had been one change with a Use Classes Order but rather they could act up to the 10 years. They might have scratched their head a bit about how to frame the notice. Essentially, I am asking for your assistance on this. It may be a novel point but is that novel because it is just not a good point or is there, lurking in the undergrowth, about which I know nothing, a genuine point of anxiety which has been troubling local authorities about this? Because there is quite a difference between that situation and one where somebody has thought of a point that nobody else has thought of.
MR LITTON: I cannot speak on behalf of all local authorities, being that I do not act on behalf of all of them in relation to these proceedings but what I can say is that in my experience over the last 20 years plus, I have never come across a situation where this matter has been needed to be even considered. I do not know whether my learned friend has.
MR JUSTICE OUSELEY: That would suggest that there is not actually a problem.
MR LITTON: My Lord, I would say, contrary to your Lordship's judgment, the reason why it has not been a problem is because no-one has come before the courts, or indeed an Inspector, and successfully argued that an agglomeration of individual uses none of which has occurred for more than 10 years has been a reason for requiring immunity in a Use Classes Order case. I appreciate that you and I are at loggerheads in relation to that but I would also suggest that that is one of the reasons why the matter has not come before the courts before. I appreciate that your Lordship has found against us in relation to that but certainty as to who of us is right is obviously of some --
MR JUSTICE OUSELEY: I have the advantage of being the judge. So, if there is an issue of certainty, there is a judgment.
MR LITTON: My Lord, yes. Which is why I say that perhaps a third party arbiter --
MR JUSTICE OUSELEY: I do not have an arbiter between you and me.
MR STRACHAN: My Lord, can I just raise a procedural point which is of relevance to this? Leaving aside the issue of the merits of appealing your Lordship's judgment, can I just raise this point: if this claim had proceeded as a section 289 appeal, which it is in all but name, the requirement is to seek permission from the Court of Appeal because it is a second appeal. Therefore, in my submission, by analogy, although it is a judicial review, the claimants cannot be in a better position than the local planning authority and it is appropriate in those circumstances for the Court of Appeal to decide whether or not to grant permission.
MR JUSTICE OUSELEY: I will tell you what I am going to do, I am going to adjourn the question of permission to appeal, partly because of the hour and partly because I think Mr Litton may want to contemplate the argument you have just raised. There may be something in your point. What I propose to do is to adjourn the application. You have started it, so time is not running against you. You may wish to wait until you have got a copy of the transcript.
MR LITTON: I was going to ask, my Lord, in any event, if you were to refuse permission, whether or not there could be an extension of time for making that application.
MR JUSTICE OUSELEY: I would certainly have granted you that but I do not think that that is going to be necessary. What I am going to do, I think, is wait and resolve your application when I have got the corrected transcript and you have got the corrected transcript. So, we will adjourn it until then, partly in view of the hour but I think I would also like your response to Mr Strachan's point on a considered basis because there is something in it as matter of, if you were the local authority, you would have a much stronger uphill task than a normal application for permission to appeal because it is a --
MR LITTON: (Inaudible over-talking).
MR JUSTICE OUSELEY: -- query how far that should enter the discretionary judgment. That apart, Mr Strachan, would you oppose permission to appeal?
MR STRACHAN: I do, my Lord.
MR JUSTICE OUSELEY: Would you rather do it in writing or orally?
MR LITTON: For costs reasons, it is probably better to put it in writing. I am content with that.
MR JUSTICE OUSELEY: Mr Strachan?
MR STRACHAN: I am content with that as well.
MR JUSTICE OUSELEY: I will receive submissions on permission to appeal, to be submitted to me in writing 7 days after you have received the approved transcript, and you have 7 days to put in your reply, and if you are really moved to add something in reply, you will have no more than 2 or 3 days to do it.
MR LITTON: Thank you, my Lord.
MR JUSTICE OUSELEY: Thank you very much. | 2 |
Judgment of the General Court (Seventh Chamber) of 16 December 2009 – Giordano Enterprises v OHIM – Dias Magalhães & Filhos (GIORDANO) (Case T-483/08) Community trade mark – Opposition proceedings – Application for the Community word mark GIORDANO – Earlier national word mark GIORDANO – Relative ground for refusal – Likelihood of confusion – Partial refusal of registration – Article 8(1)(b) of Regulation (EC) No 40/94 (now Article 8(1)(b) of Regulation (EC) No 207/2009) 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 – Likelihood of confusion with the earlier mark (Council Regulation No 40/94, Art. 8(1)(b)) (see paras 19, 33)
Re:
ACTION brought against the decision of the Second Board of Appeal of OHIM of 28 July 2008 (Case R 1864/2007-2) relating to opposition proceedings between José Dias Magalhães & Filhos lda. and Giordano Enterprises Ltd.
Information relating to the case
Applicant for the Community trade mark:
Giordano Enterprises Ltd
Community trade mark sought:
Word mark GIORDANO for goods in Classes 18 and 25
Proprietor of the mark or sign cited in the opposition proceedings:
José Dias Magalhães & Filhos lda.
Mark or sign cited in opposition:
Portuguese word mark GIORDANO for goods in Class 25 (No 22534)
Decision of the Opposition Division:
Opposition partially upheld
Decision of the Board of Appeal:
Decision of the Opposition Division annulled in so far as it upheld the opposition in relation to certain goods in Class 18; appeal dismissed as to the reminder.
Operative part The Court:
1.
Dismisses the action;
2.
Orders Giordano Enterprises Ltd to bear its own costs and to pay those incurred by the Office for Harmonisation in the Internal Market (Trade Marks and Designs). | 0 |
1999 1 SCR 996 The Judgment of the Court was delivered by BHARUCHA, J. The assessee manufactures cement at Chittorgarh in the State of Rajasthan. It purchased dumpers for the purpose of its operations in the State of Rajasthan. The purchase was made in the State of Tamil Nadu. Tax was paid thereon under the provisions of the Central Sales Tax Act. When the dumpers were transported into Rajasthan, entry tax was demanded thereon under the provisions of the Rajasthan Tax on Entry of Motor Vehicles Into Local Areas Act, 1988 the said Act . The assessee claimed rebate of the tax under the Central Sales Tax Act that it had paid on the dumpers, invoking the provisions of Section 4 2 of the said Act. Upon a demand being raised by the assessing authority, without giving to the assessee the benefit of such rebate, the appellant filed a writ petition in the High Court of Rajasthan for a direction to the taxing authorities to give the same. The writ petition having been transferred to the Rajasthan Taxation Tribunal, it was dismissed by the judgment and order which is under challenge. The said Act provides for the levy of tax on the entry of motor vehicle into local areas of the State of Rajasthan for use and sale therein. The incidence of tax is provided for under Section 3 which states that a tax on the purchase value of motor vehicles shall be levied and companylected if entry of the motor vehicles is effected into the local areas of the State for use or sale therein at such rate or rates as had been numberified for motor vehicles under the Rajasthan Sales Tax Act, 1954. For our purposes, the relevant provision is Section 4 2 . Section 4 provides for deduction in tax liability and sub-section 2 thereof reads thus 4 2 The amount of tax leviable under this Act shall subject to such companyditions as may be prescribed, be reduced to the extent of the amount of tax paid, if any, under the law relating to General Sales Tax as may be in force in any other State or Union Territory by an importer who, number being a dealer registered under the provisions of the Rajasthan Sales Tax Act, 1954 Act No. 2 of 1954 , had purchased the motor vehicle in that State for his own use. The question is whether the law relating to General Sales Tax as may be in force in any other State or Union Territory includes the Central Sales Tax Act. The Central Sales Tax Act defines sales tax law and general sales tax law in Section 2 i thus 2 i sales tax law means any law for the time being in force in any State or part thereof which provides for the levy of taxes on the sale or purchase of goods generally or on any specified goods expressly mentioned in that behalf, and general sales tax law means the law for the time being in force in any State or part thereof which provides for the levy of tax on the sale or purchase of goods generally. There is a clear distinction, therefore, between a general sales tax law that provides for the levy of tax on the sale or purchase of goods generally and a special sales tax law that provides for the levy of tax on the sale or purchase of specified goods or in specified circumstances. Tax under the Central Sales Tax Act would clearly fall within the second category. That this is so would also be borne out by reference to Entry 54 of List II of the Seventh Schedule of the Constitution which empowers the State to levy taxes on the sale or purchase of goods and Entry 92A of List I of the Seventh Schedule which empowers the Central to levy taxes on the sale or purchase of goods when the same takes place in the companyrse of inter- State trade or companymerce. Our attention has been invited by learned companynsel for the appellant to the judgment of this Court in Orissa Cement Ltd. v. State of Orissa and Anr., 1970 3 SCC 869. The Orissa Sales Tax Act, 1947 gave the assessee a rebate if he made prompt payment of the tax due. The question was whether that stimulus was a part of the manner of companylection, in which event, by reason of Section 9 3 of the Central Sales Tax Act, it would be available to an assessee thereunder. This Court held that the rebate was offered to facilitate and expedite companylection. It was intended to stimulate the companylection. It was, therefore, a part of the process of companylection and, by reason of Section 9 3 , was available to an assessee making payment of tax due under the Central Sales Tax Act within the time prescribed in the relevant provision of the Orissa Sales Tax Act. We do number think that this judgment can be of any assistance here. The basis of that judgment was a provision of the Central Sales Tax Act, namely, Section 9 3 numbersuch basis is available in the present case. | 4 |
FIRST SECTION
CASE OF KAFTAILOVA v. LATVIA
(Application no. 59643/00)
JUDGMENT
STRASBOURG
22 June 2006
THIS CASE WAS REFERRED TO THE GRAND CHAMBER,
WHICH DELIVERED JUDGMENT IN THE CASE ON
7 DECEMBER 2007
This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision.
In the case of Kaftailova v. Latvia,
The European Court of Human Rights (First Section), sitting as a Chamber composed of:
MrC.L. Rozakis, President,MrsF. Tulkens,MrsN. VajiĆ,MrA. Kovler,MrD. Spielmann,MrS.E. Jebens, judgesMrsJ. Briede, ad hoc judge,and Mr S. Nielsen, Section Registrar,
Having deliberated in private on 23 May 2006,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 59643/00) against the Republic of Latvia lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a stateless person of Georgian origin, Mrs Natella Kaftailova (“the applicant”), on 10 April 2000.
2. The Latvian Government (“the Government”) were represented by their Agent, Mrs I. Reine.
3. The applicant alleged, in particular, that in refusing to regularise her stay in Latvia the Latvian authorities had infringed her rights under Article 8 of the Convention.
4. The application was allocated to the First Section of the Court (Rule 52 § 1 of the Rules of Court). Within that Section, the Chamber that would consider the case (Article 27 § 1 of the Convention) was constituted as provided in Rule 26 § 1.
5. As the seat of the judge in respect of Latvia was vacant, the Latvian Government, in a letter of 15 September 2004, appointed Mrs J. Briede as ad hoc judge in the present case (Article 27 § 2 of the Convention and Rule 29 § 1).
6. By a decision of 21 October 2004 the Court declared the application admissible.
7. On 1 November 2004 the Court changed the composition of its Sections (Rule 25 § 1). This case remained assigned to the First Section, in its new composition (Rule 52 § 1).
8. Neither of the parties filed additional written observations on the merits (Rule 59 § 1). However, by letter of 3 February 2005, the Government informed the Court of further developments in the case and requested that the application be struck out of the Court’s list of cases in accordance with Article 37 § 1 (b) of the Convention. On 20 April 2005 the applicant submitted her observations on that letter.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
9. The applicant, who is of Georgian origin, was born in 1958 in Georgia and has lived in Riga (Latvia) since 1984. She was a Soviet national until 1991 and now has no nationality.
A. Background to the case and initial regularisation of the applicant’s stay
10. In 1982 the applicant, who was living in Russia at the time, married a Soviet civil servant employed by the USSR Ministry of the Interior. In 1984 the couple had a daughter, born in Russia. In the same year the applicant and her family settled in Latvian territory.
11. In 1987 the applicant’s husband was granted the right, in a professional capacity, to rent a room in a “duty residence” in Riga. In July 1988 he exchanged the accommodation he had previously been renting in Kazan (Russia) for the right to rent a State-owned flat in Riga. He and his family moved in straight away.
12. On 16 March 1990 the applicant cancelled her formal registration of residence (known at the time as пропucкa in Russian and pieraksts or dzīvesvietas reģistrācija in Latvian) in Volzhsk (Russia). On 16 April 1990 the applicant’s husband registered her, without her knowledge or consent, as resident at the family’s new address in Riga. In August 1990 he registered his own residence at that address.
13. In the meantime, in May 1990, the applicant lodged a complaint with the relevant local authority concerning her residence registration, arguing that her husband had registered her residence unlawfully without informing her. Consequently, on 15 June 1990, her name was removed from the register in question. Her minor daughter, however, continued to be registered at her father’s address until October 1994.
In October 1990 the applicant and her husband divorced.
14. In August 1991 Latvia regained full independence. In December 1991 the Soviet Union, the State of which the applicant had hitherto been a national, broke up. The applicant therefore became stateless.
15. By a final judgment of 3 February 1993 the Riga City Vidzeme District Court granted the applicant the right to rent the room obtained by her former husband in a “duty residence” in 1987. Shortly afterwards, still in February 1993, the applicant requested the Interior Ministry’s Nationality and Immigration Department (Iekšlietu ministrijas Pilsonības un imigrācijas departaments – “the Department”) to enter her name in the register of residents (Iedzīvotāju reģistrs) as a permanent resident of Latvia. In her request, however, she gave the address at which her ex-husband had unlawfully registered her, rather than the address in Riga at which she then lived. The Government explained that this had been a case of mistaken interpretation of the law on the register of residents, one which had had far‑reaching consequences, having led to the loss of the applicant’s legal status in Latvia.
16. The Department granted the applicant’s request. In March 1993 her daughter obtained the same registration as her mother. However, by a decision of 21 July 1993, the Department cancelled the applicant’s registration on the ground that the stamp in her passport was false. The file was immediately forwarded to the Kurzeme district prosecutor who, in a decision of 17 January 1994, decided not to institute criminal proceedings against the applicant. The prosecutor found that the registration stamp was authentic, but had been placed in the passport by the authorities in breach of the relevant regulations. The prosecutor concluded that, although the applicant’s registration of residence was not valid, she could not be charged with forgery or use of forged documents.
17. On 15 February 1994 the Department removed the applicant’s name from the register of residents and cancelled her personal identification code (personas kods). On 21 September 1994 the same action was taken in respect of the applicant’s minor daughter.
18. On 30 November 1994 the Civil Division of the Supreme Court allowed a third-party appeal by the Prosecutor General’s Office and quashed the final judgment of 3 February 1993 concerning the applicant’s right to rent the room she was living in. The case was therefore referred back to the Riga City Vidzeme District Court, which, in an order of 29 December 1999, decided “not to examine the case”.
B. Proceedings concerning the applicant’s situation in Latvia
19. On 9 January 1995 the Department served a deportation order (izbraukšanas rīkojums) on the applicant, ordering her to leave Latvia with her daughter by 15 January 1995. The Department had discovered that, on 1 July 1992, the decisive date laid down by the Aliens and Stateless Persons (Entry and Residence) Act (“the Aliens Act”), the applicant had not had an officially registered permanent residence in Latvia. Under the terms of the first paragraph of the Supreme Council’s decision on the arrangements for entry into force and application of that Act (see paragraph 40 below), she ought therefore to have applied for a residence permit within one month of the date of entry into force, failing which she would be made the subject of a deportation order; the applicant, however, had omitted to do this.
20. Having lodged an administrative appeal with the head of the Department, without success, the applicant applied to the Riga City Vidzeme District Court seeking to have the order for her deportation set aside and to have her name re-entered in the register of residents.
21. By a judgment of 26 April 1995 the court of first instance rejected the application. The court found that, since the registration of the applicant’s residence in Riga had never been valid, she did not fall within the scope of the Act on the Status of Former USSR Citizens without Latvian or other Citizenship (“the Non-Citizens Act”); she was therefore illegally resident in Latvia. The applicant lodged an appeal on points of law against this judgment with the Supreme Court. The latter, in a final judgment of 19 May 1995, dismissed the appeal on the same grounds as the lower court.
22. In March 1997 the applicant made a fresh application for a residence permit to the Department; the application was rejected.
23. Following the entry into force on 25 September 1998 of amendments to section 1 of the Non-Citizens Act, the applicant requested the head of the Interior Ministry’s Nationality and Migration Directorate (Iekšlietu ministrijas Pilsonības un migrācijas lietu pārvalde – “the Directorate”), which had succeeded the Department, to regularise her stay in accordance with the Non-Citizens Act. When her request was refused, she lodged a fresh application with the Riga City Central District Court. In her memorial she stressed in particular that she had been living in Latvia for sixteen years and that she and her daughter had no other country to move to.
24. In a judgment of 8 September 1999 the district court rejected the application. It held that the applicant did not satisfy the conditions laid down in section 1(1) of the Non-Citizens Act since, on 1 July 1992, she had not had a valid registration of residence in Latvia. Furthermore, on that date, she had been resident in Latvian territory for only eight years rather than the required ten years. With specific regard to whether the registration of the applicant’s residence in Latvia was null and void, the court referred to the arguments and findings set out in the Supreme Court judgment of 19 May 1995, which had become final.
25. The applicant appealed against the judgment before the Riga Regional Court. In a judgment of 15 May 2000 following adversarial proceedings, the regional court also found against the applicant, endorsing in substance the reasoning of the court of first instance. The applicant then lodged an appeal on points of law with the Senate of the Supreme Court. In a final order of 10 July 2000 the Senate, in a preparatory sitting (rīcības sēde) held in private, declared the appeal inadmissible for lack of arguable legal grounds.
26. Meanwhile, on 6 July 2000, the applicant made a third application for regularisation to the Directorate, requesting it to grant her “the right to reside legally in Latvia”. Her application was rejected.
27. In a letter of 22 September 2000 to the Interior Ministry, the director of the National Human Rights Bureau (Valsts cilvēktiesību birojs) expressed support for the applicant’s cause and requested the Ministry to regularise her stay in Latvia. The letter received no reply.
28. In August 2001 the head of the Directorate decided to reopen the file concerning the applicant’s daughter, who was then seventeen. He noted in particular that, on 1 July 1992, she had been registered at her father’s address as a “permanently resident non-citizen” of Latvia, and that she therefore fulfilled the requirements of section 1 of the Non-Citizens Act. Accordingly, in October 2001, the Directorate issued the applicant’s daughter with a passport based on the status of “permanently resident non‑citizen”, re-entered her name in the register of residents and gave her a new personal identification code.
29. By Decree no. 820 of the Cabinet of Ministers of 24 December 2003, the applicant’s daughter became a naturalised Latvian citizen (paragraph 1.105 of the Decree).
C. Developments after the application was declared admissible
30. On 7 January 2005 the Directorate sent a letter to the applicant which read as follows:
“ ... The Directorate ... has taken note of the final decision of the European Court of Human Rights (First Section) ... on the admissibility of the application in the case of Natella Kaftailova v. Latvia.
The Directorate has explored the options currently available under Latvian legislation which might make it possible to regularise your stay in Latvia; it therefore invites you to take this opportunity to have your legal status in Latvia determined and to obtain a residence permit.
On 9 January 1995 a deportation order was served on you under section 38 of the [Aliens] Act, requesting you to leave Latvian territory by 15 January 1995. The deportation order has not been enforced, nor have any measures been taken with a view to its enforcement. Section 360(4) of the Administrative Procedure Act ... currently in force stipulates that ‘an administrative act may not be enforced if more than three years have elapsed since it became enforceable’... In view of the fact that, under the previously existing rules, enforcement of the deportation order was not stayed, and that you did not comply with it, enforcement is no longer possible.
The Status of Stateless Persons Act, in force prior to 2 March [2004], made no provision for granting stateless person status to persons illegally resident in Latvia. Accordingly, the Directorate did not invite you to submit the papers required to obtain that status.
The Stateless Persons Act which entered into force on 2 March 2004 replaced the Status of Stateless Persons Act... The conditions for the granting of stateless person status laid down by the [new] Act differ from those contained in the [old] Act.
Under Section 2(1) of the Stateless Persons Act, a person may be granted stateless person status ... if no other State has recognised him or her as a national in accordance with its own laws. Under section 3(1) of the Act, persons not covered by the Convention of 28 September 1954 relating to the Status of Stateless Persons cannot be recognised as stateless persons...
In accordance with section 4(1) of the Stateless Persons Act, in order to be recognised as a stateless person, the individual concerned must submit to the Directorate:
(1) a [written] application;
(2) an identity document;
(3) a document issued by a competent body in the foreign State, to be determined by the Directorate, certifying that the person concerned is not a national of that State and is not guaranteed nationality of that State, or a document certifying the impossibility of obtaining such a document.
In view of the fact that you were born in Georgia and are of Georgian ethnic origin and the fact that, prior to your arrival in Latvia, you had been living in Russia..., it is essential ... to ascertain that you are not recognised as a national of the Republic of Georgia or of the Russian Federation or guaranteed the right to nationality of those countries in accordance with their laws. Accordingly, to enable us to take a decision granting you stateless person status, you must provide [us] with a document issued by the competent bodies in the Republic of Georgia and the Russian Federation to the effect that you are not a national of those countries and that you are not guaranteed the right to such nationality, or with a document certifying the impossibility of obtaining such a document.
Under section 6(1) of the Stateless Persons Act, stateless persons must reside in Latvia in accordance with the rules laid down by the Immigration Act, that is to say, on the basis of a residence permit or, at least, a visa.
Having considered the circumstances of your case, we are prepared, once we have determined your legal status and obtained the necessary documentation..., to address an opinion to the Minister of the Interior proposing that you be issued with a permanent residence permit, in accordance with section 24(2) of the Immigration Act...”
31. The Directorate then listed the documents to be submitted by the applicant to her local department and indicated the usual period of validity of each document. The letter went on as follows:
“Once you have been recognised as a stateless person and been issued with a residence permit..., your personal data will be entered in the register of residents and you will receive a personal identification code.
In the Directorate’s view, this is the only basis on which you can obtain a permanent residence permit, given the circumstances of your case... That being so, the Directorate, in addressing its opinion to the Minister of the Interior, will draw the Minister’s attention to the fact that issuing you with a permanent residence permit would be compatible with the aspects [sic] of a democratic society, while maintaining the fair balance to be struck between the restriction of individual rights and the benefits to society of that restriction. The aim is to ensure that you have the right to conduct your private and family life without hindrance.
The Directorate would draw your attention to the fact that no one can be recognised as a stateless person or obtain a residence permit on a unilateral basis. You must therefore express a personal interest by making an application to that effect. In the view of the Directorate, ... the solution outlined above corresponds to your interests, would remove the threat of deportation in the future and would enable you to exercise your right to private and family life without any great restrictions; moreover, in accordance with the Nationality Act, you could aspire to Latvian citizenship by naturalisation.
In view of the above, we invite you to contact the Directorate and submit the necessary documents to it, so that ... your legal status can be determined and ... the Minister of the Interior can take a decision on the issuing of a permanent residence permit. ...”
At the end of the letter the Directorate gave the telephone numbers of the officials to whom the applicant should address any further queries concerning the regularisation of her status.
32. By Decree no. 75 of 2 February 2005, the Cabinet of Ministers instructed the Minister of the Interior to issue the applicant with a permanent residence permit “once the documents required to make such an application have been received” (Article 1). At the same time the Minister of Foreign Affairs was instructed to have the Court’s decision of 21 October 2004 on the admissibility of the present application translated into Latvian, and to have the translation published in the Official Gazette (Article 3).
33. It is clear from the applicant’s explanations that she did not take the steps indicated by the Directorate and that she continues to reside illegally in Latvia.
II. RELEVANT DOMESTIC LAW
A. General provisions
34. Latvian legislation on nationality and immigration distinguishes several categories of persons, each with a specific status.
(a) Latvian citizens (Latvijas Republikas pilsoņi), whose legal status is governed by the Citizenship Act (Pilsonības likums);
(b) “permanently resident non-citizens” (nepilsoņi) – that is, citizens of the former USSR who lost their Soviet citizenship following the break-up of the USSR in 1991, but have not subsequently obtained any other nationality – who are governed by the Non‑Citizens Act (see paragraph 35 below);
(c) asylum-seekers and refugees, whose status is governed by the Asylum Act of 7 March 2002 (Patvēruma likums);
(d) “stateless persons” (bezvalstnieki) in the narrow and specific sense of the term. Prior to 2 March 2004 their status was governed by the Status of Stateless Persons Act, read in conjunction with the Aliens Act (see paragraphs 36 and 39 below) and, after 1 May 2003, with the Immigration Act (see paragraph 41 below). Since 2 March 2004 their status has been governed by the new Stateless Persons Act (see paragraph 38 below), also read in conjunction with the Immigration Act;
(e) “aliens” in the broad sense of the term (ārzemnieki), including foreign nationals (ārvalstnieki) and stateless persons (bezvalstnieki) falling solely within the ambit of the Aliens Act (before 1 May 2003), and the Immigration Act (after that date).
B. “Permanently resident non-citizens”
35. The relevant provisions of the Act of 12 April 1995 on the Status of Former USSR Citizens without Latvian or other Citizenship (Likums “Par to bijušo PSRS pilsoņu statusu, kuriem nav Latvijas vai citas valsts pilsonības”) read as follows:
Section 1(1)
[Version in force before 25 September 1998]: “This Act governs citizens of the former USSR resident in Latvia ..., who were resident within Latvian territory prior to 1 July 1992 and whose residence is registered there, regardless of the status of their housing, and who are not citizens of Latvia or any other State; it also governs the minor children of such persons who are not citizens of Latvia or any other State.”
[Version in force since 25 September 1998]: “The persons governed by this Act – ‘non-citizens’ – shall be citizens of the former USSR who are resident in Latvia ..., and their children, who satisfy all the following criteria:
(1) on 1 July 1992 they were registered as being resident within the territory of Latvia, regardless of the status of their housing; or their last registered place of residence on 1 July 1992 was in the Republic of Latvia; or a court has established that before the above-mentioned date they had been resident within Latvian territory for not less than ten years;
(2) they do not have Latvian citizenship;
(3) they are not and have not been citizens of any other State. ...”
...
Section 2(2)
“... [N]on-citizens shall have the right:
...
(2) not to be deported from Latvia, save where deportation takes place in accordance with the law and another State has agreed to receive the deportee. ...”
C. Specific status of “stateless person”
36. The specific status of “stateless person” (bezvalstnieks) was established by the Status of Stateless Persons Act (Likums “Par bezvalstnieka statusu Latvijas Republikā”) of 18 February 1999. The Act remained in force until 2 March 2004, when it was replaced by the Stateless Persons Act (Bezvalstnieku likums) of 29 January 2004.
37. Section 2(1) of the 1999 Act read as follows:
“The status of stateless person may be granted to persons whose status is not defined either by the Act on the Status of Former USSR Citizens without Latvian or other Citizenship or by the Asylum Act , provided they
...
(2) are legally resident in Latvia.”
38. The relevant provisions of the new Stateless Persons Act read as follows:
Section 2(1)
“In the Republic of Latvia, an individual may be recognised as a stateless person if no other State has recognised him or her as a national in accordance with its own laws.”
Section 3
“1. In the Republic of Latvia, an individual not falling within the scope of the Convention of 28 September 1954 relating to the Status of Stateless Persons may not be recognised as a stateless person.
2. An individual whose status is governed by the [Non-Citizens] Act may not be recognised as a stateless person.”
Section 4
“1. In order to be recognised as a stateless person, the individual concerned must submit to the [Directorate]:
(1) a [written] application;
(2) an identity document;
(3) a document issued by a competent body in the foreign State, to be determined by the Directorate, certifying that the person concerned is not a national of that State and is not guaranteed nationality of that State, or a document certifying the impossibility of obtaining such a document.
2. Where the individual concerned is unable to produce one of the documents referred to in points 2 or 3 of the first paragraph, an official instructed by the head of the Directorate shall decide whether or not to grant him or her the status of stateless person. The decision shall be taken on the basis of information available to the Directorate supported by documentary evidence.”
Section 5(3) and (4)
“...
3. The person [concerned] may appeal to the head of the Directorate against the decision [concerning the granting of stateless person status].
4. The person [concerned] may lodge an application with the courts challenging the decision by the head of the Directorate.”
Section 6(1)
“1. The stateless person shall reside in the Republic of Latvia in accordance with the provisions of the Immigration Act.”
D. Status of aliens generally
39. The relevant provisions of the Aliens and Stateless Persons (Entry and Residence) Act of 9 June 1992 (Likums “Par ārvalstnieku un bezvalstnieku ieceļošanu un uzturēšanos Latvijas Republikā), in force prior to 1 May 2003, read as follows:
Section 11
“Any foreigner or stateless person shall be entitled to stay in the Republic of Latvia for more than three months [version in force since 25 May 1999: ‘more than ninety days in the course of one half of a calendar year’], provided that he or she has obtained a residence permit in accordance with the provisions of this Act. ...”
Section 12
(amended by the Act of 15 October 1998)
“Aliens or stateless persons may be issued with...
(1) a temporary residence permit;
(2) a permanent residence permit. ...”
Section 23(1), first paragraph
(added by the Act of 18 December 1996, in force since 21 January 1997)
“Permanent residence permits may be obtained by aliens who, on 1 July 1992, were officially registered as being resident for an indefinite period within the Republic of Latvia if, at the time of applying for a permanent residence permit, they are officially registered as being resident within the Republic of Latvia and are entered in the register of residents.”
Section 35
“No residence permit shall be issued to a person who
...
(5) was deported from Latvia during the five years preceding the application;
(6) has knowingly supplied false information in order to obtain such a permit;
(7) is in possession of false or invalid identity or immigration documents;
...”
Section 38
“The head of the Directorate or of the regional office of the Directorate shall issue a deportation order...
...
(2) if the alien or stateless person ... is in the country without a valid visa or residence permit; ...”
Section 40
“The individual concerned shall leave the territory of Latvia within seven days after the deportation order has been served on him or her, provided that no appeal is lodged against the order in accordance with this section.
Persons in respect of whom a deportation order is issued may appeal against it within seven days to the head of the Directorate, who shall extend the residence permit pending consideration of the appeal.
An appeal against the decision of the head of the Directorate shall lie to the court within whose territorial jurisdiction the Directorate’s headquarters are situated, within seven days after the decision has been served.”
40. The decision of the Supreme Council of the Republic of Latvia of 10 June 1992 on the arrangements for entry into force and application of the Aliens Act gave details of the scope of the Act. In particular, the first paragraph required foreign nationals and stateless persons resident in Latvia on the date of the Act’s entry into force, but with no permanent registration of residence, to apply for a residence permit within one month, failing which they would be served with a deportation order.
41. Since 1 May 2003 the Aliens Act cited above is no longer in force; it was repealed and replaced by the Immigration Act (Imigrācijas likums) of 31 October 2002. The relevant provisions of the new Act read as follows:
Section 1
“The present Act uses the following definitions:
1. an alien [ārzemnieks] – a person who is neither a Latvian citizen nor a “[permanently resident] non-citizen” of Latvia; ...”
Section 24(2)
“In cases not covered by the present Act, a permanent residence permit shall be granted by the Minister of the Interior, where it accords with the interests of the State.”
Section 33 (2)
“... When the time-limit set down [for submitting an application for a residence permit] has passed, the head of the Directorate may authorise [the person concerned] to submit the [relevant] documents, where such authorisation accords with the interests of the Latvian State, or on grounds of force majeure or humanitarian grounds.”
Section 47
“1. Within ten days of establishment of the facts detailed in the first and second subparagraphs of the present paragraph, ... the [relevant] official of the Directorate shall take a forcible expulsion decision..., where:
(1) the alien has not left the Republic of Latvia within seven days of receiving the deportation order..., and has not appealed against the order to the head of the Directorate..., or the head of the Directorate has dismissed the appeal;
...
2. In the cases referred to in the first subparagraph of paragraph 1 of this section, no appeal shall lie against the forcible expulsion decision...
...
4. In the event of a change of circumstances, the head of the Directorate may set aside a forcible expulsion decision.”
E. General administrative law
42. Section 360(4) of the Administrative Procedure Act (Administratīvā procesa likums), in force since 1 February 2004, provides:
“An administrative act may not be enforced if more than three years have elapsed since it became enforceable. In calculating the limitation period, any period during which implementation of the administrative act was suspended shall be deducted.”
THE LAW
I. THE GOVERNMENT’S PRELIMINARY OBJECTION
A. The parties’ submissions
43. By letter of 3 February 2005 the Government informed the Court of the practical measures taken by the Latvian authorities with a view to regularising the applicant’s stay in Latvia (see paragraphs 30-32 above). They explained that it had been decided at the Cabinet of Ministers’ meeting of 2 February 2005 not to offer the applicant a friendly settlement within the meaning of Article 39 of the Convention, but to remedy her complaint directly by offering her a permanent residence permit. In view of these measures, the Government considered that the matter giving rise to the application had been resolved and the application should be struck out of the Court’s list of cases in accordance with Article 37 § 1 (b) of the Convention.
44. The applicant opposed the striking-out of the application. She contended that the Government could not rely on domestic legislation adopted after the domestic legal decisions which had given rise to the alleged violation. The applicant argued that “the Court should examine only the legal basis on which [she] and [her] daughter [had been] deprived of [their] rights”. Similarly, accepting the Government’s proposals and subscribing to their point of view would “leave her devoid of arguments”. Finally, the applicant considered that, by acting as they had, the Government had “acknowledged implicitly that they were wrong”. In sum, the matter was far from being resolved and there were no grounds for applying Article 37 § 1 (b) of the Convention.
B. The Court’s assessment
45. The Court considers that in the instant case the objection raised by the Government is closely linked to the question whether the applicant has effectively lost her status of “victim” within the meaning of Article 34 of the Convention as a result of developments since the application was declared admissible. It is true that, in its judgment in Pisano v. Italy ([GC] (striking out), no. 36732/97, 24 October 2002), the Court examined this question separately from the question of the application of Article 37 § 1 (b), ruling that the applicant could continue to claim the status of “victim”, while going on to decide that the matter had been resolved (loc. cit., §§ 38‑39). However, the present application concerns the removal of a foreign national and her illegal residence within the national territory; in cases of this type, where the applicant’s stay was regularised during the course of the Court’s examination of the application, the Court has generally considered whether it should continue its examination under Article 34 of the Convention by reference precisely to the notion of “victim” (see, for example, Maaouia v. France (dec.), no. 39652/98, ECHR 1999‑II; Pančenko v. Latvia (dec.), no. 40772/98, 28 October 1999; Mikheyeva v. Latvia (dec.), no. 50029/99, 12 September 2002; Aristimuño Mendizabal v. France, (dec.), no. 51431/99, 21 June 2005; and Yildiz v. Germany (dec.), no. 40932/02, 13 October 2005). The Court considers that in the instant case the Government’s objection should be examined under both provisions taken together, as a finding that the applicant has lost her “victim” status within the meaning of Article 34 of the Convention would prompt the Court to conclude that the matter has been resolved within the meaning of Article 37 § 1 (b).
46. The Court points out first of all that, in order to conclude in the instant case that the matter has been resolved within the meaning of Article 37 § 1 (b) and that there is therefore no longer any objective justification for the applicant to pursue her application, it is necessary to examine, firstly, whether the circumstances complained of directly by the applicant still obtain and, secondly, whether the effects of a possible violation of the Convention on account of those circumstances have also been redressed (see Pisano, cited above, § 42). Similarly, in relation to Article 34, the Court has always held that, as a general rule, a decision or measure favourable to the applicant is not 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 alleged breach of the Convention (see, among many other authorities, Amuur v. France, judgment of 25 June 1996, Reports of Judgments and Decisions 1996‑III, p. 846, § 36; Dalban v. Romania [GC], no. 28114/95, § 44, ECHR 1999‑VI; Labita v. Italy [GC], no. 26772/95, § 142, ECHR 2000‑IV; and Guisset v. France, no. 33933/96, § 66, ECHR 2000‑IX).
47. Where the person concerned complains in particular of his or her deportation or illegal status within the country, the minimum steps required are, firstly, the setting-aside of the deportation order and, secondly, the issuing or recognition of a residence permit (see the Mikheyeva decision, cited above, and the decision of 21 October 2004 on the admissibility of the present application). However, it is also necessary to ascertain in each case whether these measures are sufficient to fully remedy the complaint in question.
48. In the instant case the Court observes that, until 1994, the applicant was legally resident in Latvia. In February 1994 her name was removed from the register of residents and her personal identification code was cancelled; in January 1995 an order was made for her deportation. Although the order was never enforced, its existence indisputably placed the applicant in a very uncertain and insecure position in Latvia. Only in January and February 2005, that is, after the present application had been declared admissible by the Court, did the Latvian authorities take practical steps aimed at regularising the applicant’s stay. It is worth noting that eleven years elapsed between the removal of the applicant’s name from the register and the adoption of the above-mentioned measures.
49. The Court notes that none of the relevant Latvian authorities explicitly acknowledged the existence of a violation of Article 8 of the Convention. It observes, however, that the Directorate’s letter of 7 January 2005 and Government Decree no. 75 of 2 February 2005 both referred to the Court’s decision on the admissibility of the present application. It therefore accepts that the fact that the applicant’s complaint to the Court was thus taken into consideration could be regarded as implicit acknowledgement of the existence of an issue under Article 8.
50. That said, and regard being had to all the relevant circumstances of the case, the Court considers that the measures taken by the authorities do not constitute adequate redress for the complaint in question. Admittedly, the Government’s explanations – which have not been disputed by the applicant – make clear that the regularisation arrangements proposed would allow her to live permanently and without hindrance in Latvia. However, that solution does not erase the long period of insecurity and legal uncertainty which she has undergone in Latvia. In sum, while it is true that some redress has been afforded, it is no more than partial (see the Aristimuño Mendizabal decision, cited above, and, mutatis mutandis, Chevrol v. France, no. 49636/99, § 42, ECHR 2003‑III).
51. The Court further considers that this case differs from the cases of Maaouia, Pančenko, Mikheyeva and Yildiz, cited above, and from the case of Mehemi v. France (no. 2) (no. 53470/99, ECHR 2003‑IV), in which the granting of a residence permit was found to constitute redress. In Maaouia, Mehemi (no. 2) and Yildiz, the alleged violation of Article 8 consisted in the removal or deportation of the applicants. In Pančenko and Mikheyeva, the complaints were similar to that of Mrs Kaftailova, but the length of the applicants’ illegal residence in the country was appreciably shorter (almost three years in the case of Mrs Pančenko and approximately six years in the case of Mrs Mikheyeva). In the instant case, the alleged violation stems from the insecure and uncertain situation in which the applicant lived for around eleven years. In the circumstances, the Court finds that the adverse consequences for the applicant resulting from the circumstances complained of have not been wholly erased.
52. It follows that, since the authorities have not afforded full redress for the violation alleged by the applicant, the latter can still claim to be a “victim” within the meaning of Article 34 of the Convention. The matter has therefore not yet been resolved and the Court sees no grounds for applying Article 37 § 1 (b) of the Convention.
Accordingly, the Court dismisses the Government’s objection.
II. ALLEGED VIOLATION OF ARTICLE 8 OF THE CONVENTION
A. The parties’ submissions
1. The Government
53. The Government denied that there had been interference with the exercise of the applicant’s right to respect for her private and family life. They submitted a legal analysis designed to demonstrate that all the decisions taken in the case by the Latvian authorities had been in accordance with domestic law, that the applicant was not, and never had been, entitled to the status of “permanently resident non-citizen” which she was claiming, and that there had been no indication of arbitrariness in the conduct of the authorities. The Government further pointed out that the applicant was currently at no risk of being deported from Latvia and could regularise her stay at any time by following the indications given by the Directorate. Consequently, the measures taken in respect of the applicant had not attained a sufficient degree of severity to amount to “interference” within the meaning of Article 8 § 2 of the Convention.
54. Even assuming this not to be the case, the Government contended that the alleged interference met the requirements of the second paragraph of Article 8. Firstly, it had been “in accordance with the law” and, secondly, it had pursued a “legitimate aim”, namely the “prevention of disorder”, in view, among other things, of the particularly wide margin of appreciation enjoyed by States in immigration matters.
55. The Government further took the view that the interference in question had been and continued to be “necessary in a democratic society”, that is to say, that it was proportionate to the legitimate aim pursued. In that connection the Government pointed out that the applicant had been born in Georgia and had lived in Russia until the age of twenty-six. All her schooling had been in Russia and she had completed her professional training there. It was in Russia that she had married a man of Russian origin, and there that her daughter had been born in 1984. The Government stressed the fact that, originally, it had not been the applicant’s choice to move to Latvian territory; she had been accompanying her husband, an official with the USSR Interior Ministry, who had been transferred there for a period of time. In the Government’s view, this was borne out by the fact that the applicant’s ex‑husband had been able to obtain only a room in a “duty residence” rather than permanent accommodation.
56. Consequently, the applicant could not be regarded as an “integrated alien” within the meaning of the Court’s established case-law. On the contrary, she had quite strong linguistic and cultural ties with Russia. As she herself had declared in her application for registration in 1993, she spoke Russian and Georgian with her family; her command of Latvian, on the other hand, was poor. Accordingly, she would have no major difficulty in adjusting to life in Russia from a social and cultural point of view if she were forced to move there.
57. As to the applicant’s daughter, the Government pointed out that Mrs Kaftailova herself was unemployed; consequently, there could be no bond of specific economic dependency between them. Similarly, the case file showed that, until 1994, the applicant’s daughter had lived with her father, who continued to support her financially. Lastly, the applicant had not claimed the existence of any obstacle to her visiting her daughter in Latvia on the basis of a visa or having her daughter visit her in Russia. The ties between the applicant and her daughter were therefore not such as to render the interference in question disproportionate.
2. The applicant
58. The applicant challenged the Government’s position. Like the Government, she submitted an analysis, in this case aimed at demonstrating that the removal of her name from the register of residents had been in breach of Latvian domestic law. She further pointed out that she and her daughter had lived in Latvia since 1984; at that time, Latvian territory had formed part of the Soviet Union and people had been free to move between the different parts of that State. In that connection the applicant emphasised the fact that, following the break-up of the USSR, she had been left without any nationality; she maintained that the Latvian authorities had deprived her of the Latvian citizenship she had held previously.
59. The applicant stressed the social and economic problems she faced on account of her illegal status in Latvia. She could not work legally or receive allowances or social security benefits; moreover, she lived under constant threat of losing the only accommodation she had. With regard to the regularisation of her daughter’s stay and her subsequent naturalisation, the applicant considered that these measures did not afford adequate redress for the damage they had both sustained as a result of their ordeals. In sum, there had been a violation of Article 8 of the Convention.
B. The Court’s assessment
1. Whether there was interference
60. The Court observes at the outset that some of the events referred to by the applicant occurred before 27 June 1997, the date of the Convention’s entry into force in respect of Latvia. While the Court cannot rule on the existence of a violation of the Convention or the Protocols thereto prior to that date, it nevertheless can, and must, take into consideration the events which occurred during that period.
61. The Court reiterates that the Convention does not guarantee as such the right of an alien to enter or to reside in a particular country and that Contracting States have the right, as a matter of well-established international law and subject to their treaty obligations including the Convention, to control the entry, residence and expulsion of aliens (see, among many other authorities, Baghli v. France, no. 34374/97, § 45, ECHR 1999-VIII, and Boultif v. Switzerland, no. 54273/00, § 39, ECHR 2001-IX). Nevertheless, the decisions taken by States in the immigration sphere can in some cases amount to interference with the right to respect for private and family life secured by Article 8 § 1 of the Convention, in particular where the persons concerned possess strong personal or family ties in the host country which are liable to be seriously affected by application of the measure in question.
62. In the instant case the applicant maintained that the Latvian authorities had deprived her of the Latvian citizenship she had previously held. In that connection the Court observes that the applicant was originally a citizen of the Soviet Union, a State which ceased to exist in 1991, and has at no time been a Latvian citizen. Nor is there anything to show that she could legally claim Latvian citizenship under that country’s laws, or that it was arbitrarily denied her (see, mutatis mutandis, Slivenko v. Latvia (dec.) [GC], no. 48321/99, §§ 77-78, ECHR 2002‑II). The applicant’s allegations on this point are therefore unfounded (see Kolosovskiy v. Latvia (dec.), no. 50183/99, 29 January 2004).
63. In the instant case the Court notes that the applicant arrived in Latvian territory in 1984, at the age of twenty-six, since which time she has always lived in Latvia. Accordingly, it is not in dispute that, during her stay within Latvian territory, she has forged the personal, social and economic ties that make up the private life of every human being.
As to the existence of “family life” within the meaning of Article 8 § 1, the Court observes that the deportation order issued in 1995 in respect of the applicant also related to her daughter; as both were enjoined to leave the country, the measure could not have had the effect of breaking up their life together (see Slivenko v. Latvia [GC], no. 48321/99, § 97, ECHR 2003‑X). The applicant’s daughter is now twenty-two; she has been legally resident in Latvia since 2001 and has had Latvian citizenship since 2003. As her daughter is an adult, and in the absence of specific elements of dependency going beyond the normal affective ties, the applicant can no longer rely on the existence of “family life” in relation to her daughter (see, in particular, the Kolosovskiy decision, cited above). The Court will therefore examine the applicant’s complaint under the heading of her “private” life.
64. The Court notes that the order for the applicant’s deportation was never enforced and can no longer be enforced. In that connection it reiterates that Article 8, like any other provision of the Convention or the Protocols thereto, must be interpreted in such a way as to guarantee not rights that are theoretical or illusory but rights that are practical and effective (see, mutatis mutandis, Artico v. Italy, judgment of 13 May 1980, Series A no. 37, p. 16, § 33, and Soering v. the United Kingdom, judgment of 7 July 1989, Series A no. 161, p. 34, § 87). Furthermore, while the chief object of Article 8 is to protect the individual against arbitrary interference by the public authorities, it does not merely compel the State to abstain from such interference: in addition to this negative undertaking, there may be positive obligations inherent in effective respect for private or family life (see, for example, Gül v. Switzerland, judgment of 19 February 1996, Reports 1996-I, pp. 174‑175, § 38; Ignaccolo-Zenide v. Romania, no. 31679/96, § 94, ECHR 2000‑I; and Mehemi (no. 2), cited above, § 45). In other words, it is not enough for the host State to refrain from deporting the person concerned; it must also, by means of positive measures if necessary, afford him or her the opportunity to exercise the rights in question without interference.
65. In the instant case the Court considers that the prolonged refusal of the Latvian authorities to recognise the applicant’s right to reside legally and permanently in Latvia amounts to interference with her private life (see the Slivenko judgment, cited above, § 96). It remains to be ascertained whether that interference was compatible with the second paragraph of Article 8 of the Convention, that is, whether it was “in accordance with the law”, pursued one or more of the legitimate aims listed in that paragraph and was “necessary in a democratic society” in order to achieve them (see Boultif, cited above, § 41).
2. Whether the interference was justified
66. With regard first of all to the lawfulness of the interference, the Court acknowledges that it was “in accordance with the law” (in this case sections 23(1), 35 and 38 of the former Aliens Act and the decision of the Supreme Council of 10 June 1992 on the arrangements for entry into force and application of that Act). Similarly, given the fact that the interference is or was designed to ensure compliance with the immigration laws, the Court accepts that it pursued a “legitimate aim”, namely the “prevention of disorder”.
67. As to whether the impugned measure was “necessary in a democratic society”, that is to say, whether it was proportionate to the legitimate aim pursued, the Court notes that the applicant has lived in Latvia since 1984, in other words, for twenty-two years. Granted, she is not of Latvian origin and has spent a significant proportion of her life in Russia. However, the Court does not consider that circumstance to be decisive in the present case. Firstly, there is nothing to indicate that the applicant is entitled to obtain Russian or Georgian nationality; moreover, the Directorate itself appeared to acknowledge this in its letter, by inviting the applicant to provide documents certifying that she was not a citizen of either of these two countries and was not guaranteed the right to such citizenship (see paragraph 30 above). Secondly, it is not disputed that, in the period since 1984, the applicant has developed personal and social ties such that she can now be said to be sufficiently well integrated into Latvian society even if, as the Government contend, her level of Latvian is unsatisfactory (see the Slivenko judgment, cited above, § 124). The Court also notes that, until 1990, the applicant’s officially registered residence was in Russia; however, she does not appear to have had genuine and stable ties to that country since then. In any event, it seems clear that the applicant has not established personal and social ties in any other country similar to those she has in Latvia (ibid., § 125).
68. In these circumstances, only reasons of a particularly serious nature could justify the impugned measure, and the Court has been unable to discern such reasons in the instant case. Whilst it recognises the right of each State to take effective steps to ensure compliance with its immigration laws, it considers that a measure of the kind imposed on the applicant could be considered to be proportionate only if the applicant had acted in a particularly dangerous manner. In that connection the Court reiterates that most of the similar cases it has examined under Article 8 of the Convention have related to situations in which the applicants had been deported after being convicted of serious criminal offences. By contrast, in the present case, no penalty, however slight, was imposed on the applicant; on the contrary, the prosecutor dealing with the case decided on 17 January 1994 not to institute criminal proceedings against her (see paragraph 16 above).
69. To sum up, taking into consideration all the circumstances, and in particular the eleven-year period of instability and legal uncertainty which the applicant has undergone in Latvia, the Court considers that the Latvian authorities exceeded the margin of appreciation left to the Contracting States in this sphere and did not strike a fair balance between the legitimate aim of preventing disorder and the applicant’s interest in having her rights under Article 8 protected. It is therefore unable to find that the interference complained of was “necessary in a democratic society”.
70. In view of all the above considerations, the Court holds that there has been a violation of Article 8 of the Convention in the instant case.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
71. 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.”
72. The Court notes that the applicant did not submit a claim for just satisfaction within the time allowed. Accordingly, it sees no reason to award the applicant any sum under that head.
FOR THESE REASONS, THE COURT
1. Dismisses by five votes to two the Government’s preliminary objection;
2. Holds by five votes to two that there has been a violation of Article 8 of the Convention.
Done in French, and notified in writing on 22 June 2006, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Søren Nielsen Christos RozakisRegistrarPresident
In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the following separate opinions are annexed to this judgment:
(a) partly concurring opinion of Mr Spielmann, joined by Mr Kovler;
(b) dissenting opinion of Mrs Vajić;
(c) dissenting opinion of Mrs Briede.
C.L.R.S.N.
PARTLY CONCURRING OPINION OF JUDGE SPIELMANN, JOINED BY JUDGE KOVLER
(Translation)
1. I share the opinion of the majority in finding a violation of Article 8 of the Convention under the heading of “private life”. However, I do not share the majority’s view that the applicant cannot rely on the existence of “family life” between herself and her daughter and that the complaint merits examination only under the heading of the applicant’s “private life” (see paragraph 63 of the judgment).
2. It is true that this very restrictive interpretation of the notion of family life is in line – in the specific sphere of the entry, residence and expulsion of non-nationals – with the case-law established in Slivenko (see Slivenko v. Latvia [GC], no. 48321/99, § 97, ECHR 2003-X).
3. Allowing for this, and still bearing in mind the Slivenko judgment of 9 October 2003, which I am obliged to follow, I cannot in all conscience fail to register my disagreement with this unduly restrictive approach to the notion of family life.
4. The Court has traditionally – in a wide variety of spheres, moreover – adopted a broad construction of the notion of “family life”. As far back as the Marckx case, it emphasised that “‘family life’, within the meaning of Article 8, includes at least the ties between near relatives, for instance those between grandparents and grandchildren, since such relatives may play a considerable part in family life”. The Court went on to conclude that “‘respect’ for a family life so understood implies an obligation for the State to act in a manner calculated to allow these ties to develop normally” (see Marckx v. Belgium, judgment of 13 June 1979, Series A no. 31, p. 21, § 45; see also Scozzari and Giunta v. Italy [GC], nos. 39221/98 and 41963/98, § 221, ECHR 2000‑VIII).
5. By way of example I would cite the L. judgment of 1 June 2004, in which the Court accepted that family life could also exist between a child and a parent who had never lived together, if other factors demonstrated that the relationship had sufficient constancy to create de facto family ties (see L. v. the Netherlands, no. 45582/99, § 36, ECHR 2004‑IV)[1]. The Court has even gone so far as to say that “family life” can encompass de facto relationships between persons with no ties of kinship (see X, Y and Z v. the United Kingdom, judgment of 22 April 1997, Reports of Judgments and Decisions 1997-11, pp. 629-630, §§ 36-37)[2]. What counts is whether there are “legal or factual elements indicating the existence of a close personal relationship” (see L., cited above, § 37).
6. In paragraph 63 of the judgment the Court notes that the order for the applicant’s deportation made in 1995 also related to her daughter, observing that, as both were enjoined to leave the country, the measure could not have had the effect of breaking up their life together. The Court further observes that the applicant’s daughter is now twenty-two; she has been legally resident in Latvia since 2001 and has had Latvian citizenship since 2003. The Court finds that, since she is an adult, and in the absence of specific elements of dependency going beyond the normal affective ties, the applicant can no longer rely on the existence of “family life” between herself and her daughter.
7. I do not subscribe to this point of view.
8. Giving precedence to the criterion of dependency to the detriment of that of normal affective ties strikes me as a very artificial approach to determining the existence of “family life”. It seems inconceivable to me that so little importance can be attached to the affective ties between a mother and her daughter that they can fall outside the scope of “family life”.
9. This line of case-law which, admittedly, appears to be confined to the sphere of expulsions, greatly impoverishes the notion of “family life”.
DISSENTING OPINION OF JUDGE VAJIĆ
(Translation)
I regret that I am unable to join the majority in finding that there has been a violation of Article 8 of the Convention in the instant case. In that connection, I would refer to the arguments expressed by Judge Briede and myself in our joint dissenting opinion in Sisojeva and Others v. Latvia (no. 60654/00, judgment of 16 June 2005).
Having regard to the circumstances of the case, and in particular the Government’s offer to regularise the applicant’s stay and the authorities’ statement to the effect that enforcement of the deportation order is no longer possible (paragraph 30 of the judgment), I have come to the conclusion that the matter giving rise to the present case has been resolved. Accordingly, I am of the opinion that the application should have been struck out of the Court’s list of cases in accordance with Article 37 § 1 (b) of the Convention.
DISSENTING OPINION OF JUDGE BRIEDE
(Translation)
In the instant case I can only refer to my dissenting opinion in the case of Shevanova v. Latvia (no. 58822/00, judgment of 15 June 2006). As in that case, I consider that, in view of the measures proposed to the applicant to regularise her stay, she can no longer claim to be a “victim” of a violation of Article 8 of the Convention. In my opinion, the matter has been resolved and the application should be struck out of the Court’s list of cases in accordance with Article 37 § 1 (b) of the Convention.
[1] See also the arguments set out in F. Sudre et al, Les grands arrêts de la Cour européenne des Droits de l’Homme, 3rd edition, Paris, PUF, Coll. Thémis Droit, 2003, p. 474.
[2] See also F. Sudre, Droit européen et international des droits de l’homme, 7th edition, Paris, PUF, Coll. Droit fondamental, 2005, p. 429.
| 1 |
MR JUSTICE MUNBY: This is an application for judicial review, permission having been granted by Walker J on 12 December 2005. The matter was originally listed for hearing before me on 9 February 2006 but had to be adjourned because the claimant, who appears in person and is currently detained at Yarl's Wood Immigration Removal Centre, had not been produced by the authorities.
The claimant, a citizen of the Democratic Republic of Congo, claimed asylum on her arrival in this country on 29 March 2004. Her application was refused by the Secretary of State on 13 May 2004. She appealed, but her appeal was dismissed by the adjudicator, Mr Sarsfield, in a determination dated 28 July 2004.
In paragraph 21 the adjudicator found that the claimant was not credible for a variety of reasons which he set out in paragraphs under letters a to v. In paragraph 22 the adjudicator concluded that the claimant had embellished her account as time had progressed. He found her to be evasive and found her account to be "not credible and a fabrication.".
In paragraph 19 of his determination the adjudicator made certain findings as to what he called the "stereotypical physical characteristics" of Tutsis of Ruwandan origin and acknowledged that Congolese people who are not Tutsis but had that appearance were viewed as Tutsis. He also recorded the well-known, if lamentable, fact that since the 1998 conflict began there have been serious human rights abuses committed against Tutsis, or those perceived to be Tutsis, both by government security forces in Kinshasha and elsewhere and also by private citizens.
As Mr Palmer, on behalf of the Secretary of State, correctly pointed out, the adjudicator, in paragraphs 23 and 24 of his determination, made four findings of fact which were not merely central to his decision but were also highly relevant to the subsequent decision of the Home Secretary which is the subject of the present challenge. The first of those four findings was:
"The appellant's physical appearance did not match that of a Tutsi".
The second relevant finding was:
"On her own evidence she had a DRC identity card, so that her nationality as a Congolese was accepted by the authorities."
The third relevant finding was:
"Her mother, a Rwandan, remains in the DRC and there was no evidence that she or the appellants' family had continued to have problems."
The fourth relevant finding was:
"As I find the appellant's account a fabrication, I am not satisfied she has ever suffered as a result of any Rwandan connection or perception."
The claimant sought permission to appeal from the decision of the adjudicator to the Immigration Appeal Tribunal. Permission to appeal was refused on 2 November 2004. The claimant subsequently exercised her right to make an application to a judge of this court for statutory review of that decision. That application in turn was refused. The claimant had accordingly exhausted all her rights of appeal and no longer had any lawful basis for remaining in this country.
On 27 September 2005, she was detained. On 12 October 2005, removal directions were given for the claimant's removal from this country to the Democratic Republic of Congo on an aeroplane leaving at 7pm on 2 November 2005. The present proceedings seeking judicial review were issued on that very day: 2 November 2005.
In the meantime, on 31 October 2005, immigration advisers acting on the claimant's behalf had written to the Secretary of State making what was described in their letter as a "further human rights representation". That letter briefly summarised the successive dismissals of the claimant's application for asylum and of her appeals against that refusal. It then rehearsed what, as Mr Palmer correctly points out, was the substance of the claim which had been put before the adjudicator and rejected by him. The letter went on to assert that the Congolese authorities were unable to protect her in the DRC and that there would be a breach of her human rights were she to be returned by this country to the DRC. Thus far, as Mr Palmer correctly points out, the letter said nothing that had not already been said previously by, or on behalf of, the claimant and in the event, as it happens, rejected by the adjudicator.
The letter then continued by saying that the claimant was providing "fresh evidence", that it was not safe for her to return to the DRC and that this country would be in breach of her Convention rights if she was removed to the DRC because, so it was asserted in the letter, she was in one of the categories of risk identified by the Tribunal in the case of AB and DM (Risk categories reviewed - Tutsis added) DRC CG [2005] UKIAT 00118. That, I should explain, was a country guidance decision of the Tribunal, dated 21 July 2005, which revisited, and in significant measure departed from, the views expressed by the Tribunal in the earlier case of L (DRC) 07/2004, which had been the relevant authority at the time of the hearing before the adjudicator and which had been taken into account by the adjudicator.
However, despite the assertion in that letter, as Mr Palmer points out, the only enclosures with the letter were a copy of the Tribunal's decision in AB and DM and a copy of a report which had been before the Tribunal in that case and had in fact been the basis of its decision. In other words, the letter sent on behalf of the claimant provided no additional factual material of any sort. It provided no fresh evidence. The only new material which was even referred to was the decision of the Tribunal in AB and DM.
The Secretary of State's decision letter was dated 2 November 2005. He rehearsed the history of the claimant's claim for asylum and its rejection by the adjudicator. He drew specific attention to various findings of the adjudicator, including some of those to which I have already made reference, in particular, the adjudicator's finding that the claimant's physical appearance did not match that of a Tutsi. The letter continued:
"It is noted your client sought leave to appeal to the Tribunal and raised the issue of her alleged Tutsi ethnicity in her grounds of appeal. However leave to appeal was refused and furthermore, an application for statutory review was also refused.
You have provided no new evidence to support your assertion that your client would be at risk in DRC as a result of her Tutsi ethnicity or imputed political opinion. Taking this and the Appellate Authority's earlier findings of fact, we do not accept that your client's removal from the United Kingdom would breach the Refugee or the Human Rights Conventions. Accordingly, your representations are refused."
The Secretary of State then went on to explain, by reference to paragraph 353 of the Immigration Rules, why it was that because the current representations were based on the same premise as the claimant's earlier application it had been decided not to treat her representations as a fresh claim for asylum and human rights. The Secretary of State further indicated that the claimant's application for discretionary leave on compassionate grounds was being refused, there being, as the letter put it, absence of sufficiently compelling or compassionate circumstances.
Although in form the application for judicial review was founded on a complaint that the Secretary of State had failed to deal with the further representations, the substance of the matter both when the application was before Walker J and today is the question of whether or not the Secretary of State was entitled to decide as he did and for the reasons he gave on 2 November 2005.
Bearing in mind that, as I have said, no fresh evidence or other relevant material of any sort had been placed before the Secretary of State, the question, in substance, comes down to this: whether the change in the law represented by the Tribunal's repudiation in AB and DM of the earlier learning in L justified, or required, a decision different from that to which the adjudicator had correctly come.
Mr Palmer correctly submits that, for present purposes the crucial findings of the Tribunal in AB and DM are to be found in paragraphs 39, 40 and 54 of its determination. In paragraph 39 the Tribunal said this:
"The evidence currently available satisfies us that the position has changed since the Tribunal considered the issue of the risk to Tutsis in M and TC. In the current situation in the DRC the Tribunal accept that, with the exception of high level officials of RCD/Goma, returnees of Tutsi ethnicity or believed to be of this ethnicity could be at real risk on return. The resentment against anything or anybody Rwandan or perceived to be Rwandan is very high such that there is a real risk of generalised hostility from local communities against which the authorities are currently unlikely to protect. The situation improved in 2003 but we are satisfied in the light of the evidence before us that there has been a sharp deterioration in 2004."
It is, however, important to read that in the light of what the Tribunal went on to say in paragraph 40:
"However, we would emphasise that a person cannot expect to succeed in a refugee or Art 3 claim merely by asserting that he or she is a Tutsi or would be perceived as one. Given that there are distinct physical characteristics typical of a Tutsi ... a highly significant consideration will be the extent to which a person possesses those characteristics. If a person claims to be of mixed Tutsi ethnicity"[ that is the case here] "it will be relevant to examine to what extent he or she will be seen to have taken the ethnic identity of their father or mother. Furthermore, given the importance in the DRC context of tribunal links, geographical location, linguistic identity, customs, traditions and other factors, there may be valid reasons for finding that a person, albeit lacking entirely the characteristics of a Tutsi, will be perceived as one."
In paragraph 54 the Tribunal summarised its approach as follows:
"It is not sufficient for an appellant simply to state that he is Rwandan or Tutsi or would be perceived as such. Evidence as to ethnicity will need to be scrutinised carefully. Given that Tutsis are described as being physically distinct from other tribes, ... a person is more likely to be viewed as a Tutsi by the authorities if he or she has those distinctive characteristics. Similarly those whose dialect, tribal links and geographical origins link them closely to Tutsis ... would also appear to fall within the at risk category. However, the mere fact of coming from the East or being of mixed ethnicity is unlikely without more to give rise to a perception of being Tutsi. The assessment must be made on the basis of a careful analysis of an appellant's ethnicity, background and profile."
Mr Palmer's submission is that having regard to the findings made by the adjudicator, having regard to the fact that no further evidence or material had been put before the Secretary of State, and applying the principles laid down by the Tribunal in AB and DM, the Secretary of State was fully entitled to decide as he did and for the reasons he gave. Mr Palmer submits that correctly understood there is nothing in the decision of the Tribunal in AB and DM which, in fact, lends any significant support to the claimant's case. As he correctly pointed out, the claimant did not advance to the Secretary of State any representations as to why she might be perceived as a Tutsi, despite her appearance (see, for the significance of that submission, the final sentence in paragraph 40 of the Tribunal's determination.)
He submits, correctly in my judgment, that the burden was upon the claimant to do so. He submits that all the claimant has done was precisely what the Tribunal, in the first sentence of its determination in paragraph 40, had spelt out would be insufficient, namely, she had merely asserted, and without elaboration, that she would be at risk by virtue of being perceived to be a Tutsi. As Mr Palmer pointed out, no reasons were advanced in the representations letter, or indeed, I might add, in the grounds for judicial review, as to why that should be so, save for a repetition of the very facts and matters which, having been so carefully considered by the adjudicator, had been rejected by the adjudicator; a rejection subsequently upheld not merely by the Tribunal but also on statutory review by this court.
Mr Palmer submitted that there was, in truth, and I agree, nothing before the Secretary of State upon which he could properly conclude that the claimant was at risk. He submits, and I agree, that the Secretary of State's decision was wholly in accordance with the decision of the Tribunal in AB and DM and that he was accordingly fully entitled not merely to refuse the claimant's further representations, but furthermore entitled to conclude that because they did not differ in any significant measure from her earlier claim they should not be treated as giving rise to any fresh claim.
As Mr Palmer points out, the highly significant factors in this case, as found by the adjudicator, are that the claimant did not possess the distinct physical characteristics typical of a Tutsi. Whilst she claimed to be of mixed Tutsi ethnicity it appeared that she had taken the ethnic identity of her Congolese father and not her Rwandan mother. In those circumstances, as Mr Palmer correctly submitted, the decision of the Tribunal in AB and DM shows that the claimant cannot expect to succeed merely by asserting that she was a Tutsi, or would be perceived as one, nor merely by asserting, without more ado, that she was of mixed ethnicity.
While lacking the physical characteristics of a Tutsi the claimant had advanced no basis other than that already rejected by the adjudicator upon which she might be perceived as one. Accordingly, submitted Mr Palmer, and I agree, there was no basis upon which the claimant could be assessed to be at risk of being perceived as a Tutsi. In those circumstances it followed, virtually inevitably, that the Secretary of State was entitled to conclude that her removal would not breach this country's obligations under either Convention.
As I have mentioned, the claimant appeared before me in person. As was her right, she chose to address me after Mr Palmer had made his submissions so that she would be in the best position not merely to make her own case, but also to meet the case being put against her by Mr Palmer. She told me of her fears as to what is happening at present in the DRC and of the fact that women are being raped and killed there. That, no doubt, is true. It does not assist the claimant in her particular circumstances.
The central core of her submissions to me was summarised in her observation, which was to the effect that, "If the adjudicator said that I am physically not or not like a Tutsi, I disagree." That assertion was elaborated to a certain extent, but, in substance and in reality, amounted to no more than (a) the assertion that the adjudicator was wrong and (b) the assertion that the claimant either is, or looks like, or would be perceived by people in the DRC to be, a Tutsi.
For reasons which I have already explained, mere assertion of those matters is not sufficient. The fact is that at the point which had been reached when I began to give this judgment, no fresh evidence, and no fresh material of any sort, had, at any stage, been placed either before the Secretary of State, before this court, or before me, going beyond the materials which were before the adjudicator.
The fact of the matter is that the claimant's case before me is founded on no more than assertion in just the same way as the Secretary of State correctly concluded that the representations made to him, in the letter of 31 October 2005, amounted to mere assertion. Mere assertion is not enough. In my judgment, for the reasons I have given, which are essentially the reasons laid before me by Mr Palmer both in his skeleton argument and in his oral submissions, the Secretary of State was fully entitled to decide as he did and for the reasons he gave.
Accordingly, in my judgment, this application for judicial review fails and must be dismissed.
MR JUSTICE MUNBY: Mr Palmer, I assume that there is no question of costs here?
MR PALMER: No application.
MR JUSTICE MUNBY: The claimant appears in person. Has she at any time, as far as you are aware, been advised from anybody of the benefit of a public funding certificate?
MR PALMER: I am aware that in the different stages there are three different representations--
MR JUSTICE MUNBY: The claim form says that no she is not. Under section 4 it says "Is the claimant in receipt of a CLS certificate?" and the "no" box has been ticked.
MR PALMER: That is right. The representations were originally made by TM Legal Services and I note that at the bottom of the grant of permission by Walker J a new representative's name appears, but it does not appear that they have continued.
MR JUSTICE MUNBY: Very well. Nobody has made an application for detailed assessment for public funding purposes. There is no certificate on the file, so I think in the circumstances the order I make is simply an order dismissing the application for judicial review with no order as to costs.
MR PALMER: I am grateful, your Honour.
MR JUSTICE MUNBY: There is nothing else, Mr Palmer, is there?
MR PALMER: ۍ
MR JUSTICE MUNBY: There is no need for the claimant remaining in court any longer and as far as I am concerned the claimant can now be returned to Yarl's Wood as soon as convenient. | 5 |
SMT. RANJANA PRAKASH DESAI, J. The appellant is original accused number 2. He was tried along with six other accused in the companyrt of Additional District and Sessions Judge Fast Track Court No.1 Chidambaram in Sessions Case No. 175 of 2004 inter alia for offence punishable under Section 302 read with Section 34 of the Indian Penal Code for short, the IPC . The Sessions Court by judgment and order dated 25th July, 2005 acquitted original accused number. 5 to 7 and companyvicted accused Nos. 1 to 4 under Sections 449, 341 and 302 read with 34 of the IPC. The appellant along with others carried appeals to the Madras High Court. By the impugned judgment and order dated 16.3.2007, the Madras High Court dismissed the said appeals. Hence this appeal by special leave. Shortly stated the case of the prosecution is that pursuant to the criminal companyspiracy hatched over a period of one week prior to 9.6.2002, at 10.00 a.m. on 9.6.2002, Sivakumar, Jayaseelan, Loghu and Lakshmanan A1 to A4 respectively trespassed into the office of the Chairman of the panchayat i.e. Senthil Kumar PW-5 and they wrongfully restrained Ramesh the deceased and indiscriminately and fatally attacked him. In the companyrse of the same transaction, A1 is stated to have caused hurt to Ravi PW-2 with a dangerous weapon. In support of its case, the prosecution examined as many as 27 witnesses. The accused denied the case, however, they did number lead any evidence. Thiru Vinoba PW-1 is the elder brother of the deceased. Tmt. Puratchimani PW-6 is the younger sister of the deceased. Ravi, Ashok and Sundar PW-2, PW-3 PW- 4 respectively who were examined as eye witnesses, turned hostile. There is numberdispute about the fact that this case has political overtones. The trial companyrt as well as the High Court believed the evidence of PW-1 to the extent it implicates the appellant, A1, A3 and A4. The question is whether evidence of PW-1 can be relied upon to companyfirm the sentence awarded to the appellant. Shri K.K. Mani, learned companynsel for the appellant submitted that almost all the witnesses have turned hostile. He submitted that PW-1 claims to be an eye witness. Since he is the brother of the deceased, he is an interested witness. His evidence, therefore, needs companyroboration. Conviction cannot be based solely on his evidence. Learned companynsel pointed out that the other eye witnesses PWs -2, 3 and 4 have turned hostile. Thus evidence of PW-1 is number companyroborated. Learned companynsel drew our attention to the evidence of PW-6, the younger sister of the deceased who took the deceased to the hospital. He submitted that in her cross-examination, she stated that the police came to the hospital in a jeep pursuant to the call made by the doctor. The police made inquiry with her. She gave her statement which was reduced into writing at 10.00 A.M. Learned companynsel submitted that therefore, this statement was recorded prior to the recording of Ex.P1 i.e. the FIR which was recorded at 11.00 A.M. Learned companynsel submitted that the statement of PW-6 should have been treated as FIR being the earliest statement recorded by the police. The prosecution has suppressed this statement. FIR Ex. P1 is, therefore, a fabricated document. He submitted that the prosecution has suppressed the genesis of the case and, therefore, adverse inference needs to be drawn against it. In support of this submission he relied on the judgment of this Court in Marudanal Augusti vs. State of Kerala1. Learned companynsel for the State submitted that the impugned judgment and order needs numberinterference. It is number possible for us to accept the submissions of learned companynsel for the appellant. It is true that PWs-2, 3 and 4 who were examined as eye witnesses have turned hostile. But having carefully perused the evidence of PW-1, we feel that it can be safely relied upon so far as prosecution case against the appellant is companycerned. It is true that being the brother of the deceased, PW-1 is an interested witness. However, on that ground his evidence cannot be discarded. As stated by this Court in Sarwan Singh Ors. Vs. State of Punjab2 and Sucha Singh Anr. Vs. State of Punjab3, it is number the law that the evidence of an interested witness should be equated with that of a tainted witness 1 1980 4 SCC 425 2 1976 4 SCC 369 3 2003 7 SCC 643 or that of an approver so as to require companyroboration as a matter of necessity. The evidence of an interested witness does number suffer from any infirmity as such, but the companyrts require as a rule of prudence, number as a rule of law, that the evidence of such witnesses should be scrutinised with a little care. Once that approach is made and the companyrt is satisfied that the evidence of the interested witness has a ring of truth such evidence companyld be relied upon even without companyroboration. This submission of the learned companynsel is, therefore, rejected. We are also unable to companye to the companyclusion that the prosecution has suppressed the statement of PW-6 and that the FIR Ex. P1 is a fabricated document. The High Court has dealt with this point and recorded its finding that Ex. P1 was recorded prior in time and it is number a fabricated document. We companycur with that finding. It is pertinent to numbere that PW-6 has stated in her evidence that she took the deceased to the hospital in an auto rickshaw and her elder brother went to the police station and gave companyplaint. This indicates that the brother reached the police station prior to the recording of the statement of PW-6. Merely because PW- 6 has stated in her evidence that her statement was recorded around 10.00 A.M, it cannot be companycluded that her statement was prior to the FIR which was recorded at 11.00 M. It must be numbered that PW-6 used the words around 10.00 A.M. It appears to be an obvious error. It is also important to numbere that PW-6 is number an eye witness. In our opinion, this discrepancy is a minor discrepancy which does number have any adverse impact on the prosecution case. The judgment of this Court in Marudanal Augusti does number help the appellants case. There, in the peculiar facts and circumstances of that case, this Court held that once FIR is held to be fabricated or brought into existence long after the occurrence, the entire prosecution case would companylapse. | 0 |
LADY JUSTICE ARDEN: This is an application by the defendant, Mr. Collinson, for permission to appeal from the order of His Honour Judge Morton-Jack sitting in the Oxford County Court dated 29th June 2000. By this order the judge dismissed an appeal from the refusal of the District Judge to set aside a judgment dated 18th December 1999 for £1,000.85 for beer sold and delivered. (£1 of this amount had apparently at some stage been paid.) Mr Collinson also seeks an extension of time because the notice of appeal ought to have been lodged within 14 days of 29th June but was not lodged until 15th November 2000. Mr. Collinson has appeared in person today and has made helpful submissions.
This is a second appeal. Accordingly, CPR 52.13 applies, and so Mr Collinson must show either that the appeal would raise an important point of principle or practice or that there is some other compelling reason for the Court of Appeal to hear it. It is a second appeal because the judge has already heard one appeal from the refusal of the District Judge.
I turn to the background to these proceedings. Hook Norton Brewery supplied the beer, and there is no dispute but that the £1,000 represents the amount of beer delivered. Mr. Collinson says that there might be a small error here. Substantially he accepts that figure. It arose out of an arrangement between Mr Collinson and the brewery for the supply of beer to public houses, where he had arranged that the landlord would take Hook Norton's beer. He would then receive the proceeds of sale and deduct his share. Mr. Collinson describes the arrangement with the brewery in his helpful written submissions:
"The conditions of the agreement were that if I entered licenced premises etc with the object of furthering Hook Norton sales, and found that the landlord was already dealing with the brewery, then I should immediately withdraw from such negotiations. Similarly, once I had brought a customer who was not dealing with the brewery into the fold, then all subsequent dealings with him must be done through me and not by the brewery direct.
I found the agreement eminently sensible, safeguarding the interests of parties on both sides, and so I readily acceded. Indeed, whenever I approached a pub or hotel for the first time, my early remarks were to make these terms known to the landlord.
Yet the brewery blatantly broke this agreement when they ripped my best customer, the Blue Boar, Chipping Norton, off my hands without even prior consultation with me."
Mr. Collinson says that the agreement was broken by Hook Norton by their taking over the supply of beer to the Blue Boar Public House and to his other outlets as well. I gather that there were some five other breweries. So far as reasons for doing this are concerned, it is Mr Collinson's case that Hook Norton repudiated the agreement wrongfully. The brewery suggested that their reason for breaching the agreement was because of late payments by Mr Collinson. Mr. Collinson tells me that there were two instances of late payment during the whole time of his trading with the brewery. On the first occasion it was when the defendant had difficulty in extracting the money from the publican and that on this occasion the amount due was paid in a very short time after the due date. The second occasion was owing to a banking error on the part of a large hotel group. Immediately the hotel group discovered the error they sent a letter of explanation dated 26th April 1999 to the brewery and to Mr Collinson. The brewery's then accountant saw no problem with either incident. Mr. Collinson has candidly explained to me what the brewery says was their reason for breaching it. His case, and I accept this, is that it was an act which was in breach of his agreement with them. I will come back to that in a moment.
I now summarize the various grounds of the appeal. First, Mr. Collinson says that the brewery refused part payment of the sum of £180. Second (this is a point I have already dealt with) the debt was a little less than £1,000. Third, he says that a part payment was made. Fourth, he says that, arising out of the breach of the agreement to which I have referred, he has a counterclaim of £17,043.59. Fifth, he says that the claim was entered against him personally when it should have been entered against his company, Shelui Co Ltd. However, Mr Collinson fairly stated that he was not really relying on this point because he had in fact paid cheques himself direct to the brewery. Therefore, I need say no more about this point. Sixthly, Mr Collinson has included within his written submissions a contention that the judge did not allow him to present his case properly and that the judge failed to hear the case properly. It appears that Mr Collinson went to the Banbury County Court and was there told that the case had in fact been transferred to Oxford. He then had to make his way as quickly as he could to Oxford and then present his case. He feels that he was not able to present his case properly in those circumstances. It was heard late in the day. But Mr. Collinson has put in a full written submission today and has made written submissions to this court, and I am satisfied that he has had a full opportunity now to present his case, and of course I have been through all of his papers before the hearing started.
I now turn to my conclusions. The test which had to be applied, in deciding whether or not to set aside the default judgment, is that set out in Civil Procedure Rule 13.3. The heading to this rule is "Cases where the court may set aside or vary judgment entered under Part 12. Part 12 is default judgment. It reads as follows:
"(1) In any other case, the court may set aside or vary a judgment entered under Part 12 if -
(a) the defendant has a real prospect of successfully defending the claim; or
(b) it appears to the court that there is some other good reason why -
(i) the judgment should be set aside or varied; or
(ii) the defendant should be allowed to defend the claim.
(2) In considering whether to set aside or vary a judgment entered under Part 12, the matters to which the court must have regard include whether the person seeking to set aside the judgment made an application to do so promptly."
It will be recalled that the opening words of Rule 13.3 are "in any other case". That means in any case not covered by Rule 13.2 but that is not applicable because it deals with a case where a judgment was irregular for failing to follow the correct procedure in the court. This particular case falls within 13.3. Mr Collinson says that he has a good defence to the claim. It is that rule which the court was and is today considering.
I therefore turn to the grounds of appeal, excluding those minor matters with which I have dealt. It is clear to me that the main contention on Mr Collinson's part is his counterclaim for £17,043.59 which of course far exceeds the claim against him. Indeed, it arises out of breach of the same transaction which led to the delivery of beer. The beer was delivered under the arrangement which Mr Collinson has described in his papers. The question is whether or not Mr. Collinson has a real prospect of successfully defending the claim on the basis that he has a cross claim for that amount or at least for £1,000.85. There is no evidence as to how that sum is made up. Mr Collinson has given me some information but it is not in written form. Were there to be an appeal it would have to be fully set out in witness statements and the court would have to agree to allow that evidence to be submitted on the appeal. Mr. Collinson was not able to give me details of the calculation of £17,043.59, but he was able to tell me that his arrangement with the Blue Boar generated for him personally a profit of about £15 per week on the three firkins of beer which they normally took. That would make about £45 a month. At the same time as taking orders from the Blue Boar, Mr. Collinson was also taking orders from five other outlets and placing their orders with the brewery. At the time when the brewery took over the Blue Boar account, they refused to supply any more beer to those other five sources. No doubt it would be said that all those acts were in breach of the agreement. It is clear that the Blue Boar was the most profitable part of this business.
Even working on the basis that each of the outlets generated the same income as the Blue Boar, this would not give a loss of profit claim for anything like the figure of £17,043.59. Mr. Collinson accepts that the arrangement between the brewery and himself could be brought to an end. He has accepted that two months' notice or thereabouts would have been reasonable. He tells me that there were about six other public houses that he was hoping to bring into the fold but they would not have been in the immediate future. There would have been about a three month delay because they were waiting for the summer season. Doing the best I can, and it has to be borne in mind that the court has no witness statements at this point, it seems to me that the maximum counterclaim which could be launched would be for about £450 or £500, which is less than half of the judgment debt.
There are a number of additional points which have to be recognized. First, this could only be a good ground of appeal if the court agreed to look at some more evidence because there is no evidence at the moment. As regards that, the position is that since this is an appeal court, further evidence can only be adduced under strict conditions and the court has to be satisfied that it would be just and fair to allow the admission of evidence. That usually involves the applicant showing that he could not, with due diligence, have put in that evidence at an earlier stage. The position here is that this evidence must have been available before the judgment was obtained or at least before the matter was heard by the district judge on his application or before the judge. There is no real prospect that the court would on an appeal receive this evidence or allow it to be adduced. The court would bear in mind that its refusal to admit the evidence would not in any way inhibit Mr Collinson from bringing that claim later, if he decided to do so, in separate proceedings, but there might be substantial prejudice to the brewery who has fought the case so far on the evidence as it stands, which contains no particularisation of the £17,000 claim. Until that figure is vouched by evidence it is a figure to which the court cannot give any credence at all. This is the main point on the appeal. Even accepting, as I do accept, that Mr. Collinson has a claim for repudiation by the brewery of his agreement with them, he would not before this court on an appeal be able to adduce evidence as to his loss. Therefore the court would not be able to say that he has a real prospect of successfully defending the claim as required by Rule 13.3, and that had the evidence been available to the lower court they would have set aside the default judgment. Rule 13.3 contains a separate part, which says that the court can set aside a default judgment even if there is no real prospect of success where there is some other good reason. I cannot think that there is such a good reason in this case, particularly because there is always the ability, subject to the limitation period, for Mr Collinson of bringing a separate claim for the money which is due to him for damages for breach of the agreement. Taking all those considerations into account, it seems to me that on the cross claim I cannot reach the conclusion that there is a real prospect of success.
That leaves the remaining points in the grounds of appeal which I have not already mentioned. They include the brewery's refusal to accept a part payment. Mr Collinson went along in all good faith to try and negotiate a settlement and a parting of the ways. The brewery refused to accept his proposal. In law, however, a tender of a part payment is not enough, and the amount tendered was £180 which is well below half of the debt. It is said in the papers that there was a part payment. The same point would apply. The brewery is not bound to accept a part payment in settlement of the whole. There is no information that this amount made any material difference to the judgment debt. As I have said, the wrong party point which is not one that Mr Collinson presses. I have dealt with the point about not having an opportunity to put his case properly before the court. Finally, Mr. Collinson makes the point that there was what he calls funny behaviour on the part of the brewery. If they had gone about this matter in a proper way rather than going behind his back, on his version of the events, then this litigation could have been avoided. I bear all those points in mind. None of them gives rise to a right to pursue this matter on appeal or to a conclusion that there would be a real prospect of success on appeal.
I have dealt with the case thus far on the basis of whether there is a real prospect of success on appeal. I have to be satisfied that there is that real prospect before I can give permission in any case. I am not so satisfied. There is in this particular case, because it is what we call a second appeal, a further hurdle that the appeal would raise an important point of principle or practice or there is some other compelling reason for the Court of Appeal to hear it. It is not such a case as to satisfy those requirements. Had I been satisfied that the court below had made a material error, it would have been possible for me to be satisfied as to those tests. I am not satisfied. Having considered the matter carefully and with the benefit of Mr Collinson's submissions, I dismiss the application.
Order: Application refused. | 7 |
B. Majmudar, J. Leave granted. The appellant in the year 1975 was appointed as Cleaner in the Andhra Pradesh State Road Transport Corporation and later he was promoted as Coach Builder. He was charge sheeted which ultimately led to his removal from service. The order of removal was, however, set aside by the award of the Lab our Court dated 05th February 1992. The award directed reinstatement of the appellant with companytinuity of service and back-wages at 60. The said award was subject-matter of challenge by the respondent-Corporation in a writ petition filed in the High Court. The High Court by impugned judgment dated 07th April 1997 modified the award to the extent it directed payment of backwages and companytinuity of service to the appellant. The appellant has challenged the order of the High Court as it results in depriving him the companytinuity of service and back-wages. A limited numberice companyfined to the question of granting companytinuity of service to the appellant has been issued to the respondent. Having regard to the nature of the charges, learned companynsel for the respondent has very fairly stated that the Corporation, on the facts and circumstances of the present case, would have numberobjection to grant companytinuity of service to the appellant so long as he does number insist on back-wages, which is agreeable to the appellant. | 3 |
Order of the Court (First Chamber) of 6 March 1997. - Giorgio Bernardi v European Parliament. - Appeal - Ombudsman - Nominations - Appointment procedure - Action for annulment - Appeal clearly inadmissible and unfounded. - Case C-303/96 P.
European Court reports 1997 Page I-01239
Summary
Keywords
1 Appeals - Pleas in law - Mere repetition of the pleas in law and arguments before the Court of First Instance - Inadmissible - Appeal dismissed
(EC Statute of the Court of Justice, Arts 49 and 51; Rules of Procedure of the Court of Justice, Art. 112(1)(c))
2 Appeals - Pleas in law - Plea in law directed against the decision of the Court of First Instance on costs - Inadmissible where all the other pleas in law are dismissed
(EC Statute of the Court of Justice, Art. 51, second para.)
Summary
3 The combined effect of Article 51 of the Statute of the Court of Justice and Article 112(1)(c) of the Rules of Procedure is that an appeal must indicate precisely the contested elements of the judgment of the Court of First Instance which the appellant seeks to have set aside, and also the legal arguments specifically advanced in support of the appeal.
That requirement is not satisfied by an appeal which merely repeats or reproduces word for word the arguments previously submitted to the Court of First Instance.
4 Where all the other pleas in law relied upon in an appeal against a decision of the Court of First Instance have been dismissed, the plea concerning the lawfulness of its decision on costs must, pursuant to the second paragraph of Article 51 of the Statute of Court of Justice, be dismissed as inadmissible. | 7 |
ORIGINAL JURISDICTION Writ Petition Nos 5880-82, 6176- A 77, 5921, 5922, 6220, 6426-27, 6355-56, 6264-70,6276, 6178-79, 6191, 1718 of 1980 and 220-22, 2113 of 1981. Under Article 32 of the Constitution K K Venugopal, 6355-56 of 1980 In W P. Nos. 6212, 6427 5880-82/80 F.S. Nariman, In W.P. Nos. 6264-70/80 K Gargo, In W.P. Nos. 6191 6426/80 , S.N. Kackar, In P. Nos 5921/80 220/81 and G.L. Sanghi, In W.P. No. 1718/81 for the Petitioners. S. Vaidyanathan, Vineet Kumar, Parthasarathi, A.T.M. Sampath. Miss Lily Thomas, N.A. Subramanium, Naresh Kumar, Mahakir Singh and S. Srinivasan for the Petitioners. Lal Narayan Singh, Attorney General In W.P. No 5880180 M.R Banerjee, Addl. Solicitor General In W.P. No. 6355/80 R. Rrishnamoorthy, Adv. Genl. T.N. In W.P. Nos. 1718 6276/ 1980 for the Respondents. D Dr. Y. S. Chitale, In W.P. No. 6426/80 , L. M. Singhvi, In W.P. 6264/80 Mr. Laxmi Kant Pandey and S.S. Ray, In W.P. 6212 of 1980 for the Respondents. V. Rangam, In all matters for the Respondents. E The Judgment of the Court was delivered by VBNKATAR MIAH. J. In these writ petitions, the petitioners who were holders of posts of part-time village officers in the State of Tamil Nadu or associations of such persons have questioned the companystitutional validity of the Tamil Nadu Abolition of posts of part-time Village officers ordinance, 1980 Tamil Nadu ordinance No. 10 of 1980 hereinafter referred to as the ordinance and the Tamil Nadu Abolition of posts of part-time Village officers Act, 1981 Tamil Nadu Act No. 3 of 1981 hereinafter referred to as the Act which replaced the ordinance. The total number of posts abolished by the Act is 23,010 In Tamil Nadu, as in other parts of India, the village has been the basic unit of revenue administration from the earliest times of which we have any record. The administration was being carried on at the lowest level by a chain of officers in regular gradation one above the other at the companymencement of the Christian era. The same system has been in vogue uptil number. It was generally known as the borabaluti system ordinarily companysisting of twelve functionaries. In Tamil Nadu, these functionaries were known as I headman, 2 karnan or accountant, 3 shroff or numberazar, 4 nirganti, 5 toty or taliary, 6 potter, 7 smith, 8 jeweller, 9 carpenter, 10 barber, 11 washerman and 12 astrologer. Of them, the first five only rendered service to Government. The headman who goes by various names such as monigar, potail, naidoo, reddy, peddakapu etc. is an important officer. He represented the Government in the village, companylected the revenue and had also magisterial and judicial powers of some minor nature. As a magistrate he companyld punish persons for petty offences and as a Judge companyld try suits for sums of money or other personal property upto Rs. 10/- in value, there being numberappeal against his decision. With the companysent of the parties, he companyld adjudicate civil claims upto Rs. 100 in value. The headman has been generally one of 1 the largest landholders in the village having companysiderable influence over its inhabitants. The karnam or the village accountant maintained all the village accounts, inspected all fields in the village for purposes of gathering agricultural statistics, fixation of assessment and prevention and penalisation of encroachments, irregular use of water and verification of tenancy and enjoyment. The nirgantis guarded the irrigation sources and regulated the use of water. The toty or taliary assisted the village accountant in his work. By the end of the nineteenth century, two Acts were brought into force in the Presidency of Madras for the purpose of regulating the work of some of the village officers. The Madras Proprietary states Village Service Act, 1894 Madras Act No. II of 1894 dealt with three classes of village officers viz. village accountants, village headmen and village watchmen or police officers in permanently settled estates, in unsettled palaiyams and in inam villages. It provided for their appointment and remuneration and for the - prevention and summary punishment of misconduct or neglect duty on their part and generally for securing their efficiency. The Madras Hereditary Village offices Act, 1895 Madras Act No. III of 1895 regulated the succession to certain other hereditary village offices in the Presidency of Madras for the hearing and disposal of claims to such offices or the emoluments annexed thereto for the appointment of persons to hold such offices and the companytrol of the holders thereof. The Village officers dealt with by this Act were i village munsifs, ii potels, monigars and peddakapus, iii karnams, iv nirgantis, v vettis, totis and tar dalgars and vi talayaris in ryotwari villages or inam villages, which for the purpose of village administration, were grouped with ryotwari villages. Under both these statutes, the village offices were companysidered as hereditary in character and the succession to all hereditary village offices devolved on a single heir according to the general custom and rule of primogeniture governing succession to impartible zamindaris in Southern India. When the person who would otherwise be entitled to succeed to a hereditary village office was a minor, such minor was being registered as the heir of the last holder and some other person qualified under the statutes in question to discharge the duties of the office was being appointed to discharge the duties of the office until the person registered as heir on attaining majority or within three years thereafter was qualified to discharge the duties of the office himself when he would be appointed thereto. If the person registered as heir remained otherwise disqualified for three years after attaining majority, he would be deemed to have forfeited his right to office and on such forfeiture or on his death, the vacancy had to be filled up in accordance with the provisions of the statutes as if he was the last holder of the office. It is stated that in cases to which the above two statutes were inapplicable, provision had been made by the Standing orders promulgated by the Board of Revenue which were known as the Boards Standing orders for appointing village officers again generally on a hereditary basis. Some of the other distinct features of the service companyditions of the village officers appointed under the Madras Act No. II of 1894 of the Madras Act No. III of 1895 or the Boards Standing orders were that they were part-time employees of the Government that the records maintained by them were allowed to be retained in their houses that there was numberattendance register and numberfixed hours of duty were prescribed in their case. They were appointed directly by the Revenue Divisional officer and against his order, an appeal lay to the District Revenue officer and then a revision to the Board of Revenue and a second revision to Government. They were number companystituted into any distinct service, There was numberprovision for reservation of posts of village officers G for Scheduled Castes Scheduled Tribes and backward classes There was numberminimum general qualification prescribed prior to the year 1970 for persons to be appointed as village officers under the said - statutes or the Boards Standing orders. It was enough if they were able to read and to write. No period of probation was prescribed after they were appointed. The Fundamental Rules applicable to all other State Government servants, the Pension Rules and the Leave Rules were number applicable to these village officers. They companyld take up part-time work or occupation after securing necessary permission from the companycerned Revenue authorities. There was numberage of superannuation fixed in their case and they were number entitled to retirement benefits such as gratuity and pension. All village head men including those who belonged to Scheduled Castes and Scheduled Tribes had to furnish security in the form of property or cash the estimated value of which was number less than half the amount of land revenue and loan demand of the village. They companyld number be transferred outside their district. In fact very rarely they were transferred. During the period of leave, numberhonorarium was paid to them and during the period of suspension, numbersubsistence - allowance was paid. The honorarium paid to them was a fixed amount with numberelement of dearness allowance. In M. Ramappa v. Sangappa Ors. where this Court had to companysider whether the officers holding the hereditary village offices under the Mysore Village offices Act, 1908 which companytained provisions similar to the provisions of the two Madras Acts referred to above were qualified for being chosen as members of the State Legislative Assembly, it was held that such officers who were appointed to their offices by the Government, though it might be that the Government had numberoption in certain cases but to appoint an heir of the last holder, held offices of profit under the State Government since they held their office by reason of appointment made by the Government and they worked under the companytrol p and supervision of the Government and that their remuneration was paid by the Government out of the Government funds and assets. Accordingly this Court came to the companyclusion that such village officers were disqualified under Article 191 I a of the Constitution from companytesting at an election to the State Legislative Assembly. In Gazula Dasaratha Rama Rao v. The State of Andhra Pradesh Ors this Court held that section 6 1 of the Madras Hereditary Village offices Act, 1895 Madras Act No. 3 of 1895 which Provided that in choosing Persons to fill the new village offices of an amalgamated village under that Act, the Collector should select the persons whom he companysidered to be the best qualified from among the families of the last holders of the offices in the villages which had been abolished as a companysequence of such amalgamation was void as it companytravened Article 16 2 of the Constitution. After the above decision, instructions were issued by the Madras Board of Revenue on March 12, 1962 to the effect that in respect of future vacancies in village offices governed by the Madras Act No. II of 1894 and the Madras Act No. III of 1895 the appointments should be made on temporary basis only following the procedure prescribed under the Boards Standing order No. 156. Since it was felt that the above two Madras Acts which companytained provisions providing for appointment to village offices on hereditary basis were violative of Article 16 of the Constitution in view of the pronouncement of this Court in Gazula Dasaratha Rama Raos case supra , the State Legislature passed the Madras Proprietary Estates Village Service and the Madras Hereditary Village offices Repeal Act, 1968 Madras Act No. 20 of 1968 repealing the above two statutes viz. the Madras Act No. II of 1894 and the Madras Act No. III of 1895. The said Act was brought into force with effect from December 1, 1968. It extended to the whole of the State of Madras, except the Kanyakumari district and the Shencottah taluk of the Tirunelveli district vide section I 2 of the Madras Act No. 20 of 1968 . Sub-section 3 of Section 2 of that Act, however, provided that every holder of a village, office, appointed under the Acts repealed by it would, numberwithstanding the repeal companytinue to hold office subject to such rules as may be made under the proviso to Article 309 of the Constitution. Section 3 of that Act directed that any vacancy arising after the date of the companymencement of that Act in the village once referred to in subsection 3 of section 2 thereof should be filled up in accordance with the provisions of the Rules made under the proviso to Article 309 of the Constitution. On December 1, 1968, the Governor of Tamil Nadu promulgated a Rule under the proviso to Article 309 of the Constitution providing that the Standing orders of the Board of Revenue applicable to number hereditary village offices shall apply to every holder of a village office to which the Madras Proprietary Estates Village Service Act, 1894 Madras Act No. II of 1894 or the Madras Hereditary Village offices Act, 1895 Madras Act No. Ill of 1895 was applicable immediately before the 1st day of December, 1968 on which date the Madras Act No. 20 of 1968 came into force. Pursuant to section 3 of the Madras Act No. 20 of 1968, the Governor of Tamil Nadu promulgated under the proviso to Article 309 of the Constitution the Tamil Nadu Village officers Service Rules, 1970 providing for the companystitution of the Tamil Nadu Village officers Service companysisting of i village headman, additional village headman, ii village karnam, additional village karnam and iii talayari and nirganti and the method of recruitment to the said posts. The said Rules came into force on December 16, 1970 and they extended to the whole of the State of Tamil Nadu except the Kanyakumari District and the Shenootah taluk of the Tirunelveli district and the city of Madras. Rule 18 of the said Rules, however, stated that numberhing companytained in them would apply to persons, who on the date of companying into force of the said Rules, were holding the posts of village headman or additional village headman, village karnam or additional village karnam either temporarily or permanently. Consequently the said Rules were number applied to the holders of village offices who had been appointed temporarily or permanently under the two repealed Acts and under the Boards Standing orders before the date on which the said Rules came into force. These Rules prescribed that every person who made an application for appointment the post of village headman or additional village headman or village karnam or additional village karnam should possess the following qualifications, namely i he should have companypleted the S.S.L.C. Examination held by the Government of Tamil Nadu and ii he should have secured a pass in the special tests specified in cl. 2 of the table given in Rule S thereof in respect of the posts specified in companyumn I thereof. On the same date, the Tamil Nadu Village officers Classification, Control and Appeal Rules, 1970 and the Tamil Nadu Village officers Conduct Rules, 1970 promulgated under the proviso to Article 309 of the Constitution by the Governor of Tamil Nadu came into force. These Rules were applicable number merely to the village officers appointed after that date but also to those who had been appointed under the repealed Acts and under the Boards Standing order prior to December 16, 1970. The Tamil Nadu Civil Services Classification, Control and Appeal Rules dealt with the disciplinary proceedings that might be instituted against the village officers governed by the them. The Tamil Nadu Village officers Conduct Rules provided that the Tamil Nadu Government Servants Conduct Rules, 1960 as amended from time to time would apply to the village officers subject to the modification specified in rule 3 thereof which provided that the village officers being parttime Government servants might take up part-time work or occupation provided that I such part-time work or occupation did number interfere A with their legitimate duties as village officers and 2 the previous permission in writing had been applied for and obtained from the Revenue Divisional officer companycerned if the work or occupation was companyfined to the charge village and from the District Collector companycerned if the work or occupation extended beyond the charge village. From November 15, 1973 all the three sets of Rules which came into force on December 16, 1970, as stated above, became applicable to the village officers in the Kanyakumari district and the Shencottah taluk of the Tirunelveli district also. They, however, companytinued to be inapplicable to the city of Madras. In the year 1973, the Administrative Reforms Commission headed by Mr. T.A. Verghese, I.C.S. recommended that the existing part-time village officers should be replaced by regular whole-time transferable public servants and that they should form part of the Revenue hierarchy, disciplined in the tradition of that department and motivated by the incentive of career advancement available in that department. They also recommended that 16,585 survey villages in the State of Tamil Nadu should be grouped into 11,9554 revenue groups. The Commission further recommended that the 11,954 revenue groups should be regrouped into larger village panchayats with a population of about 5,000 and the 8 annual panchayat tax demand of the order of Rs. 5,000. The Commission envisaged that with some marginal adjustment the enlarged village panchayat would be of the order of 4,000 in the State of Tamil Nadu and that there should be a village officer, a village clerk and a village peon in respect of each such enlarged village panchayat and on appointment to these offices, the holders of village offices appointed under, the two repealed statutes and the Boards Standing orders should be removed and the former village offices should be abolished since the Commission felt that the administration at the grass root level, provided by the present generation of village officers with feudal traditions, is inconsistent with the-egalitarian principles aimed at in our democratic companystitution. The Commission further felt that the reform of village administration has high priority, as it would benefit the whole mass of rural population. The Commission, however, took numbere of the fact in paragraph 2.11 of its Report that the Government had, in the recent years, attempted to remedy the situation by repealing the Madras Hereditary Village offices Act, 1895 and by framing a set Of new service rules for village establishment under Article 309 of the Constitution. But it was of the opinion that the said Rules, however, did number go far enough as they were number applicable to the existing set of village officers. It was of the view that full-time officers companyld be expected to service a much larger area than the existing villages or groups of villages and such regrouping of villages into larger groups had to be done carefully taking into account local companyditions such as companypactness of the group, easy intercommunications, nature of land, number of holdings etc. The Commission, however, was of the view that such of those among the existing village headmen and karnams, who had passed the S.S.L.C. Examination might be companysidered for the posts of the village officers and village clerks on their past performance. Similarly as regards village officers working in the Kanyakumari district and the Shencottah taluk of the Tirunelveli district which came over to the State of Tamil Nadu from Kerala in 1956 on the reorganisation of States, the Commission observed that l most of the village officers of those transferred territories who were qualified and full-time Government servants should be absorbed in the new set up as envisaged by the Commission. On May 17,1975, the Governor of Tamil Nadu promulgated the Tamil Nadu Village officers appointed under B.S. Os Service Rules, 1974 under the proviso to Rule 309 of the Constitution in respect of the village officers appointed prior to December 16, 1970. The above Rules were, however, kept in abeyance by an order made on July 1, 1975 on receipt of representations from the village officers in regard to the fixation of the age of superannuation at SS years. On August 24,1977, the Chief Minister of Tamil Nadu announced on the floor of the Legislative Assembly that the Government proposed to set up a Committee to . examine whether the posts of karnams companyld be dispensed with. Thereafter on October 9,978, the Tamil Nadu Village officers appointed under B.S.Os Service Rules, 1978 were issued fixing the age of retirement of the village officers at 60 years. Sub-rule 2 of Rule I of the said Rules stated that the said Rules would apply to all village officers holding the posts of village headman or additional village headman, village karnam or additional village karnam, talayari, vetti or nirganti either permanently or temporarily on December 16, 1970 provided that at the time of their appointment, they were qualified under the Boards Standing orders. The Government thought that the said Rules would be applicable to all village officers who were holding village offices on December 16,1970 referred to in Rule 1 2 . But some of the holders of the village offices who had been appointed under the Madras Act No. III of 1895 prior to the decision of this Court in Gazula Dasaratha Rama Raos case supra which as rendered on December 6, 1960, filed writ petitions on the file of the High Court of Madras stating that the Tamil Nadu Village officers appointed under the b. Service Rules, 1978 which fixed the age of superannuation of village officers at 60 years were number applicable to them since on a true companystruction of the said Rules, they were inapplicable to them. The High Court of Madras allowed the said writ petitions by its judgment dated August 18, 1980 holding We have already extracted sub-rule 2 of rule 1 of the rules. That rule expressly states that the rules will apply to village officers, who, at the time of their appointment, were qualified under the Boards Standing orders applicable to them and their appointment had been made by the authority companypetent under the Boards Standing orders. In respect of these petitioners, who were appointed under the provisions of Madras Act 3 of 1895 before 6th December, 1960, there was numberquestion of their being qualified to be appointed to the village office under the Boards Standing orders applicable to them, and their qualifications and appointment rested solely on the provisions companytained in Section 10 of the Act. Consequently the petitioners herein will number answer the description companytained in sub-rule 2 of rule 1 of the rules. If they do number answer the description companytained in sub-rule 2 of rules, the rules are number applicable to them and therefore, they can number be required to retire under rule 4 1 of the rules. It would appear that some of the other village officers to whom the said Rules had been made applicable had also filed writ petitions on the file of the High Court questioning the validity of the Rules on the ground that the said Rules made a discrimination between them and the village officers who were holding office prior to December 16, 1970 to whom the said Rules were held to be inapplicable by the judgment of the High Court delivered on August 18, 1980 and those petitions were posted for hearing during the first week of December, 1 980. Before the said petitions were taken up for hearing the Governor of Tamil Nadu issued the ordinance on November 13, 1980 abolishing the posts of part-time village officers in the State of Tamil Nadu. Immediately after the promulgation of the ordinance, steps were taken to take possession of all the records with the village officers who were holding offices on that day and to replace them by Officers appointed under section 14 of the ordinance. Immediately after the promulgation of the said ordinance, some of the village officers who were affected by it questioned its validity before this Court in Writ Petitions Nos. 5880-82 of 1980 and 5921 of 1980. The other companynected writ petitions came to be filed thereafter. In the meanwhile the Tamil Nadu State Legislature passed the Act which is impugned in these petitions replacing the ordinance. The petitioners have challenged in these writ petitions the Act also by seeking appropriate amendment of their petitions. The broad features of the Act are these The object of the Act is set out in its preamble. Because the State Government was of the opinion that the system of part-time village officers was outmoded and did number fit in with the modern needs of village administration and the State Government had after careful companysideration taken a policy decision to abolish all the posts of part-time village officers on grounds of administrative necessity and to introduce a system of whole-time officers to be incharge of village administration, the Act came to be enacted with effect from November 14, 1980 in the place of the ordinance. The Explanatory Statement attached to the ordinance also companytained a statement to the same effect indicating the object of the Ordinance. The expression part-time village officers is defined in section 2 e of the Act as village headman including additional village headman village karnam including chief karnam and additional village karnam or Triune officer who was exercising functions of three different village officers appointed under the Madras Act II of 1894, the Madras Act III of 1895, the Boards Standing orders, the Tamil Nadu village Service Rules, 1970 officers Kuvalar, or any other law but does number include, Grama Kavalar Grama Paniyalar and Pasana Kavalar. Village Administrative officer means an officer appointed under section 4 1 of the Act. By sec. 3 of the Act, the posts of part-time village officers were abolished with effect from November 14, 1980 and every officer holding post so abolished ceased to hold such post. The Act provided for appointment of Village Administrative officers. Section 5 of the Act provided for payment of companypensation to those who ceased to be part-time village officers calculated in accordance with the formula mentioned in it. Section 10 of the Act provided that the Act would number apply to the posts of karnams which were held by whole-time Government servants in the city of Madras and the posts of village officers and village assistants which were held by the wholetime Government servant in the Kanyakumari district and Shencottah taluk of the Tirunelveli districts. Three principal points are urged before us by the petitioners in these petitions i that the ordinance and the Act are violative of Art. 19 1 g of the Constitution, that they are violative of Article 311 2 of the Constitution and iii that they companytravene Article 14 of the Constitution. The State Government companytends that since by the ordinance and the Act, certain posts have been abolished, the officials who were incumbents of the abolished posts cannot raise any of the grounds raised by them. Entry 41 in List II of the Seventh Schedule to the Constitution companyfers the power on the State Legislature to make laws with respect to State public services subject to the provisions of the Constitution. Article 309 of the Constitution provides that subject to the provisions of the Constitution, the State Legislature may regulate the recruitment and companyditions of service of persons appointed to public services and posts in companynection with the affairs of the State. Article 311 2 of the Constitution states that numberperson who is a member of a civil service of the Union or an all-India service or a civil service of a State or holds a civil post under the State shall be dismissed or removed or reduced in rank except after an inquiry in which he has been informed of the charges against him and given a L reasonable opportunity of being heard in respect of those charges. Article 14 of the Constitution guarantees equality before the law and equal protection of the laws. It is number disputed that any law that is passed in relation to a Government employee should number companytravene any of these provisions-Article 19 1 g , Article 311 2 and Article 14 of the Constitution. We shall number proceed to examine the case with reference to each of them. The power to abolish a civil post is inherent in the right to create it. The Government has always the power, subject, of companyrse, to the companystitutional provisions, to reorganise a department to provide efficiency and to bring about economy. It can abolish an office or post in good faith. The action to abolish a post should number be just a pretence taken to get rid of an inconvenient incumbent. We have the following statement of the law in American Jurisprudence 2nd, Vol. 63 at Pages 648-649 Manner, sufficiency, validity, and effect. It is number always easy to determine whether a public office has been abolished. It is number sufficient merely to declare that a particular office is abolished, if in fact it is number abolished, and the duties thereof are companytinued. An office is abolished when the act creating it is repealed. But the repeal of the statute creating an office, accompanied by the reenactment of the substance of it, does number abolish the office. Abolition of an office may also be brought about by a companystitutional provision, or by a new companystitution or a companystitutional amendment. A numbercompanystitutional office may be indirectly abolished as by legislating away the duties and emoluments of the office. The legislature may number evade companystitutional provisions by a sham or pretended abolition of an office, as where there is mere companyorable abolition of the office for the purpose of getting rid of its incumbent. This may happen where an office is abolished in terms and promptly recreated under the same or a different name, provided the legislature does number attach duties and burdens to the new office of a character such as to make it in reality a different office. Where an office is duly abolished by the legislature or the people, it ceases to exist and the incumbent is numberlonger entitled to exercise the functions thereof, or to claim companypensation for so doing, unless he is under companytract with the state so as to companye within the protection of the companystitutional inhibition against impairment of the obligation of companytract. Since a de jure office is generally essential to the existence of a de facto officer, persons cannot act as de facto officers of an office which has been abolished. Eliot Kaplan writes in his book entitled The Law of Civil Service at pages 214-115 thus Good Faith in Abolition of Positions-There of companyrse, is numbervested right to employment in the public service. The numberion, much too prevalent, that any one who has been appointed after a companypetitive examination is entitled to be retained in the service is erroneous. Where there is any reasonable justification for eliminating positions in the public service, even where such abolition of positions may be subject to judicial review, the inclination of the companyrts is number to interfere, avoiding substitution of judicial wisdom or judgment for that of the administrator. A position is number lawfully abolished solely because it has been left vacant for a short period of time and subsequently filled by another appointee than the one laid off and entitled to re-employment. Good faith of a head of department in abolishing a position on alleged grounds of economy has often been challenged. Most companyrts have held that the issue of good faith on the part of an administrative official is one of law solely for the companyrt to pass on, and number an issue of fact which may be submitted to a jury for determination. The jury may determine the facts, which the companyrt in turn may find as a matter of law companystitute bad faith but a verdict by a jury that a department head had acted in bad faith in abolishing a position was set aside as a companyclusion of law, and number properly finding of fact. What companystitutes bad faith as a matter of law in abolishing positions must be determined by the precise facts in each case. As a general rule, where positions are purported to be eliminated and incumbents laid off, and thereafter identical or similar positions are re-established and the positions filled by others number entitled under the Civil service law and rules to such employments, the companyrts will number hesitate to order re-employment of the laid off employees. The above passages sum up the law on the question of abolition of posts in civil service as it prevails in United States of America. In England too there is provision for companypulsory premature retirement in the public interest on structural grounds, grounds of limited efficiency and redundancy. Vide paragraph 1303, Vol. 8 Halsburys Laws of England 4th Edn. In the instant case, the abolition of the posts of village officers is sought to be achieved by a piece of legislation passed by the State Legislature. Want of good faith or malafides cannot be attributed to a Legislature. We have only to see whether the legislation is a companyourable one lacking in legislative companypetence or whether it transgresses any other companystitutional limitation. So far as the argument based on Article 19 1 g of the Constitution is companycerned, we are bound by the view expressed by the Constitution Bench of this Court in Fertilizer Corporation Kamgar Union Regd , Sindri Ors. v. Union of India Ors. in which Chandrachud, C.J. has observed at pages 60-61 thus The right to pursue a calling or to carry on an occupation is number the same thing as the right lo work in a particular post under a companytract of employment. If the workers are retrenched companysequent upon and on account of the sale, it will be open to them to pursue their rights and remedies under the Industrial Laws. But the point to be numbered is that the closure of an establishment in which a workman is for the time being employed does number by itself infringe his fundamental right to carry on an occupation which is guaranteed by Article 19 1 g of the Constitution. Supposing a law were passed preventing a certain category of workers from accepting employment in a fertiliser factory, it would be possible to companytend then that the workers have been deprived of their right to carry on an occupation. Even assuming that some of the workers may eventually have to be retrenched in the instant case, it will number be possible to say that their right to carry on an occupation has been violated. It would be open to them, though undoubtedly it will number be easy, to find out other avenues of employment as industrial workers. Article 19 1 g companyfers a broad and general right which is available to all persons to do work of any particular kind and of their choice. It does number companyfer the right to hold a particular job or to occupy a particular post of ones choice. Even under Article 311 of the Constitution, the right to companytinue in service falls with the abolition of the post in which the person is working. The workers in the instant case can numbermore companyplain of the infringement of their fundamental right under Article 19 1 g than can a Government servant companyplain of the termination of his employment on the abolition of his post. The choice and freedom of the workers to work as industrial workers is number affected by the sale. The sale may at the highest affect their locum, but it does number affect their locus, to work as industrial workers. This is enough unto the day on Art. 19 1 g . In view of the above ruling, it is number possible to hold that the Act violates Article 19 1 g as it does number affect the right of any of the incumbents of the posts to carry on any occupation of their choice even though they may number be able to stick on to the posts which they were holding. We shall next examine the argument based on Article 311 2 of the Constitution. We have already seen in the Fertilizer Corporation Kamgar Unions case supra the observation to the effect Even under Article 311 of the Constitution, the right to companytinue in service falls with the abolition of the post in which the person is working. It is said that the act of removing a person from a chair is different from the act of removal of the chair itself although the incumbent loses the chair in both the cases. Since it is. strenuously urged before us that there is some amount of companytradiction in some of the rulings of this Court, we shall review the legal position to the extent necessary before reaching our own companyclusion on the question. The doctrine that the tenure of a holder of a civil post is dependent upon the pleasure of the Crown is peculiar to English law. In India, Article 310 of the Constitution of India provides 310 1 Except as expressly provided by this Constitution, every person who is a member of a defence service or of a civil service of the Union or of an all India service or holds any post companynected with defence or any civil post . under the Union holds office during the pleasure of the President, and every Person who is a member of a civil service of a State or holds any civil post under a State holds office during the pleasure of the Governor of the State. Notwithstanding that a person holding a civil post under the Union or a State holds office during the pleasure of the President or, as the case may be, of the Governor of the State, any companytract under which a person, number being a member of a defence service or of an all-India service or of a civil service of the Union or a State, is appointed under the Constitution to hold such a post may, if the President or the Governor, as the case may be, deems it necessary in order to secure the services af a person having special qualifications, provide for the payment to him of companypensation, if before the expiration of an agreed period that post is abolished or he is, for reasons number companynected with any misconduct on his part, required to vacate that post. While the doctrine of pleasure incorporated in Article 310 cannot be companytrolled by any legislation, the exercise of that power by the President or the Governor, as the case may be, is however made subject to the other provisions of the Constitution, one of them being Article 311, which is number made subject to any other provision of the Constitution and is paramount in the field occupied by it. The companytention urged before us is that every kind of termination of employment under Government would attract Article 311 2 of the Constitution and a termination on the abolition of the post cannot be an exception. While companystruing Article 311 2 of the Constitution, as it stood then, in Parashotam Lal Dhingra v. Union of India, Das, C.J. Observed The Government cannot terminate his service unless it is entitled to do so I by virtue of a special term of the companytract of employment, e.g., by giving the requisite numberice provided by the companytract or 2 by the rules governing the companyditions of his service, e.g., on attainment of the age of superannuation prescribed by the rules, or on the fulfillment of rule companyditions for companypulsory retirement or subject to certain safeguards, on the abolition of the post or on being found guilty, after a proper enquiry on numberice to him, of misconduct, negligence, inefficiency or any other disqualification. emphasis added Again at pages 857-858 in the same judgment, the learned Chief Justice observed The foregoing companyclusion, however, does number solve the entire problem, for it has yet to be ascertained as to when an order for the termination of service is indicted as and by way of punishment and when it is number. It has already been said that where person is appointed substantively to a permanent post in Government service, he numbermally acquires a right to hold the post until under the rules, he attains the age of superannuation or is companypulsorily, retired and in the absence of a companytract, express or implied, or a service rule, he cannot be turned out of his post unless the post itself is abolished or unless he is guilty of misconduct, negligence, inefficiency or other disqualifications and appropriate proceedings are taken under the service rules read with Art. 311 2 . emphasis added It may be mentioned here that the words subject to certain safeguards found in the earlier extract are number used with reference to abolition of posts in the above extract. Later on, Das, C.J observed that the Court should apply two tests namely 1 whether the servant had a right to the post or the rank or 2 whether he had been visited with evil companysequences such as loss of pay and allowances, a stigma affecting his future career in order to determine whether the removal of an officer from a post attracted Article 311 2 . The decision in Parshotam Lal Dhingras case supra was reviewed by a Bench of seven Judges of this Court in Moti Ram Deka etc. v. General Manager, N.E.F. Railways, Maligaon, Pandu v. etc. In that case the question which arose for companysideration was whether Rules 148 3 and 149 3 of the Indian Railway Establishment Code violated either Article 311 2 , or Article 14 of the Constitution. Sub-rules 1 and 2 of Rule 148 dealt with temporary railway servants and apprentices respectively. The relevant part of Rule 148 3 read thus 148 3 other number-pensionable railway servant- The service of other number-pensionable railway servants shall be liable to termination on numberice on either side for the periods shown below. Such numberice is number however required in cases of dismissal or removal as a disciplinary measure after companypliance with the provisions of Clause 2 of Article 311 of the Constitution, retirement on attaining the age of superannuation, and termination of service due to mental or physical incapacity. Rule 149 was brought into force in the place of Rule 148 in the case of pensionable servants in November, 1957. Here again, sub-rules 1 and 2 of Rule 149 dealt with temporary railway servants and apprentices. Rule 149 3 read thus 149 3 other railway servants- The services of other railway servants shall be liable to termination on numberice on either side for the periods shown below. Such numberice is number however, required in cases of dismissal or removal as a disciplinary measure after companypliance with the provisions of clause 2 of Article 311 of the Constitution, retirement on attaining the age of superannuation, and termination of service due to mental or physical incapacity. The majority judgment in this case, however, observed that a Government servant on being appointed to a post permanently acquired a right to hold the post under the Rules until he attained the age of superannuation or was companypulsorily retired or was found guilty of an act of misconduct in accordance with Article 311 2 . It disapproved the statement found in Parshotam Lal Dhingras case supra at pages 857-858 to the extent it recognised the removal of a permanent Government servant under a companytract express or imp lied or a service rule. After referring to one passage at page 841 and another at page 843 in Parsotam Lal Dhingras case, Gajendragadkar, J. as he then was , who delivered the majority judgment in Moti Ram Dekas case supra observed at pages 718-719 thus Reading these two observations together, there can be numberdoubt that with the exception of appointments held under special companytract, the Court took the view that wherever a civil servant was appointed to a permanent post substantively, he had a right to hold that post until. he reach ed the age of superannuation or was companypulsorily retired, or the post was abolished. In all other cases, if the services of the said servant were terminated, they would have to be in companyformity with the provisions of Art. 311 2 , because termination in such cases amounts to removal. The two statements of the law to which we have just referred do number leave any room for doubt on this point. emphasis added It may be numbericed that removal of a Government servant from a post on its abolition is recognised in the above passage as a circumstance number attracting Article 311 2 of the Constitution. The Court after a review of all the decisions before it including the decision in Parshotam Lal Dhingras case supra held that the above two Rules 148 3 and 149 3 which authorised the removal officers holding the posts substantively by issuing a mere numberice infringed Article 311 2 of the Constitution. The question of abolition of posts did number arise for companysideration in this case. The validity of removal of a Government servant holding a permanent post on its abolition was companysidered by Desai, J. and Chandrachud, J. as he then was in P.V. Naik Ors. v. State of Maharashtra Anr. 1 The learned Judges held that the termination of service of a Government servant companysequent upon the abolition of posts did number involve punishment at all and therefore did number attract Article 311 2 . Since much reliance is placed by the petitioners on the decision of this Court in State of Mysore v. H. Papanna Gowda Anr. etc. 2 it is necessary to examine that case in some detail. The facts of that case were these The respondent in that case was holding the post of a chemical assistant in the Agricultural Research Institute, Mandya in the Department of Agriculture of the State of Mysore. Under the Mysore University of Agricultural Sciences Act, 1963 which came into force on April 24, 1964, the University of Agricultural Sciences was established. Sub-section 5 of section 7 of that Act provided 7. 5 Every person employed in any of the companyleges specified in sub-section 1 or in any of the institutions referred to in sub-section 4 immediately before the appointed day or the date specified in the order under subsection 4 , as the case may be, shall, as from the appointed day or the specified date, become an employee of the University on such terms and companyditions as may be determined by the State Government in companysultation with the Board. The Board referred to in the above sub-section was the Board of Regents of the University. By a numberification dated September 29, 1965 issued under section 7 4 and 5 of that Act, the companytrol and management of a number of research and educational institutions under the Department of Agriculture were transferred to the University. Alongwith them, the Institute in which the respondent was working was also transferred to the University. The result was that the respondent ceased to be an employee of the State Government and became an employee of the University. Thereupon he questioned the validity of sub-sections 4 and 5 of section 7 of the said Act on the ground that they companytravened Article 311 2 of the Constitution before the High Court of Mysore, which upheld his plea. The State Government questioned the decision of the High Court before this Court in the above case. This Court affirmed the decision of the High Court holding that Article 311 2 of the Constitution had been companytravened as the prospects of the respondent in Government service were affected. In this case the parties proceeded on the basis that there was numberabolition of post as such as can be seen from the judgment of the High Court. The only ground was whether when the post companytinued to exist though under a different master, in this case it being the University, it was open to the State Government to transfer its employee to the companytrol of a new master without giving an option to him to state whether he would companytinue as a Government employee or number. The companyrt was number companycerned about the companysequences of abolition of a post as such in this case. As can be seen from the judgment of the High Court in this case vide Papanna Gowda v. State of Mysore 1 one serious infirmity about the impugned provisions was that whoever was holding the post in any of the institutions transferred to the University automatically ceased to be the Government servant. Even if the case was one where abolition of the post was involved, the law should have made provision for the determition of the employees in the cadre in question who would cease to be Government employees with reference to either the principle of last companye, first go or any other reasonable principle and given them an option to join the service under the new master instead of just transferring all the employees who were then working in the institutions to the University. The impugned provisions were number rules dealing with the age of superannuation or companypulsory retirement. Nor the case was dealt with on the principle of abolition of posts. The decision in this case takes its companyour from the peculiar facts involved in it. One principle that may be deduced from this decision is that if a post is number a special post and its incumbent is a member of a cadre his rights as a member of the cadre should be companysidered before deciding whether he has cased to be a government employee on the abolition of the post. It is likely that on such scrutiny the services of another member of the cadre may have to be terminated on its abolition or some other member of the cadre may have to be reverted to a lower post from which he may have been promoted to the cadre in question by the application of the principle of last companye, first go. If, however, where the post abolished is a special post or where an entire cadre is abolished cadre and there is numberlower cadre to which the members of the abolished can reasonably be reverted, the application of this principle may number arise at all. In the circumstances, the petitioners cannot derive much assistance from this decision. The question whether Article 311 2 would be companytravened if Government servant holding a civil post substantively lost his employment by reason of the abolition of the post held by him directly arose for companysideration before this Court in M. Ramanatha Pillai v. The state of Kerala Anr. 1 Two points were examined in that case i whether the Government had a right to abolish a post in a service and ii whether abolition of a post was dismissal or removal within the meaning of Article 311 of the Constitution. The Court held that a post companyld be abolished in good faith but the order abolishing the post might lose its effective character if it was established to have been made arbitrarily, mala fide or as a mask of some penal action within the meaning of Article 311 2 . After companysidering the effect of the decisions in Parashotam Lal Dhingras case supra , Champaklal Chimanlal Shah v. The Union of India, 2 Moti Ram Dekas case supra , Satish Chandra Anand v. The Union of India 1 and Shyam Lal v. State of U.P. and Union of India. 2 This Court observed in this case at page 526 thus The abolition of post may have the companysequence of termination of service of government servant. Such termination is number dismissal or removal within the meaning of Article 311 of the Constitution. The opportunity of showing cause against the proposed penalty of dismissal or removal does number therefore arise in the case of abolition of post. The abolition of post is number a personal penalty against the government servant. The abolition of post is an executive policy decision. Whether after abolition of the post, the Government servant who was holding the post would or companyld be offered any employment under the State would therefore be a matter of policy decision of the Government because the abolition of post does number companyfer on the person holding the abolished post any right to hold the post. The true effect of the decision in Moti Ram Dekas case supra on the question of applicability of Article 311 2 of the Constitution to a case of abolition of post has been clearly explained in this case and we have very little to say anything further on it. Suffice it to say that the Moti Ram Dekas case supra is numberauthority for the proposition that Article 311 2 would be attracted in such a case. The above view was followed by this Court in State of Haryana v. Des Raj Sangar Anr. 1 to which one of us Murtaza Fazal Ali, J. was a party. Khanna, J. speaking for the Court observed at pages 1037-38 thus Whether a post should be retained or abolished is essentially a matter for the Government to decide. As long as such decision of the Government is taken in good faith the same cannot be set aside by the companyrt. It is number open to the companyrt to go behind the wisdom of the decision and substitute its own opinion for that of the Government on the point as to whether a post should or should number be abolished. The decision to abolish the post should, however, as already mentioned, be taken in good faith and be number used as a cloak or pretence to terminate the services of a person holding that post. In case it is found on companysideration of the facts of a case that the abolition of the post was only a device to terminate the services of an employee, the abolition of the post would suffer from a serious infirmity and would be liable to be set aside. The termination of a post in good faith and the companysequent termination of the services of the incumbent of that post would number attract Article 311. Before companycluding our discussion on this topic, it is necessary to refer to a decision of the Jammu and Kashmir High Court in Abdul Khalik Renzu Ors. v. The State of Jammu and Kashmir 1 to which one of us Murtaza Fazal Ali, J. as he then was was a party in which the validity of the abolition of posts companystituting the special police squad of the State of Jammu and Kashmir was questioned. In that case, the High Court while recognising the power of the State Government to abolish the posts and to terminate the services of the incumbents of such posts held that such action companyld be validly taken only subject to certain safeguards and in the absence of any such safeguards the abolition was bad. The High Court did number clearly spell out the nature and extent of safeguards referred to therein. The High Court relied on the words subject to certain safeguards, on the abolition of posts in the passage occurring at page 841 in Parshotam Lal Dhingras case supra which is extracted above to reach the companyclusion that unless the abolition of posts was accompanied by such safeguards, Article 311 would be infringed. With respect, it should be stated that the High Court did number numberice that in another passage at pages 857-858 in the same decision, which is also extracted above, the abolition of posts referred to therein was unqualified. In this passage there is numberreference to any safeguards at all. Probably the safeguards referred to in the passage at page 841 in Parshotam Lal Dhingras case supra meant an abolition of posts which was in good faith and number a pretence of abolition of a post resorted to in order to get rid of its incumbent and the creation of the same post with a different form or name with a new incumbent. The above view of the High Court of Jammu and Kashmir is however, in companyflict with the decision in Ramanatha Pillais case supra and hence must be companysidered as having been overruled by this Court. In modern administrations, it is necessary to recongnise the existence of the power with the Legislature or the Executive to create or abolish posts in the civil service of the State. The volume of administrative work, the measures of economy and the need for streamlining the administration to make it more efficient may induce the State Government to make alterations in the staffing patterns of the civil service necessitating either the increase or the decrease in the number of posts. This power is inherent in the very companycept of governmental administration. To deny that power to the Government is to strike at the very roots of proper public administration. The power to abolish a post which may result in the holder thereof ceasing to be a Government servant has got to be recognised. But we may hasten to add that any action legislative or executive taken pursuant to that power is always subject to judicial review. It is numberdoubt true that Article 38 and Article 43 of the Constitution insist that the State should endeavour to find sufficient work for the people so that they may put their capacity to work into economic use and earn a fairly good living. But these articles do number mean that every body should be provided with a job in the civil service of the State and if a person is provided with one he should number be asked to leave it even for a just cause. If it were number so, there would be numberjustification for a small percentage of the population being in Government service and in receipt of regular income and a large majority of them remaining outside with numberguaranteed means of living. It would certainly be an ideal state of affairs if work companyld be found for all the able bodied men and women and everybody is guaranteed the right to participate in the production of national wealth and to enjoy the fruits thereof. But we are today far away from that goal. The question whether a person who ceases to be a Government servant according to law should be rehabilitated by giving an alternative employment is, as the law stands today, a matter of policy on which the Court has numbervoice. On a fair companystruction of the provisions of Article 311 2 of the Constitution and a companysideration of the judicial precedents having a bearing on the question, we are of the view that it is number possible to hold that the termination of service brought about by the abolition of a post effected in good faith attracts Article 311 2 . An analysis of Article 311 2 shows that it guarantees to a person who is a member of a civil service of the Union or an all-India service or a civil service of a State or holds a civil post the right to defend himself in any proceeding leading to his dismissal, removal or reduction in rank. It requires that in such a case an inquiry should precede any such action, at that inquiry he should be informed of the charges against him and given a reasonable opportunity of being heard in respect of those charges. Where it is proposed after such inquiry to impose upon him any such penalty, such penalty may be imposed on the basis of the evidence adduced during such inquiry and it shall number be necessary to give such person any opportunity of making representation on the penalty proposed. The second proviso to Article 311 2 of the Constitution sets out the circumstances when that clause would number apply. These provisions show that Article 311 2 deals with the dismissal, removal, or reduction in rank as a measure of penalty on proof of an act of misconduct on the part of the official companycerned. This fact is emphasised by the introduction of the words an inquiry in which he has been informed of the charges against him in Art. 311 2 when it was substituted in the place of the former clause 2 of Article 311 by the Constitution Fifteenth Amendment Act, 1963 which came into force on October 5, 1963. In the circumstances, it is difficult to hold that either the decision in Moti Ram Dekas case supra or the decision in Papanna Gowdas case supra lays down that the provisions of Article 311 2 should be companyplied with before the services of a Government servant are terminated as a companysequence of the abolition of the post held by him for bona fide reasons. In view of the foregoing, it cannot be said that the Act impugned in these petitions by which the village offices in the State of Tamil Nadu were abolished companytravenes Article 311 2 of the Constitution. We have number to companysider the submission based on Article 14 of the Constitution. This aspect of the case has to be examined from two angles- i whether the step taken by the Legislature to abolish the village offices in question is so arbitrary as to companyflict with Article 14 of the Constitution and ii whether unequals have been treated as equals by the Legislature. While dealing with the first point it is to be observed that the posts of village officers which were governed by the Madras Act II of 1894, the Madras Act III of 1895 and the Boards Standing Orders were feudalistic in character and the appointments to those posts were governed by the law of primogeniture, the family in which the applicant was born, the village in which he was born, and the fact whether he owned any property in the village or number. Those factors are alien to modern administrative service and are clearly opposed to Articles 14 and 16 of the Constitution. No minimum educational qualifications had been prescribed. It was enough if the applicants knew reading and writing in the case of some of them. The posts were number governed by the regular service rules applicable generally to all officials in the State service. Rightly therefore, the Administrative Reforms Commission recommended their abolition and reorganisation of the village service. The relevant part of the Report of the Administrative Reforms Commission reads thus The companycept of service was companyspicuously absent in this relationship. Village officers were part-time employees and number subject to numbermal civil service discipline. They do number function from public offices where they were expected to receive people and transact public business. All accounts, survey and registry records were in their private custody. Villagers had to go to the residences of Village officers and await the latters companyvenience for referring to public records or for getting extracts from them. This reduced the accessibility particularly of high caste village officers to the poor farmers of the backward and untouchable companymunities. Their emoluments for the part-time service, were meagre and appeared to be an honorarium rather than a living wage. Communications and living companyditions in villages being difficult, subordinate inspecting officers were dependent on the private hospitality of village officers during their official visits. These factors led to the village officers developing an attitude of companydescension in their dealings with villagers. Even though the hereditary principle was held to be unconstitutional recently, the members of their families still get preferential treatment, even if informally, in filling up vacant offices. In recent times, village officers have generally ceased to be leading and affluent riots and are reduced to earn their livelihood largely through the misuse of their position. The problems involved in the reorganisation of Revenue villages in Tamil Nadu were also discussed in the Report of Mr. S.P. Ambrose, I.A.S. submitted to the State Government in January, 1980. In the companyrse of the Report, he observed 4.2 Reorganization of Revenue Villages- 4.2.1. In view of the companysiderable increases in the total beriz of villages, particularly those with extensive irrigated areas, new rules for the regulation and distribution of water in the project areas and in old ayacut areas, and the reduced work and responsibilities of the talayaris on account of the increase in the strength of the regular Police establishments the numberms, for determining the strength of the villagee establishment, as laid down in B.P. Ms. No. 324, dated the 9th December 1910, read with B.P. Ms. No. 231, dated the 23rd February 1921, numberlonger held good. 4.2.2. The size of the survey villages vary widely 4.77 hectares is the extent of the smallest village and 20,947 hectares is the extent of the biggest village. In terms of population, the smallest has population of 33, while the largest has a population of 12,777. Even though survey villages have been grouped to form companyvenient revenue groups for purposes of village administration, the size of revenue groups also vary widely. With the increases in the area cultivated, area irrigated both from Government and private sources and the number of pattas the work load in most villages has increased companysiderably number. The question for companysideration is whether a companyprehensive exercise to reorganise the revenue villages into companyvenient and viable village administrative units with reference to the existing work load should be attempted, and thereafter to revise the strength of the village establishment by laying down fresh numberms for determing its strength. This will be a major administrative exercise. If companyvenient village administrative units with, more or less, equal work load are to be companystituted, several factors like area cultivated gross and net , area irrigated, crop pattern, population, number of pattadars and beriz have to be taken into account Before this is attempted, the major policy issue is whether to companytinue the present part-time system of village officers or to have regular, transferable Government servants as Village Officers in charge of bigger administrative units as recommended by the Administrative Reforms Commission. Having regard to the abolition of similar village offices in the neighbouring States of Karnataka and Andhra Pradesh and the agitation in the State of Tamil Nadu for reorganisation of village service, it cannot be said that the decision to abolish the village offices which were feudalistic in character and an achronisms in the modern age was arbitrary or unreasonable. Another aspect of the same question is whether the impugned legislation is a companyourable one passed with the object of treating the incumbents of village offices in an unjust way. A similar companytention was rejection by this Court in B.R. Shankaranarayana and Ors. v. The State of Mysore and Ors. 1 in which the validity of the Mysore Village Offices Abolition Act 14 of 1961 which tried to achieve more or less a similar object arose for companysideration, with the following observations at pages 1575-1576 As pointed out by this Court in Gajapati Narayan Deos case, AIR 1953 S.C. 375, the whole doctrine of companyourable legislation resolves itself into the question of companypetency of a particular legislature to enact a particular law. If the legislature is companypetent to pass the particular law, the motives which impel it to pass the law are really irrelevant. It is open to the Court to scrutinize the law to ascertain whether the legislature by device, purports to make a law which, though in form appears to be within its sphere, in effect and substance, reaches beyond it. Beyond attempting the argument that the impugned Act is a piece of companyourable legislation, learned Counsel for the appellant has number succeeded in substantiating his companytention that the Act and the rules made there under are merely a device for removing the present incumbents from their office. The provisions of the Act and the rules made thereunder plainly provide for the abolition of hereditary village offices and make those offices stipendiary posts. The Act makes numbersecret of its intention to abolish the hereditary posts. It is argued that even after abolition, the same posts are sought to be companytinued. It is numberdoubt true that the names of the offices have number been changed but there is a basic structural difference between the posts that have been abolished. The posts created by the new Act are stipendiary posts. They carry salaries according to the grades created by the rules. The incumbents are transferable and their service is pensionable. Different qualifications are prescribed for the new posts. From a companysideration of the incidents attaching to the new posts it is clear that the old posts have been abolished and new posts have been created and that the whole companyplexion of the posts has been changed. The result is that in our opinion the impugned Act cannot be held to be a piece of companyourable legislation and as such invalid. A learned discussion on all the points raised in the above case is found in the judgment of the High Court of Mysore in B.H. Honnalige Gowda v. State of Mysore and Anr. 1 Hence the above companytention has to be rejected. The next companytention of the petitioners which is of some substance and which is based again on Article 14 needs to be examined here. It is seen from section 2 e of the Act that the expression part-time village officer is defined as follows 2. e part-time village officer means Village Headman including Additional Village Headman, Village Karnam including Chief Karnam and Additional Village Karnam or Triune Officer appointed underthe Madras Proprietary Estates Village Service Act, 1894 Madras Act II of 1894 or the Madras Hereditary Village offices Act, 1895 Madras Act III of 1895 the Boards Standing orders the Tamil Nadu Village officers Service Rules, 1970 or any other rules made under the proviso to Article 309 of the Constitution or any other law, but does number include Grama Kuvalar, Grama Paniyalar and Pasana Kavalar By section 3 of the Act, the posts held by the parttime village officers, as defined above, are abolished. As a companysequence of the above provision number merely posts of officers appointed under the Madras Act No. II of 1894, the Madras Act No. III of 1895 and the Boards Standing orders prior to December 16, 1970 but also the posts held by officers appointed after that date under the Rules made under the proviso to Article 309 of the Constitution i.e. The Tamil Nadu Village Officers Service Rules, 1970 or any other rule made by the Governor have been abolished. It is argued that the abolition of posts of officials appointed after December 16, 1970 under the Rules made under the proviso to Article 309 of the Constitution is violative of Article 14 of the Constitution. We have given our anxious companysideration to this submission. Any classification should satisfy two testsi that there exists an intelligible differentia between those who are grouped together and those who are number included in the group and ii that there exists a reasonable nexus between the differentia and the object for which classification is made. As stated earlier the object of the impugned legislation is to abolish posts which were part-time in nature and which had companye into existence under laws which were feudalistic in character and to replace them by posts held by new incumbents who are recruited under it. The question for companysideration is whether the grouping together of the part-time posts mentioned in section 2 e of the Act is unconstitutional. There is numberdispute that upto December 16, 1970 all appointments to village offices were being made under the two Madras Acts referred to above and the Boards Standing orders on the basis of factors dealt with above. But after December 16, 1970, recruitment was being made in accordance with the Tamil Nadu Village Officers Service Rules, 1970 By the said Rules a new service of part-time village officers was companystituted. Rule 5 thereof prescribed the minimum educational qualification and the tests which an applicant had to be eligible for being appointed. The Rules fixed the age of superannuation at 55 years. But even under these Rules, the persons who were appointed were part-time village officers who were paid a fixed amount every month by way of remuneration. The nature of duties performed by them and the responsibilities they had to discharge were also the same. The posts held by them were number pensionable posts. Under the Act and the Rules framed thereunder, the village administrative officers to be appointed are to be recruited directly. No person shall be eligible for appointment to the post of a village administrative officer unless he possesses the minimum general educational qualification referred to in Rule 12 a i of Part II of the Tamil Nadu State Subordinate Services Rules and prescribed Schedule I to the said Part II. Every person appointed to the post has within a period of one year from the date on which he joins duty to undergo the training and pass the tests prescribed by Rule 9 of the Rules made under the Act. Every person appointed as a village administrative officer is liable to be transferred from one place to another. The age of superannuation is fixed at 58 years. The said posts are numberlonger part-time posts and the holders thereof are full time Government officials entitled to draw salary every month in the scale of Rs. 350-10-420-15-600 and other allowances and these posts are pensionable posts. It is also to be seen from the recommendations of the Administrative Reforms Commission and other material placed before us that the revenue village will be reorganised so as to form viable administrative units which would require the services of a whole time village administrative officer. The area under a village administrative officer is much larger than many of the existing revenue villages. When such reorganisation of the village administration is companytemplated, it would number be possible to allow charges of diverse sizes to companytinue to remain in any part, of the State of Tamil Nadu. In these circumstances, even though the village officers appointed after December 16, 1970 are in a way different from the village officials appointed prior to that date, they too cannot be equated with the new village administrative officers who will be appointed under the Act and the Rules made thereunder. It cannot, therefore, be held that Article 14 of the Constitution has been violated in abolishing the posts held by those appointed after December 16, 1970. The petitioners in Writ Petitions Nos. 6191, 6355 and 6356 of 1980 who are holders of village offices in Tiruttani Taluk and Pallipatu area have questioned the impugned Act on the ground that the State Legislature companyld number pass the law without the previous approval of Central Government as required by the proviso to sub-section 4 of section 43 of the Andhra Pradesh and Madras Alteration of Boundaries Act, 1959 Central Act 56 of 1959 . The area in which these petitioners were working as village officials forms part of the transferred territories transferred from Andhra Pradesh to Tamil Nadu under the aforesaid Act. Their companytention is that since they were working as village officials in the said area prior to the companymencement of the above said Act the companyditions of their service companyld number be altered to their prejudice without obtaining the previous approval of the Central Government. Section 43 of the Andhra Pradesh and Madras Alteration of Boundaries Act, 1959 reads Provisions relating to services- Every person, who immediately before the appointed day, is serving in companynection with the affairs of Andhra Pradesh or Madras shall, as from that day, companytinue so to serve, unless he is required by general or special order of the Central Government to serve provisionally in companynection with the affairs of the other State. As soon as may be after the appointed day, the Central Government shall by general or special order, determine the State to which every person provisionally allotted to Andhra Pradesh or Madras shall be finally allotted for service and the date from which such allotment shall take effect or be deemed to have taken effect. Every person who is finally allotted under the provisions of sub-section 2 to Andhra Pradesh or Madras shall, if he is number already serving therein, be made available for serving in that State from such date as may be agreed upon between the two State Governments or in default of such agreement, as may be determined by the Central Government. Nothing in this section shall be deemed to affect, after the appointed day, the operation of the provisions of Chapter I of Part XIV of the Constitution in relation to the determination of the companyditions of service of persons serving in companynection with the affairs of Andhra Pradesh or Madras. Provided that the companyditions of service applicable immediately before the appointed day to the case of any person provisionally or finally allotted to Andhra Pradesh or Madras under this section shall number be varied to his disadvantage except with the previous approval of the Central Government. The Central Government may at any time before or after the appointed day give such directions to either State Government as may appear to it to be necessary for the purpose of giving effect to the foregoing provisions of this section and the State Government shall companyply with such directions. The answer of the State Government to the above companytention is that the petitioners in these petitions are number allotted under section 43 2 of the above said Act to the State of Tamil Nadu and hence the proviso to sub-section 4 of section 43 is number applicable. The petitioners have number shown any such order of allotment under section 43 2 . Hence the proviso to sub-section 4 of section 43 is number attracted. Under section 43 4 of the above said Act, the State Government is entitled to deal with all the officials in the areas transferred to them in accordance with Chapter I of Part XIV of the Constitution. The above companytention is, therefore, rejected. In the companyrse of the hearing on a suggestion made by the Court, the learned Attorney General filed a memorandum which reads as follows All the erstwhile Village officers who possess the minimum general educational qualification as required under the Abolition Act and irrespective of their age but subject to the rule of retirement framed under the Abolition Act and the Rules framed thereunder will be screened by a Committee to be appointed by the Government. They need number make any application and they need number also appear for any test companyducted by the Tamil Nadu Public Service Commission for the post of Village Administrative officer. Guidelines to the Committee will be as follows- Punishment Physical companydition. All the persons selected by the Committee will be appointed by the companypetent authorities and relaxation in respect of age will be given. They will be new appointees under the Abolition Act and will be governed by the provisions of the Act and the rules made thereunder. Compensation will number be available to those who are so appointed. The remaining vacancies will be filled up from among the candidates already selected by the Tamil Nadu Public Service Commission. After the above petitions were filed under the interim order passed in these cases all the officials involved in these cases are being paid the honorarium by the State Government. Those who fail in these petitions would have become liable to repay the amount which they have thus drawn in excess of the companypensation, if any, they may be entitled to. It is submitted by the learned companynsel for the State of Tamil Nadu that the State Government will number take steps to recover such excess amount. The above statement is recorded. The attitude displayed by the State Government in filing the memorandum referred to above and in making a statement to the effect that the amount paid pursuant to the interim orders in in excess of the companypensation payable the village officials companycerned will number be recovered is a highly companymendable one and we record our deep appreciation for the laudable stand taken by the Government. It was, however, strenuously urged by Shri R. K. Garg that those who have to vacate the posts would be without any work and some of them have large families and that companypensation, if any, payable to them is very inadequate He urged that it was the duty of the State Government to make adequate provision pursuant to Article 38 and Article 43 of the Constitution. These Articles are in Part IV of the Constitution. They are number enforceable by the companyrts but they are still fundamental in the governance of the companyntry. The nature of the relationship that exists or ought to exist between the Government and the people in India is different from the relationship between the ruler and his subjects in the West. A study of the history of the fight for liberty that has been going on in the West shows that it has been a companytinuous agitation of the subjects for more and more freedom from a king or the ruler who had once acquired companyplete companytrol over the destinies of his subjects. The Indian tradition or history is entirely different. The attitude of an Indian ruler is depicted in the statement of Sri Rama in the Ramayana thus Kshatrirairdharyate chapo nartshabdo bhavaideeti Ramayana III-10-3 Kshatriyas the kings bear the bow wield the power in order to see that there is numbercry of distress from any quarter . The duty of the administrator, therefore, is that he should promptly take all necessary steps to alleviate the sufferings of the people even without being asked to do so. While attending to his duties an administrator should always remember the great saying of the Tamil saint Tiruvalluvar Do numberght that soul repenting must deplore, If thou hast sinned, its well if thou dost sin numbermore. Let a minister never do acts of which he would have to grieve saying, What is this I have done, but should he do them , it were good that he grieved number. No. 655 in Tirukkural Translation by Rev. Dr. G.U. Pope and others Reprint 1970 p. 175 . An administrators actions should be such as he is number driven to repent for the mistakes he may have companymitted. But if he has companymitted any mistakes in the past he should try to avoid a repetition of such mistakes. It is significant that in Tamil language the equivalent of the word people is Makkal which is also sometimes used as the equivalent of children. It is for the State Government to companysider what can be done to those who fail in the petitions. This observation is made particularly in regard to those who were recruited after December 16, 1970 under the rules made under the proviso to Article 309 of the Constitution in view of the fact that their recruitment was number made on the hereditary principle. Those who have passed S.S.L.C. examination amongst them companye within the scope of the statement made by the learned Attorney General. But those who have merely companypleted S.S.L.C. examination but number passed it fall outside the scope of that statement even though they have gained experience while they were in office. We hope and trust that the State Government will look into this matter purely from a humanitarian point of view. This is only a suggestion and number a direction. In the result the petitions are dismissed subject to the following The State Government will give effect to the memorandum filed on its behalf which is incorporated in this judgment in the case of those who possess the minimum general qualifications prescribed under the Act and the Rules made thereunder and who were holding the posts of parttime village officers immediately before the Act came into force. The State Government shall reemploy all such persons who have number crossed the age of superannuation and who are selected as per the memorandum in the new cadre within four months from today. Until they are so selected, they will number be paid any remuneration. Even if they are reemployed, the amount paid to them pursuant to the interim orders will number be recovered from them. The companypensation, if any, payable by the State Government under section 5 of the Act to those who cease to be village officers shall be adjusted against the amount paid pursuant to the interim orders passed in these cases. The State Government will number recover from them any amount paid to them pursuant to the interim orders passed in these cases in excess of the companypensation, if any, payable to them. The interim orders stand vacated with effect from April 15, 1982. No companyts. | 4 |
Judgment of the Court (First Chamber) of 16 March 1978. - Wolfgang Oehlschläger v Hauptzollamt Emmerich. - Reference for a preliminary ruling: Bundesfinanzhof - Germany. - Case 104/77.
European Court reports 1978 Page 00791
Greek special edition Page 00277
Portuguese special edition Page 00293
Summary
Parties
Subject of the case
Grounds
Decision on costs
Operative part
Keywords
1 . QUESTIONS REFERRED FOR A PRELIMINARY RULING - JURISDICTION OF THE COURT OF JUSTICE - LIMITS
( EEC TREATY , ART . 177 )
2 . COMMON CUSTOMS TARIFF - DESCRIPTION OF GOODS - ALUMINIUM WASTE AND SCRAP - SUBHEADING 76.01 B - INTERPRETATION
3 . COMMON CUSTOMS TARIFF - CLASSIFICATION OF GOODS - GOODS MADE OUT OF USED ALUMINIUM CABLES - CLASSIFICATION UNDER SUBHEADING 78.01 A - CONDITIONS
Summary
1 . UNDER ARTICLE 177 OF THE TREATY , WHICH IS BASED ON A CLEAR SEPARATION OF FUNCTIONS BETWEEN THE NATIONAL COURTS AND THE COURT OF JUSTICE , THE LATTER IS EMPOWERED ONLY TO GIVE RULINGS ON THE INTERPRETATION OR THE VALIDITY OF A COMMUNITY PROVISION ON THE BASIS OF THE FACTS WHICH THE NATIONAL COURT PUTS BEFORE IT ; TO VERIFY WHETHER SUCH FACTS ARE CORRECT IS NOT WITHIN THE COMPETENCE OF THE COURT OF JUSTICE , AND IS A MATTER FOR THE NATIONAL COURT .
2 . THE CONCEPTS OF ' ' WASTE AND SCRAP ' ' IN SUBHEADING 76.01 B OF THE COMMON CUSTOMS TARIFF COVERS PRODUCTS WHICH , AS FAR AS THEIR OBJECTIVE CHARACTERISTICS ARE CONCERNED , ARE LEFT OVER FROM THE CUTTING , SHAPING OR OTHER MECHANICAL WORKING OF ALUMINIUM OBJECTS OR ARE DEFECTIVE , USED OR IRREPARABLE ALUMINIUM ARTICLES AND WHICH , AS REGARDS THE USE TO WHICH , THEY CAN BE PUT , HAVE NO REMAINING VALUE OTHER THAN BEING FIT FOR THE RECOVERY OF THE METAL .
3 . GOODS CONSISTING OF CHOPPED ALUMINIUM WIRE OF A LIGHT GREY SHINING APPEARANCE AND PRODUCED IN A SO-CALLED SHREDDER BY THE COMMINUTION OF USED ALUMINIUM CABLES AND SUBSTANTIAL REMOVAL OF THE INSULATION COME WITHIN SUBHEADING 76.01 A OF THE COMMON CUSTOMS TARIFF IN SO FAR AS THEY CONSIST ESSENTIALLY OF ALUMINIUM AND CONTAIN ONLY MINUTE QUANTITIES OF OTHER METALS .
Parties
IN CASE 104/77
REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE BUNDESFINANZHOF ( FEDERAL FINANCE COURT ) FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN
FIRMA WOLFGANG OEHLSCHLAGER , HILDEN
AND
HAUPTZOLLAMT ( PRINCIPAL CUSTOMS OFFICE ) EMMERICH ,
Subject of the case
ON THE INTERPRETATION OF THE PROVISIONS OF THE COMMON CUSTOMS TARIFF RELATING TO THE TARIFF CLASSIFICATION OF UNWROUGHT ALUMINIUM AND ALUMINIUM WASTE AND SCRAP ,
Grounds
1BY AN ORDER OF 27 JULY 1977 WHICH WAS RECEIVED AT THE COURT ON 22 AUGUST 1977 , THE BUNDESFINANZHOF UNDER ARTICLE 177 OF THE EEC TREATY ASKED QUESTIONS CONCERNING THE INTERPRETATION OF CERTAIN PROVISIONS OF THE COMMON CUSTOMS TARIFF RELATING TO UNWROUGHT ALUMINIUM AND ALUMINIUM WASTE AND SCRAP .
2THOSE QUESTIONS WERE RAISED IN THE CONTEXT OF A DISPUTE OVER THE TARIFF CLASSIFICATION OF GOODS DESCRIBED BY THE IMPORTER AS ' ' ALUMINIUM MILLING WASTE AND FILINGS ' ' .
ACCORDING TO THE DETAILS SUPPLIED BY THE NATIONAL COURT IN ITS ORDER MAKING THE REFERENCE , THE GOODS AT ISSUE CONSIST OF LIGHT GREY , SHINING METAL GRAINS , WHICH ARE OBTAINED FROM USED ALUMINIUM CABLES AND FROM REMNANTS OF CABLES CUT INTO SHORT PIECES IN A SHREDDER AND THEN COMMINUTED INTO IRREGULARLY-SHAPED GRAINS BY ROTATING CUTTERS , THE CONSTITUENT PARTS OF THE RESULTING MIXTURE THEN BEING SEPARATED AND ISOLATED FROM ONE ANOTHER .
AFTER OBTAINING AN OPINION FROM THE ZOLLTECHNISCHE PRUFUNGS- UND LEHRANSTALT ( CUSTOMS TECHNICAL TESTING AND RESEARCH INSTITUTE ) COLOGNE THE GERMAN CUSTOMS AUTHORITIES CLASSIFIED THE SAID GOODS UNDER SUBHEADING 76.01 A OF THE COMMON CUSTOMS TARIFF ( ' ' UNWROUGHT ALUMINIUM ' ' ) BEARING AUTONOMOUS DUTY OF 10% .
THE IMPORTER CHALLENGED THAT CLASSIFICATION , ARGUING THAT THE IMPORTED GOODS CAME UNDER TARIFF SUBHEADING 76.01 B II ( ' ' ALUMINIUM SCRAP ' ) AND ARE THEREFORE FREE OF DUTY .
3IN ITS ORAL OBSERVATIONS , THE PLAINTIFF IN THE MAIN ACTION STATED THAT THE DESCRIPTION OF THE GOODS GIVEN BY THE NATIONAL COURT IN ITS ORDER MAKING THE REFERENCE IS INCORRECT .
4UNDER ARTICLE 177 OF THE TREATY , WHICH IS BASED ON A CLEAR SEPARATION OF FUNCTIONS BETWEEN THE NATIONAL COURTS AND THE COURT OF JUSTICE , THE LATTER IS EMPOWERED ONLY TO GIVE RULINGS ON THE INTERPRETATION OR THE VALIDITY OF A COMMUNITY PROVISION ON THE BASIS OF THE FACTS WHICH THE NATIONAL COURT PUTS BEFORE IT .
TO VERIFY WHETHER SUCH FACTS ARE CORRECT IS NOT WITHIN THE COMPETENCE OF THE COURT OF JUSTICE , AND IS A MATTER FOR THE NATIONAL COURT .
5IN ITS FIRST QUESTION , THE BUNDESFINANZHOF ASKS THE COURT WHETHER TARIFF SUBHEADING 76.01 B OF THE COMMON CUSTOMS TARIFF MUST BE INTERPRETED AS INCLUDING GOODS HAVING THE CHARACTERISTICS DEFINED ABOVE .
IN THE EVENT OF THAT QUESTION BEING ANSWERED IN THE NEGATIVE , IT IS THEN ASKED WHETHER THE AFORESAID GOODS COME UNDER TARIFF SUBHEADING 76.01 A .
AS THE TOW QUESTIONS RELATE TO THE TARIFF CLASSIFICATION OF THE SAME GOODS , THEY MUST BE DEALT WITH TOGETHER .
6SUBHEADING 76.01 B , CHAPTER 76 , SECTION XV OF THE COMMON CUSTOMS TARIFF REFERS TO ALUMINIUM ' ' WASTE AND SCRAP ' ' .
THE EXPRESSION ' ' WASTE AND SCRAP ' ' IS DEFINED BY NOTE 6 TO SECTION XV OF THE CCT AS MEANING , FOR THE PURPOSES OF THAT SECTION , ' ' WASTE AND SCRAP METAL FIT ONLY FOR THE RECOVERY OF METAL OR FOR USE IN THE MANUFACTURE OF CHEMICALS ' ' .
IN ADDITION , THE EXPLANATORY NOTE TO THE BRUSSELS NOMENCLATURE ON HEADING 76.01 REFERS , FOR THE DEFINITION OF ' ' ALUMINIUM WASTE AND SCRAP ' ' , TO THE EXPLANATORY NOTE ON HEADING 73.03 CONCERNING WASTE AND SCRAP OF FERROUS METALS .
THE LATTER NOTE DEFINES THE CONCEPT OF ' ' WASTE AND SCRAP ' ' BY REFERENCE TO ' ' WASTE AND SCRAP RESULTING FROM THE CUTTING , SHAPING OR OTHER MECHANICAL WORKING OF IRON AND STEEL ' ' OR TO ' ' UNUSABLE , WORN-OUT AND BROKEN ARTICLES OF IRON OR STEEL ' ' .
THE SAME NOTE ALSO STATES THAT SUCH ARTICLES ARE ' ' FREQUENTLY CRUSHED OR COMPRESSED TOGETHER ' ' .
IT FOLLOWS FROM THESE PROVISIONS THAT THE CONCEPT OF ' ' WASTE AND SCRAP ' ' IN SUBHEADING 76.01 B OF THE CCT COVERS PRODUCTS WHICH , AS FAR AS THEIR OBJECTIVE CHARACTERISTICS ARE CONCERNED , ARE LEFT OVER FROM THE CUTTING , SHAPING OR OTHER MECHANICAL WORKING OF ALUMINIUM OBJECTS OR ARE DEFECTIVE , USED OR IRREPARABLE ALUMINIUM ARTICLES AND WHICH , AS REGARDS THE USE TO WHICH THEY CAN BE PUT , HAVE NO REMAINING VALUE OTHER THAN BEING FIT FOR THE RECOVERY OF METAL .
THEREFORE , IN VIEW BOTH OF THEIR FORM AND OF THE PROCESSING FROM WHICH THEY RESULTED , IT DOES NOT APPEAR THAT THE GOODS DESCRIBED BY THE NATIONAL COURT CAN BE REGARDED AS WASTE OR SCRAP FOR THE PURPOSES OF SUBHEADING 76.01 B OF THE CCT .
7ACCORDINGLY , CLASSIFICATION UNDER THAT SUBHEADING BEING EXCLUDED , IT FALLS TO BE CONSIDERED , UNDER THE SECOND QUESTION ASKED BY THE NATIONAL COURT , WHETHER THE SAID GOODS CAN BE CLASSIFIED UNDER TARIFF SUBHEADING 76.01 A , WHICH RELATES TO ' ' UNWROUGHT ALUMINIUM ' ' .
8IT EMERGES FROM THE STRUCTURE OF CHAPTER 76 , HEADINGS 76.02 TO 76.05 OF WHICH REFER TO SEMI-FINISHED PRODUCTS AND HEADINGS 76.06 TO 76.16 OF WHICH APPLY TO FINISHED PRODUCTS AND OTHER ARTICLES OF ALUMINIUM , THAT THE EXPRESSION ' ' UNWROUGHT ALUMINIUM ' ' IN SUBHEADING 76.01 A DESIGNATES THE METAL AS SUCH , AS YET UNPROCESSED .
ALTHOUGH THE COMMON CUSTOMS TARIFF DOES NOT SPECIFY THE PERCENTAGE OF METAL WHICH PRODUCTS COMING UNDER THAT SUBHEADING MUST CONTAIN , GENERAL RULE NO 2 ( B ) FOR THE INTERPRETATION OF THE NOMENCLATURE COMMON CUSTOMS TARIFF STATES THAT ' ' ANY REFERENCE IN A HEADING TO A MATERIAL OR SUBSTANCE SHALL BE TAKEN TO INCLUDE A REFERENCE TO MIXTURES OR COMBINATIONS OF THAT MATERIAL OR SUBSTANCE WITH OTHER MATERIALS OR SUBSTANCES ' ' .
FURTHERMORE , THE EXPLANATORY NOTE TO THE BRUSSELS NOMENCLATURE ON HEADING 76.01 STATES THAT THE EXPRESSION ' ' UNWROUGHT ALUMINIUM ' ' ALSO INCLUDES ' ' ALUMINIUM PELLETS , MAINLY USED IN METALLURGY ' ' .
ACCORDING TO THE INFORMATION SUPPLIED BY THE NATIONAL COURT , THE GOODS DESCRIBED ARE FORMED OF GRAINS OF METAL CONSISTING ESSENTIALLY OF ALUMINIUM AND CONTAINING ONLY MINUTE PROPORTIONS OF OTHER METALS .
9FOR ALL THESE REASONS , THE APPROPRIATE ANSWER TO THE QUESTIONS RAISED IS THAT GOODS CONSISTING OF CHOPPED ALUMINIUM WIRE OF A LIGHT GREY SHINING APPEARANCE AND PRODUCED IN A SO-CALLED SHREDDER BY THE COMMINUTION OF USED ALUMINIUM CABLES AND SUBSTANTIAL REMOVAL OF THE INSULATION COME WITHIN SUBHEADING 76.01 A OF THE COMMON CUSTOMS TARIFF IN SO FAR AS THEY CONSIST ESSENTIALLY OF ALUMINIUM AND CONTAIN ONLY MINUTE QUANTITIES OF OTHER METALS .
Decision on costs
COSTS
10THE COSTS INCURRED BY THE COMMISSION OF THE EUROPEAN COMMUNITIES , WHICH HAS SUBMITTED OBSERVATIONS TO THE COURT ARE NOT RECOVERABLE .
AS THESE PROCEEDINGS ARE , IN SO FAR AS THE PARTIES TO THE MAIN ACTION ARE CONCERNED , IN THE NATURE OF A STEP IN THE ACTION PENDING BEFORE THE NATIONAL COURT , THE DECISION ON COSTS IS A MATTER FOR THAT COURT .
Operative part
ON THOSE GROUNDS ,
THE COURT ( FIRST CHAMBER ),
IN ANSWER TO THE QUESTIONS REFERRED TO IT BY THE BUNDESFINANZHOF BY AN ORDER OF 27 JULY 1977 , HEREBY RULES :
GOODS CONSISTING OF CHOPPED ALUMINIUM WIRE OF A LIGHT GREY SHINING APPEARANCE AND PRODUCED IN A SO-CALLED SHREDDER BY THE COMMINUTION OF USED ALUMINIUM CABLES AND SUBSTANTIAL REMOVAL OF THE INSULATION COME WITHIN SUBHEADING 76.01 A OF THE COMMON CUSTOMS TARIFF IN SO FAR AS THEY CONSIST ESSENTIALLY OF ALUMINIUM AND CONTAIN ONLY MINUTE QUANTITIES OF OTHER METALS . | 5 |
Lord Justice Keene:
Introduction
Planning control is the creature of statute. It is now almost exactly sixty years since Parliament, on 6 August 1947, passed the first truly comprehensive town and country planning legislation. For most of the subsequent period, since in fact August 1960, it has been a feature of the statutory scheme that, once an enforcement notice directed at a breach of planning control has been through the appeal process or the time for appeal has expired, the notice cannot be challenged in any subsequent proceedings, civil or criminal, on any ground on which an appeal against the notice lay. That prohibition is now contained in section 285(1) of the principal statute now applicable, the Town and Country Planning Act 1990 ("the 1990 Act"). The terms of the subsection are set out in paragraph 36 of this judgment.
One of the grounds on which an appeal to the Secretary of State against an enforcement notice may be brought under section 174 of the 1990 Act is that
"at the date when the notice was issued, no enforcement action could be taken"
in respect of the alleged breach of planning control (section 174(2)(d)). This provision reflects the fact that the legislation has, in its various forms over the years, also recognised that if a breach of planning control has persisted for a certain number of years without enforcement action being taken by the local planning authority, the breach will become immune from enforcement and the land is then said to enjoy existing use rights. If such rights exist, an appeal to the Secretary of State may be brought on such a basis within the time specified against an enforcement notice subsequently served in respect of the development covered by those rights. Since the Town and Country Planning Act 1968, the existence of such use rights as at a particular date may achieve a form of official recognition by way of a certificate, now known as a Certificate of Lawful Use or Development. This is now provided for by section 191 of the 1990 Act.
This civil appeal raises as a principal issue the question whether and (if so) to what extent in subsequent proceedings based on an enforcement notice which has come into effect a court may go back to look at existing use rights as they existed before the issue of the enforcement notice. Does it make any difference that those earlier use rights were recognised in a Certificate of Lawful Use ("CLU") granted before the enforcement notice?
I shall turn to the facts in more detail in the next section of this judgment, but in the present case both civil and criminal proceedings were brought by the relevant local planning authority as a result of a non-compliance with an enforcement notice. The authority, Staffordshire County Council ("the County Council"), brought two sets of civil proceedings which were eventually consolidated – one for an injunction to prevent the breach of planning control and then subsequently, after the County Council had taken direct action itself under section 178 of the 1990 Act to remedy the breach, another set of proceedings to recover from the owners of the land the expenses which they had incurred. These proceedings came before Her Honour Judge Kirkham, sitting as a High Court judge: she, by a judgment dated 23 February 2007, found against the County Council, which now appeals. Judge Kirkham's decision was largely founded upon the existence of an earlier CLU.
At the same time a criminal appeal has been heard by this same constitution sitting as the Court of Appeal Criminal Division. This results from the prosecution on indictment of Basil John Challinor, the first defendant in the civil proceedings, on two counts of failing to comply with the enforcement notice contrary to section 179(5) of the 1990 Act. Mr Challinor eventually pleaded guilty to both counts but only after a ruling by Mr Recorder Evans, QC, that it was no defence that the use covered by the enforcement notice had been previously declared lawful by the CLU dated 15 June 1994. The judge relied in particular on the restriction contained in section 285(1) of the 1990 Act. Mr Challinor has appealed against his conviction and we deal with that appeal in a separate but brief judgment.
I would only add that it seems to me to have been eminently sensible for these two appeals, civil and criminal, to have been listed and heard together in this way. It is a procedure which has saved time and also avoided the (no doubt remote) possibility of conflicting decisions emerging from the two divisions of the Court of Appeal. I hope that a similar approach will be adopted whenever such a situation arises in future.
The Facts
The enforcement notice in question, dated 16 June 1997, concerns an area of land about 2 hectares (5 acres) in extent located in a rural area at Hopton in Staffordshire. The land is known as Woodside. Within it is a smaller area, perhaps about a half-hectare in extent, the subject-matter of the CLU of 15 June 1994. I shall call this "the smaller area". The whole site was owned for many years by Mr Challinor's father, but he died in August 1997 and Mr Challinor and his sister, Mrs Robinson (the second defendant in the civil proceedings), are the executors of the estate. They are sued as such, insofar as the County Council seeks to recover the costs of its direct action to remedy the breach of planning control. No grant of probate has yet been made.
At one stage it seems that the land known as Woodside was all in agricultural use and its regrading to certain specified levels using appropriate fill materials was regarded in 1985 as permitted development because it was requisite for the use of the land for agriculture. However, in 1988 the County Council served an enforcement notice, alleging a breach of planning control because of operations consisting of the excavation of land and the deposit of material on land exceeding in area, volume and steepness of final profile the scheme sanctioned in 1985. Amongst the steps required to be taken by that notice was to
"cease importation of waste material to the site."
This notice applied to most of the Woodside site, including most of the smaller area. No appeal to the Secretary of State was lodged against this 1988 enforcement notice.
According to the evidence of the first defendant put before Judge Kirkham, he had been using some of the land for business purposes for some time and on 13 May 1993 he applied to the Staffordshire Borough Council for a CLU under section 191 of the 1990 Act. On the 15 June 1994 that authority issued a CLU. By it the Borough Council certified
"that on 13th May 1993 the uses described in the First Schedule hereto in respect of [the smaller area] were lawful within the meaning of section 191 of the Town and Country Planning Act 1990 (as amended) …"
The reason given for so certifying was that the uses in question had begun more than 10 years before the date of the application for a certificate and so the time for taking enforcement action in respect of those uses had expired. The uses as described in the First Schedule were as follows:
"1. The use of the land as a plant hire contractor's yard including the repair, maintenance, storage and distribution of associated equipment and vehicles, such vehicles not exceeding ten in number.
2. The use of the land for the storage, distribution and general trading of materials recovered for demolition and construction sites for recycling, such storage of materials not exceeding 4 metres in height."
It is agreed on all sides that the second line of paragraph 2 there should read "materials recovered from demolition and construction sites."
It will be observed that this CLU was granted by the Stafford Borough Council, not the County Council who had issued the 1988 enforcement notice and who were to issue the 1997 enforcement notice which is at the heart of this case. There is a reason for this. Normally matters of planning control, whether concerned with the grant of planning permission or with the issuing of enforcement notices, were in non-metropolitan counties like this dealt with by the district council for the area, which would include a borough council. But certain matters were designated as "county matters", for which the relevant county council would be the appropriate local planning authority. Amongst such "county matters" was the "use of land or the carrying out of operations in or on land for the deposit of refuse or waste materials": see the Town and Country Planning (Prescription of County Matters) Regulations 1980, regulation 2(a). The 1988 enforcement notice, as its requirements indicated, was concerned with the deposit of waste and, as we shall see, so was the 1997 enforcement notice. Consequently the County Council was the appropriate local planning authority to issue these notices. The CLU of 15 June 1994 on the face of it did not relate to waste, or at least did not include any express reference to "waste" or indeed to "refuse" in the description of the lawful uses in the First Schedule. This, no doubt, was why it was thought appropriate for the Stafford Borough Council to issue it. In fact the Borough Council subsequently wrote to the first defendant on 23 November 1995, pointing out that "waste disposal which includes recycling is a planning function of the County Council and not this Borough Council" and saying that the Borough Council had no power to grant a CLU for a waste process.
In July 1996 the County Council refused to grant a CLU relating to use of a substantial part of the Woodside site for the importation, storage, sorting, treating, processing, reclamation and recycling of soils, bricks, concrete and other demolition and construction materials, together with distribution and general treating of such materials. Nonetheless, it seems that waste materials were at around this time or soon afterwards being imported onto the Woodside site and being handled, stored, sorted, screened and treated there. Certainly that was an agreed fact by the time of the public inquiry held in December 1998 into the first defendant's appeal against the 1997 enforcement notice. I turn to deal with that enforcement notice.
Issued by the County Council on 16 June 1997, the notice in its original form alleged that there had been a breach of planning control on the Woodside site by a change of use to use as "a waste transfer station from agriculture." It required various steps to be taken, the first of which was to
"cease importation of all waste on the land [the Woodside site],"
and on the same land to
"cease the use of the handling, sorting, screening, storage, treatment and disposal, or any of these, of waste materials and soils."
The time for compliance in respect of these particular steps was specified as one day from the notice taking effect. Various other works were also required.
The first defendant appealed against the notice to the Secretary of State, who appointed an inspector to determine the appeal. The grounds of appeal changed in various ways before the inquiry into the appeal took place. To understand what happened, it is necessary to set out the potential grounds of appeal available under section 174(2), apart from ground (a) – that ground asserts that planning permission ought to be granted for the development enforced against, as a matter of the planning merits, and at no time did the first defendant rely upon that ground. Some of the other grounds in section 174(2) relate to the matters said by the notice to constitute a breach of planning control. Grounds (b) to (g) are as follows:
"(b) that those matters have not occurred;
(c) that those matters (if they occurred) do not constitute a breach of planning control;
(d) that, at the date when the notice was issued, no enforcement action could be taken in respect of any breach of planning control which may be constituted by those matters;
(e) that copies of the enforcement notice were not served as required by section 172;
(f) that the steps required by the notice to be taken, or the activities required by the notice to cease, exceed what is necessary to remedy any breach of planning control which may be constituted by those matters or, as the case may be, to remedy any injury to amenity which has been caused by any such breach;
(g) that any period specified in the notice in accordance with section 173(9) falls short of what should reasonably be allowed."
Ground (e) was never raised.
Initially, the appeal was brought solely on ground (d), but subsequently grounds (b), (c), (f) and (g) were added. However, all except ground (b) were withdrawn about one week before the inquiry took place on 8 December 1998. The inspector records that the appeal proceeded on ground (b) only, i.e. that the matters said to have occurred had not occurred. The appellant, Mr Challinor, was represented by leading counsel and the main argument advanced was that there had been no change of use to a waste transfer station. It was contended on his behalf that, while the land was being used for the treatment of waste materials, this did not amount to use as a waste transfer station. It is unnecessary to spell out the argument in detail for present purposes. Suffice it to say that, while the inspector was not convinced that the term "waste transfer station" was a misnomer, he thought it better for the avoidance of any future doubt to correct the wording of the notice so as to reflect more fully the precise nature of the activities taking place.
As to what those activities were, he was satisfied that the land had been used for the importation, handling, sorting, screening, storage, treatment and disposal of waste materials. He took the view that the notice could be corrected without causing any injustice and so he amended the wording by deleting the phrase "a waste transfer station from agricultural" and substituting new wording so that it then defined the breach of planning control as a change of use to use
"for the importation, handling, sorting, screening and storage of waste materials, and the disposal of waste materials."
Subject to that amendment he dismissed the appeal.
It will be clear from this summary of the appeal to the Secretary of State that Mr Challinor did not, in the end, seek to challenge the enforcement notice on the basis that part of the land enjoyed existing use rights or that such rights had been reflected in the 1994 CLU referred to in paragraph 9 of this judgment. No doubt there was some tactical or other reason for this. The inspector was, however, aware of the existence of the CLU as a matter of the site's planning history, for he referred in paragraph 25 of the decision letter to the CLU and in particular to that part of it, paragraph 1 of the First Schedule, which dealt with use as a plant hire contractor's yard. He commented on the absence of any evidence to suggest that such a use was still on-going at the time when the enforcement notice was issued. I shall return to the significance of that later in this judgment.
Moreover, immediately after the paragraph in which he determined the appeal, he went on under the heading of "Other Matters" to say this in paragraph 30:
"For the further avoidance of doubt, I should also make it clear that whilst I understand the County Council's reservations as to the validity of the Lawful Development Certificate issued by the Stafford Borough Council in 1994, having regard to the provisions of section 191(6), I am of the opinion that so far as this notice is concerned, it cannot require the cessation of the lawful use of any part of the land, identified by that Certificate, for the storage of materials recovered for recycling, up to a height of 4m. It is my interpretation of the Certificate that it relates only to materials already recovered from waste, and not to the sorting, treatment or processing of waste materials, and I am reinforced in that view by the letter from Stafford Borough Council to the County Council dated 28 September 1995. I therefore see no need to vary the requirements of the notice to make a saving in that respect."
The decision letter ended with the usual statement, telling the recipient about his rights of appeal to the High Court against the decision.
Pausing there, certain points can be made at this stage. First, although the inspector amended the enforcement notice in the way I have described, no fresh enforcement notice in the amended terms was issued, nor is that normal procedure. Any person who in the future wished to know the terms in which this enforcement notice was eventually couched would have to have had recourse to the register kept by the district planning authority under section 188, though we were told in the course of argument that the decision-letter itself would normally be available. Secondly, there can be no doubt that the inspector placed a certain interpretation on the 1994 CLU and decided that the wording of this enforcement notice required no variation in the light of the CLU. Thirdly, no part of his decision, including that part to which I have just referred, was subsequently challenged in the High Court under section 289 of the 1990 Act. Fourthly, and of relevance to the injunction proceedings, the amended enforcement notice took effect on receipt of the decision-letter, 20 April 1999.
It seems that in 2001 criminal proceedings were begun against Mr Challinor for breach of the 1997 enforcement notice but these were in the event not pursued. However, on 25 April 2002 The County Council issued civil proceedings against him, seeking an injunction to restrain him from committing further breaches. An interim injunction was granted on 23 July 2002 by His Honour Judge Mitchell, restraining Mr Challinor from using the land at Woodside for importing waste, handling, sorting, screening, storage, treatment and disposal, or any of these, of waste materials and soils until trial or further order. But the County Council also took the view that he had failed to carry out the requirements of the 1997 enforcement notice insofar as that required the removal of waste materials from the land, and so in April 2003 they took direct action under section 178 of the 1990 Act to carry out such removal. This gave rise to the further civil claim by the County Council, brought in July 2004, to recover the expenses of their direct action, put at £243,685.12 plus interest. It was this claim which, having been consolidated with the injunction proceedings, eventually came before Judge Kirkham for decision.
In the meantime, two other things had happened. First, the County Council had sought an extension of the interim injunction so as to cover an additional area of land. That was refused by Mitting J on 24 March 2004. He continued the existing interim injunction, but varied it so as to add a proviso, the purpose of which was to exclude from the scope of the injunction activities on the CLU site which he regarded as falling within the second paragraph of the CLU's First Schedule. Secondly, fresh criminal proceedings against Mr Challinor were started on 8 April 2004 in respect of the deposit of waste on the enforcement notice land, Woodside, on 12 February 2003 and 7 April 2003. These are the proceedings which have ultimately given rise to the criminal appeal.
Mitting J in his judgment took the view that the CLU related to the storage, distribution and general trading of certain materials and activities incidental thereto. The screening, treating and any sorting of materials was, he said, excluded. But in considering what type of materials could be stored, distributed and traded in, he differed from the inspector who had upheld the enforcement notice, in that the inspector saw the CLU as applying only to material already recovered from waste before delivery to the site, whereas Mitting J was of the view that the CLU covered materials obtained from demolition or construction sites, whether or not they had been sorted before reaching this site. As a result, he excluded the storage, distribution and general trading of such materials from the scope of the interim injunction which he was continuing until trial or further order.
He was not, of course, amending or purporting to amend the 1997 enforcement notice in the terms in which it had been approved by the inspector. He had no jurisdiction to do so. The implication of his decision was that there was a conflict between the 1997 enforcement notice as approved and the 1994 CLU. That conflict, however, was not addressed by Mitting J, and indeed he was not asked to consider the effect of section 285 of the 1990 Act and its prohibition on subsequent challenges to an enforcement notice on any such conflict. It is noticeable that there is no reference to that section in his judgment. One can only assume that it was not drawn to his attention.
To complete the sequence of events: the criminal proceedings against Mr Challinor gave rise to the hearing of certain preliminary issues in the Crown Court before Mr Recorder Evans QC on 21 June 2005. One of those issues concerned a defence which Mr Challinor wished to run, based on the CLU. The prosecution relied on section 285(1) of the 1990 Act, arguing that if he had wished to rely on the CLU, he should have raised it by way of appeal against the enforcement notice and that he was now precluded from doing so by the terms of that sub-section. The judge accepted that contention. As a result, Mr Challinor subsequently in October 2006 pleaded guilty to both charges against him.
The trial of the consolidated civil claims took place in November and December 2006, with Judge Kirkham handing down her detailed reserved judgment on 23 February 2007. In that judgment, she considered the meaning of "waste" in the European Directive 75/442/EC, referring to several decisions on that topic, and she then went on to deal with the meaning and effect of the 1994 CLU. She held that the prohibition in section 285(1) on challenging an enforcement notice which is in force did not suffice "to override the conclusive nature of the CLU", referring to section 191(6) of the 1990 Act (see paragraph 35 below). She then said this at paragraph 81:
"It follows that any operations carried out on the CLU Area which fell within the scope of activity permitted by the CLU were not in breach of the EN. SCC were thus not entitled to undertake direct action in respect of operations carried out on the CLU Area and which fell within the scope of the CLU."
Having reached such a conclusion, it was understandable that she then turned to the scope of the CLU. On this she adopted the interpretation put forward by Mr Justice Mitting, concluding that Mr Challinor was entitled to bring onto the CLU area any materials obtained from demolition and construction sites. Of course, these conclusions did not mean that the entirety of the direct action taken by the County Council in April 2003 was necessarily ultra vires nor that Mr Challinor was not in breach in some respects of the enforcement notice, and Judge Kirkham accepted that up to the time of the direct action there had been a breach in respect of 18 instances. But because the County Council could not distinguish between the costs it had incurred in respect of its direct action found by her to be related to breaches of the enforcement notice and those costs incurred in doing work which fell outside the enforcement notice because of the CLU, the judge concluded that the County Council could not recover any of the costs of its direct action.
Nonetheless, she very properly went on to assess the costs which it would have been entitled to recover under section 178, had it been entitled to act as it did. After a careful and detailed analysis, she concluded that the expenses reasonably incurred would have been a total of £179,035.94.
Judge Kirkham also considered a number of arguments advanced by Mrs Robinson, the second defendant, about the validity of the enforcement notice, its service, the warrant of entry obtained by the County Council and issues under the European Convention on Human Rights. The judge ruled against Mrs Robinson on each of these matters.
So far as the County Council's claim for a permanent injunction was concerned, the judge was influenced by the fact that she had found only two breaches of the enforcement notice after the date of the direct action, largely because other alleged breaches fell within the scope of the CLU. Because, on this basis, the County Council had demonstrated "only very limited breaches" of the enforcement notice since the direct action, she concluded that there had not been "flagrant and prolonged defiance" by Mr Challinor of planning control, and she therefore refused to grant the injunction sought.
The Legal Context
The 1997 enforcement notice was directed against a breach of planning control consisting of the carrying out of development without planning permission. "Development" includes, by virtue of section 55(1) of the 1990 Act, "the making of any material change in the use of any buildings or other land", and by section 55(3)(b) the deposit of waste materials on land involves a material change in its use, even if the land is comprised in a site already used for that purpose, if the superficial area of the deposit is extended or the height of the deposit is extended and exceeds the level of the land adjoining the site.
Section 171A(1) provides that carrying out development without planning permission is a breach of planning control. Planning permission may consist of an express grant of permission following an application made for that purpose under section 62, but it may also have been granted (by virtue of section 58(1)(a)) by a development order applicable generally throughout England and Wales, the current version being the Town and Country Planning (General Permitted Development) Order 1995, which means that permission automatically exists for such things as minor extensions of dwelling-houses, or hard surfaces within the curtilage of such houses for a purpose incidental to the enjoyment of the dwelling-house. Section 172(1) empowers a local planning authority to issue an enforcement notice where it appears to them that there has been a breach of planning control and that it is expedient to do so, having regard to the development plan and other material considerations. There are, however, time limits on taking enforcement action, as I indicated in paragraph 2 of this judgment: thus in almost all cases where the breach consists of making a material change of use of land without permission,
"no enforcement action may be taken after the end of the period of ten years beginning with the date of the breach": section 171B(3)
Any enforcement notice shall specify the steps which the authority requires to be taken or the activities which it requires to cease (section 173(3)). A right of appeal to the Secretary of State is provided by section 174. The grounds upon which such an appeal may be brought are contained in section 174(2), the relevant parts of which I have set out in paragraph 13 of this judgment. The time-limits on bringing enforcement action are reflected in section 174(2)(d), which enables an appellant to appeal on the ground that the time for taking such action has passed. In such a situation he is often said to enjoy existing use rights. It is to be noted that the material change of use or other form of development must not merely have taken place the requisite number of years before the enforcement notice is issued: it must also have continued during the intervening period: see Secretary of State for the Environment v. Thurrock Borough Council (No. 2) [2002] EWCA Civ 226; [2002] JPL 1278; Fairstate Ltd v. First Secretary of State [2005] EWCA Civ 238; Swale Borough Council v. First Secretary of State [2005] EWCA Civ 1568. This is of significance when one comes to consider CLUs.
Section 176(1) is the provision which empowers the Secretary of State (or more usually these days one of his inspectors) on an appeal to correct any "defect, error or misdescription" in the enforcement notice or to vary its terms, so long as he is satisfied that doing so will not cause injustice to the appellant or the planning authority. This is the sub-section used by the inspector in the present case to amend the 1997 enforcement notice. Whatever the outcome of the appeal to the Secretary of State, there is a right of appeal against the decision on a point of law to the High Court, with the leave of that court, under section 289.
The power of the planning authority to take direct action where an enforcement notice is not complied with is to be found in section 178(1). That states:
"Where any steps required by an enforcement notice to be taken are not taken within the period for compliance with the notice, the local planning authority may-
(a) enter the land and take the steps; and
(b) recover from the person who is then the owner of the land any expenses reasonably incurred by them in doing so."
Under the 1990 Act, "owner" is defined by section 336(1) as
"a person, other than a mortgagee not in possession, who, whether in his own right or as trustee for any other person is entitled to receive the rack rent of the land, or … would be so entitled if it were so let"
It is not in dispute that both defendants were, as executors, "owners" within the meaning of that provision.
It is a criminal offence under section 179(2) for an owner of land to be in breach of an enforcement notice. He is in breach if, after the end of the period for compliance, any step required by it to be taken has not been taken or any activity required by it to cease is being carried on: section 179(1). Likewise a person who has control of or an interest in the land must not carry on an activity which is required by the notice to cease, and he commits an offence if he does: section 179(4) and (5).
CLUs are provided for by section 191 of the 1990 Act. Insofar as material to the present case, that section provides as follows:
"191 – (1) If any person wishes to ascertain whether –
(a) any existing use of buildings or other land is lawful;
(b) any operations which have been carried out in, on, over or under land are lawful; or
(c) any other matter constituting a failure to comply with any condition or limitation subject to which planning permission has been granted is lawful,
he may make an application for the purpose to the local planning authority specifying the land and describing the use, operations or other matter.
(2) For the purposes of this Act uses and operations are lawful at any time if –
(a) no enforcement action may then be taken in respect of them (whether because they did not involve development or require planning permission or because the time for enforcement action has expired or for any other reason); and
(b) they do not constitute a contravention of any of the requirements of any enforcement notice then in force.
(3) …
(4) If, on an application under this section, the local planning authority are provided with information satisfying them of the lawfulness at the time of the application of the use, operations or other matter described in the application, or that description as modified by the local planning authority or a description substituted by them, they shall issue a certificate to that effect; and in any other case they shall refuse the application.
(5) A certificate under this section shall-
(a) specify the land to which it relates;
(b) describe the use, operations or other matter in question (in the case of any use falling within one of the classes specified in an order under section 55(2)(f), identifying it by reference to that class);
(c) give the reasons for determining the use, operations or other matters to be lawful; and
(d) specify the date of the application for the certificate.
(6) The lawfulness of any use, operations or other matter for which a certificate is in force under this section shall be conclusively presumed. "
Finally, there is the prohibition on challenging an enforcement notice in any proceedings on any ground on which an appeal might be made to the Secretary of State. This is to be found in section 285(1) of the 1990 Act, which provides:
"The validity of an enforcement notice shall not, except by way of an appeal under Part VII, be questioned in any proceedings whatsoever on any of the grounds on which such an appeal may be brought."
There is a limited exception provided for by section 285(2) where a person was not served with a copy of the notice, did not know that it had been issued and could not reasonably have been expected to know.
The reference to the "validity" in section 285(1) might perhaps be thought to mean simply the formal validity of the notice. That, however, would not make sense, given the scope of the grounds on which an appeal can be brought to the Secretary of State, which include, in effect, the planning merits of the development enforced against and any existing use rights which are relevant. Thus it was that the House of Lords in Davy v. Spelthorne Borough Council [1984] 1 AC 262 noted that the word "validity" (in the predecessor section to section 285) really meant enforceability, Lord Fraser of Tullybelton saying at page 272 B-D;
"I note in passing that, although section 243(1)(a) provides that the "validity" of an enforcement notice is not to be questioned except as therein provided, the word "validity" is evidently not intended to be understood in its strict sense. It is used to mean merely enforceability. That appears from a consideration of the grounds on which an appeal may be brought under Part V of the Act of 1971, which are not limited to matters affecting the validity of the notice. The relevant grounds are set out in section 88(2), part of which I have already quoted, and it is apparent that paragraph (a) (at least) goes to the merits rather than to the validity (in the strict sense) of the notice. Accordingly, the fact that the respondent is not questioning the "validity" of the notice is immaterial."
What was also made clear in that decision was that the prohibition in section 285(1), as it now is, only applies to challenges on grounds which could have been raised on an appeal to the Secretary of State or one of his inspectors. A challenge on other grounds is unaffected by that prohibition.
The Issues
The main issues in this appeal concern the relationship between the 1994 CLU and the 1997 enforcement notice, particularly in view of Judge Kirkham's decision that section 285(1) did not override "the conclusive nature of the CLU" and that activities within the scope of the CLU were not in breach of the enforcement notice. On behalf of the County Council, Mr Dove QC contends that in so deciding the judge erred in law. It is submitted that it is well-established that, if existing use rights are not relied on as a ground of appeal to the Secretary of State under section 174(2) against an enforcement notice, they cannot subsequently be invoked on a prosecution for breach of the notice. The Divisional Court decision in Vale of the White Horse District Council v. Parker [1997] JPL 660 makes that clear, and other authorities make the same point in relation to proceedings for an injunction sought in support of an enforcement notice.
The fact that such existing use rights were reflected in a CLU in the past cannot, it is said, affect the position. Such a certificate is simply declaratory in effect. Mr Dove argues that, when section 191(6) refers to the lawfulness of the use dealt with by the certificate being "conclusively" presumed, the terminology seen by the judge as of great significance, it merely means that the certificate is conclusive as to what it states, namely that the use in question was lawful at the date of the application for it. It does not establish that the use, and hence its lawfulness, had continued up to the date of the enforcement notice subsequently issued. That is why a use specified in a CLU can be abandoned: see M and M (Land) Limited v. Secretary of State for Communities and Local Government [2007] EWHC 489 (Admin). If it is not then relied on as a ground of appeal against the enforcement notice, the latter supersedes it. This creates no unfairness, submits Mr Dove, because there was an opportunity to raise it on appeal. If that opportunity is not taken, there is no hardship or injustice in preventing the point being taken later.
In any event, in the present case the inspector who upheld the enforcement notice was aware of the CLU, even though it was not relied on as a ground of appeal, and took it into account in his decision. As a result of the interpretation he attached to the CLU, the inspector decided not to vary the terms of the enforcement notice to take account of it, because he concluded that that was unnecessary. That decision by him as to the meaning and effect of the CLU and his decision not to vary the enforcement notice in that regard were not challenged in the courts under section 289, as they could have been if he was thought to have erred in that part of his decision-letter. It is therefore submitted on behalf of the County Council that the argument accepted by the court below in these proceedings amounts to a belated and impermissible challenge to the inspector's decision.
Mr Dove also has a subsidiary argument, if it becomes necessary, based on the 1988 enforcement notice. He emphasises that that earlier notice prohibited the importation of waste material onto most of the Woodside site, including most of the smaller area covered by the 1994 CLU. But section 191(2) expressly provides that a use is only lawful if it does not contravene a requirement of an enforcement notice in force at the time of the application for a CLU, and the 1988 enforcement notice remained in force in 1994. It is not argued on behalf of the County Council that this rendered the CLU invalid: rather, it is submitted that as a matter of construction the CLU cannot have meant that the importation of waste was lawful, and that this supports the interpretation put on it by the inspector in 1999.
On behalf of Mr Challinor, Mr Anthony Smith QC submits that section 285(1) does not apply when one has a CLU in existence. He recognises that existing use rights cannot be relied on once an enforcement notice has come into force, but it is contended that such a certificate makes all the difference. It overcomes the problem which would arise if existing use rights could be relied on as a defence to a prosecution for breach of an enforcement notice: that could well involve magistrates having to decide the difficult question of whether such use rights had been proved. But a CLU does that for them.
In addition, reliance is placed on behalf of Mr Challinor on a line of authority beginning with Mansi v. Elstree Rural District Council [1965] 16 P and CR 153 and continuing with R v. Harfield [1993] 2 PLR 23 and Duguid v. Secretary of State for the Environment [2001] 82 P & CR 52 for the proposition that an enforcement notice cannot take away legally permitted rights. Consequently, Mr Smith argues that an enforcement notice cannot bite on a use which is lawful and that the courts should remove from the scope of an enforcement notice a use which is lawful. He accepts that if there was a total conflict between such a lawful use and an enforcement notice, such a limitation on the scope of the latter would amount to impugning the validity of the enforcement notice and be contrary to section 285(1). But it is contended that if there is only a partial conflict, there is no conflict with that sub-section because one would not be impugning the validity of the notice. It would not render the notice void.
So far as the 1988 enforcement notice is concerned, it is submitted that section 191(6) prevents the courts from looking behind the CLU because the latter is made conclusive. If the vires of the issuing of the CLU is not challenged at the time, it cannot subsequently be said that it was unlawful to issue it. Moreover, says Mr Smith, the 1988 enforcement notice must be read as a whole and its prohibition on the importation of waste was clearly aimed at preventing the deposit of waste materials on the land, not their temporary storage.
On these issues, similar arguments are advanced on behalf of Mrs Robinson by Ms Dilmitis, whom we allowed to address us as a form of Mackenzie friend. It is emphasised that the lawfulness of the use on the smaller area of the CLU had already been established by the existence of that certificate, which created a very different situation from one where someone is later seeking to raise the issue of existing use rights. In addition, reliance is placed on certain other arguments. It is said that the County Council's direct action involved a breach of Mrs Robinson's rights under Articles 6 and 8 of the European Convention on Human Rights and Article 1 of the First Protocol thereto. Moreover, it is argued that the County Council did not keep a proper record of the items taken from the site during their direct action and that Judge Kirkham failed to allow in her calculations for the full value of what was taken. Hence her figure of £179,035.94 is excessive.
Arguments were advanced on both sides about the justification or otherwise for the grant of an injunction to support the enforcement notice. I shall take those later as a specific topic.
Discussion
(a) The CLU and the Enforcement Notice:
It is an over-simplification and a misinterpretation of the authorities to contend that an enforcement notice cannot take away lawful use rights. It patently can have that effect in certain circumstances, and that is the undoubted result of section 285(1). Even in the absence of a CLU, a use which is within the existing use rights enjoyed by a piece of land is a lawful use: section 191(2) expressly provides that a use is lawful if it is immune from enforcement action because of the passage of time. Yet it has long been established that such lawful rights will be lost if an enforcement notice is served and the rights are not then raised as a ground of appeal. That is the result of section 285(1) and is recognised in cases such as R v. Smith (Thomas George) [1985] JPL 182 and the Vale of the White Horse District Council case (ante). In the latter, the Divisional Court found that the magistrates had been wrong in law in permitting a defendant to a prosecution to lead evidence to show that the land had been used for the purpose enforced against for a period in excess of 10 years prior to the issue of the enforcement notice. Section 285(1) prohibited any such course being adopted: see Otton LJ at page 667, applying the Smith case.
Another vivid illustration of the point is to be found in this court's decision in North West Estates plc v. Buckinghamshire County Council [2003] EWCA Civ 719, where it was held that it was not possible in defending injunction proceedings to raise matters which could have been raised in an appeal against the enforcement notice, such as lawful use rights. It was, said Ward LJ at paragraph 35, too late to raise such arguments.
Where the courts have said that an enforcement notice cannot take away lawful use rights, it has been said in a very specific context. One obvious such situation is where the statutory rights of challenge to the issue of the enforcement notice are still being pursued, so that the notice has not taken effect: section 285(1) allows such a challenge at that stage. Consequently, lawful use rights may be raised at that stage, with or without a CLU to demonstrate them, as a ground under section 174(2), and if demonstrated will prevail. The enforcement notice will be quashed or, as happened in Mansi, will be amended. The amendment in Mansi to the enforcement notice was to allow for the continuation of retail sales on a limited scale because there were use rights to that effect.
In Harfield, it was indeed said that
"No enforcement notice can take away these legally permitted rights" (per Latham J at page 30) (emphasis added).
However, it is important to note what "these" rights were. They were in fact the right to use land for purposes ancillary to a principal use which was not being enforced against, in that particular case to park some commercial vehicles ancillary to the use of the site as a petrol filling station. As the court pointed out, that could not have been raised as a ground of appeal against the enforcement notice itself, which related to the non-ancillary parking of commercial vehicles: see page 30. As a matter of interpretation the enforcement notice was to be construed so as to exclude such an ancillary use.
Finally, there is the case of Duguid, where this court held that it was unnecessary to amend an enforcement notice so as to safeguard those use rights which arose as a result of the permission granted generally by the General Permitted Development Order 1995 (see paragraph 30, ante) for a temporary use of land for not more than a certain number of days in the year. It was in that context, and indeed in the course of a statutory challenge under section 289 to an inspector's decision on an appeal against an enforcement notice, that Ward LJ said that such a notice could not take away legally permitted rights (see page 62). As he went on to say at page 63:
"There is … absolutely no need at all to refer to the GDPO because it operates as a matter of law within parameters that are certain, being those defined by the order itself."
In short, what this line of cases indicates is that an enforcement notice will be interpreted so as not to interfere with permitted development rights under the General Development Permitted Order or with rights to use land for a purpose ancillary to a principal use which is itself not being enforced against. The authorities go no further than that and certainly do not establish any general right to assert existing use rights at a time when the enforcement notice has come into effect after an unsuccessful appeal or in the absence of an appeal. Such rights must be asserted at the time of appeal against the enforcement notice. If the landowner sleeps on those rights, he will lose them. There is a sound practical reason for this, in that any other course would require the courts, including magistrates courts, to delve into the planning history of a site and into the use made of it over a number of years.
Is the position any different when existing use rights have been certified in a CLU? The first thing to note is that neither section 174(2), allowing for an appeal to the Secretary of State, nor section 285(1) with its prohibition on subsequent challenge, draws any distinction between lawful use rights covered by a CLU and those which are not. Moreover, the use in question is "lawful" at a particular time, whether a CLU exists or not: see section 191(2). On the face of it, one would not expect the existence of a CLU to make any difference to the effect of section 285(1).
Such a certificate may have the practical effect of reducing the amount of investigation into the past use of the land required of a court in subsequent proceedings, as Mr Smith argues. But it would not necessarily avoid such a requirement. A CLU only certifies that the use in question was lawful on the specified land at a particular point in time, namely the date of the application for the CLU: see section 191(4) and (5)(d). The conclusiveness of the presumption in section 191(6) relates only to the lawfulness of the use at that date. It will not always be an answer to a subsequent enforcement notice, even if it is raised on appeal, because the use may not have continued until the date of the issue of the notice: see the cases referred to in paragraph 31 of this judgment. That appears to have been the view of the inspector in the present case in respect of the use of the land as a plant hire contractor's yard, even though that had been the first of the two uses covered by the CLU.
Indeed, it has been held in the M and M (Land) Ltd case that a use certified by a CLU can be abandoned, despite section 191(6). It was held there that
"… section 191(6) does no more and no less than declare conclusively that at the point of time that the certificate refers to, that particular use is lawful in that it operates like a planning permission for a change of use which enures for the benefit of the land and makes a particular use lawful and then is spent. However, as I have said, the authorities are quite clear that that does not stand in the way of a permitted change of use being abandoned. ... A use permitted can be abandoned: a use that has been dignified with a certificate of lawful use can also be abandoned, notwithstanding the words of section 191(6)."
That decision in the High Court seems to me to be right and to accord with the other authorities to which I have just referred. It indicates both that the existence of a CLU does not necessarily overcome the problems facing a court if a subsequent challenge to an enforcement notice could be mounted and also that a CLU is only "conclusive" in a limited sense. The purpose of section 285(1), namely to resolve issues such as existing use rights as part of the process of appeal to the Secretary of State, could still be undermined if a CLU could be relied on at a later stage. There could be a considerable interval of time since the issuing of the CLU, during which time a site may have undergone a complex sequence of uses.
For my part, therefore, I conclude that the judge erred in regarding the activities covered by the 1994 CLU as exempt from the 1997 enforcement notice insofar as they took place on the smaller area of the CLU. The enforcement notice would prevail if there were any conflict between the two.
That takes me to Mr Dove's further argument which also seems to me to have merit, namely that the inspector in upholding the enforcement notice had to construe the CLU and that his construction of it was not challenged, as it could have been, in the courts. It was a construction which avoided any conflict between the CLU and the enforcement notice and it was relevant therefore to how the enforcement notice was ultimately worded as a result of the appeal. Whether the inspector's construction of the meaning of the CLU was right as a matter of law is not now an appropriate question. He expressly declined to vary the notice because he saw no conflict, and that decision is not now open to challenge in the courts, because the only statutory avenue of challenge was not followed. It is therefore unnecessary to decide now whether Mitting J's interpretation of the CLU is to be preferred if one were dealing with that issue in isolation from the enforcement notice. One is not, and that disposes of the point.
It follows that it is not strictly speaking necessary to decide whether the County Council's argument about the effect of the 1988 enforcement notice on the CLU is correct or not. I would only say two things. First, in my view Mr Smith is right to assert that once the CLU has been issued and the time for challenge, presumably by way of judicial review (see R v. Sheffield City Council, ex parte Russell [1994] 68 P and C R 331) had passed, one cannot seek to question the vires of its issue on the ground that it breached section 191(2)(b). Indeed, Mr Dove does not argue strongly to the contrary. Secondly, though the 1988 enforcement notice did require the importation of waste to an area which included most of the CLU land to cease, Mr Smith seems to me to be correct in arguing that this meant importation for the purpose of deposit in a permanent sense. That was the context of that requirement. So the judge below was right on this aspect of the case. However, for the reasons I have already indicated, it does not assist the defendants.
(b) The other issues
As I have said, Mrs Robinson argues that the direct action by the County Council in April 2003 to remove waste materials from the Woodside land was in breach of her rights under the European Convention on Human Rights. On this part of the case, I agree with Judge Kirkham's conclusion that no such breach was involved. Article 6(1) was not engaged. Whether or not the County Council should have given a warning before acting under section 178, which is what is now complained about, the action by the County Council did not involve a determination of the civil rights and obligations of either defendant. Moreover, recourse to the courts to challenge the legality of the action was available. As for Article 8, the right to respect for private and family life was not breached by the County Council's action. The right to peaceful enjoyment of property, provided for by Article 1 of the First Protocol, is of more obvious relevance. However, the action taken by the County Council was undoubtedly lawful under our domestic law and, given the duration of the breach of the enforcement notice, cannot be said to have been disproportionate. The enforcement notice had taken effect on or about 20 April 1999 and had been largely ignored by those in control of this land during the four years between then and the date of the direct action by the County Council. It is said on behalf of Mrs Robinson that that action was disproportionate because the County Council was aware of the CLU. No doubt it was, but it was also well aware of the 1997 enforcement notice and the inspector's decision on the limited effect of the CLU.
A point is taken on Mrs Robinson's behalf about the signing of the enforcement notice and of the warrant of entry. Those matters were dealt with by Judge Kirkham at paragraphs 74 and 89 of her judgment. She rejected Mrs Robinson's arguments on the basis of the evidence put before her. I see no reason for disturbing the judge's findings on this aspect of the case.
I was for a time troubled by the contention that the judge had not properly allowed in her calculations of the County Council's expenses for the resale value of the materials removed from the site. She allowed for the resale of plant and equipment, but it is said that she failed to do so in respect of soil and other materials which were removed. Having looked with care at the judgment, I am not persuaded that the judge erred in this respect. Her analysis of the sums due to the County Council, if they were entitled to anything, is lengthy and meticulous and produces a sum about £71,000 less than had been claimed. It is right that the defendants alleged that the material removed had certain values, but it must be implicit in the judgment that the judge could find no adequate evidential basis for those values. I conclude that the eventual figure at which she arrived was the best assessment she could achieve in the light of the evidence put before her by both sides. Consequently I would accept her figure of £179,035.94 as the County Council's proper expenses under section 178.
It is, however, accepted by the County Council that, as the defendants are sued for these expenses in their capacity as executors, their liability should be limited to the extent of the value of the estate. That would seem to be right, and any order of this court should reflect such a limitation. Whether or not it would have any practical effect on the County Council's recovery of the sum referred to in the previous paragraph has not been disclosed to the court.
Since the hearing of this appeal concluded, Mrs Robinson has written to complain that she was put at a disadvantage during that hearing because she did not have all the documents at the outset to which reference was then made. She also says that she was given lengthy additional documentation at the end of the first day's hearing, and that she was prejudiced by the civil and criminal appeals being dealt with together when she was not involved in the criminal appeal.
I can well understand a litigant in person, even with a Mackenzie friend to assist, finding some of the legal arguments in this case difficult to follow. However, I for my part cannot accept the points now being made. Virtually no reference was made during the hearing to the documents involved in the criminal appeal, it being accepted by all parties and the court that the main issues in the civil appeal were to all intents and purposes the same as those in the criminal. At no stage was any application made for an adjournment because of any problems in digesting any new documents. The court allowed Ms Dilmitis to speak on Mrs Robinson's behalf, which she did very ably, at some length and with apparent complete familiarity with the documents in the case. Sympathetic though one is to someone in Mrs Robinson's position, I cannot accept that she was in any way prejudiced by the way in which the hearing proceeded.
(c) The injunction
A permanent injunction is sought only against the first defendant, Mr Challinor. The principles on which the grant or refusal of an injunction in support of an enforcement notice will be determined are not controversial. Section 187B makes it clear that an injunction may be granted to restrain an actual or apprehended breach of planning control, whether or not the local planning authority have exercised any of their other statutory powers, and in South Bucks District Council v. Porter [2003] 2 AC 558 it was held that the court in considering whether to grant an injunction should take into account all the circumstances of the case. It should, however, not examine afresh matters of planning policy and judgment. Personal considerations may well be relevant, but so will the need to enforce planning control in the general interest. The House of Lords endorsed a statement made by Simon Brown LJ in the Court of Appeal in those proceedings, where he had said
"The degree and flagrancy of the postulated breach of planning control may well prove critical." (paragraph 20 (38))
Judge Kirkham in the present case refused a permanent injunction largely because of her decision about the effect of the CLU. Since I regard that decision to have been in error, the refusal of the injunction requires reconsideration. It is open to this court to arrive at its own decision on the application for an injunction, and Mr Smith on behalf of Mr Challinor welcomes a decision by this court, rather than a remission to the court below.
The County Council emphasises the length of time during which there has been non-compliance with the enforcement notice, which came into effect in April 1999. The activity prohibited by the notice persisted for four years until the County Council took direct action in early April 2003. Mr Dove points out also that it has never been suggested that the prohibited use was in any way acceptable in planning terms or did not cause significant damage to amenity. Mr Challinor has never sought planning permission for the use of Woodside for this purpose, not even when he appealed against the 1997 enforcement notice and could have easily raised the planning merits of the use under ground (a) of section 174(2).
In response, Mr Smith and his junior Mr Darby make a number of points. It is argued that the breaches of the enforcement notice have been more limited in recent times, with the judge finding that there had only been two breaches outside the smaller area of the CLU after the taking of direct action by the County Council in early April 2003. It cannot therefore be said that there has been a flagrant disregard of the enforcement notice during the more recent period. It is also emphasised that after March 2004 Mr Challinor was entitled to rely on Mitting J's judgment about the CLU.
I take that last point, but I do not find this general line of argument persuasive. There are a number of reasons for that. First, between the direct action in April 2003 and Mitting J's judgment almost a year later, the legal position remained as it had been since the inspector's decision in 1999, when the inspector had given his unchallenged ruling on the meaning and effect of the CLU and had refused to vary the enforcement notice. No court had ruled that that notice did not apply fully to the whole of the Woodside site. So one cannot confine one's attention to the breaches on that part of it outside the CLU area. It seems from the judgment below, paragraph 105, that there were some 21 breaches of the notice on the site as a whole after the taking of direct action in early April 2003. Secondly, even on Judge Kirkham's view of the legal effect of the CLU, there were still on her findings a number of breaches of the enforcement notice in April and June 2006: see paragraphs 155 and 157 of the judgment below. Thirdly, while the recent record of this defendant in respect of enforcement notice breaches is important, it must be remembered that there was an injunction already in force, albeit an interim one, after 23 July 2002, varied to some extent in March 2004 but still continued. The conduct of Mr Challinor while the subject of such an injunction can only provide very limited evidence as to his likely conduct, were an injunction not to be in place.
Finally, one must not lose sight of the extent and flagrancy of the breaches which occurred before the direct action in April 2003. That was a time when (a) there had been an interim injunction in force for over 8 months and (b) there was no court ruling suggesting that the CLU sanctioned the breaches. Yet the scale of the past activities on the Woodside site can be appreciated from the expenses of nearly £180,000 incurred by the County Council in removing waste from that site.
I conclude that there had been a flagrant non-compliance with the 1997 enforcement notice up until the interim injunction was imposed in July 2002 and that there has been a significant, if lesser, non-compliance since that date. A permanent injunction appears to be necessary if compliance by Mr Challinor with the enforcement notice is to be secured, and it is in the public interest that such compliance should be secured. None of the points raised nor any other circumstance seems to me to outweigh the need for, and the public interest in having, such an injunction. Its precise terms may need to be the subject of submissions, but provisionally I would favour wording along the following lines:
"That the first defendant be restrained, whether by himself, his servants or agents or by permitting any other person to so act, from using the land known as Woodside, Within Lane, Hopton, Staffordshire, shown edged red on plan WL2 attached to the enforcement notice dated 16 June 1997 from importing waste, handling, sorting, screening, storing, treating and disposal, or any of these, of waste materials and soils, save that the storage, distribution and general trading of materials already recovered from waste from demolition and construction sites for recycling and not requiring further sorting are not affected by this order insofar as such activities take place on the land hatched black on the attached plan and any such storage does not exceed 4 metres in height."
Conclusion
It follows that I would allow this appeal, would grant an injunction against the first defendant in the above terms, subject to any further argument on those terms and would order that judgment be entered against both defendants and each of them for £179,035.94, that amount to met from the estate of which they are the executors.
Lord Justice Hughes:
Section 285/section 191(6)
I agree that the plain purpose of the statutory scheme, and of section 285 in particular, is to prevent any challenge to the enforcement notice on grounds which can be raised before the Inspector under section 174, in any place other than before him, with appeal from him to the High Court and beyond on a point of law. If the Certificate of Lawful Use did provide an answer to the Enforcement Notice, that was a ground of challenge which could and should have been the subject of an appeal under section 174, invoking grounds (c) and/or (d). That is enough to conclude this appeal. In short, section 285 prevails over section 191(6). The latter establishes conclusively the lawfulness of the certificated use at the time of the CLU, but the issue must be raised in the manner prescribed by the statute, namely before the Inspector.
It is certainly possible to envisage rare cases in which this law may work some injustice. They will be confined to those in which both (a) there is a defect in the Enforcement Notice which can irrefutably be established, and (b) the landowner had an understandable reason for omitting to pursue a section 174 appeal. The coincidence of those factors will, I think, be rare. But it is not entirely unknown for administrative errors to lead to the issue of an Enforcement Notice when there is an existing planning permission, or Certificate of Lawful Use, and the chance of such error is no doubt increased if there are two different authorities concerned in the case. It is no doubt possible that a landowner might be absent abroad, ill, illiterate or simply may wrongly think that his CLU provides an answer and he need take no advice and do nothing. There is, we are told, no power even in an exceptional case to extend time for bringing a section 174 appeal. So in such a case, rare as it may be, the landowner could perhaps find himself with a cast iron defence to a prosecution under an Enforcement Notice, which he is prevented by section 285 from advancing.
I do not think that Mr Dove's analogy with limitation is a sufficient justification for treating this possible scenario as simply irremediable. It is one thing to impose a limit upon the time in which a man may bring an action against someone else. It is another to deprive him of the power to advance a cast iron defence so that he ends up convicted of an offence of which he is legally guilty but of which he ought not to be convicted.
It needs clearly to be said that the theoretical scenario which I am presently envisaging is not the present case. The CLU in this case did not provide a cast iron defence. On the contrary, its meaning and extent was very much in question. But quite apart from that, Mr Challinor did not reasonably omit to make a section 174 appeal against the Enforcement Notice. He lodged such an appeal. He then added ground (d) but not ground (c). And then he abandoned ground (c), and indeed all grounds other than (b) and ran the appeal solely on the meaning of 'waste transfer station'. He was represented by extremely experienced leading counsel with special skill in planning, and by a planning consultant. His decision not to run the CLU as a challenge to the Enforcement Notice was plainly deliberate. Likewise, his decision not to appeal to the High Court on the grounds that the Inspector's limited adjustment of the Enforcement Notice involved a wrong construction of the CLU, must also have been a considered one. There is in this case no question of Mr Challinor having any excuse for not raising the CLU point in the statutory appeal. Mr Dove is right to say that his consequent inability to raise it in the civil and criminal cases which followed is a self-inflicted wound.
It follows that we are not concerned with a case such as I have envisaged in paragraph 2. If such a case were to arise, then the courts do, as it seems to me, have limited capacity to address it. Firstly, so long as the court retains the rarely exercised but important power to stay a prosecution on the grounds that it is an abuse of the process of the court, under the second limb of the law as explained by the House of Lords in R v Horseferry Road Magistrates Court ex p Bennett [1994] 1 AC 42, the criminal court has available the means of preventing the gross injustice of a conviction. Secondly, the civil court plainly retains a discretion whether or not to grant an injunction if one is sought, and it might be very relevant if the scenario were that envisaged. Whether, if direct action had also followed without the error being appreciated, there would exist any defence to a claim for expenses incurred, for example on the basis that they were not reasonably incurred (s 178(1)(b)) is a question which can safely be left for the day it happens, improbable as it plainly is.
The meaning of the CLU
Since the case is concluded by section 285, we do not get to the issue of what is the correct construction of the CLU. For myself, if the issue were one which had to be resolved, I would see some force in the reasoning of Mitting J and Judge Kirkham. A CLU can of course be refused, but if granted it will often be granted in the terms in which the application is framed. I am by no means convinced that in 1994 Mr Challinor's father, who framed this application, had in mind the highly technical law of waste and the specialised meaning which 'recovered' bears within it. Of course, it is more possible that a planning officer who granted the CLU addressed such technical meaning, but I am unpersuaded that he did; if he had, he would surely have told Mr Challinor what he meant. I acknowledge also that the meaning of the CLU, and any other public planning document, is a matter for objective construction rather than for resolution simply according to what those concerned with its production thought they were saying. Thus the question is not a simple one. But all that is irrelevant, and for two reasons. First, section 285 means that the CLU cannot be raised, whatever it means, in either the civil action or the criminal prosecution. Second, the Inspector's decision on the ambit of the Enforcement Notice, and any re-wording to allow for the uses permitted by the CLU, was never appealed, as it could have been if Mr Challinor wanted to say it was wrong. This is precisely the kind of question which is, by section 285, for the planning appeal structure, informed by the planning history and the often rather arcane expertise of that discipline, and not for a later criminal or civil court. It is too late to advance Mitting J's alternative construction now.
The 1988 Enforcement Notice
If the construction of the CLU had been in issue, I would not have been persuaded that the 1988 Notice was in this case of any significant help. Of course, section 191(2)(b) means that a CLU ought not to be granted if the uses certified would conflict with the requirements of an existing EN. But if nevertheless such a certificate is granted, section 191(6) makes its terms conclusive as to what is lawful. No doubt a CLU subsequent to an EN will be construed, so far as it properly can be, as consistent with the earlier EN. But in this case, I simply do not think that the 1988 EN and the 1994 CLU really addressed comparable issues.
Conclusion
I respectfully agree that this appeal must be allowed for all the reasons given by Keene LJ. Subject to any additional submissions, I also agree with his proposed formulation of the injunction.
Lord Justice Rix:
I agree with both judgments. | 3 |
Mr Justice Newey :
In these proceedings, a disqualification order under the Company Directors Disqualification Act 1986 ("the CDDA") is sought against the Defendant, Mr Kirankumar Mistry.
The case is an unusual one. Applications under the CDDA are normally made by the Secretary of State for Business, Innovation and Skills or the Official Receiver against individuals who are or have been company directors. The present case, in contrast, is founded on Mr Mistry's conduct in relation to companies of which he was a liquidator; it is not suggested that he was ever a director of any of the companies. Further, the application is not brought by the Secretary of State or Official Receiver but by liquidators; the Claimants, Mr Nicholas Wood and Mr James Earp, who are partners in Grant Thornton UK LLP, are the present liquidators of the relevant companies.
Basic facts
After reading physics at Manchester University, Mr Mistry qualified as a chartered accountant in 1990 and became a licensed insolvency practitioner in 1997. By the time of the events at issue in this case, Mr Mistry was a partner in HKM Harlow Khandhia Mistry ("HKM"), an accounting firm and insolvency practice based in Leicester.
By the summer of 2003, Mr Mistry was in discussion about the possibility of acting as liquidator for some 100 companies that had been established and run by Safe Solutions Accounting Limited and what was then Safe Solutions Management Services Limited ("the Safe Solutions Companies"). The Safe Solutions Companies provided a tax-saving scheme to individuals coming to work in the United Kingdom on a temporary basis. The scheme involved setting up personal service companies ("PSCs") through which the individuals would provide their services. Each PSC would employ up to ten of the participants, who would also become shareholders in the PSC. Each participant would be paid the minimum wage, less deductions for PAYE and National Insurance Contributions, by his PSC. The balance of the earnings would be distributed by way of dividend, after deduction of an administration charge and a retention to cover corporation tax on the PSC's profits. The scheme was lawful at the time, provided that it complied with the requirements of the "Intermediaries' Legislation" (known as "IR35") which was introduced on 6 April 2000. The companies of which it was proposed that Mr Mistry should become a liquidator were all PSCs.
The Safe Solutions Companies were controlled by Mr John Hill, his son Mr Timothy Hill and Mr Kevin Goddard. The last of these was a chartered accountant who ran Goddards, a firm of chartered accountants. Mr Mistry had, I gather, been introduced to Mr Goddard in about late 2002 by Mr Derek Williamson, an accountant/bookkeeper working for Goddards.
Between August 2003 and July 2004, Mr Mistry became a liquidator or administrator of 92 PSCs. Mr Mistry and another partner in HKM, Mr John Harlow, were appointed as joint liquidators of ten PSCs on 26 August 2003. Another 44 PSCs went into creditors' voluntary liquidation in batches on 14 October 2003, 18 December 2003, 20 January 2004, 26 February 2004 and 18 March 2004, in each case with Mr Mistry and Mr Harlow as the joint liquidators. Between 14 May and 26 July 2004, a further 38 PSCs went into administration with Mr Mistry and Mr Harlow as joint administrators.
All the companies in a batch would be put into liquidation together. For instance, a single creditors' meeting was held in respect of the nine companies comprising the batch that went into liquidation on 14 October 2003. Mr Mistry and Mr Williamson were both present. Mr Williamson was there as a creditor in his own name for a nominal sum (£5), and as representing the director of the PSCs (namely, Safe Solutions Management Services Limited) and the PSCs' major creditor (which was said to be another company in the Safe Solutions group, Safe Solutions Accounting Services Limited). Mr Williamson and Safe Solutions Accounting Services Limited ("SSAS") apart, no creditors were identified.
Asegaai Consultants Limited ("Asegaai"), one of the PSCs in the 14 October batch, was typical. According to its statement of affairs, Asegaai owed £5 to Mr Williamson and £102,615.48 to SSAS. No assets were identified other than cash at bank of £881.41. The company's history was summarised in these terms:
"Asegaai Consultants Limited was incorporated on 29 October 1997 with a view to managing a number of IT contractors. It commenced trading on 1 September 1998 but in March 2003 the consultants commenced returning to Australia, and by 30 July 2003 the company had ceased trading, as it had no consultants and there was no further income being generated.
The company had sustained losses of £101,835.54, which effectively was funded by the managing agents Safe Solutions Accounting Services Limited, who are a creditor for £102,615.48. There are no other known creditors".
Mr Mistry took no further appointments in respect of PSCs after the batch of 26 July 2004 because his insolvency licence was successively restricted and withdrawn. His licence was restricted for reasons unconnected with the PSCs on 27 July 2004 following a monitoring visit by the Joint Insolvency Monitoring Unit ("JIMU") of the Institute of Chartered Accountants in England and Wales ("ICAEW"), and in April of 2005 Mr Mistry was informed that the Insolvency Licensing Committee of the ICAEW had decided to withdraw his licence altogether. An appeal against that decision was, however, successful, and by February 2006 Mr Mistry once again held an unrestricted licence. The Review Committee of the ICAEW said that it "share[d] JIMU's concern that [Mr Mistry] has at a certain time in his career and over a period, conducted himself and his practice in a way which fell below the standard expected of the Institute of which he was a member", but considered that Mr Mistry had "taken JIMU's concerns very seriously indeed and … gone to considerable lengths and cost to address them". It also attributed events to Mr Mistry "being, from time to time, overworked, inadequately trained and inexperienced and naïve".
The Claimants became the liquidators of the companies at issue in these proceedings at about this point. They had already, in the latter part of 2005, been appointed as liquidators of the Safe Solutions Companies at the instigation of HM Revenue and Customs ("HMRC"), who had been investigating the Safe Solutions Companies since March 2005. On 8 March 2006, the Claimants were also appointed as liquidators of 64 PSCs. The PSCs in question comprised the 44 of which Mr Mistry and Mr Harlow had become liquidators and 20 further PSCs which had gone into liquidation with Mr Harlow alone as liquidator between December 2004 and February 2005, during the period that Mr Mistry's insolvency licence was restricted. Later in 2006, the Claimants replaced Mr Mistry and Mr Harlow as the administrators of the 38 PSCs that had gone into administration between May and July of 2004. However, the Claimants never became liquidators of the first batch of PSCs to go into liquidation, in August 2003, since these companies had been dissolved.
During 2006, the Safe Solutions Companies, by the Claimants as liquidators, brought proceedings against Mr John Hill, Mr Timothy Hill and Mr Goddard. Some £21 million was claimed. £18 million was subsequently recovered under a compromise and from other sources.
A bankruptcy order was made against Mr Mistry on 11 January 2011. The order was based on a guarantee Mr Mistry had given in respect of a loan made to WM Proserv LLP, of which Mr Mistry had become a partner. As a result of his bankruptcy, Mr Mistry was unable to use his accountancy qualification, and he had surrendered his licence as an insolvency practitioner in December 2010. His bankruptcy has now, however, been discharged, and it is open to him to re-apply for membership of the ICAEW and his insolvency licence. When giving evidence, he said that he had not yet decided whether to re-apply for his licence.
Legal framework
Statutory provisions
While applications under the CDDA are generally made by the Secretary of State or Official Receiver, section 16 of the Act makes provision for disqualification orders under sections 2-4 to be sought by a wider range of applicants. Section 16(2) is in these terms:
"An application to a court with jurisdiction to wind up companies for the making against any person of a disqualification order under any of sections 2 to 4 may be made by the Secretary of State or the official receiver, or by the liquidator or any past or present member or creditor of any company in relation to which that person has committed or is alleged to have committed an offence or other default."
The potential applicants thus include liquidators.
Section 4 of the CDDA, which is one of the provisions referred to in section 16(2), is headed, "Disqualification for fraud, etc., in winding up". So far as relevant, section 4(1) reads:
"The court may make a disqualification order against a person if, in the course of the winding up of a company, it appears that he—
(a) has been guilty of an offence for which he is liable (whether he has been convicted or not) under section 993 of the Companies Act 2006 (fraudulent trading), or
(b) has otherwise been guilty, while an officer or liquidator of the company receiver of the company's property or administrative receiver of the company, of any fraud in relation to the company or of any breach of his duty as such officer, liquidator, receiver or administrative receiver".
Unlike sections 6 and 8, under which most disqualification orders are made, section 4 is not confined to company directors. It extends, in particular, to liquidators. A disqualification order can be made under section 4(1)(b) against a liquidator who has been "guilty … of any fraud in relation to the company or of any breach of his duty as such … liquidator".
Section 4 is, in its origins, rather older than sections 6 and 8, which allow for disqualification where a person's conduct has shown him to be unfit to be concerned in the management of a company. A power to disqualify a person on the basis of unfitness was first introduced by the Insolvency Act 1976. A provision very comparable to section 4 of the CDDA had been included in the Companies Act 1948, though the equivalent of what is now section 4(1)(b) (viz. section 188(1)(b)(ii) of the 1948 Act) made no reference to liquidators, receivers or managers of a company's property until it was amended by the Companies Act 1981. As first enacted, section 188(1)(b)(ii) was limited to fraud and breaches of duty by an "officer".
One difference between sections 4 and 6 of the CDDA is that the former provision (like section 8) confers a discretion on the Court. Section 6 stipulates that, if satisfied that the conditions set out in section 6(1)(a) and (b) are met, the Court "shall" make a disqualification order; disqualification is mandatory. In contrast, section 4 says that the Court "may" make an order.
Whichever section of the CDDA such an order is made under, a disqualification order will be:
"an order that for a period specified in the order—
(a) [the person] shall not be a director of a company, act as a receiver of a company's property or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company unless (in each case) he has the leave of the court, and
(b) he shall not act as an insolvency practitioner".
(See section 1(1) of the CDDA.)
Authorities
In Re Adbury Park Estates Ltd [2003] BCC 696, a shareholder applied pursuant to section 4 of the CDDA for disqualification orders to be made against the liquidators of a hopelessly insolvent company. Jacob J refused the application on two grounds: first, that the applicant had no standing to bring the application and, secondly, that the application anyway had no merit.
With regard to the applicant's standing, Jacob J said this (at 698):
"The company is hopelessly insolvent. It follows that the two individuals concerned, the liquidators, are principally concerned with apportioning the company's assets amongst the creditors. [The applicant] is not a creditor, and so to the extent that the liquidators make an error in admitting to proof, or not admitting to proof, debts, he is wholly unaffected. He cannot be a victim of any maladministration by the liquidators of their duties. In those circumstances, it is submitted that [the applicant] has no standing to make this application. I think that submission is right. It cannot be right that [the applicant] sets himself up as some kind of public prosecutor for the general interests of the public to complain about what has been done or done wrongly by these liquidators. The fact that he was a director once makes no difference. Of course, the Secretary of State, if he comes to the conclusion that there has been some sort of maladministration warranting disqualification can apply under s.4. I was told that [the applicant] has made no complaint to the Secretary of State. It was suggested that if I thought that there was sufficient to look into that I ought to adjourn the matter for the Secretary of State to make representations. Quite apart from the fact that I do not so think, such a course would be wholly unjust and wrong. If a disinterested person thinks that a liquidator's conduct warrants disqualification, then the proper person to report it to is the Secretary of State, not to bring proceedings before the court and then ask the court to refer it to the Secretary of State."
Jacob J went on to observe, citing in particular Deloitte & Touche AG v Johnson [1999] 1 WLR 1605, that "[t]he authorities make it plain that complaints of this nature can only be made by those who have an interest in the result of the case, in the sense of the remedy that is to be provided". He ended this section of his judgment by saying this (at 700):
"I unhesitatingly conclude that [the applicant] has shown no interest in the order … which he seeks. He does not have standing to bring this application."
As for the merits of the application, Jacob J concluded (at 700):
"People make mistakes; they sometimes make big mistakes. These liquidators did make mistakes, but there is nothing that suggests that the way they made the mistake amounts to such conduct that they are not fit to be liquidators. On the contrary, as soon as they found out their mistake they put it right".
A little earlier in his judgment, Jacob J had said this:
"It is plain as anything that the conduct which merits disqualification has to be, if not fraudulent, at least very serious. One only has to stand back for a moment to think of the purpose of the section. It is to take off the road a liquidator who is either fraudulent or has conducted himself in such a way that in the public interest he ought not to be allowed to do the job any more. Thus, although the section formally gives jurisdiction for any breach of his duty, one does not look for trivial breaches or breaches which are the result of a mistake, one is looking for something worse. [Counsel for the applicant] recognised that. He said that the conduct of the liquidators amounted to reckless indifference to their duties, or incompetence amounting to a gross dereliction of duty."
Deloitte & Touche AG v Johnson, to which there was reference in the Adbury case, involved an application by defendants to proceedings brought by a company in liquidation for the liquidators to be removed on the basis that they had a conflict of interest. The Privy Council upheld a decision dismissing the application, which was made under section 106 of the Companies Law (1998 rev.) of the Cayman Islands. Lord Millett, giving the judgment of the Privy Council, said this (at 1611):
"In their Lordships' opinion two different kinds of case must be distinguished when considering the question of a party's standing to make an application to the court. The first occurs when the court is asked to exercise a power conferred on it by statute. In such a case the court must examine the statute to see whether it identifies the category of person who may make the application. This goes to the jurisdiction of the court, for the court has no jurisdiction to exercise a statutory power except on the application of a person qualified by the statute to make it. The second is more general. Where the court is asked to exercise a statutory power or its inherent jurisdiction, it will act only on the application of a party with a sufficient interest to make it. This is not a matter of jurisdiction. It is a matter of judicial restraint. Orders made by the court are coercive. Every order of the court affects the freedom of action of the party against whom it is made and sometimes (as in the present case) of other parties as well. It is, therefore, incumbent on the court to consider not only whether it has jurisdiction to make the order but whether the applicant is a proper person to invoke the jurisdiction.
Where the court is asked to exercise a statutory power, therefore, the applicant must show that he is a person qualified to make the application. But this does not conclude the question. He must also show that he is a proper person to make the application. This does not mean, as the plaintiff submits, that he 'has an interest in making the application or may be affected by its outcome.' It means that he has a legitimate interest in the relief sought. Thus even though the statute does not limit the category of person who may make the application, the court will not remove a liquidator of an insolvent company on the application of a contributory who is not also a creditor: see In re Corbenstoke Ltd. (No. 2) [1990] B.C.L.C. 60. This case was criticised by the plaintiff: their Lordships consider that it was correctly decided.
The standing of an applicant cannot therefore be considered separately and without regard to the nature of the relief for which the application is made. Section 106(1) does not limit the category of persons who may make the application. The plaintiff, therefore, does not lack a statutory qualification to invoke the section. But the question remains whether it has a legitimate interest in the relief which it seeks. It is not asking the court to appoint a liquidator to fill a vacancy. It is asking the court to remove incumbent liquidators for cause. The English cases relied upon by the plaintiff show that an interest which is sufficient to support an application of the former kind may not be sufficient to support an application of the latter kind.
The company is insolvent. The liquidation is continuing under the supervision of the court. The only persons who could have any legitimate interest of their own in having the liquidators removed from office as liquidators are the persons entitled to participate in the ultimate distribution of the company's assets, that is to say the creditors. The liquidators are willing and able to continue to act, and the creditors have taken no step to remove them. The plaintiff is not merely a stranger to the liquidation; its interests are adverse to the liquidation and the interests of the creditors. In their Lordships' opinion, it has no legitimate interest in the identity of the liquidators, and is not a proper person to invoke the statutory jurisdiction of the court to remove the incumbent office-holders."
The scope of section 4(1)(b)
Mr Donald Lilly, who appeared for Mr Mistry, argued that serious misconduct is required for a disqualification order to be made pursuant to section 4(1)(b) of the CDDA. Mr Lilly accepted that, since section 4(1)(b) speaks of "any breach of duty" (emphasis added), any breach of duty by a person as a liquidator is strictly capable of giving the Court jurisdiction to make a disqualification order, but he said that the Court would not be justified in exercising its power to disqualify if the misconduct was not serious. In support of this submission, Mr Lilly referred to the passages from Jacob J's judgment in the Adbury case that are quoted in paragraph 21 above. Mr Lilly submitted that Jacob J had been right to take the view that "the conduct which merits disqualification has to be, if not fraudulent, at least very serious".
For my part, I cannot envisage circumstances in which the Court would exercise its discretion to make a disqualification order against a liquidator without serious misconduct having been established. That is not to say that each breach of duty alleged must, individually, be serious if it is to be relevant. Were a serious breach of duty established, the Court could surely take other, less important breaches into account when deciding what, if any, order to make under section 4. A number of relatively minor breaches of duty could also, taken together, be thought serious enough to warrant a disqualification order.
Standing
One of the grounds on which Jacob J declined to make a disqualification order in the Adbury case was that the applicant had "no interest in the order … which he seeks" and so no standing to bring the application. Mr Lilly, in well-judged submissions, argued that the Claimants in the present case also have no interest in the relief sought and, hence, that they lack standing to make the application. While, given the terms of section 16(2) of the CDDA, the Court might have jurisdiction to make a disqualification order on an application by liquidators, the Court should (Mr Lilly said) decline to entertain the Claimants' application as a matter of judicial restraint or in the exercise of its discretion. Mr Lilly submitted that the Claimants are unable to point to any genuine interest they have in the relief sought. He suggested, moreover, that allowing the Claimants to pursue the proceedings would raise the prospect of liquidators:
i) depleting a company's assets for the purposes of a claim that gives no discernible benefit to creditors;
ii) litigating disqualification claims where the Secretary of State has either (a) not considered whether they would be in the public interest or (b) decided that they would not be in the public interest; and
iii) adopting investigative and claim procedures that are not subject to the requirements as to fairness imposed on the Secretary of State (compare Re Finelist Ltd [2003] EWHC 1780 (Ch), [2004] BCC 877).
The views that Jacob J expressed in Adbury on standing have been the subject of some criticism. Walters and Davis-White, "Directors' Disqualification & Bankruptcy Restrictions", 3rd. ed., suggests (at paragraph 7–43) that, "contrary to the view of Jacob J., there is no need for a creditor or shareholder to show that they have a financial interest before they are entitled to bring disqualification proceedings under any of CDDA ss.2–4". Mithani: Directors' Disqualification comments (in a footnote to paragraph III[4]):
"On the basis of the reasoning in Re Adbury Park Estates Ltd, neither a liquidator nor any member (past or present) nor a creditor of a company may bring or continue disqualification proceedings under ss 2–4 unless the Secretary of State has consented to the proceedings being brought by such a person. Given that the provisions of s 16(2) specifically empower such persons to bring disqualification proceedings under ss 2–4, the reasoning in the case — which goes against the plain words of s 16(2) — is difficult to understand. It is probably appropriate to confine it to its own particular facts. On the facts: (a) the liquidators against whom disqualification proceedings had been brought had done no more than make genuine mistakes which they had put right as soon as they discovered them; (b) the court was not satisfied that the applicant's motive for bringing the proceedings was genuine; and (c) the applicant had delayed over two years before bringing the proceedings. If there was any real public interest in having the respondents disqualified, then 'standing by and letting them practise their trade … [was] somewhat inconsistent with the stand that [the applicant] took.'"
Whether or not such criticisms are well-founded in relation to applications by shareholders (such as that before Jacob J in the Adbury case), I do not think it can be the case that a liquidator can apply under section 4 of the CDDA only if he has a financial interest in a disqualification order being made. In the first place, it is difficult to think of a situation in which a liquidator would ever have such an interest. To require such an interest would thus mean that liquidators could not in practice make applications under section 4. That, however, would seem to run counter to section 16(2), which expressly provides for applications by liquidators.
A second point is that it is hard to see why a financial interest should necessarily be a prerequisite of an application under section 4 of the CDDA. The purpose of disqualification is essentially, after all, the protection of the public, not private advantage. Why then need an applicant always have a personal financial interest? In fact, even the Secretary of State and the Official Receiver would presumably be unable to apply under section 4 if a personal financial interest were invariably required.
Of course, the Secretary of State and the Official Receiver are obviously appropriate people to seek relief in the public interest. However, liquidators also have a public interest role. Under the Companies Act 1862, the Court was empowered by section 167 to direct a liquidator to bring a criminal prosecution; in In re London and Globe Finance Corporation Ltd [1903] 1 Ch 728, Buckley J said (at 734) that it was "plain that the principle upon which [he was] to apply, or refuse to apply s.167 is not measured or limited or even concerned with pecuniary benefit to be obtained for the shareholders or creditors". No equivalent of section 167 of the 1862 Act now exists, but it remains the case that a liquidator's functions extend beyond the collection and distribution of assets (important though his responsibilities in that regard are). In In re Pantmaenog Timber Co Ltd [2003] UKHL 49, [2004] 1 AC 158, Lord Walker of Gestingthorpe said (at paragraph 77):
"winding up has, and has had almost throughout the history of company law, a dual purpose. One purpose is the orderly settlement of a company's liabilities and the distribution of any surplus funds, prior to the company being dissolved. The other is the investigation and the imposition of criminal or civil sanctions in respect of misconduct on the part of persons (especially directors of an insolvent company in compulsory liquidation) who may be shown to have abused the privilege of incorporation with limited liability. The first function is primarily a concern of a company's creditors and shareholders; the second function serves a wider public interest."
In similar vein, Lord Millett said (at paragraph 63):
"The liquidator's functions in relation to the company which is being wound up are not and never have been limited to the recovery and distribution of the company's assets."
In the circumstances, I do not accept that the situations in which liquidators can properly apply for a disqualification order under section 4 of the CDDA are as limited as Mr Lilly suggested. That said, it will no doubt be a relatively rare case in which it would be appropriate for a liquidator to make an application under section 4. A creditor might well have legitimate grounds for complaint if such an application involved any substantial depletion of the company's assets without his consent. An application would doubtless be dismissed if shown to have been brought for an improper ulterior purpose. It may well be that an application would not be allowed to proceed either if the Secretary of State indicated that he considered that a disqualification order would not be in the public interest.
In my view, it would not be right (whether as a matter of judicial restraint, discretion, or otherwise) to deny the Claimants' standing to apply for a disqualification order against Mr Mistry. The reasons include these:
i) There is no reason at all to think that the Claimants have an improper ulterior motive;
ii) This is not a case in which company assets are being used to the prejudice of creditors without their consent. The only legitimate creditors of the PSCs appear to be HMRC, and they fully support the application. Mr Walsh noted in his affidavit:
"It is a matter of extreme concern to HMRC that a licensed insolvency practitioner has been involved in the deliberate removal of monies from cases under his control for his own benefit and to the detriment of HMRC";
iii) Far from complaining that the liquidators are misusing company assets, HMRC have provided funding for the proceedings;
iv) HMRC themselves have a legitimate interest in the application. They are creditors in very many liquidations and other insolvency procedures. It is understandable that they should not wish a liquidator who has acted fraudulently (as Mr Mistry is alleged to have done) to act as an insolvency practitioner in the future;
v) The Secretary of State has not indicated that he considers the proceedings to be contrary to the public interest. When approached about the possibility of becoming a co-Claimant, the Insolvency Service explained that the Secretary of State was not in a position to do so, in particular because there was insufficient time to undertake the necessary work before the trial. The Insolvency Service also, however, referred to the Secretary of State "supporting in principle the disqualification in the public interest of anyone responsible for the wrongdoing [the Claimants] allege" and observed that the Claimants' position as joint liquidators appeared "inherently different" to that of the contributory in the Adbury case;
vi) Mr Lilly conceded that, if the allegations made against Mr Mistry were well-founded, there would be a public interest in a disqualification order being made; and
vii) The Claimants accepted for the purpose of the present proceedings that they, like the Secretary of State, should be subject to the requirements as to fairness explained in the Finelist case. They maintained that they had in fact presented the case against Mr Mistry fairly, and I see no basis for disagreeing.
Evidence
The Claimants' witnesses comprised Mr Wood, the First Claimant; Mr Kevin Hellard, another partner in Grant Thornton whom Mr Wood asked to investigate Mr Mistry's conduct as liquidator; Mr Eugene Walsh, an officer of HMRC whose responsibilities have included matters relating to the Safe Solutions group and the PSCs of which Mr Mistry became liquidator or administrator; and Miss Louise Bell, a partner in the Claimants' solicitors, Gateley LLP. Sensibly, Mr Lilly did not suggest that any of these witnesses was other than truthful.
Mr Mistry also gave evidence. He remained impressively calm and courteous during his cross-examination despite the seriousness of the accusations being made against him. He was also at times an appealingly rational witness, acknowledging the logic of points even if he did not accept them. Nonetheless, I have concluded that I cannot treat Mr Mistry as a reliable witness. It seems to me that his evidence was informed by his knowledge of what other evidence was available: he tailored his own evidence to fit in, so far as possible, with the other evidence before the Court. When giving judgment in 2010 in Re Mumtaz Properties Ltd, following a trial where Mr Mistry had been a witness, Judge Simon Brown QC concluded that Mr Mistry and one of the parties had told the Court "bare faced lies". I am afraid that I consider that Mr Mistry knowingly gave untruthful evidence in these proceedings too.
The Claimants served a hearsay notice in respect of evidence Mr Williamson gave when interviewed on behalf of the Claimants on 8 April and 22 September 2009. The value of that evidence is, however, very doubtful. Not only was there no opportunity for Mr Lilly to test Mr Williamson's evidence in cross-examination, but (a) some of the evidence Mr Williamson gave when being interviewed appears to have been incorrect and, indeed, untruthful and (b) there is reason to think that Mr Williamson may himself have been complicit in any fraud Mr Mistry might have committed. In the circumstances, I do not think I should place any substantial weight on Mr Williamson's interviews when considering factual disputes.
Payments to IIAS and Dreamcast
Allegations
Four of the allegations made against Mr Mistry can conveniently be considered together. They concern (a) payments of £750 which were made by many of the PSCs of which Mr Mistry was liquidator to Independent Insolvency Advisory Service Limited ("IIAS"), a company of which Mr Williamson was the sole director and shareholder, and (b) payments which IIAS made to Dreamcast Limited ("Dreamcast"), a Mauritian company which Mr Mistry controlled and of which he was the beneficial owner.
In the form in which they were pursued at trial, the relevant allegations were expressed in these terms:
"i. Mr Mistry, whilst acting as liquidator of the Companies [i.e. the PSCs of which the Claimants subsequently became liquidators], remitted monies he had dishonestly obtained from the Companies to an offshore vehicle (Dreamcast) which he controlled.
ii. Mr Mistry concealed the fact that he was diverting funds from the Companies for his own use by employing a third party (Mr Williamson) to act as a conduit for the funds.
iii. To secure Mr Williamson's co-operation, Mr Mistry paid IIAS/Mr Williamson fees … to which IIAS/Mr Williamson were not entitled.
iv. Mr Mistry made payment from the insolvent estates of the Companies of invoices raised by IIAS/Mr Williamson which he knew to be false".
Mr Wood summarised the Claimants' case in relation to these allegations in these terms in one of his affidavits:
"The allegations of fraud which are made against Mr Mistry are that whilst he was liquidator of the Companies, he paid invoices which he knew to be fraudulent (from funds provided for the purposes of the liquidations …) to a third party who, acting on the instructions of Mr Mistry, paid the majority of those receipts to an offshore company known as Dreamcast Limited …. Dreamcast is a company controlled by Mr Mistry".
Factual history
Mr Williamson was paid £250 for each of the ten PSCs that went into liquidation in August 2003 (or possibly for all but one of those PSCs). For the next batch of PSCs, comprising nine companies that entered liquidation in October 2003, Mr Williamson received £500 per company. Each invoice was issued in Mr Williamson's own name and stated to be for assistance in the preparation of the statement of affairs.
There was reference to the change from £250 per company to £500 in correspondence between Mr Mistry and Mr Williamson. In a letter to Mr Mistry of 6 October 2003, Mr Williamson said:
"As you know, although we agreed for me to be paid £500 per company on the Safe Solutions jobs; it was reduced to £250 for the first 10 companies.
With your revised fees, I will be charging £500 per company from now on for both Safe Solutions companies and others".
Writing to Mr Williamson on 24 November 2003, Mr Mistry said:
"My revised fee is now a total of £2643.75 per company and on this basis, you are charging £500 per company for assistance in the preparation of the Statement of Affairs and ancillary assistance as required in respect of queries received in relation of the companies".
In his second affidavit, Mr Mistry explained that "[t]he increase to £500.00 reflected the beyond anticipated time spent by [Mr Williamson] at [creditors'] meeting[s] caused by the attendance of the HMRC officers and the questions asked by them at each of those meetings".
By December 2003, Mr Williamson was no longer billing in his own name. Invoices for the £500 payments were instead raised by IIAS.
It was also at this stage that additional payments of £750 per company began to be made. In respect of each of the PSCs that went into liquidation on 18 December 2003, IIAS was paid £750 for "additional work" as well as £500 for "assistance with the preparation of the Statement of Affairs". Payments totalling £1,250 (i.e. £500 plus £750) were also made to IIAS in respect of other PSCs of which Mr Mistry became a liquidator or administrator.
By way of example, IIAS issued two invoices to the liquidators of Ballito Limited, one of the PSCs that went into liquidation on 20 January 2004. The first, dated 23 January 2004, was for £500 and was stated to be for "assistance with the preparation of the Statement of Affairs for 'Ballito Ltd'". The second invoice, dated 2 February 2004, claimed £750 for "additional work on Ballito Ltd as requested and agreed".
IIAS was itself invoiced by Dreamcast. Three invoices were raised. The first, dated 8 January 2004, was for £12,000; the second, dated 13 February 2004, was for £17,000; and the third, dated 24 August 2004, was for £26,250. The earlier two were stated to be for "Professional services pursuant to consultancy agreement". The last invoice identified the services rendered as "Consultancy and Business Services Pursuant to Consultancy Agreement".
Dreamcast had entered into a consultancy agreement with IIAS not long before. An agreement dated 5 November 2003 ("the Consultancy Agreement") provided for Dreamcast to supply IIAS with "consultancy services", defined to mean:
"the sourcing of a suitable purchaser for the business and the assets or the shares of the companies and businesses introduced by [IIAS] and the provision of advice in relation to such a purchase and its implementation together with any general consultancy advice required by [IIAS]".
The definition was also stated to encompass "the provision of restructuring, Corporate Finance and Corporate Rescue advice to specific companies and businesses introduced by [IIAS]".
In cross-examination, Mr Mistry accepted that he would have arranged for Dreamcast to enter into the Consultancy Agreement. He maintained that the agreement was "primarily intended to deal with potential acquisition targets overseas, on behalf of IIAS". However, he accepted that no services had in fact been provided to IIAS in relation to the three invoices raised by Dreamcast. He agreed that the invoices were fictitious and that he had behaved dishonestly in this respect.
Dreamcast's £12,000 and £17,000 invoices were both paid in March 2004. The £26,250 invoice was settled in January 2005 by a transfer to an account Dreamcast held with Barclays Bank in Mauritius.
On 19 July 2004 Dreamcast transferred sums of £3,250 and £4,000 to a Spanish account whose beneficiary was named as "Prosper Trust No 5904". The beneficiary of the account was evidently the Prosper Trust, an offshore trust associated with Mr Williamson. The payments were said to be in respect of "Professional fees" in Dreamcast's instructions to its bank. Mr Mistry, who was one of those who signed the instructions on behalf of Dreamcast, accepted in cross-examination that no "professional fees" had in fact been due to the Prosper Trust and that he had therefore behaved dishonestly.
Dreamcast has now been dissolved.
Mr Mistry's case
Mr Mistry's case is to the following effect:
i) The £750 payments made to IIAS were for additional work. In his first affidavit, Mr Mistry said this:
"Mr Wood [the First Claimant] asserts that Mr Williamson carried out no additional work to justify fees, over and above his statement of affairs fee. That is simply not true. Mr Williamson negotiated increased fees to reflect the fact that he was being required to carry out more work, on a case by case basis, to reflect the increasing interest in the cases from HMRC. Specifically, Mr Harlow and I were aware, from HMRC attendance at creditors meetings, that HMRC were seeking ever more detailed information, much of which had to be obtained by Mr Williamson from the Director of the company in question".
In his second affidavit, Mr Mistry stated that it had been agreed that Mr Williamson would collect information required to answer HMRC queries and "send that information on to [Mr Mistry's] office, so that Mr Harlow or [he] could then respond to HMRC";
ii) IIAS made payments to Dreamcast on the basis that the money would be passed on to the Prosper Trust (and possibly other entities), and that was what happened. Mr Mistry explained matters as follows in his first affidavit:
"At Mr Williamson's request, I agreed that he could forward monies to Dreamcast and that on receipt of those funds they would be transferred on his instructions to Prosper Trust, controlled by him.
… I was not unduly concerned by his request and assumed based on discussions with him, that these arrangements were designed to assist his own personal tax arrangements".
In his second affidavit, Mr Mistry said:
"Sums paid on to Dreamcast … were then passed on by Dreamcast to Prosper and/or (as I recollect) other entities, in accordance with the instructions of [Mr Williamson]".
Mr Mistry also said that Mr Williamson had told him that he had paid tax in the United Kingdom on the money;
iii) Mr Mistry did not know of any connection between the £750 payments that IIAS received and its payments to Dreamcast. As to this, Mr Mistry said in his second affidavit:
"Such payments to Dreamcast were so far as I was aware, wholly unrelated to [the Safe Solutions group]";
iv) Mr Mistry had set up Dreamcast several years earlier to deal with intended property transactions overseas. Mr Mistry said in his second affidavit:
"I was aware of a resort development planned in Mauritius, and I intended that Dreamcast would be the brokerage to be used by persons interested in acquiring plots on that development. I intended to become actively involved in that project";
v) The Consultancy Agreement was, according to Mr Mistry, "primarily intended to deal with potential acquisition targets overseas, on behalf of IIAS".
Problems with Mr Mistry's case
Mr Mistry's version of events is problematic in numerous ways. I shall outline some of them.
In the first place, it is hard to see why anyone would have thought it appropriate for Mr Williamson to be paid an extra £750 per PSC for additional work. The fee paid in respect of each company had already been increased from £250 to £500 to take account of "the attendance of the HMRC officers [at creditors' meetings] and the questions asked by them at each of those meetings", and the £500 was recorded as covering "assistance in the preparation of the Statement of Affairs and ancillary assistance as required in respect of queries received in relation of the companies". As a result, Mr Williamson would be paid £5,000 in respect of a batch of 10 companies on top of whatever remuneration he received as an employee of Goddards or from the Safe Solutions group. (During one of his interviews, Mr Williamson spoke of the Safe Solutions group paying him £250 a company.) Nothing seems to have happened by 1 January 2004, when the first of the £750 invoices were raised, to warrant an additional payment. When giving evidence to the Review Committee of the ICAEW in 2005, Mr Mistry said that at the creditors' meetings on 26 August 2003 HMRC did not "suggest that [he] should take or not take any particular course of action", that the "course of the [14 October 2003 creditors'] meeting(s) was very similar" and that "no particular requests were made of [him] as liquidator either at or after the [18 December 2003 creditors'] meetings". During his oral evidence in the present proceedings, Mr Mistry confirmed that HMRC had not asked him at the August meeting to carry out any particular investigations. Further, there is (to quote Miss Bell) "no indication on the files [HKM maintained] that in the period to 1 January 2004 (when the first invoice for Additional Work was raised by Mr Williamson) … any additional work was required or anticipated as a result of any queries raised by HMRC"; in fact, (to quote Miss Bell again) there is "no evidence on any of the files of Mr Mistry (or anyone else at HKM) instructing Mr Williamson to carry out any further work as a result of any creditors' meeting or question raised by HMRC or of Mr Williamson having carried out any further work and sending information he had obtained to HKM so that they could respond to HMRC's queries". Mr Mistry was inclined to attribute this to poor record-keeping on the part of his firm, but he accepted (a) that Mr Williamson would have provided any information to HKM rather than to HMRC direct, (b) that HKM would have forwarded any information to HMRC in writing and (c) that any such letter should be in the files. No such letter has, however, come to light. On balance, the evidence indicates that HMRC were not even in attendance at the 14 October creditors' meetings. Further, for what it is worth Mr Williamson did not suggest that the £750 payments were in respect of additional work. For example, he said during an interview:
"If you look at a typical case there it's £1,250; £500 is for work that I would have done, anything over and above that was billed on".
Next, a spreadsheet produced within HKM undermines Mr Mistry's account. The spreadsheet in question, which is headed "Hammersmith Jobs", lists the PSCs that went into liquidation or administration between February and July of 2004 and gives figures for the first 27 of the companies under the headings "TPF received", "IIAS '1'", "IIAS '2'", "D" and "Prosper". The "TPF received" column appears to show "third party funds" received from the Safe Solutions group, and the "IIAS '1'" and "IIAS '2'" columns respectively the £500 and £750 payments made to IIAS by PSCs. During cross-examination, Mr Mistry claimed that the "Prosper" column, in which "250" is entered for each of the 27 companies, related to £250 payments that he had discovered Mr Williamson had been receiving from the Safe Solutions group on top of the £500 and £750 payments. The "D" column, Mr Mistry said, referred to payments to Mr Williamson, whose first name is Derek. The "750" entries in this column, Mr Mistry suggested, were arrived at by aggregating the £500 payments to IIAS and the additional £250 payments from the Safe Solutions group.
If, however, the "D" stood for "Derek", the column might have been expected to show the totality of what Mr Williamson/IIAS were receiving: on Mr Mistry's figures, £1,500 per company (i.e. £500 plus £750 plus £250). I find it difficult, moreover, to understand why Mr Mistry (or anyone else at HKM) would have wanted a column reflecting just the £500 and £250 payments. It is also, as it seems to me, highly significant that, in respect of one of the PSCs (viz. Thatemp Productions Limited), the "IIAS '2'" and "D" columns are both blank although "500" appears under "IIAS '1'" and "250" under "Prosper". If, as Mr Mistry claimed was the case, the "D" column had reflected the £500 and £250 payments, it should have included a "750" entry. The fact that it did not suggests a correlation between the "D" figures and the £750 payments to IIAS: in other words, that there was in this instance no "D" payment because IIAS had not received £750. That would make sense if the "D" referred to "Dreamcast" rather than "Derek" and the £750 payments to IIAS were to be passed on to Dreamcast. There having been no £750 payment for Thatemp Productions Limited, there would have been nothing to transfer on to Dreamcast and, hence, nothing to enter in the "D" column.
A correlation can also be seen between the numbers of PSCs going into liquidation or administration and the amounts of Dreamcast's invoices to IIAS. The figures in the "D" and "Prosper" columns on the "Hammersmith Jobs" spreadsheet add up to £26,250. That is also the amount of Dreamcast's invoice to IIAS of 24 August 2004. That invoice is thus consistent with Dreamcast having invoiced IIAS for (a) £1,000 for all but one of the 27 companies in respect of which payments are listed in the spreadsheet and (b) £250 in respect of Thatemp Productions Limited. Dreamcast had previously invoiced IIAS for sums totalling £29,000 (i.e. £12,000 plus £17,000), and 29 PSCs had gone into liquidation since the introduction of the £750 payments to IIAS but before those listed in the "Hammersmith Jobs" spreadsheet. The £29,000 accordingly equates to £1,000 per company. Dreamcast's three invoices can therefore be explained on the basis that, except where IIAS was not paid £750 (as with Thatemp Productions Limited), Dreamcast would invoice at the rate of £1,000 per company.
If the fact that the total of the "D" and "Prosper" columns on the "Hammersmith Jobs" spreadsheet matches the amount of Dreamcast's third invoice to IIAS is significant rather than coincidental, the invoice will have included £250 per PSC attributed to "Prosper". That the Prosper Trust was paid £250 per PSC is also suggested by the payments to the Prosper Trust from Dreamcast for which there is evidence. The payments amount to £7,250. That could represent £250 for each of the 29 PSCs that (a) went into liquidation after the introduction of the £750 payments and (b) are not included in the "Hammersmith Jobs" spreadsheet.
Manuscript notes that Mr Williamson made on transaction print-outs also indicate that the £750 payments to IIAS were passed on to Dreamcast and that further sums of £250 per company were transferred to the Prosper Trust via Dreamcast. For example, notes on one print-out of transactions suggest that the £55,250 Dreamcast invoiced to IIAS represented 56 payments of £250 and 55 of £750, and the difference between the 56 and the 55 can be explained by the fact that there was no £750 payment for Thatemp Productions Limited. A note on another print-out appears to refer to "29 payments @ 250", and, as already mentioned, the £7,250 that Dreamcast can be seen to have transferred to the Prosper Trust equates to 29 multiplied by £250. Further, a figure "[d]ue to Prosper" seems to have been calculated by deducting 59 times £750 from the amounts paid to Dreamcast by IIAS.
While, therefore, Mr Williamson's manuscript notes indicate that Dreamcast passed on some money to the Prosper Trust, they lend no support to the proposition that all the money Dreamcast received was paid on to the Prosper Trust. Nor does any of the other documentary evidence. The documents are, rather, consistent with Dreamcast transferring on £250 per PSC.
It is significant too that the purported justifications for the payments to Dreamcast and the Prosper Trust were unfounded. By Mr Mistry's own account, the payments IIAS made to Dreamcast were not for "Professional services pursuant to consultancy agreement" or "Consultancy and Business Services Pursuant to Consultancy Agreement", as claimed in the relevant invoices. The instructions in respect of Dreamcast's transfers to the Prosper Trust were similarly misleading. The fact that Mr Mistry was willing to give false justifications for payments to Dreamcast and the Prosper Trust makes it less improbable that he would have been prepared to be complicit in false justifications being given for the PSCs' payments to IIAS.
Further, although Mr Mistry now denies knowing of any connection between the £750 payments that IIAS received and its payments to Dreamcast, he appeared to accept in his first affidavit that the sums paid by IIAS to Dreamcast represented sums that had been paid by the PSCs to IIAS. He said:
"At Mr Williamson's request, I agreed that he could forward monies to Dreamcast and that on receipt of those funds they would be transferred on his instructions to Prosper Trust, controlled by him.
Whilst it would have been simpler to pay Mr Williamson direct, he requested that monies be paid to him (Prosper Trust) via Dreamcast" (emphasis added).
The implication must be that it would have been simpler for the PSCs' payments to have been made direct to the Prosper Trust instead of via Dreamcast and IIAS.
While I do not think I should place any significant weight on it, the interviews with Mr Williamson also provide evidence that the £750 payments to IIAS were passed on to Dreamcast. For example, Mr Williamson said during an interview on 8 April 2009:
"the extra £750 that were paid, I was then billed on by another company that was controlled by the partners of HKM".
The timing of IIAS's first invoices for £750 and Dreamcast's first invoice to IIAS tends to confirm that there was a link between the payments. IIAS's first invoices were raised on 1 January 2004, Dreamcast's first invoice only shortly afterwards, on 8 January 2004.
Finally, it is noteworthy that Mr Mistry answered "no comment" to questions relating to Dreamcast and the Prosper Trust when interviewed under caution by investigators with HMRC's criminal investigation team in 2007. In evidence in these proceedings, Mr Mistry explained that he had been advised by solicitors to say "no comment" to all questions. He had, however, been warned by the HMRC investigators that it might harm his defence if he did not mention when questioned something he later relied on in Court.
Miscellaneous points
Deficiencies in the evidence
Mr Lilly made much of gaps in the evidence. He pointed out, in particular, that some of the documents that HMRC held when interviewing Mr Mistry are no longer available. In addition, as a result of an error, HMRC returned to Mr Williamson materials they had seized from him, and he seems to have had some of them shredded, apparently in the belief that they were not needed. Mr Lilly also suggested that there had been weaknesses in the Claimants' investigations: he said, for example, that the Claimants had not done much to investigate the Prosper Trust.
It seems to me, however, that the points Mr Lilly made are of limited significance. It is certainly unfortunate that materials that were released to Mr Williamson are missing and that others are no longer available: both the list of property returned and references to documents during Mr Mistry's interviews suggest that some of the missing materials would have been of interest. However, there is no reason to think that they would have undermined the Claimants' case in any important way. More generally, it seems to me that the evidence before me is such as to allow me to arrive at fair and reliable conclusions.
Mr Harlow's role
In his affidavits in particular, Mr Mistry was inclined to emphasise the fact that Mr Harlow was also a liquidator of the PSCs in respect of which allegations are made. Where, however, Mr Mistry and Mr Harlow were joint liquidators, it was Mr Mistry who was the lead liquidator, and Mr Harlow will therefore have relied on him. As Mr Wood explained, the Claimants found no evidence that Mr Harlow was personally involved in the matters of which complaint is made. Even had there been evidence that Mr Harlow shared the blame, that would not have exonerated Mr Mistry.
The origins of the money paid to IIAS
The Safe Solutions group appears to have provided funding for the liquidation of the PSCs of which Mr Mistry became liquidator. On the strength of this, Mr Mistry maintained that "[n]o funds originating from the [PSC's] funds or assets were paid by way of fee to Mr Williamson" (emphasis added). Regardless, however, of whether the money paid to Mr Williamson and IIAS can be traced back to funding from the Safe Solutions group, the simple fact is that the payments were made out of assets of the PSCs. As Mr Mistry accepted in cross-examination, the payments were made out of the liquidation estates and from accounts specific to the PSCs. Further, the payments purportedly represented expenses of the liquidations: Mr Mistry himself referred in one of his affidavits to funds having been "released by HKM to the liquidator to discharge Mr Williamson's fees as an expense of the liquidation" (emphasis added).
The standard of proof
It is common ground between the parties that the applicable standard of proof is the ordinary civil standard. If and to the extent, however, that what is alleged is inherently improbable, that is a factor to be taken into account when considering whether the event in question is more likely than not to have occurred. Having regard to the gravity of what is alleged against Mr Mistry in relation to the payments to IIAS and Dreamcast, I approach the matter on the assumption that it is inherently improbable that he behaved as alleged and, therefore, that cogent evidence is required to substantiate the allegations.
Conclusions
I have arrived at these conclusions on this part of the case:
i) The £750 payments to IIAS were not made for "additional work" but on the basis that the money would be passed on to Dreamcast for the benefit of Mr Mistry;
ii) Mr Mistry was well aware that IIAS was not carrying out "additional work" for the £750 payments and, hence, that the justification given for the payments in IIAS's invoices was false;
iii) Mr Mistry nevertheless approved the £750 payments to IIAS;
iv) The money out of which the £750 payments were made belonged to the PSCs regardless of whether it had been derived from funding provided by the Safe Solutions group;
v) The £750 payments to IIAS were passed on to Dreamcast pursuant to the invoices it raised;
vi) With the exception of Thatemp Productions Limited, Dreamcast invoiced IIAS at the rate of £1,000 per PSC. The intention was that Dreamcast would retain £750 (representing the £750 paid to IIAS in respect of the company) and pay £250 on to the Prosper Trust;
vii) Dreamcast's third invoice to IIAS, for £26,250, related to the 27 PSCs in respect of which figures were given in the "Hammersmith Jobs" spreadsheet. 20 of these went into administration rather than liquidation so cannot be the subject of complaint in the present proceedings. However, the other seven companies went into liquidation;
viii) In all, sums totalling £27,000 (i.e. £750 multiplied by 36) were paid to Dreamcast for the benefit of Mr Mistry in respect of PSCs that had gone into liquidation with Mr Mistry as a liquidator.
Relating these conclusions to the four allegations set out in paragraph 36 above, I consider allegations (i), (ii) and (iv) to have been proved. As regards allegation (iii), I am satisfied (a) that Mr Mistry caused IIAS to be paid fees to which it was not entitled and (b) that some of the money that IIAS paid to Dreamcast was passed on to the Prosper Trust for the benefit of Mr Williamson. On the other hand, I do not think it has been established that Mr Mistry paid IIAS or Mr Williamson fees to which they were not entitled "[t]o secure Mr Williamson's co-operation". The "fees … to which IIAS/Mr Williamson were not entitled" comprised the £750 payments, and those were retained by Dreamcast for the benefit of Mr Mistry.
Mr Ewan McQuater QC, who appeared for the Claimants with Mr Matthew Parker, raised the possibility that the £750 payments were made in return for Mr Mistry "burying" the PSCs without proper investigation. In this context, Mr McQuater referred, for example, to a letter of October 2003 in which Mr Williamson referred to HKM as "our tame insolvency practitioners". In my view, however, the evidence does not establish that the £750 payments were made for the suggested motive.
Failure to take steps in the liquidations
The final allegation made against Mr Mistry is this:
"Mr Mistry continued to accept bulk instructions to place the Companies into creditors' voluntary liquidation without taking any steps to recover monies that were owed to the Companies by the Safe Solutions Companies. In particular, he failed to demand that the Safe Solutions Companies pay the sums retained by them for payment of the Companies' tax and NICs to the Companies".
In the course of his submissions on this allegation, Mr McQuater criticised Mr Mistry for failing (a) to obtain proper books and records for the PSCs of which he was liquidator and (b) to do enough to investigate the reasons for the PSCs going into liquidation. It is important, however, to remember that the focus of the allegation, as framed, is on Mr Mistry's failure to take steps to recover money from the Safe Solutions Companies. What Mr Mistry did or did not do to obtain books and records or to investigate the reasons for the liquidations will thus be relevant only in so far as it casts light on whether Mr Mistry took adequate steps to recover money from the Safe Solutions Companies.
Guidance as to a liquidator's investigative responsibilities is to be found in Statement of Insolvency Practice 2 ("SIP 2"), which is one of a number of such statements approved by the professional bodies concerned with insolvency. Paragraph 3 of SIP 2 explains that the purpose of an investigation is "to determine the property … and liabilities of the company and to identify any actions which could lead to the recovery of funds" and that "[t]he standard of investigation set out in [SIP 2] should be applied in every case". Paragraph 9 states that, at the outset of the winding up, the liquidator "should normally arrange to make enquiries of the officers of the company and other senior officials as to the company's affairs, including the reasons for failure and the location of its records and property". Paragraph 16 stipulates that "material transactions [with associated companies or connected persons] should be examined in detail".
Mr Mistry confirmed in evidence that he was familiar with SIP 2 and that it applied to the liquidations of the PSCs. In fact, HKM had an "Investigation checklist" one of the objectives of which was stated to be, "To identify any actions which could lead to the recovery of funds (SIP 2)".
As mentioned earlier (paragraph 4), the PSCs were set up pursuant to a tax-saving scheme. The scheme involved earnings generated by participants being paid to them partly as wages and partly by way of dividends. The Safe Solutions Companies retained sums to cover administration charges and corporation tax.
As Mr Wood explained, there should have been no question of PSCs becoming insolvent. Administration charges should not have been so high as to preclude dividends: otherwise, participants would clearly have lost rather than gained money by using the scheme. Moreover, money was being withheld to meet administration charges and tax liabilities.
In the event, PSCs went into liquidation on the basis that, rather than being owed money by the Safe Solutions group, large sums were due to the group in respect of administration charges. Mr Mistry claimed that he had been told by Goddards that they had forgotten to charge costs. Mr Wood, however, expressed the view that "it should have been obvious to [Mr Mistry] that the Safe Solutions Companies were retaining funds from the personal service companies (at the expense of HMRC) to which they were not properly entitled"; it was, he said, as "plain as a pikestaff" that those behind the Safe Solutions Companies were trying to avoid paying tax. He observed that "any sensible chartered accountant or insolvency practitioner" would have realised that something was wrong even at the stage of the first batch of appointments.
I find Mr Wood's comments compelling. The nature of the scheme to which PSCs were integral was such that (a) they should not have become insolvent and (b) the Safe Solutions group could be anticipated to owe money to them rather than to be owed money by them. Mr Mistry was, moreover, never supplied with evidence substantiating the charges that were said to be outstanding to SSAS; to the contrary, he was told in letters from Mr Williamson that no further books or records were available. Further, the debts alleged by SSAS were implausibly large: had 100 PSCs each owed as much as Asegaai was claimed to owe, the total due to SSAS would have been in excess of £10 million. Another point is that the supposed debts to SSAS were at odds with accounts that had been approved by the Safe Solutions group itself. For example, Asegaai's most recent filed accounts, for the year ended 31 October 2001, recorded that the company had made profits after tax of £94,512 and £148,170 in respectively 1999-2000 and 2000-2001, that dividends of £94,415 and £148,007 had accordingly been paid and that the company had net assets of £1,148. Had Asegaai incurred management charges to SSAS on the scale alleged when it went into liquidation, it would seem that it would not have earned the profits shown, should not have paid the dividends it had and would have had a large liability that was not reflected in its balance sheet. Yet the accounts had been approved by a company in the Safe Solutions group as Asegaai's director.
Mr Mistry himself said during cross-examination that he could not say that he had properly investigated the claims that the Safe Solutions group was making. He also accepted that he had "SIP 2 failures", though he "wouldn't say it was for want of … trying"[1].
Mr Lilly argued that I was precluded from deciding that Mr Mistry ought to have done more by the absence of independent expert evidence. However, the Courts do not normally regard expert evidence as necessary in disqualification cases: see e.g. Re Barings plc (No 5) [1999] 1 BCLC 433, at section IIIC, Re Barings plc (No 5) [2000] 1 BCLC 523, at paragraphs 37-39, and Secretary of State for Trade and Industry v Aaron [2007] EWHC 1720 (Ch), [2007] Bus LR D95. Moreover, guidance as to what can be expected from a liquidator is available from both SIP 2 and Mr Wood's evidence.
Mr Lilly also drew attention to the risks of being wise after the event (compare Re Living Images Ltd [1996] 1 BCLC 348, at 356). While it could be seen now that the Safe Solutions scheme was extremely concerning, Mr Mistry should not (Mr Lilly said) be judged with the benefit of hindsight. It should be remembered, Mr Lilly submitted, that the liquidations were coming to Mr Mistry through apparently reputable accountants (viz. Goddards) and that he was working on a shoestring. Mr Lilly pointed out that the Review Committee of the ICAEW had recognised that it was appropriate to "take into account the level of fees charged for the services carried out by [Mr Mistry] when establishing whether he did behave in a fit and proper manner".
It seems to me, however, that Mr Mistry ought to have challenged the debts that were said to be outstanding to SSAS and taken steps to recover the money that the Safe Solutions Companies had kept back to meet tax liabilities. The circumstances were such that the claims of SSAS were obviously anomalous. If funding was a problem, the obvious remedy was to approach HMRC for assistance. A passage from Mr Wood's cross-examination is relevant in this context. He said:
"What you should be doing is going to HMRC and saying, 'This is what's happened in your case, I think that something is wrong here and I'm going to help you prove that there's something wrong here'".
Mr Mistry made reference to the fact that he and Mr Harlow had suggested that "the question of whether expenses charged …, were in fact legitimately allowable, should be conducted in a 'test' case before the … Commissioners". However, this possibility does not appear to have been raised until early 2005, 18 months or so after the first batch of PSCs went into liquidation. In any case, much the more obvious course was surely to reject SSAS's claims.
In all the circumstances, it seems to me that Mr Mistry failed in his duties in taking no steps to challenge the claims made by SSAS and, following on from that, to recover the sums that the Safe Solutions Companies had kept back to meet tax liabilities.
Consequences
As noted earlier, disqualification under section 4 of the CDDA is discretionary. I am in no doubt, however, that I should make a disqualification order in the present case. It may be that the last of the allegations discussed above (viz. that relating to taking steps to recover money from the Safe Solutions Companies) would not have warranted a disqualification order on its own, but the totality of the misconduct I have found proved certainly does.
Section 4(3) of the CDDA provides that the maximum period of disqualification under the section is 15 years. Guidance as to length of disqualification orders can be found in In re Sevenoaks Stationers (Retail) Ltd [1991] Ch 164. The Court of Appeal there endorsed (at 174) the following three brackets:
"(i) the top bracket of disqualification for periods over 10 years should be reserved for particularly serious cases. These may include cases where a director who has already had one period of disqualification imposed on him falls to be disqualified yet again. (ii) The minimum bracket of two to five years' disqualification should be applied where, though disqualification is mandatory, the case is, relatively, not very serious. (iii) The middle bracket of disqualification for from six to 10 years should apply for serious cases which do not merit the top bracket."
To my mind, the present case is a "particularly serious" one meriting an order in the top bracket. The sums which Dreamcast received from the liquidations may not have been that large (£27,000 in total), but Mr Mistry's conduct was still grossly improper. It was not confined to an isolated incident or incompetence. Mr Mistry dishonestly caused sums to be paid for his benefit over an extended period in respect of some 36 companies.
I shall make a 12-year disqualification order against Mr Mistry.
Note 1 The transcript records that Mr Mistry said “for want of not trying”, but he clearly meant “for want of trying”. [Back] | 2 |
Opinion of Mr Advocate General Cosmas delivered on 10 December 1996. - Diego Calì & Figli Srl v Servizi ecologici porto di Genova SpA (SEPG). - Reference for a preliminary ruling: Tribunale di Genova - Italy. - Harbour company - Prevention of pollution - Legal monopoly - Abuse of a dominant position. - Case C-343/95.
European Court reports 1997 Page I-01547
Parties
In Case C-343/95,
REFERENCE to the Court under Article 177 of the EC Treaty by the Tribunale di Genova (Italy) for a preliminary ruling in the proceedings pending before that court between
Diego Calì & Figli Srl
and
Servizi Ecologici Porto di Genova SpA (SEPG)
on the interpretation of Article 86 of the EC Treaty,
THE COURT,
composed of: G.C. Rodríguez Iglesias, President, G.F. Mancini, J.L. Murray and L. Sevón, Presidents of Chambers, C.N. Kakouris, P.J.G. Kapteyn (Rapporteur), C. Gulmann, D.A.O. Edward, J.-P. Puissochet, H. Ragnemalm and M. Wathelet, Judges,
Advocate General: G. Cosmas,
Registrar: L. Hewlett, Administrator,
after considering the written observations submitted on behalf of:
- Diego Calì & Figli Srl, by F. Bruno, of the Genoa Bar,
- Servizi Ecologici Porto di Genova SpA (SEPG), by V. Afferni, M. Bucello, E. Cavallari and G. Schiano di Pepe, of the Genoa Bar,
- the Italian Government, by Professor U. Leanza, Head of the Legal Department at the Ministry of Foreign Affairs, acting as Agent, assisted by P.G. Ferri, Avvocato dello Stato,
- the German Government, by E. Roeder, Ministerialrat at the Federal Ministry of Economic Affairs, acting as Agent,
- the French Government, by C. de Salins, Deputy Director of the Legal Affairs Directorate at the Ministry of Foreign Affairs, and R. Loosli-Surrans, Special Adviser at the same Ministry, acting as Agents,
- the United Kingdom Government, by S. Braviner of the Treasury Solicitor's Department, acting as Agent, and N. Paines, Barrister,
- the Commission of the European Communities, by G. Marenco, Legal Adviser, and F. Mascardi, of its Legal Service, acting as Agents,
having regard to the Report for the Hearing,
after hearing the oral observations of Diego Calì & Figli Srl, represented by F. Bruno; Servizi Ecologici Porto di Genova SpA (SEPG), represented by G. Schiano di Pepe; the Italian Government, represented by P.G. Ferri; the French Government, represented by C. de Salins and R. Loosli-Surrans; the United Kingdom Government, represented by J.E. Collins, Assistant Treasury Solicitor, acting as Agent, and N. Paines; and the Commission, represented by G. Marenco, at the hearing on 15 October 1996,
after hearing the Opinion of the Advocate General at the sitting on 10 December 1996,
gives the following
Judgment
Grounds
1 By decision of 12 October 1995, which was received at the Court on 30 October 1995, the Tribunale di Genova referred to the Court for a preliminary ruling under Article 177 of the EC Treaty three questions concerning the interpretation of Article 86 of the Treaty.
2 Those questions were raised in a dispute between Diego Calì & Figli Srl (hereinafter `Calì') and Servizi Ecologici Porto di Genova SpA (hereinafter `SEPG') regarding the payment to be made by Calì for preventive anti-pollution services performed by SEPG in the oil port of Genoa.
3 At the material time, the port of Genoa was managed by the Consorzio Autonomo del Porto (hereinafter `CAP'), which was replaced in 1994 by the Autorità Portuale (Port Authority). The CAP was a public body upon which both the administrative and economic functions relating to the management of the port had been conferred by legislation.
4 By Order No 14 of 1 July 1986, the President of the CAP, in his capacity as delegate of the Government, approved the regulations governing the harbour police and security at the oil port of Genoa-Multedo.
5 By Order No 32 of 23 August 1991, the President of the CAP amended those regulations by creating a compulsory surveillance and rapid intervention service intended to protect maritime areas against any pollution caused by accidental discharges of hydrocarbons into the sea.
6 Article 1 of Order No 32 defines the service in the following terms:
`The service shall be responsible for the following functions and intervention procedures:
(a) constant surveillance of the waters on account of the presence of tankers laying alongside or berthed at quays in order to identify at once any risk of spills of hydrocarbons or other pollutants arising from criminal acts or negligence;
(b) in cases of pollution, whether from a ship or from dry land, occurring during loading or unloading operations or in any other circumstances:
(1) immediate reporting of the incident to the responsible authorities, together with the provision of any information which could be of use in evaluating the incident;
(2) taking all such action at the appropriate time, subject to those responsible for the pollution being liable for the costs thereby incurred, as is necessary and advisable for the purpose of containing the spill and associated risks and for removing and/or neutralizing the spilled substances and fully cleansing the waters in question.'
7 By Decree No 1186 of 30 August 1991, the President of the CAP entrusted that service, in the form of an exclusive concession, to SEPG.
8 By Decree No 1191 of 30 August 1991, the President of the CAP approved the tariffs which SEPG was authorized to apply, in respect of the service in question, to vessels using the installations of the oil terminal. Those tariffs were established in accordance with the tonnage of the vessels, the quantities transported and the duration of the intervention.
9 On several occasions between 1992 and 1994, Calì, which transports, for third parties, petrochemical products by sea in tankers, used the oil port of Genoa-Multedo for the purpose of loading and unloading products, including acetone.
10 The operations themselves were carried out not by Calì, but, on payment of a fee, by the harbour company Porto Petroli di Genova SpA. The vessels used were equipped with anti-pollution devices and systems.
11 SEPG invoiced Calì for a total amount of LIT 8 708 928 in respect of the anti-pollution surveillance services performed on Calì's behalf. The latter refused to pay on the ground that it had never requested nor had recourse to services of that type during the operations carried out in the oil port of Genoa.
12 On 22 December 1994 SEPG obtained an order from the Tribunale di Genova which required Calì to pay the disputed invoices.
13 In the course of the proceedings contesting that order, the Tribunale di Genova stayed proceedings until the Court of Justice had given a preliminary ruling on the following questions:
`1. Can a "dominant position within the common market or in a substantial part of it" be said to exist where a limited company, set up by a national port authority, is given responsibility for and does actually carry out, pursuant to an administrative concession from that authority, the task of providing, with exclusive rights within a harbour sector specializing in loading and unloading petroleum products, an "anti-pollution surveillance" service, and where that company collects the relevant fee, which is set unilaterally by the port authority on the basis of the vessel's tonnage and the quantity of the product loaded or unloaded, from users of that service, that is to say vessels which dock at the wharves to carry out those operations?
2. Having regard to the situation set out in Question 1 and if there is a dominant position within the common market or a substantial part of it, is there an abuse of the aforesaid "dominant position" within the meaning of Article 86 of the Treaty, in particular of subparagraphs (a), (c) and (d), and are there related practices, when an undertaking holding the exclusive concession for a service (even though on the basis of a decision of the authority granting the concession) charges fees:
- which are compulsory and independent of the provision of an efficient surveillance and/or intervention service, merely because a vessel berths in a mooring in the Porto Petroli and loads/unloads goods, whether petroleum products or chemicals and petrochemicals, according to the contractual terms imposed;
- the amount of which depends solely on the tonnage of the vessel, the amount of the product and also, in the event of any actual intervention, the duration thereof, but not on the product's nature, quality or capacity to pollute;
- which, since they are imposed exclusively on the vessel (which is merely passively loaded and unloaded), affect a subject other than those whose responsibility it is to carry out the necessary technical operations (in this case SpA Porto Petroli di Genova and the laders/receivers of the product), resulting in an inevitable discrepancy between the responsibility for any pollution and the bearing of the cost of the anti-pollution service;
- which, given the nature of the product and/or its existence, represent an unnecessary service for vessels equipped with their own anti-pollution devices and systems adapted to the type of product to be loaded or unloaded;
- which impose on the vessel a charge, and an associated extra cost, in addition to those provided for by the landing contract between the carrier and the company operating the wharves, and have no practical connection with the subject-matter of the contract.
3. If, in the situations set out in Questions 1 and 2, there are one or more practices amounting to abuse of a dominant position by an undertaking for the purposes of Article 86 of the Treaty, does this lead to a potential adverse effect on trade between Member States of the Union?'
14 In order to answer the first question, concerning the existence of a dominant position, it must be established whether an activity of the kind carried on by SEPG in this case falls within the scope of Article 86 of the Treaty.
15 Such activities are carried on under an exclusive concession granted to SEPG by a public body.
16 As regards the possible application of the competition rules of the Treaty, a distinction must be drawn between a situation where the State acts in the exercise of official authority and that where it carries on economic activities of an industrial or commercial nature by offering goods or services on the market (Case 118/85 Commission v Italy [1987] ECR 2599, paragraph 7).
17 In that connection, it is of no importance that the State is acting directly through a body forming part of the State administration or by way of a body on which it has conferred special or exclusive rights (Case 118/85 Commission v Italy, cited above, paragraph 8).
18 In order to make the distinction between the two situations referred to in paragraph 16 above, it is necessary to consider the nature of the activities carried on by the public undertaking or body on which the State has conferred special or exclusive rights (Case 118/85 Commission v Italy, cited above, paragraph 7).
19 On this point, it is clear from the order for reference and the wording of the first question that the main proceedings concern the payment to be made by Calì for anti-pollution surveillance exercised by SEPG in relation to the loading and unloading of acetone products transported by Calì in the oil port of Genoa.
20 Furthermore, it is common ground that the dispute in the main proceedings does not concern the invoicing of any action by SEPG necessitated by pollution actually produced during loading or unloading operations.
21 Article 1 of Order No 32 of the President of CAP referred to above expressly distinguishes, moreover, between surveillance intended to prevent pollution and intervention in a case where pollution has occurred and it provides (Article 1(b)(2)) that those responsible for the pollution are to bear the costs arising from any action deemed necessary or advisable.
22 The anti-pollution surveillance for which SEPG was responsible in the oil port of Genoa is a task in the public interest which forms part of the essential functions of the State as regards protection of the environment in maritime areas.
23 Such surveillance is connected by its nature, its aim and the rules to which it is subject with the exercise of powers relating to the protection of the environment which are typically those of a public authority. It is not of an economic nature justifying the application of the Treaty rules on competition (Case C-364/92 SAT Fluggesellschaft v Eurocontrol [1994] ECR I-43, paragraph 30).
24 The levying of a charge by SEPG for preventive anti-pollution surveillance is an integral part of its surveillance activity in the maritime area of the port and cannot affect the legal status of that activity (Case C-364/92 SAT Fluggesellschaft v Eurocontrol, cited above, paragraph 28). Moreover, as stated in paragraph 8 of this judgment, the tariffs applied by SEPG have been approved by the public authorities.
25 In the light of the foregoing considerations, the answer to Question 1 must be that Article 86 of the EC Treaty is to be interpreted as not being applicable to anti-pollution surveillance with which a body governed by private law has been entrusted by the public authorities in an oil port of a Member State, even where port users must pay dues to finance that activity.
26 In view of the answer to Question 1, there is no need to answer Questions 2 and 3.
Decision on costs
Costs
27 The costs incurred by the Italian, German, French and United Kingdom Governments and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.
Operative part
On those grounds,
THE COURT,
in answer to the questions referred to it by the Tribunale di Genova (Italy), by decision of 12 October 1995, hereby rules:
Article 86 of the EC Treaty must be interpreted as not being applicable to anti-pollution surveillance with which a body governed by private law has been entrusted by the public authorities in an oil port of a Member State, even where port users must pay dues to finance that activity.
Opinion of the Advocate-General
I - Preliminary observations
1 The Tribunale di Genova has submitted to the Court of Justice, pursuant to Article 177 of the EC Treaty, a number of questions for a preliminary ruling concerning the compatibility with Community law of the monopoly established by the port authority in favour of a harbour company for the provision of anti-pollution surveillance and intervention services in the Port of Genoa.
2 This case calls for consideration of the extent to which the various services compulsorily provided by the ports in the Member States are compatible with Article 86 of the Treaty. The issue here bears certain similarities to the question raised in an earlier reference by the same court in the case of Merci Convenzionali Porto di Genova v Siderurgica Gabrielli, (1) concerning both the national legislative framework and the organization of activities in the Port of Genoa, on which the Court of Justice delivered judgment on 10 December 1991 (hereinafter `the judgment in Merci').
3 It is important, in my view, because it affords the Court of Justice an opportunity to clarify to what extent protection of the environment is or is not a core public authority activity and, consequently, whether a body whose main task is preventing pollution is exercising an activity that constitutes a State responsibility.
II - Legislative framework
A - Community provisions
4 Article 86 of the Treaty prohibits, as incompatible with the common market, any abuse of a dominant position by an undertaking which may affect trade between Member States. It provides that:
`Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market in so far as it may affect trade between Member States.
Such abuse may, in particular, consist in:
(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
(b) ...
(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.'
5 Article 90 of the Treaty provides that:
`1. In the case of public undertakings and undertakings to which Member States grant special or exclusive rights, Member States shall neither enact nor maintain in force any measure contrary to the rules contained in this Treaty, in particular to those rules provided for in Article 6 and Articles 85 to 94.
2. Undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in this Treaty, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or fact, of the particular tasks assigned to them. The development of trade must not be affected to such an extent as would be contrary to the interests of the Community.
3. ...'
B - The national legislation
6 The Port of Genoa is managed by a public body, the Consorzio Autonomo del Porto (hereinafter `the CAP'), (2) upon which responsibilities for the management of the port of both an administrative and economic nature have been conferred by law.
7 By Order No 14 of 1 July 1986, the President of the CAP approved regulations governing port police and security at the Porto Petroli of Genoa-Multedo, that is to say the petroleum products terminal of the Port of Genoa (hereinafter `the Porto Petroli').
8 Order No 32 of the President of the CAP, of 23 July 1991, amended the earlier regulations by creating a compulsory surveillance and rapid intervention service in order to protect the maritime area of the Porto Petroli against the threat of pollution caused by spills of hydrocarbons.
9 By Decree No 1186 of 30 August 1991, the President of the CAP entrusted that service, in the form of an exclusive concession, to Servizi Ecologici Porto di Genova SpA (hereinafter `SEPG').
10 Under Article 1 of Order No 32 of the President of the CAP, the following responsibilities have been entrusted to SEPG:
(a) constant surveillance of the waters on account of the presence of tankers laying alongside or berthed at quays in order to identify at once any risk of spills of hydrocarbons or other pollutants arising from criminal acts or negligence;
(b) in cases of pollution, whether from a ship or from dry land, occurring during loading or unloading operations or any other circumstances:
(1) immediate reporting of the incident to the responsible authorities, together with the provision of any information which could be of use in evaluating the incident;
(2) taking all such action at the appropriate time, subject to those responsible for the pollution being liable for the costs thereby incurred, as is necessary and advisable for the purpose of containing the spill and associated risks and for removing and/or neutralizing the spilled substances and fully cleansing the waters in question.
11 By Decree No 1191 of 30 August 1991, the President of the CAP approved the tariffs to be charged by SEPG for the provision of the relevant services to vessels using the installations of the Porto Petroli. The tariffs are calculated on the basis of the vessel's tonnage and the quantities transported as well as the duration of the intervention when in fact required. Under that decree all vessels, regardless of their provenance or nationality, that use the Porto Petroli terminal installations to load or unload petroleum products and petrochemicals are required to pay for the pollution prevention/intervention service, according to the tariffs drawn up by SEPG.
12 However, the abovementioned decisions of the President of the CAP did not provide for the fees to be applied to the harbour company, Porto Petroli di Genova SpA, which the CAP had made responsible for carrying out the technical operations of loading and unloading petroleum, chemical and petrochemical products in the Porto Petroli.
III - Facts
13 On several occasions between 1992 and 1994 Diego Calì & Figli Srl (hereinafter `Calì'), a company governed by Italian law which transports petrochemical products by sea in tankers on behalf of third parties, used berths West 2 and West 3 of the Porto Petroli (3) to unload acetone. (4)
14 There are no other terminals in the Ligurian Gulf in which chemicals and petrochemicals can be loaded and unloaded. (5)
15 The actual unloading operations were carried out not by Calì but by the harbour company, Porto Petroli di Genova SpA. Calì's vessels, however, were equipped with their own anti-pollution equipment and systems.
16 SEPG invoiced Calì for a total of LIT 8 708 928 for `services provided'. Calì refused to pay, objecting that it had never approached SEPG to request any anti-pollution service in the Port of Genoa.
17 On 22 December 1994, SEPG obtained an order from the Tribunale di Genova requiring Calì to pay the sum in question.
IV - The questions submitted by the national court
18 In the course of the proceedings brought by Calì contesting that order to pay, the Tribunale di Genova referred to the Court of Justice, by decision of 12 October 1995, three questions for a preliminary ruling:
`1. Can a "dominant position within the common market or in a substantial part of it" be said to exist where a limited company, set up by a national port authority, is given responsibility for and does actually carry out, pursuant to an administrative concession from that authority, the task of providing, with exclusive rights within a harbour sector specializing in loading and unloading petroleum products, an "anti-pollution surveillance" service, and where that company collects the relevant fee, which is set unilaterally by the port authority on the basis of the vessel's tonnage and the quantity of the product loaded or unloaded, from the users of that service, that is to say vessels which dock at the wharves to carry out those operations?
2. Having regard to the situation set out in Question 1 and if there is a dominant position within the common market or a substantial part of it, is there an abuse of the aforesaid "dominant position" within the meaning of Article 86 of the Treaty, in particular of subparagraphs (a), (c) and (d), and are there related practices, when an undertaking holding the exclusive concession for a service (even though on the basis of a decision of the authority granting the concession) charges fees:
- which are compulsory and independent of the provision of an efficient surveillance and/or intervention service, merely because a vessel berths in a mooring in the Porto Petroli and loads/unloads goods, whether petroleum products or chemicals and petrochemicals, according to the contractual terms imposed;
- the amount of which depends solely on the tonnage of the vessel, the amount of the product and also, in the event of any actual intervention, the duration thereof, but not on the product's nature, quality or capacity to pollute;
- which, since they are imposed exclusively on the vessel (which is merely passively loaded and unloaded), affect a subject other than those whose responsibility it is to carry out the necessary technical operations (in this case Porto Petroli di Genova SpA and the laders/receivers of the product), resulting in an inevitable discrepancy between the responsibility for any pollution and the bearing of the cost of the anti-pollution service;
- which, given the nature of the product and/or its existence, represent an unnecessary service for vessels equipped with their own anti-pollution devices and systems adapted to the type of product to be loaded or unloaded;
- which impose on the vessel a charge, and an associated extra cost, in addition to those provided for by the landing contract between the carrier and the company operating the wharves, and have no practical connection with the subject-matter of the contract.
3. If, in the situations set out in Questions 1 and 2, there are one or more practices amounting to abuse of a dominant position by an undertaking for the purposes of Article 86 of the Treaty, does this lead to a potential adverse effect on trade between Member States of the Union?'
V - Replies to the questions submitted
A - Admissibility of the questions submitted
19 In its appeal against the order to pay, Calì argued that there were two possible approaches to resolving the dispute, the second of which required an interpretation of Article 86 of the Treaty.
20 Specifically, according to Calì, were the Tribunale to accept that the CAP's decisions had to be interpreted as applying solely to vessels loading and unloading petroleum products in the Porto Petroli but did not concern vessels engaged in similar operations for petrochemicals, there would be no need to refer to the Court of Justice for a preliminary ruling in order to resolve the dispute. Such a reference would, however, be necessary were the Tribunale to accept that the fees charged for the provision of services by SEPG to vessels using the installations of the Porto Petroli apply without distinction to all vessels that dock at that port or load or unload petroleum or petrochemical products.
21 The United Kingdom Government also points out that since the national court has not resolved this important issue of national law, there is no need for the matter to be referred to the Court of Justice as the latter would then be ruling on a hypothetical question; the United Kingdom Government cites the judgment in Meilicke in this connection. (6)
22 The arguments put forward by Calì and the United Kingdom Government cannot, in my view, be accepted. In accordance with consistent case-law, it is for the national courts, which alone are able directly to establish the facts of a case, to decide, having regard to the particular features of each case, as to both the need for a preliminary ruling to enable them to give judgment and the relevance of the questions referred to the decision to be taken in the case before them. (7) Moreover, the Court of Justice has made clear, on a number of occasions, that the discretion enjoyed by the national court, under Article 177 `includes a discretion to decide at what stage of the procedure it is appropriate to refer a question to the Court for a preliminary ruling'. (8)
23 In the light of the aforementioned case-law and given that the Court of Justice has before it `the matters of fact or law necessary to give a useful answer to the questions submitted to it', (9) the questions submitted by the Tribunale di Genova cannot be held to be manifestly without relevance for the resolution of the dispute pending before that court. (10) Consequently, `in so far as the quotation of the provision in question is not incorrect on the face of it' the Court of Justice should examine the questions referred. (11)
B - Substance
24 In submitting its questions to the Court of Justice, the national court is seeking a ruling as to whether in the case of SEPG there is an abuse of a dominant position within the common market or a substantial part thereof that may affect trade between Member States within the meaning of Article 86 of the Treaty.
25 The first question that needs to be clarified plainly concerns whether SEPG actually constitutes an undertaking in terms of the Community rules on competition and, if it does, the Court is then being asked to determine the market within which it will consider whether SEPG holds a dominant position.
(1) Does SEPG constitute an undertaking?
26 The German Government and Calì consider that, in accordance with the judgments in Merci (12) and Corsica Ferries, (13) SEPG does constitute an undertaking that holds a dominant position in a substantial part of the common market.
27 Calì contends that the relationship between SEPG and the CAP, the public body that granted the concession, is of an administrative nature, whereas the relationship between SEPG and users of the Porto Petroli is based on a compulsory contract, not entered into freely by the contracting parties but imposed by the port authority, the CAP, which requires the contracting carrier to use the anti-pollution surveillance service provided by SEPG.
28 According to the Italian Government, it is clear from the aim and object of the service administered by SEPG in the form of an exclusive concession that this is an activity very different from the other harbour services to which the questions submitted to the Court of Justice in the Merci and Corsica Ferries cases related, as this activity consists in anti-pollution surveillance and is designed to guarantee port safety in order to protect the maritime environment (paragraph 3 of the Italian Government's observations).
29 SEPG maintains that by providing surveillance and anti-pollution services in the Porto Petroli, available to all vessels which dock there, it is ensuring what is described as `passive' port safety and the safety of the neighbouring densely populated districts of Genoa as well as the adjacent tourist areas. The decision determining the compulsory fees charged in invoices issued to vessels docking in the port is open to challenge in the administrative courts. As regards the actual services provided to combat pollution should an accident occur, SEPG contends that these are not compulsory services since the polluter (if identified) may commission those same services from an undertaking of its choosing, at its own expense.
30 It is therefore necessary to establish whether, as regards its anti-pollution activity in the Porto Petroli, its principal activity, the exercise of which together with the issue of invoices has given rise to this case, SEPG is engaged in an economic activity and is, consequently, subject to the rules on competition, as maintained by the German Government, the Commission and Calì. The other possibility would be to consider this activity by SEPG to be bound up with the exercise of public authority powers, an argument put forward by the French Government and by SEPG itself in their observations; that, moreover, is a possibility that the Commission too does not omit to mention in its written observations.
31 I shall begin by considering the case-law of the Court of Justice on entities which constitute undertakings within the meaning of the Community rules on competition, and then go on to consider the crucial question of whether SEPG itself constitutes an undertaking.
(a) The case-law of the Court of Justice
32 The Court of Justice has had on several occasions to consider what entities are covered by the concept of undertaking and, consequently, subject to the Community rules on competition. It has ruled that `the concept of an undertaking encompasses every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed'. (14) In its case-law, therefore, the Court of Justice always gives the concept of undertaking a broad interpretation. It is therefore absolutely indispensable to establish whether the activity of a body or an administrative authority constitutes the exercise of official authority or the pursuit of an economic activity of an industrial or commercial nature which is `capable of being carried on, at least in principle, by a private undertaking with a view to profit'. (15)
33 There are several examples in the case-law of the Court of Justice. In Höfner and Elser the Court of Justice held the German Bundesanstalt für Arbeit to be an undertaking because that public body is engaged in economic activity as an independent unit in the employment sector in a broad sense. (16)
34 The Merci (17) case concerned the market for the organization, on behalf of third parties, of the loading and unloading of ordinary freight in the Port of Genoa, by a specific dock-work undertaking and the carrying-out of that work by a specific dock-work company. It was common ground in that case that these were undertakings engaged in economic activity. The Court of Justice ruled that the undertakings in question had to be regarded as undertakings to which exclusive rights had been granted by the State within the meaning of Article 90(1) of the Treaty. It further held that such a dock-work undertaking and/or company could not be regarded `as being entrusted with the operation of services of general economic interest', within the meaning of Article 90(2) of the Treaty. (18)
35 In its Corsica Ferries (19) judgment concerning the market in compulsory piloting services in the Porto Petroli of Genoa, administered by the Corporation of Pilots of the Port of Genoa (Corporazione Piloti del Porto di Genova), the nature of which as an undertaking was not in dispute, the Court of Justice ruled, as in the Merci judgment, that the corporation in question `has received from the public authorities the exclusive right to provide compulsory piloting services in the Port of Genoa', (20) within the meaning of Article 90(1) of the Treaty.
36 In the SAT Fluggesellschaft case, (21) the Court of Justice had to ascertain whether the activities of that body, which is responsible in particular for the common organization of air navigation services in the air space of the signatory States, constituted activities within the meaning of Articles 86 and 90 of the Treaty, and, after considering the nature of those activities, their purpose and the rules governing them, (22) the Court concluded that the body in question was not an undertaking within the meaning of those articles.
37 The Court of Justice ruled that: (23) `Taken as a whole, Eurocontrol's activities, by their nature, their aim and the rules to which they are subject, are connected with the exercise of powers relating to the control and supervision of air space which are typically those of a public authority. They are not of an economic nature justifying the application of the Treaty rules of competition.' (24) The Court therefore held that the collection of route charges formed an integral part of Eurocontrol's activities as a whole, (25) but did not examine whether, exclusively in the context of its activity of collecting route charges which gave rise to the main action, Eurocontrol did or did not constitute an undertaking entrusted with a revenue-producing monopoly, within the meaning of Article 90(2) of the Treaty. (26)
38 It should be underlined that in the abovementioned case (SAT Fluggesellschaft) the Court of Justice followed the opinion of Advocate General Tesauro, who pointed out that: `the performance of duties involving the exercise of public authority by a body may prevent the range of activities carried on by it from being subject to the rules of competition only where those duties form an inseparable part of the activity in question', concluding from that that `in the case in point the services provided (radar control, meteorological information, warning services) form an indissociable whole'. The Advocate General went on to say that `air control constitutes a natural monopoly in the air space where it is carried out, and in that respect, competition between two bodies not only is not desirable but would not even be possible in practice'. (27) He also pointed out that (28) the pursuit of an activity that involves the exercise of official powers is incompatible with the classification of an entity as an undertaking, with the result that a body acting as a public authority is not subject to the Treaty rules on competition. The Advocate General concluded that `it is a public service to which any idea of commercial exploitation with a view to profit is alien: which may not be incompatible, where appropriate and given equal efficiency, with economic management of the activity in question'.
39 Moreover, in the judgment in Poucet (29) the Court of Justice ruled that sickness insurance funds or the bodies which act on their behalf in administering the social security system provided by the State, are not engaged in economic activity but have an `exclusively social function' because that activity is subject to control by the State, (30) `is based on the principle of national solidarity and is entirely non-profit-making'. In addition, `the benefits paid are statutory benefits bearing no relation to the amount of the contributions'. (31) The Court stressed that `the social security schemes, as described, are based on a system of compulsory contribution, which is indispensable for application of the principle of solidarity and the financial equilibrium of those schemes'. (32) It further ruled that in the discharge of their duties, the funds `apply the law and thus cannot influence the amount of the contributions, the use of assets and the fixing of the level of benefits'. (33)
40 It is worth pointing out that where the Court of Justice has to establish whether or not an activity is an economic activity, it looks at the nature of the activity, irrespective of the body that carries it out. The Court has thus recognized that (34) `the State may act either by exercising public powers or by carrying on economic activities of an industrial or commercial nature by offering goods and services on the market' (35) and that in order to classify such an activity as an activity carried out by a public undertaking it is of no importance that the body in question does not have a legal personality distinct from that of the State. But the Court has made clear that `in order to make such a distinction, it is therefore necessary, in each case, to consider the activities exercised by the State and to determine the category to which those activities belong'. (36)
41 It is clear from the case-law of the Court of Justice, and more especially the judgments in SAT Fluggesellschaft and Poucet, that certain bodies that are the instruments of a policy in the (general) public interest and enjoy prerogatives of the public authority, that is to say bodies that exercise an activity typical of a public authority or have an exclusively social function, do not constitute undertakings and are not therefore subject to the Community rules on competition.
42 In reaching those conclusions, the Court of Justice has focused on the nature of the activity exercised, that is to say whether or not it is of an economic nature and whether it could, in principle, be performed by a private profit-making undertaking. It has also considered the aim of the activity and the rules to which it is subject. (37) In addition, the Court has looked at a number, or bundle, of indicators that on their own are not sufficient to rule out that an activity is of an economic nature and establish that it falls outside the scope of competition law. Basically, the Court has assessed the extent to which the entity whose activities are under review operates in compliance with the rules laid down by the administrative authorities and whether, more particularly, it has the power to influence the level of the consideration demanded in return for the services provided to users, and the extent to which it is profit-making.
(b) Are the activities of SEPG of an economic nature?
43 A distinction has, in principle, to be made here. I take the view that the collection of fees by SEPG, which gave rise to the main action, forms an integral part of its activities for the protection of the port's maritime environment and, for that reason, I shall consider the extent to which it constitutes an undertaking, in terms of the Community rules on competition, on the basis of those activities as a whole. (38)
44 On the question of whether or not the activity of SEPG is of an economic nature, both the national court in its order for reference, SEPG itself and the Italian and French Governments consider that the fundamental aim of SEPG's anti-pollution activity is not only to guarantee the safety of users of the Porto Petroli, of the densely populated districts adjacent to the port and, more generally, of those districts of Genoa close to the port where tourism is a growth industry, but also to protect the port environment and, in the final analysis, ensure that public assets are properly preserved.
45 In my view, the antipollution surveillance carried out by SEPG at the Porto Petroli cannot be considered to be of an economic nature, and, consequently, that company cannot be held to be an undertaking within the meaning of the Community rules on competition.
46 In point of fact, if the nature and purpose of the activities of SEPG - as defined in Article 1 of Order No 32 of the President of the CAP, and consisting in antipollution surveillance, that is to say in protecting the environment of the port and adjacent areas - are analysed, they have clearly to be classified differently, according to what they are designed to achieve. Firstly, the maritime zone of the Porto Petroli, that is to say a public asset, is being protected in the interest of the State and of citizens. Secondly, users of the Porto Petroli are being protected against the risk of accidents and, thirdly, protection is being provided for the areas surrounding the Porto Petroli, the inhabitants of those areas and undertakings established there which have a direct interest in the prevention of environmental accidents caused by tankers docking at the port.
47 The anti-pollution surveillance carried out by SEPG at the Porto Petroli meets the fundamental need to ensure the safety of both users of the Porto Petroli and the inhabitants of the surrounding area. As well as being geared to protection of the environment, an aspect that I shall consider below, that activity is directly linked, if not equivalent, to the function of policing the maritime area of the port, and that, in my view, is a function that may be exercised by a public authority, regardless of the legal form adopted for its organization and administration. Consequently, a legal body assigned the above responsibilities may not be deemed to be an undertaking within the meaning of Article 86, and it is therefore unnecessary to consider whether it constitutes an undertaking entrusted with the operation of services of general economic interest, within the meaning of Article 90(2) of the Treaty. (39)
48 Furthermore, it seems to me that the performance of the abovementioned tasks, that is to say SEPG's anti-pollution activities, ought specifically to be recognized by the Court as constituting an essential function of the State. In other words, an activity that consists in anti-pollution surveillance of the maritime environment, that is to say in protecting the environment, cannot constitute the activity of an undertaking but falls into the category of a core State activity.
49 In the light of the above analysis, I consider that in so far as it involves anti-pollution surveillance of the Porto Petroli, the activity of SEPG cannot conceivably be carried out within a competitive system, since that would jeopardize, if not destroy, the effectiveness of the system of safeguards as regards both the port environment and the safety of port users and inhabitants of the surrounding areas. It is therefore a public service unrelated to commercial profit-making activity. Furthermore, that this service is provided for the benefit of the whole of the community is also apparent from the fact that the surveillance has to be exercised regardless whether the fees owed by any particular vessel have been paid.
50 A further element leading me to conclude that SEPG's activity is not of an economic nature is the fact that it is run according to operating criteria that are not appropriate to a private undertaking, given that, on the basis of Decree No 1191 of the President of the CAP, the CAP unilaterally fixes the fees SEPG is to charge for providing its services to vessels which use the terminals of the Porto Petroli. That means that SEPG is unable to take decisions independently of the CAP, that it acts on behalf of the CAP, has no real power to influence the process of setting the charges and is able only to determine the amount owed on each occasion (40) and collect it.
51 Finally, it seems to me necessary to underline that, if the service in return for which fees are paid is held not to be of an economic nature, the activity involved in collecting the fees must be regarded as having the same nature.
52 SEPG claims that it is not necessary for there to be a contractual relationship between SEPG itself and Calì before it can require Calì to pay the sum invoiced and that the latter's obligation to pay derives ultimately from the taxation powers of the CAP. SEPG further claims that the sums invoiced on the basis of those charges for the anti-pollution surveillance services provided by SEPG to every vessel using the facilities of the Porto Petroli and which SEPG is responsible for collecting have to be considered to be purely fiscal in character.
53 Furthermore, as the Italian Government representative stated at the hearing, that feature of the anti-pollution service means that this cannot be considered to be a market because the element of supply and demand is lacking; this is a service provided in the Porto Petroli generally, regardless of the specific services provided to tankers docking at the port, and it involves guaranteeing the cleanliness of the maritime environment and preventing the risk of pollution. It was in fact pointed out that should an accident occur, SEPG would be liable not in regard to the vessels but solely in regard to the Genoa port authorities. According to the Italian Government, that factor distinguishes this dispute from compulsory pilotage in the port where the pilot is liable in regard to the vessel for any accident he himself causes by negligence.
54 I would point out that, in this case, the sums collected by SEPG for anti-pollution surveillance of the Porto Petroli have to be deemed to be a charge payable by an individual for the benefit he has received as a result of a specific administrative activity carried on chiefly in the interest of the community. (41)
(c) Prevention of pollution as a public authority activity
55 Awareness of the dangers that now threaten the environment and the serious environmental disasters that occur from time to time (42) throughout the world have sensitized and mobilized not only individuals but also private and public bodies as well as governments everywhere, prompting the adoption of measures for the effective protection of the environment. Clearly, then, the prevention of pollution is crucially important, as it serves the general interest not only of the current generation but of future generations also. (43) It can therefore be said that the aim of protecting the environment is fundamentally valid as a preventive measure. (44)
56 Analysis of the Treaty and secondary Community law seems to me to indicate that protection of the environment, particularly where based on prevention, constitutes a public authority activity (45) that cannot be understood as anything other than a core State activity. (46)
57 Article 2 of the Treaty lays down specifically that the Community has the task, among its other objectives, of promoting `growth respecting the environment'. In accordance with Article 3(k) of the Treaty, for the Community to fulfil its task, its activities are to include `a policy in the sphere of the environment'. Respect for the environment and the establishment of a policy on the environment seem to me inconceivable unless the appropriate vigilance is exercised by the competent authorities, specifically by taking action to prevent incidents damaging to the environment.
58 The growing interest in protecting the environment is also apparent from the fact that the whole of Title XVI of the Treaty (Article 130r to Article 130t) is devoted to the environment.
59 The basic provision on the protection of the environment is Article 130r of the EC Treaty which reads as follows:
`...
2. Community policy on the environment shall aim at a high level of protection taking into account the diversity of situations in the various regions of the Community. It shall be based on the precautionary principle and on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source and that the polluter should pay. Environmental protection requirements must be integrated into the definition and implementation of other Community policies.
...' (47) (emphasis added).
Under Article 130t, the protective measures adopted by the Council pursuant to Article 130s `shall not prevent any Member State from maintaining or introducing more stringent protective measures', but they must be compatible with the Treaty and notified to the Commission. (48)
60 In my view, various provisions of secondary Community law as well as the case-law of the Court of Justice allow us to maintain that protection of the environment and, more particularly, supervision and control of the extent to which legislation and practices designed to prevent accidents are actually being applied, constitute the exercise of public powers, that is to say of public authorities, given that `the best environment policy consists in preventing the creation of pollution or nuisances at source, rather than subsequently trying to counteract their effects'. (49)
61 Accordingly, as regards Council Directive 84/631/EEC, (50) the Court held, (51) in relation to the transfrontier shipment of hazardous waste, that `the relevant national authorities are entitled to raise objections and are therefore able to prohibit a particular shipment of dangerous waste ... in order to deal with the problems concerning, first, protection of the environment and of health and, secondly, public policy and security'. (52) Protection of the environment and of health as well as public policy and security are thus held to be factors justifying specific activities on the part of the national authorities. Consequently, we can consider that they have to be held to be activities falling within the responsibility of the public authorities. (53)
62 A further argument supporting the view that the prevention of environmental disasters is a public authority activity emerges if we consider, for instance, the provisions of Council Directive 93/75/EEC. (54) To be more specific, according to the third recital in its preamble, the directive has set in place arrangements for providing the public authorities with information to enable them to adopt the necessary precautions with regard to vessels carrying dangerous or polluting goods bound for or leaving Community ports. It is clear from the provisions of Directive 93/75 as a whole that preventing the risk of pollution and the risk of serious accidents resulting from the transport by sea of dangerous or polluting goods is linked to the more general endeavour to exercise supervision and guarantee safety in order to avert and limit the damage that a disaster would cause to the maritime environment inside and outside ports. In other words, supervision and control intended to gauge compliance with legislation that is designed to prevent accidents of that nature constitute public authority activities exercised in order to meet an essential public interest. (55)
63 Furthermore, the case-law of the Court clearly indicates that protection of the environment is recognized by the Court itself as an objective `in the general interest' (56) justifying the restrictions on freedom of trade and freedom of competition. (57)
64 Finally, various other Community texts (58) bear out the view that exercising supervision to prevent pollution is an activity of the public authorities which cannot be considered to be of an economic nature.
(2) Has SEPG infringed Articles 86 and 90(2) of the Treaty?
65 Under Italian law, SEPG has the exclusive right to exercise surveillance (and undertake rapid intervention) to protect the maritime environment in the event of pollution resulting from the spillage of petroleum products. It therefore enjoys an exclusive right within the meaning of Article 90(1) of the Treaty.
66 The Court has consistently recognized that the `the conduct of an undertaking referred to in Article 90(1) of the Treaty must be assessed with regard to the provisions of Articles 85, 86 and 90(2)'. (59) Thus, should the Court hold that SEPG does constitute an undertaking under Community competition law, then, once SEPG's conduct has been reviewed in the light of Article 86, it would seem to me necessary to consider whether SEPG may be held to be an undertaking entrusted with providing a service of general economic interest in accordance with Article 90(2), and to analyse the implications of that definition.
(a) Reply to the first question: determination of the relevant market and whether SEPG occupies a dominant position
67 The United Kingdom Government claims that in the light of the judgment in Merci, SEPG, which enjoys an exclusive right and is responsible for exercising supervision to prevent pollution, has a dominant position in a substantial part of the common market. It further claims that the services provided by SEPG do not appear to represent a separate service additional to use of the port, as in the Merci case, but form an integral part of the running of the port. It points out that the element of `surveillance' involved actually comprises surveillance exercised in the port for the rapid detection of instances of pollution. Any intervention in the event of pollution is not so much a service provided for the benefit of the polluting vessel but constitutes an integral part of the way in which the port is managed for the benefit of all users and in the interest of the proper functioning of the port installations generally.
68 In the view of both the United Kingdom Government and the Commission, the dominant position is held not by SEPG but by the port authority, the CAP, as a whole, which makes the port facilities available to users. The fees collected by SEPG are part of the whole range of charges levied for use of the Porto Petroli.
69 The Commission does not dispute that the anti-pollution surveillance exercised where petroleum products are being loaded and unloaded constitutes a service in the public interest of an economic nature. However, considering that SEPG formed part of the CAP at the time of the events in question, the Commission argues that the CAP and SEPG constitute a single economic entity, so that any measure taken by SEPG may be directly imputed to the CAP. Referring to the judgment in Merci, (60) it considers that the Court of Justice has on a number of occasions held that the CAP possesses all of the traits necessary to be deemed an undertaking within the meaning of Article 86 of the Treaty.
70 The Commission further claims that in order to answer the question whether there is a dominant position and whether the invoices issued by SEPG represent an unwarranted additional service, unconnected with the subject-matter of the contract and such as to constitute the abuse of a dominant market position, the making available to users in the Porto Petroli of Genoa of installations and equipment for loading and unloading petroleum, petrochemical and chemical products has to be regarded as being the activity of an undertaking. That, according to the Commission, is because Calì asked to use the equipment and that service goes hand-in-hand with the obligation to use the surveillance and intervention service in the event of pollution that SEPG provides.
71 That line of argument from the United Kingdom Government and the Commission cannot be accepted. I consider that it is solely the nature of the activities of SEPG, and not whether or not it forms a single economic entity with the CAP, that is the crucial element that will enable us to determine whether or not the activities of SEPG make it an undertaking whose conduct will have to be examined in the light of Articles 86 and 90 of the Treaty. (61) That, moreover, is the question referred to the Court of Justice by the national court, and, in order to provide a helpful solution, I do not consider it necessary to analyse whether the CAP constitutes an undertaking within the meaning of Article 86 and, more specifically, an undertaking entrusted with operating a service of general economic interest.
72 In addition to the above considerations, it is worth pointing out that it is clear from the judgment in Merci (62) that the Court is referring not to the CAP but specifically to `an undertaking' of a Member State `such as the Port of Genoa company'. (63) That is to say that the Court did not in fact establish whether the CAP constituted an undertaking under Article 86 but whether two specific entities constituted an undertaking. (64) To be precise, the Court found, with reference to the market in the organization, on behalf of third parties, of dock work with regard to ordinary freight in the Port of Genoa (65) and the actual performance of such dock work by a specific dock-work company, (66) that that dock-work undertaking and/or company had a dominant position but could not be held to be `entrusted with the operation of services of general economic interest' within the meaning of Article 90(2) of the Treaty, (67) without ascertaining the extent to which the CAP as a whole constituted an undertaking. (68)
73 Furthermore, in its judgment in Corsica Ferries, (69) in which the Court had to establish whether there was an abuse of a dominant position in the case of an undertaking that had been accorded an exclusive right to provide compulsory piloting services in the Port of Genoa, the Court defined the relevant market as the market `in piloting services in the Port of Genoa'. (70) Here again, in other words, it did not seek to establish whether the CAP constituted an undertaking holding a dominant position in a specific market (namely the market in port activities as a whole).
74 According to SEPG, although in the judgment in Merci the Court held that the Port of Genoa constituted a substantial part of the common market, that view cannot be applied to the Porto Petroli in this case because of its size (it is a part of the Port of Genoa), the kind of products that it handles (petroleum products and petrochemicals) and the alternative solutions offered under the port system.
75 That argument by SEPG cannot be accepted as formulated. It seems to me that the case-law is unambiguous in this case. In the judgment in Merci, the Court of Justice stated: `Regard being had in particular to the volume of traffic in that port and its importance in relation to maritime import and export operations as a whole in the Member State concerned, that market may be regarded as constituting a substantial part of the common market.' (71)
76 The market at issue in this case is the market in the provision of anti-pollution services in a part of the Port of Genoa in which it is possible, because of the special facilities it contains, to carry out operations involving the loading and unloading of petroleum products, chemicals and petrochemicals. The statistics - produced by the representatives of Calì and the Commission at the hearing - on the volume of goods (petroleum products, chemicals and petrochemicals) that are handled in the Porto Petroli of Genoa and account for a substantial percentage of the total volume of goods handled in the port as a whole, show that the Porto Petroli serves the whole of Liguria. The strategic position of the Porto Petroli is evident, given its proximity to important industrial areas of north-west Italy. On the basis of the judgment in Merci, (72) the market in which SEPG operates (the provision of anti-pollution and intervention services in the Porto Petroli of Genoa) has to be held to constitute a substantial part of the common market.
77 Since, as is clear from the order for reference and the Italian legislation at issue, SEPG has the monopoly on anti-pollution activities (and also intervention measures if pollution occurs) in a substantial part of the common market, that fact alone confirms the dominant position of the undertaking in question, in accordance with consistent case-law. (73)
78 For those reasons, it is my view that the solution adopted in the judgment in Merci may be applied to this case also, that is to say we may consider that, as regards this element of its activity in which it takes the form of an undertaking holding a monopoly, SEPG does have a dominant position in a substantial part of the common market, bearing in mind, however, that `the simple fact of creating a dominant position by granting exclusive rights within the meaning of Article 90(1) of the Treaty is not as such incompatible with Article 86', as has been consistently held by the Court of Justice. (74)
(b) Reply to the second question: abuse of a dominant position
79 Since the question has been raised before the national court of whether or not SEPG is an undertaking abusing the dominant position it holds in the Porto Petroli, with the risk of distorting competition in trade between the Member States - a question which arose as a result of Calì's failure to pay invoices issued in respect of the use by its tankers of the wharves of the Porto Petroli - I take the view that the problem need be considered only in terms of SEPG's activities in the area of anti-pollution surveillance. It is not therefore necessary to consider what would happen in the event of an accident that caused pollution in the Porto Petroli, an issue that has not been raised before the national court. Were it to do so, the Court would be providing an answer that would not help decide the case that is pending; (75) it would simply be providing an advisory opinion on a hypothetical question, on which the national court does not have to decide. (76) Moreover, the Court has consistently declared that it `has no jurisdiction to rule on questions submitted by a national court if they bear no relation to the facts or the subject-matter of the main action and are therefore not strictly needed in order to decide the dispute in that action'. (77)
80 Having made that preliminary distinction, I shall consider to what extent the CAP's approval of the fees charged by SEPG creates the conditions that enable SEPG to abuse its dominant position within the meaning of subparagraphs (a), (c) and (d) of the second paragraph of Article 86 of the Treaty.
(i) Infringement of subparagraph (a) of the second paragraph of Article 86
81 According to Calì, the invoicing system applied by the CAP, regardless of the fact that SEPG did not ultimately provide any actual services to port users, which takes no account of whether the products carried are hazardous in nature but only of the vessel's tonnage and the quantities of the product, constitutes an unfair trading condition within the meaning of subparagraph (a) of the second paragraph of Article 86. Calì in fact argues that, at the expense of users of the Porto Petroli, charges are imposed for unsolicited services at a disproportionate level.
82 According to SEPG, its fees do not constitute an unfair trading condition, in so far as the carrier is able to include the cost in the freight charge. Given the type of activity that it carries on, the criteria applied to determine the sum payable, based on the vessel's tonnage and the quantities of the product, cannot be regarded as constituting an unfair trading condition since, it is maintained, they were fixed on the basis of a specific and detailed study by experts in the field and following negotiations with the users of the Porto Petroli. Furthermore, in any event, given the low level of the charges, they cannot be considered disproportionate.
83 In view of the nature of the services provided by SEPG (78) to all users of the Porto Petroli without distinction, I consider that the criteria that determine the amount of the charges, namely the vessel's tonnage and the quantities of the product rather than the nature, quality and capacity to pollute of the goods themselves, cannot be held to be an unfair trading condition. In my view, these criteria are acceptable because they are objective. The same conclusion is reached when considering the level of the charges, which is quite low, (79) so that it seems to me difficult to envisage any infringement of subparagraph (a) of the second paragraph of Article 86.
84 However, subparagraph (a) of the second paragraph of Article 86 could be held to have been infringed in so far as SEPG, which holds a dominant position and has been granted exclusive rights under the national rules, is thereby requiring payment for services that Calì has not specifically requested. (80) The question is whether that `abuse' of a dominant position is justified in the light of Article 90(2), which I shall consider below (under (3)).
(ii) Infringement of subparagraph (c) of the second paragraph of Article 86
85 According to the national court, the fact that SEPG compulsorily charges fees which, because they are imposed only on vessels in the port, affect a subject other than those whose responsibility it is to carry out the necessary technical operations, (81) inevitably results in a discrepancy between the responsibility for any pollution and the bearing of the cost of the anti-pollution service. Basically, the national court is therefore raising the question of whether there is an abuse of a dominant position because dissimilar conditions are being applied to equivalent services, within the meaning of subparagraph (c) of the second paragraph of Article 86 of the Treaty.
86 That argument cannot be accepted. I do not think that dissimilar conditions can be considered to be being applied to similar transactions, in this case as between Porto Petroli di Genova SpA, which carries out the loading and unloading, and the laders-receivers of the product on the one hand and the tankers on the other, because it is not possible to collect the sums payable other than from vessels that use the port installations and could, for one reason or another, trigger an environmental accident; and those sums are ultimately being collected from the operator on whose behalf the transport and related port operations are carried out.
(iii) Infringement of subparagraph (d) of the second paragraph of Article 86
87 According to Calì, the anti-pollution surveillance service provided by SEPG is an additional service that is unnecessary in relation to the contract for use of the port between the carrier and the Porto Petroli. It therefore represents, according to Calì, an unnecessary and unjustified additional charge which the carrier has to bear and is therefore incompatible with subparagraph (d) of the second paragraph of Article 86 of the Treaty.
88 According to the Commission, the CAP is in breach of subparagraph (d) of the second paragraph of Article 86, via its subsidiary SEPG, because it imposes on all vessels berthing at the Porto Petroli, without distinction, a service which, because of the nature of the product transported (in the case of non-polluting goods) is neither useful nor justified.
89 That argument clearly underestimates the importance of prevention when it comes to safeguarding the port environment and averting pollution in the interest of port users; it could, at least at first sight, be held to be founded only if the nature of the services provided to users of the Porto Petroli is totally left out of account. However, I find it difficult to accept that the charge for the anti-pollution surveillance service represents an unnecessary and unjustified additional cost to be borne by the carrier, even if the individual vessel carries anti-pollution equipment appropriate to the nature of the goods carried. Once again the question is whether that `abuse' of its dominant position by SEPG is justified in the light of Article 90(2), an issue which I shall consider below (under (3)).
(c) Reply to the third question: the effect on intra-Community trade
90 According to Calì, the fees charged by SEPG result in an unjustified additional cost to the carrier which is then reflected in the prices of the products imported and exported. The monopoly enjoyed by SEPG is therefore alleged to distort competition to the detriment of other Italian undertakings and undertakings from the other Member States seeking to supply similar services in the Porto Petroli.
91 Given that the Port of Genoa is of major importance for international trade and in the light of the consistent case-law of the Court of Justice, (82) according to which Article 86 does not require it to be demonstrated that the abusive conduct has actually substantially affected trade between the Member States but requires it to be established that that conduct is capable of having such an effect, it could, in my view, be claimed in this case that SEPG's conduct, constituting an abuse of a dominant position within the meaning of Article 86, is capable of distorting trade between the Member States.
(3) Is SEPG an undertaking entrusted with the operation of a service of general economic interest?
92 As the representative of the Italian Republic emphasized in the written observations and at the hearing, SEPG is entrusted with a service for the benefit of the public. This implies that SEPG may be held to be an undertaking entrusted with the operation of a service of general economic interest within the meaning of Article 90(2) and that the rules on competition are not therefore applicable in this case.
93 According to the United Kingdom Government, in contrast with the approach taken in the judgment in Merci, the port authority, which forms a single entity with SEPG, has to be considered to be providing a service of general economic interest within the meaning of Article 90(2) of the Treaty.
94 The Commission, however, maintains that, in accordance with the judgment in Merci, the port activities, which include the activities of SEPG, do not exhibit special characteristics as compared with other economic activities that would justify the application in this case of the derogation under Article 90(2).
95 In accordance with Article 90(2) of the Treaty, `Undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in this Treaty, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them'. Given that that definition (undertaking entrusted with the operation of services of general economic interest) introduces a derogation from the Community rules on competition, the Court of Justice interprets it narrowly. (83) It is within that framework that I shall consider the extent to which the rules on competition apply to SEPG.
96 Certainly, undertakings entrusted with the operation of services of general economic interest (84) are engaged in `activities of direct benefit to the public'. (85) In this case it seems to me that in so far as it is deemed an undertaking in terms of Community competition law, SEPG has, in any event, to be placed in that category because of the nature of the activities it exercises.
97 Consequently, I believe it has to be accepted in this case that it is clear from the documents forwarded by the national court and the written observations presented to the Court that, if they are held to be of an economic nature, SEPG's activities are of general economic interest. The constant surveillance of the port installations, designed to prevent pollution and ensure that they are maintained in a condition that enables tankers to dock and load or unload unhindered, without risk to users of the Porto Petroli or residents or economic operators in the surrounding areas, should, in my view, be held to constitute the operation of a service of general economic interest. (86)
98 According to the case-law of the Court of Justice, the question of the application of Article 90(2) of the Treaty arises only where the operation of the service of general economic interest concerned has been entrusted to a specific undertaking `by an act of the public authority'. (87) In this case, the decisions of the President of the CAP which entrusted to SEPG, exclusively, the concession to provide anti-pollution surveillance services in the Port of Genoa constitute `an act of the public authority', in the abovementioned sense, entrusting to a specific undertaking the operation of a service of general economic interest or specifically defining the obligations incumbent on that undertaking in the exercise of its operations.
99 There then arises the question whether the restrictions of competition are necessary to enable SEPG to carry out the special task with which it has been entrusted.
100 The Court has accepted the possibility of restricting competition from other economic operators, (88) but only `in so far as is necessary in order to enable the undertaking entrusted with such a task of general interest to perform it. In that regard, it is necessary to take into consideration the economic conditions in which the undertaking operates, in particular the costs which it has to bear and the legislation, particularly concerning the environment, to which it is subject.' The Court acknowledges (89) that it is for the national court to consider whether the restriction on competition is necessary in order to enable the undertaking entrusted with that task of general economic interest to perform it. (90)
101 In the light of documents supplied and the written observations submitted, I consider that application of the rules on competition contained in the Treaty could obstruct SEPG in the performance of its task. Setting aside the fact that it is not, in reality, possible to envisage anti-pollution surveillance activities being entrusted to several bodies that are in competition with each other and not, therefore, very effective, were private undertakings to be authorized to compete with the holder of the exclusive rights in the sectors of their choice corresponding to those rights, they could concentrate on the economically profitable operations concerning, for instance, surveillance of the loading and unloading operations of certain companies only, and offer more advantageous tariffs than those applied by the holder of the exclusive right, since, unlike the latter, they would not be bound for economic reasons to offset losses in the unprofitable sectors against profits in the more profitable sectors. (91) A solution of that nature would have the effect of undervaluing the need for constant and effective protection of the environment, respect for which has to be guaranteed by the Community and the Member States.
102 To summarize, only were the Court of Justice to find SEPG to be an undertaking under the Community rules on competition, would I have to conclude, given the nature of the tasks entrusted to it (anti-pollution surveillance), that it is an undertaking entrusted with a task of general economic interest within the meaning of Article 90(2) of the Treaty. Consequently, it is for the national court to assess, on the basis of the information provided by SEPG, the company in question, what requirements of public interest it has to meet which oblige it to act in a manner incompatible with Articles 86 and 90 of the Treaty. (92)
VI - Conclusion
103. In the light of the foregoing, I propose that the Court should give the following answer to the questions referred by the Tribunale di Genova:
A harbour company entrusted with providing an anti-pollution protection/surveillance service in a port's marine environment, such as the company described in the order for reference, does not constitute an undertaking within the meaning of Articles 86 and 90 of the Treaty.
(1) - Case C-179/90 [1991] ECR I-5889.
(2) - On 30 December 1994 the CAP was replaced by the Autorità Portuale (Port Authority), pursuant to Law No 84 of 28 January 1994 reforming harbour legislation.
(3) - The national court has explained that berths West 2 and West 3 are used solely for loading and unloading chemical and petrochemical products, whilst berths 1, 2, 3 and 4 of the Porto Petroli are used for loading and unloading petroleum products.
(4) - As the Commission points out (in paragraph 9 of its written observations), according to the Community legislation in force, acetone is a hazardous chemical product because it is highly flammable but it is not a pollutant of the marine environment.
(5) - As the Commission points out (in paragraph 7 of its written observations), the Porto Petroli at Genoa is Italy's principal port both because of its strategic position and the large quantities of goods transported, given its proximity to the major industrial regions of north-west Italy. According to the evidence produced, in 1993, the petroleum and chemical products handled accounted for more than 50% of the total of goods transported through the Gulf of Genoa, making up 23 830 000 tonnes of a total of 43 225 000 tonnes. Moreover, the volume of those products passing through the port of Genoa was appreciably greater than the total volume of products in the same sector that passed through the ports of La Spezia, Livorno and Savona. Finally, the Petroleum Port of Genoa is Italy's principal port for petroleum products accounting for 15% of the total volume of petroleum products handled in Italy as a whole. According to Calì, in 1995, more than 50% of the products transported through the Gulf of Genoa were petroleum, chemical and petrochemical products. To be precise: 27 417 550 tonnes of petroleum products and 1 387 tonnes of petroleum waste, and 745 553 tonnes of chemical products and 622 tonnes of chemical waste were carried.
(6) - Case C-83/91 Meilicke v ADV/ORGA [1992] ECR I-4871, paragraphs 29-32.
(7) - See, for instance, Case C-67/91 Asociación Española de Banca Privada and Others [1992] ECR I-4785, paragraph 25. See also Case 83/78 Pigs Marketing Board v Redmond [1978] ECR 2347, paragraph 25 and Case C-127/92 Enderby v Frenchay Health Authority and Secretary of State for Health [1993] ECR I-5535, paragraph 10.
(8) - See, in particular, Case C-348/89 Mecanarte v Metalurgica da Lagoa [1991] ECR I-3277, paragraph 48 and prior to that Joined Cases 36/80 and 71/80 Irish Creamery Milk Suppliers Association and Others v Government of Ireland and Others [1981] ECR 735, paragraph 5 et seq. and Case 338/85 Pardini v Ministero del Commercio con l'Estero [1988] ECR 2041, paragraph 8.
(9) - Meilicke, cited in footnote 6 above, paragraph 32.
(10) - See also Case 14/86 Pretore di Salò v Persons Unknown [1987] ECR 2545, paragraph 16.
(11) - See Case 13/68 Salgoil v Italy [1968] ECR 453.
(12) - Cited in footnote 1 above.
(13) - Case C-18/93 Corsica Ferries Italia v Corpo dei Piloti del Porto di Genova [1994] ECR I-1783.
(14) - See, more particularly, Case C-41/90 Höfner and Elser v Macrotron [1991] ECR I-1979, paragraph 21.
(15) - See point 9 of the Opinion of Advocate General Tesauro in Case C-364/92 SAT Fluggesellschaft v Eurocontrol [1994] ECR I-43.
(16) - More specifically, in the judgment in Höfner and Elser (cited at footnote 14 above) concerning a public employment agency engaged in the business of employment procurement, the Court of Justice recognized that that body may be classified as an undertaking and established that, in the context of competition law `employment procurement is an economic activity', going on to explain (paragraph 22) that `the fact that employment procurement activities are normally entrusted to public agencies cannot affect the economic nature of such activities. Employment procurement has not always been, and is not necessarily, carried out by public entities.' The Court concluded (paragraph 23) that such an agency `may be classified as an undertaking for the purpose of applying the Community competition rules'.
(17) - Cited in footnote 1 above.
(18) - Ibid., paragraph 28.
(19) - Cited above at footnote 13.
(20) - Ibid., paragraphs 39 and 42.
(21) - Cited in footnote 15 above. The dispute in that case was brought before the Belgian courts by Eurocontrol and concerned the recovery of route charges owed by an airline (SAT Fluggesellschaft) for the flights it had made during a certain period of time.
(22) - The responsibilities of Eurocontrol, which had the resources it needed for this, included in particular the collection (and, where necessary, enforced collection), on behalf of the contracting parties and third States that had acceded to the Convention (Convention concluded in Brussels on 13 December 1960, as subsequently amended), of the charges payable by users for the provision of air navigation services, as provided for under the Multilateral Agreement on Route Charges. The subject-matter of the agreement included in particular the establishment of a common system for determining and collecting route charges payable in respect of flights made in the air space of the contracting States.
(23) - SAT Fluggesellschaft judgment, cited in footnote 15 above, paragraph 30.
(24) - Moreover, although the Court of Justice has not defined the concept of official authority, the interpretation provided by Advocate General Mayras in Case 2/74 Reyners v Belgian State [1974] ECR 631, 665, remains the locus classicus and is worded as follows: `Official authority is that which arises from the sovereignty and majesty of the State; for him who exercises it, it implies the power of enjoying the prerogatives outside the general law, privileges of official power and powers of coercion over citizens. Connexion with the exercise of this authority can therefore arise only from the State itself, either directly or by delegation to certain persons who may even be unconnected with the public administration.' See also points 22 and 23 of the Opinion of Advocate General Jacobs in Höfner and Elser (cited in footnote 14 above).
(25) - Paragraph 28; see also paragraph 30.
(26) - See also on this point the earlier judgment in Case 29/76 LTU v Eurocontrol [1976] ECR 1541, paragraphs 4 and 5.
(27) - Point 13 of the Opinion in SAT Fluggesellschaft (cited in footnote 15 above).
(28) - Ibid., point 9.
(29) - Joined Cases C-159/91 and C-160/91 Poucet and Pitre v AGF and Cancava [1993] ECR I-637 (hereinafter `the judgment in Poucet').w').
(30) - Ibid., paragraph 14. An almost identical approach was taken by Advocate General Jacobs in point 64 of his Opinion in Joined Cases C-430/93 and C-431/93 Van Schijndel and Van Veen v SPF [1995] ECR I-4705, concerning the legal definition of an occupational pension fund as an undertaking, but the Court of Justice did not in the end give a ruling on that question.
(31) - Judgment in Poucet, cited in footnote 29 above, paragraph 18; see also paragraph 8. In its judgment in Case C-244/94 Fédération Française des Sociétés d'Assurance and Others v Ministère de l'Agriculture et de la Pêche [1995] ECR I-4013, the Court of Justice considered that the concept of undertaking within the meaning of Articles 85 and 86 of the Treaty encompassed an organization responsible for managing a supplementary old-age insurance scheme operating according to the principle of capitalization, since the insurance contributions were invested on the financial market and then paid back in the form of an annuity for life and not capital. It was considered (paragraph 12) that, even though it was non-profit-making and it managed a system established by law as an optional scheme, operating in keeping with the rules laid down by the authorities and presenting some aspects of solidarity (paragraphs 19 and 20), while the benefits it provided depended solely on the amount of the contributions, a body of that nature did constitute an undertaking within the meaning of Articles 85 and 86 of the Treaty.
(32) - Judgment in Poucet, cited in footnote 29 above, paragraph 13.
(33) - Ibid., paragraph 15.
(34) - See Case 118/85 Commission v Italy [1987] ECR 2599, paragraph 7, in which the Court of Justice ruled that Italy's Amministrazione Autonoma dei Monopoli di Stato (Autonomous State Monopolies Board) constituted a public undertaking that did not have legal personality distinct from that of the State but carried on economic activities by offering goods and services on the market in the manufactured tobacco sector.
(35) - For instance, in Case 107/84 Commission v Germany [1985] ECR 2655, paragraphs 14 and 15 in particular, the Court of Justice ruled that only part of the postal activities carried out by a body governed by public law may be regarded as the activities of a public authority in the strict sense.
(36) - Case 118/85, cited in footnote 34 above, paragraph 7. See also Case C-92/91 Taillandier [1993] ECR I-5383, paragraph 14. Furthermore, in Case 41/83 Italy v Commission [1985] ECR 873, paragraph 20, the Court of Justice took the view that the rules laid down by British Telecom, in the exercise of the rule-making powers conferred on it by statute, should be considered to form an integral part of its business activity.
(37) - See the judgments in SAT Fluggesellschaft, cited in footnote 15 above, paragraph 30 and Poucet, cited in footnote 29 above, paragraph 18.
(38) - As regards the area of SEPG's activities involving operations to neutralize the effects of pollution of the Porto Petroli in the event of an environmental accident, particularly spillages of petroleum, chemical or petrochemical products, I consider it right that the polluted waters should be decontaminated by an operator which has specialist staff and the proper equipment. It has then a predominantly economic character and is based on the principle that, where identifiable, `the polluter pays'.
(39) - It is certainly undeniable that the provision of those services has incidental advantages, including advantages from an economic point of view. As the Italian Government points out, the mere fact of establishing the service has meant that shipowners have been able to obtain better terms and lower rates from the insurance companies.
(40) - In the SAT Fluggesellschaft case (cited in footnote 15 above), the Court of Justice pointed out, on the one hand, that the international organization `acts in that capacity on behalf of the Contracting States without really having any influence over the amount of the route charges' (paragraph 29) and, on the other, that `the charges are collected on behalf of the Contracting States to which they are paid over, after deduction of a proportion of the revenue corresponding to an "administrative rate" intended to cover collection costs' (paragraph 23). In the Poucet case (cited in footnote 29 above), the Court of Justice further pointed out that the social security bodies cannot influence the amount of the contributions, the use of assets and the fixing of the level of benefits (paragraph 15).
(41) - See also the similar line of argument contained in point 14 of the Opinion of Advocate General Tesauro in the SAT Fluggesellschaft case (cited in footnote 15 above).
(42) - We have only to call to mind the environmental disasters caused from time to time by the spillage of petroleum products, such as occurred off the coasts of Brittany and Scotland, for example, nuclear accidents (as in the case of Chernobyl) or the escape of hazardous chemicals into the atmosphere (dioxins in Seveso).
(43) - That was stressed in the 1992 Rio Declaration (principle 3) and, in 1987, in the report of the World Commission on Environment and Development, better known as the Brundtland Report.
(44) - See Mikhail Dekleris [Vice-President of the Simvoulio tis Epikratias (Greek Council of State)]: `O Dodekádeltos tou perivállontos - Ególpio viosímou anaptíxeos' (`Bulletin on the Environment - A Vademecum for Viable Development'), in the series Nómos kai Físi - Vivliothíki Perivallontikoú Dikaíou (Law and Environment - Library of Environmental Law), editor: A.N. Sakkoula, Athens-Komotini, 1996 (397 pp.) The author argues that the whole complex of texts relating to the environment under international, Community and national law point to `the principle of a Public Environmental Order', as he describes it, and that, according to that principle, planning, regulating and monitoring the balance between man-made and eco-systems is basically a State responsibility that has to be assured by the State (pages 67 and 119); `the market clearly has a complementary role'; and the environment has to be protected `in accordance with scientific criteria' (p. 119); the author concludes that this principle is binding on everyone (p. 67).
(45) - The same conclusion emerges if we analyse international legislation in this field and, in particular the 1972 Stockholm Declaration on the Environment (principles 17 and 18) and the 1992 Rio Declaration (principles 4, 7 and 11) as well as Agenda 21 of 1992 which restated the principles of the Rio Declaration (see the guidelines contained in Chapter 8 on the organic merging of the environment and development in the decision-taking process); see also M. Dekleris, op. cit., p. 122 et seq.
(46) - That, clearly, does not imply that if this objective is to be consistently pursued, all interested parties and citizens will not have to be made aware of and contribute to it.
(47) - Article 130r (1) and (4) provide: `1. Community policy on the environment shall contribute to pursuit of the following objectives: - preserving, protecting and improving the quality of the environment; - protecting human health; - prudent and rational utilization of natural resources; - promoting measures at international level to deal with regional or worldwide environmental problems. ... 4. Within their respective spheres of competence, the Community and the Member States shall cooperate with third countries and with the competent international organizations .....'
(48) - Article 24(1) of the Greek Constitution provides a good example of this, laying down that `the protection of the natural and cultural environment is the responsibility of the State. To safeguard that environment, the State must take the appropriate preventive measures and measures of enforcement ...'.
(49) - That statement is the first of the general principles of a Community policy on the environment approved by the Council meeting of Environment Ministers in Bonn on 31 October 1972. See annex (Title II) to the Declaration of the Council of the European Communities and of the Representatives of the Governments of the Member States meeting in the Council of 22 November 1973 on the Programme of Action of the European Communities on the Environment (OJ 1973 C 112, p. 1).
(50) - Council Directive 84/631/EEC of 6 December 1984 on the supervision and control within the European Community of the transfrontier shipment of hazardous waste (OJ 1984 L 326, p. 31), as amended by Council Directive 86/279/EEC of 12 June 1986 (OJ 1986 L 181, p. 13). The directive set in place a comprehensive system, mainly concerned with the transfrontier shipment of hazardous waste for disposal in precisely specified installations, and is based on the requirement that the holder of the waste provide detailed advance notification.
(51) - Case C-422/92 Commission v Germany [1995] ECR I-1097, paragraph 32.
(52) - See Council Regulation (EEC) No 259/93 of 1 February 1993 on the supervision and control of shipments of waste within, into and out of the European Community (OJ 1993 L 30, p. 1) which replaced Directive 84/631. As the Court of Justice has pointed out (see Case C-209/94 P Buralux and Others v Council [1996] ECR I-615, paragraph 5), that regulation `establishes a uniform and comprehensive system for the transfer of all types of waste, whether hazardous or otherwise, not only between Member States but also between the Community and non-member countries'. It lays down (Article 30) the obligation to adopt the necessary measures and, more especially, a system of checks to be carried out by the competent authorities of the Member States to guarantee that the waste is transported as provided for under the regulation.
(53) - Article 5 of Council Directive 78/319/EEC of 20 March 1978 on toxic and dangerous waste (OJ 1978 L 84, p. 43) provides that: `Member States shall take the necessary measures to ensure that toxic and dangerous waste is disposed of without endangering human health and without harming the environment ...' Moreover, Article 15 establishes a system of control and supervision by the competent authorities.
(54) - Council Directive 93/75/EEC of 13 September 1993 concerning minimum requirements for vessels bound for or leaving Community ports and carrying dangerous or polluting goods (OJ 1993 L 247, p. 19). That directive implements the Solas and Marpol international conventions as well as IMO Resolution A 648 (16).
(55) - It is significant that, as also confirmed by the Court of Justice, Council Directive 80/68/EEC of 17 December 1979 on the protection of groundwater against pollution caused by certain dangerous substances (OJ 1980 L 20, p. 43), `seeks to protect the Community's groundwater in an effective manner by laying down specific and detailed provisions requiring the Member States to adopt a series of prohibitions, authorization schemes and monitoring procedures in order to prevent or limit discharges of certain substances', listed in the two annexes (see Case C-131/88 Commission v Germany [1991] ECR I-825, paragraph 7).
(56) - Case 240/83 Procureur de la République v ADBHU [1985] ECR 531, paragraph 15.
(57) - Case 278/85 Commission v Denmark [1987] ECR 4069, paragraph 16. In its judgment in Joined Cases 372/85 to 374/85 Ministère Public v Traen and Others [1987] ECR 2141, paragraph 22, concerning criminal proceedings brought against three operators of private waste disposal undertakings and a driver of a vehicle carrying solid waste for having disposed of waste in various places without first obtaining the permission of the competent authority, as provided for by Council Directive 75/442/EEC of 15 July 1975 on waste, the Court of Justice ruled that the power vested in the Member States regarding organization of the supervision provided for in the directive `subject to the usual limitations upon the exercise of a discretionary power ... is qualified only by the requirement that the objectives of that directive, namely the protection of human health and of the environment, must be complied with'. It can again be argued on the basis of that extract that protection of the environment constitutes an objective in the general interest, the pursuit of which, in my view, constitutes an activity analogous to the exercise of public powers. The Traen judgment is of interest because, as in the case of SEPG, the authority responsible for supervising solid waste disposal was the director of the sewage company, a company set up by the public authorities.
(58) - For example, following the European Council meeting held in Dublin in June 1990, the participants declared it to be the intention of the Heads of State and Government that action by the Community and its Member States will be developed on a coordinated basis and on the principles of sustainable development and preventive and precautionary action. Sustainable development means development that meets current needs without prejudicing the ability of future generations to meet their needs. See also the Resolution of the Council of 1 February 1993 on a Community programme of policy and action in relation to the environment and sustainable development (OJ 1993 C 138, p. 1). Meeting in Luxembourg on 20 June 1996, the Council of Energy Ministers adopted a `common position' on the principles and conditions for the gradual creation of a single market in electricity. What is significant is that, in accordance with that `common position' which was forwarded to the European Parliament as the next stage in the procedure, the directive to be adopted, provides, among other things, (see `Résumé of the "common position" of the Council (drawn up by the Council Secretariat)' in EUROPE/Documents, No 1993, 10 July 1996) that: `Member States may impose public service obligations on undertakings operating in the electricity sector relating to security of supply, regularity, quality and price of supplies and to environmental protection'. In other words, protection of the environment is acknowledged to be a public service obligation and, therefore, a public authority responsibility. Finally, I would refer by way of illustration to the fifth `European Community programme of policy and action in relation to the environment and sustainable development' entitled `Towards Sustainability', drawn up by the Commission (OJ 1993 C 138, p. 5). Significantly, Chapter 3, entitled `The actors', confirms that the action programmes on the environment in place until then were largely based on legislation and controls involving government and manufacturing industry. It is, however, stressed that the concept of shared responsibility requires a much more broadly-based and active involvement of all economic players including public authorities, public and private enterprise in all its forms and, above all, the general public, both as citizens and consumers. The role of local and regional authorities is highlighted in areas such as, for instance, the control of industrial pollution.
(59) - See, for example, Case C-260/89 ERT [1991] ECR I-2925, paragraph 28 and Case C-393/92 Municipality of Almelo and Others v Energiebedrijf Ijsselmij [1994] ECR I-1477, paragraph 33.
(60) - In point of fact the Commission is citing paragraph 13 of the judgment in Merci, cited in footnote 1 above, and point 16 of the Opinion of Advocate General Van Gerven in that same case.
(61) - See paragraph 19 et seq. of the judgment in Case C-364/92 SAT Fluggesellschaft, cited in footnote 15 above.
(62) - Paragraph 13, cited in footnote 1 above.
(63) - Furthermore, it is apparent from point 16 of the Opinion of Advocate General Van Gerven, cited in footnote 60 above, that the question of establishing whether undertakings existed concerned two port entities (Merci and Compagnia) and not the CAP as a whole.
(64) - The fact that it is pointed out, in paragraph 27 of the judgment in Merci, that `it does not appear either from the documents supplied by the national court or from the observations submitted to the Court of Justice that dock work is of a general economic interest exhibiting special characteristics as compared with the general economic interest of other economic activities' does not, in my view, absolutely preclude certain activities carried out in a port having those same characteristics; at any rate, the Court did not rule that the CAP constituted an undertaking within the meaning of Community competition law.
(65) - i.e. Merci Convenzionali Porto di Genova.
(66) - i.e. Compagnia Unica Lavoratori Merci Varie del Porto di Genova.
(67) - Judgment cited in footnote 1 above, paragraph 28.
(68) - Which would not, moreover, have been appropriate because, under the national legislation, the CAP has been entrusted with both economic and administrative activities.
(69) - Cited in footnote 13 above.
(70) - Paragraph 41.
(71) - Cited in footnote 1 above, paragraph 15.
(72) - Judgment cited in footnote 1 above, paragraph 15. See also Corsica Ferries (cited in footnote 13 above), paragraph 41.
(73) - See, for example, Merci (paragraph 14), Höfner (paragraph 28) and Corsica Ferries (paragraph 40) and Case C-260/89 ERT (cited in footnote 59 above), paragraph 31.
(74) - Merci (cited in footnote 1 above), paragraph 16. See also paragraph 42 of Corsica Ferries (cited in footnote 13 above).
(75) - See Case 244/80 Foglia v Novello [1981] ECR 3045, paragraph 21; Case C-231/89 Gmurzynska-Bscher v Oberfinanzdirektion Köln [1990] ECR I-4003, paragraph 20; Case C-346/93 Kleinwort Benson v City of Glasgow District Council [1995] ECR I-615, paragraph 24 and Case C-415/93 Union Royale Belges des Sociétés de Football Association and Others v Bosman and Others [1995] ECR I-4921, paragraph 60.
(76) - See Case 244/80 Foglia v Novella (paragraphs 18 and 20) and Case 149/82 Robards v Insurance Officer [1983] ECR 171, paragraph 19. See also Joined Cases C-422/93, C-423/93 and C-424/93 Zabala Erasun and Others [1995] ECR I-1567, paragraph 29.
(77) - See, for example, Case C-96/94 Centro Servizi Spediporto v Spedizioni Marittima del Golfo [1995] ECR I-2883, paragraph 45 and Corsica Ferries (cited in footnote 13 above), paragraph 14.
(78) - The loading and unloading of petroleum, chemical and petrochemical products involves a risk to the environment that justifies the existence of the anti-pollution surveillance service in question.
(79) - The order for reference indicates that Calì received an order to pay a total of LIT 8 708 928 in respect of the provision of services by SEPG. The Commission points out that that sum covers 18 invoices issued to Calì for the use of docks in the Porto Petroli between 31 January 1992 and 31 January 1994.
(80) - In the judgment in Merci, cited in footnote 1, the Court of Justice recognized (paragraph 19) that there had been an abuse because the undertakings holding a dominant position, which had been granted exclusive rights in accordance with the procedures laid down in the national rules in question, were, as a result, induced either to demand payment for services which had not been requested or to charge disproportionate prices.
(81) - In this case Porto Petroli di Genova SpA and the laders/receivers of the product.
(82) - See, for example, Case 322/81 Michelin v Commission [1983] ECR 3461, paragraph 104; Case 226/84 British Leyland v Commission [1986] ECR 3263, paragraph 20 and Höfner and Elser (cited in footnote 14 above), paragraph 32.
(83) - See, in particular, Case 127/73 BRT v SABAM and Fonior [1974] ECR 313, paragraph 20.
(84) - The Court of Justice has on a number of occasions examined activities of general economic interest: that of maintaining the navigability of an important waterway, for instance (Case 10/71 Ministère Public of Luxembourg v Muller and Others [1971] ECR 723); the provision of services in the telecommunications sector (Case 155/73 Sacchi [1974] ECR 409); the operation of air routes that are not commercially viable (Case 66/86 Ahmed Saeed Flugreisen and Silverline Reiseburo v Zentrale zur Bekämpfung unlauteren Wettbewerbs [1989] ECR 803; and postal services (Case C-320/91 Corbeau [1993] ECR I-2533).
(85) - As stated by Advocate General Van Gerven in point 27 of his Opinion in the Merci case (cited in footnote 1 above). See also point 137 of the Opinion of Advocate General Darmon in Case C-393/92 Almelo (cited in footnote 59 above).
(86) - See the similar approach taken by the Court of Justice in the judgment in Merci (cited in footnote 1 above), paragraph 27.
(87) - See Case 127/73 BRT (cited in footnote 83 above), paragraph 20; Case 172/80 Züchner v Bayerische Vereinsbank [1981] ECR 2021, paragraph 7; and Case 66/86 Ahmed Saeed Flugreisen (cited in footnote 84 above), paragraph 55.
(88) - See the judgment in Almelo (cited in footnote 59 above), paragraph 49, which concerned an undertaking entrusted, in the form of a non-exclusive concession under public law, with the task of supplying electricity in part of the national territory only.
(89) - See, in particular, Almelo (cited in footnote 59 above), paragraph 50, and Corbeau (cited in footnote 84 above), paragraphs 16 and 19.
(90) - See, in particular, Almelo (paragraph 50) and Corbeau (paragraph 20). See also Ahmed Saeed Flugreisen (cited in footnote 84 above), paragraphs 55 to 57.
(91) - On a similar issue, see Corbeau (cited in footnote 84 above), paragraph 18.
(92) - Clearly, if the national court concludes that the supplementary conditions of Article 90(2) are in fact fulfilled, then, particularly on the point of establishing whether the task assigned by a Member State and its performance involve a form of trade development incompatible with the Community interest, that court can, if it sees fit, contact the Commission for an answer to that question and obtain the legal and economic information on which to base its ruling. That clearly accords with the findings of the Court of Justice on the application of Articles 85 and 86 in, for example, Case C-234/89 Delimitis v Henniger Brau [1991] ECR I-935, paragraph 53, and in the earlier order in Case C-2/88 Imm. Zwartveld and Others [1990] ECR I-3365, paragraph 18. See also point 28 of the Opinion of Advocate General Van Gerven in Merci (cited in footnote 1 above). | 6 |
LORD JUSTICE ELIAS: This is an appeal by way of case stated from the decision of his His Honour Judge O'Malley and two justices sitting as an appeal court in the Crown Court at Taunton. The appellant was convicted before the magistrates of failing to provide a specimen for analysis contrary to Section 7(6) of the Road Traffic Offenders Act 1988. That Section provides that:
i. "A person who without reasonable cause fails to provide a specimen when required to do so pursuant to this Section is guilty of an offence."
He appealed to the Crown Court on the basis that the police officers had infringed his right to obtain legal advice as soon as reasonably practicable under Section 58 of the Police and Criminal Evidence Act 1984, and that in the circumstances, the magistrates should in their discretion have excluded the evidence of the breath test procedure under the provisions of Section 78 of that Act. The appeal failed and the appellant requested that the court state a case, which they did.
The background was this. The appellant was stopped in his car early one Saturday morning because of a defective headlight. He was found to be smelling of alcohol and was asked to provide a specimen of breath. He complied with the roadside breath test procedure and the test was positive. He was arrested and taken to Yeovil police station and kept in detention. The custody record noted that at 1.35 he confirmed that he required legal advice. The court below found that the call by the police to the duty solicitor was not made for some 20 minutes. In the interval, the police had sought to initiate the breath test procedure. The appellant was asking questions about what his options were, and whether he could have advice. He was, in the view of the police, procrastinating and in practice refusing to take part in the test. It was made plain to him that he would not be allowed to delay the procedure pending obtaining advice. He was told that his solicitor would tell him the same. He still would not provide a sample of breath, and was charged under section 7(6).
When the duty solicitor was called, he returned the call to the police station within two minutes. He was informed, wrongly in fact, that the appellant was currently on the intoxilyser machine, and that he should call back to find out the readings in some 20 minutes. At about 4.30 in the morning an officer administered an informal breath test to see whether the appellant was fit to be released. This showed an alcohol level of 45 milligrams of alcohol in 100 millilitres of breath.
The statutory provisions
Section 58.1 of PACE provides:
i. "A person arrested and held in custody in a police station or other premises shall be entitled, if he so requests, to consult a solicitor privately at any time."
Sub-section 4 then states:
ii. "If a person makes such a request, he must be permitted to consult a solicitor as soon as is practicable, except to the extent that the delay is permitted by this Section."
Section 58 is supplemented by the code of practice in connection with the conduct of police officers investigating suspected offences. Paragraph 6.5 of the code provides that:
i. "The exercise of the right of access to legal advice may be delayed only as in annexe B whenever legal advice is requested, unless annexe B requires. The custody officer must act without delay to secure the provision of such advice."
Section 78 of PACE provides:
i. "In any proceedings, the court may refuse to allow evidence on which the prosecution proposes to rely to be given if it appears to the court that having regard to all the circumstances, including the circumstances in which the evidence was obtained, the admission of the evidence would have such an adverse affect on the fairness of the proceedings that the court ought not to admit it."
The authorities
Before considering the submissions in the case, I will deal with some of the more important authorities chronologically. In DPP vs Billington [1988]1 WLR 535, Lord Justice Lloyd, with whom Mr Justice Mann agreed, giving judgment in the Divisional court, made it plain that neither the legislation nor the code entitles a defendant to refuse to give a specimen until having received legal advice. That case involved an allegation of a breach of Section 8(7) of the Road Traffic Act 1972, the statutory predecessor of Section 7(6) of the 1988 Act. The submission was that until advice had been obtained, there was a reasonable excuse for not providing the specimen. Lord Justice Lloyd said this:
i. "Under the code, a person who is asked to consult a solicitor, in order to obtain his advice, may not be interviewed until he has received that advice, save in certain circumstances.But there is nothing in the code, just as there is nothing in the Act, to prohibit the taking the specimen under Section 8. It is quite obvious that the Section 8 procedure is not in any sense an interval within the meaning of the code."
This case was followed by DPP vs Salter [1992] RTR 386. Again in that case the defendant made it plain that he wished to speak to a solicitor before taking a breath test. He was told that the duty solicitor had been informed, which was what he wanted, but the defendant should take the breath test first. He refused. The issue was whether on these facts he could establish a reasonable excuse in law for not providing a specimen. The court held that he could not. The court recognised there may be circumstances where a defendant's mental state is such that he does not properly appreciate the consequences of his refusal to provides specimens of breath. However, a refusal to do so simply because he wishes to see a doctor or a solicitor first could not as a matter of law afford any reasonable excuse for the failure.
In Kennedy vs DPP 2002 EWHC Admin 297, 2004 Road Traffic Reports 77, the court found that Section 58 had been infringed on the facts of that case. There had been a delay of some 21 minutes before attempts were made to contact a solicitor after a request was made. The defendant refused to provide a breath test, and although this was not an explanation given at the time, claimed that he was waiting to speak to his solicitor before doing so. As in this case, the magistrates had been asked to exercise their discretion to exclude the evidence under Section 78 of PACE because of that breach, but they refused. The Divisional court (Lord Justice Kennedy and Mr Justice Pitchers) held that they were right to do so. The court reviewed both English Commonwealth and Strasbourg authorities on the question whether on domestic law there was a right to legal advice before providing a specimen, and if not, whether effect had to be given to that right under Article 6 of the European Convention. Lord Justice Kennedy, giving the judgment of the court, held that it was not a breach of Article 6 to conduct the test before advice was obtained. He then discussed the circumstances in which some small minimal delay, pending obtaining advice, might be permitted, (paragraph 31):
i. "The public interest requires that the obtaining of breath specimens, part of the investigation, cannot be delayed to any significant extent in order to enable a suspect to take legal advice.
ii. "That, to my mind, means this; if there happens to be a solicitor in the charge office who the suspect says that he wants to consult with for a couple of minutes before deciding whether or not to provide specimens of breath, he must be allowed to do. Similarly, if the suspect asks at that stage to speak on the telephone for a couple of minutes to his own solicitor or the duty solicitor, and the solicitor in question is immediately available, whereas here the suspect had no more than indicated a general desire to have legal advice, I see no reason why the custody officer should not simply continue to take details and alert the solicitor's call centre at the first convenient opportunity."
I make four observations about this case. First, the exclusion of the evidence under Section 78 necessarily results in an acquittal, since there is nothing to sustain the prosecution thereafter. Second, Lord Justice Kennedy distinguished between the case where a solicitor was immediately available and one where he was not. No accommodation of the request would be required at all in the latter circumstances. Third, the court did not directly engage with the question of whether there was reasonable excuse not to take the test, no doubt because the question framed by the magistrates was in terms of whether the evidence of the procedures should have been excluded under Section 78. Fourth, although Lord Justice Kennedy indicated that suspect should be allowed access to a solicitor in the exceptional circumstances where the solicitor is immediately available, he did not spell out what would be the consequences if that access were not in fact permitted. I do not infer that his Lordship is intending to say that it would be a reasonable excuse to refuse to provide a specimen under the circumstances, nor that the court would be obliged to exclude the evidence under Section 78.
The next relevant case is Gearing vs DPP [2008]RTR72. The facts were very similar to those arising here. In that case, a defendant asked on some seven or eight occasions for the police to contact a lawyer, and she declined to take a breath test until she had spoken to the lawyer. She was told that the breath test would not be delayed. No attempt was made to contact the duty solicitor for some 22 minutes, during which time she had declined to provide specimens of breath. Once contacted, the duty solicitor spoke to the appellant some seven minutes later, and subsequently spoke to an officer advising him that the appellant was now willing to provide the sample. No sample was in fact taken, and the appellant was convicted for failing to provide a specimen of breath. Again, the contention advanced before the court below was that the evidence of the breath test should be excluded under Section 78 because the breach of Section 58. This was rejected both on the grounds that there had been no breach of Section 58, and that even if there had been, the evidence should be admitted. On appeal, heavy reliance was placed on the dictum of Lord Justice Kennedy in the Kennedy case. In addition, emphasis was placed on the fact that the solicitor proved to be available within seven minutes of being contacted. Accordingly, it was said that had the call been made at the appropriate time, there would be no undue delay and no offence would have been committed. It was also suggested that the only appropriate remedy was to exclude the evidence, since otherwise there would no effective remedy at all for the Section 58 breach.
In the Divisional court, Lord Justice Latham and Mr Justice Nelson held, contrary to the view of the court below, that there had been a breach of Section 58, but that the magistrates were entitled not to exclude the evidence. In the course of giving judgment, Mr Justice Nelson summarised certain relevant factors which should be considered when the court is deciding whether or not to exercise its discretion to exclude evidence in circumstances of this kind under Section 78, (see paragraphs 20 and 21 of the judgment):
As to Mr Madden's points in relation to Kennedy, it does indeed demonstrate that someone who asks for legal advice must be permitted to consult a solicitor as soon as is practicable, and indeed the officer must act under the Code 6.5 without delay in seeking that advice. But having said that, it is also clear that there can be no significant delay because of the important public interest in those who have in fact failed a roadside breath test being tested promptly. Were that not to be so, many who in fact had committed an offence and were above the limit would not be successfully prosecuted, the consequence being a significantly increased likelihood of road accidents and consequent injuries. So there cannot be any significant delay, and it is only in circumstances such as where there is a duty solicitor there and present who can be spoken to for a couple of minutes, or where the individual wishes to speak to his or her own solicitor or the duty solicitor and that solicitor in question is known to be immediately available. What Kennedy LJ is emphasising, is that anything other than a very, very short period will amount to a significant delay, given the public interest in prompt testing. The example he gives is "a couple of minutes" and he uses the words "immediately available" when referring to the availability of the solicitor. That emphasises the need for there to be no more than a very short delay.
When one turns, therefore, as I do on my finding that section 58 is breached, to section 78, one must of course have regard to Mr Madden's submission that once the right has been breached a remedy must be given and that here, had the advice been given, no offence would have been committed because the appellant would simply have followed the legal advice that she was given. That, however, is only one of the factors to be taken into account when considering section 78. The important features are the public interest which I have indicated, the fact that the procedure carries with it its own safeguards, the practicability of obtaining prompt legal advice, the extent of the delay, and whether it is significant; each case must be dealt with on its own facts.
. Mr Justice Nelson then applied those principles to the facts and concluded that this appellant knew that she might be over the limit, and did not need legal advice that she had no physical or medical excuse to decline to take the breath test. There was no challenge to the roadside breath test, and she was clearly informed that she would be prosecuted if she refused to take the test.
Lord Justice Latham then gave a concurring judgment. He noted that there was a tension between on the one hand the statutory obligation to permit a defendant to consult a solicitor as soon as is practicable, and on the other, the need to assure that the breathalyser procedure is conducted promptly. He then made the following observations (paragraph 27)::
i. "If a solicitor is present, or a specific solicitor is identified, then any delay will be minimal, and in the ordinary case a very short delay in carrying out the procedures, something in the order of a couple of minutes, as Lord Kennedy had put it, should be allowed. If that is not the case, the police can insist on the suspect providing the specimen. Since it is not clear how long it may take to contact the duty solicitor, because the procedure requires contacting the call centre, who then in turn contact the duty solicitor, there is an obligation to carry on with the procedure. In practice, it is not possible to say how long it may be before the duty solicitor is able to contact the police station. It may be very quick, as it was in this case, but it might not. Given the uncertainty, the public interest in carrying out the test speedily outweighs the right to obtain advice."
As I read Lord Justice Latham's judgment, he is limiting any argument about whether the evidence should be excluded under Section 78 to the specific case where a solicitor is immediately available, but the police nevertheless insist on carrying on with the breathalyser procedure. Even then it will, of course, be a matter of discretion on the facts of each case whether evidence should be excluded.
Finally, in Cowper vs DPP 2009 EWHC 2165 Admin, Gearing was cited, and it was suggested that even where a duty solicitor has been contacted, the court should require a five minute delay against the possibility that advice might be available within that period. Both Mr Justice Dobbs, given the lead judgment in the Divisional court, and Sir Anthony May who gave the concurring judgment, expressly rejected that argument.
The decision of the Crown Court
I turn to the decision of the court below. After reviewing a number of authorities, the Crown Court found that the delay in contacting the duty solicitor constituted a breach of Section 58. They noted that in Kirkup a delay of seven minutes was conceded by the prosecution to be too long. In Kennedy the delay was 21 minutes, and in Gearing 23 minutes and both were considered to be an unacceptable delay. However, the court also concluded that this did not justify excluding the evidence under Section 78. They accepted that the proper approach was to consider the factors which Mr Justice Nelson had identified as being material to this issue in paragraph 21 of Gearing, which we have set out. The court noted the strong public interest in those who failed the roadside breathalyser being tested promptly to reduce the risk of accidents and injuries. They were satisfied that it was made very clear to the appellant what the consequences of non-compliance were, and they were in no doubt that the continued procrastination amounted to a deliberate refusal to provide a specimen.
The grounds of appeal
The appellant's submissions can be treated relatively briefly. It is said that the court failed properly to apply the factors identified in Gearing and reached a decision they were not entitled to reach. Too much weight, in particular, had been attached to the fact that the officers conducting the breath test had properly explained the law and the consequences of non-compliance. The rationale behind Section 58 was that the defendant should be given a right to independent legal advice. If that had been done at the appropriate time, then given that the solicitor in fact responded within two minutes of being called, there would have been no significant delay at all. The decision of Lord Justice Kennedy in Kennedy shows that a small delay of that nature should be accommodated. The fact that Mr Chalupa may have sought to delay the procedure was entirely irrelevant; he was entitled to stand on his right to require legal advice. If the evidence cannot be excluded in a case such as this, then it would difficult to envisage circumstances in which it would be appropriate to exclude it. That would make the remedy for breach of Section 58.4 a hollow one.
The respondent submits that this was a perfectly proper exercise in discretion by the court below, and not one with which this court should interfere.
In my judgment, there are two answers to this appeal. The first is that this is not in my view one of those exceptional cases where a solicitor was immediately available, such that it could be said that any delay would necessarily have been minimal. I do not accept that the exception identified in Kennedy applies here. The appellant submits that it does on the basis that fortuitously, as it happens, the duty solicitor did respond within two minutes of being contacted. That may be true in this case, but there is plainly no guarantee under the duty solicitor scheme that there will always be such a speedy response. Moreover, he would not necessarily have been in a position to respond so promptly had he been contacted earlier. In my judgment, this was not one of those cases therefore which falls within that exceptional category.
It follows that we are not in the territory where Section 78 is properly engaged in the sense that there is no arguable basis at all for excluding the evidence. The authorities establish that the right to prompt legal advice and any breach of that right will, in general, have no bearing whatsoever upon the obligation to provide a specimen of breath. It is not a reasonable excuse to refuse to provide a specimen until advice has been received. Indeed, and perhaps more importantly, it is not even a reasonable excuse to refuse to provide the breath specimen when that is in accordance with the lawyer's advice, see Dickenson vs DPP [1989] Crim Law Reports 741. Accordingly, there is nothing unfair or improper with the police insisting on a specimen being provided before advice is obtained. To use the language of Section 78, there is nothing about the particular circumstance in which the evidence is obtained which might even arguably render it unfair to admit the evidence. Nor can the general circumstance that section 58 is infringed as a result of a short albeit unjustified delay in contacting the solicitor, begin to constitute such a justification. It could not possibly be said that to admit this evidence would have an adverse affect on the fairness of the trial. It would simply punish the prosecution in a manner wholly disproportionate to the nature of the wrongdoing, given in particular the public interest in the test being promptly conducted, and the importance of bringing to book those who are suspected of breaking this law.
In short, there is in my judgment no evidence at all on which any reasonable court, properly directing itself, could have concluded that fairness required that the evidence should be excluded. The balancing test was not even engaged. Of course, if the breach of Section 58 impacts on later stages of the investigation, that could have very different consequences.
As I have said, the only possible qualification where Section 78 may be engaged is as suggested in the Kennedy and Gearing decisions; namely where the police refuse to allow a suspect access to a solicitor who is ready and immediately available. In those very limited circumstances, Section 78 may, in principle, be available to justify excluding the evidence, although even then I would anticipate there would be very powerful arguments why the discretion should not be exercised. This was a case where there was a generalised request to obtain advice, and the duty solicitor was called. Accordingly, in my judgment, the appeal should fail on the ground that we are not in the exceptional situation, and Section 78 is not really in issue at all.
The second reason for rejecting the appeal is that even if Section 78 was potentially engaged on the grounds that the response was in fact very speedy from the duty solicitor, then the court below is, in any event, plainly entitled to refuse to exclude the evidence. I note that the argument that is run here is a substantial issue that ran unsuccessfully in the Gearing case. It was for the Crown Court to exercise the section 78 discretion and we are not here to substitute our views. We should only to interfere if the exercise of that discretion was wrong. In my judgment, that test was nowhere near being satisfied here, and the decision of the court below wholly justified. There was, in truth, no prejudice resulting from the breach of Section 58.
Disposal
The question posed by the court was this:
"Having found that there had been a breach of Section 58 of PACE, were the factors outlined by Mr Justice Nelson in Gearing properly applied when this court exercised its discretion to refuse to exclude the evidence of the breath test procedure?"
I appreciate that the question was posed in that way because it reflected the argument before the court below. Nevertheless, I do not think that it was appropriate for it to be so formulated. It involves treating the factors outlined by Mr Justice Nelson as if they were a statute. The issue is not whether those factors were properly applied, but more generally whether the discretion was properly exercised. The relevant question is simply whether, notwithstanding the breach of Section 58, the court was entitled to exercise its discretion so as to refuse to exclude the evidence of the breath test procedure. The answer I would give to that question is that they were so entitled. Indeed, as I have indicated, I do not think that there was ever any serious balancing exercise to undertake. Thank you both for your careful submissions and your skeletons.
Post-judgment discussion
MR WORSLEY: There is an application for costs. I have shown my learned friend a schedule which is not complete. It involves various factors that are still fluid. Can I invite your Lordships to make an order for costs to be assessed within a week?
LORD JUSTICE ELIAS: I am sure that --
MR JUSTICE OPENSHAW: You can, yes, you can apply, you can lodge an application in a week, but I don't think it will be assessed within a week.
MR WORSLEY: No, I will lodge the bill within a week.
LORD JUSTICE ELIAS: You don't resist the application for costs?
MR AHUJA: No, your Lordships, I don't think I can, simply to say that Mr Chalupa is legally aided in matters.
LORD JUSTICE ELIAS: He is legally aided?
MR AHUJA: He is legally aided, then, of course, if costs are granted, then he will have to pay those in due course.
LORD JUSTICE ELIAS: Are you still pursuing your application if he is legally aided?
MR JUSTICE OPENSHAW: Is he is paying a contribution on his aid?
MR AHUJA: I am not too sure about the answer to that, my Lord, unfortunately.
MR JUSTICE OPENSHAW: That is pretty important these days, is it not?
MR AHUJA: Yes.
MR JUSTICE OPENSHAW: Because some pay nothing and some pay a great deal.
MR AHUJA: If your Lordships will permit me, I have the certificate of representation here. There is no indication on the certificate, your Lordships, that he has to pay a contribution. It seems to be a full certificate.
MR WORSLEY: My Lord, that is right. If he is fully legally aided, there is no point me making an application.
LORD JUSTICE ELIAS: There is no point in making an application.
MR WORSLEY: Thank you.
LORD JUSTICE ELIAS: So we just make no order as to costs?
MR AHUJA: Yes, thank you. | 7 |
Mr Justice Morgan:
The principal application which is before me is an application by the Claimants for an order requiring some or all of the Defendants to permit the Claimants to enter, or re-enter, into possession of the dwelling house at 1 Garratt Close, Beddington, Surrey, alternatively, for the Claimants to be permitted to protect and/or collect their possessions which are in those premises. The immediate background to this application is that the First and Second Claimants, Mrs Pritchard and her son Mr Carter, were evicted from the premises by the Fifth Defendant, Fineland Investments Limited ("Fineland"), on 1st April 2011.
The events which led up to the eviction on 1st April 2011 essentially begin with a transaction entered into between Mrs Pritchard and Fineland on 9th August 2004. The nature of that transaction was described in detail in a judgment given by Ms Alison Foster QC, sitting as a Deputy Judge of the Chancery Division, on 31st January 2011, in proceedings brought by Fineland against Mrs Pritchard. Those proceedings were commenced on 29th June 2006 and I will refer to them as "the 2006 proceedings". The neutral citation of the judgment given on 31st January 2011 is [2011] EWHC 113 (Ch).
In very brief summary, prior to 9th August 2004, Mrs Pritchard was a secure tenant of the premises, holding the same from the London Borough of Sutton. She was entitled to, and did, exercise the Right to Buy under the Housing Act 1985. On 9th August 2004, the London Borough of Sutton transferred the freehold in the premises to Mrs Pritchard at a price discounted in accordance with the 1985 Act. On that date, her secure tenancy of the premises came to an end: see section 139(2) of the 1985 Act. Also on 9th August 2004, Mrs Pritchard contracted to sell the freehold in the premises to Fineland. The price agreed with Fineland was £20,000 more than the price paid by Mrs Pritchard. To avoid the London Borough of Sutton reclaiming all or part of the discount on the sale to Mrs Pritchard, the contract to sell to Fineland provided for completion at a date just over 3 years thereafter. Also on 9th August 2004, Mrs Pritchard granted to Fineland a lease of the premises for a term of 20 years. As the term of the lease was only 20 years, this grant did not oblige Mrs Pritchard to pay back to the London Borough of Sutton any part of the discount. Under the formal documents, Mrs Pritchard was obliged to give vacant possession of the premises to Fineland on 9th August 2004. However, Fineland informally agreed to allow Mrs Pritchard a short time to vacate the property. The Deputy Judge held that this meant that Mrs Pritchard was entitled to remain in the property until 30th August 2004.
Shortly after 9th August 2004, Mrs Pritchard sought to resile from the arrangements she had made with Fineland. She declined to vacate the premises. Eventually, Fineland brought the 2006 proceedings to claim possession of the premises and various other heads of relief. Mrs Pritchard filed a defence to those proceedings. Initially, she was represented by solicitors but later in the course of those proceedings she acted in person.
In late 2009, directions were given fixing the date of the trial of the 2006 proceedings so that it would take place in October 2010. On 22nd September 2010, Mrs Pritchard applied for an adjournment of the trial. That application was heard by Floyd J on 5th October 2010 and was dismissed.
The trial of the 2006 proceedings duly began on 11th October 2010. Mrs Pritchard had written to the court just before this date and the Deputy Judge considered her letter as a further application to adjourn the trial. The Deputy Judge considered that application and decided not to adjourn the trial. The trial then proceeded on the 11th and 12th October 2010. Fineland was represented by counsel. Mrs Pritchard did not attend the trial. The Deputy Judge was addressed in detail on behalf of Fineland and Fineland called oral evidence in accordance with witness statements which had earlier been served.
The Deputy Judge reserved her judgment, which was handed down on 31st January 2011. Mrs Pritchard attended on the handing down of the judgment. The approved judgment extends to some 30 pages. The Deputy Judge considered the documents which had been entered into by the parties, the allegations made by Mrs Pritchard in her Defence and the oral evidence. The Deputy Judge found in favour of Fineland.
A detailed order was drawn up to give effect to the judgment of 31st January 2011. Mrs Pritchard was ordered to give possession of the premises on 14th March 2011. The order also provided for the transactions entered into on 9th August 2004 to be perfected by appropriate registrations at the Land Registry. In particular, it was provided that Fineland should be registered as the proprietor under Title Number SGL 660273 in relation to the lease granted by Mrs Pritchard on 9th August 2004. The Deputy Judge refused permission to appeal. Mrs Pritchard has not at any time issued an Appellant's Notice seeking to appeal to the Court of Appeal against the order of 31st January 2011.
On 4th and 24th February 2011, solicitors for Fineland wrote to Mrs Pritchard with a copy of the order of 31st January 2011. The solicitors specifically referred to 14th March 2011 as the date on which possession was to be given up. In the second letter, the solicitors reminded Mrs Pritchard that she would need to remove her possessions from the property by that date.
On 9th March 2011, Mrs Pritchard appeared before David Richards J seeking a stay in relation to the possession order which was expressed to take effect on 14th March 2011. The judge directed that Mrs Pritchard should decide whether she wished to pursue that application and, if she did, he would hear an application to that effect on 11th March 2011. Mrs Pritchard did not later indicate to the judge or to Fineland that she wished to pursue the application and she did not appear before the judge on 11th March 2011, although Fineland was ready to appear through counsel on that date if an application were made.
Although I think that Fineland were not previously aware of this fact, Mrs Pritchard told me at the hearing on 13th April 2011 that she appeared before Peter Smith J and sought a stay of the order of possession. She did not give me the date of that appearance but she did tell me that the judge said that he could not, or would not, extend the date for possession and informed Mrs Pritchard that if she wished to challenge the order for possession she would have to appeal to the Court of Appeal.
Mrs Pritchard did not vacate the premises on 14th March 2011. On that date, the solicitors for Fineland were contacted by Mr Carew-Reid. On 15th March 2011, Mr Carew-Reid sent to those solicitors the Claim Form in proceedings which were issued by the Claimants on 11th March 2011. In the details of claim set out in the Claim Form, Mr Carew-Reid claimed to be the owner of the premises pursuant to an alleged agreement of June 2004. Mrs Pritchard and her son also claimed damages and possession of the premises as a result of what they said was immoral behaviour, conspiracy to defraud and a fraudulent trick by the Defendants. The Defendants included Fineland and also an associated company of Fineland, a director of Fineland and three firms of solicitors.
On 21st March 2011, Mrs Pritchard issued an application in the 2006 proceedings. The order which she sought was that there be a directions hearing in relation to a later full hearing of an application to stay and/or to set aside the order made on 31st January 2011. That application was returnable on 7th April 2011 when directions were apparently given for a hearing on 5th May 2011.
On or about 30th March 2011, Fineland applied for a writ of possession and a writ in Form No. 66 was issued on 30th March 2011. Fineland did not apply for permission to issue this writ. It took the view that the case fell within RSC order 113 r 7 rather than RSC order 45 r 3. It should be noted however that the appropriate writ under order 113 r 7 is Form No. 66A and not Form 66 but I would regard the difference as an irregularity which, on the facts of this case, the court should waive.
On 1st April 2011, the writ of possession was enforced at the premises by two Enforcement Officers. Mrs Pritchard was evicted. Her son, Mr Carter, was not present at the beginning of the eviction but he returned in the course of it. The premises were secured. Various possessions belonging to Mrs Pritchard and her son remained on the premises. There is a considerable dispute about the way in which the eviction was carried out and about the conduct of the Enforcement Officers, the police (who were in attendance) and Mrs Pritchard herself. On the view I take as to the legal position, it is not necessary in this present judgment to investigate the serious allegations and counter-allegations which have been made about the course of the eviction and the behaviour of the parties.
On 7th April 2011, Mr Carew-Reid appeared before me, without notice to Fineland. He wished to make an application in accordance with an application notice issued that day; that application notice is the one which I later heard on 13th April 2011 and which is the subject of this judgment. Mr Carew-Reid gave me a very abbreviated history of the matter which omitted many highly relevant matters. The associate in court on that day went in search of the court file which contained the judgment handed down on 31st January 2011. Having read that judgment to myself, I indicated to Mr Carew-Reid that it was not appropriate for me to make the orders which he sought when I had not heard from the other side, who indeed knew nothing of his application.
At the hearing on 13th April 2011, Mrs Pritchard appeared in person. She spoke on behalf of herself and her son, who was not present. Mr Carew-Reid was not present although it may be that Mrs Pritchard was able to speak on his behalf.
In considering whether to grant the relief sought by the application notice of 7th April 2011, I think that I should consider whether this is, or might be, a case in which the court will set aside the order for possession made on 31st January 2011 and also consider whether anything which happened in relation to the issuing of the writ of possession on 30th March 2011 or the circumstances in which the eviction took place on 1st April 2011 should result in the court setting aside the writ of possession of 30th March 2011 and/or allowing the Claimants to enter, or re-enter, the premises. If a court were in due course to set aside the order for possession then it would seem to follow that the court should then set aside the writ of possession and it would be open to the court, if it thought fit in all the circumstances, to restore the Claimants to the position they were in before the writ of possession was executed on 1st April 2011.
At the hearing on 13th April 2011, Mrs Pritchard did not focus on her application to set aside the order for possession but instead focussed on the circumstances in which she was evicted on 1st April 2011. Nonetheless, it seems to me that the first topic that I should consider is whether a court would or might set aside the order for possession in this case.
In my judgment, the court's powers to set aside the order for possession of 31st January 2011 are governed by CPR 39.3. In this case, the hearing on 11th and 12th October 2010 amounted to a "trial" for the purposes of that rule: contrast Forcelux Ltd v Binnie [2009] EWCA Civ 854. In any event, the court should normally apply the provisions of Rule 39.3(5) by analogy, even if they do not strictly apply in a case where judgment was given at a hearing which was not a "trial": see London Borough of Hackney v Findlay [2011] EWCA Civ 8 at [24].
Although the application which Mrs Pritchard has made to set aside the order for possession was not for hearing on 13th April 2011, if the possibility of the order for possession being set aside is to be a ground for me restoring Mrs Pritchard to possession of the premises, I must form some assessment on the material before me of Mrs Pritchard's prospects of success in that application. As to the requirements of rule 39.3(5), on the material before me, it is strongly arguable that Mrs Pritchard did not apply promptly to set aside the order of 31st January 2011. Further, in view of the refusal of Floyd J and of the Deputy Judge to adjourn the trial, I do not think that Mrs Pritchard has put forward a good reason for not attending the trial. In addition, it is strongly arguable that she has not shown a reasonable prospect of success at the trial. I would describe Mrs Pritchard's prospects of success in obtaining an order setting aside the order for possession as being only slight. In my judgment, those prospects are not sufficient to persuade me to restore her and her son to the premises in the meantime, while an application to set aside the order for possession is further considered.
I next turn to consider the various arguments which I heard about the circumstances in which the writ of possession was issued and in which Mrs Pritchard and her son were evicted on 1st April 2011.
The principal complaint made by Mrs Pritchard was that she was not given notice of the intended eviction on 1st April 2011. She was told, and reminded, in advance of 14th March 2011, that she was expected to deliver up possession by that date. However, I find that Fineland did not attempt to tell Mrs Pritchard that it had applied for, and obtained, a writ of possession and was proposing to execute that writ on 1st April 2011. I also find that when the Enforcement Officers attended the premises on 1st April 2011, this was a complete surprise, indeed a shock, to Mrs Pritchard. I think that Mrs Pritchard thought that she would have notice of any intended eviction and she may have thought that the proceedings issued on 11th March 2011 and the application made on 21st March 2011 were an effective means of keeping Fineland at bay while those proceedings took their course.
Mrs Pritchard submitted to me that the writ of possession was unlawful and the eviction should not have happened without notice having been given to her. I therefore need to consider, amongst other things, whether Fineland should have informed Mrs Pritchard of its intention to seek a writ of possession and, separately, whether (following the issue of the writ of possession) Fineland should have notified Mrs Pritchard of the intended eviction on 1st April 2011.
I have already mentioned that Fineland relied on RSC order 113 r 7 as justifying its decision not to seek the permission of the court to issue the writ of possession. Such permission is normally required under RSC order 45 r 3 but order 113 r 7 is an exception to that normal requirement.
Whether this case is governed by order 113 r 7 or order 45 r 3 is not an altogether easy point. Order 113 r 7 refers to "an order for possession in a possession claim against trespassers under Part 55". In my judgment, the phrase "a possession claim against trespassers" just quoted from order 113 r 7 is to be given the same meaning as in CPR 55, where the phrase is defined by rule 55.1(b) to mean: "a claim for the recovery of land which the claimant alleges is occupied only by a person or persons who entered or remained on the land without the consent of a person entitled to possession of that land but does not include a claim against a tenant or sub-tenant whether that tenancy has been terminated or not".
If one applies the above definition in CPR 55.1(b) to this case, it would appear that the possession order in this case was made in "a possession claim against trespassers". Mrs Pritchard had not entered the premises as a trespasser but after 30th August 2004 she remained in possession as a trespasser: see Greater London Council v Jenkins [1975] 1 WLR 155, as to the application of this definition to an ex-licensee. Further, I do not think that the claim to possession against Mrs Pritchard was a claim against a tenant or sub-tenant; although she had been a tenant of London Borough of Sutton up until 9th August 2004, she then became a transferee as freeholder from London Borough of Sutton (her tenancy thereupon being terminated) and then for some 21 days she was the licensee of Fineland.
There are other matters which I ought to consider. In CPR 55.2(1)(a)(iii) there is a reference to a possession claim brought by a "licensor (or former licensor)". A separate provision, CPR 55.2(1)(b), refers to "a possession claim against trespassers". The claim to possession in the present case would seem to fall within rule 55.2(1)(a)(iii); does that mean that it must fall outside rule 55.2(1)(b)? In my judgment, these two provisions need not be mutually exclusive. Paragraph (a)(iii) refers to the person bringing the claim: paragraph (b) refers to the person against whom the claim is brought. A single claim can come within both provisions. As I have explained, this case would seem to fall also within the definition of "a possession claim against trespassers".
I have also considered whether the claim to possession was "a possession claim against trespassers", given that the 2006 proceedings also included claims for other heads of relief. If one works through the many provisions in CPR 55 which refer to "a possession claim against trespassers", it is sometimes straightforward, and sometimes not, to apply those provisions to the 2006 proceedings. However, even if the individual provisions do not always fit with more complex proceedings such as the 2006 proceedings, that does not compel the conclusion that the claim to possession in the 2006 proceedings did not fall within the definition in CPR 55.1(b). I also note paragraph 1.7 of PD55A which refers to Part 55 applying to proceedings which include a claim to possession but also includes other claims. That would seem to cover the 2006 proceedings.
I have also considered the policy behind the special rule in RSC order 113 r 7. It seems to have been considered that a claim against a trespasser raises different issues and is to be dealt with in a different way from other possession claims and, in particular, without the safeguard of the need for permission pursuant to RSC order 45 r 3. If Fineland had made a claim to possession against Mrs Pritchard on the same basis as in the 2006 proceedings but using a separate set of proceedings, where the only remedy claimed was an order for possession, then I would without hesitation have held that such proceedings were a claim to possession against a trespasser. If Fineland had then obtained an order for possession in such proceedings, it would have been able to take advantage of RSC order 113 r 7. I do not see any good policy reason for treating the order for possession in the 2006 proceedings any differently just because it was in a set of proceedings which claimed relief in addition to an order for possession.
My conclusion is that the writ of possession in the present case was properly issued even though Fineland did not seek the permission of the court for the issue of the writ.
For the sake of completeness, I have considered what would probably have happened if Fineland had sought permission under RSC Order 45 r 3. In my judgment, Fineland would have been entitled to seek that permission by an ex parte application. RSC order 46.4(1) says so. The decision in Fleet Ltd v Lower Maisonette [1972] 1 WLR 765 is a little difficult to square with the wording of RSC order 46.4(1) and may have to be confined to a case within order 46 r 2(1)(d): see how the matter was described by Simon Brown LJ in Jephson Homes v Moisejevs [2001] 2 All ER 901 at [44] and [47]. The present case is not within order 46 r 2(1)(d). If permission had been sought by an ex parte application, I find that it would have been within the power of the court to give permission on such an application, without directing that the application be served on anyone. The application would have had to have satisfied RSC order 45 r 3(3). Fineland would have been able to satisfy the court that Mrs Pritchard's son, who was living with her, was likely to have received sufficient notice of the proceedings. There was no material put before me to show that her son had any rights binding on Fineland. There was no material before me to show that Mr Carew-Reid was in actual possession of the premises.
I now need to consider Mrs Pritchard's separate point that even if the writ of possession was properly issued, she should have been given notice of the intended eviction. However, there is simply no requirement in any High Court rule or in the forms for the writ of possession that notice needs to be given to the persons against whom the order for possession will be executed.
It follows from the above that the writ of possession was validly issued and there was no procedural defect in the manner of execution of the order for possession.
The order for possession in the present case was enforceable against Mr Carter who had no rights as against Fineland, entitling him to retain possession. As to Mr Carew-Reid, I had no evidence that he had been in possession of the premises on or before the 1st April 2011. Further, in so far as Mr Carew-Reid relies upon the contract which he says he made with Mrs Pritchard in June 2004, that contract is not binding on the leasehold interest held by Fineland as the contract was not at any relevant time protected by registration at the Land Registry. Fineland's entitlement to possession is pursuant to its title as lessee of the premises. Further, although I need not decide anything on this point, the genuineness of the alleged contract of June 2004 calls out for investigation.
I have held that the writ of possession was valid and that possession has been recovered pursuant to it. In any case, Fineland was entitled to enforce the order for possession in its favour without issuing and enforcing a writ of possession: see Aglionby v Cohen [1955] 1 QB 558 and McPhail v Persons Unknown [1973] Ch 447 at 457. Proceeding in that way would not infringe section 3 of the Protection from Eviction Act 1977 as the licence which Mrs Pritchard enjoyed from 9th August 2004 to 30th August 2004 would appear to have been a gratuitous licence and therefore an excluded licence pursuant to section 3A(7) of that Act.
It is apparent from the entirety of the proceedings and the applications on the part of Mrs Pritchard that she contends that unlawful violence was used in connection with the eviction. Conversely, Fineland allege that Mrs Pritchard acted unlawfully in resisting the eviction and it refers to the fact that she was arrested on a charge of aggravated trespass pursuant to section 68 of the Criminal Justice and Public Order Act 1994.
If one or other of the parties involved in the eviction on 1st April 2011 behaved unlawfully then such behaviour is not to be condoned. However, any unlawful actions on the part of Fineland or the Enforcement Officers or the police on or after the eviction do not invalidate the recovery of possession by Fineland, with or without the benefit of a valid writ of possession. If Mrs Pritchard is able to establish such unlawful behaviour, I would not regard that as a justification for making an order that she be restored to the premises. In view of the judgment of the Deputy Judge on 31st January 2011 and my finding that Mrs Pritchard has not shown a real prospect of the order for possession being set aside, the effect of restoring her to possession of the premises would be that Fineland would then be required to evict her a second time which, on my findings, they would be able to do. I would not regard the grant of an injunction leading to a second eviction as conferring any worthwhile benefit on Mrs Pritchard.
The above conclusions deal with the Claimants' application for an order allowing them to enter, or re-enter, the premise. There is also the question of the Claimants having access to the premises to remove their possessions. Fineland did not oppose the Claimants having a suitable opportunity under suitable supervision to remove the relevant items. At the conclusion of the hearing on 13th April 2011, I indicated the order which I would make in this respect and I need not repeat that matter in this judgment.
The application which was made on 7th April 2011 was served on the Third Defendants and on the Fourth Defendants. The Third Defendants were the solicitors who had acted for Fineland at an earlier stage in the 2006 proceedings until they were replaced by the Fourth Defendants. In addition to joining these Defendants to the application of 7th April 2011, the Claimants also gave notice that they required a number of individual solicitors from the Third and Fourth Defendants to attend the hearing on 13th April 2011 so that they could be cross-examined. The result was that the Third and Fourth Defendants separately instructed counsel to represent them at the hearing.
I held at the hearing on 13th April 2011 that the Claimants' conduct in giving notice to the Third and Fourth Defendants as Respondents to the application of 7th April 2011, which really only concerned Fineland, and also the application to cross-examine individual solicitors at the two firms was open to criticism on the grounds that it was unnecessary to require the Third and Fourth Defendants to attend the hearing and it was wrong to apply for an order that individual solicitors be cross-examined. I therefore dismissed any application in these respects against the Third and Fourth Defendants. I further ruled that I would certify that the applications against the Third and Fourth Defendants were totally without merit and that the Claimants should pay the costs of the Third and Fourth Defendants. They applied for costs to be assessed on the indemnity basis. I directed that they should have permission to apply at a later point for costs to be on the indemnity basis. My reason for postponing that particular decision is that the Claimants have made allegations against the Third and Fourth Defendants which remain to be dealt with at a future hearing and so as not to prejudge what might be determined at a future hearing, I will not rule at this stage on whether the costs of the hearing on 13th April 2011 should be on the indemnity basis. | 3 |
Lord Justice Buxton :
The nature of the case
This is an application for permission to appeal, with appeal to follow if permission granted, against a decision of Sullivan J on an application to him under section 288 of the Town and Country Planning Act 1990. The complaint before the judge was against his dismissal of the claimant's, now applicant's, appeal against a planning inspector's refusal of his appeal from a decision of the second respondent refusing permission for a gypsy caravan park at Woodside Caravan Park, Hatch, Bedfordshire [Woodside]. The proceedings are thought to raise issues of general importance about planning policy in relation to gypsy caravan sites.
The history can be succinctly stated in the terms adopted by the judge in paragraphs 3-8 of his judgment:
3. "Since the site had been used as a gypsy caravan park since 1998, the inspector treated the appeal as being made against a refusal to retain the four plots on the site which were occupied by four family groups.
4. Woodside Caravan Park comprises two parts: the back or northern field and the front or southern field fronting onto Hatch Road. Access from Hatch Road runs through the southern field to the northern field. The inspector summarised the lengthy planning history of the site in paragraph 17 of the decision letter. So far as relevant for present purposes, the history is as follows. The most recent occupation of the site by gypsy caravans began in 1998, when caravans were brought onto the site and various works, such as the construction of hard-standings and roadways, were undertaken. On 1st October 1998 the Council served an enforcement notice, stop notices were also served, but development continued and resulted in a layout of some 27 plots. Appeals were made against the enforcement notices and in a decision letter dated 29th June 1999 an inspector dismissed those appeals and upheld the enforcement notice. In doing so, the inspector extended compliance with the notice to a period of 12 months and suggested that consideration should be given to the possibility of approving a smaller site with substantial additional landscaping.
5. In a decision letter dated 8th January 2001, an appeal relating to 22 pitches on the site was dismissed. The inspector concluded that the site was a noticeable and incongruous feature in the countryside and on a scale that would not be small enough to avoid harm to the countryside. He felt that it would be possible to meet some of the need for gypsy accommodation in the district by what he called a "genuinely smaller scale gypsy site".
6. In due course applications for planning permission were made to retain 11 plots on that part of the site comprising the northern field. Those applications were refused. There were further appeals, and in a decision letter dated 20th June 2002 those appeals were dismissed by the Secretary of State following an inspector's report. In his decision letter, the Secretary of State said that he shared the inspector's view that a reasonable interpretation of a "much reduced site" could be a caravan park on the southern field forming a limited extension to Hatch and screened behind substantial landscaping but, the Secretary of State said, significantly different considerations applied to the northern field.
7. In June 2002 the High Court granted an injunction requiring the removal of all the occupants from the site, both the northern and southern fields. The injunction was to come into effect on 1st November 2002, but so far as the southern field was concerned a stay was granted pending the outcome of the appeal which is the subject of this application.
8. By the time the inspector considered the appeal at an inquiry held between 30th March and 1st April 2004, the occupants of the northern field had been removed and all of the plots had been cleared, with the exception of one of them.
The inspector's decision
In paragraph 19 of the decision letter the inspector identified six main issues arising from the proposed continued use of the site as a gypsy caravan park, namely whether that use would: (i) unacceptably spoil the character and appearance of the countryside, or (ii) harm the amenities nearby residents might reasonably expect to enjoy, or, (iii) undermine important policy aims relating to the provision of sites for gypsies, or, (iv) exacerbate flood risks, or, (v) meet a need for further gypsy sites that should be met here, or, (vi) meet the special needs of specific gypsy families.
The inspector concluded that the needs of the residents on the site were outweighed by what he saw as the serious harm that the site would cause. Of that, he said at paragraph 57 of his report:
"Because I cannot be certain that adequate drainage arrangements can be secured or properly maintained, a risk from flooding and the possibility of pollution remains. And, it seems to me that the size, position and origins of the site would combine to swamp the hamlet, harm the amenities nearby residents might reasonably be expected to enjoy, and give grounds for resident[s] to be apprehensive that previously experienced problems might recur. The character and appearance of the countryside here would also be altered irrevocably. For those reasons, the retention of [Woodside] would not just be harmful, it would also be contrary to the relevant planning policies emerging here. And given the origins and continued unlawful occupation of the site I consider that its retention would serve to undermine fundamental aims of Government policy"
The judge was satisfied that the inspector had set out his reasoning in clear and adequate detail; was entitled to take a different view from that of his predecessors; and had made no error of law. He therefore dismissed the appeal.
This application
In the appeal that is sought to be brought in this court complaint is made of three elements in the inspector's reasoning. It is right to say that the Notice of Appeal dealt with these matters in terms very different from, and much more attenuated than, the form that they took both in Mr Willers'skeleton argument and in the debate before the court. With some hesitation, we permitted the application to be extended in this way, as we were satisfied that the respondents had had adequate opportunity to understand, and to respond to, the way in which the case is now put. The three errors said to have been committed by the inspector, each of which separately is said to have been sufficient to undermine his order, can be stated, at the moment for purposes of identification only, as (i) the fear of crime issue; (ii) the shift from authorised to unauthorised sites issue; and (iii) the competition for local work issue. I will consider those in turn.
Fear of crime
Under the heading of "residential amenities" the inspector first, at paragraph 25 of his report, recorded the finding summarised in his paragraph 57 (see paragraph 4 above) that the scale of the proposed development "would still be sufficient to swamp the hamlet and so alter the perception of those living within it". He then referred to particular difficulties between the inhabitants of Woodside and the occupier of an immediately adjoining property, which he thought (paragraph 26) to arise from "the juxtaposition of two largely incompatible land uses". Neither of those conclusions is the subject of appeal.
The inspector then turned to past complaints about crime and vandalism since the Woodside site was created, and fears that such would continue. Those were the "grounds for resident[s] to be apprehensive that previously experienced problems might recur" to which the inspector referred in his summary in paragraph 57 of his report. The judge cited the inspector's reasoning on this point in full, and so must I. He said in his paragraphs 27-28 that at all three previous Inquiries:
"evidence was submitted of increased crime, trespass, vandalism and anti-social behaviour since the Woodside caravan park was set up. The last inspector was satisfied that the residents of Hatch were then being subjected to levels of nuisance and disturbance which was unacceptable and absent prior to the establishment of the encampment. The catalogue of police incidents submitted to me supports that view. But, it is also clear that more recently, and since the partial implementation of the injunction, the number of incidents has substantially decreased. At first sight the schedule appears to indicate that the removal of the gypsies from the land to the north has resulted in an almost complete absence of police attendance at Woodside. However, PC Knowles enumerated 5 occasions (excluding the one that might have related to activities on the fields beyond the poplar plantation) between August 2003 and March 2004 when police inquiries or 'complaints' to the force were associated with the site in some way. Unfortunately, the evidence presented does not distinguish between incidents associated with those remaining on the northern land and the appeal site. Indeed, there was nothing to link any incident with the appellants. Nevertheless incidents continue to occur.
28. The fear of crime is capable of being a material consideration, as is clear from the West Midlands Probation Committee v SSE and Walsall MBC (1997) JPL 323. In the present case the continued occurrence of incidents involving the police provides some grounds for residents to remain apprehensive about the prolonged existence of this gypsy caravan site. Moreover, residents have previously experienced some quite alarming events, one involving over 100 officers, of whom 18 were armed, backed up by 3 dog handlers and a helicopter. In those circumstances I do not find it surprising that they should express some apprehension that apparently quite innocuous inquiries might herald the on-set of something more disturbing. Even more so as the limited level of occurrences that now persists seems to me to be well in excess of what might ordinarily be expected in a small rural hamlet such as this."
The judge held that on the basis of that evidence the residents' fears could not possibly be said to be unjustified, or based on pure prejudice. Although the number of incidents had substantially decreased, they had continued.
The Inspector correctly cited the West Midlands Probation Committee case, as the ruling authority in this court. That case concerned a bail and probation hostel, which had attracted numerous visits by the police, and given rise to a fear of crime. That diminished the amenity of the area. Giving the judgment of this court, Pill LJ, at p395 held that justified public concern in the locality about emanations from land as a result of its proposed development may be a material consideration, but that the "particular purpose of a particular occupier of land" is not normally a material consideration in deciding whether the development should be permitted. He continued:
"A significant feature of the present case is the pattern of conduct and behaviour found by the Inspector to have existed over a substantial period of time. I include as part of that pattern the necessary responses of the police to events at the hostel. That behaviour is intimately connected with the use of the land as a bail and probation hostel….The established pattern of behaviour found by the Inspector to exist, and to exist by reason of the use of the land as a bail and probation hostel, related to the character of the use of the land, use as a bail and probation hostel… Given such an established pattern, I would not distinguish for present purposes the impact of the conduct upon the use of adjoining land from the impact of, for example, polluting discharges by way of smoke or fumes….Fear and concern felt by occupants of neighbouring land is as real in this case as in one involving polluting discharges and as relevant to their reasonable use of the land…..it is a question of planning judgement what weight should be given to the effect of the activity on the neighbouring land "
I respectfully draw from that guidance the conclusions that (i) fear and concern must be real, by which I would assume to be required that the fear and concern must have some reasonable basis, though falling short of requiring the feared outcome to be proved as inevitable or highly likely; and (ii) the object of that fear and concern must be the use, in planning terms, of the land. As we have seen, Pill LJ went to some trouble to demonstrate that it was the use of the land as a bail hostel, and not just the behaviour of some of the hostel's occupants, that grounded the legitimate concern: however much that behaviour was relied on to demonstrate the nature and likely effect of that use.
The inspector's approach in our case therefore presents two problems. First, not only had the number of incidents diminished, but those reported to the enquiry could not be reliably attributed either to the appeal site or to the applicants. Second, it was necessary in order to take these incidents into account to attribute them not merely to the individuals concerned but also to the use of the land. But a caravan site is not like a polluting factory or bail hostel, likely of its very nature to produce difficulties for its neighbours. Granted that the evidence of recently past events attributable to the site was sparse, or on a strict view non-existent, the fear must be that the concern as to future events was or may have been based in part on the fact that the site was to be a gypsy site. It cannot be right to view land use for that purpose as inherently creating the real concern that attaches to an institution such as a bail hostel.
Because of this difficulty, and the state of the evidence, the issue of fear of crime needed in this case to be very carefully explored. If the concern for the future rested not wholly on extrapolation from past events, but at least partly on assumptions not supported by evidence as to the characteristics of the future occupiers, then in accordance with the guidance contained in the West Midlands case it could not be taken into account.
These points were not put to the judge in quite this way. If they had been, I have little doubt that he would have held that the evidence before the inspector did not suffice to establish real concern of the kind that the authorities require before that concern can enter into the planning judgement.
Mr Sharland sought to counter this difficulty by pointing out that investigation of the fear of crime formed part of the inspector's analysis of the "residential amenities" issue. He had already determined that to grant permission would unreasonably interfere with the residential amenities of the area before he came to the fear of crime issue: see paragraph 6 above. He would therefore have determined that permission should be withheld on amenity grounds even if he had come to a different conclusion about the fear of crime. I cannot accept that argument. Although listed for convenience as an amenity issue, fear of crime was plainly regarded by the inspector, as it had been by the objectors, as a discrete, and important, issue. That is shown by the summary of his conclusions in paragraph 57 of his report: see paragraph 4 above. Whether the inspector would have come to the same final decision if he had taken a different view of the issues complained of in this appeal, including fear of crime, is a question that I shall have to consider at the end of this judgment. But it is a question that has to be assessed in the context of the inspector's determination as a whole.
This aspect of the determination is also important when addressing the other two issues in this appeal. Although they have to be taken separately, both of them arose in the context of the inspector's consideration of whether there was an established need for another gypsy site in Mid-Bedfordshire; or, if there was that need, whether there was a need for the site to be provided at Woodside. The issue of need arose because of what the inspector had found to be valid objections to Woodside. Those objections might be balanced out by demonstrating need for accommodation that would be fulfilled by provision at Woodside; but in those circumstances it was for the applicants to prove the need.
Shift from authorised to unauthorised sites
The inspector found, and the judge held that he was justified in finding, that there had been a history of movement from authorised to unauthorised caravan sites. The judge said that it was a matter for him what weight he gave to that fact. The inspector explained the point in his paragraph 47 as follows:
"I am also concerned that the data derived from the last 5 counts of gypsy caravans in the District seems to indicate a shift of caravans from authorised sites to unauthorised encampments. No one could provide an explanation at the Inquiry. Hence, I simply observe that there is a large reduction of caravans on authorised sites indicated by the count undertaken in July 2002 and a modest increase in unauthorised encampments. The decline in the latter shown by January 2003 clearly reflects the injunction at Woodside. But, by July 2003, not only had the number of caravans on unauthorised sites almost returned to previous levels, but also the number on authorised sites was substantially below levels that had previously been achieved. In the absence of any proffered information to the contrary, this seems to me to reflect a reduction in the use of authorised sites in favour of unauthorised encampments. I am not prepared to support such a trend, which in my view can only serve to undermine local and national policies to provide sites for gypsies. And, of course, it must follow that the number of unauthorised encampments in the District would be most unlikely to be a direct reflection of the need for additional gypsy caravan sites."
The inspector therefore drew two conclusions. First, the flight from authorised sites in the district supported the doubts that he had already expressed about the need for further such sites. Second, there was a danger that a grant of planning permission would undermine government policy to direct gypsy caravans to authorised sites. Mr Willers took us to the figures, in greatly more detail than he appears to have done before the judge, and argued that, properly understood in the context of seasonal migration, they did not support the existence of a "trend". There is, however, a more fundamental difficulty than that about both of the inspector's conclusions.
The figures were "snapshot" counts of vehicles at particular points in time, which said nothing about where the caravans had come from, or whether and if so why caravans had left authorised sites to go on to unauthorised sites. These figures therefore told one nothing about demand for authorised sites. That might be established by a count of vacancies on authorised sites, but the Decision Letter did not rely on any such evidence. Second, it might seem a paradox that the transformation of Woodside from an unauthorised to an authorised site (Mr Sharland, for the Secretary of State, having confirmed that in terms of government policy Woodside, with planning permission, would count as authorised) could be opposed as undermining governmental policy as to the extension of authorised sites. I do not exclude the possibility of such an argument, but it needed to be made in much more detailed and expositive terms than are adopted in the Decision Letter.
Competition for local work
Having found that need for further sites in Mid-Bedfordshire had not been established, the inspector continued in his paragraph 48:
"But, even if a general need for additional gypsy caravan sites were to be identified in Mid Bedfordshire, there are good reasons for not seeking to provide it here. This particular part of the District already serves as the principle location for almost all the authorised provision for gypsies. The 2 main 'private' sites at Cartwheel and Talamanca lie just to the west of Sandy beside the A1(T), barely 1.5 km to the north. The main 'public' site is at Potton, roughly 5 km to the east of Sandy. The other sites in the District are only for single family occupation. One has recently been permitted to the south of Biggleswade, another exists to the west of Letchworth and another is at Houghton Conquest. It is thus clear that almost all the authorised provision for gypsy accommodation in the District is in the vicinity of Sandy. The evidence from HRAG is that, at the first Inquiry, the Gypsy Liaison Officer indicated that the over-provision of sites in this part of the District was a defect in relation to the location of Woodside. The site was described as being too close to Cartwheel and Talamanca, risking undue competition for local work and potential conflicts between gypsy communities. In my view, this is yet another reason why the appeal site is not suitable for a location for a gypsy encampment."
The evidence referred to had been given in written form to the first inquiry. The witness had not been available for cross-examination either then or before this inspector, and therefore had not explained what she meant by her fears of "conflicts" between gypsy communities. Mr Caws very frankly said that the only sensible meaning that could be given to the word in its context was of social hostility or even physical violence between gypsies. The inspector should not have accepted this startling reason for refusing to meet need without a great deal more understanding of its meaning and implications.
Here again, the fundamental objection to this point does not seem to have been put to the judge, who was invited merely to reconsider the factual position as to work-habits of the potential inhabitants of Woodside. Had the matter been put to him as it was to us I doubt if he would have felt able to support this part of the inspector's determination.
The effect of my findings about the Decision Letter
I therefore find that in three respects the inspector relied on considerations that were not properly open to him. What is the effect of that upon his determination as a whole: which, as we have seen, contained further weighty objections to the development that have not been and could not have been appealed? Mr Caws very properly took us to the decision of this court in Simplex v Secretary of State for the Environment (1988) 57 P&CR 306, in relation to, in that case, factual errors made in a ministerial decision. At p 327 Purchas LJ said, with the agreement of Sir Roualeyn Cumming-Bruce, that
"it is not necessary…to show that the Minister would , or even probably would, have come to a different conclusion. [The appellant] has to exclude only the contrary contention, namely that the Minister necessarily would still have made the same decision."
If we apply that test, I do not think that it can be said that the inspector would necessarily have seen the detrimental factors in this application as dispositive had he not concluded as he did on the matters that I have ventured to criticise. The issue is however put out of contention by a further element in his decision.
When the inspector summarised the serious harm that he found in the application, as set out in his paragraph 57 cited in paragraph 4 above, he did so to demonstrate that that harm was not offset by the particular needs that he had identified: see paragraph 58 of his determination. Those particular needs were not the need for further gypsy provision in general, so far discussed, but the educational and medical needs of some of the children resident on the site. He described these in his paragraphs 54 and 55:
"the conditions of Mary and Lydia are cause for serious concern. Particularly in Lydia's case, the consultant recommends close supervision by her GP on a regular basis to avoid frequent admissions to hospital. Mary has also been admitted to Bedford Hospital. [55] Retention of [Woodside] would, therefore, help to meet some particular needs of at least 4 people in 3 of the gypsy families on the site. It would allow Isaac and Jason to continue at a school into which they appear to have settled, it would forestall future bouts of serious depression and it would enable necessary close medical supervision to continue. These important considerations need to be weighed in the balance with the matters previously considered"
The inspector thus gave proper and sensitive weight to the pressing and serious needs of some very disadvantaged children. I would expect such considerations also to weigh with the Secretary of State. It would do a serious disservice to the inspector to conclude that he would necessarily have found against those needs if significant elements in the factors that he had placed in the balance against them were to be removed.
Disposal
I would grant the application; allow the appeal; quash the inspector's determination; and remit the application for re-consideration by the Secretary of State.
Lord Justice Sedley:
I agree.
Mr Justice Rimer:
I also agree. | 3 |
Mr Justice Warby:
Members of the legal profession and other readers of the law reports will be familiar with 'Solicitors from Hell'. It is the name used for and by a variety of websites which, over a period of years, have been used as a vehicle for denouncing solicitors and other member of the legal profession in the most outspoken terms, for alleged misconduct. The original website, set up by Rick Kordowski, was at www.solicitorsfromhell.co.uk. That site was closed down some years ago.
The solicitors firm which is the claimant in this action acted for the claimants in the litigation against Mr Kordowski, in which orders were made that closed down the original Solicitors from Hell site: Law Society v Kordowski [2011] EWHC 3185 (QB), [2014] EMLR 2. Now the firm itself has been targeted, via a web address which is a simple variant of the original. I shall refer to the new site as SFHUK.com.
Some of the claims made against the operator(s) of Solicitors from Hell websites in the past have been for harassment. The majority have been in libel, as is the present claim. There are two aspects to this claim. The first complains of the listing of the claimant firm as one of the 'Solicitors from hell'. The site is, as its home page explains, devoted to complaints about 'Solicitor fraud, misconduct, incompetence, negligence, dishonesty, overcharging, corruption, embezzlement, lying/perjury and racism.'
The second aspect of the claim arises from some words which refer specifically to alleged conduct of the firm. An item referring to the claimant appears on the site in the 'complaints' section. It is headed with the firm's name and address, and the headline or subject line 'Harassment'. The item takes the form of a letter of complaint by an anonymous client of the firm. In summary, the letter accuses the firm of seeking to charge three times the quoted fee for a simple letter and then, when the client refused to pay, unjustifiably threatening legal action and engaging in a campaign of harassment.
The offending words first appeared on SFHUK.com at some point between 2 October 2014 and 15 January 2015, which is when the claimant discovered their presence there. The words complained of were still on the site at the date of the application before me in September 2015.
The claimant firm has tried, in conjunction with the Law Society, to find out the identity of the people who operate SFHUK.com, but without success. They have discovered that the WHOIS registry lists 'Anonymous Speech' as the website owners. Anonymous Speech is a proxy registrant service. It claims to move its servers from one country to another on a regular basis. It further claims to ignore court orders originating from the EU or US. It appears to be an organisation which specialises in providing proxy services to those who do not wish to be traced.
A letter of claim dated 20 February 2015 was emailed to an "info@" address of SFHUK.com, but received no response. On 24 April 2015 the Law Society and the claimant obtained a Norwich Pharmacal order against Anonymous Speech, requiring it to disclose identifying information in relation to the owner/operator of SFHUK.com. The order provided for its service by email to [email protected] and [email protected] and two physical addresses, one in Tokyo and the other in Panama. There was no response. So when, on 28 July 2015, the claimants started this action claiming damages for libel and an injunction to restrain the continued publication of the words complained of, they issued their claim form against Persons Unknown.
The legitimacy of this procedure has been recognised for over a decade, since Bloomsbury Publishing Group plc v News Group Newspapers Ltd [2003] 1 WLR 1633. It is necessary for the unknown persons to be identified by description, in such a way as to identify with certainty those who are included within it and those who are not. That criterion has been met here by describing the defendants as "Persons Unknown responsible for the operation and publication of the website [SFUK.com]".
There is no difficulty in principle, if an action may be brought against persons unknown, in granting an injunction to restrain those persons from carrying out acts such as the misuse of unlawfully obtained copies of a book prior to its official publication date (as in the Bloomsbury case), or harassment (as in Stone & Williams v "WXY" [2012] EWHC 3184 (QB), and Kerner v WX [2015] EWHC 128 (QB)). In each of the last two cases the defendants were described as "Persons Unknown responsible for pursuing and/or taking photographs of" the claimants at specified places on specified dates.
Although the injunctions granted in the cases just cited were all interim, the court can grant final injunctive relief against persons unknown. McGowan J did so in Novartis Pharmaceuticals UK Ltd v Stop Huntingdon Animal Cruelty & Ors [2014] EWHC 3429 (QB), where she concluded on the written evidence put before her that the test for summary judgment in CPR 24.2 was satisfied.
The relevant procedural safeguards must of course be applied. A difficulty that can arise in cases of this kind is that of ensuring that the unknown defendants have been duly served with the proceedings, and with any application for interim or final relief. Kerner v XY provides an illustration of some of the difficulties: see the judgments at [2015] EWHC 178 (QB) and [2015] EWHC 1247 (QB). In the present case, however, the claimant applied on 28 July 2015, the day the claim form was issued, for permission pursuant to CPR 6.15 to serve the claim form, Particulars of Claim, any other statements of case, application notices and documents in these proceedings by an alternative method, namely by email to the two addresses mentioned above. Master McCloud allowed that application to be made without service on the defendants, and granted permission. As submitted by the claimant, the email addresses are given as contact addresses by Anonymous Speech, and it is reasonable to infer that they are genuine addresses, and that emails sent to them will be brought to the attention of the domain owners.
On the evening of 28 July the claimant emailed those two addresses with the claim form, Particulars of Claim, Response Pack, Master McCloud's order and the documents that had been put before her. Certificates of service were completed the following day, pursuant to CPR 6.17(2). I am satisfied that the proceedings were duly served. Pursuant to CPR 23.10(1) the defendants had the right to apply to set aside or vary the order of Master McCloud. Paragraph 3 of the order itself pointed this out. The time limit for making such an application is 7 days after the date the order was served on the person making the application: r 23.10(2). No such application was made within that time limit, or at all. Nor did the defendants file an acknowledgment of service or a defence by the deadline for doing so which has been calculated as, and I accept was, 13 August 2015. Indeed, nothing at all has been heard from the defendants.
It is against that background that on 19 August 2015 the claimants issued the application now before me, and served it on the defendants by the method authorised by the order of Master McCloud. The application seeks, inevitably, default judgment pursuant to CPR 12.3(1) and 12.4(2). It also seeks "summary disposal of the case pursuant to section 8 of the Defamation Act 1996 with the following relief: (a) damages, (b) an injunction and (c) costs." The application is supported by a witness statement of Mr Iain Wilson, a partner in the claimant firm. Mr Wilson is not a solicitor-advocate but has prepared a skeleton argument and appeared before me on the application and I have allowed him to advance submissions.
The first issue to be addressed is whether it is right to hear and dispose of the claimant's application in the absence of the defendants. I accept Mr Wilson's submission that I should follow the approach I identified in Sloutsker v Romanova [2015] EWHC 545 (QB) [22]-[23]:
"Where a party fails to appear at the hearing of an application the court may proceed in their absence: CPR 23.11. This is a power that must be exercised in accordance with the overriding objective. Ms Page properly referred me to authority making it clear that the court should be very careful before concluding that it is appropriate to proceed in the absence of a litigant in person who is seeking for the first time to adjourn a hearing: Fox v Graham Group Ltd (26 July 2001) (Neuberger J); SmithKline Beecham Ltd v GSKline Ltd [2011] EWHC 169 (Ch) (Arnold J), [6]. That is not the situation here, however. The defendant has not sought an adjournment. …
Where a litigant fails to appear without giving a reason it is necessary to consider first whether they have had proper notice of the hearing date and the matters, including the evidence, to be considered at the hearing. If satisfied that such notice has been given, the court must examine the available evidence as to the reasons why the litigant has not appeared, to see if this provides a ground for adjourning the hearing."
The application in Sloutsker was the defendant's application to set aside service of proceedings on her outside the jurisdiction. In the present case, as Mr Wilson fairly points out, there is another important facet to the requirement of proper notice, in the form of s 12(2) of the Human Rights Act 1998. Section 12 is engaged because the order the claimants seek involves "relief which, if granted, might affect the exercise of the Convention right to freedom of expression" within the meaning of s 12(1). Section 12(2) prohibits the court from granting such relief if the respondent is neither present nor represented, unless satisfied "(a) that the applicant has taken all reasonable steps to notify the respondent; or (b) that there are compelling reasons why the respondent should not be notified."
There is clearly no good reason for not notifying the defendants in this case. But I am satisfied that the claimant has taken all reasonable steps to notify them. I am satisfied that the defendants have in fact had notice, and an adequate time to respond if they chose. As I have already noted, it is reasonable to infer that emails sent to the Anonymous Speech addresses have come to the attention of those responsible for the operation of SFHUK.com. Indeed, that is in my view highly probable. The inference I draw is that the reason why the defendants are not present or represented at this hearing is that they wish to remain anonymous, and are "hiding". They have decided, in my judgment, to avoid engaging with the court process. I see no reason not to proceed in their absence. On the contrary, there is good reason to proceed in their absence. Any other course would lead to delay and further cost, without any justification.
The conditions for obtaining judgment in default of an acknowledgment of service prescribed by CPR 12.3(1) are met: the time for filing an acknowledgement of service or defence has expired, and neither has been filed. This is not a case in which default judgment can be obtained by filing a request pursuant to CPR 12.4(1). The claimant has, as required by CPR 12.4(2), made an application pursuant to CPR 23.
The claimant's entitlement on such an application is to "such judgment as it appears to the court that the claimant is entitled to on his statement of case": CPR 23.11(1). I accept Mr Wilson's submission that I should interpret and apply those words in the same way as I did in Sloutsker v Romanova [2015] EWHC 2053 (QB) at [84]:
"This rule enables the court to proceed on the basis of the claimant's unchallenged particulars of claim. There is no need to adduce evidence or for findings of fact to be made in cases where the defendant has not disputed the claimant's allegations. That in my judgment will normally be the right approach for the court to take. Examination of the merits will usually involve unnecessary expenditure of time and resources and hence [be] contrary to the overriding objective. It also runs the risk of needlessly complicating matters if an application is later made to set aside the default judgment: see QRS v Beach [2014] EWHC 4189 (QB), [2015] 1 WLR 2701 esp at [53]-[56]. "
As I said in the same judgment at [86], "the general approach outlined above could need modification in an appropriate case, for instance if the court concluded that the claimant's interpretation of the words complained of was wildly extravagant and impossible, or that the words were clearly not defamatory in their tendency." Those instances of circumstances which might require departure from the general rule are not exhaustive, but only examples. I have considered whether there is any feature of the present case that might require me to consider evidence, rather than the claimant's pleaded case, verified by a statement of truth and uncontradicted by the defendants. I do not think there is any such feature. I have therefore proceeded on the basis of the pleaded case, both in my introductory description of the facts above, and in reaching the conclusion that the claimant has established its right to recover damages for libel, and to appropriate injunctions to ensure that the libel is not further published by the defendants.
In reaching those conclusions I have considered first the question of jurisdiction. Section 10(1) of the Defamation Act 2013 provides as follows:
"(1) A court does not have jurisdiction to hear and determine an action for defamation brought against a person who was not the author, editor or publisher of the statement complained of unless the court is satisfied that it is not reasonably practicable for an action to be brought against the author, editor or publisher."
Section 10(2) of the 2013 Act provides that the terms 'author', 'editor' and 'publisher' in this context have the same meaning as in s 1 of the Defamation Act 1996. That section provides so far as material as follows:
"(2) For this purpose "author", "editor" and "publisher" have the following meanings, which are further explained in subsection (3)—
"author" means the originator of the statement, but does not include a person who did not intend that his statement be published at all;
"editor" means a person having editorial or equivalent responsibility for the content of the statement or the decision to publish it; and
"publisher" means a commercial publisher, that is, a person whose business is issuing material to the public, or a section of the public, who issues material containing the statement in the course of that business.
(3) A person shall not be considered the author, editor or publisher of a statement if he is only involved—
(a) in printing, producing, distributing or selling printed material containing the statement;
(b) in processing, making copies of, distributing, exhibiting or selling a film or sound recording (as defined in Part I of the Copyright, Designs and Patents Act 1988) containing the statement;
(c) in processing, making copies of, distributing or selling any electronic medium in or on which the statement is recorded, or in operating or providing any equipment, system or service by means of which the statement is retrieved, copied, distributed or made available in electronic form;
(d) as the broadcaster of a live programme containing the statement in circumstances in which he has no effective control over the maker of the statement;
(e) as the operator of or provider of access to a communications system by means of which the statement is transmitted, or made available, by a person over whom he has no effective control.
In a case not within paragraphs (a) to (e) the court may have regard to those provisions by way of analogy in deciding whether a person is to be considered the author, editor or publisher of a statement."
The defendants in the present case are described in the title to the action as persons 'responsible for the operation and publication of' SFHUK.com. They are described in paragraph 3 of the Particulars of Claim as 'an individual or group of individuals who has/have established and run a website at … [SFHUK.com].' Paragraph 5 alleged that SFHUK.com is 'a website that produces its own content and apparently allows third parties to submit material for publication.' In paragraph 14 the Particulars of Claim allege that the defendants 'published or caused to be published, and are continuing to publish, on SFHUK.com' the words complained of.
The Particulars of Claim do not allege that the defendants are in the 'business' of issuing material to the public, or contain any similar allegation. It seems that the defendants are likely to fall outside the scope of the term 'publisher', as defined by s 1 of the 1996 Act. I cannot conclude, on the pleaded case, that they fall within it. The claimant has not alleged, either, that the defendants are the 'authors' of any of the words complained of, or made any similar allegation. Indeed, in paragraph 39 of the Particulars of Claim it is said that 'It is not known whether the publication has been authored by the Defendant(s) or whether it has been submitted by a third party.' I am satisfied, however, that on the claimant's pleaded factual case the persons unknown who are the defendants to this action are persons within the definition of "editor" in s 1(2), and that they are not within any of the categories described in s 1(3)(a) to (e), or any analogous category. The court therefore has jurisdiction.
That conclusion means it is not necessary for me to address the pleaded allegation in paragraph 39 of the Particulars of Claim that "if [the publication] has been submitted by a third party it is not possible to identify him/her from the publication and it is therefore not practicable (or indeed possible) to bring an action against him/her." I would however say in passing that whilst the evidential position may be different I am not sure that this pleading would suffice to satisfy the proviso to s 10.
The Particulars of Claim allege that the words which the defendants published or caused to be published on SFHUK.com bore the following defamatory meanings:-
"(a) The Claimant is a shameless, corrupt, fraudulent, dishonest, unethical, incompetent and oppressive firm of solicitors which does not provide competent services, has had a justified complaint made against them and whose wrongdoing should be exposed to prevent others from suffering by instructing them.
(b) The Claimant unscrupulously inflates costs.
(c) The quality of the Claimant's work is sub-standard and poor value for money.
(d) The Claimant's staff and/or partners are guilty of committing the imprisonable offence of harassment contrary to section 1 of the Protection from Harassment Act 1997.
(e) The Claimant breaches its professional obligations and acts contrary to the Solicitors Regulation Authority's Code of Conduct.
(f) The Claimant's staff and/or partners are rude, threatening, intimidating and unprofessional.
(g) The Claimant 'strong-armed' payment from a former client that was not owed or warranted and thus committed an offence contrary to section 40 of the Administration of Justice of Act 1970.
(h) Prospective clients seeking to instruct the Claimant will receive sub-standard advice and lose out financially."
The allegation that the words bore these meanings is an uncontradicted allegation of fact, and it is not one that I consider extravagant. I proceed on the basis that these are the natural and ordinary meanings of the words complained of. The meanings plainly have a defamatory tendency. Section 1(1) of the Defamation Act 2013 provides however that "A statement is not defamatory unless its publication has caused or is likely to cause serious harm to the reputation of the claimant". And by s 1(2) it is provided that "For the purposes of this section, harm to the reputation of a body that trades for profit is not 'serious harm' unless it has caused or is likely to cause the body serious financial loss." The claimant is clearly a body that trades for profit.
Allegations relevant to these requirements are made in paragraph 2 of the Particulars of Claim, which describes the claimant. Further relevant allegations are made in paragraphs 16 to 29, which appear under the heading "Serious harm to reputation and financial harm".
Paragraph 16 states that "The Claimant believes that the publication of the defamatory words has caused serious harm to its reputation. It also believes that the publication has caused it serious financial harm." This could be criticised as a statement of belief rather than a statement of fact. I note also that the statutory term is "financial loss" not "financial harm". If no more had been pleaded I would have felt uneasy about granting default judgment. I would have had to ask myself if these allegations were enough to show that the serious harm requirement is met. In the event, enough is alleged in other parts of the Particulars of Claim to satisfy me that the requirement is met.
The features of the pleaded case that lead me to that conclusion are these:
i) The claimant is a "'boutique' firm of solicitors based in London" with two departments, one specialising in "defamation, privacy and harassment law", and the other in "criminal litigation, civil fraud, regulatory and disciplinary proceedings" (para 2).
ii) "The firm is relatively small and is only five years old. Traditionally it has attracted a considerable amount of work from the internet. Where work comes from a different source, it is usual for the prospective client to undertake some sort of 'due dilligence', this would typically involve a Google search." (para 21).
iii) For six months, Google searches for Brett Wilson LLP or Brett Wilson solicitors have produced the following result and snippet within the top five listings, immediately below links to the firm's own website (para 19):
"SOLICITORS FROM HELL - Brett Wilson LLP Solicitors ...
[web address given]
Rude, intimidating and threatening. Clients should stay well away from Brett Wilson Solicitors.Have you complained about your solicitor and got nowhere?"
iv) "… the publication has been read, and will inevitably continue to be read, by a number of prospective clients considering instructing the Claimant and undertaking research on the Claimant's reputation" (para 22).
v) "It is inevitable that a number of prospective clients who have read (or will read) the snippet and publication have decided (or will decide) not to instruct Brett Wilson LLP as a result of what has been published."
vi) "The loss of a single instruction can cost the firm tens of thousands of pounds (and in some instances more)."
vii) "… on 20 April 2015 a litigation opponent raised the publication as evidence that the Claimant was a disreputable firm."
viii) "… on 25 July 2015 a prospective client who had previoulsy indicated he wished to instruct the firm withdrew his instructions as a result of the publication."
ix) "It can be inferred that there will have been a far greater number of instances where an individual has read the publication or search result snippet and not notified the Claimant. That is, they have simply decided to 'go elsewhere'. …"
x) "The Claimant believe[s] that there has been a noticeable drop in the conversion of enquiries from prospective clients to instructions over the past six months. …"
xi) The Claimant has suffered financial loss …"
Whilst the allegation quoted at [29] (x) suffers from the same deficiency as paragraph 16, these pleaded allegations taken overall are in my judgment sufficient to make out a case of serious financial loss. I need say little to elaborate on that. "Serious" is an ordinary English word. I would only add that whether loss is serious must depend on the context.
This is enough to justify judgment for damages to be assessed. It is not necessary for that purpose to allege falsity, although the Particulars of Claim do so – no doubt for the purpose of supporting the claim for an injunction.
I am satisfied that the pleaded allegations make out a case for the grant of injunctions against the defendants. It is alleged that the defendants have published allegations of a highly defamatory nature, which have caused serious financial loss, and that they are continuing to do so. It is alleged that the allegations are false. None of this has been contested by the defendants. The Particulars of Claim also set out the defendants' failure to respond to the letter of claim and these proceedings.
Because s 12 of the HRA is engaged I must have particular regard to the importance of the Convention right to freedom of expression: s 12(4). I must be satisfied that the injunctive relief granted represents an interference which is necessary in the pursuit of a legitimate aim, and goes no further than required. I am so satisfied. The legitimate aim is the protection of the reputation of the claimant against false and damaging allegations of misconduct. I bear in mind that it is contrary to the public interest for false or misleading information to be issued on matters of this kind.
The injunctions now sought are both prohibitory and mandatory. The mandatory orders are for the removal from the World Wide Web of specified webpages, and the removal from the SFHUK.com website of any metadata or search engine links which refer to the claimant as 'solicitors from hell' or 'lawyers from hell'. I hesitated at first over the mandatory orders, for two reasons. I was initially concerned that these orders went beyond what is sought in the Particulars of Claim. These claimed a negative injunction. However, there is a prayer for 'further or other relief.' Secondly, I wondered if mandatory orders would impose obligations which the defendants might be unable in practice to perform. However, given the way the defendants are described and defined, I consider that these aspects of the order sought are legitimate.
The orders for damages to be assessed and for final injunctions to which I have just referred are available to the court on the application for default judgment. As I have explained, however, the claimant's application notice also seeks summary disposal pursuant to ss 8 and 9 of the Defamation Act 1996. Section 8 allows the court to give judgment for the claimant in a defamation case and grant "summary relief" if it appears to the court "that there is no defence to the claim which has a realistic prospect of success and no other reason why the claim should be tried." Summary relief is defined by s 9:
"9.— Meaning of summary relief.
(1) For the purposes of section 8 (summary disposal of claim) "summary relief" means such of the following as may be appropriate—
(a) a declaration that the statement was false and defamatory of the plaintiff;
(b) an order that the defendant publish or cause to be published a suitable correction and apology;
(c) damages not exceeding £10,000 or such other amount as may be prescribed by order of the Lord Chancellor;
(d) an order restraining the defendant from publishing or further publishing the matter complained of.
This has been a relatively little-used procedure. That is probably because summary judgment under CPR 24 is now available in defamation cases, and the damages recoverable by way of summary relief remain capped at £10,000, as they were when the procedure was first enacted. The procedure is invoked here, however, in order to bring a swift end to the matter and avoid assessment proceedings which might well be disproportionately expensive. The claimant does not seek a declaration of falsity or any order for an apology. The application is for damages of £10,000 and an injunction. The procedure has been used in similar circumstances and for similar reasons before, for example in Robins v Kordowski [2011] EWHC 1912 (QB).
In Robins Tugendhat J held at [55]-[57] that the jurisdiction to grant summary disposal is available after the court has entered default judgment for damages to be assessed. He applied the reasoning of the Court of Appeal in Loutchansky v Times Newspapers Ltd [2001] EWCA Civ 1805, [2002] QB 783, where judgment on the merits had been entered after a trial. Tugendhat J concluded that the criteria for summary disposal were satisfied and assessed damages at £10,000. I am invited to do likewise.
For these purposes I can and should have regard to evidence. CPR 53.2 provides that "In proceedings for summary disposal … rules 24.4 (procedure), 24.5 (evidence) and 24.6 (directions) apply." I have allowed the claimant to apply for summary disposal although no acknowledgement of service or defence has been filed. The witness statement of Mr Wilson was served in time, in compliance with rule 24.4. CPR 24.5 and 24.6 are inapplicable to this case.
Given what I have said already it is easy to conclude that Mr Wilson is correct when he asserts in paragraph 25 of his witness statement that there is no defence to the claim, and no other reason why it should be tried. In reaching this conclusion I have considered the five matters to which s 8(4) of the 1996 Act directs me to have regard in deciding whether there is a reason for the claim to be tried. I accept also that the claimant is entitled to an award of the maximum sum available by way of damages under s 9(1), that is to say £10,000.
For this purpose the claimant relies on the matters pleaded in paragraphs 16 to 29 and 40 of the Particulars of Claim, the material parts of which I have quoted in paragraph [29] above, and some supplementary evidence contained in the witness statements of Mr Wilson and Emma Lyons. Ms Lyons is Head of Search at Eight&Four digital marketing company, and runs digital marketing campaigns for corporate clients including the claimant. Her evidence is that between 15 January and 27 July 2015 some 276 individuals carried out a search on Google for "Brett Wilson LLP" or "Brett Wilson solicitors". She is able to provide this figure because the firm has a Google Pay per Click account, which allows one to see how many users have carried out a search of a particular term. A further six weeks have passed since 27 July 2015 and the offending words have remained online, with the snippet cited above returned among the top search results.
Mr Wilson's statement supports, evidentially, what is alleged in the Particulars of Claim about the response of individual clients to the publication complained of.
It is beyond dispute that the words complained of had a clear tendency to put people off dealing with the claimant firm. That was their evident purpose. The allegations are serious, and would be likely to deter anybody unfamiliar with the firm from engaging its services. There is affirmative evidence that in all probability one client was deterred, with probable financial loss. I bear in mind that of the 276 searches identified by Ms Lyons, some may have been repeats, and some may not have been serious enquiries, likely to lead to an instruction. Equally, however, the continued publication during August and September and the "grapevine" effect of publication including, if not especially, online publication must mean that the numbers to whom the defamatory messages were conveyed are very likely to be substantially larger. I have no doubt that others were put off, and that there has been a financially damaging impact on a serious scale. Quite apart from this, the award needs to serve the purpose of vindication.
Mr Wilson draws my attention to other awards made in comparable circumstances. He mentions not only Robins but also Farrall v Kordowski [2011] EWHC 2140 (QB), Hussein v Hamilton Franks & Co Ltd [2013] EWHC 462 (QB) and The Bussey Law Firm PC v Page [2015] EWHC 563 (QB). Farrall, like the present case, concerned a posting criticising the competence and integrity of a solicitor. The posting was thought to have been live for about a month. On an application under ss 8 and 9 of the 1996 Act in a claim which was undefended Lloyd-Jones J awarded £10,000. Hussein also involved an online "blacklist", on which the claimants were accused of fraud. On an assessment of damages, three foreign Claimants were awarded £20,000, £10,000 and £10,000. In The Bussey Firm a US law firm and its principal sued an English defendant who had published a false and defamatory review on Google maps that was live for approximately 12 months, alleging that the principal "pays for false reviews and loses 80% of his cases". After a trial Sir David Eady assessed damages for the law firm "conservatively, at £25,000".
Every case depends on its own facts, but these four cases lend some support to my conclusion that the award of £10,000 is amply merited on the facts of the present case.
That disposes of the claim for summary relief in the form of damages. Section 9(1)(d) of the 1996 Act allows me to prohibit republication but does not at least in terms give me power to grant mandatory injunctions as part of an order for summary relief. As I have explained, however, I have power to grant the injunctions sought as part of the default judgment process. It is better to use that power in this case, and I do. | 3 |
The Master of the Rolls:
Introductory
This is the judgment of the court (to which all members have made substantial contributions) on an appeal brought by the Commissioner of Police of the Metropolis ('the Commissioner') against a decision of the Divisional Court (Sir Anthony May PQBD and Sweeney J). By that decision, the Divisional Court decided that, in certain respects, the crowd control carried out by the Metropolitan Police in connection with two demonstrations (known, at least in these proceedings, as the Royal Exchange demonstration and the Climate Camp), which took place in the City of London on Wednesday, 1 April 2009, did not constitute 'lawful police operations' – [2011] EWHC 957 (Admin), [2011] HRLR 24, para 64.
The decision was made in the context of judicial review proceedings brought by the claimants, who were both involved in the Climate Camp, to challenge a number of the policing decisions made in connection with the handling of the crowd which attended the two demonstrations. From an early stage it has rightly been accepted that judicial review proceedings in this case are appropriate only to the consideration of the strategic decisions. If there are allegations of excessive force or other tortious behaviour against individual, or groups of, police officers, in the course of the operations consequent on those decisions, those allegations must be made in ordinary Queen's Bench Division actions and their rights or wrongs are not the concern of this case.
The Divisional Court, which heard the evidence of Chief Superintendent Johnson, the officer in overall charge of the policing operation, rejected a number of complaints about his strategic decisions but, as mentioned, it upheld two. The Commissioner appeals in respect of the two complaints which were upheld. The claimants do not pursue those which were rejected. In the result, the principal outstanding issue has been whether, on the facts of this case, a decision to deploy the tactic of containment (or 'kettling' as it is sometimes, somewhat derogatorily known) was or was not lawful when applied to one part of the day's demonstrations.
Like several other protests which took place on 1 or 2 April 2009, the two demonstrations were held against the background of a G20 summit held in London on 2 April. There was a degree of co-ordination between some of those who were involved with those demonstrations and protests, via websites and no doubt in other ways. The Royal Exchange demonstration was targeted on an area outside the Royal Exchange and the Bank of England, and had been styled the 'Financial Fools' protest. The Climate Camp was established outside the Climate Exchange Building in Bishopsgate, about a quarter of a mile away, and had been styled the 'Fossil Fools' protest.
The 'Fossil Fools' protest had its origins in earlier environmental protest camps under the same title; police intelligence suggested that those had involved small numbers and had not become violent. The two demonstrations had each been advertised in various places including a website styled 'G20 Meltdown'. Neither demonstration had any identifiable leader with whom the police could have had discussions. The police had asked in advance where in Bishopsgate the Climate Camp would be set up but had been given no answer.
By the afternoon of 1 April, Mr Johnson estimated that there were between 4000 and 5000 people attending each of the two demonstrations. Those numbers were significantly higher than police intelligence had anticipated, and reserves had to be called up. It was an ordinary working day for those employed in London or visiting on business; there were also tourists to consider.
The Royal Exchange demonstration was disorderly to the point of serious violence. The Climate Camp was markedly less disorderly; violence was only intermittent and significantly less serious than at the Royal Exchange. Some of those who took part in the Climate Camp brought tents and cooking equipment and were intent on staying the night. The Camp completely blocked Bishopsgate, a four lane highway running roughly north-south and constituting a major thoroughfare into and out of the City. The Camp's southern edge was a barricade erected by the protesters and formed of bicycles and other metallic objects.
Shortly after midday, Mr Johnson decided that it had become necessary for the crowd at the Royal Exchange to be managed by containing it – i.e. by stationing a police cordon at each of the several possible points of egress. There has never been any suggestion in these proceedings that this decision was unlawful; there is no challenge to the police's perception that it was necessary and proportionate in order to prevent the spread of breaches of the peace. The containment was followed in the evening by a progressive dispersal of the Royal Exchange demonstration, which was accomplished whilst public transport was still running. That again is not alleged in these proceedings to have been an unlawful or improper procedure.
Mr Johnson believed that the dispersal would give rise to the real likelihood of an imminent breach of the peace if, as he judged likely, the two crowds then mingled, particularly if some of the violent elements from the Royal Exchange demonstration made their way to the Climate Camp or were joined by people from it. Accordingly, he decided that the crowd at the Climate Camp should be contained at the time of the dispersal of the Royal Exchange demonstration. As part of the execution of the Climate Camp containment, the local sub-commander deployed a line of policemen physically to move the crowd's southern edge and barricade some 25 metres up Bishopsgate so as to remove the possibility of ingress to or egress from the Climate Camp via two alleyways, one on either side of Bishopsgate and running east and west from it; this has been labelled 'the push north'.
It is these two linked actions, the Climate Camp containment and the push north, which the Divisional Court held were unlawful, and which are now the subject of this appeal. It is appropriate to describe the evidence relating to the decision to contain the Climate Camp and the decision to push north in more detail, as it is crucial to the outcome of this appeal.
The relevant facts in more detail
We gratefully take the detailed relevant history from the full and careful judgment of the Divisional Court.
Mr Johnson, who was, as mentioned, responsible for the policing of the two demonstrations, travelled between them, and also to and from a command headquarters. Just after midday, he decided to contain the Royal Exchange demonstration, which had, according to his contemporaneous log, become 'highly excitable' and threatened to cause 'serious injury', and appeared to be likely to result in 'groups running amok in the City of London, damage to property + people attacked'. Containment did, to a substantial extent, if not completely, achieve its end in the sense of containing the crowd, but it did not prevent further violence from the Royal Exchange demonstration during the course of the day. That violence included an attack on a branch of the Royal Bank of Scotland in Threadneedle Street (which was looted and set on fire), setting off of smoke bombs, throwing of missiles, and the occupation and damaging of an unoccupied building.
As at 12.35, around the time it became necessary to contain the Royal Exchange crowd, the Climate Camp was reported to Mr Johnson as constituting a large, but not hostile, crowd blocking Bishopsgate. In contradistinction to the position outside the Royal Exchange, he decided not to contain the Climate Camp at that stage, but rather to put in place loose 'filter cordons' at either end of the crowd, to prevent it from spreading further. Such filter cordons allowed people to pass through in small numbers. Later in the day one officer, apparently at the centre of the crowd, noted that there was a 'party atmosphere' at the Climate Camp, although that was not reported to Mr Johnson. The Climate Camp was not, however, entirely free from violence. At 13.30 it was reported that the crowd had greatly increased in size, that bottles and coins were thrown at the police officers, and that three police carrier vehicles had been damaged ('wrecked' was the description subsequently used by Mr Johnson in his evidence). Some eighteen minutes later, it was reported that sections of the crowd were putting on masks, a sign that disorder was possibly being contemplated. Mr Johnson had relayed to him the opinion of his local sub-commander, Chief Inspector Dale, that the loose cordons would not be likely to maintain complete control, at least if the situation were to worsen.
Mr Johnson decided, however, that containment ought not, at that stage, to be ordered, on the basis that that decision would be reconsidered if necessary. His contemporaneous log recorded: 'Decided no at this time – no real disorder'. In his oral evidence Mr Johnson explained that by this he meant that, in contrast with what was happening at the Royal Exchange, there was no concerted attack on the police and the crowd was not breaking into buildings, smashing windows, or behaving in equivalent fashion.
There had by then been a serious breakout from the contained Royal Exchange demonstration. A large group of the crowd had charged through the cordon at around 13.00, and had thrown missiles and smoke bombs. A similar breakout occurred at about 14.50, when extra police units had to be rushed to the scene to prevent the crowd attacking the nearby Stock Exchange. That attack was forestalled, but some violent sections of the Royal Exchange crowd remained outside the cordon. Some of them got into a disused building and threw missiles from the roof. At about 16.30, around 1,000 people, many of whom appeared to have been part of the break-out groups, were running along Cannon Street breaking windows. At 16.40 a group of some 200, described as 'hardcore' protesters, reached the Climate Camp and joined it. Subsequently, it was reported to Mr Johnson from the Climate Camp that missiles had been thrown at police officers, that there had been an attack on a police van, that the crowd was 'volatile', and that the tyres of police vehicles had been slashed. Mr Johnson referred to the police trying to make arrests for disorder, criminal damage and assault, but that was not specifically at the Climate Camp.
It was at around this time that Mr Johnson made the decision, which is not challenged as having been unlawful, to disperse the still-contained Royal Exchange crowd after the rush hour, but whilst public transport was running and before night fell. He reached that decision at about 16.50, with a view to beginning the dispersal process at about 19.00. In the event, it started half an hour later. The dispersal was effected by allowing groups to leave by exits to the west of the Royal Exchange crowd (i.e. furthest from Bishopsgate), via two streets running away from Bank underground station (to the immediate west of the Royal Exchange), namely Princes Street (north-west) and Queen Victoria Street (south-west). The eastern end of the Royal Exchange crowd remained sealed, in particular by a cordon across Threadneedle Street. The plan was to try to release the crowd in pockets of between ten and twenty at a time, dependent on the mood and hostility of those involved, as well as on the police manpower available. There was estimated to be between 4,000 and 5,000 people to disperse, and the dispersal was complete by about 20.30. So the outflow must have been considerable.
At 18.17, in anticipation of this dispersal operation, Mr Johnson decided that it would be necessary to contain the Climate Camp crowd, and that this should be done at 19.00, to coincide with the projected start of Royal Exchange crowd dispersal. As already mentioned, his sub-commander, Mr Dale, directed the push north at around that time, in aid of the containment of the crowd.
Mr Johnson's reasons for the decision to contain the Climate Camp were logged in brief at the time, and were given in a little more detail in his evidence to the court. The Divisional Court expressly found that his decisions were taken in good faith, and it accepted his factual evidence (although, as explained below, it did not fully accept, or at least questioned, his assessment of the level of violence in the Climate Camp). The summary logged at the time read:
'Decision to put in containment of Carbon Exchange [i.e. Climate Camp] when the dispersal of Royal Exchange begins. Rationale: there are 4-5000 at Royal Exchange. There are 4-5000 at Carbon Exchange. Although Carbon Exchange relatively peaceful, the groups at [Royal Exchange] are not. I do not want them hi-jacking the Carbon Exchange or those groups outside the Carbon Exchange who are intent on disorder doing so. I will endeavour to clear Royal Exchange and then clear Carbon Exchange. If groups are allowed to mix, real danger of B[reach] of P[eace].'
In his witness statement Mr Johnson expanded on, but did not alter, this basis for his decision. In particular, he explained the third sentence of this entry in his log. As it records, he had two concerns. The first was that the violent elements of the Royal Exchange crowd, when dispersed, might join (and 'hi-jack') the Climate Camp. The second was that there had been disorder, albeit of a lesser degree, within the Climate Camp already. The two demonstrations were not wholly separate, but had been advertised together.
Mr Johnson considered, as the transcript of the Divisional Court hearing reveals, that:
'there was a real danger of a breach of the peace if the groups were allowed to mix, and I believed that this would happen imminently, (i.e. within a few minutes, allowing for the short distance between the two locations) in the absence of containment.'
He added that it was not possible to identify, still less to isolate, those in the Climate Camp crowd who were violent or disorderly. Accordingly, he said:
'I therefore had to use a tactic that would prevent those groups from getting out and mixing with the disorderly and violent elements from the Royal Exchange. Similarly, it would not have been possible or practical to try and target only troublemakers from the Royal Exchange and prevent them from entering the Climate Camp. That would not have dealt with the problem I was facing, which was the need to keep the two volatile groups separate.'
Mr Johnson also explained in his statement that the dispersal at the Royal Exchange required extra deployment of police officers there, which limited those available to be at or near the Climate Camp. In his oral evidence, he said that the bulk of his resources were tied up in the dispersal operation at the Royal Exchange. He also explained that only some of his officers were 'protected', that is to say equipped with riot kit and protective clothing, and that it was not practicable to deploy unprotected officers in confrontation with a violent crowd. He exhibited a spreadsheet showing the numbers of officers available to him overall that day, including those borrowed from the City of London and Sussex forces, together with their operational units. It demonstrated that sizeable numbers were on duty for between 11 and 16 hours that day, and that many were also required for the expected demonstrations on the following day, when the G20 summit began.
The careful cross examination of Mr Johnson by Mr Fordham QC (who appeared for the Claimants with Mr Steele, as he does in this court) was directed, inter alia, to two issues concerned with the decision to contain the Climate Camp crowd. The first was what, if any, risk of disorder there was from within the Climate Camp crowd; the second issue was the time-scale within which any of the dispersed Royal Exchange protesters might arrive at the Climate Camp.
As to the first proposition, Mr Johnson made it clear that he had been anxious not to order containment at the Climate Camp unless it was 'absolutely necessary'. He had not done so even when the group of 200 'hardcore' protesters from the Royal Exchange had got into the Climate Camp at or about 16.40. It was the prospect of the dispersal at the Royal Exchange which was the tipping point in deciding to contain the Climate Camp. He agreed that he would not have ordered such containment if the crowd on Bishopsgate had been wholly peaceful and was never going to engage in violence. If that had been his assessment, he would not have ordered containment even with the risk of contamination by Royal Exchange demonstrators.
However, Mr Johnson did not agree that there was no danger of violence from the Climate Camp. The crowd there was not by any means all disorderly, but his evidence was there were elements in it which were, and the reports which he received suggested to him, he said, that its volatility was escalating during the afternoon. He reiterated that it was the risk of mixing of the two crowds, and especially of the disorderly elements in each, which presented the risk of such a breach of the peace as to require, in his view, containment of the Climate Camp. Previous experience of dispersals had suggested, he said, that disorder often attended them, as it in fact did on this occasion. He also explained that his concern was not limited to the risk of people from the Royal Exchange going to Bishopsgate: he was also worried that violent or disorderly elements from the Climate Camp would get out and join the dispersing violent crowd from the Royal Exchange and that he would be left with a large crowd which he could not control 'running amok' in the City.
As to the second proposition, Mr Johnson accepted that there were police cordons to the east of the Royal Exchange crowd, and across Bishopsgate at or near its junction with Threadneedle Street. Those prevented dispersed protesters from going to the Climate Camp by the most direct routes, easterly along Threadneedle Street or Cornhill and turning north into Bishopsgate. The Royal Exchange dispersal was being conducted to the west, furthest from the direct route towards Bishopsgate. However, he explained that the City is full of alleyways, mews and side streets, and there appeared to be many routes by which people from the Royal Exchange could reach Bishopsgate, even though they were initially dispersed westwards. He said that, with the resources available, he could not work out a strategy for preventing the two crowds from joining up, and that he believed that the two crowds had ample means of communication between them.
Both parties relied to some extent on events which occurred after the decision to contain the Climate Camp had been made. At about 20.00, that is to say within half an hour of the dispersal at the Royal Exchange beginning and half an hour before it was completed, a crowd of between 200 and 300 from there arrived behind the police on Bishopsgate, south of those who were policing the Climate Camp. This group threw missiles at the police, lit fires and damaged property. It had clearly looped south and east after dispersal. A unit of police officers was despatched to try to deal with it. Its members were induced to run away to the south, over Southwark Bridge.
At about 21.35 a further group of between 200 and 300 people appeared at the northern end of the Climate Camp, at the junction of Bishopsgate with Wormwood Street. Its members threw bottles, coins and other articles at the police and caused a significant amount of trouble. Four or five units of police officers (about 110 men) had to be deployed to deal with it. This group was, similarly, behind the lines of the police officers containing the Climate Camp crowd. The dispersal of the Climate Camp had to be delayed until this group could be removed. It refused to move for about an hour, despite the invocation of section 14 of the Public Order Act 1986 to impose conditions on the assembly, but eventually, at 22.30 when the decision was made to begin to arrest its members, it melted away. Neither group was thus able to join up with the Climate Camp, nor was any part of the Climate Camp able to leave to join up with either group.
The evidence relating to the push north came not from Mr Johnson but from his sub-commander, Mr Dale, who was not required by the claimants to be cross-examined. According to Mr Dale's witness statement, it was his decision to move the barrier which had been put up across Bishopsgate and to push the crowd north of the junctions with the two alleyways. This was to prevent frustration of Mr Johnson's order to contain the Climate Camp. The push north was attended by active resistance on the part of the crowd, including the throwing of missiles from a gantry, and by the use of some force by the police who were in protective kit with riot shields. There are arguments as to the manner in which this operation was conducted by the officers involved in it, but, as already explained, we are here concerned only with the decision to undertake it. Mr Johnson was asked some questions about the push north but apart from observing that it was a sensible part of a containment operation to stop up exits or entrances he said only that he would not second-guess the decision of the officer on the spot. He was also cross-examined about the state of instructions for the execution of such a manoeuvre, but that forms no part of the appeal before us.
In the course of its judgment the Divisional Court suggested that Mr Johnson had been cross-examined as to why the push north had been necessary at all and why it had not been possible to station lines of officers across the mouths of each of the alleyways. The court recollected that Mr Johnson had indicated that resources were insufficient – [2011] HRLR 24, para 34; however, now that a complete transcript is available, it is apparent that the suggestion of blocking the alleyways was not made to Mr Johnson. His answers about resources were directed to more general questions as to whether he could prevent all means of access from Royal Exchange to Bishopsgate, and questions about resources at the Climate Camp.
Lastly, Mr Johnson was cross-examined on the suggestion that the push north had been unnecessarily provocative because it had moved the crowd 30 metres beyond the alleyway junctions. The factual basis for that assertion seems at best uncertain. Mr Dale's statement referred only to moving the crowd to a point north of the alleyways. The suggestion made in cross examination was not adopted by the judgment. It seems that the move was between 20 and 30 metres to a point north of the alleyways.
The applicable law
In R (Laporte) v Chief Constable of Gloucestershire Constabulary [2006] UKHL 55, [2007] 2 AC 105, the police intercepted the claimants who were on their way to a protest, and escorted them whence they came, because it was believed that some of them were intent on causing a breach of the peace. This action would clearly have been an infringement of the claimants' rights unless it could be justified by the concern of the police about a breach of the peace. The House of Lords held that the common law entitled, indeed bound, police officers and citizens alike to seek to prevent, by arrest or action short of arrest, any breach of the peace occurring in their presence or which they reasonably believed was about to occur. If no breach of the peace had actually occurred, a reasonable apprehension of an imminent breach of the peace was required before any form of preventive action was permissible.
On the facts of Laporte [2007] 2 AC 105, the House of Lords held that not only had there been no indication of any imminent breach of the peace when the coaches were intercepted, but the police did not consider that a breach of the peace was imminent. Accordingly, the police action was held to have constituted an unlawful interference with the claimants' right to demonstrate at a lawful assembly.
If police action is to be justified where no actual breach of the peace has occurred, it is therefore essential that the police reasonably apprehend an imminent breach of the peace. Imminence was described at [2007] 2 AC 105, para 141, by Lord Mance in these terms:
'The requirement of imminence is relatively clear-cut and appropriately identifies the common law power (or duty) of any citizen including the police to take preventive action as a power of last resort catering for situations about to descend into violence. That is not to suggest that imminence falls to be judged in absolute and purely temporal terms, according to some measure of minutes. What is imminent has to be judged in the context under consideration, and the absence of any further opportunity to take preventive action may thus have relevance.'
Lord Rodger of Earlsferry said at [2007] 2 AC 105, para 69, that there was no need for the police officer 'to wait until an opposing group hoves into sight before taking action', as that would 'turn every intervention into an exercise of crisis management'. Lord Carswell said this about imminence at [2007] 2 AC 105, para 102:
'[I]t can properly be applied with a degree of flexibility which recognises the relevance of the circumstances of the case. In particular it seems to me rational and principled to accept that where events are building up inexorably to a breach of the peace it may be possible to regard it as imminent at an earlier stage temporarily than in the case of other more spontaneous breaches.'
Three other observations in that case are worth noting in the present context. First, at [2007] 2 AC 105, para 29, Lord Bingham of Cornhill made the point that a constable has a 'duty' as well as a 'power' to 'seek to prevent … any breach of the peace occurring in his presence …, or any breach of the peace which is about to occur.' Secondly, Lord Rodger said at [2007] 2 AC 105, para 84, that a police officer could stop potential protesters from proceeding further, 'even if they were entirely peaceful', provided 'there was no other way of preventing an imminent breach of the peace'. Thirdly, Lord Brown of Eaton-under-Heywood said at [2007] 2 AC 105, para 114, that, even when a breach of the peace is reasonably judged imminent, the police must still take no more intrusive action than appears necessary to prevent it.
The Divisional Court in this case said at [2011] HRLR 24, para 12, that it derived the following propositions from Laporte [2007] 2 AC 105, which we consider to be an accurate summary of the law, which was not challenged on this appeal:
(1) For a police officer to take steps lawful at common law to prevent an apprehended breach of the peace, the apprehended breach must be imminent;
(2) Imminence is not an inflexible concept but depends on the circumstances;
(3) If steps are to be justified, they must be necessary, reasonable and proportionate;
(4) Depending on the circumstances, steps which include keeping two or more different groups apart may be necessary, reasonable and proportionate, if a combination of groups is reasonably apprehended to be likely to lead to an imminent breach of the peace; and
(5) Again depending on the circumstances, where it is necessary in order to prevent an imminent breach of the peace, action may lawfully be taken which affects people who are not themselves going to be actively involved in the breach.
Containment was specifically considered in a subsequent decision of the House of Lords, Austin v Commissioner of Police of the Metropolis [2009] UKHL 5, [2009] 1 AC 564, where the claimant, together with thousands of other demonstrators, had been required to remain inside a cordon for seven hours. The claimant, who had not been violent in any way, claimed damages for false imprisonment and breach of her right to liberty under Article 5 of the European Convention on Human Rights.
The claim failed. As the Divisional Court put it in this case at [2011] HRLR 24, para 13, the House of Lords in Austin [2009] 1 AC 564 concluded that:
'The police had been engaged in an unusually difficult exercise of crowd control which had as its aim the avoidance of personal injuries and damage to property and the dispersal as quickly as possible of a crowd bent on violence and impeding the police. The police had acted reasonably and properly to prevent serious disorder and violence. The restriction of the claimants' liberty had not been an arbitrary deprivation of liberty and Article 5 was not applicable.'
And, as the Divisional Court went on to say four paragraphs later, it is common ground 'that the circumstances in which police containment action would be lawful at common law are for practical purposes the same as the circumstances in which there would be no violation of Article 5'.
Consistent with the approach of Lord Rodger in Laporte [2007] 2 AC 105, para 84, the Court of Appeal (whose decision was affirmed by the House of Lords) had held in Austin [2007] EWCA Civ 989, [2008] QB 660, paras 68 and 119, that, where a breach of the peace was taking place or reasonably thought to be imminent, the police could interfere with or curtail the lawful exercise of rights of innocent third parties, but only if they had taken all other possible steps to prevent the breach or imminent breach of the peace and to protect the rights of third parties, and only where they reasonably believed that there was no other means to prevent a breach or imminent breach of the peace.
From this, it follows that the containment of the Climate Camp and the push north could only have been justified if each action was reasonably believed by the police to have been the only way of preventing an imminent breach of the peace. When considering reasonableness in this context, both sides were, correctly in our view, happy to adopt the approach of Sedley LJ in Redmond-Bate v Director of Public Prosecutions (1999) 163 JP 789, 791, where he said:
'[T]he test of the reasonableness of the constable's actions is objective in the sense that it is for the court to decide not whether the view taken by the constable fell within the broad band of rational decisions but whether in the light of what he knew and perceived at the time the court is satisfied that it was reasonable to fear an imminent breach of the peace. Thus, although reasonableness of belief, as elsewhere in the law of arrest, is a question for the court, it is to be evaluated without the qualifications of hindsight.'
The Divisional Court's reasoning
After an introductory section, the Divisional Court set out the law and the facts at [2011] HRLR 24, paras 7-17 and 18-29 respectively. We have already set out the relevant primary facts and the law, so there is no need to discuss the contents of these two sections of the judgment further, with the exception of four passages.
First, at [2011] HRLR 24, para 21, the Court recorded that between 13.00 and about 17.30, Mr Johnson was informed as to what was going on in the two crowds. He was told about escalating disorder at the Royal Exchange demonstration (including attacks on, looting in, and setting fires in, the Royal Bank of Scotland in Threadneedle Street, and entry onto, and throwing items from the roof of, an empty building). He was also told about increasing numbers of demonstrators at the Climate Camp, some of whom threw bottles and coins, and some of whom put on masks. He was also told that around 200 of the Royal Exchange demonstrators had joined the Climate Camp, and that a police van at the Climate Camp had been attacked, and that tyres on police vehicles had been slashed.
Secondly, at [2011] HRLR 24, para 23, the Court explained Mr Johnson's reasons for deciding at 19.00 to contain the Climate Camp, in these terms:
'Mr Johnson considered that, when the Royal Exchange dispersal took place, he did not want the two groups joining up under any circumstance, as he feared widespread violence and breach of the peace. He decided to disperse the Royal Exchange crowd from two exits in Princes Street and Queen Victoria Street, that is those away from Bishopsgate, to try to prevent those leaving from going towards the Climate Camp. At the time, he was told that the crowd at the Climate Camp was volatile and that tyres on police vehicles had been slashed. He had been at the Special Operations Room in Lambeth, but returned to the Climate Camp where, at 6.17pm, he decided to put in a containment there to start when the Royal Exchange dispersal began, i.e. at 7.00pm. His rationale was that there were about 4-5000 demonstrators at each of the demonstrations. The Climate Camp was relatively peaceful, but the Royal Exchange groups were not. There had been some disorder and violence at the Climate Camp and some of the protestors had put on masks. He considered that there was a real danger of a breach of the peace at the Climate Camp if the groups were allowed to mix, and he believed that this would happen imminently, which he explained in his witness statement as within a few minutes allowing for the short distance between the two demonstrations. He said that the major change which caused him to contain the Climate Camp was the dispersal of people from the Royal Exchange who had been acting in a disorderly and criminal manner. It was not practical to find out which individuals at the Climate Camp were intent on disorder or criminality. He had however to prevent those groups from getting out and mixing with the disorderly and violent elements from the Royal Exchange. The converse applied to the troublemakers from the Royal Exchange.'
Thirdly, at [2011] HRLR 24, para 24, the Court stated that 'Dispersal of the Royal Exchange crowd released some police resources to deploy to the Climate Camp. But as the groups were released from the Royal Exchange, Mr Johnson considered there was an imminent threat of disorder by those released from the Royal Exchange going to the Climate Camp.' Fourthly, at [2011] HRLR 24, para 27, the Court stated that
'Mr Johnson's fear that dispersed Royal Exchange protestors might try to join those at the Climate Camp was justified to the extent that 200-300 people from the Royal Exchange found their way into Gracechurch Street to the south of Bishopsgate, where they were throwing missiles at the police, lighting fires and damaging property. Somewhat later, at about 9.35pm, other Royal Exchange protestors found their way to Wormwood Street and tried to approach the Climate Camp from the north.'
The Court then discussed the dispersal of the crowd at the Royal Exchange a little further.
At [2011] HRLR 24, paras 30-37, the Divisional Court discussed the evidence given by Mr Johnson in relation to the various claims made by the claimants. In relation to the Climate Camp containment, the Divisional Court said at [2011] HRLR 24, para 31, that its justification:
'has to depend on the proposition that dispersal of violent protestors from the western end of the Royal Exchange demonstration created a reasonable apprehension of an imminent breach of the peace at the Climate Camp, or possibly elsewhere but including those at the Climate Camp. There were in reality two possibilities – one that dispersed Royal Exchange protestors would join the Climate Camp; the other that Climate Camp protestors would break out to join dispersed Royal Exchange protestors on the streets of the City. The first of these was perhaps more likely than the second, and it was to this which Mr Johnson's evidence was mainly directed.'
The Court then explained that there were certain roads which could have been taken to get from the Royal Exchange to the Climate Camp, and said that 'Mr Johnson's evidence was that he did not have the resources to seal off all roads and that this would have been physically impossible'. While accepting that evidence, the Court 'was not convinced that it would have been impossible to seal off Great St Helens Street and the unnamed alley way opposite' as 'the two side streets were not within the area occupied by the Climate Camp' – [2011] HRLR 24, para 34. In the same paragraph, the Divisional Court described the decision to push north as 'broadly sensible'. The Court went on to record that, on the grounds of 'police resources', Mr Johnson had, in his evidence, rejected the suggestion that, rather than containing the Climate Camp, he could have blocked the two side streets and provided 'loose cordons at the possible exits from the Climate Camp'.
At [2011] HRLR 24, para 36, the Court recorded Mr Johnson's evidence that his 'decision to contain predicates the possibility of force or violence, either by the police or by protestors reacting to the containment ... [and] that he would not have used force against a peaceful crowd. His officers must be aware that some in the crowd would be violent towards the police'. The Court then referred to the criticism by the House of Commons Home Affairs Select Committee of 'the use of shield strikes and in particular of lack of communication and training and the placing of untrained officers in the front line of public protests' (which are not matters for consideration in these proceedings as explained in para 2 above).
The Court at [2011] HRLR 24, paras 38-47 and paras 48-55 then summarised the claimants' and the Commissioner's respective cases. At [2011] HRLR 24, paras 40 and 41, the Court said this when setting out the claimants' case on the decision to contain the Climate Camp (which we quote fairly fully as it includes part of the reasoning of the court on this issue):
'40. Mr Fordham submits that at 6.17pm, when the decision to contain the Climate Camp was taken, there was no sufficient apprehended imminent breach of the peace by any of those participating in the Climate Camp demonstration to justify containment. That in our judgment is correct. The Climate Camp was largely not hostile and such violence or disorder as there had been there during the afternoon was sporadic. … When [containment] was put in place, it was at most precautionary. Mr Fordham is also, we think, correct to submit that, apart from the possibility of dispersing Royal Exchange protestors mixing with those at the Climate Camp, there never was a reasonable apprehension of imminent breaches of the peace at the Climate Camp. Mr Fordham submits that the defendants' contention that there were groups within the Climate Camp who were intent on disorder or criminal damage is largely unsupported by the evidence. We think this is correct, although Mr Johnson did say as much in general terms. This was one part of Mr Johnson's otherwise truthful and straightforward evidence which we did not find convincing. Apart from the reported arrival of 200-300 hardcore protestors at around 4.40pm, the specific incidents of disorder relied on had occurred earlier in the afternoon. The real justification relied on for the Climate Camp containment was the dispersal of the Royal Exchange demonstration and the perceived need to prevent some of those dispersed from hijacking the relatively peaceful Climate Camp.
41. Mr Fordham submits that at 7.07pm and thereafter there was no sufficient apprehension of any breach of the peace at the Climate Camp to justify containment. Even if dispersed Royal Exchange protestors were intent on joining the Climate Camp and intent on violence there, there was no reasonable apprehension by those putting the containment in place that it was likely to occur. The two obvious routes to Bishopsgate were quite a distance on foot from the western end of the Royal Exchange demonstration at Bank where the dispersals were occurring. If Royal Exchange protestors did approach the Climate Camp, an appropriate cordon could be formed at short notice. In the event, it was not until around 9.30pm that some Royal Exchange protestors reached the northern end of the Bishopsgate demonstration via Wormwood Street. This is, of course, hindsight but the journey required made delay quite likely. … Mr Fordham submits that there was no reasonable apprehension of an imminent breach of the peace. No breach of the peace was about to be committed nor on the point of happening in the near future. This was not a case where there was no need to wait until an opposing group hove into sight, since there was no opposing group and no groups on the point of converging. It would not be crisis management to wait to see how things developed. ...'
The Court's description of the claimants' case on the push north is at [2011] HRLR 24, paras 46-47, and it is unnecessary to quote it in this judgment, as it does not contain any relevant expressions of opinion. Nor, for the same reason, is it necessary to quote any part of the judgment directed to the summary of the Commissioner's case.
At [2011] HRLR 24, paras 56-64, the Divisional Court expressed their conclusions. They began at [2011] HRLR 24, para 56, by identifying the 'principal issue' as being 'whether the containment at the Climate Camp between 7.07pm … and 11.15pm or so was necessary, proportionate and justified in law'. The Court then explained that:
'To be justified in law as being the lawful exercise of the common law power to take reasonable steps to prevent a breach of the peace …, the police had reasonably to apprehend an imminent breach of the peace at the Climate Camp or, if not at the Climate Camp, so associated with the Climate Camp that containing the Climate Camp itself was reasonably necessary.'
The Court then stated that a breach of the peace 'is imminent if it is likely to happen' and that the 'test of necessity is met only in extreme and exceptional circumstances'.
At [2011] HRLR 24, para 57, the Court stated that it 'accept[ed] the truthfulness of [Mr Johnson's] factual evidence' save to the extent that it 'question[ed] whether he did not overstate the extent to which there had been elements of disorder at the Climate Camp during the day and any basis for supposing that violence might break out as the evening approached'. They then went on to express 'considerable sympathy for Mr Johnson and his officers', who had 'over a long and gruelling day, to deal as best they might with two large and often disorderly demonstrations'.
At [2011] HRLR 24, para 58, the Court then said that, while they accepted that 'there had been serious and sustained violence at the Royal Exchange demonstration sufficient to justify its containment throughout the period it was in place', 'there had been no equivalent disorder or violence at the Climate Camp during the afternoon, not even when 200-300 so called hardcore protestors had joined the Climate Camp at around 4.40pm'. Paragraph 58 of the judgment then continued:
'Containment of the Climate Camp was not justified by the behaviour and conduct of those at the Climate Camp alone. When the Royal Exchange protestors were dispersing from 7.25pm there was clearly a risk that some of them might head for the Climate Camp and the police were right to anticipate the risk and take appropriate steps to deal with it, if it materialised. But it was, we think, no more than a risk, and the distances between Bank and the demonstration in Bishopsgate were significant for people travelling on foot and the available routes were circuitous. A Royal Exchange protestor bent on joining the Climate Camp who was reasonably familiar with the geography of the City might at a stretch and in theory reach the Climate Camp in 10 minutes or so, but those who did reach the northern end in fact took up to 2 hours to do so. As we have said, we are not clear on the evidence that those in Gracechurch Street ever really reached the outskirts of the Climate Camp.'
The Divisional Court then said this at [2011] HRLR 24, paras 59-60:
'59. There was at 7.07pm no reasonably apprehended breach of the peace, imminent or otherwise, within the Climate Camp itself sufficient to justify containment. The Commissioner's main case depends entirely on the risk that there would be breaches of the peace at or associated with the Climate Camp resulting from the arrival of protestors from the Royal Exchange. There was such a risk, but it was at that stage only a risk; and it was not, in our judgment, a risk of imminent breaches of the peace sufficient to justify full containment at the Climate Camp. Such flexibility as the concept of imminence bears does not extend that far on the facts of this case.
60. Accepting, as we do, that the police were right to take steps to guard against the risk, we have to consider other possibilities. These, we think, included being prepared to implement some form of absolute cordon or cordons, if that became later necessary to deal with an imminent risk, and, it may be, sealing off some side roads. An absolute cordon at the north of the Climate Camp may well have become necessary and proportionate at or around 9.30pm when some Royal Exchange protestors did eventually arrive there. That may not have justified an absolute cordon at the south, since the need was, not so much to keep the Climate Camp protestors in, as to keep the Royal Exchange protestors out.'
The Court then turned to the push north. At [2011] HRLR 24, para 61, they said that 'the police were right to have an eye to infiltration from Great St Helens Street and the street or alleyway opposite', and that 'Mr Johnson had finite and limited resources'. However, they considered that:
'[T]he officers who did the pushing and some others could have cordoned the relatively narrow side roads as an extension of the filter cordon at the southern end of Bishopsgate. We think that at 7.00pm filter cordons at each of the side roads would have sufficed. We accept that blocking all the more distant means of access to Bishopsgate would not have been feasible. It follows that, in our judgment, the pushing operation from the south was not necessary or proportionate. In the event, those side streets were not used by Royal Exchange protestors in any number to try to reach the Climate Camp.'
The only other aspect of the conclusions which should be referred to is in [2011] HRLR 24, para 62, where the Court referred to instances of 'unduly inflexible release' and of 'unnecessary, and, we think, unjustified force in the pushing operation'. They also concluded that there had been 'insufficient' 'training and on the spot instruction'.
The Commissioner's appeal: the issues
Having set out the facts and the applicable legal principles, it appears to us that, so far as the issues which are the subject of this appeal are concerned, there were three questions for the Divisional Court, two relating to the containment of the Climate Camp and one relating to the push north:
(i) (a) Did Mr Johnson reasonably apprehend an imminent breach of the peace at the Climate Camp as at 19.00?
(b) If so, was the decision to contain the Climate Camp a reasonable and proportionate response to that apprehension?
(ii) Was the decision to push north, at the southern end of the Climate Camp, a reasonable and proportionate decision?
As explained more fully above, after correctly summarising the applicable law at [2011] HRLR 24, paras 7-17, expressing unexceptionable conclusions (subject to what we say in para 63 below) as to what one might call the objective primary facts at [2011] HRLR 24, paras 18-28, accurately summarising Mr Johnson's evidence (subject to the point made at para 29 above) at [2011] HRLR 24, paras 29-37, and fairly summarising the parties' respective contentions at [2011] HRLR 24, paras 38-55, the Divisional Court reached its conclusions at [2011] HRLR 24, paras 56-64. On this appeal, we must, of course, focus on those conclusions and the reasons given to support them.
When considering the Commissioner's appeal, the first step is to identify what those conclusions were. It appears from the above analysis of the judgment that the Court effectively concluded that the Commissioner failed on question (i)(a), on the ground that, although Mr Johnson honestly believed that a breach of the peace was imminent if the Climate Camp was not contained, that belief was not reasonable. The Court made it clear in more than one passage, most clearly at [2011] HRLR 24, para 59, that a breach of the peace was not imminent, but it also made it clear that Mr Johnson was, save perhaps on the point mentioned in the passage quoted at para 48 above, an accurate witness, and that he had made his decisions on 1 April 2009 in good faith - see [2011] HRLR 24, paras 23 and 57.
Turning to question (i)(b), there appears to be no finding by the Court that, if, contrary to its conclusion, Mr Johnson's apprehension of an imminent breach of the peace was justifiable, his decision to contain the Climate Camp was unreasonable or disproportionate. However, in his well-presented submissions on behalf of the claimants, Mr Fordham contended that, on Mr Johnson's own evidence, the Commissioner should fail on this question. That was, he said, because Mr Johnson had said in evidence that he would not have ordered containment of the Climate Camp unless there had been actual violence in the Climate Camp itself.
As to question (ii), we consider that the Court's conclusion that the push north was unreasonable stands or falls with its conclusion on question (i). If the containment of the Climate Camp was, as the Court concluded, unjustifiable, then, as it also concluded, the push north was similarly unjustifiable. On the other hand, if, contrary to the Court's view, the containment was reasonable, then there is no basis for impeaching the push north. This conclusion rests on a passage in the evidence of Mr Dale and a few findings in the judgment below.
Mr Dale, who was not called for cross-examination, said in his witness statement that the push north was 'necessary to prevent frustration of the containment'. The Court concluded that the decision to push north 'so that the two side streets were not within the area occupied by the Climate Camp…. was a broadly sensible decision subject to the details of the pushing operation to which we will come' - [2011] HRLR 24, para 34. Those 'details' were, as Mr Fordham realistically accepted, the instances of unjustified and unnecessary force allegedly used in the operation, referred to at [2011] HRLR 24, para 62, which cannot themselves impinge on the reasonableness or otherwise of the actual decision to push north. A conclusion that, even if containment of the Climate Camp was justified, the decision to push north was not reasonable or proportionate, would therefore have been inconsistent with the Court's conclusion in [2011] HRLR 24, para 34.
The Court's conclusion that the pushing operation was not reasonably necessary also appears to be dependent upon its opinion at [2011] HRLR 24, para 60 that 'some form of absolute cordon or cordons' at the southern end of the Climate Camp (i.e. containment) was not necessary, because there was no imminent risk of breaches of the peace (as mentioned in the previous paragraph of the judgment), and that blocking the side streets as an extension of 'filter cordons' at the southern end of Bishopsgate would have sufficed - [2011] HRLR 24, para 61.
Furthermore, in the same paragraph of the judgment, the Court accepted that Mr Johnson had finite and limited resources and that the pushing decision was Mr Dale's not his. There was no evidence that the resources available to Mr Johnson were sufficient to extend the filter cordon. Indeed, in his witness statement and in his cross-examination, Mr Johnson said that the manpower needed to ensure an orderly dispersal of the Royal Exchange demonstration further limited the police resources available to be deployed at the Climate Camp. In this connection it is also relevant to note that, at [2011] HRLR 24, para 34, the Court accepted his evidence that he did not have the resources to 'seal off all the roads' and that 'this would have been physically impossible' in any event. It is true that there is an earlier observation in the judgment that '[d]ispersal of the Royal Exchange crowd released some police resources to deploy at the Climate Camp' at [2011] HRLR 24, para 24, but we have some difficulty with that statement, as there was no evidence to support it, and it seems inconsistent with the evidence of Mr Johnson, which the Court accepted.
Finally, on question (ii), it appears to us very difficult to see how it could have been fairly open to the Court to conclude that the decision to push north was not a reasonable and proportionate way of implementing a lawful containment decision (as opposed to the proposition that it was not reasonably necessary because containment was not justified). That is because the decision was made by Mr Dale and not by Mr Johnson, and Mr Dale had provided a witness statement explaining his reasons for making the decision, and the claimants had elected not to cross-examine him.
Accordingly, in order to determine this appeal, we have to focus on two issues. The first is whether Mr Johnson's genuinely held apprehension that there was a breach of the peace at the Climate Camp imminent was a reasonable view, and the second issue is whether his decision to contain the Climate Camp was unjustifiable on his own evidence.
So far as the first of those issues is concerned, there are no fewer than ten different grounds raised in the Commissioner's notice of appeal and written argument prepared on his behalf by Ms Carss-Frisk QC, who appeared in this court with Mr Pievsky, for the Commissioner, as she did below. However, as she realistically accepted in the course of her well-presented oral submissions, she really had two criticisms of the Divisional Court's reasoning as to why the Commissioner had failed to establish that Mr Johnson's apprehension of an imminent breach of the peace was reasonable. The first was that, rather than considering whether Mr Johnson's apprehension was reasonable, the Court formed its own view on the matter. The second criticism was that, in so far as the Court did decide that the apprehension was unreasonable, there was no evidence upon which it could fairly have done so.
Accordingly, there are two questions to be considered on the first issue, and one on the second issue. Those questions are (i) whether the Divisional Court adopted the wrong approach to the question whether a breach of the peace was imminent, (ii) whether Mr Johnson's apprehension that there was an imminent breach of the peace was reasonable, and (iii) whether, on Mr Johnson's own evidence, he should not have ordered containment of the Climate Camp. We turn to consider those questions, which overlap to an extent.
The imminence of a breach of the peace: was the Court's approach wrong?
The role of the Divisional Court was, as both sides accepted, accurately described by Sedley LJ in Redmond-Bate (1999) 163 JP 789, 791, namely 'to decide not whether the view taken by [Mr Johnson] fell within the broad band of rational decisions but whether in the light of what he knew and perceived at the time the court is satisfied that it was reasonable to fear an imminent breach of the peace'. The Court's function was not, therefore, to form its own view as to imminence.
It can be said with some force that it would be surprising if the Divisional Court had made the mistake of forming its own view as to the imminence of a breach of the peace at the Climate Camp, rather than assessing the reasonableness of Mr Johnson's apprehension of such imminence. Not only did the Court give a careful and accurate summary of the applicable law at [2011] HRLR 24, paras 7-17, but it also referred to the decision in Redmond-Bate (1999) 163 JP 789 at [2011] HRLR 24, para 39. However, those two points are mitigated by the fact that, in its analysis of the law, while concentrating on the need for imminence, the Court did not in terms focus on the nature of its role or the nature of the question it had to answer, and by the fact that the Court referred to Redmond-Bate (1999) 163 JP 789 not in that connection, but in context of Mr Fordham's point that 'if the police reasonably apprehended breaches of the peace by dispersing Royal Exchange protestors, the police preventive action should have been directed against them and did not justify containment of the Climate Camp protestors who were in the main peaceful'.
Ms Carss-Frisk relies on the way the Court expressed itself in four crucial paragraphs of the judgment, [2011] HRLR 24, paras 58-61. Thus, the Court said (with underlined emphasis supplied):
a) '58. … [T]he risk that there would be breaches of the peace at the Climate Camp ... was, we think no more than a risk", an observation which was followed by the Court's own assessment of the time it would have taken for someone at the Royal Exchange demonstration to reach the Climate Camp;
b) '59 … [T]he risk that there would be breaches of the peace … was not, in our judgment, a risk of imminent breaches of the peace …';
c) '60 … [O]ther possibilities, we think, included' measures including cordons and blocking off roads, which was followed by the Court's own assessment of what 'may well have become necessary and proportionate at or around 9.30 pm …';
d) '61 … [Dealing with the push north] 'We think that at 7.00 pm filter cordons on each side of the road would have sufficed. … [I]n our judgment, the pushing operation … was not necessary …".
Any appellate court should be slow to latch onto what may be no more than linguistic imperfection or infelicity of expression in order to undermine an otherwise impeccable judgment. To borrow an expression of Lord Diplock (in The Antaios [1985] AC 191, 203) detailed semantic and syntactical analysis of first instance judgments by appellate courts is generally to be deprecated. However, one cannot simply ignore the way in which a judge expresses himself in a judgment: after all, the purpose of a reasoned judgment is to explain why the judge arrived at his decision. In the end, as with any question involving the interpretation of a document, one has to construe a judgment as a whole, but, at least in the absence of good reason to the contrary in a particular case, one should, in our view, approach any issue with a predisposition in favour of the judge having got the law right rather than wrong.
In this case, each of the four paragraphs which encapsulate the Court's reasoning contain at least one sentence suggesting that the Court applied the wrong test, namely proceeding on the basis of its own view of imminence rather that on its assessment of the reasonableness of Mr Johnson's view of imminence. On the other hand, there is not a single sentence in those four paragraphs which expressly indicates that the Court considered the reasonableness of Mr Johnson's apprehension.
However, there is one sentence in those four paragraphs which may be said to indicate that the Court adopted the right approach. At the beginning of [2011] HRLR 24, para 59, the Court said that '[t]here was at 7.07pm no reasonably apprehended breach of the peace, imminent or otherwise, within the Climate Camp itself sufficient to justify containment' (emphasis supplied). However, as is clear from the word 'itself' and from what follows in the paragraph, that sentence is not concerned with the source of the breach of the peace which triggered Mr Johnson's apprehension, Royal Exchange demonstrators from outside the Camp joining the Climate Camp. It is also true that, in earlier parts of the judgment the Court had accurately set out its function. Thus, at [2011] HRLR 14, para 31, it said that 'the justification for the Climate Camp containment has to depend on [the creation of] a reasonable apprehension of an imminent breach of the peace at the Climate Camp' (emphasis supplied). Also, when setting out Mr Fordham's submissions, the Court accurately identified the right approach – at [2011] HRLR 24, paras 40-41, the claimants' case is described as being that 'there never was a reasonable apprehension of breaches of the peace at the Climate Camp' and that 'there was no reasonable apprehension by those putting the containment in place that [a breach of the peace] was likely to occur' (emphasis supplied).
We accept that it can be said that these passages at the beginning of [2011] HRLR 24, para 59 and in the course of [2011] HRLR 24, paras 31 and 40-41 show that the Court had the correct approach well in mind. However, it can equally be said that the contrast in language between those earlier paragraphs and what was said by the Court in the passages cited in para 70 above, when explaining its conclusions on the very issue on which it was being called on to decide, supports the Commissioner's case, as it shows that the Court can state the precisely correct approach when it wishes to do so.
The notion that the Divisional Court wrongly formed its own assessment, rather than considering the reasonableness of Mr Johnson's assessment, of imminence is supported by another feature of the judgment below. That feature is that the Court did not examine Mr Johnson's own reasons, as contained in his log, his witness statement and his cross-examination, for concluding that the acknowledged risk, which he rightly anticipated and took appropriate steps to deal with, was not merely a risk of a breach of the peace, but a risk of an imminent breach of the peace. If the Court was fairly to find that Mr Johnson's assessment at 19.00 that a breach of the peace was imminent was not reasonable, one would expected it to have given an explanation as to why this was so, in the light of what Mr Johnson knew and honestly perceived at the time, and his rationale as to imminence, which was accurately summarised at [2011] HRLR 24, para 23 (and set out at para 43 above). When giving their reasons for allowing the claimants' case at [2011] HRLR 24, paras 57-61, the Court expressed its view, as highlighted in the passages cited in para 70 above. But nowhere did it expressly address Mr Johnson's reasons for reaching a different view (other than dealing somewhat delphically, at [2011] HRLR 24, para 58, with his view that it would have been easy for Royal Exchange demonstrators to get access to the Climate Camp, and accepting his statement that he had limited resources at [2011] HRLR 24, para 61).
In all these circumstances, we have reached the conclusion that the Commissioner has made out his case that the Divisional Court applied the wrong test when assessing whether there was an imminent risk of breach of the peace in the Climate Camp.
The imminence of a breach of the peace: was Mr Johnson's view reasonable?
If we are wrong in that conclusion, it would be necessary to consider the question whether the Divisional Court was entitled to conclude that Mr Johnson's apprehension that there was an imminent breach of the peace in the climate Camp was a reasonable one. If we are right in that conclusion, it may well still be necessary to consider that question, because, otherwise, it may be necessary to order a retrial. Accordingly, we turn to consider the second point made by Ms Carss-Frisk.
It appears to us difficult to contend that Mr Johnson's apprehension that there was an imminent breach of the peace in the Climate Camp as at 19.00 was unreasonable, in the light of the fact that the Divisional Court accepted that his apprehension was honest, and that the evidence he gave was accurate (save to the limited extent of 'question[ing]' his assessment of the extent of the violence within the Climate Camp). Further, as we have just mentioned, the Court does not appear to have analysed his evidence with a view to explaining why his apprehension was unreasonable: indeed, it does not appear to have rejected that evidence, at any rate expressly.
Mr Fordham, however, submitted that the Court had in fact rejected Mr Johnson's reasons for apprehending that there was an imminent breach of the peace in the Climate Camp, and had done so on two grounds. Those grounds were that the Court held to have been wrong or unreasonable, (i) Mr Johnson's assessment of the extent of disorder in the Climate Camp as at 19.00, and (ii) his assessment as to the time that it would take for the dispersed Royal Exchange demonstrators to reach the Climate Camp.
As to the first ground, it seems to us that the Court did not conclude that the Climate Camp had been entirely peaceful: they merely 'question[ed]', at [2011] HRLR 24, para 57, whether Mr Johnson had not overstated the extent to which there had been disorder at the Climate Camp during the day, and his basis for supposing that violence might break out as the evening approached – see also at [2011] HRLR 24, para 40. That is very different from rejecting his evidence that the Climate Camp was not entirely peaceful. Indeed, it is hard to see how that evidence could have been rejected. As the Court noted at [2011] HRLR 24, paras 21 and 23 (and repeated at para 30 when discussing his cross-examination), Mr Johnson had been told during the afternoon that the crowd at the Climate Camp was volatile, that there had been throwing of coins and bottles, that some demonstrators were putting on masks, that tyres on police vehicles had been slashed, that there had been an attack on a police van, and that 200 hardcore protesters had already joined the Camp.
This level of disorder at the Climate Camp may well have been 'more of the same', as Mr Fordham put it, but that is no basis for a conclusion that Mr Johnson's perception of either the extent of the disorder at the Climate Camp, or the potential for violence to break out if the crowds at the Royal Exchange demonstration and at the Climate Camp were allowed to mix, was unreasonable.
It is also true that the Court, at [2011] HRLR 24, para 41, thought that what it described Mr Johnson as 'sa[ying] in general terms' in his evidence, namely that 'there were groups within the Climate Camp who were intent on disorder or criminal damage' was 'largely unsupported by the evidence' and was 'unconvincing'. However, that merely serves to underline the fact that the Court accepted that there was a degree of disorder and violence in the Climate Camp: the only question is how much. That might be important if Mr Johnson's primary reason for containing the Camp had been the level of violence and disorder threatened within the Camp shorn of any incursion. However, as the Court accepted and emphasised more than once, the factor which precipitated Mr Johnson's apprehension of imminent breaches of the peace in the Camp was a result of combination of the two groups, either by incursion into the Climate Camp by some of the Royal Exchange demonstrators or by mixing of violent elements from the Climate Camp with those demonstrators.
Indeed, it seems to us that this ground, and indeed, much of the basis of Mr Fordham's cross-examination of Mr Johnson in the Divisional Court, proceeded on the false basis that containment of the Climate Camp could only be justified by a risk emanating solely from the demonstrators within the Camp, rather than from a combination of some or all of those demonstrators with elements from the Royal Exchange demonstration.
As for Mr Fordham's second ground, namely the contention that the Court rejected Mr Johnson's assessment of the time that it would take for the dispersed Royal Exchange demonstrators to reach the Climate Camp, the position appears to be as follows. Mr Johnson's perception was that those people who were dispersed from the Royal Exchange demonstration could get to the Climate Camp 'within a few minutes allowing for the short distance between the two demonstrations' - [2011] HRLR 24, para 23. The Court's own assessment, as expressed at [2011] HRLR 24, para 58, was that 'a Royal Exchange protestor who was bent on joining the Climate Camp who was reasonably familiar with the geography of the City might at a stretch and in theory reach the Climate Camp in 10 minutes or so'. Even if that assessment was correct (and taking the same questionable course as the Divisional Court, we think the journey could easily have been achieved in ten minutes normal walking), it would not mean that Mr Johnson's perception that the Royal Exchange demonstrators could join the Climate Camp in 'a few minutes' was not reasonable in the light of what he knew and perceived at the time.
It is also in point that the Court (when summarising Mr Fordham's argument, apparently with approval) said that the distance between the two demonstrations would mean that it was 'quite likely' that there would be 'delay' between the demonstrators leaving the Royal Exchange and finding their way to the Climate Camp, such that 'an appropriate cordon could be formed at short notice' – [2011] HRLR 24, para 41. That assessment, bearing in mind the tense position on the ground, renders it very difficult to characterise as unreasonable a decision on the ground that there might be insufficient delay to form an effective cordon.
Indeed, it is hard to see how a perception that there was an imminent risk of the Royal Exchange demonstrators joining the Climate Camp and importing their violence could be characterised as unreasonable on the undisputed facts of this case. There were two very large crowds in close proximity to each other, with a number of possible routes between them, in circumstances where, as the Court accepted, Mr Johnson 'did not have the resources to seal off all roads and this would have been physically impossible' - [2011] HRLR 24, para 34, and where one of the crowds, which was being dispersed, included many demonstrators who had committed serious breaches of the peace.
The Court's conclusion (if such it was: again, it may have simply been a record of Mr Fordham's submissions) at [2011] HRLR 24, para 41, that the police did not have to take 'expansive measures' to deal with these dispersing demonstrators, and that they may simply have made their way to Fenchurch Street Station, was contrary to the evidence of Mr Johnson that those demonstrators were causing problems such as throwing missiles and lighting fires and had to be dispersed – evidence which there was no reason to doubt, and no evidence to contradict.
This was not a case where the Court concluded that no containment was justified. The Court accepted at [2011] HRLR 24, para 60, that an absolute cordon at the north of the Climate Camp may well have become necessary and proportionate at or around 21.30 when some of the Royal Exchange demonstrators eventually arrived there. Even if one puts to one side the Commissioner's argument that this analysis amounted to an erroneous 'crisis management' approach to imminence, this acceptance demonstrates that the difference between the assessment of the Court and that of the person on the ground, Mr Johnson, was one of timing and/or degree. On that basis, if the Court was fairly to hold that the latter assessment was not a reasonable one, there should have been a careful explanation in the judgment as to why, and there is no such explanation.
Indeed, while hindsight is normally better avoided when considering whether a particular assessment was reasonable or not, there is a slightly different, if connected, point. It is a fact that, after dispersal began at the Royal Exchange at 19.25 ([2011] HRLR 24, para 27), over 200 people from the Royal Exchange demonstration had found their way to the cordon to the south of the Climate Camp by 20.00 and had to be dispersed (according to the contemporary log and Mr Johnson's evidence). This makes it hard to suggest that Mr Johnson's apprehension at the time that the dispersion of the Royal Exchange demonstration was about to start, that those being dispersed would seek to join the Climate Camp and cause a breach of the peace, was an unreasonable one. The mere fact that an anticipated or feared happening did not, in fact, occur, rarely can safely provide any support for the contention that it was not reasonable to anticipate or fear that the happening would occur; however, as we see it, the fact that the happening did, in fact, occur can properly be cited in support of the contention that it was reasonable so to anticipate or fear.
Accordingly, whether or not the Divisional Court adopted the right approach on the question of the imminence of a breach of the peace in the Climate Camp as a result of it being joined by demonstrators from the Royal Exchange, we agree with the Commissioner's case on this appeal that, on the facts as found by the Court, there was no justifiable basis for concluding that Mr Johnson's apprehension that such a breach was imminent was unreasonable.
Was the decision to contain the Climate Camp unjustified on Mr Johnson's evidence?
Mr Fordham's argument on this point involves three propositions, namely (a) whatever threat the infiltration by Royal Exchange demonstrators may have posed to a breach of the peace in the Climate Camp, Mr Johnson accepted that, unless there had been violence in the Climate Camp, its containment would not have been justified, but (b) there had, as a matter of fact, been no violence in the Climate Camp, and so (c) it follows that the containment cannot be justified as a matter of law.
This argument can be disposed of shortly in the light of what we have already said. We are prepared to assume that proposition (a) is correct, although we are not convinced that it is a fair reflection of Mr Johnson's evidence, which is summarised at para 23 above. However, we do not consider that proposition (b) can be supported, and so proposition (c) fails. Our reasons for rejecting proposition (b) can be found in the summary of the evidence summarised at paras 13-15 and 19-20 above, the findings of the Divisional Court set out in paras 42-43 above, and our conclusions in paras 80-82 above.
Concluding remarks
For these reasons, we would allow the Commissioner's appeal, on the basis that there was no valid basis for concluding that Mr Johnson's decision to contain the Climate Camp at 19.00 on 1 April 2009 was unlawful, as his apprehension that a breach of the peace was imminent was a reasonable view for him to have formed in the light of the information available to him at the time. The Divisional Court appears to have formed its own view on the imminence of a breach of the peace rather that assessing the reasonableness of Mr Johnson's view, and, even if they decided that his view was unreasonable, there was no valid basis for reaching such a decision.
We have concluded that a decision to contain a substantial crowd of demonstrators, whose behaviour, though at times unruly and somewhat violent, did not of itself justify containment, was justifiable on the ground that containment was the least drastic way of preventing what the police officer responsible for the decision reasonably apprehended would otherwise be imminent and serious breaches of the peace, as a result of what he reasonably regarded as the immediate risk of the crowd being joined by dispersing demonstrators from another substantial crowd, which had itself been contained, as its behaviour had been seriously violent and disorderly. A few further words about our conclusion may therefore be appropriate.
At [2011] HRLR 24, para 56, the Divisional Court said that '[i]t is only when the police reasonably believe that there is no other means whatsoever to prevent an imminent breach of the peace that they can as a matter of necessity curtail the lawful exercise of their rights by third parties'. It is right to emphasise that we agree with this, and that nothing in our decision is intended to detract from it. Indeed, the observation accords with the evidence of Mr Johnson in his cross-examination. He said that the decision to contain the Climate Camp should not have been made 'unless it was absolutely necessary'. That is right, for reasons of principle and practice. Containment of a crowd involves a serious intrusion into the freedom of movement of the crowd members, so it should only be adopted where it is reasonably believed that a breach of the peace is imminent and that no less intrusive crowd control operation will prevent the breach, and where containment is otherwise reasonable and proportionate. Further, as Mr Johnson said in evidence, 'containment … can actually escalate what is already going on, in terms of disorder, to make it even worse'.
Any member of the police considering whether to contain a crowd, and any court considering whether a decision to contain a crowd was justified, should bear in mind these important factors. At [2011] HRLR 24, para 56, the Divisional Court also said that '[t]he test of necessity is met only in truly extreme and exceptional circumstances'. This is no doubt true, but we doubt whether it gives any assistance over and above the requirements discussed in Laporte [2007] 2 AC 105 and summarised so clearly by the Divisional Court at [2011] HRLR 24, para 12 (and set out at para 36 above). Almost by definition, a decision to contain will only be made, or even considered, in extreme and exceptional circumstances: the Divisional Court made it clear that they thought the circumstances appertaining in the City of London on 1 April 2009 were extreme and exceptional (see for instance what they said at [2011] HRLR 24, para 57, cited at para 51 above). But an argument as to whether, in a particular case, the circumstances were extreme or exceptional enough, or 'truly' extreme and exceptional, is scarcely likely to assist those deciding at the time whether to contain, or those subsequently deciding whether the containment was justified.
In view of the fact that we are allowing the Commissioner's appeal, it is not necessary to deal with his further argument that, even if the containment and push north were not lawful operations, the Court should not have declared that, as a result, the claimants' Article 5 rights were infringed. Ms Carss-Frisk's contention, which must await other proceedings for its resolution, is that, unless the claimants had wanted to leave the Climate Camp during the period of containment, their Article 5 rights would not have been infringed, and that that issue must be determined on a claimant-by-claimant basis, and not in judicial review proceedings, whose function is as described in para 2 above.
The only other point that we should mention is that the observations of the Divisional Court about the way in which the containment and the push north were conducted at [2011] HRLR 24, para 62 (to which some reference has been made at para 55 above) cannot properly be treated as part of their decision. While the Court's criticisms of the conduct of the containment and push north may very well turn out to be entirely correct if the Queen's Bench actions referred to in para 2 above eventuate, these proceedings are only concerned with the lawfulness of strategic decisions.
In the event, we allow this appeal. | 3 |
MR JUSTICE SULLIVAN: In this rolled-up application for permission to apply for judicial review (and for judicial review if permission is granted) the claimant seeks a declaration that an order made by the defendant on 4 May 2007 ("the Order") to authorise the first interested party ("the Trustees") to enter into a lease under the powers given in the Charities (Alexandra Park and Palace) Order 2004 ("the 2004 Order") was unlawful. He also seeks a quashing order in respect of the Order.
The case was listed for one day and was expedited. Time constraints therefore mean that it is impossible to set out the full background history to the making of the Order. In very brief summary, the finances of Alexandra Palace, for which the Trustees are responsible, have been in a parlous state for very many years. In effect, the Palace is kept going by funds from the local authority, which make up the deficits each year. As long ago as 1998 the Trustees decided to ask the defendant to promote a Scheme in Parliament which would give the Trustees wider powers of leasing. The Trustees wished to be able to lease the whole of the Palace building, plus its immediate surroundings, for a term of 125 years at the best rate reasonably obtainable, having regard to the purposes of the Alexandra Palace Act 1985. Those purposes are that the Palace should be used for the purpose of public resort and recreation. The Trustees wished to be able to grant a lease to a private developer so as to put the funding and, in particular, the restoration of that part of the Palace which is presently derelict, on a proper financial footing.
The Scheme resulted in the 2004 Order, which provides at paragraph 3:
"3. Power to lease. The Trustees may, subject to the consent by Order of the Charity Commissioners, grant a lease of the whole or part or parts of the Palace buildings and the immediate surrounding area (which for the purpose of identification only is shown coloured red on the plan deposited with the Charity Commissioners under number 46278) for a term not exceeding 125 years at the best rent reasonably obtainable regard being had to the purpose of the Alexandra Park and Palace Acts and Order 1900 to 1985, provided that the Trustees may not grant any such lease which permits a use otherwise than is consistent with the said purposes."
The draft of the 2004 Order was considered in the House of Commons by the First Standing Committee on Delegated Legislation on 14 January 2004. A number of members of Parliament objected to the making of the Order. In response to those MPs who were objecting or raising concerns, the Parliamentary Under-Secretary of State, Fiona McTaggart MP, said this:
"There are other important safeguards connected to issues raised by hon. Members. First, there will be consultation on many proposals. The Charity Commission must authorise the grant of any lease, and it will be possible to raise concerns with the commission. One of the commission's roles is to safeguard the interests of the charity's beneficiaries, as well as to ensure that the trustees maintain their duties under the trust. I am quite certain that the lengthy procedure will continue in that regard.
However, it is important that there is an opportunity to have specific consultation on the beneficial interest, as well as on issues connected with established procedures such as planning. I therefore asked the commission for an undertaking, which I have now received, to publish the draft of any order that it might make authorising a lease under the Scheme, and to invite and consider any representations that it may receive.
In view of the time that it has taken, it seems right that there should be consultation on how beneficial interests should be protected and to ensure that they are so protected. I urge those commenting on the order to focus on those issues rather than on those that relate to planning or other matters. The Charity Commission will authorise a specific lease only if the trustees can demonstrate that it is expedient and in the interest of the charity."
One of those MPs who was opposing the Order, Mr Foster, expressed delight that the minister "has persuaded the Charity Commission to ensure that there is widespread consultation".
Following a tender process, the Trustees chose the second interested party, Firoka, as the preferred developer. There was a public exhibition of Firoka's outline proposals in January 2006. In March 2006, the Trustees consulted under section 36(6) of the Charities Act 1993. In October 2006, the defendant published the draft of the Order, together with a question and answer sheet. The draft order was "to authorise the Trustees to enter into a lease under the powers given in the Charities (Alexandra Park and Palace) Order 2004 and section 26 of the Charities Act 1993 ..." The draft contained a definition as to what was meant by the lease, and it was:
"'The lease' means a lease substantially in the form of the draft provided to the Charity Commission on 2 November 2006 in respect of land at Alexandra Palace for a term of 125 years, and between the mayor and burgesses of the London Borough of Haringey, Firoka (Alexandra Palace) Limited and Firoka (Kings Cross) Limited."
The draft order contained a number of conditions. Amongst those conditions was condition 5(1), which was in these terms:
"The trustees shall, at the same time as granting the lease, enter into the project agreement with Firoka (Alexandra Palace) Limited."
Thus it was clear that the lease was to be tied into the project agreement. The question and answer sheet explained that the defendant proposed to make a legal document called "An order for Alexandra Park and Palace", and said:
"This question and answer sheet answers some questions and sets out why we need to make the Order. This is not a full explanation of our decision making process."
The background is then set out, and concludes with a statement that the Trustees "now wish to grant a long lease to Firoka (Alexandra Palace) Limited. Firoka will develop the Palace and immediate surrounding area for uses consistent with Alexandra Park and Palace Acts and Orders 1900-2004, which govern the charity". There is then the question: "Why are we making an Order for Alexandra Park and Palace?" The answer is given:
"In 2004, after giving public notice, we made a Scheme for the charity permitting the grant of a 125 year lease of the Palace and its immediate surround for the best rent reasonably obtainable. However, our consent is still needed before the lease can be granted.
The trustees therefore need our consent to grant the lease to Firoka, as required by the 2004 Scheme. The Order will provide this consent."
In answer to the question: "What information have the trustees provided us with?", the defendant said:
"The trustees have provided us with information to show that the lease to Firoka is in the interests of the charity and that it is permitted by the 2004 Scheme."
Question 5 asks: "Is granting the lease in the interests of the charity?" Included in the answer to that question is the statement that:
"The lease therefore provides the prospect of a capital payment and a rent by which the Charity can continue its activities."
Various other questions are answered, and in answer to the question: "What is the publication period?", the question and answer sheet makes it clear that representations must be made by Friday 5 January 2007. The claimant made representations. Among other things, he said this:
"The order refers to the proposed lease. Although neither the terms of this lease, nor a plan of the exact land to be leased, have been included as an appendix to the published draft order, so making this 'consultation' meaningless (because one cannot comment on something one is not allowed to see), the commission knows, as we do, that the area of the land in the proposed lease to be reserved for the purposes of this charity is in reality confined to the theatre and a tiny corner for a museum.
Please take this letter as also constituting our formal request for sight of the lease and of all correspondence between the commission and the trustee about this order under the Freedom of Information Act."
He was not the only one of the consultees to make a point of that kind, and other representations to the same effect are included in the court bundle. In the interests of time, I will not read them out.
It is clear that the officers advising the Commission were well aware that this objection had been made. They said when summarising the objections:
"The lease and project agreement should have been made public (or parts of it) before the notice period. As it is, the public do not know what covenants are contained in the lease or what else they may wish to make representations about."
Although the issue was raised, the officers gave no answer to the objection, and indeed none was provided for or by the Commission. The reason why the lease and project agreement were not disclosed is to be found in an earlier exchange of correspondence between the Commission and the Trustee's solicitor. In a letter dated 24 February 2006, the Trustee's solicitor wrote to the Charity Commission, saying:
"The General Manager has asked me to indicate his immediate and major concerns in regard to your statement that the Commission might decide that the draft Lease would need to be published so that members of the public would be consulted and given an opportunity to object."
The letter then went on to say why that should not happen, and in particular made the point:
"Nothing in Mr Clapp's letter, any communications to the Commissioner over the last 13 years or indeed anything said by the Minister in the course of the January 2004 Parliamentary Debate, has given a scintilla of a suggestion that there might be publication of highly confidential and commercially sensitive terms."
The Charity Commission was asked to reconsider its position. Unfortunately for the purposes of these proceedings the Charity Commission did reconsider its position, and in a letter dated 15 March 2006, the Trustees' solicitor was advised:
"It is likely that the order will need to be published as this is such an important local issue. You are correct in understanding that it is the fact that it is the Commission's intention to make the order that is published (with the public having sight of the draft order upon request) rather than the sealed executed order. I can confirm that we will not require the lease terms to be published."
The report to the Commission summarising the representations received said that the Commission had received 328 representations, and that 324 of the respondents had expressed at least some concern about aspects of the proposals. Four of those responding were clearly in support of the proposals. Thus, this was a case in which there was considerable local interest. Indeed, the defendant's letter of 15 March 2006 recognised that the Order was "an important local issue".
The report's summary of the consultation responses was sent to the Trustees so that they could make comment upon it. The Trustees' solicitor did so, and commented on the representations in a lengthy and detailed 13-page letter dated 13 February 2007. Again, I do not read out the details of that letter. It is sufficient for present purposes to say that the Trustees responded to the concerns expressed by consultees by referring to numerous clauses in either the lease or the agreement, and then explaining by reference to those clauses why the concerns that had been expressed were not well-founded.
The points made in that detailed response were then taken up (at least in part) in a further report which was made to the Commission: "Decision review: Alexandra Palace" dated 2 March 2007. Simply by way of example, the report stated that the 2004 Scheme permitted a lease:
"• to a person who would commercially exploit the premises;
• that the use of the premises must be restricted to uses to which the premises might otherwise have been put by the Trustee in the different context to pursuing the objects;
• that the use of the premises must be consistent with the use of the park remaining in the trustee's possession in furtherance of the objects by the trustee; and
• that the rent must be the best rent reasonably obtainable and consistent with the commercial exploitation of the premises, but revised to take account of the limited use to which the premises may be put."
The report then continued:
"In considering whether the lease met these requirements, the user provisions, nuisance provisions and rent provisions were particularly important."
The report then considered the terms of the user provisions and referred to specific clauses in the lease.
The reasons for the Commission's decision, which was made on 27 April 2007, are set out in a document. That sets out the background, and in paragraph 5.3 there is a heading, "Consideration of representations". The paragraph refers to the number of representations that have been made, and says:
"The Commissioners considered each of the potential areas for concern raised in the representations which are set down below."
The areas of concern are summarised and the Commissioner's response to them is set out. Under the heading "Issues already considered", the decision document said:
"Some representations questioned the power of the Commission to make the order or whether the lease fell within the power granted by the Scheme. Others questioned whether the Commission had given enough public notice of its intention to make the order."
That would appear to be the closest one gets to any recognition by the defendant of the fact that a number of consultees had said in effect that they needed to see the lease in order to be able to make sensible representations. The ambit of the defendant's decision is described in the concluding paragraph of the reasons:
"In conclusion the Commissioners were satisfied that the proposed lease falls within the Scheme, that the decision is in furtherance of the objects and powers of the Charity, that the decision to enter into the proposed lease was properly taken by the Board in the best interests of the Charity. The Commissioners were satisfied that the decision to enter into the proposed lease by the Board was in the interests of the Charity and provided an advantageous means of furthering it purposes, and consequently will be authorised under the Charities (Alexandra Park and Palace) Order 2004 as being expedient in the interests of the charity ..."
Thus it is clear that the ambit of the Commission's decision was not simply to decide whether or not what was proposed fell within the terms of the Act and the Scheme, but also whether it was "expedient in the interests of the charity". One might have thought that it would be a fairly elementary proposition that a decision whether it would be expedient in the interests of a charity to enter into a particular 125-year lease and project agreement would depend on the particular terms of that lease and project agreement.
Against that background, certain conclusions can be drawn. The proper starting point is that one is not concerned with just any promise of consultation. This is not a case where a junior official in an off-guard moment has, perhaps unwisely, given an assurance on behalf of a public body. This was a promise made by a junior minister of the Crown, in Parliament, during the consideration of subordinate legislation. Moreover, the promise was made to meet the concerns of those who were opposing the passage of that legislation. It seems to me that two things follow from that. Firstly, it is of particular importance that a promise of that kind, given in Parliament, is honoured. Conversely, there would have to be very good reasons indeed if the Commission was to decide that it should not after all be honoured. Secondly, the minister's promise has to be interpreted not in a legalistic way, but purposefully, bearing in mind the background against which, and the reason for which, it was given. Moreover, it has to be interpreted in such a way as to make sense of the promise that there would be consultation on how beneficial interests should be protected, rather than to make a nonsense of that assurance and to make it ineffective.
When giving the assurance to Parliament, the minister no doubt expected, as did those who were listening to her, that the consultation carried out by the Commission would be both effective and fair; and that it would not be ineffective and/or unfair. The Commission's approach, as explained to me by Mr Kovats in his submissions on behalf of the defendant, was that the Commission had honoured the commitment that had been given by the minister, and it has done so because it promised to publish the draft order and seek representations on the draft order, and that indeed is precisely what it had done.
The submission was, as I understood it, that the Commission was obliged to do no more than that as a result of the minister's assurance. In my judgment, that makes a complete nonsense of the minister's promise and strips it of any real effect. The reason for that is quite simple. Any reasonable person asked to comment on a draft order giving trustees that have power, subject to consent, to enter into 125-year leases, consent to enter into a particular 125-year lease tied into a development agreement on the basis that it would be expedient in the interests of the trust that they should do so, would be bound to say: "Show me the lease and the agreement, and then I will be able to answer your question", or at the very least they would say: "If for some reason you are unable to show me the lease and the project agreements themselves, then at least tell me sufficient about them to enable me to form a view about whether entering into them would be expedient in the interests of the trust". The draft order may be consenting to a most excellent proposal. Conversely, it may be consenting to a thoroughly disadvantageous proposal. It all depends on what is contained in the lease and project agreement.
To put it bluntly, it would be a nonsense for a public body to give a public assurance that it will consult upon a draft order which proposes to consent to X, and then when it is asked by consultees, "Well, what is X?", for the public body to answer: "We do not propose to tell you; it is confidential". It is not too difficult to imagine the likely reaction of Mr Foster MP and the other MPs who were opposing the Order (para 4 above) if the minister had told them: "While the Commission has promised to publish the draft of any order authorising a lease under the scheme, the Order will not, of course, contain any information about the terms of the lease, and if consultees ask what those terms are, they will be told that some of the terms can be made available because they are all confidential." The minister's assurance would have been met with the Parliamentary equivalent of hoots of derision.
Mr Kovats very properly accepted that whatever the precise terms of the minister's undertaking may have been, there was nevertheless an overarching requirement that the consultation process should be fair. It is difficult to see how in the complete absence of any information as what it was that consent was proposed to be given to, there could have been much fairness, but the unfairness of the process as a whole is emphasised by the fact that although some objectors had asked for and been refused a copy of the lease and the project agreement, when their representations were referred to the Trustees, the Trustees were able to, and did, respond to the representations of consultees, who were essentially shooting in the dark, by reference to the detailed provisions of the lease and the project agreement. One can see that in the letter of the Trustees' solicitor to the Commission, and also in the way in which the detailed points by reference to particular clauses of the lease were then picked up in the report of officials to the Commission. I find it difficult to understand how the Commission could have thought that this was a fair process. One would have thought that the alarm bells would be ringing loud and clear, in particular since the point had been flagged up, but not answered, by the officials in the report to the Commissioners in the passage to which I have referred above.
In his submissions, Mr Kovats relied on the fact that there had been compliance with the statutory requirements as to consultation, and he submitted that those requirements were a powerful indicator as to what fairness required. As a general proposition, the fact that there are statutory requirements and that they have been complied with will often be a powerful indicator that there has been fairness, but that is beside the point in the present case because here there was not simply a promise to comply with the statutory framework, there was a specific promise of consultation given by the minister to assuage concerns that were being raised in Parliament. She told Parliament that she had sought and obtained a specific assurance from the Commission.
So far as the proposition that the Commission honoured the minister's undertaking, I accept Mr Kovats' submission that the Commission appears to have understood the undertaking in a very limited way. But, in my judgment, that understanding was simply unreasonable and wholly unrealistic since it stripped the assurance of any real effect. One asks rhetorically: what would be the point in publishing for consultation a draft order that indicated that consent was to be given to enter into a particular lease if one then refused to give consultees information about what the lease contained?
Mr Kovats referred to the confidentiality agreement between the Commission and the Trustees, but it is difficult to see how such a private agreement between two parties could possibly negate the effectiveness of a consultation which had been publicly promised by a minister in Parliament. The Commission, in apparently changing its position and giving the assurance sought by the Trustees that the lease would not be made public, appears to have lost sight of the need for there to be an effective and fair consultation in line with the minister's assurance. Unless it decided that the undertaking given in Parliament should not be honoured, the Commission had no power to enter into any agreement that would render the promised consultation ineffective. What is particularly surprising is that the point having been squarely raised by a number of consultees, and having been identified by the Commission's officers, there appears to have been no further consideration of the matter: no further consideration for example of whether it might be possible to supply a redacted version of the lease and the agreement; no further consideration of whether it might be possible to supply a gist or a summary of all or parts of those documents, so that those who were being consulted would at least have some idea of what they were being consulted about.
Lastly, Mr Kovats mentioned the history of disclosure by the Trustees themselves. This was a point which was elaborated by Mr Hickman on behalf of the Trustees. He too relied particularly strongly on the confidentiality agreement between the Trustees and the defendant. But, as I have said, the primary obligation on the Commission as a public body was to ensure that there was an effective and fair process of consultation. It should not have given any assurance that prevented that process from taking place. That is not to say that it could not have agreed that certain particularly sensitive terms of the lease, for example rent or financial payments, should be redacted, but it was under an obligation to ensure that those who were consulted had sufficient information to be able to make a meaningful response to the question: should consent be given to the Trustees entering into this particular lease because it would be expedient in the interests of the charity for them to do so?
Reverting to the question of earlier disclosure and consultation by the Trustees themselves, Mr Hickman referred to the different stages of consultation. Firstly, there was consultation prior to what became the 2004 Scheme. That is of no assistance to the Trustees because we know that that consultation resulted in objections to the scheme, and it was to remove the concerns of those objectors that the minister gave the assurance that there would be consultation.
Then it said that there was consultation by the Trustees in respect of Firoka's own scheme: there was an exhibition in the Palm Court at Alexandra Palace for some six days in January 2006. However, on the face of the brochure it is clear that what Firoka were presenting at that stage were outline proposals, and indeed in a subsequent report they were correctly described by the general manager of the Trustees as "outlined concepts". It was clear that the detail would be worked up later, and it is clear from the extensive documentation in the bundle that there was a lengthy period of negotiation, and that there were various versions of the lease. At the end of the day what mattered was not what was shown in outline at the exhibition in January 2006, but what had been finally agreed and incorporated into the lease and the project agreement in November 2006, and it is clear from the documents that changes had occurred over the intervening months.
Mr Hickman referred to the consultations with the various statutory and non-statutory bodies that advised the Trustees. But again, if one looks at the minutes of the meetings of those bodies, one can find them asking to see copies of the lease and the project agreement -- again for perfectly understandable reasons. He also referred to the section 36(6) consultation by the Trustees themselves in respect of the proposal to grant a lease, but the notice in respect of that proposal is barely more informative than the notice in respect of the draft order consulted upon by the defendant. The notice of proposed disposition under section 36(6) of the 1993 Act says:
"The Alexandra Park and Palace Board as charity trustees ... hereby give public notice pursuant to section 36(6) of the Charities Act 1993 of their proposal to grant a lease of the appellant's buildings in the immediate surrounding area shown in the plan below coloured red. Representations which should be addressed to the General Manager are invited by 27 April 2006. Any representations about the proposed disposition received by 27 April 2006 will be taken into consideration."
The notice is at least accompanied by a plan which shows the area of the trustee's proposal at that time.
For these reasons, the earlier consultation exercises, which preceded the detailed negotiations on the lease and the project agreement, could not sensibly have been regarded as a substitute for the consultation which had been promised by the minister, which was consultation not by the Trustees but by the defendant. It follows that the process was very seriously flawed. This is not a case of a consultation exercise where consultees have been given some but inadequate information. This is a consultation exercise where simply publishing the draft notice, with virtually nothing more, gave consultees virtually no information about what it was that consent was being sought for. It had been established by that stage that the Trustees could, subject to the defendant's consent, grant a 125-year lease of the Palace buildings and their immediate surrounds, that much was known, but the notice given by the defendant told consultees virtually nothing beyond that. All the critical information was withheld, and it appears that for whatever reason no thought was given as to how it might have been made available to consultees, even if the Trustees and Firoka were raising objections to the disclosure of the lease and project agreements on the grounds of confidentiality.
It follows that, subject to the question of discretion, the claimant is entitled to the relief that he seeks. Mr Hickman strenuously argued on behalf of the Trustees that, as a matter of discretion, the court should not grant relief. He made the point that the claimant had been able to make detailed representations. That is perfectly true. The claimant did make detailed representations, but it is equally clear that he was asking, not in the least unreasonably, to see copies of the lease and agreement which were the subject of the draft order. When I say "not in the least unreasonably", I do not mean to imply that the whole of those documents unredacted should necessarily have been given to him. I do say that that request having been made, very serious consideration should have been given as to the extent to which he could properly have been given details of what was contained in the lease of the project agreement so as to enable him to make fully informed representations.
It is important to bear in mind when considering this exercise of discretion that although there is only one claimant in these proceedings, as I have said he was not alone among consultees in raising this issue, and it is clear from the number of representations that were made to the Commission that this was an issue of very considerable local interest, eliciting 328 representations, of which 324 were expressing some degree of concern.
Mr Hickman submitted that the practical consequence of granting relief would in effect be that Firoka were likely to walk away. If the lease is not signed by 17 November, then Firoka will be entitled to treat the Trustees as being in fundamental breach of the lease. While there is a good deal of second-hand evidence about that, it is perhaps significant that Firoka themselves have not chosen to play any part in these proceedings. However, Mr Hickman did seek permission to put in a very belated witness statement dated 2 October 2007 from Mr Kassam, who is a director of both Firoka (Alexandra Palace) Limited (FAP) and Firoka (Kings Cross) Limited. That statement, amongst other things, does make it clear that Firoka have invested huge amounts of time, energy and money, including a considerable amount of management time, in the Alexandra Palace project. That suggests that he would be somewhat reluctant to simply walk away from the project. Mr Kassam states that if the Trustees are unable to enter into the documents which have been agreed, then "as matters currently stand and for wholly commercial reasons" FAP will withdraw their interest in Alexandra Palace:
"Neither FAP nor Kings Cross believe it commercially sensible or viable as matters currently stand to engage in a new tender and negotiation process, with all the time, expense and uncertainty that would necessarily involve."
He also states that FAP would be unwilling to revise terms which had been finally agreed after an extremely long negotiation process. The witness statement also says:
"If during those negotiations the Trustees had suggested to me that as part of the consultation process which the Charity Commission had agreed to undertake prior to granting the required order, the lease and perhaps the other associated documents would need to be disclosed in full for public scrutiny, I would have been extremely uncomfortable and would have seriously considered walking away from the project at that stage."
It is interesting to note that Mr Kassam does not state in terms that even if full disclosure had been required, he would have walked away, merely that he would have given serious consideration to doing so. Moreover, his expressed concern, at least in his witness statement, is about disclosure in full. It says nothing about the extent to which he might have been persuaded to agree to some form of redacted disclosure, or summary or gist of what had been agreed. So if one looks at the evidence as it emerges from the horse's mouth rather than second hand, some of the submissions made by Mr Hickman on behalf of the Trustees as to the likely outcome of relief being given in this case are not made out.
Lastly, it is submitted that, into the balancing exercise, in addition to the question of confidentiality, the opportunity to make representations, and the likely adverse impact on the Trustees, the court should reach the view that really there would be no chance of a different decision being reached, even if the consultation process was reopened. As a matter of principle, the court ought to be extremely cautious in accepting such a submission. In the case of Smith v North East Derbyshire Primary Care Trust [2006] EWHC Civ 129, May LJ (with whom Keene LJ agreed) said this:
"I have already noted that neither Mr Pittaway nor Mr Post [who appeared on behalf of the defendant and the interested party] contended that the judge's second reason, that is that the decision would probably have been the same anyway, was alone sufficient to sustain his conclusion. That is a proper concession. Probability is not enough. The defendants would have to show that the decision would inevitably have been the same and the court must not unconsciously stray from its proper province of reviewing the propriety of the decision making process into the forbidden territory of evaluating the substantial merits of the decision. Authority for this synthesis may be found in R v Chief Constable of Thames Valley Police ex parte Cotton [1990] IRLR 344 at 352; Simplex G.E. (Holdings) Ltd and another v Secretary of State for the Environment (1989) 57 P & CR 306 at 327; R v Secretary of State for Environment ex parte Brent London Borough Council [1982] 1 QB 593 at 646, and see also Fordham, Judicial Review Handbook (4th Ed) at paragraph 4.5 and Clive Lewis, Judicial Remedies in Public Law (3rd Ed) at paragraph 11 027. In the light of this, I think that Collins J applied a wrong principle in paragraph 27 of his judgment."
As I have mentioned, the question for the Commission was not simply a legal one: was this proposal within the terms of the trust?; it was also a judgmental one involving consideration whether the proposal was expedient in the interests of the trust. In deciding the question of discretion, it seems to me that Mr Hickman's submissions overlook the starting point in this case, which is an assurance given by a minister in Parliament. It does seem to me that there would have to be very powerful reasons indeed, where a minister has promised that there would be consultation, to allow a situation to arise where the court acquiesces in a consultation that has been manifestly ineffective and unfair. In saying that, I should make it clear, perhaps at the risk of repetition, that I am not saying that all of the lease and the project agreement, every single clause, had to be disclosed. I am saying that sufficient information about what is contained in the lease and the project agreement must be disclosed to consultees to enable them to make a meaningful response to the question posed by the Commission: should we give consent to the Trustees entering into this lease and this agreement? It seems to me axiomatic that in order to answer the question whether it is expedient in the interests of a charity that its Trustees should enter into a particular lease one must have sufficient information about the lease proposed.
It should not be assumed that I am endorsing the extent of the redaction that has occurred in respect of the lease in response to Freedom of Information Act requests. It is most regrettable that the redacted version of the lease appeared after the conclusion of the consultation period. It is a matter for the Commission, having given an assurance to the minister that there would be consultation, to consider how it can ensure that that consultation is both effective and fair. There can be no doubt whatsoever that, in the absence of any meaningful information about the lease and project agreement, that requirement was not satisfied.
For these reasons, I grant the relief sought. I grant a declaration that the Order is unlawful, and I quash the Order.
MR WOLFE: My Lord, I am grateful. I just have one application, which is an application for costs, if I may. It is an application for costs against the Trustees. If I can just ask you to turn up Part 44 of the White Book.
MR JUSTICE SULLIVAN: This assumes that the magnificence of the public service will mean that I have a 2007 White Book on my desk. That, I am afraid, is a wrong assumption.
MR WOLFE: A 2006 version will do.
MR JUSTICE SULLIVAN: What about a 2005 version?
MR WOLFE: I do not think it has changed. I simply want to look at the rule.
MR JUSTICE SULLIVAN: Which one are you wanting?
MR WOLFE: 44.3(1) identifies the general discretion that the court has to make an order as to whether costs are payable by one party to the other, and indeed the amount of those costs. Rule 44.3(2) sets out the general rule. 44.3(4) explains that:
"In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including –
(a) the conduct of all the parties ..."
And then sub-section (5) says:
The conduct of the parties includes –
(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed any relevant pre-action protocol ..."
My Lord, there is no doubt that the court has jurisdiction to make an order that the Trustees pay the costs, and I identify within the context of 44.3(5) their conduct in two regards: (1) before the proceedings and also during the proceedings. Before the proceedings it was their pushing of the Commission on the question of disclosure which led to the position we now find ourselves in. My Lord has gone through in detail the correspondence trail and the request of the Commission to reverse its decision, which was then agreed to by the Commission. True it is that the Commission should not have acceded to that request, but the pressure came from the Trustees. In terms of the litigation itself, my Lord has already seen my complaint about the way in which the Trustees have amended their case, and indeed a substantial part of the matters which troubled my Lord today were those driven by the Trustees -- not only the arguments but, in my submission, the adding of the arguments late in the day in relation to the two aspects on discretion, which could have made a difference on the one hand, and pure discretionary relief on the other, and, my Lord, in the event it has been Mr Hickman on the part of the Trustees who has taken the running. It is a bit like one of those cases -- not as crisp, I accept, as one of those cases where the defendant accepts the error of his ways and the interested parties step in, but it is akin to that situation. So, my Lord, in my submission for those reasons and in the circumstances of the case I do ask that the court make an order that the Trustees pay the claimant's costs, to be assessed if not agreed. My Lord will have seen that he is privately funded, effectively by public contribution.
MR JUSTICE SULLIVAN: Yes. Could I just say: have you got a fall-back position if I do not think the Trustees -- a possible position would be to say: a plague on both your houses on that (inaudible) and you can have it 50/50. But apparently not.
MR WOLFE: My Lord may have seen there is an agreement between the claimant and the defendant that neither would seek the costs from the other whatever the outcome.
MR JUSTICE SULLIVAN: No, I had not seen that.
MR WOLFE: At an earlier stage of litigation there had been correspondence between the parties about, firstly, a protected costs order, and then a no costs agreement. The defendant chose to enter into one of those; the other parties did not.
MR JUSTICE SULLIVAN: Thank you very much. Yes, Mr Hickman?
MR HICKMAN: My Lord, we resist the application. We are an innocent party to this. We do not accept that the Trustees were responsible for the defect that you have identified in the consultation process. As a matter of fact, the correspondence that you referred to in your judgment we say that there was a mistake on the part of Mr Harris in that he thought the Commission had suggested that the lease might be disclosed, but that the Commission preferred that that had not been their intention to suggest that. It had always been understood that the lease would not have to be disclosed and the Trustees were never asked to disclose the lease by the Commission. When they were asked directly under the Freedom of Information Act they did disclose the lease.
The fact that the claimant and the defendant have agreed between themselves not to seek costs, in my submission, should not prejudice the charity. In other circumstances, I should think, there would be no question of the charity paying all of the costs of the claimant, and the fact that they have reached this agreement between themselves should not mean, in my submission, that the burden falls on the charity. The case would have of course gone ahead had the Trustees not intervened in this case. It still would have been heard today, and there are only two submissions which my learned friend has identified which were made by myself which supplemented substantively those that were raised by, as it was then, Mr Stilitz in the grounds of the Commission, and those relate to discretion and whether or not there would have been a difference made. In respect of those, my Lord, if I could ask you to refer to the supplementary skeleton of Mr Wolfe, you will see at paragraph 45 of that supplementary skeleton, that is where Mr Wolfe deals with the point about him not having made any difference, and he takes the point that this is a point additional to the one made by the defendant -- not also made by the defendant. He deals with that very shortly and he has dealt with it very shortly in his oral submissions today, and then at paragraph 47, relating to the exercise of discretion, which my learned friend said was not included in the grounds put in by the Trustees, well, you will see there that that has not caused him to spend an awful amount of trouble; it is three paragraphs.
MR JUSTICE SULLIVAN: Yes. So far as previous publicity is concerned, while Mr Kovats mentioned it, he made it clear it is very much your pigeon, as it were. I appreciate confidentiality might be said to be both of you, but --
MR HICKMAN: I should ask you to turn up the defendant's grounds of resistance. They may be at the front of the second bundle. At the front of tab 10.
MR KOVATS: My Lord, they start at 326 in my bundle, which is tab 10.
MR JUSTICE SULLIVAN: Yes.
MR HICKMAN: For instance, if you look at paragraph 19 of the grounds of resistance, you will see that the Commission does rely on the Palm Court display.
MR JUSTICE SULLIVAN: Which paragraph did you say?
MR HICKMAN: 129.
MR JUSTICE SULLIVAN: Yes.
MR HICKMAN: And confidentiality is also raised for example, and the other point on fairness. So it is really only those discretionary points that the Trustees have raised. Obviously, the Trustees dealt with the points raised by the Commission in my skeleton argument, and we did so in a way that we thought would assist the court, and obviously as interested party we did not seek simply to repeat the submissions of the Commission. But we did stick to the grounds, and to the extent that we raised matters of discretion, in my submission that was quite proper and has not caused any significant costs to the claimant, still less has it been such a departure that the Trustees should have to bear the full costs of the claimant.
MR JUSTICE SULLIVAN: Someone is trying to instruct you. You are being prodded from behind, or will be. (pause)
Is there anything else you want to add?
MR HICKMAN: No. In my submission, there should be no order as to costs.
MR JUSTICE SULLIVAN: Right.
MR WOLFE: My Lord, there are two points, if I may. Firstly, in relation to the request not to require disclosure, if you can go back to page 405, Mr Hickman suggested that there was not so much a request of a change in mind, I think the tenor of 405 makes the position reasonably clear. It is the second paragraph on 405:
"The General Manager has asked me to indicate his immediate and major concerns in regard to your statement that the Commission might decide that the draft Lease would need to be published ..."
So the Commission was open minded, verging on "might need to be", and it was the Trustees who piled in, and my Lord has seen the subsequent correspondence putting heavy pressure on them not to do so.
In terms of the weight of the arguments, the other thing I would draw my Lord's attention to is the evidence. The Charity Commissioner has put in two short witness statements -- actually I think possibly three -- from the Commissioners and then from a member of the Treasury Solicitor's department which say very little. I do not mean that disparagingly. They simply set out the decision-maker, and this happened on this day.
MR JUSTICE SULLIVAN: I suppose they were the circumstances I was referring to when I said I could not find any explanation of, for example, consideration --
MR WOLFE: There is real meat -- and it is only when one comes into the questions like the Palm Court display -- and what might have been said differently is in the three witness statements from Mr Harris. Firstly, he dealt in his initial one with the need for expedition, but that was the factual basis for the discretionary relief argument, and then his second and third are very much going over the ground of what it was the claimant may or may not have said, and then in the third one seeking to show that nothing the claimant might have said could have made a difference, and it was to those that the claimant then gave his witness statements in response. It is essentially as between the claimant and Mr Harris that the evidential battle ground in the proceedings has been laid out, not between the claimant and anybody from the Commission. There has not been essential controversy in that regard at all. So, my Lord, whichever way one looks at it, whether it is by reference to skeleton arguments or evidence, in my submission it has been the Trustees in the end in the driving seat. So that is the basis of my application.
MR JUSTICE SULLIVAN: Thank you very much.
MR HICKMAN: Can I clarify one point of fact?
MR JUSTICE SULLIVAN: Yes, of course.
MR HICKMAN: I have been reminded that my instructing solicitor was in discussions which do not appear in the correspondence. It was accepted that the Commission had never said or never intended to say that they might require disclosure of the lease. That is my point.
MR JUSTICE SULLIVAN: Yes, thank you.
First of all it is clear that the claimant ought to recover his costs. Then the question is: from whom? I certainly accept the submission that it should not make any difference that there has been some agreement between one of the parties, the defendant, and the claimant that each will not claim costs from the other. The question is: what would I have done absent that agreement? I am satisfied that what I would have done is to say that in large measure the Trustees are the authors of their own misfortune, but they have been ably assisted and abetted, I am afraid, by the Commission. In reality, the running today was made very largely by the Trustees, both in terms of submissions and evidence, but again I bear in mind that they are not the decision-making body; that of course is the Commission. I think the only fair thing to do is to say that, in respect of the defendant and the interested party, I would have thought that they were both equally to blame for this unfortunate set of circumstances, so the proper order for costs would have been a 50/50 order. So in respect of the defendant I make no order as to costs because of the prior agreement, but in respect of the interested party, the interested party is to pay 50 per cent of the claimant's costs; those costs to go for detailed assessment unless otherwise agreed.
MR WOLFE: My Lord, I am grateful.
MR JUSTICE SULLIVAN: Thank you. | 2 |
K. PATNAIK, J. These are the appeals against the companymon order dated 30.07.2004 passed by the Division Bench of the Andhra Pradesh High Court in Writ Appeal No. 191 of 2004 and C.M.A No. 3613 of 2003. The facts relevant for deciding these appeals very briefly are that on 29.04.2000 the appellant entered into a Memorandum of Understanding with Non-Conventional Energy Development Corporation of Andhra Pradesh Limited for short the NEDCAP , a numberal agency for number-conventional projects up to 20 MW, for setting up of a power plant in which power was to be generated from bagasse, a by-product of sugar factory. On 25.01.2002, the Andhra Pradesh Electricity Regulatory Commission for short the APERC set up under the Andhra Pradesh Electricity Reforms Act, 1998, permitted the appellant-company to supply the power generated in its plant to the respondent number1, which had taken over the functions of the erstwhile Andhra Pradesh Electricity Board. On 10.07.2002, a Power Purchase Agreement for short the PPA was entered into between the appellant and the respondent number1 which inter alia provided that the power to the extent of 9.99 MW will be supplied during the season and power to the extent of 16.94 MW will be supplied during the off season. On 11.01.2003, respondent number1 permitted the appellant to synchronize its plant with the power grid and on 13.01.2003, the appellant started supplying electricity energy to the power grid. On 01.03.2003, the appellant wrote to the APERC to direct the respondent number1 to purchase unutilized power of the appellant as sugar plant of the appellant companyld number be companymissioned due to some difficulties and power generated in its power plant remained unutilized and on 17.03.2003, APERC directed the respondent number1 to amend the PPA to provide for surplus additional quantity of power from the appellant. On 17.03.2003, the Chief Engineer of respondent No.1 wrote to Superintending Engineer directing him to stop evacuation of power from the power plant of the appellant and to cut off the supply on the ground that the plant of the appellant cannot be classified as companygeneration till the sugar plant of the appellant was companymissioned. The appellant then filed Writ Petition No. 7395 of 2003 in the Andhra Pradesh High Court challenging the letter dated 17.03.2003 of the Chief Engineer of the respondent No.1 and the learned Single Judge passed the orders on 02.05.2003 directing issue of numberice to the respondents and directing the respondents, as an interim measure, to purchase power from the appellant and to pay to the appellant Rs.2.00 per unit. The respondent No.1 then filed a review petition before the APERC for reconsideration of its earlier directions to amend the PPA issued on 17.03.2003 and on 01.10.2003 the APERC allowed the review petition and cancelled its directions issued on 17.03.2003. The appellant then challenged the order dated 01.10.2003 of the APERC before the Division Bench of the High Court in C.M.A. No. 3613 of 2003 and the Division Bench of the High Court granted interim stay of the order dated 01.10.2003 of the APERC. On 15.12.2003, the learned Single Judge of the High Court allowed Writ Petition No. 7395 of 2003 of the appellant and quashed the letter dated 17.03.2003 of the Chief Engineer of the respondent No.1 and directed the respondent No.1 to evacuate the power as agreed under the PPA and as directed by the APERC by order dated 17.03.2002. Against the said order dated 15.12.2003 of the learned Single Judge, the respondent filed Writ Appeal No. 371 of 2004 and on 12.02.2004 the Division Bench passed an interim order that numberfurther payment need to be made by respondent number1 to the appellant. Thereafter, on 22.04.2004 the Division Bench modified its earlier interim order dated 12.02.2004 and directed the respondent to pay the appellant at the rate of Rs.2.69 per unit instead of Rs.2.00 per unit and the said order was to companytinue till further orders in the Writ Petition. Finally on 30.07.2004, the Division Bench of the High Court passed the impugned order in Writ Appeal No. 191 of 2004 as well as in C.M.A. No. 3613 of 2003 setting aside the order dated 15.12.2003 of the learned Single Judge in Writ Appeal No. 7395 of 2003 and directed the parties to approach the appropriate forum chosen by the parties under the PPA for resolving the dispute. By the impugned order the Division Bench also held that the appellant will be entitled to tariff as fixed by the Division Bench of the High Court in Writ Appeal No. 371 of 2004. Dr. Rajeev Dhavan, learned senior companynsel for the appellant, submitted that the sugar plant has, in the meanwhile, companymenced the production on 21.01.2004 and the only dispute which has to be decided by this Court is with regard to the price of the power supplied by the appellant to the respondent during the period from 13.01.2003 to 21.01.2004. Mr. Dhavan submitted that by the order dated 22.04.2004 of the Division Bench in Writ Appeal No. 371 of 2004, the respondent No.1 was to be paid at the revised rate of Rs.2.69 per unit and on 08.02.2006, this Court has by an interim order, directed that the appellant would be entitled to receive payment at the rate of Rs.3.11 per unit as an interim measure for the period from 13.01.2003 to 20.01.2004 and also at the same rate of Rs.3.11 per unit for the period 21.01.2004 onwards, as has been paid to other companygenerating plants, excluding the money already paid. He submitted that in Transmission Corporation of Andhra Pradesh Limited and Another etc. etc. v. Sai Renewable Power Private Limited and Others etc.etc. 2010 6 SCALE 541 2010 8 SCR 636 JT 2010 7 SC 1 this Court has issued some directions relating to price payable for power supplied by number-conventional power projects. He referred to Para 4 of the judgment of this Court in the aforesaid case to show that the APERC had approved the rate of Rs.2.25 per unit with 5 escalation per annum from 1994-1995, being the base year, for supply of power generated by the number-conventional power projects and this was also the price fixed in clause 2.2 of the P.P.A for supply of electricity by the appellant to the respondent number1. He submitted that the benefit of the aforesaid judgment of this Court delivered on 08.07.2010 should therefore be granted to the appellant and directions be issued to respondent number1 accordingly. Learned companynsel for respondent number1, on the other hand, submitted that the judgment of this Court delivered on 08.07.2010 in Transmission Corporation of Andhra Pradesh Limited and Another etc. etc. v. Sai Renewable Power Private Limited and Others etc.etc. supra was on tariff and purchase price of power produced by companygeneration number-conventional energy plants and the plant of the appellant was number a company generation plant during the period from January, 2003 to January, 2004, as there was numberproduction of sugar in the plant during the aforesaid period and therefore the judgment of this Court in Transmission Corporation of Andhra Pradesh Limited and Another etc. etc. v. Sai Renewable Power Private Limited and Others etc.etc. supra has numberrelevance to the price of power supplied by the appellant to the respondent No.1 during January, 2003 to January, 2004. We have companysidered the submissions of the learned companynsel for the parties and we find that clause 2.2 of P.P.A. between the appellant and respondent number1 reads as follows 2.2. The companypany shall be paid the tariff for the energy delivered at the interconnection point for sale to APTRANSCO at Rs.2.25 paise per unit with escalation at 5 per annum with 1994-95 as base year and to be revised on 1st April of every year up to the year 2003-2004. Beyond the year 2003-2004, the purchase price by APTRANSCO will be decided by Andhra Pradesh Electricity Regulatory Commission. There will be further review of purchase price on companypletion of ten years from the date of companymissioning of the project, when the purchase price will be reworked on the basis of Return on Equity, O M expenses and the Variable Cost. The dispute between the appellant and respondent No.1 before us is whether or number during the period 13.01.2003 to 21.01.2004, when the sugar plant of the appellant had number companymenced production of sugar, the unutilized power supplied by the appellant to the respondent No.1 will have the same price as the price of power supplied by number-conventional energy projects in the State of Andhra Pradesh determined by the APERC. It will be more appropriate for the APERC, which is a regulatory companymission with expertise in determination of price and tariff of power, to decide what would be the price for supply of power by the appellant to the respondent number1 during the disputed period 13.01.2003 to 21.01.2004 and thereafter. By the judgment dated 08.07.2010 of this Court in Transmission Corporation of Andhra Pradesh Limited and Another etc. etc. | 7 |
OPINION OF MR ADVOCATE GENERAL MANCINI
delivered on 8 October 1986 ( *1 )
Mr President,
Members of the Court,
1.
On 29 January 1982 Mr Becker, a member of the temporary staff in Grade A 5 employed since 1981 in the Commission's Informatics Engineering Division, wrote to the Director-General for Administration, Mr Morel, asking him to reconsider his status with a view to his possible establishment as an official in career bracket A 5/A 4. He stated that although he had been informed by the Personnel Department that temporary staff of his level were normally established in Grade A 6, in his case studies in economics had been followed by lengthy experience in the computer field (1969-75), after which he had been employed until 1981 by the Commission as an assistant to Mr Borschette and Mr Vouel, Members of the Commission. When he left Mr Vouel's Cabinet he had been promised that he would shortly be established in Grade A 5. Mr Becker concluded his letter by writing: ‘in view of the foregoing ... and of the responsibilities that my present duties entail... I trust — even though in the last resort I would be prepared to accept the solution proposed ... — that you will be able to find a way of establishing me as an official in Grade A 5 under the existing rules.’
On 4 July 1983 Mr Becker applied to be admitted to competition COM/339/82 for a post of administrator in career bracket A 7/A 6 in the division in which he was already working. He appended to his application a memorandum stating: having for the time being no other choice ‘I would observe ... that my application by no means signifies that I have renounced my acquired rights’. The memorandum went on to say that the reply to his letter of 29 January 1982 stated that ‘henceforward, exceptions would be made to the principle of establishment in the starting grade only in the case of posts of head of a specialized department or similar posts.’ It continued: ‘However, I see that the administration has just published several notices of internal competitions on the basis of qualifications for posts in Grades A 5/A 4 and A 3 in order to regularize the position... of temporary research staff. My situation is basically similar, which means that I have been treated unfairly in this case’.
On 6 February 1984, having passed the competition, Mr Becker was appointed as a probationary official in Grade A 6, Step 5. But the matter did not end there. Some months later the Commission announced that three internal competitions would be held for posts in career bracket A 5/A 4. Thereupon Mr Becker submitted to the appointing authority a request pursuant to Article 90 (1) of the Staff Regulations in which he asked to be reclassified in Grade A 5, on the ground that the publication of the said notices of competition showed that the Personnel Department had misled him about the possibility of appointment in a career bracket higher than ‘the starting grades’. The appointing authority rejected that request and his subsequent complaint. Mr Becker thereupon lodged this application, which was received at the Court on 23 July 1985. He claims that the Court should:
(a)
annul the decision rejecting his complaint;
(b)
declare that the Commission is under a duty to treat him in the same way as it treats other officials;
(c)
order the Commission to compensate the applicant for the damage which he has suffered.
2.
The Commission raises, as a preliminary issue, an objection of inadmissibility; in its contention the action is essentially directed against the decision of 6 February 1984 by which Mr Becker was appointed as a probationary administrator in Grade A 6 and not in Grade A 5, as he had requested on several occasions. With regard to the date of that decision, the complaint made on 30 November 1984 was out of time, and the fact that the appointing authority had nevertheless considered a request made pursuant to Article 90 (1) ‘cannot have the effect of ... reestablishing a right of action which is definitively time-barred’ (judgment of 12 July 1984 in Case 227/83 Moussis v Commission [1984] ECR 3133, paragraph 13).
For his part the applicant relies on the existence of a new fact: he had not realized that he had been discriminated against until the Commission published three notices for competitions which were in all respects similar to the competition in which he had taken part but intended to fill posts in career bracket A 5/A 4. That circumstance, which was definitely ‘different’ from the circumstances in which his appointment took place, prompted him to ask for his grading to be reviewed and, as a result of the decision of 6 November 1984 refusing his request, to lodge a complaint on 30 November 1984. On that basis, the applicant maintains that the time-limits for the pre-litigation procedure were complied with and there is no reason to declare the action inadmissible.
3.
I would point out to begin with that, according to the judgment of the Court of 30 May 1984 in Case 326/82 (Ascbermann and Others v Commission [1984] ECR 2253, paragraph 13), the appointing authority ‘is not required, unless important new facts arise, to reconsider a decision which is no longer open to challenge’. In the present instance there is no doubt that the measure at issue is the decision of 6 February 1984 and that Mr Becker did not challenge it in time. Consequently, the only remaining question is whether the circumstance on which the applicant relies in his reply is new and important in accordance with the requirements set out in the judgment cited above.
In my view, those requirements are not fulfilled. Even assuming that, by publishing after Mr Becker's appointment notices of three internal competitions with the same conditions but offering better grading to successful candidates, the Commission discriminated against Mr Becker, the fact remains that he had already complained of precisely the same discrimination when he took part in the competition (he wrote ‘the administration has just published several notices of internal competitions on the basis of qualifications for posts in Grades A 5/A 4 and A3... which means that I have been treated unfairly in this case’). Therefore, the 1984 notices of competition could not have been, in his eyes, a ‘new fact’ which might affect his legal position and thus warrant the revision of his grading.
In the light of those factors and in view of the fact that the time-limits prescribed in the Staff Regulations are a matter of public policy, since they were laid down with a view ‘to ensuring clarity and legal certainty’ (judgment in the Moussis case, cited above, paragraph 12), I propose that the Court should declare the application to be inadmissible.
4.
In the event that the Court does not accept my proposal, I consider that it should, in any event, declare the applicant's claims to be unfounded. The first claim is for the annulment of the decision rejecting his complaint on the ground that the decision does not contain an adequate statement of reasons: in other words, the appointing authority failed to explain why it rejected Mr Becker's request. Yet, to me, the appointing authority's reply was comprehensive: it states that ‘the administration alone is responsible for the organization of its departments, which it must be able to determine and modify on the basis of its own objectives’ and that ‘the fact that an official fulfils tasks on a level higher than his grade is not ... sufficient to warrant’ a review of his administrative position. It is hardly necessary to point out that that wording faithfully reflects the approach consistently adopted by the Court (judgment of 12 July 1973 in Case 28/72 Tontodonati v Commission [1973] ECR 779, paragraph 8; judgment of 14 July 1977 in Case 61/76 Geist v Commission [1977] ECR 1419, paragraph 38).
In his second claim the applicant asks the Court to declare that the Commission is bound to comply with the principles of equal treatment and legitimate expectations. As regards the first point he relies on the alleged strong similarity between the tasks described in the notice of the competition in which he took part (Grade A 6) and the tasks appertaining to the posts in career bracket A 5/A 4 announced in the subsequent notices of competition. Furthermore, Mr Becker maintains that ever since he entered the service of the Commission he has carried out tasks corresponding to posts of a higher grade. Obviously, however, those observations lose their force in the light of the case-law which I have just cited. What is more, candidates in the competition which Mr Becker considers to be discriminatory had to show that they had ‘in-depth experience relevant to the post’ (my emphasis). That stipulation was not among the requirements of the competition which Mr Becker passed. As a result, the alleged resemblance is nonexistent.
As regards the principle of legitimate expectations, the applicant asserts that the Commission did not honour the promise to appoint him in Grade A 5. However, I would observe that the subject-matter of the application is the Commission's refusal to regrade Mr Becker in that career bracket. Since that argument is directed against the decision appointing Mr Becker as an official in Grade A 6 (which is no longer open to challenge) it is therefore irrelevant.
5.
In the light of the foregoing I propose that the Court should declare the application brought by Mr J. V. Becker against the Commission of the European Communities to be inadmissible or, failing that, dismiss it, and, in accordance with Article 70 of the Rules of Procedure, order the parties to bear their own costs.
( *1 ) Translated from the Italian. | 3 |
GRAND CHAMBER
CASE OF SABRİ GÜNEŞ v. TURKEY
(Application no. 27396/06)
JUDGMENT
STRASBOURG
29 June 2012
This judgment is final but it may be subject to editorial revision.
In the case of Sabri Güneş v. Turkey,
The European Court of Human Rights (Grand Chamber), sitting as a Grand Chamber composed of:
Nicolas Bratza, President,Josep Casadevall,Nina Vajić,Dean Spielmann,Lech Garlicki,Peer Lorenzen,Boštjan M. Zupančič,Elisabeth Steiner,Khanlar Hajiyev,Ján Šikuta,Mark Villiger,Luis López Guerra,Mirjana Lazarova Trajkovska,Işıl Karakaş,Vincent A. de Gaetano,Erik Møse,Helen Keller, judges,and Johan Callewaert, Deputy Grand Chamber Registrar,
Having deliberated in private on 8 February and 30 May 2012,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 27396/06) against the Republic of Turkey lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Turkish national, Mr Sabri Güneş (“the applicant”), on 29 May 2006.
2. The applicant was represented by Mr A.E. Binici, a lawyer practising in İzmir. The Turkish Government (“the Government”) were represented by their Agent.
3. Relying on Article 6 of the Convention, Mr Sabri Güneş alleged, in particular, that he had been denied a fair hearing and that his right of access to a court had been infringed. He also complained of a violation of Article 2 of the Convention taken together with Article 13 (right to an effective remedy).
4. The application was allocated to the Second Section of the Court (Rule 52 § 1 of the Rules of Court). On 24 May 2011 a Chamber of that Section composed of the following judges: Françoise Tulkens, Danutė Jočienė, Ireneu Cabral Barreto, Dragoljub Popović, András Sajó and Işıl Karakaş, and also of Françoise Elens-Passos, Deputy Section Registrar, delivered judgment. The Chamber, by a majority, declared the application admissible as to the complaints under Articles 2, 6 § 1 (fairness of the proceedings and access to court) and 13. The Chamber also held, by five votes to two, that there had been a violation of Article 6 § 1 of the Convention. Lastly, by five votes to two, the Chamber found that it was not necessary to examine the complaint under Articles 2 and 13 of the Convention.
5. On 15 September 2011, following a request by the Government of 23 August 2011, the panel of the Grand Chamber decided to refer the case to the Grand Chamber in accordance with Article 43 of the Convention.
6. The composition of the Grand Chamber was determined according to the provisions of Article 27 §§ 2 and 3 of the Convention and Rule 24.
7. The applicant and the Government each filed written observations on the preliminary objections and on the merits (Rule 59 § 1). The Grand Chamber having decided that no hearing on the merits was required (Rule 59 § 3 in fine), the parties replied in writing to each other’s observations.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
8. The applicant, Mr Sabri Güneş, is a Turkish national who was born in 1981 and lives in İzmir.
9. He suffered a personal injury while doing his military service. He was hospitalised on 30 October 2001 and subsequently underwent several operations on his right knee. He is now permanently disabled.
10. On 7 April 2003 the applicant submitted a claim to the Ministry of Defence for compensation in respect of his permanent disability.
11. Following tacit dismissal of the claim by the administrative authorities, the applicant brought an action for damages in the Supreme Military Administrative Court on 12 August 2003 in respect of the disability suffered during his military service. He claimed 15,000 Turkish liras (TRY – approximately 9,400 euros (EUR)[1]) in respect of pecuniary damage and the same sum in respect of non-pecuniary damage.
12. Two expert reports ordered by the Supreme Military Administrative Court were added to the case file. The first, dated 12 March 2004, established a 5% disability. The second, dated 30 April 2004 and communicated to the applicant on 11 May 2004, assessed the applicant’s pecuniary damage at more than TRY 27,438 (approximately EUR 17,150).
13. Having held a public hearing on 7 July 2004, the Supreme Military Administrative Court delivered its judgment on the same day. It ruled in favour of the applicant and awarded him the full amount of his claim in respect of pecuniary damage, namely, TRY 15,000. It awarded him a further TRY 2,000 in respect of non-pecuniary damage. The court considered in particular that the conclusions of the expert report of 30 April 2004 were relevant and satisfied the criteria established by its case-law.
14. On 21 November 2004 the applicant applied to the Ministry of Defence for additional compensation in respect of his permanent disability. He claimed that he had only become aware of the extent of his pecuniary damage for the first time on 11 May 2004, when he received the report of 30 April 2004 assessing his pecuniary damage at TRY 27,438.
15. On 29 March 2005, following tacit dismissal of the claim by the administrative authorities, the applicant lodged a fresh claim with the Supreme Military Administrative Court for additional compensation, namely, TRY 12,438 (approximately EUR 5,600), on the basis of the expert report of 30 April 2004. He argued that he had received the expert report of 30 April 2004 on 11 May 2004, whereupon he had become aware of the true extent of the damage he had suffered.
16. By a judgment of 22 June 2005 the Supreme Military Administrative Court considered the applicant’s fresh claim to be an application to have the initial amount amended (ıslah) and dismissed it for being out of time. The court stated in particular:
“The claimant has clearly sought an amendment of the initial amount. The purpose of an amendment is to rectify a procedural act. Having regard to the judgment of the Constitutional Court published in the Official Journal of 14 November 2000, we must conclude that, in civil law, injured persons are entitled to seek additional compensation once an expert report has been issued. However, in the proceedings before the Supreme Military Administrative Court, the time-limits of one year and sixty days from the date of referral to the administrative authorities apply. Under section 46(4) of the Supreme Military Administrative Court Act, the amount claimed cannot be rectified once those deadlines have passed. Consequently, this claim must be rejected for being out of time ...”
One judge (out of five) expressed a dissenting opinion. He stated in particular:
“The amount of damage in personal injury cases is established only upon production of an expert report. Moreover, the date on which such reports are confirmed is taken into account when calculating the time-limits for referral to the administrative authorities and for bringing an action ...
The claim for additional compensation based on the expert report was lodged within the relevant time-limit because the applicant did not become aware of the extent of the damage until after that report had been issued ....”
17. On 9 September 2005 the applicant lodged an application for rectification of the judgment.
18. By a judgment of 16 November 2005, served on the applicant on 28 November 2005, the Supreme Military Administrative Court rejected that application.
II. RELEVANT DOMESTIC LAW AND PRACTICE AND INTERNATIONAL TEXTS
A. Domestic provisions concerning the calculation of time-limits
19. Section 8(2) of the Administrative Procedure Act (Law no. 2577) and Article 162 of the Code of Civil Procedure provide that if the dies ad quem of a time-limit is a public holiday, that time-limit will be extended to the following working day.
B. Relevant international texts
1. The 1969 Vienna Convention on the Law of Treaties
20. Article 31 § 1 of the Vienna Convention, entitled “General Rule of Interpretation”, states that a treaty shall be interpreted “in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.”
2. European Convention on the Calculation of Time-Limits
21. The European Convention on the Calculation of Time-Limits, opened for signature on 16 May 1972 in Basle, came into force on 28 April 1983. It was drawn up with a view to establishing uniform European rules for calculating time-limits on the basis of responses obtained from governments. It applies both domestically and internationally, as clearly stated in the preamble thereto which affirms that “the unification of rules relating to the calculation of time-limits, both for domestic and international purposes”, will contribute to the attainment of greater unity between Council of Europe member States (see the explanatory report). Currently, only four of the ten signatory States have ratified that Convention. Turkey has neither signed it nor acceded to it.
22. Article 5 of that Convention provides as follows:
“Saturdays, Sundays and official holidays shall count when calculating a time‑limit. However, where the dies ad quem of a time‑limit before the expiry of which an act shall be performed is a Saturday, a Sunday, an official holiday or a day which shall be considered as an official holiday, the time‑limit shall be extended to include the first working day thereafter.”
3. European Union Law
23. Article 3 § 4 of Council Regulation (EEC, Euratom) no. 1182/71 of 3 June 1971 determining the rules applicable to periods, dates and time limits (Official Journal no. L 124 of 08/06/1971) provides as follows:
“Where the last day of a period expressed other than in hours is a public holiday, Sunday or Saturday, the period shall end with the expiry of the last hour of the following working day.”
THE LAW
24. Mr Sabri Güneş claimed that the judgment of the Supreme Military Administrative Court dismissing his additional claim for compensation for being out of time had deprived him of his right of access to a court and, therefore, of his right to a fair trial within the meaning of Article 6 § 1 of the Convention. He also complained of a violation of Article 2 of the Convention taken together with Article 13.
THE GOVERNMENT’S PRELIMINARY OBJECTION
25. In their request for referral to the Grand Chamber, and subsequently in their observations, the Government submitted that the applicant had failed to comply with the six-month time-limit referred to in Article 35 § 1 of the Convention. In particular, they argued that the Chamber’s finding that the time-limit had been complied with was inconsistent with the Court’s well-established case-law.
26. The Court points out that the respondent Government did not raise its objection that the application was out of time at the admissibility stage. However, in its final admissibility decision, the Chamber decided to consider the issue of its own motion. The Government raised the six-month rule for the first time in their submissions to the Grand Chamber. The applicant did not rely on Rule 55, which provides that “any plea of inadmissibility must, in so far as its character and the circumstances permit, be raised by the respondent Contracting Party in its written or oral observations on the admissibility of the application”.
27. In the light of the foregoing, the Grand Chamber considers that it should first rule on the application of the six-month rule to the instant case. In doing so, it must first ascertain whether it has jurisdiction to examine the issue of the applicant’s compliance with the six-month rule, and whether or not the Government are estopped from raising that issue at this stage of the proceedings.
A. Whether or not the Court has jurisdiction to examine the issue of the applicant’s compliance with the six-month rule and whether or not the Government are estopped from raising that issue
28. The Court points out that, in accordance with Article 35 § 4 of the Convention, it may “at any stage of the proceedings” reject an application which it considers inadmissible. Thus, even at the merits stage, the Court may reconsider a decision to declare an application admissible where it concludes that it should have been declared inadmissible for one of the reasons given in the first three paragraphs of Article 35 of the Convention (see, among other authorities, Azinas v. Cyprus [GC], no. 56679/00, § 32, ECHR 2004‑III, and Odièvre v. France [GC], no. 42326/98, § 22, ECHR 2003‑III).
29. The Court has already considered that the six-month rule is a public policy rule and that, consequently, it has jurisdiction to apply of its own motion (see Assanidze v. Georgia [GC], no. 71503/01, § 160, ECHR 2004‑II), even if the Government have not raised that objection (see Walker v. the United Kingdom (dec.), no. 34979/97, ECHR 2000‑I).
Furthermore, in each case brought before it, the Court must ensure that the application has been lodged in compliance with the six-month time-limit, which the Chamber did in the instant case. That was also the position taken by the Commission, which considered that the Contracting States could not, of their own motion, put aside the rule of compliance with the six-month time-limit (see X v. France, no. 9587/81, Commission decision of 13 December 1982, Decisions and Reports (DR) 29, p. 228, and K. v. Ireland, no. 10416/83, Commission decision of 17 May 1984, DR 38, p. 162, § 6).
30. Consequently, the Court considers that, notwithstanding the requirements of Rule 55, which must in any case be interpreted in a manner compatible with the Convention, and in particular with Article 32 thereof, the Government are not estopped from raising the issue of the six-month rule before the Grand Chamber (see, mutatis mutandis, Blečić v. Croatia [GC], no. 59532/00, §§ 66-69, ECHR 2006‑III).
31. Accordingly, the Grand Chamber has jurisdiction to examine the issue of compliance with the six-month rule.
B. Compliance with the six-month rule
1. The Chamber judgment
32. The Chamber examined the issue of compliance with the six-month rule of its own motion and concluded that the time-limit provided for by Article 35 § 1 of the Convention had been complied with. In so doing, it first of all pointed out that as regards the determination of the dies a quo – the day on which the six-month time-limit starts to run – the Court had always taken account of domestic law and practice. It then decided to apply the principles governing the determination of the dies a quo to the determination of the dies ad quem. In support of its conclusion, it referred to the decision in the case of Fondation Croix-Etoile, Baudin and Delajoux v. Switzerland (no. 24856/94, 11 April 1996), in which the Commission had considered that given that the dies ad quem was an official holiday in domestic law, the time-limit should be extended to the first working day thereafter (see Chamber judgment, § 40).
33. The Chamber further considered that the requirements of legal certainty and protection, which were vital in that area where there was no doubt that the litigants intended in good faith to observe the procedural rules of their domestic law, were best satisfied by taking account of domestic law and practice when calculating the six-month time-limit. It considered that such an interpretation implemented the principle of subsidiarity which underpins the Convention system (see Chamber judgment, § 44).
34. Thus, the Chamber observed that the decision of the Supreme Military Administrative Court of 16 November 2005, which constituted the final domestic decision, had been served on the applicant on 28 November 2005 and that the time-limit set by Article 35 § 1 of the Convention had therefore started to run on 29 November 2005 and had expired on 28 May 2006. However, as that day was a Sunday, it considered that
“... the applicant cannot be criticised for having submitted his application on the first working day following that Sunday, in accordance with domestic custom and practice. Consequently, as far as the Court is concerned, it is more consistent with the purpose and aim of Article 35 to conclude that the six-month time-limit should be extended to the first following working day. Accordingly, since the applicant submitted his application on 29 May 2006, the time-limit laid down in Article 35 of the Convention was complied with.”
2. The parties’ submissions to the Grand Chamber
35. As far as the Government were concerned, the application was out of time and should be rejected, in accordance with Article 35 § 1 of the Convention. They argued that the position of the Court as regards calculation of the six-month time-limit had been firmly established in its case-law (see Kadikis (no. 2) v. Latvia, 25 September 2003; Otto v. Germany, 10 November 2009; Benet Czech, spol. s.r.o. v. the Czech Republic, 18 May 2010; and Büyükdere and Others v. Turkey, 8 June 2010). The Chamber judgment had not followed that case-law even though the Court should not depart from its precedents without good reason.
36. The Government further challenged the connection made by the Chamber between the interpretation of the six-month rule and the principle of subsidiarity. They argued that taking account of domestic custom and practice when calculating that time-limit did not satisfy the requirements of legal certainty and protection which were vital in that area. Any such practice would oblige the Court to draw up a full schedule of official holidays in the forty-seven States Parties to the Convention, which clearly differed from one State to the next and which could also change over time within the same State.
37. The Government challenged the relevance of the instruments cited by the Chamber in its judgment. They argued that those instruments had been ratified by very few countries, were very old and out of touch with the current situation and failed to take into account the development and expansion of the Council of Europe and the European Union. Lastly, they argued that the six-month time-limit was sufficient to afford the prospective applicant time to consider whether to lodge a complaint and to decide on the complaints and arguments to be raised.
38. The applicant, for his part, referred to domestic procedural legislation under which time-limits were automatically extended where the last day thereof coincided with a non-working day. Pointing out that the six‑month time-limit available to him in which to lodge an application with the Court had started to run on 28 November 2005 (see paragraph 18 above) and therefore ended on 28 May 2006, he argued that because that second date fell on a Sunday, he had been unable to lodge his application until the first working day thereafter, namely, 29 May, which in his view had been entirely legitimate.
3. The Grand Chamber’s assessment
a. Relevant general principles
39. The six-month time-limit provided for by Article 35 § 1 has a number of aims. Its primary purpose is to maintain legal certainty by ensuring that cases raising issues under the Convention are examined within a reasonable time, and to prevent the authorities and other persons concerned from being kept in a state of uncertainty for a long period of time (see P.M. v. the United Kingdom (dec.), no. 6638/03, 24 August 2004). It also affords the prospective applicant time to consider whether to lodge an application and, if so, to decide on the specific complaints and arguments to be raised (see O’Loughlin and Others v. the United Kingdom (dec.), no. 23274/04, 25 August 2005) and facilitates the establishment of facts in a case, since with the passage of time, any fair examination of the issues raised is rendered problematic (see Nee v. Ireland (dec.), no. 52787/99, 30 January 2003).
40. That rule marks out the temporal limit of the supervision exercised by the Court and signals, both to individuals and State authorities, the period beyond which such supervision is no longer possible (see Walker v. the United Kingdom (dec.), no. 34979/97, ECHR 2000‑I). The existence of such a time-limit is justified by the wish of the High Contracting Parties to prevent past judgments being constantly called into question and constitutes a legitimate concern for order, stability and peace (see De Becker v. Belgium (dec.), no. 214/56, 9 June 1958).
41. Article 35 § 1 contains an autonomous rule which has to be interpreted and applied in such a manner as to ensure to any applicant claiming to be the victim of a violation by one of the Contracting Parties of one of the rights set forth in the Convention and its Protocols the effective exercise of the right of individual petition pursuant to Article 35 § 1 of the Convention (see Worm v. Austria (dec.), no. 22714/93, 27 November 1995).
42. The Court reiterates that with regard to procedure and time-limits, legal certainty constitutes a binding requirement which ensures the equality of litigants before the law. That principle is implicit in all the Convention’s Articles and constitutes one of the fundamental elements of the rule of law (see, among other authorities, Beian v. Romania (no. 1), no. 30658/05, § 39, ECHR 2007‑V (extracts)).
b. Determination of the dies ad quem
43. The issue is whether or not, when the dies ad quem of a time-limit set by Article 35 § 1 of the Convention is a Saturday, a Sunday, an official holiday or a day considered to be an official holiday, the time‑limit will be extended to include the first working day thereafter.
44. In that connection, it is important to note the relevant established case-law of the European Commission of Human Rights, as it results from the decision in the case of K.C.M. v. the Netherlands (no. 21034/92, Commission decision of 9 January 1995, DR 80‑A, pp. 87-88). Referring to the method of calculating the time-limit used by the Court in its interpretation of the former Article 32 of the Convention which governed the time-limit for lodging an application (see Istituto di Vigilanza v. Italy, 22 September 1993, § 14, Series A no. 265‑C; Figus Milone v. Italy, 22 September 1993, § 14, Series A no. 265‑D; and Goisis v. Italy, 22 September 1993, § 9, Series A no. 265‑E), the Commission held, in particular, that the six-month time-limit started to run on the day following delivery of the final domestic decision and that it expired six calendar months later, irrespective of the actual length of those months. For example, a final domestic decision delivered on 4 February 1994 entailed a six-month period starting on 5 February of the same year and expiring at midnight on 4 August 1994 (see Hokkanen v. Finland, no. 25159/94, Commission decision of 15 May 1996); a final domestic decision delivered and pronounced on 25 January 1995 entailed a time-limit starting on 26 January of the same year and ending at midnight on 25 July 1995 (see Pollard v. the United Kingdom, dec. no. 28189/95, Commission decision of 12 April 1996).
45. The method in question was later used in several cases examined by the Commission (see, among many others, Legendre v. France, no. 25924/94, Commission decision of 15 January 1997). The Court specifically followed that approach subsequently (see, among many others, Loveridge v. the United Kingdom (dec.), no. 39641/98, 23 October 2001; Ataman v. Turkey (dec.), no. 46252/99, 11 September 2001; Zarakolu v. Turkey (dec.), no. 32455/96, 5 November 2002; and Nelson v. the United Kingdom, no. 74961/01, §§ 12-13, 1 April 2008).
46. In that context, the question has arisen of which approach to adopt when the last day of the six-month time-limit is a non-working day, namely, a Saturday, a Sunday or an official holiday.
47. In its decision in the case of Fondation Croix-Etoile, Baudin and Delajoux v. Switzerland (cited above), the Commission considered that where the dies ad quem was an official holiday, the time-limit should be extended to the first working day thereafter.
48. However, the Court has not taken account of non-working days in determining the dies ad quem. For example, in the case of Kadikis v. Latvia (dec. no. 62393/00, 25 September 2003), the last day of the six-month period was a Saturday. The applicant lodged his application two days later, namely, on the following Monday, claiming that in such circumstances, domestic law provided for an automatic extension of time-limits to the first working day thereafter. The Court rejected that argument, considering that “the six-month time-limit is calculated in accordance with the Convention criteria and not on the basis of the conditions laid down by the domestic law of each respondent State”.
49. The Court has confirmed on numerous subsequent occasions the principle that compliance with the six-month time-limit must satisfy the Convention criteria and not the arrangements laid down by the domestic law of each respondent State (see, among many other authorities, Otto, cited above; Benet Czech, spol. s.r.o., cited above; and Büyükdere and Others, cited above).
50. While it is not formally bound to follow any of its previous decisions or judgments, the Court considers that it is in the interest of legal certainty, foreseeability and equality before the law that it should not depart from its own precedents without compelling reason (see, for example, Chapman v. the United Kingdom [GC], no. 27238/95, § 70, ECHR 2001-I). The same is true, a fortiori, with regard to procedural rules, where legal certainty is of particular importance and the Court’s precedents should be followed even more strictly so as to ensure that the requirements of foreseeability and consistency, which serve the interests of all the parties to the proceedings, are met.
It is therefore necessary to ascertain whether there are good reasons to justify a departure by the Court from its established case-law and practice as described above.
51. In its judgment, the Chamber pointed out that as regards the determination of the dies a quo, the Court had always taken account of domestic law and practice and it decided to use the same approach in order to determine the dies ad quem (see Chamber judgment, § 40).
52. However, in the Grand Chamber’s view, an analysis of the case-law of the Convention institutions reveals that while taking account of domestic law and practice is, admittedly, an important aspect, it is not decisive in determining the starting point of the six-month period. That analysis in fact makes it possible to distinguish two kinds of situations in which the Convention institutions have not taken the same approach.
53. The first situation covers cases concerning the determination of the date on which a final domestic decision, delivered in the context of exhaustion of domestic remedies, has been brought to the attention of the applicant. In the case of Worm (decision cited above), the Government had claimed that the six-month time-limit had not been complied with, arguing that the time-limit should have started running on the date on which the court of appeal read out the final decision. However, under Austrian law, the final decision had to be served in writing on the applicant or, as the case may be, the applicant’s representative. In its decision, the Commission, while acknowledging that that case had led it to review the approach it had followed previously, concluded that where under domestic law, the final decision had to be served in writing, the six-month time-limit had to be calculated from the date of service, whether or not the court had read out the relevant decision either in full or in part.
The Court subsequently confirmed that approach and held that it was more in line with the object and purpose of Article 35 § 1 for the six-month time-limit to start running on the date of service of a copy of the judgment (see Worm, cited above, § 33). In its subsequent judgments and decisions, it has followed that case-law and has not hesitated to set the starting point for the six-month time-limit taking account of a practice or rule under domestic law in order to give full effect to the need to ensure effective exercise of the right of individual petition (see, among many other authorities, Papachelas v. Greece, no. 31423/96, § 29, ECHR 1999-II concerning the date of finalisation of a decision, and Seher Karataş v. Turkey, no. 33179/96, § 28, 9 July 2002 concerning notice of a fine).
54. The second type of situation concerns in particular the determination of the starting point in cases in which the alleged violation consists of a “continuing situation” and/or in which there is no effective remedy in domestic law. According to the Court’s settled case-law, in cases of a continuing situation, the period starts to run afresh each day and it is only when that situation ends that the six-month period actually starts to run (see Varnava and Others v. Turkey [GC], nos. 16064/90, 16065/90, 16066/90, 16068/90, 16069/90, 16070/90, 16071/90, 16072/90 and 16073/90, § 159, ECHR‑2009). Likewise, where it is clear from the outset that no effective remedy is available to the applicant, the six-month period runs from the date of the acts or measures complained of, or from the date of knowledge of that act or its effect on or prejudice to the applicant (ibid, § 157). It is therefore a matter for the Court to determine, given what is at stake, when an applicant intending to lodge a complaint before it should lodge that complaint (ibid, § 169).
55. The reason for the variable approach described above lies in the principle that the six-month rule is autonomous and must be construed and applied according to the facts of each individual case, so as to ensure the effective exercise of the right to individual petition (see, among many other authorities, Büyükdağ v. Turkey (dec.), no. 28340/95, 6 April 2000; Fernández-Molina González and 369 Others v. Spain (dec.), no. 64359/01, 8 October 2002; and Zakrzewska v. Poland, no. 49927/06, § 55, 16 December 2008).
56. Moreover, application by the Court of its own criteria in calculating time-limits, independently of domestic rules, tends to ensure legal certainty, proper administration of justice and thus, the practical and effective functioning of the Convention mechanism. In fact, if in determining the dies ad quem, the Court were bound to take account of domestic law and practice, it would have to draw up a full schedule of official holidays in the forty-seven States Parties to the Convention, which vary from one State to another and even within the same State (see, for example, the case of Stone Court Shipping Company, S.A. v. Spain, no. 55524/00, § 39, 28 October 2003, where the two autonomous communities involved in the case did not have the same list of official holidays) and may also change over time.
57. Furthermore, having regard to the numerous means of communication now available to potential applicants (post, fax, electronic communication, internet etc.), the Court considers that the six-month time-limit is, now more than ever, sufficient to enable them to consider whether to lodge an application and, if so, to decide on the content thereof, in accordance with Rule 47 of the Rules of Court. The Court observes that while it is essential for the efficacy of the system that Contracting States comply with their obligation not to hinder the exercise of the right of individual petition, applicants must nonetheless be alert as regards compliance with the relevant procedural rules (see, mutatis mutandis, Varnava and Others, cited above, § 160).
58. Moreover, the Court notes Council Regulation (EEC, Euratom) of 3 June 1971 determining the rules applicable to periods, dates and time limits (Article 3 § 4) and the European Convention on the Calculation of Time-Limits of 16 May 1972 (Article 5), which to date has been ratified by only four of the ten signatory States (see paragraphs 20-23 above). However, given the requirements of legal certainty as regards procedure and time-limits, and in so far as it would be difficult to conclude that there is a general consensus between Council of Europe Member States as regards the calculation of time-limits, the Court considers that it should follow its established approach.
59. In the light of the foregoing, the Court sees no reason to justify departing from the precedents described above (see paragraph 49).
c. Conclusion
60. It is sufficient to observe that, in the instant case, the final decision of the Supreme Military Administrative Court of 16 November 2005 was served on the applicant on 28 November 2005. The time-limit laid down by Article 35 § 1 of the Convention therefore started to run on the following day, 29 November, and expired at midnight on Sunday 28 May 2006. The application was lodged on 29 May 2006, that is, after the expiry of the above-mentioned time-limit.
61. As far as the Court is concerned, the fact that the last day of the six‑month time-limit, that is, 28 May 2006, fell on a Sunday and that in such circumstances, under domestic law, time-limits are extended to the following working day, does not affect the determination of the dies ad quem. The Court reiterates that compliance with the six-month time-limit is determined using criteria specific to the Convention. Furthermore, considering the time-limit provided for in Article 35 § 1 of the Convention, there is no indication in this case that the applicant, who was represented by a lawyer who should have been aware of the Court’s case-law in this regard, could not have foreseen that the dies ad quem would fall on a non-working day and acted accordingly (see Otto, cited above, and Büyükdere and Others, cited above, § 10).
62. Consequently, because this application was lodged more than six months after service of the final domestic decision within the meaning of Article 35 § 1 of the Convention, the Court is unable to examine the merits of the case.
FOR THESE REASONS, THE COURT UNANIMOUSLY
Holds that it is unable to examine the merits of the case.
Done in English and in French, and notified in writing on 29 June 2012.
Johan CallewaertNicolas BratzaDeputy to the RegistrarPresident
[1]1. All conversions into euros in this judgment have been made on the basis of the rate of exchange in force at the material time.
| 1 |
MRS JUSTICE COX: This applicant, Michael May, who is now 53 years of age, pleaded guilty at the Southend Crown Court to recklessly acting in a manner likely to endanger an aircraft, contrary to article 73 to the Air Navigation Order 2005 made under the Civil Aviation Act 1982. On 31st July 2009 he was sentenced to a term of six months' imprisonment. His application for leave to appeal against that sentence has been referred directly to this court.
The facts briefly are these. Whilst on holiday in Thailand, the applicant, who lives in Chadwell St. Mary in Essex, had purchased a laser device as a novelty. In the early hours of the morning on 25th April 2008 the crew of a police helicopter, who were carrying out a surveillance mission, were flying over Chadwell St. Mary when the applicant, who lived in a block of flats, shone the laser light into the cockpit of the helicopter. As a result the pilot was temporarily dazed and disoriented and had to terminate the surveillance. The crew were then forced to terminate the search in order to avoid potential injury to themselves. They were, however, able to identify the source of the light using thermal imaging and identified the block of flats, where the officers saw a window open and the applicant standing at it. Subsequently officers attended the flats and arrested the applicant.
In his written basis of plea the applicant denied that his shining of the light was a deliberate and sustained attack by him, but he did accept that his actions were in all the circumstances reckless. He therefore fell to be sentenced on that basis.
The applicant had only one previous conviction in 1996 for three offences of dishonestly obtaining property by deception for which he was fined. The judge treated him as effectively a man of good character.
Passing sentence upon him, the judge referred to the very grave risks he had caused, creating life-threatening danger to the pilot, his crew and to members of the public on the ground if there had been an accident. He also referred to the fact that the use of such lasers was becoming increasingly common and to the need for a deterrent sentence in the circumstances. He took the view that the offence was so serious that only an immediate custodial sentence could be justified. He took into account the fact that no accident or injury was in fact sustained on this occasion and he had regard in addition to the applicant's personal mitigation, which included a number of continuing health problems. The sentence imposed was one of six months' imprisonment.
On the applicant's behalf, Miss Kresner accepts, realistically, that this was a serious offence which crossed the custody threshold. She submits essentially that the judge failed sufficiently to take into account the applicant's significant disabilities. The applicant was seriously injured in a motorcycle accident in 1997. As a result of his injuries he now has limited mobility in both legs, needing a stick to walk even for short distances, and he has lost the use of his left arm and hand. He lives in sheltered accommodation and requires special equipment and adaptations to assist with his daily living. Miss Kresner's submission is that in view of those disabilities the custodial sentence imposed should have been suspended.
We cannot accept these submissions. This was, as she acknowledges, a very serious offence and the judge was entitled to regard it as such. As the judge observed, the applicant's reckless behaviour not only endangered the lives of the helicopter crew but put at risk members of the public on the ground if there had been an accident. The consequences were potentially catastrophic. We accept of course that the applicant has a number of permanent disabilities which create problems for him in everyday living, but in our view the judge adequately took these into account in imposing the sentence that he did. We note in addition that the prison reports available to us today refer to the fact that the applicant's mobility problems have not prevented him from engaging in a variety of prison activities and courses, which have been of real benefit to him. In our judgment this sentence cannot arguably be said to be manifestly excessive or wrong in principle and we therefore refuse leave to appeal.
We would add the following observations in this case. We note that, notwithstanding the applicant's plea to acting recklessly, the judge conducted a Newton hearing, apparently in order to determine whether on the facts the applicant's conduct had amounted to a deliberate and sustained attack on the helicopter. In our judgment this was an unnecessary step. By his plea the applicant had admitted that he was aware of the risks posed by what he was doing, but nevertheless continued deliberately to shine the light at the helicopter. It was therefore unnecessary, for the purposes of considering the appropriate sentence, to enquire further into the facts or the applicant's conduct at the time.
We refuse leave to appeal against the sentence for the reasons we have given. | 5 |
Judgment of the Court (Fifth Chamber) of 16 July 1998. - Fédération Belge des Chambres Syndicales de Médecins ASBL v Flemish Government, Government of the French Community, Coucil of Minister. - Reference for a preliminary ruling: Cour d'arbitrage - Belgium. - Directive 93/16/EEC - Specific training in general medical practice - Article 31. - Case C-93/97.
European Court reports 1998 Page I-04837
Summary
Parties
Grounds
Decision on costs
Operative part
Keywords
Freedom of movement for persons - Freedom of establishment - Freedom to provide services - Doctors - Directive 93/16 - Specific training in general medical practice - Conditions of access - Whether the diploma referred to in Article 3 of the directive must first be obtained - Not a condition
(Council Directive 93/16, Arts 3 and 31)
Summary
Article 31 of Directive 93/16 to facilitate the free movement of doctors and the mutual recognition of their diplomas, certificates and other evidence of formal qualifications does not make access to specific training in general medical practice subject to the condition that a diploma, certificate or other evidence of formal qualifications referred to in Article 3 of the directive must first be obtained.
Neither the terms of Article 31 nor the scheme of Directive 93/16, nor indeed the nature of the activities which a trainee must pursue in the course of his specific training in general medical practice, require that person to have obtained a basic diploma referred to in Article 3 of the directive before starting specific training in general medical practice.
It is for the Member States to determine whether, and if so to what extent, the participation of a person undergoing training in general medical practice in the professional activities and responsibilities of the persons with whom he works in the course of his training means that he should hold the diploma, certificate or other evidence of formal qualifications referred to in Article 3 of that directive.
Parties
In Case C-93/97,
REFERENCE to the Court under Article 177 of the EC Treaty by the Cour d'Arbitrage of Belgium for a preliminary ruling in the proceedings pending before that court between
Fédération Belge des Chambres Syndicales de Médecins ASBL
and
Flemish Government,
Government of the French Community,
Council of Ministers,
on the interpretation of Article 31 of Council Directive 93/16/EEC of 5 April 1993 to facilitate the free movement of doctors and the mutual recognition of their diplomas, certificates and other evidence of formal qualifications (OJ 1993 L 165, p. 1),
THE COURT
(Fifth Chamber),
composed of: C. Gulmann, President of the Chamber, J.C. Moitinho de Almeida, D.A.O. Edward (Rapporteur), J.-P. Puissochet and P. Jann, President of the Chamber, Judges,
Advocate General: G. Cosmas,
Registrar: H. von Holstein, Deputy Registrar,
after considering the written observations submitted on behalf of:
- Fédération Belge des Chambres Syndicales de Médecins ASBL, by Eric Thiry, of the Brussels Bar,
- the Flemish Government, by Patrick Devers, of the Ghent Bar,
- the Government of the French Community, by Jean Bourtembourg, of the Brussels Bar,
- the Belgian Government, by Jan Devadder, Conseiller Général, Ministry of Foreign Affairs, Foreign Trade and Cooperation with Developing Countries, acting as Agent, and Tom Balthazar, of the Ghent Bar,
- the Commission of the European Communities, by Berend Jan Drijber, of its Legal Service, acting as Agent,
having regard to the Report for the Hearing,
after hearing the oral observations of Fédération Belge des Chambres Syndicales de Médecins ASBL, represented by Eric Thiry, the Flemish Government, represented by Patrick Devers, and the Commission of the European Communities, represented by Pieter van Nuffel, member of its Legal Service, acting as Agent, at the hearing on 22 January 1998,
after hearing the Opinion of the Advocate General at the sitting on 26 March 1998,
gives the following
Judgment
Grounds
1 By judgment of 19 February 1997, received at the Court on 3 March 1997, the Cour d'Arbitrage (Court of Arbitration) of Belgium referred to the Court for a preliminary ruling under Article 177 of the EC Treaty three questions on the interpretation of Article 31 of Council Directive 93/16/EEC of 5 April 1993 to facilitate the free movement of doctors and the mutual recognition of their diplomas, certificates and other evidence of formal qualifications (OJ 1993 L 165, p. 1).
2 Those questions were raised in proceedings brought before the Cour d'Arbitrage on 26 January 1996 by the Fédération Belge des Chambres Syndicales de Médecins ASBL (Belgian Federation of Doctors' Associations, hereinafter `the Fédération'), an association representing the interests of persons exercising the medical profession in Belgium, to secure the annulment of Article 4(2) of the Decree of the Flemish Community of 5 April 1995, amending the Decree of 12 June 1991 relating to universities in the Flemish Community, which makes provision for specific training in general medical practice and lays down other provisions relating to universities (Moniteur Belge of 29 July 1995, hereinafter `the 1995 Decree').
Community law
3 Directive 93/16 codifies Council Directive 75/362/EEC of 16 June 1975 concerning the mutual recognition of diplomas, certificates and other evidence of formal qualifications in medicine, including measures to facilitate the effective exercise of the right of establishment and freedom to provide services (OJ 1975 L 167, p. 1) and Council Directive 75/363/EEC of 16 June 1975 concerning the coordination of provisions laid down by law, regulation or administrative action in respect of activities of doctors (OJ 1975 L 167, p. 14); it also incorporates Council Directive 86/457/EEC of 15 September 1986 on specific training in general medical practice (OJ 1986 L 267, p. 26). Those three directives were repealed by Article 44 of Directive 93/16.
4 Under Article 2 of Directive 93/16, each Member State is to recognise the diplomas, certificates and other evidence of formal qualifications - which are listed in Article 3 - awarded to nationals of Member States by the other Member States in accordance with Article 23 by giving such qualifications, as far as the right to take up and pursue the activities of a doctor is concerned, the same effect in its territory as those which the Member State itself awards.
5 Article 3 of Directive 93/16 gives a list, for all the Member States, of the documents referred to in Article 2. Those for the Kingdom of Belgium are: `"Diplôme légal de docteur en médecine, chirurgie et accouchements/Wettelijk diploma van doctor in de genees-, heel- en verloskunde" (diploma of doctor of medicine, surgery and obstetrics required by law) awarded by the university faculties of medicine, the Central Examining Board or the State University Education Examining Board'.
6 Article 23(1) of Directive 93/16 provides that the Member States are to require persons wishing to take up and pursue a medical profession to hold a diploma, certificate or other evidence of formal qualifications in medicine referred to in Article 3 which guarantees that during his complete training period the person concerned has acquired the knowledge and experience prescribed by Article 23(1)(a) to (d). Article 23(2) states that the abovementioned complete period of medical training is to comprise at least a six-year course of study or 5 500 hours of theoretical and practical instruction given in a university or under the supervision of a university.
7 Title IV of Directive 93/16 relates to specific training in general medical practice.
8 According to Article 30, `Each Member State which dispenses the complete training referred to in Article 23 within its territory shall institute specific training in general medical practice meeting requirements at least as stringent as those laid down in Articles 31 and 32, in such a manner that the first diplomas, certificates or other evidence of formal qualifications awarded on completion of the course are issued not later than 1 January 1990.'
9 Articles 31 and 32 of Directive 93/16 lay down the minimum requirements which such training must meet.
10 According to Article 31,
`1. The specific training in general medical practice referred to in Article 30 must meet the following minimum requirements:
(a) entry shall be conditional upon the successful completion of at least six years' study within the framework of the training course referred to in Article 23;
(b) it shall be a full-time course lasting at least two years, and shall be supervised by the competent authorities or bodies;
(c) it shall be practically rather than theoretically based; the practical instruction shall be given, on the one hand, for at last six months in an approved hospital or clinic with suitable equipment and services and, on the other hand, for at least six months in an approved general medical practice or in an approved centre where doctors provide primary care; it shall be carried out in contact with other health establishments or structures concerned with general medical practice; however, without prejudice to the aforesaid minimum periods, the practical instruction may be given for a maximum period of six months in other approved health establishments or structures concerned with general medical practice;
(d) it shall entail the personal participation of the trainee in the professional activities and responsibilities of the persons with whom he works.
...
3. Member States shall make the issue of diplomas, certificates, or other evidence of formal qualifications awarded after specific training in general medical practice, conditional upon the candidate's holding one of the diplomas, certificates or other evidence of formal qualifications referred to in Article 3.'
11 Article 32 of Directive 93/16 provides:
`If, at 22 September 1986, a Member State was providing training in general medical practice by means of experience in general medical practice acquired by the medical practitioner in his own surgery under the supervision of an authorised training supervisor, that Member State may retain this type of training on an experimental basis on condition that:
- it complies with Article 31(1)(a) and (b), and (3);
- its duration is equal to twice the difference between the period laid down in Article 31(1)(b) and the sum of the periods laid down in the third indent hereof,
- it involves a period in an approved hospital or clinic with suitable equipment and services and a period in an approved general medical practice or in an approved centre where doctors provide primary care; as from 1 January 1995, each of these periods shall be of at least six months' duration.'
12 Article 34 of Directive 93/16 authorises the Member States, subject to certain conditions, to make provision for specific part-time training in general medical practice.
The Belgian legislation
13 Under Article 2(1) of Royal Decree No 78 of 10 November 1967 relating to the practice of health care and of related professions and to medical committees (Moniteur Belge of 14 November 1967), `No person may practise medicine unless he holds the diploma of doctor of medicine, surgery and obstetrics required by law, obtained in accordance with the legislation on the conferring of academic degrees and the university examination syllabus, or he is exempted therefrom by law...'.
14 The Decree of 12 June 1991 relating to universities in the Flemish Community (Moniteur Belge of 4 July 1991) provides inter alia for the organisation of academic teaching.
15 The 1995 Decree provides for specific training in general medical practice. Article 2 thereof added the following paragraph to Article 7 of the Decree of 12 June 1991:
`The specific training in general medical practice is academic training which follows the academic training for a doctor. It results in the award of an academic degree in general medical practice.'
16 Article 3 of the 1995 Decree also inserted the following provisions in Article 11 of the Decree of 12 June 1991:
`The common teaching programme for the first course of training for becoming a doctor and for the first three years' study of the second course of such training must satisfy the requirements laid down by ... Directive 93/16/EEC, Title IV ... The university authorities shall issue to students who have passed the annual examination for the third year of study in the second course a certificate attesting that they have successfully completed the training course referred to in Article 23 of the abovementioned directive ...
In the fourth year of study in the second course of training for becoming a doctor, the university authorities may offer a number of options, one of which must be "general medical practice". That fourth year of study with the "general medical practice" option constitutes the first year of specific training in general medical practice referred to in Title IV of Directive 93/16/EEC ...'.
17 Article 4(2) of the 1995 Decree added the following fourth paragraph to Article 14 of the Decree of 12 June 1991:
`The total extent of training in general medical practice comprises three years' study, that is to say the fourth year of study in the second course of training for becoming a doctor and the two years' training in general medical practice.'
18 The full training course for persons aspiring to become general medical practitioners in Flanders is thus made up of a first period of six years, comprising the two basic training courses in medicine; then a seventh year, which corresponds both to a fourth and last year of study in the second training course for doctors and to the first year of the specific training in general medical practice; and, finally, an eighth year and a ninth year corresponding to a third course devoted to specific training for general medical practitioners.
19 The Fédération considers that Article 4(2) of the 1995 Decree derogates from Directive 93/16 by granting access to specific training in general medical practice to students who are not entitled to assume medical responsibilities and thus creates discrimination between trainees authorised to embark on such training in the Flemish Community and trainees from the other Communities.
20 Considering that the dispute is concerned with determining the year as from which specific training in general medical practice may commence and, more specifically, whether access to such training implies that the person concerned should hold a diploma, certificate or other evidence of formal qualifications referred to in Article 3 of Directive 93/16 (hereinafter `the basic diploma referred to in Article 3'), the Cour d'Arbitrage stayed proceedings pending a preliminary ruling from the Court of Justice on the following questions:
`1. Must Article 31(1)(a) of Council Directive 93/16/EEC of 5 April 1993 to facilitate the free movement of doctors and the mutual recognition of their diplomas, certificates and other evidence of formal qualifications, in conjunction with Articles 3 and 23 and with the other provisions of Title IV of that directive, be interpreted as meaning that the specific training in general medical practice cannot begin until after the person concerned has obtained, after at least six years' study, the diploma referred to in Article 3?
2. Must Article 31(1)(d) of that directive be interpreted as meaning that the "personal participation of the trainee in the professional activities and responsibilities of the persons with whom he works" requires the trainee to pursue the activities of a doctor which are reserved to holders of the diplomas required by Articles 2 and 3 of the directive?
3. If so, must that same provision be interpreted as meaning that the trainee should pursue the activities of a doctor from the beginning of the specific training in general medical practice, whether that training is the full-time training provided for by Article 31 of the directive or the part-time training provided for by Article 34?'
21 It must be borne in mind at the outset that Directive 93/16 is intended, according to the twenty-first recital in its preamble, only to institute specific training in general medical practice which satisfies minimum quality and quantity requirements, and supplements the minimum basic training which medical practitioners must receive in accordance with that directive. Although they are entitled to impose more stringent requirements, the Member States are required, by Article 2 of Directive 93/16, to recognise each other's diplomas, certificates and other evidence of formal qualifications awarded in accordance with the minimum requirements laid down by Directive 93/16.
The first question
22 By its first question, the national court seeks to ascertain whether Article 31(1)(a) of Directive 93/16 makes access to specific training in general medical practice subject to the condition that a basic diploma referred to in Article 3 must first be obtained.
23 In the Fédération's submission that question should be answered in the affirmative. Only the basic diploma referred to in Article 3 confers the right to pursue the activities of a doctor and ensures that the person concerned has acquired the requisite knowledge and experience during his complete training period.
24 The Belgian Government, the Flemish Government, the Government of the French Community and the Commission contend, conversely, that the Member States are free to decide that the training is to commence upon successful completion of the six years' studies required by Article 31(1)(a) of Directive 93/16 and that it is not therefore essential for the candidate to have obtained the basic diploma referred to in Article 3. The Member States may, but are not required to, make access to specific training in general medical practice subject to possession of such a diploma.
25 As is clear from its wording, Article 31 of Directive 93/16 draws a distinction between the requirement of successful completion of six years' study of medicine and that of possession of a basic diploma referred to in Article 3. The first requirement, laid down in Article 31(1)(a), concerns access to specific training in general medical practice, whereas the second, laid down in Article 31(3), concerns the issue of diplomas, certificates, or other evidence of formal training in specific general medical practice.
26 It must therefore be held that the two requirements laid down in Article 31 of Directive 93/16 are different in scope and cannot be assimilated to each other.
27 Moreover, as regards the conditions for access to training leading to the award of a diploma, certificate, or other evidence of formal qualification as medical specialist, Article 24 of Directive 93/16 draws the same distinction as Article 31 between the successful completion of at least six years' study of medicine and possession of a basic diploma referred to in Article 3.
28 It follows that, contrary to the Fédération's assertion, neither the terms of Article 31 nor the scheme of Directive 93/16 require the person concerned to hold a basic diploma referred to in Article 3 in order to be granted access to specific training in general medical practice.
29 The answer to the first question must therefore be that Article 31(1)(a) of Directive 93/16 does not make access to specific training in general medical practice subject to the condition that a basic diploma referred to in Article 3 must first be obtained.
The second and third questions
30 By its second and third questions, the national court seeks essentially to ascertain whether the nature of the activities that the candidate must pursue in the course of his specific training in general medical practice in implementation of Article 31(1)(d) implies that he should have obtained a basic diploma referred to in Article 3 before embarking on that training.
31 In the submission of the Fédération, the requirement in Article 31(1)(d) of Directive 93/16 that the trainee participate personally in the professional activities and responsibilities of the persons with whom he works means that he is obliged to perform acts which are reserved to the holders of a basic diploma referred to in Article 3.
32 In support of that submission, the Fédération relies, first, on the use of the term `medical practitioner' in Article 32, which concerns those Member States which, as at 22 September 1986, were providing training in general medical practice by means of experience in general medical practice acquired by the `medical practitioner' in his own surgery under the supervision of an authorised training supervisor.
33 It must, however, be borne in mind that the case of the `medical practitioner' mentioned in Article 32 of Directive 93/16, who works in his own surgery under the supervision of an authorised training supervisor and who must therefore hold a basic diploma referred to in Article 3, is different from that of the candidate mentioned in Article 31(1)(d), who shares the `responsibilities of the persons with whom he works', the latter, for their part, being entitled to pursue the activities of a doctor. In contrast to Article 32, the latter provision does not mention the experience `acquired by the medical practitioner in his own surgery'.
34 Second, the Fédération submits that the aspects of specific training in general medical practice described in Article 31(1)(c) and (d) also imply that the person concerned has the status of `medical practitioner' when he embarks on specific training and, therefore, that he is in possession of a basic diploma referred to in Article 3.
35 As the Commission has rightly pointed out, training in general medical practice does not involve the exercise of the profession of doctor in an independent manner, with the attendant freedom to make diagnoses and prescribe treatment; indeed, Article 31(1)(d) merely requires participation in the activities of a fully qualified medical practitioner. As for Article 31(1)(b) of Directive 93/16, it provides that the training is to be `supervised by the competent authorities or bodies'.
36 Directive 93/16 does not thus impose the requirement of possession of a basic diploma referred to in Article 3 in relation to participation in the professional activity referred to in Article 31(1)(d) thereof.
37 Since Directive 93/16 does not make possession of a basic diploma referred to in Article 3 a precondition for commencing specific training in general medical practice but only imposes that requirement when the diploma, certificate, or other evidence of formal training in specific general medical practice is awarded, and since that is a minimum requirement, Directive 93/16 leaves the Member States free to decide whether the trainee must already hold the basic diploma referred to in Article 3 at an earlier stage.
38 The answer to the second and third questions must therefore be that the nature of the activities which a trainee must pursue in the course of his specific training in general medical practice in implementation of Article 31(1)(d) of Directive 93/16 does not necessarily imply that he should have obtained a basic diploma referred to in Article 3 before starting such training. It is for the Member States to determine whether, and if so to what extent, the participation of a person undergoing training in general medical practice in the professional activities and responsibilities of the persons with whom he works in the course of his training means that he should hold the basic diploma referred to in Article 3.
Decision on costs
Costs
39 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.
Operative part
On those grounds,
THE COURT
(Fifth Chamber),
in answer to the questions referred to it by the Cour d'Arbitrage of Belgium by judgment of 19 February 1997, hereby rules:
1. Article 31(1)(a) of Council Directive 93/16/EEC of 5 April 1993 to facilitate the free movement of doctors and the mutual recognition of their diplomas, certificates and other evidence of formal qualifications does not make access to specific training in general medical practice subject to the condition that a diploma, certificate or other evidence of formal qualifications referred to in Article 3 of that Directive must first be obtained.
2. The nature of the activities which a trainee must pursue in the course of his specific training in general medical practice in implementation of Article 31(1)(d) of Directive 93/16 does not necessarily imply that he should have obtained a diploma, certificate or other evidence of formal qualifications referred to in Article 3 before starting such training. It is for the Member States to determine whether, and if so to what extent, the participation of a person undergoing training in general medical practice in the professional activities and responsibilities of the persons with whom he works in the course of his training means that he should hold the diploma, certificate or other evidence of formal qualifications referred to in Article 3 of that Directive. | 6 |
LORD JUSTICE POTTER:
INTRODUCTION
1. This appeal and cross-appeal arise out of the judgment of HH Judge Kershaw
QC sitting as a judge of the High Court in Manchester. The judge held the
defendant ("the Bank") liable to the claimants who were partners in a business
partnership under the name of "Samson Lancastrian" ("Samson") for breach of
contract and breach of confidence as a result of the bank, by a mistake,
sending documents to one of Samson's customers ("Economy Bag"), to whom Samson
had sold a consignment of imported dog chews from a Far Eastern supplier, as a
result of which Economy Bag ceased to trade with Samson and entered into a
direct relationship with Samson's supplier, thus cutting out Samson and
depriving them of their intermediate profit which had been a substantial source
of profit to Samson in their previous relationship with Economy Bag.
2. Three main issues arise. The first is that raised by paragraph 1 of the
Bank's Respondent's Notice and concerns the characterisation of the legal
relationship between Samson and Economy Bag. Samson contended, and the judge
found, that the relationship was that of seller (Samson) and buyer (Economy
Bag) and damages were awarded on that basis. The Bank contended and contends
on this appeal that the relationship was that of principal (Economy Bag) and
agent (Samson), it having been common ground at the trial that, if the
relationship was indeed one of principal and agent, the claim would fail in its
entirety because the claim for loss of profit based on the mark-up to which I
have referred was a secret profit undisclosed to Economy Bag, in respect of
which the court should deny a remedy on policy grounds. The second issue,
raised both by the Notice of Appeal and by the Respondent's Notice, is whether,
in making his award of damages, the judge was correct in his findings on
causation remoteness and quantum. The Bank contends that the damages awarded
were too remote, not having been reasonably foreseeable to the bank as a result
of its breach of duty. Samson contends that the award was inadequate on the
evidence placed before the judge. The third issue relates to the rate of
interest ordered by the judge upon his award of damages, namely 6% over base
rate. Following oral argument on 6th and 7th March 2000,
when judgment was reserved, Samson requested the court to reconvene in order to
hear further argument on the third issue. On objection by the Bank, that
request was refused. Instead, the court directed that the issue should be
addressed in further written submissions by counsel, which were not completed
until 7th April 2000.
THE FACTS
3. The plaintiffs were partners in a business which imported goods from
countries in the Far East, including Thailand, and sold them to customers in
the United Kingdom. In 1990 they were introduced to Mr Taylor, who traded in
partnership with a Mr Holt as Economy Bag. Economy Bag sold a variety of
goods, in particular dog chews which, at the time of their introduction to
Economy Bag, they were buying loose in bulk and packing themselves for
wholesale and resale supply. They wished to eliminate their packing operation
and to find a source of supply of dog chews, ready-packed in packaging which
bore their trade name.
4. The plaintiffs went to Thailand and found a potential supplier, obtaining
samples and prices. Upon return, they showed samples and quoted prices on a
CIF Manchester basis which were acceptable to Mr Taylor. Mr Jackson explained
and Mr Taylor agreed that the business would have to be done on the basis that
Economy Bag would pay under transferable letters of credit so that Samson would
have security in a situation where, if Economy Bag defaulted, Samson would be
left with dog chews in packets labelled specifically for Economy Bag with
consequent difficulties of disposition in the market.
5. By coincidence, the Bank was banker to both Samson and Economy Bag. Economy
Bag placed an order with Samson and instructed the Bank to issue to Samson a
transferable letter of credit subject to UCP 400, issued in favour of Samson in
the sum of some $48,000. Having placed the order in Thailand, Samson were let
down by their suppliers and had to revisit Thailand to find another supplier.
They found Pet Products Limited ("Pet Products"), of which the managing
director was a Mr Veerochai. Pet Products fulfilled the order consigning the
container to Manchester. After the order was placed, but before the goods
arrived in England, Economy Bag asked, and Samson agreed, that because of
Economy Bag's inexperience in such matters, Samson would deal with the import
formalities and arrange carriage from Manchester to the premises of Economy Bag
near Preston, for which it would make an inclusive handling charge of 5% of the
CIF price. The transaction was completed successfully on this basis and
thereafter a substantial number of similar transactions followed.
6. At all stages, so far as Samson was concerned, they bought as principal from
Pet Products and re-sold as principal to Economy Bag, marking up the price
which they paid to Pet Products by a percentage which varied from time to time,
and using the Bank as their bankers for the purposes of the transaction. They
did not disclose their percentage mark-up to Economy Bag, keeping the price at
which they purchased to themselves and, from Samson's point of view, it was a
virtue of the transferable letter of credit arrangements that they concealed
the mark-up from Economy Bag, because the price paid under Economy Bag's
successive letters of credit was paid, (inter alia), against Samson's invoice
and not Pet Products'. The letters of credit provided, so far as material, for
payment on production of a commercial invoice, an insurance policy/certificate
for invoice amount plus 10%, and a packing list. Partial shipments were
allowed. The insurance policy in each case showed Pet Products as the assured,
but the amount of the insurance shown was the amount of Samson's commercial
invoice plus 10%. The packing list was on Pet Products stationery; however, it
did not show either the unit price or the total invoice price from Pet Products
to Samson. Thus, while the identity of Pet Products as original supplier was
available to Economy Bag upon perusal of the documents submitted under any of
its letters of credit, neither the unit price, nor total price charged by Pet
Products to Samson was apparent and Economy Bag were unaware of any mark-up
made by Samson.
7. Once the arrangements were in place Economy Bag decided to leave the
administration of its own documentation to Samson. The Bank was instructed by
Economy Bag on 26th March 1991 to instruct its International Division to
forward all relevant documents to Samson upon application and as soon as they
were received from Thailand. The Bank followed those instructions and Economy
Bag never asked Samson for any documents sent by the Bank to Samson in
pursuance of that instruction. The timing of the deliveries was such that only
in relation to the first transaction were the documents sent to Economy Bag.
On 22nd May 1991 Economy Bag wrote to the Bank.
"To confirm that Barry Davies of Samson Lancastrian is "de facto" agent to
ourselves as regards import procedures and documentation.
I therefore authorise him to speak directly to both Deane Branch and
International Division on our behalf, on all matters concerning imports,
etc."
Further, on 22nd October 1991 Economy Bag signed a banking document
which read:
"Payments for documents with discrepancies can now be authorised by Samson
Lancastrian direct .... and need not be referred to Economy Bag"
8. Thereafter, Economy Bag did business on an increasing scale with Samson,
supplying dog chews from Pet Products whenever requested by Economy Bag until
March 1993. Thirty-three contracts over a trading period of 26 months yielded
a profit to Economy Bag on varying mark-ups of $110,371 excluding the 5%
commission which was itself largely profit. The relationship ended when, upon
completion of a purchase of dog chews pursuant to an order from Economy Bag
made on 7th January 1993, the Bank, under cover of a letter dated
15th March 1993, despatched to Economy Bag rather than to Samson, a
completion statement containing Pet Products invoice to Samson, thereby
revealing the substantial profit being made by Samson (which on that
transaction was a 19% mark-up, plus 5% "commission"), which was as much, if not
more, than Economy Bag were netting as distributors. Mr Taylor was angry at
this. His answer in evidence which the judge accepted as reflecting the
position was as follows:
"I think over the period we dealt with Samson we'd sort of lost sight of the
deal we'd come into. I suppose if you were to take a step back from it, we
knew he was making profit but I think confronted with the amount of that profit
it was hurtful to say the least."
9. He thereafter terminated the business relationship. Economy Bag then
proceeded to do its dog chew business direct with Pet Products. Discovery in
the action revealed that in the year ending March 1994 Economy Bag purchased
fifteen shipments worth US$257,944; in March 1994/95 twenty-eight shipments
worth US$468,296; in March 1995/96 twenty-three shipments worth US$462,467 and
in March 1996/97 twenty-five shipments worth US$645,429. At trial, Mr Taylor
indicated in evidence that its business with Pet Products had continued on that
scale and that Economy Bag also did business with other Far Eastern suppliers
which, had the relationship with Samson continued, would have been done through
Samson.
THE JUDGMENT BELOW
10. The judge found that the Bank was in breach of an express or implied
contractual obligation of confidence as Samson's bankers not to disclose to
Economy Bag documents relating to the purchase of the goods by Samson from Pet
Products, including in particular the invoice raised by Pet Products addressed
to the defendant. There is no appeal against that aspect of the judgment.
That finding was unimpeachable on the basis of the agreed evidence of the
banking experts on each side to the effect that the majority of transferable
letters of credit are used for the benefit of middlemen who wish to conceal
from their customer the identity of their suppliers or the amount of their
mark-up and that banking practice envisages that confidentiality be preserved
for the protection of the middleman's interests in that respect.
11. The judge rejected the submission on behalf of the Bankthat the
relationship between Economy Bag and the plaintiffs was in reality that of
principal and agent, as opposed to seller and buyer. That submission was based
upon the fact that, after the placing of the first order, which was plainly one
of purchase, by Samson from Pet Products and resale onto Economy Bag, Samson
took a 5% "commission", so described by them in their invoices to Economy Bag,
which itself represented profit to them, given that clearance and haulage
charges, VAT and import levy were all invoiced separately. Further, Samson did
nothing to make clear that they were charging a greater mark-up and, on
occasions, wrote letters which appeared to describe their own prices as those
of Pet Products. It was submitted for the Bank that these facts demonstrated
(a) that Mr Taylor was in fact ignorant that any mark-up was being charged at
all and thus that anything but "commission" (only consistent with agency) was
being paid; (b) the reason why Mr Taylor was so angry on discovering the true
situation.
12. The judge stated his conclusion on the issue of agency as follows:
"I accept [Samson's] submission that what matters is not what the parties call
themselves but the substance of the relationship. Not surprisingly, each side
was able to find passages in the evidence and the documents which support its
contention. The crucial witness was Mr Taylor .... . He did not find it easy
to give evidence. Both sides were able to find support from parts of his
evidence. It was when he gave evidence that I was particularly grateful to the
parties for their agreement that there should be a Palantype record of the
evidence, because I was relieved of the need to take a full note and better
able to watch him. I have reached the conclusion that he knew that the
plaintiff was making a profit in addition to the 5%, but not how much, but what
astonished and aggrieved him was the discovery that the plaintiff, with no risk
and no capital outlay, was making a significantly larger profit than Economy
Bag, that he over-reacted to the discovery, and that he now realises and
regrets that he did so."
The judge then quoted the answer of Mr Taylor already set out at paragraph 9
above and went on
"I appreciate Mr Taylor's evidence was not consistent. I appreciate that in
the light of his inconsistency when questioned by counsel I put the point to
him myself ... I appreciate that faced with such confusion I do not have to
prefer one version to another, but could conclude that Mr Taylor's evidence is
unreliable and cannot form a basis for any finding at all. However, with all
that in mind, I have reached the conclusion that the answer which I have quoted
reflects the true state of mind of Mr Taylor, and is consistent only with the
plaintiff being a middle-man and, not an agent ...
I have found as a fact that it was only after the first contract between the
plaintiff and Economy Bag .. had been formed that a further agreement was made
between them in relation to the import formalities and onward carriage from the
Manchester Container Port. The sequence is not consistent with agency. If no
such separate agreement had been made there would have been no agreed basis for
any remuneration of the plaintiff at all. I do not think that either the
plaintiffs or Economy Bag would have made an agreement for the plaintiffs to
act as Economy Bag's agent without making express provision of the amount of
the plaintiffs' remuneration. The favours which the plaintiffs did by placing
a few orders with Pet Products without requiring a letter of credit from
Economy Bag are also more consistent with the plaintiffs being middle-men than
agents."
13. So far as damage was concerned, the judge first dealt with and rejected the
argument for the Bank that the damage claimed was too remote. He then referred
to the rule in Hadley -v- Baxendale and, in particular, the decision of
the Court of Appeal in Kpohraror -v- Woolwich Building Society [1996]
All ER 119. He stated :
"I hold that loss of the type which the plaintiff claims arises in the normal
course of things from either of the types of breach of contract alleged by the
plaintiffs i.e. breach of an express (or, alternatively, implied) term of the
contract to transfer the letter of credit and breach of the banker/customer
contract. I hold that there was nothing to take that consequence beyond what
would arise in the normal course of things from breach of the transferable
letter of credit contract or the general banker/customer contract between the
parties."
He then, approached the matter on the basis that, having received evidence of
the level of Economy Bag's trade with Pet Products in the years following March
1993 (see paragraph 9 above), he should assess the damages on the basis of
Samson's loss of the chance of profit on those sales, quoting in particular
Stuart-Smith LJ in Allied Maples Group Limited -v- Simmons & Simmons
[1995] 1 WLR 1602 at 1614D:
"....the plaintiff must prove as a matter of causation that he had a real
substantial chance as opposed to a speculative one. If he succeeds in doing
so, the evaluation of the chance is part of the assessment of the quantum of
damage, the range lying somewhere between something that just qualifies as real
or substantial on the one hand and near certainty on the other."
The judge went on:
"In this action the plaintiff claims for damages for loss of opportunity - the
opportunity to continue to make profits by trading with Economy Bag. Mr Keith
rightly accepted that there was a significant chance of the business
relationship continuing but for the defendant's mistake. The plaintiffs had
succeeded in proving damage. The difficulty lies in the assessment of the
damages for the loss of profit in what was potentially a series of separate
events. At the best from the plaintiff's point of view Economy Bag might have
continued for many years to do a large volume of trade at a high mark-up, but
there were many uncertainties, of which some presented more risk than others to
that opportunity."
14. The judge then elaborated upon the uncertainties, starting with the
likelihood that Samson and Economy Bag would have continued to trade for a
substantial number of years, expressing himself so satisfied. He then referred
to the possibility that, although both were still trading, Economy Bag might
not have continued to place orders with the plaintiffs, observing that by 1993
Economy Bag was under the pressure of increasing competition at having to keep
its prices down in order to maintain or increase sales. It thus had a motive,
in and after 1993, to cut out Samson altogether or to continue to buy but to
undertake the import formalities themselves. He observed that, upon discovery
of the true situation, Economy Bag was quickly able to deal directly with Pet
Products, by now having the commercial self-assurance to set about doing so.
He also observed that, while Mr Taylor had recognised the value of a long-term
relationship with his supplier, shortly before the Bank's mistake came to
light, Samson had started to sell pet food to M6 Cash & Carry, which might
have affected the trading relationship with Samson if Economy Bag had
discovered that they were selling goods to other buyers in the area. Samson
were also themselves planning to open a retail outlet in Wigan which might have
caused Economy Bag to perceive that Samson was competing in the retail
business, thus reducing Economy Bag's loyalty to Samson.
15. The judge set out the figures for the profit which Samson projected
(excluding the 5% commission charge) on the basis of the figures shown at
paragraph 9 above. These were as follows (the average percentage mark-up
appearing in brackets): 1993/94 $38,831 (12.9%); 1994/95 $73,839 (15.8%);
1995/96 $82.429 (17.8%); 1996/97 $135,227 (21%). He then set out further
figures projected from March 1997 through to 2007. The judge made a number of
comments about the overall trends in the figures and the likelihood of their
being maintained and then observed:
"My jury function seems to me to require that I should assess damages on the
basis not only of many possibilities which cannot be individually evaluated but
also on a basis that some of the possibilities might, if they become realities,
themselves increase the likelihood of others. On the other hand once I
conclude, as I do, that there was a significant chance that the plaintiff's
business relationship with Economy Bag would have continued for some time,
there must be an award of damages .... . Because of the hazards which I have
mentioned the likelihood that the business relationship would have come to an
end increased as time passed. While the business relationship continued the
plaintiff's profit might have increased through increased turnover but might
have reduced, as a percentage and even in money terms, because Economy Bag
acquired the motive and the means to squeeze the plaintiff's profit margins. I
must therefore attribute an appropriate sum by way of damages for each year in
which the plaintiffs have shown that damages should be awarded."
He then went on to identify the years in respect of which he made his award as
follows:
"The years are 1st April to 31st March, which should be
sufficient to enable the parties to agree a calculation of interest.
1993-1994 $27,000.00
1994-1995 $$43,000.00
1995-1996 $29,000.00
1996-1997 $26,500.00 $124, 500.00"
16. It is thus apparent that the judge having started on the basis of the
actual business done and anticipated by Economy Bag since the breach, treated
Samson as having proved a real or substantial chance, as opposed to a merely
speculative chance, of a further four years' repeat business with Economy Bag,
reducing Samson's projected profit figures according to some progressive
formula, the details of which were not divulged by the judge and the logic of
which is not apparent. On a calculation effected by Miss Andrews, who now
appears for Samson, it seems that (taking the judge's loss of profit figures
set out at the beginning of paragraph 15 above, adding Samson's 5% commission
fee and deducting the flat rate for overheads) the judge awarded the following
percentages of Samson's projected loss of profit based on Economy Bag's
purchases made directly from Pet Products: 1993/94-57%; 1994/95-46%;
1995/96-29%; 1996/97-16%. The implication of the judgment (borne out by that
calculation) is that thereafter Samson's chance of repeat business became so
speculative as not to merit compensation.
THE QUESTION OF AGENCY
17. In arguing that the judge was wrong to find that the relationship between
Samson and Economy Bag was that of seller and buyer rather than principal and
agent, Mr Hapgood has drawn our attention to a number of points of detail on
the evidence in order to demonstrate error on the part of the judge. His
difficulty has essentially been two-fold. First, he was obliged to accept the
finding of the judge that the original contract was one of buyer and seller and
that the 5% handling charge had been agreed as consideration for Samson dealing
with the import formalities and the carriage arrangements. In the light of
that, the only way in which he could put his case for agency was to say that in
some way, and without discussion, the original relationship of buyer and seller
should be regarded as having evolved into agency thereafter, simply in the
light of Samson's subsequent reference to the 5% figure as "commission".
Second, he has been unable to demonstrate any misunderstanding on the part of
the judge of the evidence which was before him.
18. Put as its highest, Mr Hapgood's submission could only be that the judge's
findings on this issue were against the weight of the evidence. Yet, Mr
Taylor's evidence was that he regarded Samson, not Pet Products, as Economy
Bag's supplier and, in giving the evidence quoted at paragraph 8 above, Mr
Taylor acknowledged that he knew, or must have known, that Samson were making a
mark-up; he simply did not appreciate how large it was. Finally, although Mr
Hapgood rightly submitted that the fact that the parties used transferable
letters of credit did not preclude the existence of a relationship of agency
(because such letters of credit may be used by applicants and first
beneficiaries who stand in a relationship of principal and purchasing agent),
it was the agreed evidence of the expert witnesses that the majority of
transferable letters of credit are in practice used for the benefit of
middle-men who wish to conceal the identity of their supplier or the amount of
their mark-up. I can see no justifiable basis for interfering with the
findings of the trial judge upon the issue raised by the Respondent's Notice.
DAMAGES
19. Both sides appeal against the judge's assessment of damages. Miss Andrews
for Samson submits that a far higher figure should have been awarded. On the
basis that the judge rightly found on the evidence that there was a significant
chance of the business relationship between Samson and Economy Bag continuing
for some time but for the Bank's mistake, she makes the following criticisms of
the judge's approach. First, she says there is no indication to show how the
judge reached the figures at the end of his judgment, there being no consistent
pattern in the discounts applied to reach the annual figures for loss of
profit, nor any easily discernible relationship between them. Second, she
submits that the assessment is remarkably low. She complains that the judge
awarded no more than one third of the net profit figure for the four years in
question. She submits that, the judge being satisfied that Samson had
established a real or substantial chance of obtaining Economy Bag's future
business, that finding should lead to at least a fifty per cent figure for the
years to which it applies. She further submits that a proper approach would be
one similar to the assessment of a chance in personal injury cases, namely to
evaluate the potential future benefit and then apply a discount to reflect the
uncertainties of achieving it, as well as any discount to reflect the value of
receiving an accelerated capital payment in respect of any period after trial.
Finally, she argues that, in the light of the evidence of Mr Davies that he
intended to retire at the age of sixty-five in 2010 unless he made enough money
to retire earlier, plus the observation of Mr Taylor that, but for the Bank's
mistake, Samson would have gone on enjoying Economy Bag's business, the judge
should have based the loss of profits claimed on a much longer period than the
four years in fact taken.
20. In connection with the discount applied to reach that short period, Miss
Andrews made a number of specific points. First, she complained that the
reference to Economy Bag acquiring the motive to squeeze Samson's profit
margins by taking over the import and carriage aspects themselves was never
even put to Mr Taylor or Mr Davies and was contrary to Mr Taylor's evidence
that he was happy with Samson's service and charges and, but for the Bank's
error, would have continued giving them orders. Further, in referring to
Economy Bag's perception that Samson's recent plans in relation to retail sales
might have caused Economy Bag to reconsider their loyalty, the judge appears to
have misunderstood the state of the evidence before him. Mr Davies had given
unchallenged evidence that the product sold to the public by Samson at the
Wigan retail outlet was totally different from any product sold by Economy Bag
and, in any event, Mr Taylor knew about the plans and did not object to them.
Second, the judge placed importance on the answer to a question put to Mr
Taylor in cross-examination as to whether Samson had sold a quantity of pet
foods to M6 Cash & Carry. Mr Taylor said he did not remember, but he would
accept what was put to him. The matter was not taken further at that stage.
Had it been so, the evidence would have shown that the M6 Cash & Carry was
over one hundred miles away from Economy Bag's area of activity and in any
event the products were not competing. In this respect Miss Andrews applied to
put in additional evidence by way of witness statements from Mr Taylor and Mr
Jackson (Mr Davies' partner in Samson) to correct the position, on the grounds
that there had been no opportunity at the trial below, given that the judge's
misunderstanding was not appreciated until he gave his judgment. We indicated
in the course of the hearing that we would rule on that application when giving
judgment. Since the points made seem to me good, and since it does seem to me
that the judge misunderstood the position confirmed by the additional evidence,
I consider that such evidence should be admitted.
21. Miss Andrews submitted that a proper approach to the assessment, based on
the particular evidence given, would have been to take the period of ten years
from the date of breach, basing calculation of the loss of profits on the
actual trading figures for 1993-1997 and projecting the next six years (in
respect of which she was prepared to accept a nil rate of growth), and then to
discount the resulting total profits by a percentage to reflect various
legitimate imponderables, including the chance of an earlier severance in the
trading relationship and (where applicable) the accelerated receipt of money.
On the evidence before the court, she submitted that the discount should not
have been as much as, let alone more than, 50%. A fair discount would have
been no more than 25%, which would produce a figure for damages of around
US$1,000,000. Alternatively, if, as the judge appeared to consider was the
case, the relationship would have lasted only four years, the damages should
have been assessed at some US$400,000, being a conservative (undiscounted)
estimated net profit figure for those four years.
22. The submission of Mr Hapgood upon the cross-appeal was an attack upon the
principle, rather than the detailed figures, of the judge's assessment. First,
he submitted that, upon the facts of the case, the damage was too remote, in
the sense that, on the information in the possession of the Bank, it was not
within the Bank's actual or reasonable contemplation that disclosure of the
profit being made by Samson would be likely to result in the termination of the
trading relationship between the appellant and Economy Bag. The documents
showed that Pet Products knew the identity of Economy Bag, who had instructed
the bank to send all documents submitted under the credits to Samson for
checking, describing Samson as their "'de facto' agent as regards import
procedures and documentation" and giving Samson authority to waive
discrepancies in the documents. Whether or not the relationship between Samson
and Economy Bag was in fact one of agency, the Bank was entitled to think that
it was characterised by mutual trust and confidence and thus there was no
reason for the Bank to suppose that breach of its duty of confidence to Samson
would result in any damage at all. Mr Hapgood submitted that the real reason
for the loss of business following the Bank's error was Mr Taylor's feeling of
anger and betrayal when he learned of the high level of Samson's mark-up and
that such a reaction was on any view outside the reasonable contemplation of
the Bank (c.f. Kpohraror -v- Woolwich at 126g-127d).
23. For much the same reasons Mr Hapgood submitted that the Bank's breach of
duty was not the effective cause of any loss, that cause being the inherently
unstable nature of the relationship between Samson and Economy Bag, and of
Samson's concealment of its profit level. He submitted that the kind of loss
which Samson was in principle entitled to recover was any loss suffered in the
actual transaction covered by the credit, as to which it had suffered none.
Finally, Mr Hapgood submitted that, if any award were to be made, it should be
an award simply of general damages for injury to Samson's business for reasons
analogous to those where a bank fails to honour a trader's cheque or draft,
thereby causing loss to his business reputation, in respect of which damages
may be awarded without proof of actual damage (see Wilson -v- United
Counties Bank Limited [1920] AC 102 per Lord Birkenhead LC at 112), which
head of claim was extended in Kpohraror -v- Woolwich to a banker's
customers generally (cp. 124a-125f per Evans LJ).
24. In considering the appropriate measure of damages to be awarded in this
case, the court has been faced with a position in which the logic behind the
arguments of both sides, if ruthlessly applied, would lead to extreme results.
On the one hand, the arguments of Miss Andrews, based on the loss of the chance
of earning profits over the lengthy period of years for which she has argued
would have the following effects. First, it would lead to a figure for damages
which appears to be out of all proportion to the nature of the Bank's mistake.
Second, the application of such an approach in other cases of repeat orders
allegedly lost following breach by a bank of its obligations in respect of
commercial credits would give rise to the likelihood of "open ended" claims in
a field, namely the financing of sale of goods, in which generally a
restrictive approach is adopted in respect of claims for consequential loss.
On the other hand, if Mr Hapgood's principal argument is accepted, it would
lead to a situation in which a bank, despite its breach of an obligation which
is by the common acknowledgement of experts, designed to protect its customer
against the risk of precisely that which is proved to have occurred in this
case (i.e. loss of repeat business), would be obliged to pay no more than
nominal damages in cases of this kind, thus giving rise to the undesirable
phenomenon of a wrong without effective remedy.
25. I would reject Mr Hapgood's arguments in that respect. Subject to
questions of proof and the method of quantification, I consider that, in cases
of this kind, a claim in respect of loss of chance or opportunity of repeat
business should in principle be available if the requirement of the rule in
Hadley -v- Baxendale, namely that such loss was "reasonably foreseeable
as liable to result from the breach" is satisfied: see Victoria Laundry
(Windsor) Ltd -v- Newman Industries Limited [1949] 2 KB 528 per Asquith LJ
at 539, as qualified in The Heron II [1969] 1 AC 350 so as to
distinguish the rule in contract from the rule of `reasonable foreseeability'
applied in tort cases. In the latter decision, the test of foreseeability in
contract was stated to be that reflected in terms such as "not unlikely to
occur" (per Lord Reid at 388) and a "serious possibility" or "a real danger"
(per Lord Pearce at 415 and per Lord Upjohn at 425). I would leave open,
without deciding, the question whether the judge was correct, bearing in mind
the agreed rationale of the duty of confidence in commercial credit cases (see
paragraph 10 above), that proved loss of repeat orders is ipso facto
loss of a type which, without more, justifies an award of general damages under
the first limb of the rule in Hadley -v- Baxendale (see paragraph 13
above). I do not think it necessary so to decide because, in this case, the
Bank was not dealing with a `one off' transaction, but was apprised of a course
of dealing between the parties for two years prior to the breach, from which it
knew that Samson and Economy Bag enjoyed a continuing and increasing trading
relationship in a commodity supplied to the apparent satisfaction of both
parties, and it had no reason to think that such relationship was about to
end.
26. That said, however, the question of the appropriate method of
quantification and, in particular, for how long it was or should have been in
the reasonable contemplation of the parties that the trading relationship would
continue is a different matter.
27. Before turning to those questions, I should say that I reject Mr Hapgood's
argument (see paragraph 22 above) that the Bank had no reason to suppose that
its breach of confidence would result in any damage at all, or that Mr Taylor's
reaction was such as to put the termination of the trading relationship out of
the reasonable contemplation of the Bank. The very nature of the obligation
and the admitted duty of confidence in such cases arises from the acknowledged
need to protect the Bank's customer from disclosure of his level of profit and
the danger of any consequent decision by his purchaser to go direct to the
customer's own supplier. Whether that decision was in fact taken for reasons
of anger or from less complicated commercial motives, does not seem to me to be
relevant to the broad question of whether such loss of business (in the form of
repeat orders) was in the reasonable contemplation of the parties as a result
of the Bank's breach. For the same reason, I would reject Mr Hapgood's
argument that the effective cause of the loss of any repeat business was the
peculiar nature of the relationship between Samson and Economy Bag prior to the
Bank's breach. The fact that Mr Taylor felt angry and betrayed because of the
revelation as to the high level of Samson's mark-up was not a reason acting
independently of the breach. It was a state of affairs immediately
precipitated by it and was in no sense an intervening or concurrent cause which
ousted or overwhelmed the original breach as the effective cause of Mr Taylor's
decision to eliminate the mark-up, once revealed.
28. I now turn to the judge's method of quantification. It does not seem to me
to follow, as the judge appears to have held, that simply because there was a
potential liability for loss of repeat orders, that liability was open-ended.
The period over which the damages fell to be assessed on the basis of the lost
likelihood or opportunity of repeat business was that period which would have
been in the reasonable contemplation of the parties on the basis of their
shared knowledge at the time of contract. Yet the judge assessed the period
not on that basis, but on the basis of what emerged ex post facto at trial as
the likely period over which Economy Bag would in fact have continued to trade
with Samson.
29. The rule in Hadley -v- Baxendale is necessarily stated in general
terms, by reference to categories of loss. However, it is a rule as to
remoteness, applied as a method of limiting damages for breach of contract and
operating as the yardstick by which to measure the cut-off point for recovery
in any given case. Thus, when a defendant has no knowledge of special
circumstances, he will be liable under the first limb of the rule for loss
arising `in the ordinary course of things' (of which knowledge is imputed to
every defendant), and no more. Where the claimant (upon whom the burden lies)
asserts knowledge of special circumstances on the part of the defendant leading
to additional loss, the defendant will still only be liable for so much of the
loss as he should have anticipated on the facts known to him, but not for
damage arising from circumstances of which he was unaware. In many cases
however, there is no clearly defined line between the limbs of the rule, the
defendant's liability under the second limb increasing over that to which he is
subject under the first limb according to his degree of actual knowledge. As
observed by Evans LJ in Kpohraror -v- Woolwich at 127j-128b:
".. the starting point for any application of Hadley -v Baxendale is the
extent of the shared knowledge of both parties when the contract was made ....
. When that is established, it may often be the case that the first and the
second parts of the rule overlap, or at least that it is unnecessary to draw a
clear line of demarcation between them. This seems to me to be consistent with
the commonsense approach suggested by Scarman LJ in H. Parsons (Livestock)
Limited -v- Uttley Ingham & Co. Limited [1978] QB 791 at 813, and to be
applicable here."
Thus, in that case, the bank was held liable for injury to the customer's
business reputation because it knew that he was a trader, but not for further
business opportunities alleged to have been lost by reason of circumstances of
which the bank was unaware on the basis of the limited facts known to it.
30. In this case, the court is dealing with a case which is superficially not
dissimilar from Kpohraror -v- Woolwich, in the sense that the case for
Samson is one for loss assessed on the basis that the claimant would have
obtained, or had a substantial chance of obtaining, repeat business in the form
of specific transactions over a future period of time of which the Bank had no
actual knowledge. Despite his remarks above quoted, Evans LJ did in fact
consider the claimant's claim under each limb of the rule in Hadley -v-
Baxendale. He made clear (at 126j-127b) that it was not a case where the
defendant bank was said to have had knowledge of any `special circumstances' so
that the second limb applied, and, so far as the first limb was concerned he
held that, on the bank's limited knowledge of the description which the
claimant applied to himself and the purposes for which he intended to use his
account, it could not be said to be a `not unlikely' consequence of the
defendant's breach that any business loss would occur. The only damages
payable therefore were payable in respect of the claim for general damages for
injury to the claimant's credit and reputation caused by the bank's wrongful
dishonour of his cheque, a category of case in which it has long been
established that there is an irrebuttable presumption of injury in respect of
which an award of substantial (as opposed to nominal) damages may be given
without proof of special (i.e. actual) damage: see Wilson -v- United
Counties Bank Limited [1920] AC 102 per Lord Birkenhead at 112 and
Kpohraror -v- Woolwich at 123b-124c. In such a case the award of
general damages is made on the basis that there can be no accurate assessment
of the pecuniary loss (if any) suffered and, as with awards in tort for injury
to reputation in defamation or for pain and suffering in cases of personal
injury, there is no measure by which they can be assessed, except the opinion
and judgement of a reasonable man.
31. In this case, however, as presented at trial, in respect of the years
1993-1997 the claim was one for loss of business profits made up of specific
transactions where, at the time of the defendant's breach, none of the
transactions had yet been concluded and the claimant's opportunity for profit
depended on the chance or contingency that a third party (Economy Bag) would
act so as to enable the claimant to make that profit. It was no doubt on that
basis that the judge accepted the submission of Miss Heilbron QC, who appeared
for Samson below, that the claim for loss of profits (which by the time of
trial was based on transactions which were identifiable and identified in the
form of invoices obtained from Economy Bag disclosed by Samson) should be dealt
with on the loss of chance basis elucidated in Allied Maples -v- Simmons
& Simmons at 1611B-1614D. That principle however, properly regarded,
is a principle or method of quantification, and not a rule as to
remoteness, of damage. It is thus subject to, and may be constrained
by, the rules as to remoteness laid down in Hadley -v- Baxendale, so
that, whatever the judge's view of the percentage chance that, but for the
Bank's breach, Samson would in fact have been Economy Bag's supplier in
the respect of the transactions in the following years, the cut-off point for
the Bank's liability was the end of such period as was within the reasonable
contemplation of the Bank at the time of breach.
32. As to that, the Bank's knowledge of the background and details of Samson's
trading relationship was limited to the period of time and the individual
transactions conducted prior to breach. Apart from those bare facts, it had no
further information and thus no reason to suppose that Economy Bag was
motivated by other than ordinary commercial considerations in relation to the
conduct of its future business or that it would continue placing orders with
Samson for any longer than it was satisfied that it was in its commercial
interest to do so. The length of that period would in turn depend on a number
of factors and imponderables all outside the Bank's knowledge, there being no
evidence to show it was aware of the particular background to the parties'
business relationship or future intentions, save that the previous two year
relationship had apparently been a successful and expanding one.
33. In those circumstances it seems to me that there was no sufficient basis on
which the judge could or should have predicated his award covering a period
anything like as long as four years. As I read his judgment, he only did so
because, once satisfied that any award would have to be assessed on a loss of
chance basis, he treated the period to be covered by his award as dictated
simply by the point at which, on taking into account all the imponderables he
thought relevant, and a variety of facts before him which were outside the
Bank's knowledge on the date of breach, the chance of profit reduced to a level
which became merely speculative in the sense used by Stuart-Smith LJ in the
Allied Maples case at 1614D. Had the judge focused upon the Bank's
limited knowledge of the facts at the date of breach, he would have concluded
that it could reasonably foresee a substantial loss of business in relation to
orders likely to be placed by Economy Bag in the near future but with a cut-off
point far shorter than the four year period at which he arrived by the route
which he adopted.
34. In the course of the hearing before us, both parties indicated to the court
their desire that if we were of the opinion that the judge fell into error in
his general approach to the question of damages, we should ourselves perform
the exercise of assessing the damages recoverable so as to avoid the need for
remission to the judge. In my view, the judge having noted all the
difficulties of assessment with which he was faced by adopting the approach
which he in fact applied (see paragraph 15 above) essentially failed to see the
wood for the trees. He could and should have approached the case on the broad
basis that, while it could reasonably be contemplated that the established
relationship of Samson and Economy Bag would have continued for a time, and
thus that some award of damages for loss of future business fell to be made,
that time should in all the circumstances be limited to a period of one year
from the date of breach, all loss thereafter being regarded as too remote. On
the other hand, when quantifying the chance that Samson would have supplied
Economy Bag during that year with the goods which Economy Bag proceeded to buy
direct, it seems to me that the judge was in error on the facts before him at
trial to make the large discount for uncertainty which he did. Further,
(assuming no breach by the Bank) there was no reason on the facts available to
the judge to suppose that prices charged by Samson or the business conditions
or commercial considerations applied by Mr Taylor would in the short term be so
altered as to make Economy Bag inclined to cut out Samson as its supplier. As
I have indicated in paragraph 20 above, I am satisfied that the judge
misunderstood the evidence in respect of certain matters which he made the
subject of discount when he assessed the loss of chance.
35. On the assumption that the evidence (as I read it) showed that, but for the
Bank's error, Samson was virtually certain to have retained Economy Bag's
business in dog chews for the year 1993/94, the loss of profit on the figures
adopted by the judge would have been $38,831, to which should be added 5%
commission, less overheads, giving a total of $47,278.15. I would round down
that figure to $45,000.00 to reflect the small degree of uncertainty inherent
in even the closest of trading relationships and would award that sum together
with interest by way of general damages for loss of profit.
INTEREST
36. The judge made his award of interest on the damages assessed having
received an affidavit from the Bank relating, inter alia, to the state of
Samson's accounts and heard evidence from Mr Davies as to the financing of
Samson's business, followed by detailed submissions from counsel. The judge
made an award at the rate of 6% over base rate, that being the rate payable by
Samson upon its business current account at the Bank, out of which its
day-to-day trading had been financed, in conjunction with a dollar account.
The latter account received the monies derived from the trading with Economy
Bag in dollars, the profits from which were transferred from time to time into
the business account to support the business by payment of expenses and
partners' drawings. Economy Bag was the principal customer and source of
income for that business, which effectively ceased upon Economy Bag's
defection. At that time, the business current account was in overdraft to the
tune of £14,000 but was expected to reduce as trade continued. This
expectation was reflected in internal correspondence of the Bank some twelve
months after its breach in which the view was expressed that, but for the
Bank's error and the consequent loss of profit, which the Bank put at some
£4,000 per month, the business account would have been well in credit.
However, in the interim, interest had accumulated, being debited at the 6%
above base rate compounded on the usual banking basis. Although the Bank
ceased showing further debits in the account following transfer of it and other
Economy Bag accounts to the Bank's Edinburgh Office pending litigation, it made
clear before the judge that it continued to treat Samson as liable for
accumulating interest at 6% above base rate, which it reserved the right to
debit. On that basis, the amount due at trial by way of the outstanding
balance on the business account was, in round figures, £23,800.
37. In addition to the business trading account there was a business `term
loan' account in connection with a mortgage for a warehouse purchased by Samson
for the proposed use of the business. The rate on that account was 4% over
base, the loan being repayable over seven years and secured on the warehouse.
38. In making her submissions as to the rate payable, Miss Heilbron recognised
that interest is generally awarded on a conventional basis at a rate which
ignores the position of the individual plaintiff, the usual award in the
Commercial Court being 1% over base rate from time to time. However, she
submitted that, in the instant case, the court should exercise its general
discretion to make an award at a rate higher than the conventional rate so as
to recognise the position of the plaintiff personally. In that respect she
relied upon two particular matters. First, a passage in McGregor on
Damages (16th ed) at paragraph 675, where, having referred to the awards of
2% over base rate made to Lloyds Names in Brown -v- KMR Services [1995]
2 Lloyd's Rep 513 and Deeny -v- Gooda Walker (No.3) [1996] LRLR the
following statement appears:
"The reason given was that this "represented what individual Names are likely
to have to pay when borrowing money". This trend may well continue. It is
only fair to plaintiffs, if they have to borrow, that the interest rate awarded
should reflect their borrowing rate, though even two per cent over base rate
will never achieve a full indemnity for a borrowing plaintiff while the
requirement that the interest be single (sic) and not compound stands."
Second, Miss Heilbron relied upon the letter from the Bank indicating its view
that, but for its conduct, the overdraft upon the business account, which
represented Samson's actual borrowing rate for the purposes of financing its
business, would have been eliminated within a year.
39. In his submissions for the Bank, Mr Keith, who was then dealing with an
award of damages of some £80,000 spread over a period of four years,
argued that the matter should be dealt with in the conventional way and
resisted the suggestion that the business account rate was appropriate.
However, he did so largely upon the basis that the debit balance of the
business account as at trial (6% compound interest having been applied)
represented little more than one quarter of the overall award. Mr Keith was
content to put the matter in this way. Having referred to the decisions of the
Commercial Court in Brown and Deeny to raise the conventional
rate to 2% over base in relation to Lloyds Names as a class, he said:
"As a broad brush approach, they felt 2% over base was right. I would say that
this is an appropriate case for 2 or 3% over base overall or Your Lordship
could divide it up between the different awards of damages for the different
years, taking into account the interest that has been paid on the business
overdraft. But, otherwise, My Lord, I would say there is no justification for
going right up to base plus 6%, even though that is what has been charged on
their [business] overdraft by the bank."
The judge ignored that via media approach and said:
"The main contenders are Mr Keith's submission that [I] should follow
Commercial Court practice and award 1% over base from time to time and Miss
Heilbron's submission that I should award a higher rate than that because it is
not just in this case. The plaintiffs have had to borrow and have had to pay
more than that rate of interest, because they have been out of pocket because
they've not had their damages. They haven't gone out and borrowed, they have
been left, as it were, with balances, overdrawn balances, particularly on the
business current account, on which the defendant has levied interest at its
base rate plus 6%, in the case of the business current account. Therefore,
that is the obvious rate to choose.
In the peculiar circumstances of these plaintiffs ... I am bound to say that
that is the submission that I prefer. We all know perfectly well, that
interest can't within the constraints placed upon the courts at the moment ever
be an exact mathematical calculation which will or should even be designed to
compensate the plaintiffs exactly for losses."
40. That last observation is, of course, correct. Further, it is desirable
that, save in exceptional circumstances, interest on damages should be awarded
on the basis of a conventional rate. That is largely because it is an
important aspect of litigation that the amount of a claimant's claim should, so
far as possible, be readily calculable in advance and according to well
established rules in order to encourage the settlement of disputes, whether by
agreement or, (following proceedings) by a payment into court which, in the
absence of indication to the contrary, will be treated as inclusive of all
interest until the last date on which it could be accepted without needing the
permission of the court: see CPR Part 36.22. Additionally, it will generally
be neither convenient nor appropriate for the court following trial and
judgment to proceed to a further `mini-trial' consisting of an inquiry into the
level and nature of the individual claimant's borrowings from the time of the
wrong complained of, the interest incurred upon those borrowings, and the
extent to which those borrowings are directly attributable to the defendant's
wrong. Such a process may well be necessary where interest has been pleaded as
part of a claim for special damage, but is generally unnecessary and
undesirable when the claim is made in the ordinary course following judgment.
In such circumstances the usual practice is to make a discretionary ruling
following brief argument from counsel.
41. As applied in commercial cases, the contractual rate is flexible to the
extent that it does not preclude affidavit evidence "as to the rate at which
persons with the general attributes of the plaintiff could have borrowed the
money" (see Shearson Lehman Hutton -v- Maclaine Watson & Co (No.2)
[1990] 3 All ER 723, 733, per Webster J, and Tate & Lyle Food and
Distribution -v- Greater London Council [1982] 1 WLR 149, 154, per Forbes
J. In such cases, it may well be that a higher award than the conventional 1%
over base rate made in the Commercial Court will be appropriate. Nonetheless,
the rate remains based upon broad considerations appropriate to plaintiffs of
the class concerned, rather than the particular borrowing arrangements of an
individual plaintiff who, while within that class, may, by reason of his
particular creditworthiness or his inability to "shop around" for alternative
arrangements, have sustained losses which render an award made on that basis
inadequate to compensate him for being kept out of his money.
42. Applying that approach, the judge's award of 6% over base rate could not be
justified in the sense that there was no general evidence before him as to the
borrowing rates available to small business men over the period so as to
justify the exceptional `uplift' adopted. The rate applicable to the
plaintiff's business account, without more, would not suffice for that purpose.
Further, the terms of the judgment as to interest totally fail to make clear
how the judge could have regarded the existence of an overdraft of no more than
£14,000 on the business current account as justifying an award at base
rate plus 6% on the full judgment sum of £78,879.
43. Since this court has re-assessed and reduced the damages to a level
properly payable in respect of one year's loss of business, it is appropriate
that it should exercise its own discretion in respect of the award of interest.
Having studied the evidence before the judge, it seems to me that he was led
into an exercise of discretion which depended upon an investigation of Samson's
overall financial position and personal borrowing arrangements, rather than
consideration of the rates of borrowing available to small businesses of
Samson's type. Such investigation (even if appropriate) was, in any event,
incomplete. The evidence explored only the operation of the accounts I have
mentioned, and did not extend to what other accounts may have been held
elsewhere, nor whether personal accounts in the names of the partners might
have provided funds available to pay off the overdraft on the business account.
There was some evidence of other borrowings by Samson from the Bank, notably
the term loan account debit balance, which the judge rightly excluded from his
consideration because it was financed by and for the benefit of the individual
partners and not the business of Economy Bag. The rate charged upon that
account was 4% above base. However, the judge was wrong thereby to assume (if
he did so assume) that the business loan account was appropriate evidence of
the rates of borrowing generally available to traders such as Samson to replace
the monies lost to it while awaiting the award of damages. Nor is any such
evidence available to us. However, bearing in mind the concession made before
the judge that, in all the circumstances of the case, it was an appropriate
case in which to award 2 or 3% over base overall, I would award interest upon
damages at the rate of 3% over base rate.
44. I would therefore dismiss the appeal and allow the cross appeal in the
manner and to the extent indicated in paragraphs 35 and 43 above.
Mr Justice Ferris: I agree with the judgment of Potter LJ and with the
manner in which he deals with each of the various issues which are raised in
this appeal
Lord Justice Nourse: I also agree
Order: Appeals dismissed and cross appeal allowed in the manner and to the
extent indicated in paragraphs 35 and 43 of Potter LJ's judgment; application
to adduce fresh evidence granted; orders made in the terms of draft minute of
order; leave to appeal to the House of Lords refused.
(Order does not form part of the approved judgment.) | 3 |
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. McLaughlin-Coward, 2021 ONCA
626
DATE: 20210917
DOCKET: C68324
Hoy, Trotter and Paciocco JJ.A.
BETWEEN
Her Majesty the Queen
Respondent
and
Allister McLaughlin-Coward
Appellant
Allister McLaughlin-Coward, acting in
person
Michael Crystal, appearing as duty
counsel
Avene Derwa, for the respondent
Heard: September 10, 2021 by
video conference
On appeal from the sentenced imposed on April
27, 2020 by Justice Iona M. Jaffe of the Ontario Court of Justice.
REASONS
FOR DECISION
[1]
The appellant was convicted of one count of
aggravated assault. He was sentenced to 6 years imprisonment, less 17 months
credit for time spent in pre-sentence custody (PSC), and another 4 months as
a result of the harsh conditions of confinement. He applies for leave to appeal
his sentence.
[2]
The appellant attacked his former partners
husband, the victim, with a knife. The appellant and his former partner had a
daughter together 14 years earlier. The appellant was frustrated about not
being able to see her. One afternoon, he showed up unannounced at the home of
his former partner and the victim, demanding to see his daughter. His former
partner told the appellant that he must follow the formal access procedures.
[3]
When the victim intervened, the appellant
threatened him. The conflict soon turned physical. The appellant was armed with
two knives. He stabbed the victim multiple times. The police arrived shortly
after and saw the appellant using a screwdriver to puncture the tire of the
familys vehicle. In the course of his arrest, the appellant yelled at the
victim, I hope it hurt.
[4]
The appellant gave an inculpatory statement to
the police at the scene in which he explained that he believed his daughter was
being exploited. He told the police that he did not intend to kill the victim,
but he knew that it could have happened. He said he wanted to hurt the victim.
[5]
The victim sustained serious injuries. The
sentencing judge noted:
He was stabbed twice in the stomach. One
stomach wound was one centimeter in length and the other was five centimeters.
The larger of those two stab wounds eviscerated the victims abdominal
contents. The victim also sustained five stab wounds in the back and one on the
left side of his neck. The victim required surgery and spent three days in
hospital.
[6]
The appellant entered a plea of guilty to the
offence.
[7]
At the time, he was 41 years old. He had prior
convictions for assault with a weapon in 2008, for which he received a
suspended sentence, and possession of a weapon in 2017, for which he received a
suspended sentence (after spending 75 days in PSC).
[8]
The Crown submitted that the appellant should
receive a sentence in the range of 5 to 6 years imprisonment, whereas counsel
for the appellant sought a sentence of 15 to 18 months.
[9]
The sentencing judge provided thorough reasons
for sentence. She identified general deterrence and denunciation as the primary
objectives in sentencing the appellant. In doing so, she relied on the victims
injuries, the fact that the appellant armed himself with two knives, the
appellants related criminal record, and that part of the scenario occurred in
front of his daughter. The sentencing judge characterized the attack as unprovoked
and vicious, which left the victim seriously injured.
[10]
On the other side of the equation, the
sentencing judge took into account the mitigating value of the appellants
guilty plea. She also considered the detailed information about his life
circumstances in the Pre-Sentence Report (PSR) and the challenges he has
faced over the years. At the time, the appellant denied any alcohol or
substance abuse. However, he was medicated for anxiety and depression.
[11]
In her reasons, the sentencing judge expressed
concern about the appellants insight into the gravity of the offence. In his
discussions with the author of the PSR, he seemed to suggest that his actions
were justified on some level (i.e., for the protection of his daughter). He
made similar comments to the sentencing judge when asked if he had anything to
say before his sentence was imposed.
[12]
On appeal, the appellant submits that the trial
judge misunderstood his attitude in court. He acknowledges that he showed
little emotion at the time. He explained that he was under stress as a result
of the conditions of his pre-sentence custody and that he was trying to be
strong for his daughter. The appellant says that he was remorseful then, as he
is now.
[13]
There is no indication that the sentencing judge
formed her impressions about the appellants lack of insight based on his
emotional presentation. Her observations were based on the appellants statements
to the author of the PSR, and his words prior to being sentenced. During the
hearing of the appeal, the appellant made similar statements, focusing on his
concern for his daughter, rather than the impact of his offence on the victim.
[14]
We see no error in the trial judges treatment
of this factor. It was a finding that was open to her to reach on the record.
She did not improperly treat the appellants lack of insight as an aggravating
factor; instead, she merely found that she was limited in her ability to give
effect to the appellants rehabilitative potential by virtue of his attitude
towards his conduct. In the circumstances, the trial judge was correct to focus
on general deterrence and denunciation. The sentence imposed properly reflects
the application of those principles to this case. It cannot be said that the
sentence is unfit.
[15]
In conclusion, we note that the author of the
PSR recommended that the appellant take rehabilitative and/or counselling
programs directed at: substance abuse, anger management, counseling through a
mental health professional, and additional counselling as directed. At the
appeal hearing, the appellant expressed a willingness to follow this
rehabilitative path and we encourage him to do so.
[16]
The application for leave to appeal sentence is
allowed, but the appeal is dismissed.
Alexandra
Hoy J.A.
Gary
Trotter J.A.
David
M. Paciocco J.A.
| 0 |
criminal appellate jurisdiction criminal appeal number 265 of
1968.
appeal by special leave from the judgment and order dated
july 19 1968 of the patna high companyrt in criminal appeal number
72 of 1966.
nur-ud-din ahmed and b. p. singh for the appellants. p. singh for the respondent. the judgment of the companyrt was delivered by
hegde nine persons including the two appellants were tried
for the murder of ghulam rasool as well as for attempting to m
urder p.w. 9 mohd. islam. four out of those nine
accused were acquitted by the trial companyrt. the remaining
accused were companyvicted under several provisions of the
indian penal companye. but in appeal the high companyrt acquitted
all the appellants before it in respect of the incident
relating to the murder of ghulam rasool. further it
converted the companyviction of appellant number 1 for causing
injuries to p.w. 9 from one under s. 307 read with s. 34
p.c. to one under s. 326 i.p.c. and for that offence sen-
tenced him to suffer rigorous imprisonment for seven years. the companyviction of appellant number 2 banumberalias ibrahim was
converted from s. 307 i.p.c. read with s. 34 i.p.c. to one
under s. 324 i.p.c. and for that offence he was sentenced
to suffer rigorous imprisonment for three years. as against
that decision this appeal has been brought by special leave. the prosecution case in brief is that there was a qawali
competition about a month prior tothe occurrence. p.w. 4
imteyaz was one of the companypetitors. in order to show that
his performance was excellent accused nizam made a show of
making a present of rs. 3 to him on that occasion. but on
the very next day he demanded back that amount. after some
persuasion imteyaz returned rs. 2 but he failed to return
the balance of rs. 1. this led to a friction between imteyaz
and his friends on one side and nizam and his friends on the
other. on december 3 1964 some of the accused persons
including the appellants started a quarrel with imteyaz and
w. 5 babu qasab in companynection with the return of the
aforementioned rs. 1. because of the intervention of p.w. 13 numberhing serious happened on that day. but it is said
that on the next evening at about 7 p.m. when .w. 5 babu
oasab and p.w. 6 shamsuddin came near the scene of
occurrence the accused persons stopped them and assaulted
them. companying to knumber of that incident from p.w. 1 naso
his father ghulam rasool went to the scene. there he was
severely attacked as a result of which he died. thereafter
w. 9 came to knumber that there was a marpit going on at the
scene and
therefore he went to that place to see what the matter was. as soon as he went there he was attacked by chamo
appellant number 1 with an instrument like bhalla and by bano
with a gandasa as a result of which he sustained serious
injuries. immediately p.w. 9 was shifted to the hospital
where his dying declaration was recorded on december 5
1964.
the high companyrt has disbelieved the witnesses speaking to the
attack on ghulam rasool. as mentioned earlier all the accu-
sed were acquitted of the charges relating to that incident. the high companyrt has also companye to the companyclusion that it is
number proved that there was any unlawful assembly. even in
the matter of attack on p.w. 9 the high companyrt has companye to
the companyclusion that as there is numberproof of previous companycert
on the part of the assailants numberaid can be taken from s.
34 i.p.c. companysequently it companyvicted the assailants of p.w. 9 only for the injuries caused by them. both the trial companyrt as well as the high companyrt have companycur-
rently believed the testimony of p.w. 9. his testimony is
fully companyroborated by the medical evidence adduced in the
case he had sustained two serious injuries one on the
stomach and the other on the shoulder blade. as a result of
the stomach injury his intestines had companye out. the
evidence of p.w. 10 dr. ambika prasad who examined p.w. 9
corroborates his testimony. further companyroboration for the
testimony of p.w. 9 is available from the dying declaration
given by him in the hospital on the 5th of december 1964.
this companyrt ordinarily does number reappreciate the evidence un-
less it is satisfied that exceptional and special
circumstances exist for doing so. the companyrt must be
satisfied that as a result of serious misappreciation of the
evidence by the trial companyrt and the high companyrt substantial
and grave injustice has been done. it was held by this
court in hem rai v. the state of ajmer 1 that unless it is
shown that exceptional and special circumstances exist that
substantial and grave injustice has been done and the case
in question presents features of sufficient gravity to
warrant a review of the decision appealed against this
court does number exercise its over-riding powers under art. 136 1 of the companystitution. it is further held therein that
the circumstance that the appeal has been admitted by
special leave does number entitle the appellant to open out the
whole case and companytest all the findings of fact and raise
every point which companyld be raised in the high companyrt. even
at the final hearing only those points can be urged which
are fit to be urged at the preliminary stage when the leave
to appeal is asked for. 1 1954 s.c. r. 1133.
it is fully established that p.w 9 was injured at about the
time and the place mentioned in the-charge. the incident
had taken place when there was still day light. the
appellants were well knumbern to the injured. hence he had no
difficulty in identifying them. it is number shown that p.w. 9
had any motive to falsely implicate the appellants. he bad
mentioned the names of the appellants as his assailants at
the earliest possible opportunity. the version given by him
as regards the manner of attack on him is companyroborated by
medical evidence. it is true that the high companyrt has number
accepted the evidence of p.ws. 1 and 2 who sought to
corroborate the testimony of p.w. 9. that cannumber throw any
doubt on the testimony of p.w. 9. the probabilities of the
case are in favour of the version given by p.w. 9.
the only thing urged against the evidence of p.w. 9 is that
in his dying declaration he had said that a-1 had attacked
him with a bhalla but during his evidence in companyrt he
stated that he was attacked by an instrument resembling
bhalla. later on it was proved through him that he was
attacked by the instrument exh. 1 which is a kafgir. this
contradiction is of very minumber significance. anumberher
contradiction brought out at the time of his cross-
examination was that during his evidence he had merely
spoken to the attack on him by the appellants but in his
dying declaration in addition to saying that these
appellants had attacked him he had also stated that after
he fell down some of the other accused had attacked him with
sticks. this statement appears to be an exaggeration. but
under the circumstances of the case that embellishment is
number sufficient to detract from the value to be attached to
his testimony. as mentioned earlier both the trial companyrt as
well as the high companyrt have accepted his testimony as being
substantially true. we see numberreason to differ from that
conclusion. | 7 |
14th September 2001
LORD JUSTICE CHADWICK: These proceedings, (1999 A 135), were commenced in the Queen's Bench Division by the issue of a writ on 15th February 1999. The claimant, Mr Anthony Alexander, claimed against the defendant, Halifax plc, damages to be assessed in respect of what was alleged to be the breach of a right conferred on him by Article 25 of the Universal Declaration of Human Rights.
The operative paragraphs of the Statement of Claim endorsed on the writ are in these terms:
"1) Pursuant to Article 25 of the Universal Declaration of Human Rights (1948) it is provided that everyone has a right to a standard of living adequate for the health and well-being of himself and his family, and, the right to security in the event of unemployment, sickness, disability, widowhood, old age, or, any other lack of livelihood, in circumstances beyond his/her/their control.
2) By virtue by their constant harassment, the Defendants have, in breach of the said Article, upheld by Treaty, and buttressed by Ratification, to which the United Kingdom of Great Britain and Northern Ireland subscribe, continue preventing the Plaintiff from earning a livelihood, to enable him to obtain a reasonable standard of living for himself and his Partner, Miss Moira Costello, by, compelling him to spend the whom of his time in engaging in heavy and complex litigation in the County Court, in the High Court, and, in the Court of Appeal."
There follow two paragraphs under the heading "Particulars". The first of those paragraphs is itself divided into nine subparagraphs. The first of those subparagraphs - subparagraph (a) - contains the allegation that:
"Between 12th November 1990 and 23rd January 1998, the Defendants, maliciously and without good cause commenced proceedings for possession of the Plaintiff's home at Firth Cottage, Firth Gardens, in the London Borough of Hammersmith and Fulham, in the West London County Court, as follows."
There are then set out 13 dates, running from 12th November 1990 to 9th July 1998, on which, as it appears, summonses were issued in one or other of three actions. The reference numbers of those actions ( as they appear in the particulars) are WL9016511, WL931684O, and WL860182, indicating from the prefix WL that each was indeed commenced in the West London County Court. The remaining eight subparagraphs of paragraph (1)- that is to say paragraphs (b) to (j)- contain particulars of other litigation in which Mr Alexander has been involved.
Paragraph (2) of the particulars is in these terms:
"In fact in all of these proceedings there was considerable complexity of law and facts, lengthy pleadings and full discovery of documents, and there was duplication in the High Court and the County Court of work relating to two actions in respect of which, as the Court of Appeal have acknowledged, the issues of fact and law were entirely identical. In spite of the Plaintiff's legal training as an advocate pro bono the amount of work involved was such as to completely prevent the Plaintiff from carrying on his normal occupations as a professional writer and distributor of musical electronic software worldwide. He and his partner have suffered, and continue to suffer, from a considerable deterioration in their health brought on by anxiety over work and an unacceptable level of stress all as a result of the inappropriate actions and harassment on the part of the Defendants."
Halifax plc applied to strike out that Statement of Claim and to have the action dismissed on the ground that the claim disclosed no reasonable cause of action and/or was scandalous, frivolous or vexatious, and/or otherwise an abuse of the process of the court. That application came before Master Trench on 20th April 1999. Mr Alexander appeared in person. The Master made the order sought and he awarded costs against Mr Alexander. He assessed the costs of the application at £1,292, ( to include VAT) and directed that the costs of the action be taxed if not agreed.
Mr Alexander appealed to the judge. The appeal came before Ebsworth J on 10th June 1999. She dismissed the appeal with costs assessed at £1,000. She refused leave to appeal to this Court. In the judgment which she gave on 10th June 1999 she held that there was no basis upon which it could be argued that Article 25 of the Universal Declaration of Human Rights conferred a right on an individual which he could enforce in a private law action in our courts. In reaching that conclusion she was applying well settled principles, conveniently expressed at paragraph 1626 of Volume 18 of Halsbury's Laws of England ( 4th edition) to which she referred.
She went on to say this at page 5 from line 16 of her judgment:
"I would have come to the same conclusion as to the fate of the appeal on the merits in any event, because one only has to look at what is actually being said, which is that the defendants Halifax Plc have deprived the claimant of his rights under Article 25 by constant harassment by way of litigation, compelling him, as it is put, to spend the whole of his time engaging in heavy and complex litigation in the County Court.
It is right that there has been a series of actions brought against Mr Alexander, and indeed there have been some brought by Mr Alexander.
So far as the Halifax is concerned, there is an action, WL9316840, between the Halifax Building Society and Anthony Alexander; there was an action, WL806182, between the Halifax and Mr Alexander; there is an action brought by Mr Alexander, WL703260. There are, additionally, two actions brought by the Bank of Cyprus against Mr Alexander. Those actions have involved a significantly great number of hearings before District Judges, Circuit Judges and the Court of Appeal and, in five cases of consolidated actions, three of which involve Halifax, there have been attempts by Mr Alexander to persuade the Court of Appeal both to give him leave to appeal and to give him leave to appeal to the House of Lords; he has sought to petition the House of Lords.
I have to say that in a situation where Mr Alexander has regularly lost on the merits before various judges at various levels and where the present situation is that there is a series of judgments against him in the Court of Appeal which have been, for convenience, consolidated and where leave to appeal has been refused, even in circumstances where an appeal would have lain to the House of Lords, it cannot reasonably or rationally be said that it is, in this case, the Halifax who have compelled Mr Alexander to spend the whole of his time in litigation. So I would have come to the conclusion in any event that this was an action which showed no reasonable cause of action on its merits. The appeal will therefore be dismissed."
Mr Alexander did not seek to appeal against Ebsworth J's order of 10th June 1999 within the time limited by the rules for that purpose. His application for permission to appeal and his proforma notice of appeal were lodged on 27th February 2000, that is to say some eight months after the order against which he seeks permission to appeal.
In the meantime two events had occurred. First, section 55 of the Administration of Justice Act had come into force on 27th September 1999: see section 108(3) of that Act. Second, Mr Alexander had been adjudicated bankrupt. The bankruptcy order was made on 24th February 2000. The effect of the bankruptcy order was that, prima facie at least, whatever cause of action Mr Alexander might have had against the Halifax in these proceedings had vested in the official receiver, as his trustee in bankrupt: see sections 283 and 306 of the Insolvency Act 1986. That is the view that is taken by the official receiver. Mr Alexander takes a different view. He disputes the bankruptcy order itself, but in any event he contends that the cause of action remains vested in him, this being a cause of action which, as I understand him to say, is not caught by the statutory provisions.
Section 55 (1) of the Administration of Justice Act 1999 is in these terms:
"Where an appeal is made to a county court or the High Court in relation to any matter, and on hearing the appeal the court makes a decision in relation to that matter, no appeal may be made to the Court of Appeal from that decision unless the Court of Appeal considers that:
(a) the appeal would raise an important point of principle or practice; or
(b) there is some other compelling reason for the Court of Appeal to hear it."
This is a case to which that section applies. There has been an appeal to the High Court, and on the hearing of that appeal the High Court made an order in relation to it. So permission to appeal to this court cannot be given unless this court considers that the appeal would raise some important point of principle or practice, or that there is some other compelling reason for the Court of Appeal to hear it.
It was in those circumstances that, in May 2001, I directed that, rather than list Mr Alexander's application for permission to appeal for a hearing of the preliminary question whether the cause of action was vested in him or in the trustee in bankruptcy, the convenient course was to list the matter for hearing on notice to both him and the trustee, to show cause why the application should not be dismissed or struck out on the basis that the conditions in section 55(1) were not satisfied. That direction was conveyed to Mr Alexander and to the trustee by a letter of 24th May 2001. It is pursuant to that direction that this matter has been listed today.
In those circumstances we are not concerned with the question in whom does the cause of action vest. We are concerned only with the question whether an appeal against the order of 10 June 1999 could satisfy the requirements of section 55(1) of the Access to Justice Act 1999. If the appeal could not satisfy those requirements, then this application should be dismissed at this stage; because, no matter in whom the cause of action is now vested, there is no prospect that the application could proceed. The question, therefore, is whether there is any important point of principle or practice, or any other compelling reason for the Court of Appeal to entertain an appeal against the order made by Ebsworth J on 10th June 1999.
For my part, I am quite satisfied that neither paragraphs (a) or (b) of section 55(1) of the 1999 Act can be satisfied in this case. The question whether or not Article 25 of the Universal Declaration of Human Rights confers an individual right at private law has long been regarded as settled. The passage in Halsbury's Laws, to which Ebsworth J referred, the law sets out on the point. I can see no reason why this Court should regard it as sensible to entertain an appeal on that issue.
Further, even if that question were debateable, on the facts of this case, as Ebsworth J explained, there is no prospect that the Court of Appeal would take the view that the litigation in which Mr Alexander has been engaged over the past ten years or so was brought about by any infringement by the Halifax of any right which he might have under Article 25. The litigation, the history of which has been examined by this Court on a number of occasions, is litigation generated by Mr Alexander's conviction that he has been wronged. The courts have sought to dispel that conviction on a number of occasions; but without any apparent success. Mr Alexander's pursuit of his cause arises from his own misplaced conviction and not from anything for which the Halifax can be regarded as responsible.
For those reasons, I would hold that no cause has been shown why this application for permission to appeal should not be dismissed (1) I would dismiss the application.
LORD JUSTICE LAWS: I entirely agree.
(Discussion re the making of a Grepe v Loam order)
LORD JUSTICE CHADWICK: I have referred, in the judgment which I have just given, to the history of litigation between Mr Alexander and the Halifax plc as set out by Ebsworth J in her judgment of 10th June 1999. That litigation has come before this court on, I think, at least five occasions in the last few years, including most recently an occasion in May of 2001, before Schiemann LJ and Judge LJ and myself. The history of the matter is fully set out in the judgments which this court has given on the occasions when the litigation has been before it.
The present attempt to appeal in the action which is now before us is a further example of Mr Alexander's refusal to accept that there must be finality in this litigation. In those circumstances, we have taken the view that this is a case in which a Grepe v Loam order should now be made so as to provide a safeguard against further applications in this matter. Accordingly, we make an order that the claimant, Mr Alexander, shall not make any further applications, or take any steps, in this court, or in any court below, arising out of the proceedings between himself and Halifax plc, which have been referred to in the claim in this action, or in relation to the property the subject of those proceedings without first obtaining the prior permission of this court. If the claimant wishes to apply for that permission, then the application is to be made in writing without notice to the other party and is to be dealt with by a single Lord Justice on paper. If any application notice, or other form of document within the scope of this order, is served on or given to any other person without prior permission of this court, then that person shall not be required to appear and the application will stand dismissed without having been heard.
We are also proposing to refer the papers now before us to the Attorney General so that he can consider whether or not the time has come for him to make application for a restraint order under section 42 of the Supreme Court Act 1981. We are minded to do that because the history of Mr Alexander's litigation suggests that there is a real danger that Grepe v Loam orders will not provide a sufficient protection against the abuse of the process of the court. The time of the court and its resources are limited and should be employed in dealing with matters which raise real issues requiring adjudication, not with fanciful issues and hopeless points. We will refer the papers to the Attorney General for the reasons that I have indicated.
ORDER: Application dismissed. No order as to costs. Grepe v Loam order made. Papers in the case to be referred to the Attorney General. | 7 |
FIFTH SECTION
CASE OF Tamara Vasilyevna Len and
Grigoriy Kuzmich Len v. UKRAINE
(Application no. 852/05)
JUDGMENT
STRASBOURG
10 December 2009
FINAL
10/03/2010
This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision.
In the case of Tamara Vasilyevna Len and Grigoriy Kuzmich Len v. Ukraine,
The European Court of Human Rights (Fifth Section), sitting as a Chamber composed of:
Peer Lorenzen, President,Renate Jaeger,Karel Jungwiert,Mark Villiger,Isabelle Berro-Lefèvre,Mirjana Lazarova Trajkovska, judges,Mykhaylo Buromenskiy, ad hoc judge,and Claudia Westerdiek, Section Registrar.
Having deliberated in private on 17 November 2009,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 852/05) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by two Ukrainian nationals, Ms Tamara Vasilyevna Len and Mr Grigoriy Kuzmich Len (“the applicants”), on 9 December 2004.
2. The Ukrainian Government (“the Government”) were represented by their Agent, Mr Y. Zaytsev.
3. On 16 December 2008 the Court declared the application partly inadmissible and decided to communicate to the Government the complaints under Article 6 § 1 and Article 13 of the Convention and Article 1 of Protocol No. 1 concerning the lengthy non-enforcement of decisions given in the applicants' favour. It also decided to examine the merits of the application at the same time as its admissibility (Article 29 § 3). The case was given priority under Rule 41 of the Rules of the Court.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
4. The applicants were born in 1945 and 1937 respectively and live in Slovyansk, Donetsk region, Ukraine.
5. At the material time the applicants worked at the Soda State Plant (ВАТ «Содовий завод»).
6. On 31 October 1997 and 14 May 2003 the Slovyansk Town Court awarded Mrs Len 1,709.25 and 5,513.92 Ukrainian hryvnias (UAH)[1] in salary arrears and other payments, to be paid by the above-mentioned company.
7. On 3 November 1997 and 22 February 2001 the Slovyansk Town Court, and on 22 September 2003 the Labour Disputes Commission, awarded Mr Len the amounts of UAH 2,211.18 (about USD 1,176.47), UAH 9,157.04 (about EUR 1,855.94) and UAH 2,356.92 (about EUR 399.22) in salary arrears, to be paid by the above-mentioned company.
8. These decisions became final and the State Bailiffs' Service instituted proceedings to enforce them.
9. On 3 January 2001 the Donetsk Arbitration Court (after June 2001 – the Donetsk Commercial Court) instituted insolvency proceedings against the debtor company. On 4 September 2003 the court, having declared the debtor insolvent, ordered its liquidation, which is still pending.
10. The decisions given in the applicants' favour have still not been enforced.
II. RELEVANT DOMESTIC LAW
11. The relevant domestic law is summarised in the judgment of Romashov v. Ukraine (no. 67534/01, §§ 16-19, 27 July 2004).
THE LAW
I. LENGTHY NON-ENFORCEMENT OF THE DECISIONS IN THE APPLICANTS' FAVOUR
12. The applicants complained that by failing to enforce the decisions given in their favour the respondent State had violated Article 6 § 1 of the Convention and Article 1 of Protocol No. 1, which read, in so far as relevant, as follows:
Article 6 § 1
“In the determination of his civil rights and obligations ... everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. ...”
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 ....”
They also complained that they had no effective remedy for their complaints, in breach of Article 13 of the Convention, which 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.”
A. Admissibility
13. The Government submitted that the applicants had failed to exhaust domestic remedies as required by Article 35 § 1 of the Convention. In particular, they maintained that the applicants had not availed themselves of the opportunity to be registered as creditors in the insolvency and liquidation proceedings against the debtor company, and had failed to apply to any domestic court to challenge the allegedly inadequate enforcement by the Bailiffs' Service of the decisions in their favour.
14. The applicants disagreed.
15. The Court notes that similar objections have already been rejected in a number of judgments adopted by the Court (see Sokur v. Ukraine (dec.), no. 29439/02, 16 December 2003; Sychev v. Ukraine, no. 4773/02, §§ 42‑46, 11 October 2005; and Trykhlib v. Ukraine, no. 58312/00, §§ 38-43, 20 September 2005). The Court considers that the objections in the instant case must be rejected for the same reasons.
16. The Court notes that the complaints are not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that they are not inadmissible on any other grounds. They must therefore be declared admissible.
B. Merits
17. The Government contended that there had been no violation of Article 6 § 1 or Article 13 of the Convention, or of Article 1 of Protocol No. 1.
18. The applicants disagreed.
19. The Court notes that the decisions in the applicants' favour have remained unenforced for at least six years
20. The Court reiterates that it has already found violations of Article 6 § 1 and Article 13 of the Convention and Article 1 of Protocol No. 1 in similar cases (see, among other authorities, Sokur v. Ukraine, no. 29439/02, §§ 30-37, 26 April 2005; Shmalko v. Ukraine, no. 60750/00, §§ 55-57, 20 July 2004; and Voytenko v. Ukraine, no. 18966/02, §§ 43, 48 and 55, 29 June 2004).
21. Having examined all the material in its possession, 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.
22. There has, accordingly, been a violation of Article 6 § 1 and Article 13 of the Convention and a violation of Article 1 of Protocol No. 1 in respect of the lengthy non-enforcement of the decisions in the applicants' favour in the present application.
II. APPLICATION OF ARTICLE 41 OF THE CONVENTION
23. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
A. Damage
24. The applicants claimed, in respect of pecuniary damage, the amounts awarded in the decisions given in their favour. They also claimed compensation for inflation losses and loss of profits (Ms Len claimed USD 3,335.72 and EUR 1,299.38; Mr Len claimed USD 4,733.48 and EUR 3,490.51). In support of their claim for inflation losses, the applicants presented calculations based on the average consumer prices inflation index. Additionally, they claimed USD 43,200 and USD 33,600, respectively, in accrued salary arrears allegedly owed to them under domestic law provisions because of their employer's failure to pay them their salary in due time. Lastly, the applicants claimed the same amounts in respect of non-pecuniary damage.
25. The Government submitted that they did not question the necessity to enforce the decisions in the applicants' favour. However, they contested the rest of the claims as excessive and unsubstantiated.
26. In so far as the applicants claimed the amount awarded to them by the decisions concerned, the Court considers that it is undisputed that the State still has an outstanding obligation to enforce these decisions (see paragraphs 6 and 7 above).
27. As to the claim for inflation losses, the Court notes that the Government merely disagreed with the method of calculation; they did not deny that the applicants had suffered inflation losses, nor did they provide an alternative calculation of the losses involved. The Court further notes that the applicants, in calculating their claims for inflation adjustment, applied the official rates, which are designed for Ukrainian hryvnias, to the awarded sums after conversion into euros and US dollars rather than to the principal sums in Ukrainian hryvnias. The Court cannot, therefore, accept these calculations. Taking into account the amounts awarded to the applicants, the periods within which the respondent State failed to enforce the decisions in the applicants' favour, and the above-mentioned average consumer prices inflation index for the relevant period, the Court calculates the inflation losses at EUR 900 and EUR 1,800, which the Court awards respectively to the applicants. It dismisses the remainder of the claim in respect of pecuniary damage as ill-founded.
28. The Court also awards the applicants, on an equitable basis, EUR 2,600 each in respect of non-pecuniary damage.
B. Costs and expenses
29. The applicants also claimed an unspecified amount for costs and expenses incurred before the Court. In support they provided postal vouchers to a total amount of UAH 230.45 (about EUR 20.55).
30. The Government contested this claim as unsubstantiated.
31. According to the Court's case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and were reasonable as to quantum. In the present case, regard being had to the information in its possession and the above criteria, the Court considers it reasonable to award the sum of EUR 20.55 under this head.
C. Default interest
32. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
1. Declares the complaints under Articles 6 § 1 and 13 of the Convention and Article 1 of Protocol No. 1 to the Convention in respect of the lengthy non-enforcement of the decisions in the applicants' favour admissible;
2. Holds that there has been a violation of Article 6 § 1 of the Convention;
3. Holds that there has been a violation of Article 13 of the Convention;
4. Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention;
5. Holds
(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 outstanding debts under the decisions given in the applicants' favour;
(b) that the respondent State is to pay the applicants, within three months from the date on which the judgment becomes final according to Article 44 § 2 of the Convention, the following amounts, to be converted into the national currency of the respondent State at the rate applicable at the date of settlement:
(i) EUR 900 (nine hundred euros) to Ms Len and EUR 1,800 (one thousand eight hundred euros) to Mr Len in respect of pecuniary damage;
(ii) EUR 2,600 (two thousand six hundred euros) each, plus any tax that may be chargeable, in respect of non-pecuniary damage; and
(iii) EUR 20.55 (twenty euros fifty-five cents), plus any tax that may be chargeable, in respect of costs and expenses;
(c) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
6. Dismisses the remainder of the applicants' claim for just satisfaction.
Done in English, and notified in writing on 10 December 2009, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Claudia WesterdiekPeer LorenzenRegistrarPresident
[1] About 909.66 US dollars (USD) and 923.70 euros (EUR) respectively at the material time.
| 0 |
ADARSH KUMAR GOEL, J. Leave granted. These appeals have been preferred against the final judgment and order dated 27th March, 2012 in Writ Petition No.2331 of 2010 and order dated 10th October, 2012 in Review Petition No.212 of 2012 of the High Court of Orissa at Cuttack. The question raised for our companysideration is whether the appointment of the appellant to the post of Professor in the Indian Institute of Tourism and Travel Management IITTM , an autonomous body under the Ministry of Tourism, Government of India from 27th January, 1997 companyld be treated to be on regular basis and Page 1 Civil Appeal Nos. of 2014 SLP C Nos.1645-1646 of 2013 whether his appointment to the post of Director in the same Institute with effect from 8th June, 2006, on companytractual basis, had the effect of relinquishing his lien to the post of Professor, in absence of his resignation and in absence of filling up of the said post of Professor. We have heard learned companynsel for the parties. The IITTM issued an advertisement dated 25th October, 1996 inviting applications for various posts, including the post of Professor in Business Studies. The appellant applied and was duly selected for the post on the basis of interview and appointment letter dated 4th January, 1997 was issued to him. He joined service on 27th January, 1997. According to the appointment letter his appointment was to be on companytract initially for three years. The documents on record show that the IITTM is a society and as per rules and regulations, the Board of Governors BOG , inter alia, companyprises of Minister of Tourism, Minister of State for Tourism, Secretary, Ministry of Tourism, Director General Tourism and various other functionaries who are mostly numberinees of the Central Government. Appointments in the IITTM were initially made on companytractual basis for the technical reason in absence of Page 2 Civil Appeal Nos. of 2014 SLP C Nos.1645-1646 of 2013 formal sanction of posts which issue was pending with the Ministry. Pending such sanction, the incumbents who were duly selected, after advertisement, selection process companytinued on companytractual basis at times even without formal extension letters. In pursuance of directions of the Ministry of Tourism, Staff Inspection Unit SIU of the Department of Expenditure, Ministry of Finance, companyducted assessment of manpower requirement of the IITTM in the year 2001 and submitted its report in the year 2002 recommending regularization of 68 posts which included the post of Professor held by the appellant. Finally, it was on 31 st October, 2006 that the Central Government took a decision to regularize the services of the said 68 incumbents. The decision of the Central Government was ratified by the BOG in its 31 st Meeting held on 4th December, 2006. As already mentioned, the recommendations of SIU were made earlier and were duly approved by the BOG in its meeting held on 18 th September, 2002. Accordingly, a formal letter dated 15 th January, 2007 was issued to the effect that services of the appellant were regularized in the post of Professor in IITTM with effect from the date of initial joining that is 27 th January, 1997. In the Page 3 Civil Appeal Nos. of 2014 SLP C Nos.1645-1646 of 2013 meanwhile, advertisement dated 25th March, 2006 was issued by the IITTM for recruitment to the post of Director on companytract basis for three years with possibility of extension by two years. Persons holding posts on regular basis in prescribed pay scale having three years of service were also eligible. The candidates in service were to submit their applications through their employers. Minimum 18 years of experience in a recognized educational institution with at least three years of administrative experience was also required. The appellant applied to the said post and was selected and appointed vide letter dated 8th June, 2006. On expiry of period of three years, his appointment was further extended till he handed over the charge on 31st December, 2009. Thereafter he claimed to companytinue as Professor. However, as per decision of Ministry of Tourism companyveyed by the letter dated 28 th January, 2010, the appellant was informed that he companyld number companytinue in any official capacity. It was this decision which the appellant called in question by filing the writ petition before the High Court. Contention raised on behalf of the appellant is that though formal order of regularization was companyveyed by the Page 4 Civil Appeal Nos. of 2014 SLP C Nos.1645-1646 of 2013 Ministry on 31st October, 2006 and the same was ratified by the BOG on 4th December, 2006, the same was in respect of persons already appointed after due selection and who had already been assessed and recommended for regularization by the SIU in the year 2002. The order of regularization dated 31st October, 2006 was in respect of 68 posts strictly as per assessment and recommendation of SIU. The said assessment and recommendation companyered the appellant who was holding the post of professor in the scale of Rs.16400- Rs.22400. The appellant had joined the post of Director in the Institute on 8th June, 2006 after serving the Institute as Professor from 27th January, 1997 and he had already been assessed and recommended for regularization. Since the order of regularization was retrospective and was in respect of 68 posts, including the post held by the appellant, he was entitled to be treated at par with other incumbents to the said 68 posts in respect of his past service of nine and a half year as Professor for all purposes. His joining another higher post in the same Institute companyld number be read as excluding him from the benefit of regular appointment merely because few months before Page 5 Civil Appeal Nos. of 2014 SLP C Nos.1645-1646 of 2013 issuance of formal order, he had joined higher post. Once it is assumed that the appellant stood regularized as Professor, as indeed is the effect of documents referred to above w.e.f. 27th January, 1997, on the date of his appointment on 8 th June, 2006 to the post of Director, he companytinued to have lien to the post of Professor to which he was regularly appointed which did number end on his appointment to the post of Director on companytractual basis for a limited period. The stand of the appellant was companytested by the IITTM by filing a companynter affidavit before the High Court. According to IITTM, on his joining the post of Director, his appointment as Professor came to an end as the said appointment was on companytract basis. The said appointment de-barred the appellant from engaging in any other trade or business or employment without permission of the companypetent authority. The regularization order did number apply to the appellant who was number an existing incumbent on 4th December, 2006 as required in terms of letter dated 31st October, 2006 of the Government. Letter dated 15th January, 2007 issued on that basis was by the appellant himself as a Director which had to be ignored. Page 6 Civil Appeal Nos. of 2014 SLP C Nos.1645-1646 of 2013 We have duly companysidered the rival submissions. As already mentioned, the question for companysideration is whether the appellant is deemed to have been regularized from 27th January, 1997 or is deemed to be working on companytractual basis on the date of his appointment as Director on 8th June, 2006. The stand of the IITTM is that since the appellant was number an existing incumbent on the date of issuance of letter dated 31st October, 2006, companyveying the sanction of posts from the date of initial appointment, the decision of the Government to regularize the incumbents to 68 posts referred to in the recommendation of the SIU did number companyer the appellant. This plea has been accepted by the High Court. We have companysidered the companyrectness of the said view. The terms of letter dated 31st October, 2006 being crucial, it may be appropriate to reproduce the operative part of the same Sub - Implementation of the recommendation of the staff Inspection Unit, made in 2002. Sir, I am directed to refer to the companyrespondence on the subject and to companyvey the Ministrys sanction to regularization of 68 sixty eight posts strictly as per assessment and recommendation of Staff Inspection Unit, Department of Expenditure, Ministry of Page 7 Civil Appeal Nos. of 2014 SLP C Nos.1645-1646 of 2013 Finance. The IITTM will ensure that post regularized are the ones recommended by the SIU. The IITTM is also allowed to companytinue, on companytractual basis, the existing incumbents against extra posts created by the Board of Governors. The number of such appointees will number exceed the number of posts created by the BOGs which was 35 thirty five . Further, numbernew companytract appointment will be made till further order. It has also been decided to request the Staff Inspection Unit to companyduct another study of the IITTM. The study will also companyer the proposed centre of the IITTM at Delhi Noida. The above is issued with the approval of Secretary T , Ministry of Tourism. According to learned companynsel for the appellant, the subject and para 1 of the letter clearly refer to the recommendation made in the year 2002 by the SIU after due assessment and the said recommendation was accepted. Second para of the letter which used the expression existing incumbents, was applicable to those appointed against extra posts created by the BOG, i.e. 35 posts in addition to 68 posts which were directed to be regularized. Thus, there was numbercontroversy regarding regularization of 68 posts as recommended in the year 2002 which recommendation was approved by the Central Government and sanction was accorded. Page 8 Civil Appeal Nos. of 2014 SLP C Nos.1645-1646 of 2013 We find merit in this submission. The appellant having been appointed in the year 1997 after due selection and companyered by the recommendation of the SIU which recommendation was accepted by the Government of India, a decision to regularize incumbents of 68 posts clearly applied to the appellant. No doubt, the appellant had taken over as Director in the Institute but on that ground it will be unjust to deny him the benefit of the said regularization. As already numbered, the expression existing incumbents was number applicable to 68 posts. In this view of the matter, the view taken by the High Court cannot be sustained. The appellant had to be taken as having been regularized on the post of Professor with effect from 27th January, 1997. Next question is whether the appellant was entitled to lien and had a right to join the post of Professor after his tenure as Director came to an end. Learned companynsel for the IITTM relied upon decision of this Court in S. Narayana vs. Mohd. Ahmedulla Khan1 to the 1 2006 10 SCC 84 Page 9 Civil Appeal Nos. of 2014 SLP C Nos.1645-1646 of 2013 effect that question of lien arises only when a person is substantively appointed to a post and duly companyfirmed. Distinction was also drawn between expression companyfirmed and expression regularized. It was submitted that even if the appellant was regularized but he was number companyfirmed and, therefore there companyld be numberquestion of lien. In response, learned companynsel for the appellant pointed out that number only the observation in the judgment relied upon are to be read in the companytext of the case decided and the facts in the said case, the matter was number governed by amended Fundamental Rules FRs . Vide numberification dated 9 February, 1998, Rule 9 13 of the FRs stood amended to substitute the expression substantively by regular basis. The Rule prior to and subsequent to the amendment is as follows PRIOR TO AMENDMENT AFTER AMENDM Lien means the title of a government servant to hold Lien means th substantively, either immediately or on the termination of a period of a Gover or periods of absence, a permanent post, including a tenure post, to servant to ho which he has been appointed substantively regular basis immediately or termination of or periods of ab a post, includ tenure post, to Page 10 Civil Appeal Nos. of 2014 SLP C Nos.1645-1646 of 2013 he has appointed on r basis and on wh is number on probat We are of the view that the judgment relied upon on behalf of the IITTM is distinguishable. In the present case, the expression regularization does number refer to any irregular appointments which are sought to be regularized in violation of the Rules. It was the case of regularization on account of subsequent retrospective sanction, proposal for which was already pending. Initial appointment was number irregular or against Rules. The decision for sanctioning regular posts was taken later but with retrospective effect from date of joining and has been duly applied to the posts incumbents in respect of whom proposal was pending. In State of M.P. vs. Sandhya Tomarth, this Court observed Lien companynotes the civil right of a government servant to hold the post to which he is appointed substantively. The necessary companyollary to the aforesaid right is that such appointment must be in accordance with law. A person can be said to have acquired lien as regards a particular post only when his appointment has been companyfirmed, and when he has been made permanent to the said post. The word lien is a generic term and, th 2013 11 SCC 357 Page 11 Civil Appeal Nos. of 2014 SLP C Nos.1645-1646 of 2013 standing alone, it includes lien acquired by way of companytract, or by operation of law. Whether a person has lien, depends upon whether he has been appointed in accordance with law, in substantive capacity and whether he has been made permanent or has been companyfirmed to the said post. Vide Parshotam Lal Dhingra v. Union of India AIR 1958 SC 36, Pratap Singh v. State of Punjab AIR 1964 SC 72, T.R. Sharma v. Prithvi Singh 1976 1 SCC 226, Ramlal Khurana v. State of Punjab 1989 4 SCC 99, Triveni Shankar Saxena v. State of U.P. 1992 Supp. 1 SCC 524, S.K. Kacker v. All India Institute of Medical Sciences 1996 10 SCC 734, S. Narayana v. Mohd. Ahmedulla Kha 2006 10 SCC 84 and State of Rajasthan v. S.N. Tiwari 2009 4 SCC 700 Similarly, in State of Rajasthan vs. S.N. Tiwari2, it was observed It is very well settled that when a person with a lien against the post is appointed substantively to another post, only then he acquires a lien against the latter post. Then and then alone the lien against the previous post disappears. Lien companynotes the right of a civil servant to hold the post substantively to which he is appointed. The lien of a government employee over the previous post ends if he is appointed to another permanent post on permanent basis. In such a case the lien of the employee shifts to the new permanent post. It may number require a formal termination of lien over the previous permanent post. This Court in Ramlal Khurana v. State of Punjab 1989 4 SCC 99 observed that SCC p. 102, para 8 2 2009 4 SCC 700 Page 12 Civil Appeal Nos. of 2014 SLP C Nos.1645-1646 of 2013 Lien is number a word of art. It just companynotes the right of a civil servant to hold the post substantively to which he is appointed. In Arun Kumar Agrawal vs. Union of India and others3, it was observed It is a settled proposition of law that a deputationist would hold the lien in the parent department till he is absorbed in any post. The position of law is quite clearly stated by this Court in State of Rajasthan v. S.N. Tiwari 2009 4 SCC 700 2009 1 SCC LS 934 SCC p. 704, paras 18 19 This Court in Ramlal Khurana v. State of Punjab 1989 4 SCC 99 1989 SCC LS 644 1989 11 ATC 841 observed that SCC p. 102, para 8 Lien is number a word of art. It just companynotes the right of a civil servant to hold the post substantively to which he is appointed. The term lien companyes from the Latin term ligament meaning binding. The meaning of lien in service law is different from other meanings in the companytext of companytract, companymon law, equity, etc. The lien of a government employee in service law is the right of the government employee to hold a permanent post substantively to which he has been permanently appointed. Similarly, in Triveni Shankar Saxena v. State of U.P. 1992 Supp 1 SCC 524 1992 SCC LS 440 1992 19 ATC 931 it has been held as under SCC p. 531, para 24 3 2014 2 SCC 609 Page 13 Civil Appeal Nos. of 2014 SLP C Nos.1645-1646 of 2013 A learned Single Judge of the Allahabad High Court in M.P. Tewari Union of India 1974 All LJ 427 following the dictum laid down in the above Paresh Chandra case Paresh Chandra Nandi v. North-East Frontier Railway, 1970 3 SCC 870 and distinguishing the decision of this Court in Parshotam Lal Dhingra v. Union of India AIR 1958 SC 36 has observed that All LJ p. 429 a person can be said to acquire a lien on a post only when he has been companyfirmed and made permanent on that post and number earlier with which view we are in agreement. Learned companynsel for the appellant also highlighted the departmental numberings suggesting that after the companypletion of his tenure as Director, the appellants joining report as Professor may be accepted as he had neither resigned number it was clearly mentioned that on joining as Director he will lose lien which is numbermally available. The companypetent authority has rejected the claim of the appellant only on the ground that he was number having substantive appointment as Professor which, in our view, is number companyrect. However, the question whether having regard to the nature of the work to which the appellant was appointed on companytract basis, i.e., Director and the period Page 14 Civil Appeal Nos. | 3 |
Opinion of Mr Advocate General Van Gerven delivered on 18 November 1992. - Criminal proceedings against Bernard Keck and Daniel Mithouard. - References for a preliminary ruling: Tribunal de grande instance de Strasbourg - France. - Free movement of goods - Prohibition of resale at a loss. - Joined cases C-267/91 and C-268/91.
European Court reports 1993 Page I-06097
Swedish special edition Page I-00431
Finnish special edition Page I-00477
Opinion of the Advocate-General
++++
Mr President,
Members of the Court,
1. The central question in these cases concerns the compatibility with Community law of national legislation prohibiting resale at a loss. This question was raised in criminal proceedings brought against Mr Keck and Mr Mithouard, in charge of supermarkets situated at Mundelsheim and Geispolsheim respectively, for selling certain products at a loss. Before the Seventh Criminal Chamber of the Tribunal de Grande Instance (Regional Court), Strasbourg (hereinafter "the national court") they claim that the statutory prohibition in question, laid down in Article 1 of Finance Law No 63-628 of 2 July 1963, as amended by Article 32 of Order No 86-1243 of 1 December 1986, (1) is incompatible with Community law and, in particular, with the provisions of the Treaty on the free movement of goods, persons, services and capital, free competition and non-discrimination. That submission led the national court to submit the following question to the Court in both cases:
"Is the prohibition in France of resale at a loss under Article 32 of Order No 86-1243 of 1 December 1986 compatible with the principles of the free movement of goods, services and capital, free competition in the Common Market and non-discrimination on grounds of nationality laid down in the Treaty of 25 March 1957 establishing the EEC, and more particularly in Article 3 and 7 thereof, since the French legislation is liable to distort competition:
(a) firstly, because it makes only resale at a loss an offence and exempts from the scope of the prohibition the manufacturer, who is free to sell on the market the product which he manufactures, processes or improves, even very slightly, at a price lower than his cost price;
(b) secondly, in that it distorts competition, especially in frontier zones, between the various traders on the basis of their nationality and place of establishment?"
2. First of all, I will clarify the question of the relevant provisions of the Treaty with reference to which the French legislation concerned must be examined. Like the Commission, I consider that the provisions and principles of the Treaty relating to the free movement of workers, freedom of establishment and freedom to provide services do not apply in the present case. The link between those rules and the situation being considered is too indirect and too hypothetical: the cases involve two supermarkets established in France (very close to the German border, it is true) and neither the case-file nor the observations submitted by the parties to the main proceedings indicate any real factors from which it must be deduced that the aforementioned provisions are applicable.
I can also be brief with regard to Article 7 of the Treaty, which is also expressly referred to by the national court: that provision only prohibits discrimination based on the nationality of traders. (2) Since the French legislation in question does not make any direct or indirect distinction according to nationality or place of establishment of the undertakings to which it is applicable, Article 7 does not apply. It should be added that the Court has repeatedly held that Article 7 is not contravened merely because other Member States apply less strict rules and that the competitivity of other traders established in the Member State concerned is affected in relation to that of traders established in other Member States. (3)
As regards the applicability of rules of Community competition law, and in particular Articles 3(f), 85 and 86 of the Treaty, I would also merely refer to the settled case-law of the Court, according to which those provisions only concern the conduct of undertakings and not legislative or regulatory measures of the Member States. (4) It is true that the Court has also held that the Member States may not adopt or maintain in force measures which might render ineffective the competition rules applicable to undertakings, the situation which it has in view here being one in which a Member State, by legislation or regulation, imposes or promotes the conclusion of agreements contrary to Article 85 or reinforces their effects, or deprives its own rules of the character of State rules by transferring decision-making powers to private companies. (5) However, in the present case, such a situation does not arise.
The only aspect of Community law with reference to which the French legislation in question must be examined would appear to be that of the free movement of goods: the case here concerns national rules relating to the sale of products. Although Article 30 of the Treaty is not actually mentioned by the national court, it would follow from the questions submitted that the Court must take that provision into consideration in order to enable the national court to assess the compatibility of the French legislation with Community law.
3. The first question which therefore arises is whether a statutory prohibition of resale at a loss must be regarded as a measure having equivalent effect within the meaning of Article 30 of the Treaty. The French Government maintains that this is not the case, since the prohibition applies without distinction to national products and imported products. The French Government further maintains that the prohibition does not deprive a foreign product of the competitive advantage of having a lower cost price than a national product and does not lay down maximum prices making it impossible to market in France an imported product (the price of which is higher in any case, if only because of the costs of transport and packaging). The French Government considers that this view is confirmed by the judgment delivered in 1978 in van Tiggele, in which the Court held that:
"... a national provision which prohibits without distinction the retail sale of domestic products and imported products at prices below the purchase price paid by the retailer cannot produce effects detrimental to the marketing of imported goods alone and consequently cannot constitute a measure having an effect equivalent to a quantitative restriction." (6)
4. I cannot accept that line of argument. In my view, the possibility cannot be excluded that a statutory prohibition of resale at a loss might impede "directly or indirectly, actually or potentially" intra-Community trade within the meaning of the Dassonville judgment. This becomes particularly clear when one takes account of the fact that sale at a loss is a sales promotional method and that, since the judgment in Oosthoek (a case concerning a national measure prohibiting the offering of certain gifts in kind when a purchase is made) the Court has consistently held that:
"Legislation which restricts or prohibits certain forms of advertising and certain means of sales promotion may, although it does not directly affect imports, be such as to restrict their volume because it affects marketing opportunities for the imported products. The possibility cannot be ruled out that to compel a producer either to adopt advertising or sales promotion schemes which differ from one Member State to another or to discontinue a scheme which he considers to be particularly effective may constitute an obstacle to imports even if the legislation in question applies to domestic products and imported products without distinction." (7)
The judgment in van Tiggele most surely cannot be invoked against that case-law, since that judgment antedated the Court' s judgments in Cassis de Dijon and Oosthoek, which greatly reduces, or even negates, its value as a precedent. (8)
5. In order for Article 30, as interpreted in the case-law of the Court, to be applicable to national legislation, it must certainly have a definite link with intra-Community trade. I do not think that this can be denied in the present case. It is true that the legislation in question does not contain any prohibition of sale at a loss at producer level. That means that a producer from another Member State still has the possibility ° if he wishes to launch his product on the French market ° to sell his product at a loss to a retailer in France or elsewhere, whereupon the retailer can resell the product in France at a greatly reduced price (but above his own cost price). Nevertheless, even such a limited prohibition of sale at a loss may still have an impeding effect on intra-Community trade if the retailer himself, without support from the foreign producer (in the form of a much reduced price or even a loss price) wishes to conduct a campaign to launch the product on the French market at a loss. A similar (potential) impeding effect exists where an importer of a product originating from another Member State must compete in France with a national producer who is able to sell his product at a loss whilst this is not possible for the importer/retailer.
Those examples show that, even though it is not applicable at producer level, the national prohibition in question may nevertheless "directly or indirectly, actually or potentially" impede intra-Community trade. (9)
6. Since it is to be assumed that the rules in question are in principle covered by Article 30, the question which must now be examined is whether the obstacles (actual or potential) to intra-Community trade which they entail must nevertheless be accepted upon application of the "Cassis de Dijon" test: for the practice of sale at a loss is not regulated by the Community and is regulated differently in the Member States; furthermore, the French legislation applies without distinction to national products and foreign products.
According to the "Cassis de Dijon" test, obstacles to free movement are to be accepted only in so far as the aim of the national legislation concerned is to satisfy mandatory requirements justified in Community law and is also necessary to attain, and is proportionate to, the aim in view. (10) It is primarily for the national court (and, before this Court, for the government of the Member State concerned) to make clear the aims which the national legislation concerned is designed to achieve and whether, having regard to the case-law of this Court, they are justified in Community law. In case of doubt, it can obtain guidance from this Court on the last point.
7. As regards the aim pursued by the national legislation concerned, the national court points out in both cases that "at first sight the prohibition of resale at a loss laid down by the national legislation may appear quite justified by the double aim of protecting consumers and regulating healthy and fair competition". In written submissions submitted to the Court the French Government further explains this point. It associates the ban on resale at a loss primarily with fair trading and only indirectly ° via the safeguarding of fair competition ° with protection of the consumer. (11) According to the French Government, the national rules are meant to combat unfair trading. In its view, resale at a loss may allow a trader to corner a market as well as artificially capture customers, and, once this purpose is achieved, the trader may then sell the products in question at the normal price or even at a higher price. The French Government maintains that such a practice is also detrimental to the interests of consumers, since the losses incurred by the trader on individual products are necessarily made up by higher profit margins on other products.
8. It would appear from the foregoing that the national rules under consideration rely on two of the mandatory requirements recognized by the Court, namely fair trading and protection of consumers. (12) The question is, then, whether the national rules at issue are necessary in order to achieve the aim sought after and whether, having regard to the obstacles to intra-Community trade which they entail, there is no alternative solution involving less restriction of that trade.
As regards the aim of ensuring fair trading, the French Government mainly has in view the case of a trader who, whether or not pursuant to a collusive agreement with another trader, tries to eliminate a competitor by pursuing the practice of selling goods at a loss. At the hearing, that view led Counsel for the French Government to distinguish resale at a loss, as a technique, from other sales promotion methods or sales methods considered in other judgments of the Court, such as joint offer (Oosthoek), doorstep selling (Buet), publicising in a special offer the offer' s duration and the price previously charged (GB-Inno-BM) and sale by mail order (Delattre). In so far as national rules governing sale at a loss are aimed at such practices, I consider that they are appropriate and necessary to achieve the aim in view, which is to ensure fair trading. They may also be apt to prevent competition from being distorted, which is an aim which is also in accord with the Treaty. However, where these two aims are concerned, the legislation concerned must pursue them in a sufficiently precise way.
So, as far as the second abovementioned aim is concerned ° protection of consumers, I can equally well imagine that in applying a ban on sale at a loss a Member State would wish to curb certain "decoy methods", such as the technique of attracting customers with products which are sold at a loss or at an exceptionally low profit margin so as then to induce them, once they have entered the sales premises, to buy other products which, in order to compensate for the losses on the decoy products, are marked at higher prices. In such a case, a ban on sale at a loss, but this time at the retail level, may also be appropriate and necessary in order to achieve an aim allowed by Community law.
Here, too, the ban must however be sufficiently precise so as to affect only those practices.
9. It cannot therefore be excluded that a ban on sale at a loss, where it is framed in a sufficiently precise way, may be necessary in order to achieve the objectives, justified under Community law, of ensuring fair trading and, in combination with that objective, of maintaining undistorted competition and/or protecting consumers.
The problem with a ban framed in general terms, such as that laid down in the national legislation concerned ° even though it does not apply at producer level ° is, however, that use of the sales promotion method which it prohibits is also banned in trading situations which cannot be regarded as unfair, anti-competitive or detrimental to the consumer. In my view, such situations are indeed likely to occur. Like the Commission, I have in mind the case where the method of selling at a loss is used in order to launch a new product or to penetrate a new market. However, there may well be other situations; I would merely mention the case where goods are sold at a loss in order to dispose of excessive stocks. (13) In so far as it also covers those situations, a prohibition of sale at a loss framed in general terms therefore goes further than is necessary to achieve the aims allowed by Community law.
10. Consequently, my conclusion is that a general prohibition of resale at a loss does not satisfy the necessity test and that a less restrictive alternative is available, which is to define the prohibition in such a way that it better accords with the aforementioned mandatory requirements accepted in Community law.
Conclusion
11. In view of the foregoing, I propose that the Court should reply as follows to the questions submitted by the national court:
A statutory prohibition of resale at a loss also embracing in its generality situations which do not fall within the scope of one (or more) of the mandatory requirements recognized in Community law is not compatible with Article 30 of the EEC Treaty.
(*) Original language: Dutch.
(1) ° For the text of this provision, I can refer to the Report for the Hearing.
(2) ° See the judgment in Case 31/78 Bussone [1978] ECR 2429, paragraphs 38 to 40, and the judgment in Case 155/80 Oebel [1981] ECR 1993, paragraph 7.
(3) ° See the judgment in Joined Cases 185/78 to 204/78 Van Dam [1979] ECR 2345, paragraph 10, the judgment in Oebel, paragraphs 9 and 10, and the judgment in Case 126/82 Smit [1983] ECR 73, paragraph 27.
(4) ° The fact that sale at a loss may, in certain specific circumstances, be classified as an abuse of a dominant position for the purpose of Article 86 of the Treaty is clear from the judgment of Court in Case C-62/86 Akzo v Commission [1991] ECR I-3454, in which the Court, in paragraphs 69 to 72, laid down the relevant criteria.
(5) ° See the judgment in Case 311/85 Vereniging van Vlaamse Reisbureaus [1987] ECR 3801, paragraphs 23 and 24, the judgment in Case 267/86 Van Eycke [1988] ECR 4769, paragraph 16, and the judgment in Case 332/89 Marchandise [1991] ECR I-1027, paragraph 22.
(6) ° Judgment in Case 82/77 ° van Tiggele [1978] ECR 25, paragraph 16.
(7) ° Judgment in Case 286/81 Oosthoek [1982] ECR 4575, paragraph 15; for recent applications, see inter alia the judgments in Case 382/87 Buet [1989] ECR 1235, paragraphs 7 and 8, Case C-362/88 GB-Inno-BM [1990] ECR I-667, paragraph 7, Case C-369/88 Delattre [1991] ECR I-1487, paragraph 50, Case C-239/90 Boscher [1991] ECR I-2023, paragraph 14, and Joined Cases C-1/90 and C-176/90 Aragonesa [1991] ECR I-4151, paragraph 10.
(8) ° In any event, the judgment in van Tiggele concerned a different issue, which was whether the laying down of minimum prices by way of regulation was compatible with Article 30.
(9) ° There is certainly a tendency in the case-law of the Court not to regard national rules whose scope of application is limited to the sale of products at retail trade level as measures having equivalent effect, within the meaning of Article 30 of the Treaty: for an illustration, see inter alia the judgment of the Court in Oebel (regulation of the times of delivery of bread to individual buyers and retailers), the judgment in Case 75/81 Blesgen [1982] ECR 1211 (statutory prohibition on offering for sale for consumption on the premises of alcoholic beverages of a certain strength) and the judgment in Case C-23/89 Quietlynn [1990] ECR I-3509 (prohibition on retailing sex articles without a licence). In the present case, however, the national rules also take effect at the level of resale, that is to say of importation and wholesale.
(10) ° This has been settled case-law since the judgment in Case 120/78 Rewe [1979] ECR 649, paragraph 8.
(11) ° See point 8 of the observations of the French Government, which deals with the compatibility of the ban with the competition rules of the Treaty.
(12) ° Those grounds have already been mentioned by the Court in the Cassis de Dijon judgment: see the judgment in Rewe, paragraph 8.
(13) ° It is not certain that this case is completely covered by the exceptions provided for by the French prohibition, in particular, paragraph II of Article 1 of the Law of 2 July 1963, such as sales of perishable products, sales carried out on cessation or change of a business, and sales of products which are out of season, out of fashion or technically obsolete. | 5 |
FOURTH SECTION
CASE OF GÓRKA v. POLAND
(Application no. 55106/00)
JUDGMENT
(Friendly settlement)
STRASBOURG
5 November 2002
This judgment is final but it may be subject to editorial revision.
In the case of Górka v. Poland,
The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of:
SirNicolas Bratza, President,MrM. Pellonpää,MrA. Pastor Ridruejo,MrsV. Strážnická,MrR. Maruste,MrS. Pavlovschi,
MrL. Garlicki, judges,and Mr M. O’Boyle, Section Registrar,
Having deliberated in private on 8 October 2002,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 55106/00) 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, Mrs Janina Górka (“the applicant”), on 1 February 1999.
2. The applicant was represented by Mr Z. Sobiech, a lawyer practising in Warsaw, Poland. The Polish Government (“the Government”) were represented by their Agent, Mr K. Drzewicki, of the Ministry of Foreign Affairs.
3. The applicant complained under Article 6 § 1 of the Convention about the length of civil proceedings.
4. On 29 January 2002, after obtaining the parties’ observations, the Court declared the application admissible.
5. On 8 August 2002 the Government submitted their and the applicant’s formal declarations accepting a friendly settlement of the case.
THE FACTS
6. The applicant was born in 1915 and lives in Kraków, Poland.
7. The proceedings in question, which concerned the distribution of an inheritance, began on 10 September 1986. On that date the applicant’s sister-in-law, Z.S.-G. filed with the Warsaw District Court (Sąd Rejonowy) an application for distribution of the estate left by the applicant’s deceased brother.
8. Between 10 September 1986 and 11 June 1991 the court held seven hearings (of which two were adjourned) and obtained four expert reports.
9. On 11 June 1991 the District Court gave a partial decision (postanowienie częściowe). On 14 April 1992 that decision was quashed on appeal by the Warsaw Regional Court (Sąd Wojewódzki). The case was remitted to the District Court.
10. In the course of the subsequent proceedings the District Court held a number of hearings and obtained several expert reports.
11. On 18 November 1998 the District Court gave its second partial decision, determining the assets which constituted the estate left by the applicant’s brother. It further proceeded to the sharing out of the property in the estate. It that connection, it needed to obtain fresh evidence from experts.
12. On 28 May 2001 the Warsaw District Court gave a decision. On 26 June 2001 E.D., one of the parties to the proceedings, appealed. The applicant appealed on 28 June 2001. On 6 August 2001 the District Court refused to proceed with her appeal as she had failed to comply with a number of procedural requirements.
It appears that the proceedings are pending.
THE LAW
13. On 13 August 2002 the Court received from the Government two declarations signed by the parties. The applicant’s declaration was made on 17 July 2002 and read as follows:
“I note that the Government of Poland are prepared to pay me the sum of 10,000 Polish zlotys covering pecuniary and non-pecuniary damage and costs with a view to securing a friendly settlement of the above-mentioned case pending before the European Court of Human Rights.
I accept the proposal and waive any further claims against Poland in respect of the facts of this application. I declare that this constitutes a final settlement of the case.
This declaration is made in the context of a friendly settlement which the Government and I have reached.
I further undertake not to request that the case be referred to the Grand Chamber under Article 43 § 1 of the Convention after delivery of the Court’s judgment.”
14. The Government’s declaration, which was made on 7 August 2002, read:
“I declare that the Government of the Republic of Poland offer to pay to Ms Janina Górka the sum of 10,000 Polish zlotys with a view to securing a friendly settlement of the application no. 55106/00 pending before the European Court of Human Rights in Strasbourg. This sum is to cover any pecuniary and non-pecuniary damage as well as costs, and it will be payable to the applicant after signing the declarations by the parties concerned, however not later than three months after the notification of the decision delivered by the Court pursuant to the Article 39 of the European Convention on Human Rights. This payment will constitute the final resolution of the case.
I declare at the same time that the offer of the above-mentioned amount has been made in connection with duration of the proceedings in the applicant’s case before the organs of the Polish judiciary.
This declaration does not entail any acknowledgement by the Government of a violation of the European Convention on Human Rights in the present case.
I further undertake not to request that the case be referred to the Grand Chamber under Article 43 § 1 of the European Convention.
[Signed:] Krzysztof Drzewicki Agent of the Government of Poland.”
15. The Court takes note of the agreement reached between the parties (Article 39 of the Convention). It is satisfied that the settlement is based on respect for human rights as defined in the Convention or its Protocols (Article 37 § 1 in fine of the Convention and Rule 62 § 3 of the Rules of Court).
16. Accordingly, the case should be struck out of the list.
FOR THESE REASONS, THE COURT
1. Decides unanimously to strike the case out of the list;
2. Takes note of the parties’ undertaking not to request a rehearing of the case before the Grand Chamber.
Done in English, and notified in writing on 5 November 2002, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Michael O’BoyleNicolas BratzaRegistrarPresident
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Mr Justice Henderson :
Introduction
On 9 and 10 June 2014 I heard a case management conference in three related actions in the Chancery Division, in which United Kingdom health authorities claim damages for alleged breaches of competition law contrary to Articles 101 and 102 TFEU against four companies in the Servier group (to which I will refer collectively as "Servier"). Servier manufactured a proprietary drug, Perindopril, which was widely used in the treatment of heart disease. The general nature of the claims is that Servier engaged in various forms of anti-competitive conduct, mainly between 2003 and 2007, which unlawfully impeded the development and marketing of generic versions of the drug after the expiry of Servier's main patents. The total value of the claims is of the order of £260m.
In the first action ("the English proceedings"), begun by a claim form issued on 3 May 2011, the principal claimant is the Secretary of State for Health. Numerous other bodies concerned with the purchase and supply of drugs in the National Health Service ("NHS") in England were also joined as claimants, including all the English Strategic Health Authorities and Primary Care Trusts. In 2013 the NHS in England was reorganised, the Strategic Health Authorities and Primary Care Trusts were abolished, and their rights of action were transferred to the Secretary of State. It is therefore agreed that the English proceedings now need to be re-amended so as to remove those bodies as parties, leaving as claimants only the Secretary of State and the NHS Business Services Authority.
In the second action ("the Scottish/NI proceedings"), begun by a claim form issued on 18 July 2012, the claimants are the Scottish Ministers, the 14 regional Scottish Health Boards, the Department of Health for Northern Ireland, and the Regional Health and Social Care Board of Northern Ireland. The public health authorities of Scotland and Northern Ireland are, of course, independent of each other, and the Scottish NHS is itself separate from the English NHS, the delivery of health services being a devolved function in each region of the UK. Despite these structural differences, however, the Scottish and Northern Irish authorities have been able to make common cause, and have joined in bringing a single set of proceedings.
In the third action ("the Welsh proceedings"), begun by a claim form issued on 10 September 2012, the claimants are the Welsh Ministers and the seven Welsh Local Health Boards.
The allegations of breach of Articles 101 and 102 TFEU made by the Scottish, Northern Irish and Welsh claimants are substantially similar to corresponding allegations made by the English claimants in the English proceedings. There is also a considerable degree of overlap between all three sets of proceedings in relation to issues of causation, and some aspects of quantum. There is, however, one claim made in the English proceedings which (for whatever reason) the other health authorities have chosen not to pursue. It is a claim that between 2001 and 2007 Servier tortiously interfered with the English claimants' economic interests by unlawful means, in that it procured, defended and enforced a particular patent ("the 947 Patent") in the European Patent Office and the English courts in reliance on claims which it knew to be untrue, or as to the truth of which it was reckless. It should be emphasised that this is a purely English tort claim, which does not depend on establishing any breach of either English or European competition law. The factual allegations about Servier's conduct which are relied upon in support of the claim are, indeed, a sub-set of those relied on in support of the English claimants' Article 102 claim; but there is the important difference that the common law claim for unlawful tortious interference does not require the claimants to prove dominance by Servier in the relevant market.
In parallel with the three sets of proceedings in England, the EU Commission ("the Commission") is conducting an investigation into Servier which it opened as long ago as 8 July 2009 ("the Commission proceedings"). It has at all stages been common ground that the UK actions cannot be tried until (at the earliest) the Commission proceedings have been concluded. The reasons for this are explained in a judgment which I handed down on 12 October 2012 in the English proceedings, rejecting an application by Servier for a complete stay of the English proceedings until after the conclusion of the Commission proceedings, but granting a more limited stay until three weeks after the end of the oral hearing requested by Servier following issue by the Commission on 27 July 2012 of a Statement of Objections addressed to Servier and a number of other companies in relation to Perindopril: see [2012] EWHC 2761 (Ch). This judgment (which I will call "the October 2012 judgment") was originally confidential to the parties, because it referred to various confidential communications between the Commission and the court. The Commission has, however, subsequently agreed that the judgment may be published, so it is now in the public domain.
Reference should be made to the October 2012 judgment for a fuller account of the background to the litigation, the issues in the English proceedings, the extent of the overlap between the Commission proceedings and the English proceedings, the history of the Commission proceedings down to the issue of the Statement of Objections, and the difficulties allegedly caused to the French defendants (i.e. the third and fourth defendants) by the French Blocking Statute in giving any form of disclosure in the English proceedings. I will not repeat most of that material, but will take it as read for the purposes of this judgment.
Since October 2012, there have been the following main developments:
i) Servier appealed to the Court of Appeal against my decision in relation to the French Blocking Statute. The appeal was dismissed by Laws, Rimer and Beatson LJJ on 22 October 2013: see [2013] EWCA Civ 1234. The Court of Appeal refused permission to appeal to the Supreme Court, and on 20 December 2013 the Supreme Court itself refused permission. The French Blocking Statute issue has therefore been conclusively determined against Servier.
ii) Meanwhile, by various orders the temporary stay of the English proceedings had been extended until 21 days after the refusal of permission to appeal by the Supreme Court. The stay therefore expired on 10 January 2014.
iii) By my order of 12 October 2012, I had given directions for the initial stages of disclosure in the English proceedings once the stay of those proceedings (later extended to 10 January 2014) had ended. I directed the parties within 35 days of the end of the stay to exchange disclosure proposals, to be followed by a meeting of the parties' legal representatives to discuss them and if possible reach agreement. In default of agreement within 9 weeks from the end of the stay, the claimants were to file an agreed list of issues in dispute and take steps to list a hearing for their resolution.
iv) By a consent order dated 9 October 2013, the Welsh proceedings were stayed until 90 days after the publication of the Commission's decision, coupled with a direction for a case management conference to be convened as soon as practicable thereafter.
v) In the Scottish/NI proceedings, however, no agreement was reached on the question of a stay, and on 2 October 2013 Mann J heard and dismissed an application by Servier to stay the proceedings until after the conclusion of the English proceedings. I will need to examine later the reasons which Mann J gave for refusing a stay. It is enough to say at this stage that he recognised there was a real problem to be addressed, but considered that the solution to it should be found at a joint CMC in all three sets of proceedings.
vi) Following the expiry of the stay in the English proceedings, the parties exchanged disclosure proposals on 12 May 2014. The claimants' proposals included a completed electronic documents questionnaire pursuant to Practice Direction 31B, and a detailed statement of the categories of documents which they expected Servier to search. By contrast, Servier's proposals were set out in a short letter from its solicitors which contended that a "targeted approach to disclosure" should be adopted. More specifically, the proposal was that Servier should identify those documents within the Commission's file which were within Servier's control and make disclosure from those documents, subject to the exclusion of documents which were irrelevant or privileged. The letter then gave a description of the documents on the Commission file, emphasising how many of them there are and the variety of matters to which they relate.
vii) The English claimants were dissatisfied with Servier's disclosure proposals, and on 21 May 2014 they issued an application asking for a further CMC to be listed for the first available date after 10 July 2014, and an order that Servier be required to serve revised disclosure proposals and a completed electronic disclosure questionnaire by 25 June. Servier also issued an application notice on the same day, asking for orders (a) that there should be a stay of the Scottish/NI proceedings until after the conclusion of the English proceedings, i.e. renewing the application which had been dismissed by Mann J in October 2013, and (b) that disclosure be given on a standard basis in accordance with CPR 31.6, but with its scope limited to the documents in the Commission's file which were under Servier's control. The two applications were supported by witness statements made by the parties' solicitors, Mr Jonathan Tickner of Peters & Peters Solicitors LLP for the English claimants and Ms Maria Isabel F. Utges Manley of Bristows LLP for Servier.
viii) At this stage the Commission's decision was still awaited, but there was reason to think that it would be forthcoming in the relatively near future. A more precise indication of the probable date of its release was given by Ms Manley in a confidential section of her statement. In these circumstances, the question arose whether it would be more sensible to postpone the CMC, together with argument on the stay and disclosure applications, until a reasonable time after the decision had been released. The question was canvassed with me in correspondence, and I decided that on balance the better course was to hold a joint CMC at the earliest convenient opportunity. There was otherwise an appreciable risk that it might not take place until early 2015, or even later, and meanwhile the process of disclosure would not even begin, despite the desirability of making an early start which I had emphasised in the October 2012 judgment at [53] to [54]. In the light of this decision, the parties then filed further evidence and the CMC duly took place on 9 and 10 June 2014. At the CMC I heard argument on both the stay and the disclosure applications over one and a half days. I then reserved my judgment.
ix) A month later, on 9 July 2014, the Commission issued its decision ("the Decision"). The Decision itself is at this stage confidential, although a redacted version of it will be published in due course. It was accompanied by a press release which contained a summary of the Commission's main findings and particulars of the fine which the Commission had decided to impose. The Decision was adverse to Servier, and companies in the Servier group were fined a total of €330,997,200.
The Commission found breaches of both Articles 101 and 102 to be established, and appears to have concentrated in particular on the so-called settlement agreements which Servier entered into with five producers of generic medicines between 2005 and 2007 when they challenged Servier's patents. According to the press release:
"This was not an ordinary transaction where two parties decide to settle a patent claim outside of court to save time and costs. Here, the generic companies agreed to abstain from competing in exchange for a share of Servier's rent. This happened at least five times between 2005 and 2007…In total, cash payments from Servier to generics amounted to several tens of millions of euros. In one case, Servier offered a generic company a licence for 7 national markets; in return, the generic company agreed to "sacrifice" all other EU markets and stop efforts to launch Perindopril there. Servier thus gained the certainty that the generic producers would stay out of the national markets and refrain from legal challenges for the duration of the agreements.
It is legitimate – and desirable – to apply for patents – patents including so-called 'process' patents, to enforce them, to transfer technologies and to settle litigation. However, Servier misused such legitimate tools by shutting out a competing technology and buying out a number of competitors that had developed cheaper medicines, to avoid competing on their own merits. Such behaviour violates EU antitrust rules that prohibit the abuse of a dominant market position (Article 102…). Each of the settlements between Servier and its generic competitors was also an anticompetitive agreement prohibited by Article 101 TFEU."
I was informed of the Decision by letters from Peters & Peters dated 9 July 2014, and from Bristows dated 17 July 2014. In a press release of its own issued on 9 July, Servier stated its intention to appeal to the General Court, and said it "strongly disagreed" with the "unprecedented theory" developed in the Decision. It is common ground that the period for filing such an appeal is two months and ten days from the date of receipt of the Decision. This deadline cannot be extended, so it will be necessary for Servier's lawyers to devote their main attention to preparation of the appeal during this relatively short period.
The application to stay the Scottish/NI proceedings
Before coming to the arguments now advanced by Servier in support of its application to stay the Scottish/NI proceedings, it is instructive to look at the reasons given by Mann J for dismissing the similar application made to him by Servier (in the absence of the parties to the English and Welsh proceedings) in October 2013: see paragraph 8(v) above. The neutral citation of Mann J's approved judgment is [2014] EWHC 2955 (Ch). The parties to the application were represented by the same counsel as before me, Ms Helen Davies QC and Ms Kelyn Bacon (now QC) for Servier, and Mr Daniel Beard QC and Mr Julian Gregory for the Scottish and Northern Irish claimants.
After briefly setting out the background, and observing that in terms of liability there is an almost complete overlap between the Scottish/NI and the English proceedings, the judge recorded the main submissions which had been made to him. The principal basis upon which Servier sought a stay was to avoid duplication of effort on both sides, when in the absence of a stay virtually identical cases on liability would be proceeding in parallel. It was argued that this would lead to an increased, unfair and unnecessary burden on Servier, which is not a normal commercial organisation but is a foundation whose profits are used only for the purposes of further research and development. Against that background, the English proceedings should go ahead because they were further advanced and more valuable than the Scottish/NI proceedings, and also because they were the only ones to raise the separate economic tort issue. Further, a stay would not be too prejudicial to the Scottish/NI claimants, because it was likely in practice that a decision on liability in the English proceedings would be treated as determinative in the Scottish/NI proceedings, even if it was not technically binding. All the necessary evidence would be preserved in the context of the English proceedings, and there was no additional evidence at risk of being lost.
On behalf of the Scottish/NI claimants, Mr Beard accepted that the two sets of proceedings should be case-managed, but not by the imposition of a stay. The Scottish/NI proceedings could quickly catch up with the English ones, and they were brought by separate claimants with their own views on the law, the case and the evidence. They should not be excluded from bringing their own case until after the English claim had been determined. Issues of causation and quantum were in any event different in the two sets of proceedings, and there was a risk of a very long delay if the Scottish/NI proceedings were stayed, possibly for as long as ten years allowing for possible appeals. The right solution, said Mr Beard, lay in proper case management which would remove, or at least greatly reduce, the risk of duplication of effort and activities.
Mr Beard also cited two authorities to Mann J. In Bollinger v Goldwell Limited [1971] FSR 405, Megarry J said at 416 that a litigant should not "be delayed in the determination of his dispute without good cause". In Hardy v Elphick [1974] Ch 65, Buckley LJ said at 74G:
"It has often been said that the jurisdiction of the court to dismiss or stay an action in limine should be exercised sparingly and with great caution. A plaintiff whose statement of claim discloses a cause of action should be allowed to have his case tried, unless his conduct in bringing the action is clearly frivolous, vexatious or otherwise an abuse of process of the court."
Mann J then stated his conclusions, as follows:
"17. This is a case management decision, as all parties sensibly accepted. It is of the essence of [Servier's] case that the only sensible way of managing this case, having an eye to the English proceedings, is to have a stay of these proceedings, and that that is sufficiently apparent at this stage that there is no need to engage in any active consideration of any other matters and no need to do so in conjunction with the English claimants in the context of their action. For reasons that will appear, I have not considered that to be a correct approach.
18. I accept in this case that all the major issues on liability are common. Mr Beard has not satisfied me that there is any significant risk of there being any real divergence or differing points on liability. Even some of the causation issues relevant to damages are likely to be common issues to the two cases, although at that point, I accept, there will be ultimately some divergence between the three cases.
19. I also accept that the two sets of claimants cannot assume that they are entitled to proceed with their own separate actions with no particular regard to the common nature of the issues and expect the court and the defendants, and particularly the court, to treat them as if the two actions are entirely separate and independent, with their own separate lives, which they are entitled to pursue. Prima facie it is not easy to see the commercial justification for two sets of representation for two sets of proceedings in litigation such as this, at least to the extent of liability. I, for my part, would question whether two sets of commercial entities, with obvious similar commercial interests to the two sets of claimants in this case, would themselves insist on two sets of representatives; but at the end of the day, claimants cannot be forced to share. I make these remarks because the claimants should not assume that these proceedings or, indeed, the English proceedings will necessarily continue to their end on the footing that two entirely [separate] sets of proceedings, with two sets of representation, are justified in this case, with the consequence, as far as those claimants would no doubt hope it to be, that case management, the ordering of events and the recovery of costs would be treated as though the separate tracks were in all ways justifiable.
20. However, at the moment the real point is two-fold. It is, first, whether decisions about the important case management decisions…should be taken now…without the English parties being represented; and second, if it is sensible to decide such things at this stage, whether the answer and the only real sensible answer is a stay. The answer to both questions, in my view, is no.
21. I agree with Mr Beard that this matter should be dealt with as a case management decision to be taken in the context of both cases being taken together. There may be other solutions to the problem of duplication of effort, and the English parties should be party to any discussions about such arrangements. Various case management techniques can be brought into play to ensure that duplication of effort is controlled or eliminated, including – and these are examples – having one set of lead solicitors, limiting the costs recovery or one or other [or] both of the claimants either at various stages of the action or throughout, or, conceivably, enhanced costs recovery for Servier if they incur additional costs because of the presence of additional and conceivably unnecessary parties.
22. None of these sorts of things have been considered in the context of a proper case management hearing. It would only be right to jump straight to the stay solution if it was obvious, and obvious at this point in time, that it is the plain and sensible solution. In my view, it is not plain. The Scottish Ministers have the right to have their own case and to have their own case advanced (by their own representatives), and they should be given a fair opportunity to influence the events in the litigation, including final decisions at trial, even if causes of action are effectively identical to those run by the English claimants. A stay now would prevent that.
23. It does not follow that the fair opportunity to which I have referred requires the full pursuit of the Scottish claim in parallel with the English claim, but it does require that the Scottish claimants should have their appropriate chance at some stage or stages. It is not clear to me at this point that the stage at which they should not be able to influence the litigation and to be informed by the disclosure is the present point, and it is certainly not at all clear to me that that point in time is a point after the English case has actually been decided. Were I to decide in Servier's favour on the present application, then that would be the consequence…Bearing in mind that the stay application is in substance an invitation to treat the English litigation as a de facto test case, that seems to me to be somewhat unfair in the present circumstances.
24. At the moment the risks of duplication are not sufficient that the court has to take drastic avoiding action now. These proceedings are not yet at the point of disclosure or even the disclosure meeting…
25. The solution to the case management problems posed by these two sets of litigation (three sets if the Welsh case is not settled) is to make sure at a proper CMC, or a series of proper CMCs, that the litigation is properly conducted. No party can assume a free hand in terms of running their own actions and the possibility of a stay of one or more of the sets of proceedings will be on the table as a possible direction if, on a proper consideration of that, and all alternatives, it turns out to be the answer to the problems that have been (and will be) thrown up. It is far from unknown for stays to be granted in parallel actions, because that happens when there are test cases in a large number of instances.
26. There is a real problem to be addressed here and, as I have indicated, the two sets of [claimants] cannot assume that they will be allowed to proceed in parallel at all times. But other solutions need to be canvassed and a joint CMC is necessary to that exercise.
27. I therefore consider that the application made to me on the material on which it is made (and at the stage at which it is made) fails. Other case management techniques will quite possibly and, indeed, in my preliminary view, are likely to provide a better and fairer solution to the problems which will otherwise arise. I therefore refuse the application."
At the risk of over-simplification, it seems to me that three main strands can be identified in Mann J's reasoning:
i) the issue was ultimately one of case management, and should be decided at one or more joint CMCs held in all three sets of proceedings;
ii) the Scottish/NI claimants were entitled to be separately represented, and to have their independent views properly taken into account when the court decided how the litigation should be conducted; and
iii) the appropriate solution was likely to lie somewhere between the extremes of a complete stay (which would be equivalent to treating the English proceedings as a de facto test case) and allowing the full pursuit of the Scottish/NI proceedings in parallel with the English proceedings.
The arguments advanced to me by counsel for Servier in support of the renewed application for a stay of the Scottish/NI proceedings were to a large extent the same as those which they had urged on Mann J. It was submitted that Servier should not simultaneously have to face multiple sets of proceedings based on the same underlying facts, with three different legal teams each incurring their own costs and imposing costs on Servier and its legal representatives. For Servier to have to defend multiple claims in this way would be contrary to the overriding objective under the CPR of ensuring that cases are dealt with justly and at proportionate cost. The CPR provide the court with a number of case management tools to enable claims to be tried with the minimum duplication of effort and expense. They include:
a) staying the whole or part of proceedings, either generally or until a specified date or event (CPR rule 3.1(2)(f));
b) the consolidation of proceedings, in whole or in part (rule 3.1(2)(g));
c) the trial of multiple claims on the same occasion (rule 3.1(2)(h));
d) the making of an order for representative proceedings (rule 19.6); and
e) the making of a group litigation order (rule 19.11).
The immediate problem, submitted Servier, is not the conduct of the eventual trial, but the case management of the pre-trial process. Dealing with multiple sets of solicitors all raising different case management issues on an individual basis, and needing to be copied into everything that was happening in the other sets of proceedings, would place an unreasonable burden on Servier's management and lawyers, and would lead to inevitable duplication of effort and cost. The burden would be still greater if, as has now happened, the Commission adopted a decision adverse to Servier, and Servier decided to appeal to the General Court. Servier would then have to prosecute its appeal while at the same time managing the multiple sets of domestic proceedings.
If the court was not persuaded that the Scottish/NI proceedings should be stayed, Servier submitted in the alternative that the three sets of domestic proceedings should be consolidated pursuant to rule 3.1(2)(g) at least up to the point of determination of liability, with one set of solicitors and counsel given the conduct of the liability claim. This alternative was not, however, advanced with much enthusiasm, and counsel referred me to the note in volume 1 of the White Book (2014 edition) at paragraph 3.1.10 on p 74, which says:
"The better course may be for the court not to order such 'partial consolidation', but to order that one claimant's claim should proceed to the trial of liability with the other claimants' claims being stayed pending the outcome, especially where the other claimants are prepared to consent to an order that they should be bound by the decision on liability."
In oral argument, Ms Davies QC emphasised that Servier's disclosure was going to be the same in each of the actions, and Servier would also deploy all of its factual evidence in the English proceedings. Accordingly, there was no risk of material evidence being lost on Servier's side if a stay were granted. So far as their own disclosure was concerned, the Scottish/NI claimants could take whatever steps were necessary to preserve their own documents and evidence.
Mr Beard QC prefaced his submissions on behalf of the Scottish/NI claimants with a number of preliminary observations. First, he submitted that the application for a stay was on any view mis-timed because it preceded the Decision. It was agreed on all sides that the parties would need to study the Decision with great care, and consider their respective positions, once it had been released. It would be wholly inappropriate, he said, for the court to order a blanket stay of the Scottish/NI proceedings at a time when the Decision was expected in the relatively near future, and before the parties had taken stock of their positions in the light of it. It needs to be remembered, in this connection, that the Decision is determinative, so far as the national court is concerned, in relation to the matters which it covers (see paragraph 4 of the October 2012 judgment).
Secondly, Mr Beard confirmed his clients' willingness to cooperate with the other claimants in managing the cases together in a way that would minimise duplication of effort and expense. He said that (unlike the English claimants) they were content with Servier's proposals for initial disclosure, and (subject to discussion with the English claimants) could see real merit in Servier's disclosure being treated as effectively a shared database. I then expressed the hope that the parties would in those circumstances "discuss the matter with a view to adopting the most economical and sensible way of ensuring that a review was carried out which respected divergent underlying interests, but minimised costs and set up a single channel of communication vis-à-vis Servier", to which Mr Beard replied: "That is all eminently sensible so far as we are concerned" (transcript, page 67).
Thirdly, Mr Beard said the fact that the Scottish and Northern Irish claimants had been able to make common cause and instruct the same legal team was itself a good indicator of their commitment to work together and save public money where it was feasible to do so. He also made it clear that the estimate of their combined costs of the whole of their case in their allocation questionnaire, which exceeded £3.5m, and upon which Servier had understandably relied, was an estimate of the cost of the litigation on the assumption that it was freestanding. Once arrangements had been made for the combined management of all three cases, the estimate would be "far, far lower".
In relation to the likely length of a stay, on the assumption that Servier appealed against an adverse decision, Mr Beard reminded me that an appeal to the General Court would lie as of right, with the possibility of a further appeal to the CJEU on questions of law. All those avenues of appeal would have to be exhausted before there could be a trial of the English proceedings, which might itself generate an appeal to the Court of Appeal, and possibly thence to the Supreme Court. Only then, if a stay were granted, could the Scottish/NI proceedings begin to progress from the early stage which they have now reached, with pleadings closed but no start yet made on disclosure. Furthermore, in the absence of agreement, the final judgment in the English proceedings would not be binding on the court which had to determine the Scottish/NI proceedings, giving rise to a potential need to re-litigate the same or similar issues, with a serious risk of inconsistent decisions being reached. Mr Beard also emphasised that the overlap between the English and the Scottish/NI proceedings was by no means complete, and that there were also significant issues raised in all the UK claims which did not appear to feature at all in the Commission proceedings, notably the key allegation that Servier knowingly or recklessly made false representations to the European Patent Office. Furthermore, the claimants in each set of UK proceedings were operating under a different legal framework, were subject to different financial pressures, and were ultimately responsible to different sets of voters. Against that background, it would be fundamentally unjust to impose a blanket stay which would prevent the Scottish/NI claimants from pursuing their claim, in the public interest, within the same timeframe as the English proceedings.
In relation to Servier's fall-back position, Mr Beard submitted that to deprive a claimant of his choice of legal representation is a very intrusive case management tool which the court should be extremely slow to adopt. Parties should not in general have legal representation imposed on them against their wishes. Furthermore, enforced joint representation could prove impractical because of the scope for conflicts of interest to arise. The evidence filed on behalf of the Scottish/NI claimants instanced an earlier case where the UK health authorities had all been jointly represented, but a conflict arose and the arrangement could not continue. The possibility of conflicts of interest arising in the present case could not be dismissed as theoretical, given (for example) the separate status of the English claimants as interested third parties in the Commission proceedings, and the differing approaches to disclosure already adopted by the English claimants and the Scottish/NI claimants.
More generally, Mr Beard emphasised the basic point that the prima facie right of a claimant with a properly arguable case of very substantial value is to have it tried and decided by the court as soon as is reasonably possible.
I also heard brief submissions on this part of the case from the Welsh claimants and the English claimants. The Welsh claimants had an interest in both limbs of Servier's application, because if Servier succeeded in obtaining a stay of the Scottish/NI proceedings, it could confidently be predicted that Servier would seek a similar order against the Welsh claimants once the temporary stay of the Welsh proceedings had come to an end. The English claimants were not threatened with an application for a stay, but Servier's fall-back submission would have affected them in the same way as the other UK claimants, forcing them to be jointly represented at least until liability had been determined.
On behalf of the Welsh claimants, Ms John adopted the submissions of the Scottish/NI claimants and added some observations of her own on the factors which she said I should take into account. She helpfully referred me to agreed directions which had been given in July 2012 in follow-on proceedings brought by the UK health authorities against the Reckitt Benckiser group relating to an established abuse by Reckitt of its dominant position in the supply of certain drugs in the UK, as an example of the way in which four concurrent claims could be case managed together in a cost-efficient manner. She emphasised that joint representation had been tried in that case, but had failed when a conflict of interest arose between her clients and the English claimants. This was, as I understand it, the same episode to which the Scottish/NI claimants had referred in their submissions. Ms John also emphasised that her instructing solicitors, Geldards, had long experience of acting for the NHS in Wales, and it was most unlikely that costs would be saved by forcing the Welsh claimants to change their legal representation.
On behalf of the English claimants, Mr Lasok QC made it clear that they too opposed any suggestion that there should be joint representation of the claimants at this stage of the proceedings. He accepted that issues of duplication of effort and costs would need to be addressed by the court in due course, and agreed with Ms John that directions such as those in the Reckitt Benckiser litigation might be appropriate at a later stage in the case. He also referred me to a letter sent on 14 May 2014 by Peters & Peters to Bristows, which stated that agreement had been reached between the English, Scottish and Northern Irish claimants to cooperate in their approach to any dispute concerning disclosure. No further details were given of the form which such cooperation might take, and on the first day of the hearing I asked if a fuller indication could be given of the kind of cooperation that was proposed. Mr Beard informed me, in some brief supplementary submissions on the second day, that the claimants were unable to submit concrete proposals until the scope of disclosure had been determined, but in principle there was willingness on the part of all the claimants to consider appropriate mechanisms for the review of electronic disclosure by Servier and the allocation of tasks between the three firms of solicitors representing the claimants.
In the light of all these submissions, I have come to the clear conclusion that Servier's application for a stay of the Scottish/NI proceedings should be dismissed. In my judgment the right way to deal with the "real problem" identified by Mann J, particularly at this relatively early stage of the UK proceedings, is by active case management of the three actions as they proceed in parallel, and not by the imposition of a blanket stay which would, in effect, turn the English proceedings into a test case. Even though the English claim is by far the largest in terms of value, and even though it raises essentially the same issues on liability as the other two claims, I think it would be wrong in principle to compel the claims brought by the other UK health authorities to wait in the wings, probably for several years, until the English proceedings have been finally resolved.
I accord considerable weight, in this context, to the fact that all three sets of proceedings have been brought in the public interest by the health authorities of constituent parts of the UK, each operating in a significantly different legal framework and answerable to a different electorate. In a situation of that kind, I consider that a very strong justification would be needed to prevent the claims from proceeding simultaneously.
It is, of course, crucial that all reasonable steps should be taken to reduce duplication of effort and expense to a minimum, and I have already made it clear on several occasions that I expect the parties to work together energetically and in good faith for that purpose. Even so, it cannot be denied that Servier and its legal team will, overall, be put to significantly greater expenditure of time and money in dealing with the three actions together, instead of the English proceedings alone, over the next few years. But this prejudice to Servier is in my judgment decisively outweighed by the much greater prejudice which would be caused to the Welsh, Scottish and Northern Irish claimants if their claims were now to be stayed. I need to remind myself that Servier has now been found guilty by the Commission of serious breaches of both Articles 101 and 102, and has been fined a very substantial amount. If Servier finds itself obliged as a result to defend all three actions simultaneously, while at the same time prosecuting its appeal against the Decision to the European Court, I cannot help reflecting that this is a self-inflicted problem which Servier has brought about by its own conduct which (subject to any successful appeal) the Commission has now determined to be unlawful.
For similar reasons, I am even less attracted by Servier's fall-back argument that the Scottish/NI proceedings (and in due course the Welsh proceedings) should be consolidated with the English proceedings, thereby compelling all the UK claimants to have the same legal representation. I would regard that as a wholly disproportionate step to take, when the alternative of allowing all three sets of proceedings to go forward under active case management is available.
When the time comes, it will be necessary to give careful consideration to the way in which the three actions should be tried, and it may well be that directions similar to those which were agreed in the Reckitt Benckiser litigation will be appropriate. It would, however, be premature to give directions of that nature at this early stage, before the parties have had time to consider the impact of the Decision on their respective cases, before disclosure has taken place, and before witness statements and expert reports have been prepared. But it is not too soon for the parties and their advisers to begin giving serious thought to the way in which the actions should ultimately be tried, with the minimum of duplication in relation to common issues. It will plainly be necessary to hold a further joint CMC once the parties have had a reasonable opportunity to take stock of their positions in the light of the Decision, and by that stage I would expect the claimants to have made serious efforts to reach at least a preliminary agreement between themselves, and if possible with Servier, on how best to minimise duplication of effort and expense in the preparation of their cases for trial, and in the conduct of the trials themselves.
Nor, for the avoidance of doubt, do I rule out the possibility that some form of sequential determination of issues may be appropriate, with one set of proceedings taking the lead while the others are stayed in the meantime. All options will remain on the table, and no party should assume that it has an unqualified right to have the whole of its case tried in full at the earliest opportunity. In saying this, I am merely repeating the sensible warnings which Mann J has already given, and emphasising that all I am rejecting at this stage is Servier's application for a blanket stay of the Scottish/NI proceedings until after the final determination of the English proceedings.
Disclosure
Although I heard full argument on a number of disclosure issues from counsel for the English and the Scottish/NI claimants, most of it in private because of the confidential nature of the Commission proceedings, I propose to deal with the question briefly. The reason for this is the recent issue of the Decision, very much at the beginning of the period during which its appearance was contemplated when the hearing before me took place. This has two important consequences. First, everybody agrees that Servier should be allowed to give its undivided attention to preparing its appeal against the Decision in the period of two months and ten days during which an appeal must be brought, that is to say until Monday 22 September 2014. Secondly, it is also common ground that all the parties now need to take careful stock of their positions and pleaded cases in the light of the Decision, bearing in mind the determinative effect of matters which the Commission has now decided, at any rate as a matter of EU and domestic competition law. This process of review and reconsideration is likely to lead to both clarification and reduction of the issues in the three sets of proceedings, and this in turn will have a significant impact on disclosure.
In these circumstances, it seems to me that the balance now comes down firmly in favour of Servier's proposal, which is that Servier's disclosure should be limited in the first instance to a review of the documents held on the Commission's file. As I have already explained, this is a substantial archive which Bristows estimate to contain around 30,000 pages, reflecting the extensive searches and enquiries carried out by the Commission in the course of its investigation. Furthermore, the review and giving of disclosure from this archive will itself be a major exercise, which is likely to occupy Servier's lawyers for several months. Although the documents are stored electronically, I was told by Ms Davies that they are not arranged in a way which makes them easy to review. Many are not in English, and some of the documentation is technical in nature. Questions of privilege and relevance will also have to be considered, not least because the approach of the Commission to issues of privilege differs significantly from that of English law.
There are three further points which encourage me to accept Servier's proposal at this stage. First, as Ms Manley emphasised more than once in her written evidence, Servier is not saying that its disclosure should necessarily be confined to the documents on the Commission's file, but only that in the interests of proportionality this exercise should be undertaken first. Secondly, the Scottish/NI claimants were content that matters should proceed in this way, even before the issue of the Decision. Thirdly, in at least one recent case of parallel EU and UK competition law proceedings, the English court has considered it appropriate to limit disclosure in the first instance to material already disclosed to the Commission: see Infederation Ltd v Google Ireland Ltd [2013] EWHC 2295 (Ch), [2014] 1 CMLR 13, at [37] to [38] per Roth J.
In the light of what I have said, I hope that the parties will now be able to agree a timetable for this first stage of the disclosure exercise, bearing in mind that it cannot start (so far as Servier is concerned) before 22 September 2014 at the earliest. Unless there are any other aspects of disclosure on which the parties consider it essential for me to give a ruling now, I think that further consideration of disclosure-related issues should be postponed until after the parties have fully digested the Decision and the issues have crystallised. Meanwhile, I emphasise the need for all parties, and Servier in particular, to take active steps to ensure that all potentially relevant documents are preserved. | 2 |
Judgment of the Court of First Instance (Fifth Chamber) of 5 December 1990. - Antonio Marcato v Commission of the European Communities. - Officials - Promotion within career brackets - List ofofficials found to be most worthy of promotion - Admissibility of application - Promotion procedure - Right to a fair hearing. - Case T-82/89.
European Court reports 1990 Page II-00735
Summary
Parties
Grounds
Decision on costs
Operative part
Keywords
++++
1 . Officials - Actions - Act adversely affecting an official - Concept - Exclusion from a list of officials eligible for promotion - Inclusion a condition for possible promotion within career bracket - Admissibility
( Staff Regulations, Arts 90 and 91 )
2 . Officials - Actions - Interest in bringing proceedings - Application for the annulment of a decision not to include an official in a list of officials eligible for promotion - Applicant' s retirement during the pre-litigation procedure - Admissibility
( Staff Regulations, Arts 90 and 91 )
3 . Officials - Decision affecting the administrative status of an official - Taking into consideration of matters not included in the personal file - Exclusion from a list of officials eligible for promotion - Exclusion based on assessment voiced orally before a consultative body - Impossibility for the official to exercise his right to a fair hearing - Illegality
( Staff Regulations, Art . 26 )
Summary
1 . The inclusion of an official' s name on a list of officials found to be most worthy of promotion within a career bracket is merely a preparatory measure and does not therefore constitute an act adversely affecting another official . In so far as the appointing authority is not obliged to promote an official included on the list, such inclusion does not in itself directly affect that official' s legal position, since no decision concerning his possible promotion has yet been taken . Nor can the mere fact that another official is included affect the legal position of officials who are not included, since it can only be affected by the actual promotion of that other official .
If, however, on the basis of internal measures relating to the procedure for promotion within a career bracket, an institution considers itself bound by the list drawn up on the completion of the proceedings of a consultative promotion committee, in so far as it excludes from promotion officials not included on that list, the decision to exclude an official from the list directly affects his legal position and constitutes an act adversely affecting him .
2 . A retired official retains a personal interest in seeking the annulment of a decision excluding him from the list of officials found to be most worthy of promotion within a career bracket since, if the decision not to include his name on the list were to be annulled, he would be able to bring an action seeking compensation for whatever damage he had suffered as a result of his exclusion .
3 . The purpose of Article 26 of the Staff Regulations is to guarantee an official' s right to a fair hearing by ensuring that decisions taken by the appointing authority affecting his administrative status and his career are not based on matters concerning his conduct which are not included in his personal file .
A decision excluding an official from a list of officials found to be most worthy of promotion within a career bracket based, in the absence of a staff report, on an assessment of him voiced orally in the context of a promotion procedure before a committee set up for that purpose, against which the official was unable to exercise the right to a fair hearing which Article 26 of the Staff Regulations seeks to ensure, infringes the safeguards under the Staff Regulations and must be annulled as having been taken following a procedure vitiated by illegality .
Parties
In Case T-82/89,
Antonio Marcato, a former official of the Commission of the European Communities, residing in Brussels, represented by Philippe-François Lebrun, of the Brussels Bar, with an address for service in Luxembourg at the Chambers of Victor Gillen, 13 rue Aldringen,
applicant,
v
Commission of the European Communities, represented by Joseph Griesmar, Legal Adviser, acting as Agent, with an address for service in Luxembourg at the office of Guido Berardis, a member of its Legal Department, Wagner Centre, Kirchberg,
defendant,
APPLICATION for the annulment of the list of officials found to be most worthy of promotion in 1988 into Grade B 2,
THE COURT OF FIRST INSTANCE ( Fifth Chamber ),
composed of : C . P . Briët, President of Chamber, H . Kirschner and J . Biancarelli, Judges,
Registrar : B . Pastor, Administrator,
having regard to the written procedure and further to the hearings on 29 March and 20 September 1990,
gives the following
Judgment
Grounds
Facts of the case
1 The applicant, born on 25 March 1928, entered the service of the Commission on 12 November 1958 . After being established in Grade D 2 with effect from 1 January 1962, and following several promotions, he was appointed in 1975 to Grade B 4 and assigned to Division XIX B 2 "Accounting, financial management and information" at the Commission . On 30 March 1987, Directorate-General XIX modified his duties .
2 His staff report for the period from 1 July 1985 to 30 June 1987, drawn up by the deputy head of division, Mr Lemoine, was submitted to him only on 13 April 1988 . The applicant challenged certain details in that report, and an appeal in respect of the reporting procedure was pending at the time of the oral procedure .
3 The promotion procedure which gave rise to the dispute was conducted in a number of stages, in accordance both with the "General Provisions for implementing the Procedure for Promotion within a Career Bracket", which the Commission adopted by decision of 21 December 1970 and amended by decision of 14 July 1971 ( published in Administrative Notices No 42 of 13 May 1975, and hereinafter referred to as "the General Provisions "), and with the rules governing promotion procedures published in Administrative Notices No 514 of 10 November 1986 .
4 The first stage of that procedure consists in the publication of the list of officials eligible for promotion who possess the requisite seniority . The applicant, established since 1 October 1980 in Grade B 3 and therefore possessing the minimum of two years' seniority required by Article 45 of the Staff Regulations of Officials of the European Communities (" the Staff Regulations "), was included on the list of officials eligible for promotion to Grade B 2 in 1988, which was published on 15 February 1988 .
5 In the next stage of the procedure, the Commission' s directorates-general draw up a list of officials whom they propose for promotion . In the circumstances, that list, which was published on 16 March 1988, comprised the names of four officials in Directorate-General XIX . The applicant' s name was not amongst them .
6 After learning that his directorate had not proposed him for promotion, the applicant sent a letter on 9 June 1988 to Mr Valsesia, President of the Promotion Committee for Category B, asking for his case to be reconsidered . That letter apparently remained unanswered . By letter of 30 June 1988, the applicant wrote to Mr Morel, the Director-General of Directorate-General XIX, asking him to state the precise reasons for which the applicant had not been proposed for promotion . By a memorandum of 3 August 1988, Mr Morel replied that the applicant' s case had been taken into consideration twice : first when Directorate C had drawn up its proposals, and the second when the definitive list had been drawn up for Directorate-General XIX . According to that memorandum, the selection had been made on the basis of a comparative examination of the relevant criteria .
7 In the meantime, the Promotion Committee for Category B had met on 15 and 16 June 1988 in order to examine the proposals for promotion to Grades B 2 and B 4 . With regard to the applicant, the Minutes of those meetings state that "the committee takes formal note of the detailed explanations furnished by the representative of Directorate-General XIX as regards the conduct of Mr Mercato ( sic ). That opinion is in conformity with the line taken in the past by other representatives of Directorate-General XIX and would therefore seem to be confirmed . However, in view of certain differences in the reports concerning Mr Mercato, the committee considers that his position should be clearly defined ". The Promotion Committee drew up the draft lists of officials found to be most worthy of promotion without including the applicant' s name .
8 On the basis of those draft lists, the Commission' s Director-General for Personnel and Administration and the Director of the Publications Office, acting in their capacity as the appointing authority, drew up on 11 July 1988 a list of officials found to be most worthy of promotion in 1988 into Grade B 2 . The list, which did not include the applicant' s name, was published in the Commission' s information sheet of 29 July 1988 . It contained the names of two of the four officials proposed by Directorate-General XIX .
9 On 23 September 1988 the applicant lodged a complaint with the Commission pursuant to Article 90(2 ) of the Staff Regulations . Relying on the absence of a staff report for the period from 1 July 1985 to 30 June 1987 and on the fact that, in his view, the memorandum addressed to him by Mr Morel on 3 August 1988 constitutes a refusal on the part of the Commission to notify him of the reasons for its decision not to include his name on the list of officials put forward by the directorate-general, the applicant claims that the Commission did not comply with the second paragraph of Article 25 ( any decision adversely affecting an official must state the grounds on which it is based ) or with Article 45(1 ) ( consideration of the comparative merits of officials ) of the Staff Regulations . He accordingly sought "the annulment of the list of officials found to be most worthy of promotion, published on 29 July 1988, and a complete revision of the promotion procedures for 1988 ".
10 However, out of concern that his complaint might be inadmissible and taking the view that he could rely by analogy on the case-law of the Court concerning selection boards ( judgment in Case 44/71 Marcato v Commission [1972] ECR 427 and in Case 37/72 Marcato v Commission [1973] ECR 361 ), the applicant - without awaiting a decision on his complaint - immediately brought an action which was lodged at the Court Registry on 28 October 1988 ( Case T-47/89 [1990] ECR II-231 ).
11 The list of officials promoted to Grade B 2 was published on 31 October 1988 . It did not contain the applicant' s name and included only one official from Directorate-General XIX .
12 On 6 April 1989, as the Commission had not yet reacted to his complaint, the applicant brought the present action, which was lodged at the Court Registry on 10 April 1989 . In his application, he pointed out that he was not discontinuing his first action but, faced with what in his view was an implied decision of rejection, he was bringing a second action in order to ensure that his rights were fully protected .
13 On 7 April 1989 the Commission adopted an express decision rejecting the applicant' s complaint, which was notified to him on 25 April 1989 . The Commission pointed out that the contested staff report had been submitted to the applicant on 13 April 1988 and considered that the applicant' s allegations did not substantiate the existence of an infringement of Articles 25 and 45 of the Staff Regulations .
Course of the procedure
14 In his first action Mr Marcato sought the annulment of the list of officials found to be most worthy of promotion to Grade B 2 in 1988 ( Case T-47/89 ). The action was also directed "in so far as is necessary" against Mr Morel' s letter of 3 August 1988, in which the latter refused to give an unequivocal explanation of the reasons for the applicant' s exclusion from that list . The applicant relied on two submissions, one alleging infringement of the second paragraph of Article 25 of the Staff Regulations ( inadequate statement of reasons ) and the other alleging infringement of Article 45(1 ) of the Staff Regulations ( irregularity in the consideration of the comparative merits of the officials concerned on account of the absence of the applicant' s most recent staff report ).
15 The Commission raised an objection of inadmissibility against that action . It maintained that the action had been brought in disregard of Article 91(2 ) of the Staff Regulations since a direct action was not admissible in the circumstances, which was disputed by the applicant .
16 By decision of 24 February 1989, the Court of Justice ( Fourth Chamber ) decided to consider the objection of inadmissibility at the same time as the substance of the case . The written procedure subsequently followed the usual course before the Court of Justice .
17 In the present action, the applicant also seeks the annulment of the list of officials found to be most worthy of promotion in 1988 into Grade B 2 . The action is also directed "in so far as is necessary" against Mr Morel' s letter of 3 August 1988 . This action is based on the same submissions and arguments as the first, that is to say infringement of the second paragraph of Article 25 and Article 45(1 ) of the Staff Regulations .
18 In the proceedings before the Court of Justice, the Commission raised an objection of inadmissibility in accordance with Article 91 of the Rules of Procedure, without lodging a defence on the substance of the case . The applicant submitted observations against that objection .
19 By order of 15 November 1989, the Court of Justice referred the two cases to the Court of First Instance pursuant to Article 14 of the Council Decision of 24 October 1988 establishing a Court of First Instance of the European Communities . By two orders of 6 December 1989, the Court of First Instance ( Fifth Chamber ) joined the two cases for the purposes of the oral procedure and the judgment and decided to exclude from consideration two documents produced by the defendant .
20 On hearing the report of the Judge-Rapporteur, the Court decided to accede to the Commission' s request for a ruling on the objection of inadmissibility without considering the substance of the case . It put two questions to the Commission . The applicant, represented by Mr Vandersanden of the Brussels Bar, and the defendant presented oral argument at the first hearing on 29 March 1990 . In reply to the questions put by the Court, the Commission' s representative produced at the hearing the text of the amended Commission decision of 21 December 1970 laying down the aforesaid General Provisions . It is apparent from Point 8 of those provisions that only such officials as are on the lists of officials considered to be most deserving of promotion ( within a career bracket ) may be promoted in the course of that year . The Commission' s representative confirmed that so far - in the case of officials in Grade B, C and D - that rule had been observed by the Commission without a single exception .
21 By judgment of 20 June 1990, the Court of First Instance dismissed the application in Case T-47/89 as inadmissible on the ground that, if the contested list constituted an act adversely affecting the applicant, the action had been brought too soon or, if not, there was no act against which an action might be brought . In the present case, Case T-82/89, the Court ruled that the objection of inadmissibility raised by the defendant would be considered at the same time as the substance of the case ( Joined Cases T-47/89 and T-82/89 Marcato v Commission [1990] ECR II-231 ).
22 Following that judgment, the Court requested the parties to confirm that, as they had stated at the hearing on 29 March 1990, all the pleadings submitted in Case T-47/89 should be taken into consideration for the purposes of the judgment on the substance of the present case .
23 By a document of 29 June 1990, the applicant gave valid confirmation that all the pleadings submitted in Case T-47/89 might be taken into consideration for the purposes of the judgment on the substance of Case T-82/89 . Since the applicant has lodged a second application meeting all the requirements of the Rules of Procedure of the Court of Justice, since both cases have the same subject-matter and since the applicant has relied on the same submissions, there is no reason to preclude him from making general reference, in his document of 29 June 1990, to all the submissions and arguments put forward in Case T-47/89 .
24 In its defence of 2 July 1990, the Commission also provided the confirmation requested by the Court . It reaffirms in their entirety, for the purposes of the present case, the substantive arguments which it put forward in its defence and rejoinder in Case T-47/89 to counter the applicant' s submissions . It would be contrary to the principle of the sound administration of justice to require the Commission to make a formal and superfluous reiteration of its submissions and arguments in its new defence .
25 On 20 September 1990, a second hearing was held before the Court, at which the applicant was again represented by Mr Vandersanden . In reply to a question put by the Court, the representatives of the parties confirmed that the applicant had taken retirement at his own request, with effect from 1 May 1990 . The representative of the Commission stated that, when the rules governing promotion procedures were amended, it might be considered whether the statements of representatives of the directorates-general on promotion committees should be included in their entirety in the personal files of the officials concerned . The President declared the oral procedure closed at the conclusion of the hearing .
Forms of order sought by the parties
26 The applicant claims that the Court should :
( i ) declare the action admissible and well founded;
( ii ) "annul the list of officials found to be most worthy of promotion in 1988 into Grade B 2 ( including BS and BT ), published in Administrative Notices No 565 of 29 July 1988, ( p . 9 et seq .), for infringement of Article 25 ( in particular, the second paragraph thereof ) and Article 45(1 ) of the Staff Regulations";
( iii ) order the defendant to pay the whole of the costs .
In its objection of inadmissibility of 12 May 1989, the Commission contends that the Court should :
( i ) dismiss the action as inadmissible;
( ii ) make an appropriate order as to costs .
In its defence of 2 July 1990, the Commission contends that the Court should :
( i ) dismiss the action as unfounded;
( ii ) make an appropriate order as to costs .
Admissibility of the action
27 In support of its objection to the admissibility of this case, raised in accordance with Article 91 of the Rules of Procedure of the Court of Justice, the Commission first reiterates the arguments which it put forward in Case T-47/89 . In that case, it relied in its defence of 28 March 1989 on the judgment of the Court of Justice in Case 346/87 Bossi v Commission [1989] ECR 303, in which the Court held that a list of officials found to be most worthy of promotion is merely a preparatory act whose regularity may be called in question only in an application brought against the decision concluding the promotion procedure . According to the Commission, that constitutes an absolute bar to proceeding with the case . Since the applicant did not lodge a complaint against the list of officials promoted to Grade B 2, which has therefore become definitive in relation to him, the Commission concluded that the application should be dismissed as inadmissible .
28 The Commission acknowledged that the Court of Justice, in its judgment in Case 86/77 Ditterich v Commission [1978] ECR 1855, at pp . 1865 and 1866, dismissed as unfounded, without declaring it inadmissible, an application for the annulment of a decision establishing a list of officials considered to be most deserving of promotion . However, the Commission considered that since, pursuant to Article 92 of the Rules of Procedure, the Court "may" of its own motion consider whether there exists any absolute bar to proceeding with a case, the Court has merely a power in that regard, and that judgments which, for reasons of judicial policy, dismiss applications as unfounded without first enquiring whether they are admissible are therefore not uncommon . In the Commission' s view, the judgment in Bossi thus does not represent a reversal of the case-law laid down in Ditterich .
29 The Commission claimed that the principles laid down by the Court in its judgment in Bossi must be applied mutatis mutandis to the present action, notwithstanding the fact that it was brought a few months before that judgment was given . Even if that judgment constituted a reversal of case-law, the court adjudicating on the substance of the case should always take account of the most recent case-law . In addition, it would be contradictory, to say the least, if such a reversal could be applied to the applicant in Bossi but not to the applicant in this case .
30 With regard to the fact that the list in question is binding on the appointing authority so far as promotions during the financial year are concerned, the Commission pointed out that, as the Court of Justice has held, even preparatory acts which are binding on the administration, such as the opinions of an establishment board or an invalidity committee, cannot be referred separately to the Court .
31 Finally, referring again to the judgment in Bossi, the Commission raised in its rejoinder of 6 July 1989 the question of the applicant' s continued interest in seeking the annulment of the list of officials found to be most worthy of promotion despite his failure to challenge within the prescribed period the list of officials actually promoted, which has therefore become definitive .
32 In the pleadings submitted in the present case, the Commission refers again to the judgment in Bossi which, it claims, is in line with the consistent case-law of the Court of Justice . It refers to the judgment of the Court of Justice in Case 11/64 Weighardt v Commission [1965] ECR 285 and the order in Joined Cases 78 and 220/87 Santarelli v Commission [1988] ECR 2699, at p . 2703 . Since the applicant did not lodge a complaint against the list of officials promoted to Grade B 2, no legal proceedings bringing that list into question may now be brought . The Commission considers, therefore, that the application is inadmissible .
33 At the hearing, the Commission claimed that the applicant can no longer be promoted after retirement . It also raised the question of what benefit the applicant could derive from a re-examination of his theoretical chances of promotion in the 1988 financial year, in view of the fact that he had failed to challenge within the prescribed period the promotions decided on in respect of that year .
34 The applicant considers that the action is admissible . He also reiterates the arguments put forward in this regard in Case T-47/89 . The applicant first compared the judgment in Bossi with the judgment in Ditterich, in which, in his view, the Court held an action directed against a list of officials proposed for promotion to be admissible . The applicant concluded that the judgment in Bossi constitutes a reversal of previous case-law, and that the question should be raised whether, in those circumstances, the principles laid down by the Court in Bossi may be relied upon by the defendant as an absolute bar to proceeding with the action . In his view, such an objection of inadmissibility should be covered by the rules on admissibility applicable at the time when the action was brought .
35 The applicant then asserted that, since the list of officials found to be most worthy of promotion is binding on the appointing authority, it was unnecessary to regard it as a preparatory act except in relation to the officials included on it but not subsequently promoted . In the case of officials not included on the list, however, the application of the principles laid down by the Court in its judgment in Bossi would mean an impairment of their rights and interests . If those principles were applicable to them, they would have to await the publication of the list of officials promoted in order to be able to assert their rights, first before the administration, and then before the Court . The chances of securing a "rectification" in their favour would therefore be reduced .
36 In the present case, the applicant reasserts that the list of officials found to be most worthy of promotion is an act adversely affecting him inasmuch as it automatically prevented him from inclusion on the list of those promoted . An official whose name has not been proposed by the promotion committee cannot be promoted by the appointing authority and is thus, the applicant claims, definitively barred from promotion .
37 At the hearing, the applicant stated that he had himself applied for retirement . He claimed that a decision which he himself had brought about could not be pleaded against him in order to challenge his interest in bringing an action .
38 Having regard to those factual and legal considerations, it is appropriate to begin by determining the act of the Commission against which the action is directed . The applicant has pointed out that the action, "in so far as is necessary", is "also" directed against Mr Morel' s letter . However, that letter refers only to the proposals for promotion drawn up by Directorate-General XIX, which have not been challenged by the applicant . The applicant sought only the annulment of a subsequent list which was not commented on in the letter in question . It follows that Mr Morel' s letter is not an act contested in the action . It is merely a factual detail on which the applicant relies in support of one of his submissions, namely that the second paragraph of Article 25 of the Staff Regulations was infringed . Accordingly, the action is directed only against the appointing authority' s decision establishing the list of officials found to be most worthy of promotion in 1988 into Grade B 2 .
39 For the purpose of considering the objection of inadmissibility raised by the Commission, it must be noted that the decisions underlying the contested list are necessarily of two different kinds . On the one hand, the appointing authority decides to include certain officials eligible for promotion on the list; on the other hand, it excludes the other officials eligible for promotion . Consequently, it should first be determined whether the inclusion of certain officials on the list is an act capable of adversely affecting an official who is not included .
40 The parties have rightly claimed that the inclusion of an official' s name on a list of officials found to be most worthy of promotion is merely a preparatory measure . It is a preliminary to promotion in so far as it is an essential prerequisite therefor . However, the appointing authority is not obliged to promote an official included on the list . Therefore the decision to include an official on the list in question does not directly affect his legal position, since no decision concerning his possible promotion has yet been taken ( see also the judgment of the Court of Justice in Case 143/84 Vlachou v Court of Auditors [1986] ECR 459, at p . 476 ). Nor can the mere fact that another official is included affect the legal position of officials who are not included, since it can only be affected by the actual promotion of that other official . Therefore the decision to include an official' s name on the list of those found to be most worthy of promotion within a career bracket does not constitute an act adversely affecting another official .
41 It follows that the application is inadmissible in so far as the applicant seeks the annulment of the entire list of officials found to be most worthy of promotion .
42 However, the application also seeks the annulment of the decision of the appointing authority establishing the list of officials found to be most worthy of promotion in so far as it excludes the applicant from that list . The Commission, referring to the judgment in Bossi, cited above, considers that part of the application also inadmissible .
43 It must be borne in mind, first of all, that the judgment in Bossi was delivered in a different legal context from that in the present case . Mr Bossi, the applicant in that case, was an official in Grade B 2 and had challenged a list of officials found to be most worthy of promotion to Grade B 1, that is to say into a different career bracket . According to the new measures governing promotions and careers adopted by the Commission on 24 November 1976 and published in Administrative Notices No 132 of 10 January 1977, the Commission publishes vacancy notices for such promotions into a different career bracket . Officials may then submit an application, even if they are not on the list of officials found to be most worthy of promotion . For promotions into another career bracket, therefore, the appointing authority is not bound by its adoption of that list, which is consequently a provisional measure inasmuch as it does not produce any definitive effect . As far as promotions within the same career bracket are concerned, however, it is clear from Point 8 of the abovementioned General Provisions ( see above, paragraph 3 ) that the appointing authority is bound by its own adoption of the list in question .
44 The facts in the present case are more similar to those in Ditterich, in which the annulment of a list of proposals for promotion to Grade A 4, that is to say within the same career bracket, was sought . The action in that case was thus brought against a list of officials producing effects similar to those of the list contested in the present case . That action was not dismissed as inadmissible . Even though, in Ditterich, the Commission did not challenge the admissibility of the application on the ground that the contested list was a preparatory act, this Court must take the judgment in that case into consideration .
45 It is also relevant to note that in its judgment in Joined Cases 181 to 184/86 Del Plato and Others v Commission [1987] ECR 4991, in which the annulment was sought of a number of decisions whereby an ad hoc committee had refused to enter the applicants' names on a list of Category B offi cials in the scientific or technical services capable of performing Category A duties, the Court of Justice did not dismiss the applications until it had considered the substance of the case . In that case, in accordance with the system instituted by the Commission, the appointing authority had automatically adopted the list of successful candidates ( see the Opinion of Mr Advocate General Mischo at p . 5003 ). Although the Commission did not argue that the act was preparatory in that case either, the judgment is also one which must be taken into consideration by this Court .
46 The Commission referred also to the case-law of the Court of Justice relating to the opinions of the Establishment Board provided for under Article 102(1 ) of the Staff Regulations . The Court of Justice regarded those opinions, which, if unfavourable, were binding on the appointing authority, as measures inseparable from the appointing authority' s decision on establishment . It considered that they did not have a direct adverse effect on the applicants ( judgment in Case 26/63 Pistoj v Commission [1964] ECR 341, at p . 352; judgment in Case 11/64 Weighardt v Commission [1965] ECR 285, at p . 298 ). However, such an opinion was addressed only to the appointing authority and thus did not constitute a decision relating to a specific individual within the meaning of the second paragraph of Article 25 of the Staff Regulations ( judgment in Case 80/63 Degreef v Commission [1964] ECR 391, at p . 403 ). It must also be borne in mind that the judgments cited in that regard concern an individual integration procedure unlike the collective promotion procedure with which the present case is concerned . The opinion of the Establishment Board was followed by a decision of the appointing authority on establishment, and that decision was addressed to the official concerned . The present action is brought against an act of the appointing authority which concerns all officials eligible for promotion . The question whether the part of that act which refers to those officials who were excluded from the list may be separated from the rest of the procedure, and whether it directly affected the legal position of the officials excluded, therefore arises in a different legal context from that of the integration procedures considered in Pistoj, Weighardt and Degreef .
47 The Commission also relied on the case-law of the Court of Justice concerning the procedure for retirement on grounds of invalidity . However, it must be observed that the order of the Court of Justice in Santarelli, cited above, which was mentioned in that connection, concerns a decision of the appointing authority to refer the applicant' s case to the Invalidity Committee . Such a decision is undoubtedly a preparatory measure inasmuch as it is followed, on completion of the individual procedure, by another decision which is addressed to the official concerned . In the present case, the decision adopting the list of officials found to be most worthy of promotion was not followed by an individual decision affecting the officials not listed . As far as promotion is concerned, a decision relating to a specific individual is taken only with regard to officials who are promoted, and no decision is addressed to those who are not . The case-law of the Court of Justice concerning preparatory measures in the context of the individual procedure for retirement on grounds of invalidity, like that concerning the opinions of the Establishment Committee, cannot therefore be transposed to the collective procedure of promotion within a career bracket .
48 This Court is aware that the considerations examined by the Court of Justice in paragraphs 22 to 24 of its judgment in Bossi, cited above, may be regarded as applicable also to the present situation . It therefore considers that it is necessary to re-examine the question whether, in the present case, the decision to exclude the applicant from the list of officials found to be most worthy of promotion was merely a preparatory act .
49 First of all, the exclusion of an official not included on such a list becomes definitive when, on the basis of that list, the appointing authority takes its decisions regarding promotion . In accordance with Point 8 of the General Provisions, only such officials as are on the list concerned may be promoted in the course of the year in question, and then only if adequate funds are available . Although those General Provisions do not have the character of strict law ( see the judgment of the Court of Justice in Case 782/89 Geeraerd v Commission [1980] ECR 3651, at p . 3663 ), the Commission observes that rule without exception, at least as far as officials in Grades B, C and D are concerned . Those circumstances alone suggest that the decision to exclude an official from the contested list is an act directly and adversely affecting the official excluded, since the Commission considers itself bound by the contents of the list . The decision to exclude an official may therefore be separated from the subsequent steps in the promotion procedure, which concern only the officials included on the list, still awaiting promotion .
50 If that were not so, the official would have to wait until the final decisions on promotion were taken before challenging - at least - one of those promoting an official on the list . Such a constraint would be likely to prove prejudicial to sound personnel management and administration . If an official not on the list claims that a purely procedural irregularity was committed either before or when that list was drawn up, then it is in both his interest and that of the institution that such a complaint should be examined as soon as possible . In order to ensure sound personnel management, therefore, the official must be able to lodge a complaint immediately so that the appointing authority may rectify any errors before the promotion procedure is completed .
51 It would, moreover, be contrary to the principle of sound administration for a procedural irregularity concerning only one official to result in the calling into question of the promotions of all the officials on the list . If the applicant had been obliged, as the Commission asserts, to challenge the decisions of promotion in order to defend his rights, he would have had to bring an action against at least one of those decisions, even though his complaint was unrelated to the merits of the official ( and colleague ) promoted . Such a result also appears incompatible with both the principle of sound administration and the desire to avoid straining relations between members of staff . In its judgment in a similar case, Case 24/79 Oberthuer v Commission [1980] ECR 1743, the Court of Justice held that the annulment of the promotions of all the officials who had in fact been promoted would constitute an excessive penalty for the irregularity committed in the applicant' s individual case and that it would be arbitrary to annul the promotion of only one official .
52 It must therefore be held that the appointing authority' s decision not to include the applicant on the contested list constitutes an act which, as regards the applicant, may be separated from the decisions bringing the procedure for promotion within the career bracket to an end . Although Point 8 of the General Provisions does not constitute a rule of law in the strict sense, the Commission is bound, as it maintained itself, by the list in question . Even on the assumption that the Commission retains - in exceptional circumstances the existence of which neither party has alleged in this case - the power to promote an official not on the list, such a theoretical hypothesis cannot be compared to the chances of officials eligible for promotion before the list is drawn up . An official not included on the list thereby loses any real chance of being promoted . His legal position is thus immediately and directly changed and affected at the moment when the decision to exclude him from the list is taken . It follows that the applicant was entitled to bring an action against that decision of the appointing authority without waiting for the final decisions on the promotions to be taken .
53 It must also be held that, contrary to the Commission' s assertions, the applicant has an interest in bringing an action against the decision excluding his name from the list . The Commission claims that the promotions for 1988 have become definitive with regard to the applicant . However, if the decision not to include his name on the list were to be annulled, the appointing authority would be obliged, pursuant to Article 176 of the Treaty, to recommence the whole procedure with regard to the applicant . If, following that reconsideration, a new decision of the appointing authority were to amend the list in his favour, the applicant would be able either to benefit from a career reconstruction or to bring an action seeking compensation for whatever damage he had suffered as a result of the failure to include him on the list in 1988 . The applicant' s interest in bringing an action is therefore incontrovertible .
54 Nor has the applicant lost his interest in bringing an action as a result of his retirement, pursuant to Article 52 of the Staff Regulations . Since a subsequent claim for damages remains possible, the applicant has retained his interest in seeking a ruling on his application . The judgment of the Court of Justice in Joined Cases 81 to 88/74 Marenco v Commission [1975] ECR 1255, on which the Commission relies, was delivered in circumstances different from those of the present case, since the applications which were dismissed as inadmissible in those cases had been brought by officials who had previously resigned .
55 The Court therefore considers that the application is admissible in so far only as it is directed against the appointing authority' s decision not to include the applicant' s name on the list of officials found to be most worthy of promotion .
The substance of the case
56 The applicant bases his application on two submissions, namely infringement of the second paragraph of Article 25 of the Staff Regulations and infringement of Article 45(1 ) of the Staff Regulations .
57 In his application, Mr Marcato maintains that the Promotion Committee for Category B and the appointing authority failed to comply with the second paragraph of Article 25 of the Staff Regulations . Mr Morel, the Director-General, should have explained to him the reasons for which Directorate-General XIX had not proposed him for promotion . In the applicant' s submission, however, Mr Morel' s letter of 3 August 1988 gave only vague and general reasons amounting to no reasons at all .
58 The Commission reiterates the arguments previously submitted in its defence in Case T-47/89 . It claims that the failure to provide reasons on which the applicant relies does not concern the act contested in this action but another, prior act . The Director-General' s letter of 3 August 1988 referred to the list of officials proposed for promotion by the Directorates-General . However, in the Commission' s submission, that list is also a preparatory act which - since it is not a decision adversely affecting the applicant - does not fall within the scope of Article 25 of the Staff Regulations . There can therefore be no question of an infringement of that article .
59 Assuming it to be possible to regard the submission as referring also to the list of officials found to be most worthy of promotion, the Commission considers that the appointing authority is not obliged to state the reasons for decisions on promotion with regard to officials who are not promoted .
60 In support of its second submission, based on infringement of Article 45(1 ) of the Staff Regulations, the applicant puts forward two arguments . First, he alleges that the promotion procedure was rendered irregular by the fact that there was no staff report on him in respect of the period from 1 July 1985 to 30 June 1987 . Secondly, he claims that he was unable to defend himself against the remarks made about him by the representative of Directorate-General XIX in the Promotion Committee .
61 The applicant states that his staff reports for the years 1973 to 1985 were excellent . The fact that there was no staff report in respect of the period from 1 July 1985 to 30 June 1987 meant that the Promotion Committee could not give his comparative merits consideration of a kind which was "genuine, serious and free from personal bias ". The applicant expresses doubts over the number and distribution of the points awarded to him on "objective" criteria and on criteria of merit .
62 In his reply in Case T-47/89, the applicant also stressed that there was a delay of over three months in communicating his staff report for 1985-87 . Now ( in 1990 ) that report is the subject of an assessment appeal procedure . He therefore considers that nothing in a document which is not yet final should be used as an argument against him .
63 With regard to his second argument, to the effect that he was denied the right to a fair hearing, the applicant stated in his reply in Case T-47/89 that the Promotion Committee for Category B reached its decision without having consulted the personal files of the officials eligible for promotion . He also alleged that nobody had expressed the slightest objection to the remarks made about him by the representative of Directorate-General XIX, although those comments were not borne out by his personal file . The applicant claimed that the decision not to include his name was based on the statements made by the representative of Directorate-General XIX within the Promotion Committee . Since he had not been made aware of that person' s attitude, he was unable to defend himself . If his conduct had been in any way unsatisfactory, which the applicant considers not to have been the case, his superiors should have informed him of the fact and sought to discuss it with him . In the applicant' s opinion, the way in which the appointing authority acted unilaterally was inconsistent with the objective, impartial and equal treatment which should govern a promotion procedure . Since he was not given a hearing, he was unable to provide proof of his superior' s animosity towards him . At the hearing before the Court, the applicant added that, according to information received from the staff representatives on the Promotion Committee, the representative of Directorate-General XIX expressed fierce opposition to his promotion .
64 The Commission reiterates the arguments which it put forward in Case T-47/89 . It denies that there was no comparative consideration of the candidates' merits . It considers that the applicant has adduced no evidence in support of that allegation . It further avers that he has remained silent on the question whether his merits were at least equivalent to those of the officials included on the list of those found to be most worthy of promotion .
65 The Commission states that, in accordance with Point 8 of the 1986 rules governing promotion procedures the Promotion Committee for Category B made a comparative consideration of all the officials eligible for promotion on the basis of the proposals of their services and their order of priority . Pursuant to Point 9 of those rules, the Committee gave particular attention to the situation of officials, such as the applicant, who were over the upper limits of the age and seniority brackets laid down .
66 The Commission further emphasizes the fact that the appointing authority which drew up the list in question also considered the comparative merits of all those eligible for promotion . The applicant has mentioned no facts to support his contrary assumption . As regards the alleged animosity on the part of his superior, the applicant should have provided proof, as the Court of Justice held in its judgment in Joined Cases 173/82, 157/83 and 186/84 Castille v Commission [1986] ECR 497, at p . 522 .
67 The staff report for the period 1985-87 is - according to the Commission - at least as important for the 1988 promotions as previous reports concerning a more distant past . The applicant received that report on 13 April 1988 . The assessment of his immediate superior was far from being as favourable as regards the services rendered by the applicant during the relevant period than had been the case for previous years .
68 The Commission refers to the case-law of the Court of Justice in support of its claim that the validity of that report was unaffected by a delay of slightly over three months ( judgment in Joined Cases 36, 37 and 218/81 Seton v Commission [1983] ECR 1789, at p . 1805 ). It further points out that the Court of Justice has held that promotions granted are not to be annulled unless the irregularities found in the personal file of one official eligible for promotion were capable of having a decisive effect on the promotion procedure ( judgment in Joined Cases 156/79 and 51/80 Gratreau v Commission [1980] ECR 3943, at p . 3955 ). The applicant has not referred to any fact from which it might follow that the alleged absence of his staff report was capable of having such a decisive effect on the course of the promotion procedure in question . Even if the assessments in question had been communicated to the applicant at the end of November 1987, there would have been no guarantee, in the Commission' s submission, that the initial assessments would have been appreciably improved to an extent which would have rendered them at least equivalent to those of the officials included on the list if - for the purposes of hypothesis - the appeal procedure had been concluded by July 1988 .
69 The reason for which the staff report did not appear in the applicant' s personal file before the Promotion Committee started its proceedings was that, not having been signed in due time by the applicant, it could not be regarded as final . The Commission considers that by requesting a referral to an appeal assessor and then the consultation of the Joint Committee on Staff Reports, the applicant himself created conditions likely to slow down the course of the assessment procedure . It stresses that, in accordance with the judgment of the Court of Justice in Case 1/87 Picciolo v Commission [1988] ECR 711, at p . 736, the delay of which the applicant complains is, at least in part, attributable to his own attitude .
70 As regards the infringement of the right to a fair hearing, the Commission concludes from the rules on promotion procedures ( see above, paragraph 3 ), Point 8 of which provides for the possibility of consultation between the Promotion Committee and a representative of the Director-General, that the applicant' s complaints concerning the Committee' s methods are unfounded . In the Commission' s view, such consultation was all the more necessary in the applicant' s case since he was over the upper limits of the age and seniority brackets laid down, and the mediator had drawn the Committee' s attention to the applicant' s case . The documents produced by the Commission do not, in its view, support a finding that the detailed explanations of the representative of Directorate-General XIX had the negative consequences ascribed to them by the applicant .
71 The extract of the Minutes of the Committee meeting was, in the Commission' s submission, completely neutral, and in no way revealed whether the applicant' s merits or conduct were in any way unsatisfactory according to the representative of Directorate-General XIX . It was in any event open to the applicant as a precautionary step to argue his case before the staff representatives on the Committee in order to counterbalance any unfavourable appraisal of him voiced within the Committee by the representative of his Director-General .
72 In the Commission' s submission, the Promotion Committee is not the proper place for quarrels and verbal confrontations between officials and representatives of the senior administration over the assessment of officials' merits and performance .
73 The Court considers that the submission based on infringement of Article 45(1 ) of the Staff Regulations, concerning the regularity of the promotion procedure, must be examined first . The applicant has put forward two arguments in that regard, including, in his reply in Case T-47/89, the fact that he was unable to defend himself against the allegations of the representative of Directorate-General XIX in the Promotion Committee even though his personal file did not bear out those remarks .
74 At the hearing, the Commission' s representative claimed that the applicant did not refer in his submissions to an infringement of Article 26 of the Staff Regulations, which relates to the personal files of officials . It must, however, be noted that the submission on which the applicant relied in his application concerns the regularity of the promotion procedure . The Rules of Procedure of the Court of Justice, applicable mutatis mutandis to the Court of First Instance, do not preclude the presentation during the course of the procedure of new arguments in support of a submission made in the application . Consequently, the Court must consider the argument based on an infringement of the rules governing the keeping of personal files, as presented by the applicant in his reply .
75 It must also be noted that the applicant stated in his application that "he has doubts over the points awarded to him on objective criteria and on criteria of merit" ( p . 7 ). The argument was thus raised succinctly in the application itself . It is therefore necessary to consider whether during the course of the promotion procedure the Commission infringed Article 26 of the Staff Regulations, under which the personal file of an official is to contain all documents concerning his administrative status and all reports relating to his ability, efficiency and conduct, and which provides that documents may not be used or cited by the institution against an official unless they were communicated to him before they were filed .
76 The draft list drawn up by the Promotion Committee and the appointing authority' s subsequent decision not to include the applicant on the list of officials found to be most worthy of promotion were based, in the absence of a staff report, on the statements made by the Director-General' s representative within the Promotion Committee . The Minutes of the committee' s meetings show that when considering the applicant' s conduct it took into consideration the relevant explanations of the Director-General' s representative . Given the importance which they thus assumed, those oral statements, made in the context of a promotion procedure before a committee set up for that purpose, are to be regarded as constituting a report within the meaning of Article 26 of the Staff Regulations . They should therefore have been immediately put into writing and recorded in the applicant' s personal file as required by Article 26 . Examination of the applicant' s personal file reveals that no transcription of those statements was recorded in it, even though they related to the applicant' s conduct, which the Promotion Committee was required to take into account when considering the comparative merits of officials as prescribed by Article 45(1 ) of the Staff Regulations . In that regard, therefore, there was indeed an infringement of the provisions of Article 26 of the Staff Regulations .
77 Furthermore, like the General Provisions, the 1986 rules governing promotion procedures ( see paragraph 3 above ), Point 8 of which, relating to Promotion Committee proceedings, provides for the possibility of consulting a representative of the Director-General, constitute only internal measures ( see the judgment in Geeraerd, cited above ) and cannot therefore derogate from mandatory provisions of the Staff Regulations ( see the judgment of the Court of Justice in Joined Cases C-41 and C-178/88 Becker and Starquit v Parliament [1989] ECR 3807 ) such as Article 26 .
78 As the Court of Justice has consistently held, the purpose of Article 26 is to guarantee an official' s right to a fair hearing by ensuring that decisions taken by the appointing authority affecting his administrative status and his career are not based on matters concerning his conduct which are not included in his personal file . The consequence of those provisions is that a decision based on such matters is contrary to the guarantees contained in the Staff Regulations and must be annulled because it was adopted on the basis of a procedure vitiated by illegality ( see the judgments in Case 233/85 Bonino v Commission [1987] ECR 739, at p . 759, in Case 88/71 Brasseur v Parliament [1972] ECR 499, at p . 505 and in Case 21/70 Rittweger v Commission [1971] ECR 7, at p . 18 ).
79 In the present case, the applicant' s right to a fair hearing was not guaranteed by the fact that it was open to him to take the precautionary step of arguing his case before the staff representatives on the Promotion Committee . That possibility, to which the Commission referred, cannot replace the guarantees which officials enjoy in that regard under the Staff Regulations .
80 It must therefore be held that the appointing authority' s decision excluding the applicant' s name from the list of officials found to be most worthy of promotion was taken following a procedure vitiated by illegality . Before the Promotion Committee had drawn up the draft list, the applicant was unable to exercise the right conferred upon him by the Staff Regulations to submit his comments on the statements of the Director-General' s representative which concerned him personally ( subparagraph ( b ) of the first paragraph of Article 26 of the Staff Regulations ). It follows that the appointing authority' s decision excluding the applicant' s name from the list in question must be annulled without there being any need to rule on the applicant' s remaining arguments concerning the illegality of the promotion procedure or on his second submission alleging a failure to state the reasons for the decision .
81 The Court had considered the possibility of hearing the evidence of the Director-General' s representative in order to ascertain the content of his statements concerning the applicant . However, even if the Court were to have taken such a measure of inquiry, it would have been necessary to annul the contested decision . It would not make good the infringement of the applicant' s right to a fair hearing for him to learn during the present procedure what was said about him within the Promotion Committee . For his rights to be re -established, he must be afforded the opportunity, in accordance with Article 26 of the Staff Regulations, to submit his comments on the statements made by the Director-General' s representative concerning him personally ( and not referring to other candidates ). Only once the applicant has been given that opportunity can the Promotion Committee and the appointing authority validly reconsider their decision concerning him and decide, if appropriate, whether to include his name retroactively on the list . It follows that in any event the contested decision must be annulled .
Decision on costs
Costs
82 Under Article 69(2 ) of the Rules of Procedure of the Court of Justice, the unsuccessful party is to be ordered to pay the costs if they have been asked for in the successful party' s pleading . Since the Commission has failed in the essential part of its submissions, it must be ordered to pay the costs .
Operative part
On those grounds,
THE COURT OF FIRST INSTANCE ( Fifth Chamber )
hereby :
( 1 ) Annuls the appointing authority' s decision excluding the applicant' s name from the list of officials found to be most worthy of promotion in 1988 into Grade B 2;
( 2 ) Dismisses the remainder of the application as inadmissible;
( 3 ) Orders the Commission to pay the costs . | 6 |
Opinion of Mr Advocate General Tesauro delivered on 12 December 1989. - Alfredo Grifoni v European Atomic Energy Community. - Action for damages - Non-contractual liability - Fall from a building. - Case C-308/87.
European Court reports 1990 Page I-01203
Opinion of the Advocate-General
++++
Mr President,
Members of the Court,
1 . By an application lodged at the Court Registry on 9 October 1987 Alfredo Grifoni, the proprietor of an undertaking of the same name based in Ispra, asks the Court to declare that the European Atomic Energy Community ( EAEC ) is liable for the damage which he suffered as a result of an accident of which he was the victim and, consequently, order the EAEC to pay appropriate compensation .
2 . Since the events prior to the application and the submissions and arguments of the parties are described in great detail in the Report for the Hearing, I shall summarize the facts of the present case briefly .
3 . By letter of 21 May 1984 the Joint Research Centre at Ispra ( hereinafter referred to as "the Centre ") accepted an offer from Mr Grifoni' s undertaking to conclude a pre-contractual agreement governing their future relations in respect of the performance of certain tin-plating and ironwork at the Joint Research Centre' s meteorological station . Clause 2 of that pre-contractual agreement stipulated that the agreement was to be valid for one year, to run, however, from the date of the first order placed by the Joint Research Centre .
4 . On 20 October 1985, when the agreement was not yet in force, Mr Grifoni, accompanied by an employee of the Centre, Mr Danielato, climbed onto the roof of the Centre' s meteorological station in order to take measurements . On that occasion he fell from a height of approximately 4.5 metres and suffered serious injuries . As a consequence of the accident and since the Commission of the European Communities refused his request for compensation, Mr Grifoni brought the present action .
5 . In support of his application Mr Grifoni submits primarily that the EAEC bears contractual liability, and in the alternative that it bears non-contractual liability .
The jurisdiction of the Court
6 . Before expressing an opinion on the substance of the case, I consider it necessary to deal briefly with the question of the Court' s jurisdiction, even though it is not disputed by the Commission .
7 . In so far as Mr Grifoni' s application is based on contractual liability, the Court' s jurisdiction appears to stem from Article 153 of the Euratom Treaty and from clause 17 of the pre-contractual agreement, which in turn refers to clause 16 of the General Terms and Conditions; jurisdiction is thus derived from an arbitration clause . For the time being, we may leave aside the question whether the validity of the abovementioned clause must be assessed in accordance with Italian law, which the parties have designated as the applicable law; and whether, if that is the case, the clause satisfies the formal conditions laid down in Article 1341 of the Italian Civil Code governing the terms of arbitration clauses . However, I must express my very strong doubts in that regard .
8 . With regard to the EAEC' s alleged non-contractual liability, the Court' s jurisdiction is derived from the combined effect of the provisions of Article 151 and the second paragraph of Article 188 of the Euratom Treaty . The latter provision is couched in terms which leave no room for doubt . This Court has exclusive jurisdiction both when non-contractual liability is alleged in relation to individual or legislative acts of the Community, and when the damage caused to the victims is itself caused by the material conduct ( 1 ) - acts or omissions - of the institutions or their servants in the performance of their duties . For an example of damage caused by objects or materials which are in the care of or are used by the Communities for performing their institutional tasks and which can give rise to the Community' s non-contractual liability, one need look no further than the damage caused by the use of radioactive substances . ( 2 )
A further example of non-contractual liability, arising this time from the Community' s failure to act, can be found in the judgment of 7 November 1985 in Case 145/83 Adams v Commission (( 1985 )) ECR 3539 . It is clearly stated in paragraph 44 that "by failing to make all reasonable efforts to pass on to the applicant the information which was available to it ... the Commission has incurred liability towards the applicant in respect of that damage ".
As regards the link between the fact which it is claimed gave rise to the liability and the performance of the duties of the institutions or their servants, in my view there is no doubt that that link does exist . In the first place, I consider that the functions and duties of an institution certainly include ensuring health and safety on the premises on which it functions . Moreover, any possible doubts in that regard are removed by the fact that a servant of the institution, and specifically the Director-General, has been expressly given the task of taking "on behalf of the Commission ... all measures necessary to ensure the safety of persons and installations for which he is responsible" ( Commission Decision 71/57/Euratom of 13 January 1971, Official Journal, English Special Edition, Second Series, September 1974, p . 14 ).
In support of the above, let me add that the jurisdiction of the Court under Article 188 of the Treaty deprives the national court of jurisdiction, the EAEC being immune from civil jurisdiction in a case such as this precisely because it is one of the entity' s own functions which is involved .
Contractual liability
9 . The accident, as I have pointed out, occurred when the contract was not yet in force . It follows that contractual liability is precluded .
10 . However, it remains to be considered whether it is possible to find in Italian law, which is applicable by virtue of the pre-contractual agreement, and in particular in Article 1337 of the Italian Civil Code, a "pre-contractual" liability or culpa in contrahendo .
Without its being necessary to express an opinion regarding the debate which has arisen within Italian legal and academic circles regarding the nature of such liability - that is, whether it is contractual or non-contractual ( see "Commentario breve al codice civile", Cian/Trabucchi, CEDAM 1988, p . 974 ) - it is sufficient to point out that none of the pre-conditions for such liability are to be found in the facts of the present case . Article 1337 provides that "in the negotiations and in the drawing up of the contract the parties shall act in good faith ". First of all, it is common ground that in the present case the parties had gone beyond the stage of negotiating and drawing up the contract . Consequently, none of the pre-contractual duties established by Italian jurisprudence and academic writers was infringed : neither the duty to provide information regarding the factors necessary to form an accurate idea of the contract, nor the duty of care, nor the duty of secrecy .
It is also common ground, again as a matter of general legal theory, that for pre-contractual liability to exist there must be some practical relationship with the subject-matter of the future contract, a relationship against which the traditional obligation of good faith is measured . A textbook example is the seller who significantly reduces the value of the object while negotiations are still in progress, or the party who breaks off the negotiations themselves entirely unreasonably . In the present case, on the other hand, the relationship between the event in question and the contract is merely chronological inasmuch as the event occurred prior to the entry into force of the contract .
11 . Consequently, from the above considerations it appears that in the present case neither contractual liability nor pre-contractual liability can be said to have been established .
Non-contractual liability
12 . As is stated in the recent judgment of 9 November 1989 in Case 353/88 Briantex v EEC and Commission (( 1989 )) ECR 3623, "the Court has consistently held (( that )) non-contractual liability on the part of the Community and entitlement to compensation for damage are conditional upon the existence of an unlawful act committed by one of the Community institutions, on actual damage and on an aetiological link between them ".
I doubt therefore whether the three conditions are met in the present case .
13 . According to Mr Grifoni, the unlawful act for which the Commission of the EAEC is liable consists in the infringement, primarily, of several provisions of the Italian legislation on the prevention of accidents ( in particular, Article 10 of Presidential Decree No 164 of 7 January 1956 on the prevention of accidents in the building trade ( GURI No 78, 31.3.1956 ), and Articles 26 and 27 of Presidential Decree No 547 of 27 April 1955 on the prevention of accidents at work ( GURI No 158, 12.7.1956 ). The application of those provisions of Italian law within the Centre is expressly provided for by Article 31 of Annex F to the Agreement of 2 July 1959 between Italy and the EAEC .
Secondly, there has been an infringement of Article 10(3 ) of Commission Decision 71/57 of 13 January 1971 on the reorganization of the Joint Nuclear Research Centre ( Official Journal, English Special Edition, Second Series, September 1974, p . 14 ), which imposes on the Director-General the duty to take "on behalf of the Commission ... all measures necessary to ensure the safety of persons and installations for which he is responsible ".
Thirdly, several conventions and recommendations of the International Labour Organization ( ILO ), which constitute common general principles in the laws of the Member States, were infringed .
14 . The Commission' s defence consists mainly in denying ab initio the existence of non-contractual liability, placing the facts of the present case within the scope of contractual liability; however, the Commission itself hastens to deny in theory the existence of the pre-conditions for such liability . At the hearing, the Commission' s agent was particularly clear on two points which had given rise to uncertainty at the written stage of the proceedings, when he stated :
( a ) that Mr Grifoni was acting within the framework of a pre-contractual agreement which he had accepted, an agreement which transferred to him responsibility regarding safety measures;
( b ) that if he had fallen from the roof through his own lack of care, the Commission could not be held to be at fault .
Finally, the Commission explained to the Court that, in its view, the accident should be classified as an "occupational hazard" which could have been foreseen and avoided with a minimum of standard precautionary measures .
15 . I must say straight away that the Commission' s arguments appear to me to be minimalist and in any event concentrated on only the hypothesis of contractual liability, which I have ruled out . The reference to clause 8 of the pre-contractual agreement is thus irrelevant for the simple but very good reason that it was not yet in force at the material time . I leave aside, yet again, my very strong doubts concerning the validity, for the purposes of Italian law, of clause 8 which, in so far as it limits liability and the capacity to raise objections, should have been expressly agreed to under Article 1341 of the Italian Civil Code, under penalty of nullity .
However, the Commission has made no submission to challenge the argument that it bears non-contractual liability and confines itself to acknowledging that it is a question of "objective" liability, or liability without fault .
16 . Consequently, the first question which must be considered is which criteria are to be taken into account in assessing the unlawfulness of the conduct which allegedly gives rise to non-contractual liability .
17 . The reference in Article 188 of the Euratom Treaty to "general principles common to the laws of the Member States" could, at first sight, give rise to doubts regarding the possibility of referring exclusively to the provisions of a single national legal system; however, notwithstanding the need to assess liability and its consequences in the light of the general principles common to the laws of the Member States, which has already been explained in a considerable body of case-law, it seems to me that at least one of the conditions for liability, that of unlawfulness, must be considered principally in relation to the provisions of the relevant legal system which are alleged to have been infringed .
The observations I have just made are particularly relevant to a case such as the one now before the Court in so far as, in the first place, it would be strange for the victim of an accident to receive protection, if he were entitled to it, which was inferior to that provided for by the Member State in which the accident occurred; in the second place, the immunity from the civil law of the Member State which exists in a case such as this, and which is the result of the Court' s jurisdiction under Article 188 of the Euratom Treaty, must not result in a significant loss of protection .
In the Italian legal system, besides the extremely general provision on non-contractual liability, based quite simply on the principle of neminem laedere ( Article 2043 of the Civil Code ), at least two other provisions of the Civil Code ( all applicable to the civil service ) come into consideration with regard to the present case, namely :
Article 2051, which provides that :
"Persons are liable for damage caused by objects in their care, unless it can be shown that the damage was caused accidentally";
Article 2087, which provides that :
"The owner of an undertaking is under an obligation to adopt those measures which, depending on the particular nature of the work, experience and technology, are necessary to protect the physical and mental well-being of workers ."
18 . That being the general legislation applicable, the relevant facts of the case are the following :
( i ) Mr Grifoni was not a worker subordinate to the Centre, nor was he ( yet ) related to it by a contract for tender; he was merely a third party;
( ii ) It is common ground that Mr Grifoni had been "called in" by officials of the Centre to take measurements on the abovementioned "cantilever roof" which gave access to the meteorological equipment on the roof, a place which was not known to Mr Grifoni;
( iii ) It is common ground that the officials of the Centre were in possession of the key to the door giving access to the "cantilever roof", which was normally locked, and that on the occasion in question one of the officials, Mr Danielato, accompanied Mr Grifoni, opening the door and thus allowing him access .
19 . Those being the facts which emerge as common ground from the documents before the Court and from the hearing, it seems to me first of all that it is possible to apply either Article 2043 of the Italian Civil Code, which lays down the principle of alterum non laedere, or Article 2051 of that code which, being a further elaboration of the principle in question, makes provision for liability for damages caused by objects in a person' s care on the assumption that there was effective control over the object .
20 . In the first case, liability is based on the notion of fault and the relevant burden of proof lies with the person who suffered the damage; in the second case, the custodian' s liability is, on the contrary, based on a presumption of fault and the burden of proof is reversed ( res ipsa loquitur ). In any event, the difference is not relevant in the present case in so far as it is common ground that the Centre did not take any precautions at all, either in respect of its employee Mr Danielato or Mr Grifoni, to prevent the accident, which substantiates the Centre' s fault .
21 . As regards the suggestion that Mr Grifoni was partly at fault, that does not emerge from any of the documents before the Court, since the Commission, with which the burden of proof lay, neither proved that that was the case nor asked for it to be proved .
22 . Let me also add that, besides the usual general provisions on civil liability, the Italian legal system, like most legal systems, contains more specific rules for the prevention of accidents at work . The fact that in the present case an accident at work is at issue cannot reasonably be disputed, as the substantial case-law shows . The concept of an accident at work covers in fact any accidental event which occurs suddenly at work, which causes death or permanent incapacity for work, whether total or partial, or temporary total incapacity which causes absence from work . Moreover, "at work" is the same as "for the purpose of work", in so far as it exists whenever the interests of the employer, production or circumstances relating to the employment relationship are found . Despite the Commission' s half-hearted attempt at the hearing to deny that this was an accident at work, it is common ground that Mr Grifoni was on the "cantilever roof" at the Centre for the purpose of carrying out work and certainly not as a mere courtesy .
23 . The legislation which is relevant in the present case is contained in Articles 26 and 27 of the rules on the prevention of accidents at work ( Presidential Decree 547/55 ) and Article 10 of the rules on the prevention of accidents in the construction industry ( Presidential Decree 164/56 ), which are relied on by Mr Grifoni, as I have said; there is also the abovementioned general provision in Article 2087 of the Italian Civil Code, which lays down the general principle of accident prevention and is applicable both to private entrepreneurs and to public bodies .
That having been said, a dispute has arisen as to whether the abovementioned special rules are applicable - as claimed by Mr Grifoni but denied by the Commission - to the present case .
24 . In principle, the Centre was subject to the abovementioned body of rules as well as to the Italian law on civil liability . In the first place, the legislation on the prevention of accidents at work is, in Italy, of so-called compulsory application (" applicazione necessaria "), since it is related to clear social requirements which cannot be derogated from; and the fact that the EAEC enjoys certain privileges and immunities in the State in which it is based does not exempt it from complying with Italian laws : immunity from civil and criminal proceedings certainly does not mean immunity also from the law . In the second place, assistance in removing any doubts is provided in the present case by a clear provision of the agreement between Italy and the EAEC for the setting up of the Centre, which in Article 31 of Annex F imposes on the Commission a duty to apply, "on its own responsibility, the Italian provisions concerning health and safety at work ".
In particular, there is no doubt that the Centre was subject to the obligations imposed by Presidential Decree No 547/65 on the prevention of accidents at work in general . That legislation ( Article 1 ) applies in fact "to all activities which have been assigned to subordinate workers", as well as to the State and to all public bodies . Article 4 imposes an obligation on employers, managers and supervisors to "put into effect the safety measures provided for in this decree ".
Article 27 provides that "parapets shall be provided on scaffolds, gangways, working platforms, and elevated working places and passageways ". That provision has been held to apply not only in the construction industry but whenever work is carried out at a height of more than one and a half metres and also to the case of occasional work ( judgment of the Italian Court of Cassation of 29 October 1984, Rivista penale 1985, p . 922 ).
In addition there is the more specific legislation on the prevention of accidents in the construction industry ( Presidential Decree 164/56 ), adopted on the basis of the model set out in the relevant ILO convention, Convention No 62 . That legislation ( Article 1 ) applies to "work on the construction, maintenance, renovation and demolition of fixed structures", and Article 10 provides more specifically that "when work is carried out on eaves and cornices, roofs and similar places which give rise in some way to the risk of falling from a height, the workers carrying out the work must use appropriate safety harnesses ". Also, the Court of Cassation has stated on a number of occasions that the obligation imposed by Article 10 "is absolute and does not allow derogations or alternatives of any kind whenever work is carried out which gives rise in some way to the risk of a fall from a height and it is not possible to provide safety rails or parapets" ( judgment of the Court of Cassation of 29 March 1984, Rivista penale 1985, p . 606 ).
25 . More generally, it should be pointed out that as well as applying the legislation on accident prevention, the courts, both commendably and legitimately, have not failed to draw every useful consequence from the fundamental constitutional principle ( Article 32 ) of the absolute right of the individual, and the corresponding interest of the community, to physical safety, a right which is defined as "irrevocable and inalienable ". In that context, the courts have, first of all, held that "a 'workplace' must be interpreted as meaning not only the pre-established place where the worker normally expects to carry out tasks appointed to him, but also all other places where the same worker, even if merely exceptionally, may go to fulfil the requirements of his employment" ( judgment of the Court of Cassation of 11 October 1979, Rivista penale 1980, p . 584 ).
It should also be pointed out that the Court of Cassation has on a number of occasions confirmed the principle that "the rules on the prevention of accidents at work to eliminate not only the risks related to the performance of particular employment activities, but also, and above all, those risks which are a consequence of any inexperience, negligence and carelessness of workers themselves, whose safety must always be protected, even against their own will ( judgment of the Court of Cassation of 5 December 1977, Rivista diritto lavoro 1978, II, p . 499; and followed in the judgment of the Court of Cassation of 24 June 1980, Rivista penale 1981, p . 103 ).
Finally, a substantial and consistent body of case-law of the Court of Cassation has gradually extended the protection afforded by the abovementioned rules both to non-dependent workers and to mere third parties who "may find themselves in the dangerous situation which the law seeks to prevent by imposing certain precautionary measures" ( see judgment of the Court of Cassation of 20 December 1971, Cassazione Penale - Massimatio annotato 1973, p . 185; judgment of the Court of Cassation of 22 November 1979, Rivista penale 1980, p . 584; and judgment of the Court of Cassation of 15 October 1984, Rivista penale 1985, p . 606 ).
26 . As regards the case at issue, it seems to me that in view of the facts described above it cannot be assessed without taking into consideration the legal report drawn up for the occasion by the experts of the Unità socio sanitaria locale ( USSL ) No 5 ( annexed to Mr Grifoni' s application ) which, under Law No 833 of 23 December 1978 setting up the Italian health service ( 3 ) is the public body which is competent to monitor compliance with the legislation on accident prevention .
The abovementioned report shows clearly that since the Centre had not taken any safety measures at all - there were no fixed parapets, temporary scaffolding or safety harnesses ( either for Mr Grifoni or for Mr Danielato, an employee of the Centre ) - it committed an infringement of the abovementioned rules .
It scarcely needs emphasizing that the same report points out that the officials of the Centre, far from denying the truth of the observations made by the experts of the USSL, confined themselves to denying that the Centre was subject to Italian law, relying, moreover, on the very international convention which, as I pointed out above, expressly confirms the Centre' s obligation to comply with the national legislation .
27 . From all the above considerations, and regardless of the relevance in the present case of the special Italian legislation for the purposes of establishing the EAEC' s non-contractual liability under Article 188 of the Treaty, it is sufficiently clear that the Centre has failed to fulfil the undeniable duties of care and prevention which exposure to the risk of a fall from the cantilever roof imposed .
In my opinion, there is no doubt that it can be demonstrated that there is a duty of care and prevention whenever there is a risk of a fall from a height; and that, in concrete terms, that duty results in an obligation to provide those concerned - even those exposed to the risk only by chance - with appropriate safety equipment . Incidentally, I should also point out that the terrace roofs of the Community buildings here in Luxembourg are - as far as I myself have been able to establish - equipped with parapets or in any case with some protection around their perimeters .
28 . The duty in question fell to the Centre in so far as it was the Centre which controlled and supervised the premises as a whole . Moreover, as a body of which subordinate workers had expectations the Centre is subject to the specific obligations imposed on owners of undertakings by Article 2087 of the Italian Civil Code and the special accident prevention rules which it contains . By that I mean that the Centre is under an obligation to prevent accidents at work regardless of Mr Grifoni' s incident ( and it is worth pointing out that Mr Danielato himself, an official of the Centre, was exposed to the risk in question ); and that therefore the relevance of those obligations, and indeed their existence or otherwise, does not depend on Mr Grifoni' s presence or the nature which may be ascribed to the relationship between Mr Grifoni and the Centre .
Consequently, the idea that the Centre was not under an obligation to prevent the accident merely because Mr Grifoni was not an employee of the Centre must be rejected completely . The theory is wholly unfounded from two points of view, both decisive . In the first place, the specific obligations to prevent accidents are, as I have already emphasized, intended to protect not only subordinate workers but also third parties who are exposed to the risk by chance . In the second place, the Centre, in so far as the roof was "in its care", in the aforementioned sense of exclusive control, is liable for the damage caused in particular to third parties in accordance with the general principle laid down in Article 2051 of the Italian Civil Code . Nor is it necessary to refer to the "occupational hazard" to which Mr Grifoni was exposed as an autonomous worker or, according to the Commission' s theory, as a ( future ) successful tenderer . In fact, discussion of that issue is possible only and exclusively if control of the "cantilever roof" had already been transferred from the Centre to Mr Grifoni, as happens when the principal "consigns the work" to the successful tenderer and therefore transfers to him all control of, and responsibility for, the property on which the work ordered is to be done . In that regard, moreover, it must be pointed out first that according to Italian case-law it is occasionally necessary to ascertain whether the organization of the work has been entrusted wholly to the successful tenderer or whether, on the contrary, the principal has reserved some power of control over the performance of the work . The successful tenderer has exclusive liability for accidents only in the first case (" when the successful tenderer is not working absolutely autonomously, the principal, who participates in the performance of the work, is also liable for failure to adopt accident prevention measures, and in such a case is also under a duty to ensure safe working conditions with regard to the work contracted out ": judgment of the Court of Cassation, Criminal Division III, of 27 November 1989, No 11513 ).
Secondly, in the present case the problem does not arise, either in law or in fact . It does not arise in law because at the material time there was no contract won by tender between the Centre and Mr Grifoni and the Centre had certainly not "consigned" the cantilever roof to Mr Grifoni' s care to enable him to organize his future work; it does not arise in fact because the cantilever roof was under the exclusive "control" of the Centre, inasmuch as it was inaccessible to any stranger who was not accompanied by an official of the Centre who had in his possession the key to the door which gave access to the roof .
29 . It scarcely needs pointing out that the legislation to which I have referred, in particular the general rules on civil liability, corresponds to general principles common to the laws of the Member States in the relevant field, and that the specific accident prevention rules correspond exactly to the aforementioned ILO rules .
30 . Moreover, since there is in the present case, without there being a need for me to make any further comment, a causal link between the Centre' s failure to act and the accident which occurred, and even real and considerable damage, I consider that the EAEC bears non-contractual liability under Article 188 of the Treaty .
31 . With regard to the quantification of the damage, the specialist medical report carried out on behalf of Mr Grifoni to assess the consequences of the accident of 20 October 1985 ( admission to hospital with uncertain prognosis and diagnosis of cranial injury with a fronto-parietal fracture radiated at the base, a 1/3 proximal fracture of the left leg, a multi-fragment break of the left kneecap, a fracture of the epiphysis of the left radius; see Annex 6 of the application ) shows that the consequences of the accident are the following :
( i ) complete invalidity for work for nine months;
( ii ) capacity for work reduced by 70 %.
32 . In his application Mr Grifoni reserved the right to quantify, during the proceedings, the amount of damage he suffered . The Commission, which denied liability for causing the accident, has however, in the alternative, criticized the results of the aforementioned medical report . In particular it contested "the extent of the injuries complained of by Mr Grifoni and which of those injuries was caused by the fall and which on the other hand are to be attributed to the applicant' s previous pathological conditions", and it reserved the right to "carry out independent checks and appropriate preliminary investigations if and when its liability is established ".
Since I would suggest that the Court rule that the Commission bears non-contractual liability for causing the accident of which Mr Grifoni was the victim and since I consider that the Court is not able, from the documents before it, to determine the amount of damage to be compensated, I would suggest that the parties should be asked to reach an agreement, on the understanding that should an agreement not be reached within 6 months, the matter will have to come before the Court again .
33 . In conclusion I propose that the Court should :
( i ) declare that the Commission of the EAEC is liable for the accident which occurred on 20 October 1985 and of which Mr Grifoni was the victim;
( ii ) request the parties to agree - within six months of the judgment being delivered - on the amount of compensation, on the understanding that if agreement is not reached the Court will settle the damages;
( iii ) order the Commission to pay the costs .
(*) Original language : Italian .
( 1 ) See the judgment of 12 July 1969 in Case 9/69 Sayag v Le Duc (( 1969 )) ECR 329 .
( 2 ) See G . Venturini : La responsibilità extracontrattuale delle Comunità europee, Giuffré ed ., Milan, 1980, p . 97 .
( 3 ) Ordinary supplement to GURI No 360, 28.12.1978, in particular Article 21 . | 7 |
MR JUSTICE NELSON :
On 16 December 2004 in the Crown Court at Newcastle-upon-Tyne, the Appellant was convicted of conspiracy to pervert the course of the public justice. On 10 February 2005 he was sentenced to 10 years imprisonment for that offence and ordered to pay £23,433 towards the costs of the Prosecution.
The Appellant was originally jointly charged with John Reginald Atkinson but Atkinson changed his plea to guilty to the offence of conspiracy to pervert the course of public justice before the jury was sworn. Both the Appellant and Atkinson had been represented by different solicitors from the same firm. After the plea Mr Brown, the Appellant's solicitor withdrew from the case due to professional embarrassment. As a consequence the Appellant applied for an adjournment to instruct fresh solicitors. This was granted, but a longer adjournment was then requested when the Appellant raised matters upon which his new solicitor said he needed many hours to investigate. This application was refused by the Judge and the new solicitor, Mr Forrester, then withdrew and the case continued with the same counsel, Mr Knox, and a second junior, Miss Henley, in respect of whom the Court ordered a representation order. At the sentencing hearing on 10 February 2005 Atkinson was sentenced to 4 years imprisonment.
The Appellant renews his application for leave to appeal against conviction after refusal by the single judge, and appeals against his sentence with the leave of the single judge.
The Background.
The prosecution of the Appellant and Atkinson for conspiracy to pervert the course of justice arose out of a murder case involving the Appellant's son, Lee Harrison. It was alleged that the Appellant and Atkinson conspired to influence witnesses or potential witnesses in Lee Harrison's trial by encouraging them to change their account of relevant events.
The case against Lee Harrison was that in the early hours of 5 August 2001 he and George Coleman who had dropped off Roweena Frost, George Coleman's girlfriend at her home, went to Grangetown, Middlesborough. They there met Jonathan Crossling and Thomas Petch. They were looking for a drug dealer named Dalzeil, whom they wished to attack because he had been "taxing" other drug dealers in the area. At 6.45 a.m. they went to 45 Errol Street, the house of Michael Moody, who allowed prostitutes to use rooms there. A man called Kalwant Singh was there with a prostitute, Claire Burgess. Irritated at being unable to find Dalzeil, Jonathan Crossling and Petch beat up Singh and threw him out of the bedroom window causing injuries from which he died. Downstairs they beat up Moody and threw him into a fish tank causing him serious facial fractures. It was alleged that Jonathan Crossling's brother, Jason Crossling was also involved but he was subsequently acquitted at trial. When carrying out the investigation into the murder of Kalwant Singh and the attack on Moody the police took statements from several witnesses, including Claire Burgess, Michael Moody, Cheryl Barker, Yvonne Stewart (Moody's daughter) and Roweena Frost. Roweena Frost, a prostitute, described in her statement how, at 3.30 a.m. on 5 August 2001 she was sitting in her boyfriend, George Coleman's car, when Claire Burgess entered the car, bought some cocaine and left with Kalwant Singh. Shortly afterwards Lee Harrison left a nearby take-away, got into Coleman's car which was driven off. Coleman and Lee Harrison left Roweena Frost at her home and drove off together towards Grangetown. Her evidence therefore linked Lee Harrison to George Coleman at that time of the morning and their joint departure to Grangetown in the car.
Michael Moody gave a statement indicating that Lee Harrison was one of the men present at the time of the violence. When he gave evidence at the subsequent trial of Thomas Petch, George Coleman and Jason Crossling he said that he could not remember what had happened and was treated as a hostile witness. Yvonne Stewart, another prostitute, and Moody's daughter, made a statement about finding her father injured at the house. Cheryl Barker, also a prostitute, gave a statement naming Lee Harrison as being present in another house at the time of the later, connected violence. The witnesses, the Crown said, came from the world of drugs and prostitution and were therefore vulnerable.
Lee Harrison and Jonathan Crossling fled abroad. As a consequence Coleman, Petch and Jason Crossling were tried separately. Coleman and Petch were convicted of murder and section 18 offences and sentenced to life imprisonment. Jason Crossling was acquitted on the basis that he had not been there and was misidentified. Jonathan Crossling was extradited from Spain and in 2003 his plea of guilty to manslaughter was accepted and he was sentenced to 18 years imprisonment. In late 2003 Lee Harrison was arrested in Jamaica, and after resisting extradition for some time he allowed the proceedings to go unchallenged and was brought back to the UK in April 2004. In November 2004 he pleaded guilty to manslaughter and was sentenced to 9 years imprisonment.
The conspiracy to pervert the course of public justice.
The case against the Appellant was that at his instigation, Atkinson approached Roweena Frost in May 2004 on some three occasions. She said that Atkinson said to her things such as "You'd better get down and drop the charges or you will have trouble with Tommy", "Tommy's going to get some lads from Leeds to sort you out", "You've got a week to get down to the police station to get the charges dropped against Lee. You can tell Yvonne Stewart and Cheryl Barker to go down to the police station and drop the charges as well".
On 11 May 2004 she saw the Appellant in Middlesborough Police Station through the window and went in to speak to him. When she said to him "What's this about you going to do me in", he said "I don't know what you're on about". When she told him that Buster Atkinson had been threatening her to drop charges he said "That's Buster playing gangster". She said the Appellant gave her £10 to get to the bus and told her to tell the police that Lee Harrison never went to Grangetown in the car. She made no mention of any cross or necklace which the CCT, R. v of them standing talking in the police station showed she had given to him. Both in this account and elsewhere in her evidence Miss Frost sought to exculpate Mr Harrison. Thus she said that although Buster Atkinson had approached her and threatened her with Tommy Harrison, she was not 100% certain that it was anything to do with Tommy as it might have been just Buster using his name.
The Defendant chose to put another incident to her in cross-examination which she had reported to the police on about 7 July 2004, but which the police had not apparently accepted as accurate. This incident had not been opened or adduced in evidence by the Crown. She stood by her account of that incident in evidence, stating that two men had assaulted her and her boyfriend and had thrown a pot through the window at her flat and that this was to do with the murder trial. One of the police officers who had investigated her complaint, Mr Swash, said in evidence that her account was not supported by what he was able to see or by what he learned of her boyfriend who said that he had been working in Manchester on the day in question.
Roweena Frost also added in evidence that in a police van, in which she was travelling with the Appellant when she had been kept in custody before giving evidence, the Appellant had said to her that she should "Tell them a pack of lies and I will walk and so will Buster".
The Crown also alleged that Moody was provided with board and lodging at a hotel in Middlesborough between March and May 2004 to a value of £750, ostensibly by Atkinson but in reality paid for by the Appellant. It was alleged that Moody was induced to make a statement to the effect that Lee Harrison never arrived at Errol Street. One of the two versions of that statement was sworn as a statutory declaration in front of a solicitor on 16 June 2004 by Moody.
On 1 July 2004, when the Appellant was arrested, two drafts of Moody's statement were found at his house. One of the pages contained the words "At no time was Lee Harrison in my house that night". The Appellant crossed out "was" and inserted "did I see". The next page, which did not mention Lee Harrison in the typed part, had the manuscript addition "at no time was Lee Harrison at my house". The Appellant alleged that this document was for use in the appeal of Petch.
Moody was not called to give evidence against Lee Harrison, having been treated as a hostile witness by the Crown at the trial of Petch and Coleman. Nor was he called to give evidence against the Appellant. He was however, the Crown contend, at all material times a potential witness capable of being subpoenaed. The Appellant himself said that he wished him to be called at Lee Harrison's trial so that he could be cross-examined.
In his first interview the Appellant made no admissions. He denied any wrong doing. His evidence was consistent with interview. He repeatedly said that he wanted Moody in court for cross-examination. He did not know who sent the Moody documentation to him. He had not met Roweena Frost before 11 May when she had offered him the cross and chain at the police station. He said that he did not want it and chased her away and then she came back. In his second interview he said that in the early stages of the murder enquiry the police would not tell him why they wanted to see Lee. He had only said that he'd bought the cross from Roweena after he had seen the police video. It was stupid not to tell the full story about buying the cross from her, but it was not an attempt to interfere with the witness. He would not tell the police about Petch's appeal although he understood that that was what the Moody documents were for. He had been kept informed of enquiries and developments and was provided with what he thought was a final statement from Moody on 30 June. He wrote the comments about Lee not being in the house. He did not ask anyone to see Moody and have his statement changed. He wanted the people who were making enquiries to come forward but he would not name them. At his next interview his solicitor read a statement and the Appellant said he had no further comment.
When he gave evidence at his trial, the Appellant said that he believed that his son was innocent and did not understand why he had pleaded guilty to manslaughter. The Appellant was an old friend of Buster Atkinson and was his landlord. He did not drive and Buster drove him about. There was no conspiracy. Atkinson, who was on a frolic of his own, decided to put up Moody at the Longlands Hotel at his own expense. The Appellant was ignorant of the alleged threats made by Atkinson. The Appellant did nothing to interfere with Roweena Frost as a witness in his son's case. He had not met her until 11 May at the police station. She said her name was Roweena and she was George Coleman's girlfriend. She said that she would not make a statement against Lee. She said it was "those in there," that is the police, "when we rattle they get us in here and give us a tenner or a bag of heroin and we'll do anything". She asked him to lend her a tenner and to give her a tenner for the cross and chain. She was bemused, pallid, sweating and shaking and he gave her a tenner because of the state she was in. Once she had left he thought the cross might be stolen. She came back and he went outside and gave her back the cross. He had not seen her since then until the hearing.
Page 2 of Moody's statement was popped through his letterbox on 1 April 2004. It was in an envelope labelled "Tommy" with a phone number and a message saying "Ring Joe Boy". The next day Joe Boy, whom the Appellant did not know, came round and said that he was Petch's cousin and they'd seen Moody who was annoyed and wanted to make a true statement about the appeals of Petch, Coleman and Crossling. The Appellant said if they wanted to tell the truth why not do so, and he added that his son was not there. He wrote the words on the document. It was just a comment of something he believed to be true and was not an attempt to distort justice; it was more or less a question "Did you see Lee there that night?" He photocopied it (other copies were found at his house), and gave the copy back to Joe Boy. It was not an attempt to derail justice in his son's case. On 30 June an envelope containing pages 2 and 3 was delivered to his house. He rang his solicitor but could not get through. Eventually he got through to Lee's solicitor.
As to not telling the police in interview about Joe Boy and Petch's appeal he said that he had nothing to hide but did not want to betray a confidence. He was also very suspicious that he was being fitted up. He was suspicious whether it was a coincidence that Roweena Frost was just going to see her solicitor and happened to be walking by the police station when he was in there. He produced a tape during the trial in which he alleged that DC Dawson said "I know Lee wasn't there", and in which the Appellant made references to wealth of £3 million from property.
It is important to recount in greater detail the circumstances of the adjournment after Atkinson had pleaded guilty, as the Judge's refusal to grant a lengthy adjournment is a matter of significant complaint. Atkinson's plea of guilty on 1 December 2004 was, the Appellant said, wholly unexpected. He and Atkinson had been represented by the same firm of solicitors, albeit by different partners, and the firm felt obliged to withdraw from the case after the plea. Another local solicitor, Mr Forrester, was assigned to the Appellant's case which was adjourned until 3 December so that he could see the Appellant, who was in custody, in court and take instructions. On 3 December however the Appellant was brought to court late and only a short conference was possible. At that hearing an application was made by the Crown to use Atkinson's plea in evidence at the Appellant's trial but this was later withdrawn. On Sunday 5 December 2004 counsel and Mr Forrester had a conference with the Appellant in prison. He said that he had supplied extensive information about Customs and police corruption which was confidential and relevant to his defence. This evidence, he said, showed why, as he believed, he had been 'fitted up' as he later said in evidence.
On 6 December 2004, counsel, who considered it would take twenty hours to take a proper proof from the Appellant and examine a substantial number of documents, applied for an adjournment to enable his solicitor to do that. The Judge was informed that if the adjournment was not granted the solicitor would feel professionally embarrassed and would be unable to continue acting for the Appellant. A hearing in chambers in the absence of the Crown took place and the Judge refused the application to adjourn. Mr Forrester withdrew. Since the Judge was of the opinion that the existing defence statement did not show the relevance of the matters being raised, that document had to be amended and he granted time for that to be done. An assertion of malicious prosecution was added to the defence statement but was not pursued in depth at trial beyond the Defendant stating in evidence that he believed he had been 'fitted up'.
During the trial the Appellant was represented by Mr Knox with the assistance of junior counsel Miss Henley, but no solicitors. This it was contended on behalf of the Appellant prevented the defence from obtaining evidence, seeing witnesses and dealing with documents, all of which required the services of a solicitor. There were therefore aspects of the case which they were unable to prepare and hence were not pursued.
The grounds of appeal and submissions.
(1) It was submitted that the refusal to grant an adjournment to enable the new solicitor Mr Forrester to take proper instructions, examine new documents, obtain evidence and to see witnesses was an error in law and a failure to accord the Defendant a fair trial within the meaning of Article 6 ECHR. The Appellant was entitled to a solicitor and counsel and through no fault of his own had no solicitor at all. The plea of guilty by Atkinson was a complete surprise and in no way brought about by the Appellant's actions. Indeed, Mr Knox submitted, the plea had no upside for the Appellant. It was therefore through no fault of the Appellant that Mr Brown felt professionally embarrassed, withdrew, and left him without a solicitor. The tape which the Appellant produced could have been verified and an agreed transcription produced had there been an adjournment. The tape was produced by the Appellant and a transcript provided to Mr Knox during the hearing. Parts of the tape were put in cross-examination to Prosecution witnesses, but not to DC Dawson who it was alleged said on the tape that he knew that Lee Harrison was not present at Errol Street. The tape was played to the jury.
The Appellant had in fact raised the issues which he wished his new solicitor Mr Forrester to deal with, with his first solicitor, Mr Brown, and with Counsel, Mr Knox. Indeed he had mentioned these matters during the course of his first interview when Mr Brown had interjected to point out that they were wholly irrelevant.
During the course of his submissions Mr Knox confirmed to us that the instructions had not varied between the two solicitors, Mr Brown, and the new solicitor, Mr Forrester. It was not so much a change of instructions but an elaboration, or change in the way the case was to be proceeded with. Both Mr Brown and Mr Knox had been aware of the Appellant's assertion that he had been fitted up because of his knowledge and documentation about Customs and police corruption.
When asked why the material that had been said by Mr Brown, the first solicitor, to be wholly irrelevant had become relevant Mr Knox was unable to provide the Court with a satisfactory explanation. He said that when the trial was going to be a joint trial with Atkinson as a co-defendant, he would not have gone into such "recondite areas", but because of the plea it became necessary.
The Crown who were represented at the renewal of the application for leave to appeal against conviction assisted the Court on the issue of the adjournment. Mr Nicholas Campbell QC submitted that the material which the Appellant wished his new solicitor to investigate had not been investigated earlier because those who represented him then thought that it was not relevant. There was no reason why the change of plea by Atkinson could have made the material relevant. As was raised with the trial judge, the Crown suggested that the Appellant was playing for time and that a delay could only have benefited him in view of the vulnerable witnesses. Roweena Frost had had to be arrested and put in custody in order to give evidence in accordance with the witness summons, and witnesses who were available for the trial might not have been available some days later. If the evidence was relevant an application for fresh evidence should have been presented to the Court.
Mr Knox submitted that there was no evidence to suggest that the Appellant was in any way seeking to manipulate Mr Brown, his first solicitor, out of the case nor was he playing for time. Atkinson's plea, which was a complete surprise to him had no upside for him, the failure to grant the adjournment simply meant that the Defence was unable properly to investigate a matter, which in order to secure a fair trial needed to be investigated.
We conclude that this ground is without merit. Whether or not to grant an adjournment was a matter wholly within the discretion of the Judge and we see no basis for suggesting that he exercised that discretion improperly. Indeed it is our view that the Judge was correct in refusing the application which was made solely in order to enable the new solicitor to deal with the assertions and material of which the previous solicitor, Mr Brown, and counsel, Mr Knox, were already aware, had clearly considered and in Mr Brown's case, had advised were irrelevant. A full proof dealing with the relevant issues alleged against him by the Prosecution had already been taken from the Appellant by his first solicitor, Mr Brown. Mr Knox accepted during the course of submissions to this Court that the instructions between the solicitors were not essentially varied. The Appellant's first team of advisors, as we have said, knew of the assertions and material relating to alleged corruption and it was then considered irrelevant. Nothing which Mr Knox said to us could explain why it had become any more relevant since Atkinson's plea of guilty. The granting of an adjournment in such circumstances would have been inappropriate. Any delay could have been disadvantageous to the interests of justice: the witnesses had been assembled ready to give their evidence and recalling vulnerable witnesses could have been a difficult task. It was not appropriate that the matter should have been left hanging over their heads or indeed over the Defendant's head.
There is no proper basis for any submission that the Appellant was denied a fair trial or that the verdict was rendered unsafe by the refusal to adjourn. In our view the Judge was not merely entitled but right to refuse the application to adjourn in the circumstances.
(2) It was said that the Judge's ruling that the indictment did not require the Prosecution to prove that both witnesses, Moody and Roweena Frost, had been interfered with was incorrect. Mr Knox submitted that as the word 'witnesses' in the plural was used in the indictment, the Crown had to prove interference with both Moody and Roweena Frost. The Judge wrongly ruled that the 'plural included the singular' and that the Crown were not required to prove interference with both witnesses. Whilst Moody might be said to have been a potential witness the reality was that he was not going to be a witness at Lee Harrison's trial because the Crown no longer relied upon him as a witness of truth after he had been treated as a hostile witness at the trial of Petch and Coleman.
We are satisfied that the Judge's ruling was correct and that he went on to give a careful and proper direction on the law of conspiracy in summing up. The indictment charges a conspiracy by contacting 'potential witnesses' in the trial of Lee Harrison. The judge was correct in his ruling that this meant any potential witness, whether one or more. The plural did include the singular or as is sometimes said the greater the lesser.
(3) Mr Knox submitted that the Judge erred in law in refusing to admit a business document, namely a client care letter written by Mr Silvester, a solicitor, confirming that Mr Moody's assistance had been sought in connection with a statement he wished to give in connection with the appeal by Coleman and Crossling. Mr Knox submitted that this letter was admissible either at common law or under Section 24 of the Criminal Justice Act 1988. The Judge ruled that neither the letter nor Mr Silvester's evidence about the letter was admissible and that if the Appellant sought to prove the point he should call Mr Moody.
In his summing up the Judge posed the question of what was the purpose of writing 'at no time was Lee Harrison in my house' which the Appellant had accepted that he wrote. Could the document serve different purposes in different people's hands? He also told the jury that the purpose that they had to think about was Mr Harrison's purpose not Mr Petch's purpose.
Mr Knox submits that the letter which he sought to adduce in evidence had a limited function, namely to show it was a genuine letter. It was not a massive point but the documents found in the Appellant's house only went to Petch's appeal rather than his son's trial. The Judge's direction on this matter before the jury was insufficiently clear.
In our view the Judge's ruling was one which he was entitled to make. The letter could not prove that the sole purpose for the statement being made was for Petch's appeal; only the Appellant or Mr Moody could give evidence as to that. The Appellant himself said in evidence that when he read the statement which he had been told concerned the appeals of Petch, Coleman and Crossling he had said "If you want to tell the truth why not do so. My son wasn't there." It was for that reason that he wrote the words in manuscript which he accepted that he had written on the statement.
The Judge's summing up on this issue was both accurate and helpful to the jury and his refusal to admit the letter correct. As Mr Knox conceded this was not a point of major substance and the exclusion of the letter did not render the verdict unsafe.
(4) The Judge should not, Mr Knox submitted, have put the incident of 7 July 2004 as if it were part of the Prosecution case when it was not. The Prosecution had not referred to it in opening, nor adduced in evidence nor in any way challenged the fact that the police had not accepted the complaint as reliable. The Judge in such circumstances should have 'trodden warily' Mr Knox submitted.
The difficulty with Mr Knox's submission is that he raised the incident of 7 July to the jury in order to demonstrate to them Roweena Frost's unreliability. Mr Swash was called to give evidence indicating that the police did not find support for her complaint and appeared to consider her account unreliable. As the evidence was before the jury the Judge clearly had to sum it up to them. He rehearsed the evidence of both Roweena Frost and that of Mr Swash accurately upon this issue and left it for them to decide what they made of it. The evidence had been given; the jury had to consider it as part of Miss Frost's evidence and it was therefore proper for the Judge to leave it to the jury to decide what effect it had on them. It would not, in our view, have been appropriate for the Judge to have indicated that her evidence was incorrect. Even though the Crown had not led the evidence and did not challenge Mr Swash's evidence the matter remained one for the jury to consider and decide upon. The Judge rightly left the doubts which Mr Swash's evidence cast upon Roweena Frost's account of this incident clearly for the jury. There was no error in the summing up upon this issue.
(5) The Judge should, Mr Knox submitted, have reminded the jury of the particular need for caution in relation to Roweena Frost's evidence. She was, Mr Knox submitted, 'damaged goods' and clearly unreliable. The Judge should have specifically warned them of her convictions including that for perverting the course of justice.
It is true that the Judge gave no set piece warning to the jury to approach Miss Frost's evidence with caution but his summing up contained numerous warnings about its unreliability and the fact that she had previous convictions. Thus he referred at page 14 to the criticism that she was an unreliable witness about dates, at page 22 that Mr Knox had described her as 'pitiful and pathetic' and was she therefore telling the truth about the essential matters relevant to the case; at page 26 the Judge reminded the jury that they had seen her and they must decide how reliable she was 'if at all', and whether her credibility was undermined was a matter for the jury. At page 27 the Judge referred to the fact that she had been in trouble 'again and again and again and again and again. Do not overlook that..' he then referred to her having been thieving to sustain her heroin addictions.
The jury had heard Roweena Frost's evidence with its cross-examination upon her prostitution, drug habit and previous convictions including that for perverting the course of justice. The Judge put the question of her reliability, her convictions and her past clearly before the jury. His direction was appropriate and in view of the clear warnings which he gave about her evidence and the criticisms made of it a set piece warning for specific caution was unnecessary.
(6) The inaccuracies and lies in Roweena Frost's evidence about what occurred at the police station, in particular in relation to the cross or chain was not put before the jury. These matters should have been expressly rehearsed, Mr Knox submits, so as to counter balance the direction the Judge gave as to the Appellant's admitted lies in relation to this incident.
The Judge did not rehearse the lies or inaccuracies in Miss Frost's evidence about the 11 May meeting at the police station but we are satisfied that this did not in any way render the verdict unsafe. The jury were well aware of her evidence which had been cross-examined upon at length and did not need to be reminded of every detail of it.
(7) The Judge failed to remind the jury that Atkinson's big silver car had been written off at a time that Roweena Frost alleged he had used the car when making threats to her. The Judge did remind the jury, at Mr Knox's invitation, at the end of his summing up that the car had been written off at the end of March, rather than, as he had said earlier in his summing up, at the end of April but he did not, Mr Knox submitted, deal with the importance of this issue.
The Judge's summing up on this issue was perfectly fair and accurate and when he corrected his error as to the date no further direction was needed. The issue was clearly before the jury and a matter for them to attach such weight to it as they thought fit.
(8) The Judge wrongly invited the jury to infer that the Defendant was trying to buy justice because of his possible reference to his finances on the tape. The Judge's reference to 'buying justice' was objectionable.
We do not accept this criticism of the summing up. The evidence about finances was introduced by the Defendant himself by the production of the tape. By referring to the matter as he did, the Judge was in our view merely seeking to ensure that the jury did not jump to any unfair conclusions against the Appellant because of his apparent wealth. As the Judge said, the evidence might be thought to be relevant to the Appellant's relationship with Atkinson.
(9) Mr Knox also made a general criticism of the summing up. He submitted that in view of the comments made by the Judge he should have given the standard direction to the jury to ignore such comments, as the facts were a matter for them. We however are satisfied that this is precisely what the Judge did. At page 5 of the summing up the Judge said this:-
"So can I say that if there is anything that I omit to mention in looking at the evidence with you, but which has stuck in your mind because you think it is of some importance, then do not give it any less importance merely because I have not touched upon it. And I suppose likewise, if I do dwell upon some aspect of the evidence which quite honestly you think does not get you anywhere, do not give it any significance just because I have touched upon. The reason for that is that the whole of the evidence is your raw material. You decide what is important and what is not. You say what you make of it. You are the judges of the facts of the truth in this case. I shall seek to be of assistance in the way that I have explained."
We are satisfied that this passage and the numerous other passages in the summing up stating that it is for the jury to decide the facts, was entirely accurate in its description of the respective functions of judge and jury. There is no reason to suppose that the jury were not aware that the facts were their province and that they were to make their own decision upon them irrespective of what the Judge said.
The grounds contain other matters which Mr Knox did not deal with in his submissions. We have considered however not only the submissions but the grounds and the contents of his advices and skeleton argument in full and are satisfied that there is no merit in any of the grounds put forward either in writing or in oral submissions on the issue of conviction. There is nothing contained within them which renders the verdict unsafe. Accordingly the application for leave to appeal against conviction is refused.
Sentence.
The Appellant is now 63 and has previous convictions for dishonesty, violence and drug offences for which he received both custodial and non custodial penalties. His most substantial term of imprisonment was 20 months for conspiring or assisting in the commission of a drug offence outside the United Kingdom on 9.6.1982. He had had no previous convictions since that year.
A pre-sentence report said that his lack of convictions since 1982 showed that he was a reformed character.
When passing sentence the Judge said that the conspiracy was of the most serious type namely to thwart the course of justice in a murder trial and was aggravated by the fact that it was a joint implementation of a conspiracy in different ways over a period of months. The campaign was planned and controlled by the Appellant who had no real mitigation. No account was taken of his attempts to silence a vulnerable witness during the trial or of his boast of wealth in a secret tape recording. That recording however showed his inherent deviousness and arrogant disdain for officers of the law and the grip that he had on others. The 10 year sentence was intended to stand as a strong deterrent to others.
The Judge made specific reference to attempting silence a number of vulnerable witnesses with repeated threats, in one case with inducement, and on one occasion with the actual use of physical violence to the person and damage to domestic property. It appears therefore that the Judge accepted the evidence of Roweena Frost as to the incident of 7 July 2004 even though the Crown had not relied upon it.
The Judge said that he was satisfied that the Appellant was a man of ample means, quite able to pay, and hence ordered him to pay £23,433 towards the Prosecution's costs within six months.
Mr Knox submitted to us that the sentence of imprisonment and the costs order were both manifestly excessive. There was no proper basis for accepting that there had been a physical assault on Roweena Frost or her partner on 7 July 2004; the sentence was out of line with the sentencing authorities such as Attorney-Generals Reference number 44 of 1994, [1996] 1 Crim Ap R (S) 256 which together with other cases indicated that a sentence of no higher than 3 years, at its highest would be appropriate and that many of the sentences passed were in months; the sentence was not only out of proportion with the authorities but out of proportion with the 9 years sentence passed on the Appellant's son Lee Harrison, and Jonathan Crossling for the substantive offence of manslaughter; the sentence was also out of line with the maximum penalty for the statutory offence of intimidating a witness under the Criminal Justice and Public Order Act 1994 section 51, which is 5 years; there was no evidence of means upon which a costs order could properly be made.
In summary Mr Knox submitted that a sentence of 10 years was out of all proportion to the offence committed.
We consider that there is merit in Mr Knox's submission on sentence. This was without question a serious case. It was a conspiracy, and as the Judge said it involved a course of conduct to interfere with the course of justice in a murder trial. The 5 year statutory maximum did not apply but we are mindful of the authorities in Thomas Current Sentencing Practice which indicate a maximum of 4 or 5 years. (R v Taggart [1995] 16 Crim Ap R (S) 789 and R v Williams [1995] 16 Crim Ap R (S) 191). It also has to be taken into account that there are doubts as to whether any violence occurred and taken at its highest such violence as there was appears to have been relatively minor.
We conclude that 10 years in these circumstances was excessive. A conspiracy to interfere with a murder trial in a climate of increasing interference with the justice system however requires, as the Judge said, a deterrent sentence. Having taken into account Mr Knox's submissions, we consider that a sentence of 6 years imprisonment would meet the justice of the case.
We also conclude that there was no proper evidence of means before the Judge upon which he could base a substantial costs order. In the absence of any proper enquiry into means we must quash the order for costs.
Accordingly the sentence of 10 years imprisonment is quashed and substituted for it is a sentence of 6 years. The order for the payment of £23,433 prosecution costs is also quashed. | 2 |
THIRD SECTION
CASE OF DU ROY AND MALAURIE v. FRANCE
(Application no. 34000/96)
JUDGMENT
STRASBOURG
3 October 2000
FINAL
03/01/2001
In the case of Du Roy and Malaurie v. France,
The European Court of Human Rights (Third Section), sitting as a Chamber composed of:
MrW. Fuhrmann, President,MrJ.-P. Costa,MrL. Loucaides,
MrP. Kūris,MrsF. Tulkens,MrK. Jungwiert,SirNicolas Bratza, judges,and Mrs S. Dollé, Section Registrar,
Having deliberated in private on 15 June 1999 and 12 September 2000,
Delivers the following judgment, which was adopted on the last‑mentioned date:
PROCEDURE
1. The case originated in an application (no. 34000/96) against the French Republic lodged with the European Commission of Human Rights (“the Commission”) under former Article 25 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by two French nationals, Mr Albert Du Roy and Mr Guillaume Malaurie (“the applicants”), on 13 September 1996. The applicants were represented by Mr J.-Y. Dupeux and Mr C. Bigot, both of the Paris Bar. The French Government (“the Government”) were represented by their Agent, Mr Y. Charpentier, Head of the Human Rights Section, Ministry of Foreign Affairs, and subsequently by his successor, Mrs M. Dubrocard.
2. Relying on Article 10 of the Convention, the applicants complained of an infringement of their right to freedom of expression.
3. On 22 October 1997 the Commission (Second Chamber) decided to give notice of the application to the Government, inviting them to submit written observations on its admissibility and merits. The Government submitted their observations on 10 February 1998 and the applicants submitted theirs on 2 April 1998.
4. Following the entry into force of Protocol No. 11 to the Convention on 1 November 1998, and in accordance with Article 5 § 2 thereof, the case was examined by the Court.
5. In accordance with Rule 52 § 1 of the Rules of Court, the President of the Court, Mr L. Wildhaber, assigned the case to the Third Section. The Chamber that would consider the case was then constituted within that Section (Article 27 § 1 of the Convention and Rule 26 § 1).
6. On 15 June 1999 the Chamber declared the application admissible [Note by the Registry. The Court's decision is obtainable from the Registry.].
7. On 25 June 1999 it requested the parties to submit further evidence and observations, together with any proposals for a friendly settlement, by 30 August 1999 and informed them that they were entitled to request a hearing; it also requested the applicants to submit their claims under Article 41 of the Convention by the same date.
8. In a letter of 2 July 1999 the applicants asked for a hearing on the merits of the case. In a letter of 27 August 1999 the Government stated that they did not consider a hearing necessary and that they were not prepared to reach a friendly settlement. The parties did not submit any further observations.
9. On 7 March 2000 the Chamber decided that it was not necessary to hold a hearing.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
10. At the material time the first applicant was the editor of the weekly magazine L'Evénement du Jeudi and the second applicant was a journalist on the magazine.
11. In its edition of 11 to 17 February 1993 L'Evénement du Jeudi published an article by the second applicant under the headline: “Sonacotra: the Left puts its house in order”.
12. The article was particularly critical of Michel Gagneux, the former head of Sonacotra (national company for the construction of workers' housing), and of his relations with Sonacotra's new management, who on 10 February 1993 had lodged a criminal complaint against Mr Gagneux alleging misuse of company property and had applied to join the proceedings as a civil party.
13. On 11 March 1993 Mr Gagneux summoned the applicants to appear in the Paris Criminal Court to answer a charge of publishing information concerning applications to join criminal proceedings as a civil party, an offence under section 2 of the Act of 2 July 1931. Mr Gagneux considered that he had been the victim of a breach of that provision on account of the following passages of the article published in L'Evénement du Jeudi:
“Sonacotra: the Left puts its house in order”
“Never before! The managers of a public company have condemned their predecessors' running of the company – and lodged a criminal complaint!”
“Raison d'Etat foiled! In bringing a complaint against their predecessor Michel Gagneux for misappropriation and misuse of company property, Sonacotra's managers have shown courage. As they are well aware, there is a serious risk that it will be discovered that men with links to the PS [Socialist Party] have been able to make free with the 'immigrants' cash'.”
14. In a judgment of 9 July 1993 the Paris Criminal Court found the applicants guilty and fined them 3,000 French francs (FRF) each. In addition to that sentence, damages were awarded to Mr Gagneux in his civil action and an order was made for the judgment to be published.
The court noted that the prohibition in section 2 of the Act of 2 July 1931 was general and absolute; the information had only to concern a criminal complaint that had been lodged together with an application to join the proceedings as a civil party.
The court further stated that the prohibition was intended to safeguard the presumption of innocence and to prevent any external influence on the course of justice. Accordingly, it was necessary in a democratic society 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” within the meaning of Article 10 of the Convention.
15. On 16 July 1993 the applicants appealed against that judgment.
16. In a judgment of 2 February 1994 the Paris Court of Appeal upheld the applicants' conviction and the amount of the fine but reduced to one franc the damages awarded to Mr Gagneux as the civil party. Its decision included the following passage:
“The trial court rightly dismissed the defendants' submission that the Act of 2 July 1931 was incompatible with Article 10 [of the Convention], noting that the provisions of that Act, which were designed to protect persons against whom a complaint is lodged, to safeguard the presumption of innocence and to prevent any external influence on the course of justice, fell within the scope of the restrictions on freedom of expression permitted by the ... Convention ..., the restriction in question being proportionate to the aim pursued.”
17. The applicants then appealed on points of law. In their grounds of appeal they submitted, as they had done in the courts below, that there had been a violation of Article 10 of the Convention. They referred to the general and absolute nature of the prohibition of publication, arguing that it was disproportionate to the aim pursued.
18. In a judgment of 19 March 1996 the Court of Cassation held that the criminal proceedings had become barred as a result of an intervening amnesty. It further held that it was still required to rule on the appeal on points of law in respect of the civil action and dismissed it, stating in particular:
“The Court of Appeal rightly dismissed the defendants' submission that the Act of 2 July 1931 was incompatible with Article 10 of the ... Convention ...
While the first paragraph of Article 10 of the said Convention states that everyone has the right to freedom of expression, the second paragraph provides that the exercise of that freedom, since it carries with it duties and responsibilities, may be subject to such formalities, restrictions or penalties as are prescribed by law and are necessary in a democratic society for, inter alia, the protection of the rights of others, and for maintaining the authority and impartiality of the judiciary; such is the purpose, which is proportionate to the aim pursued, of section 2 of the Act cited above.”
II. RELEVANT DOMESTIC LAW
A. Act of 2 July 1931
19. Section 2 of the Act of 2 July 1931 provides:
“The publication, before a judicial decision has been given, of any information concerning applications to join criminal proceedings as a civil party under Article 63 of the [former] Code of Criminal Procedure [Code d'instruction criminelle] [Article 85 of the current Code of Criminal Procedure (Code de procédure pénale)] shall be prohibited, on pain of a fine of FRF 120,000 as laid down in the last paragraph of section 39 of the Act of 29 July 1881 ...”
B. Civil Code
20. Article 9-1 of the Civil Code provides:
“Everyone is entitled to be presumed innocent until proved guilty. Where a person ... the subject of ... a criminal complaint lodged together with a civil-party application is, before any judgment has been given against him, publicly portrayed as being guilty of an offence or offences in respect of which an inquiry or judicial investigation is being conducted, the court may direct, even on a summary application, that a notice be printed in the publication concerned in order to end the breach of the presumption of innocence ...”
C. Code of Criminal Procedure
21. The relevant provisions of the Code of Criminal Procedure read:
Article 11
“Except where the law provides otherwise and without prejudice to the rights of the defence, proceedings during the inquiry and the judicial investigation shall be confidential ...”
Article 91
“Where, after a judicial investigation begun on a criminal complaint and civil-party application, a decision has been taken that there is no case to answer, the public prosecutor may summon the civil party before the criminal court in which the case was investigated. If the complaint and civil-party application are held to have been an abuse of process or to have been intended purely to gain time, the court may impose a civil fine, the amount of which shall not exceed FRF 100,000. The proceedings must be brought within three months of the date on which the decision that there is no case to answer becomes final.
Within the same period and without prejudice to the institution of criminal proceedings for malicious prosecution, the person placed under investigation or any other person who was the subject of the complaint may, if he does not bring a civil action, seek damages from the complainant ...”
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 10 OF THE CONVENTION
22. The applicants submitted that their conviction by the Paris Court of Appeal had infringed 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. ...
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.”
23. The applicants' conviction amounted to “interference” with the exercise of their right to freedom of expression. Such interference will infringe Article 10 unless it was “prescribed by law”, pursued one or more of the legitimate aims referred to in paragraph 2 and was “necessary in a democratic society” in order to achieve the aim or aims in question.
A. “Prescribed by law”
24. It was common ground that the interference was “prescribed by law”, namely section 2 of the Act of 2 July 1931. The Court shares that view.
B. Legitimate aim
25. According to the parties, the interference was intended to protect the reputation and rights of others and to maintain the authority and impartiality of the judiciary. The Court sees no reason to conclude otherwise.
C. “Necessary in a democratic society”
26. The Court must therefore consider whether the interference was “necessary in a democratic society” in order to achieve the above aims.
1. General principles
27. The Court reiterates the fundamental principles established by its case-law on Article 10.
(i) Freedom of expression constitutes one of the essential foundations of a democratic society. 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 that pluralism, tolerance and broadmindedness without which there is no “democratic society” (see the Handyside v. the United Kingdom judgment of 7 December 1976, Series A no. 24, p. 23, § 49, and the Jersild v. Denmark judgment of 23 September 1994, Series A no. 298, p. 26, § 37).
(ii) The press plays an essential role in a democratic society. Although it must not overstep certain bounds, in particular in respect of the reputation and rights of others and the need to prevent the disclosure of confidential information, its duty is nevertheless to impart – in a manner consistent with its obligations and responsibilities – information and ideas on all matters of public interest (see the De Haes and Gijsels v. Belgium judgment of 24 February 1997, Reports of Judgments and Decisions 1997-I, pp. 233-34, § 37). Journalistic freedom also covers possible recourse to a degree of exaggeration, or even provocation (see the Prager and Oberschlick v. Austria judgment of 26 April 1995, Series A no. 313, p. 19, § 38).
(iii) As a matter of general principle, the “necessity” for any restriction on freedom of expression must be convincingly established. Admittedly, it is in the first place for the national authorities to assess whether there is a “pressing social need” for the restriction and, in making their assessment, they enjoy a certain margin of appreciation. In cases concerning the press, such as the present one, the national margin of appreciation is circumscribed by the interest of democratic society in ensuring and maintaining a free press. Similarly, that interest will weigh heavily in the balance in determining, as must be done under paragraph 2 of Article 10, whether the restriction was proportionate to the legitimate aim pursued (see, mutatis mutandis, the Goodwin v. the United Kingdom judgment of 27 March 1996, Reports 1996-II, pp. 500-01, § 40, and the Worm v. Austria judgment of 29 August 1997, Reports 1997-V, pp. 1550-51, § 47).
(iv) The Court's task in exercising its supervisory function is not to take the place of the national authorities but rather to review under Article 10 the decisions they have taken pursuant to their power of appreciation. In so doing, the Court must look at the “interference” complained of in the light of the case as a whole and determine whether the reasons adduced by the national authorities to justify it are “relevant and sufficient” (see, among many other authorities, the Goodwin judgment cited above, ibid.).
2. Application of the above principles in the instant case
28. The applicants pointed out that the 1931 Act quite simply prohibited the publication of any information, whether damaging or not, about proceedings instituted on a civil-party application. They pointed out that the principle of the confidentiality of judicial investigations as provided in Article 11 of the Code of Criminal Procedure applied to all types of criminal proceedings; there was therefore no valid reason for making confidentiality stricter and treating it as absolute in certain types.
29. The applicants further maintained that the absolute confidentiality laid down by the Act in issue was not in any way intended to safeguard the presumption of innocence. To adopt such an interpretation would, they argued, be to do no less than attribute to the press intentions it did not have. When the press reported information or ideas about a matter of public interest, its aim was to establish the truth of the matter and not particularly to pillory guilty parties. The applicants submitted that there was no reason to strengthen the protection afforded by Article 9-1 of the Civil Code where proceedings instituted on a civil-party application were concerned. They concluded that subjecting the press to absolute confidentiality was manifestly incompatible with proper provision of information to the public in a democratic society.
30. The Government pointed out, as a preliminary, that the Court had held that the imposition of prior restraints or bans on publication could not be regarded as ipso facto incompatible with Article 10 of the Convention. In that connection, they relied on the Observer and Guardian v. the United Kingdom judgment of 26 November 1991 (Series A no. 216, p. 30, § 60). They further argued that the interference in issue had also been necessary to guarantee the impartiality and fairness of the proceedings while at the same time safeguarding the presumption of innocence. The 1931 Act had merely reflected the need to respect the principle of presumption of innocence, strengthening that presumption more particularly in the case of criminal complaints lodged together with civil-party applications, on account of the risks potentially attaching to unwarranted recourse to that procedure.
31. The Government added that no other means of protecting Mr Gagneux's rights existed that would have made the prohibition provided for in the 1931 Act unnecessary. They pointed out that the other means of protecting persons against whom judicial proceedings were instituted did not pursue the same aim as the Act in issue. Article 9-1 of the Civil Code protected the right to presumption of innocence in civil matters; by definition, only a person placed under investigation could rely on that provision, which amounted only to a form of right of reply. As to an action brought under Article 91 of the Code of Criminal Procedure, that merely punished ex post facto persons who had abused their right to bring court proceedings by making a civil-party application that was an abuse of process or was intended purely to gain time.
32. Lastly, the Government maintained that, while the prohibition of publication in the 1931 Act was mandatory throughout the investigation, it was never anything but a temporary measure and ceased as soon as a judicial decision was given. Consequently, the right to inform was merely postponed and its effects delayed, so as to give the courts the opportunity to satisfy themselves that the complaint was not a frivolous one.
33. In the light of those arguments, the Court considers that it must examine whether there were relevant and sufficient reasons, for the purposes of paragraph 2 of Article 10, to justify the applicants' convictions.
34. Journalists reporting on criminal proceedings currently taking place must, admittedly, ensure that they do not overstep the bounds imposed in the interests of the proper administration of justice and that they respect the accused's right to be presumed innocent (see the Worm judgment cited above, p. 1552, § 50).
35. The Court observes, however, that the interference in issue took the form of a general and absolute prohibition of the publication of any type of information.
Although the domestic courts have, as in the instant case, held the prohibition to be justified as a means of protecting the reputation of others and maintaining the authority of the judiciary, that justification does not appear sufficient, seeing that the ban applies only to criminal proceedings instituted on a complaint accompanied by a civil-party application and not to those instituted on an application by the public prosecutor's office or on a complaint not so accompanied. Such a difference in the treatment of the right to inform does not seem to be based on any objective grounds, yet wholly impedes the right of the press to inform the public about matters which, although relating to criminal proceedings in which a civil-party application has been made, may be in the public interest, as was so in the instant case, concerning as it did French political figures and their allegedly fraudulent actions as directors of a public company managing housing for immigrants.
36. The Court notes in any event that other means of protecting the rights of the accused, such as Article 9-1 of the Civil Code and Articles 11 and 91 of the Code of Criminal Procedure, make the absolute prohibition in the 1931 Act unnecessary.
37. In conclusion, convicting the journalists was not a measure that was reasonably proportionate to the legitimate aims pursued, regard being had to the interest of a democratic society in ensuring and maintaining press freedom. There has therefore been a violation of Article 10 of the Convention.
II. APPLICATION OF ARTICLE 41 OF THE CONVENTION
38. 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
39. The applicants sought the sum of 100,000 French francs (FRF).
40. The Government noted that the applicants were seeking compensation for pecuniary damage of which no evidence had been adduced, and which had not been established as being directly linked to the applicants' complaint. They also considered that non-pecuniary damage would be sufficiently compensated by any finding of a violation of the Convention.
41. The Court considers that the finding of a violation in this judgment constitutes in itself sufficient just satisfaction.
B. Costs and expenses
42. The applicants claimed FRF 150,000 in respect of costs and expenses relating to their representation. They broke that sum down as follows: FRF 100,000 for the proceedings in the domestic courts and FRF 50,000 for the proceedings before the Convention institutions.
43. The Government stated that they would be prepared to reimburse the fees paid by the applicants, provided that the relevant vouchers were produced and that the claims were reasonable.
44. On the basis of the information before it, the Court, making its assessment on an equitable basis, awards the applicants FRF 50,000.
C. Default interest
45. According to the information available to the Court, the statutory rate of interest applicable in France at the date of adoption of the present judgment is 2.74% per annum.
FOR THESE REASONS, THE COURT
1. Holds by six votes to one that there has been a violation of Article 10 of the Convention;
2. Holds unanimously that the finding of a violation constitutes in itself sufficient just satisfaction for the alleged pecuniary and non-pecuniary damage;
3. Holds by six votes to one that the respondent State is to pay the applicants, within three months from the date on which the judgment becomes final according to Article 44 § 2 of the Convention, the sum of FRF 50,000 (fifty thousand French francs) for costs and expenses, together with simple interest at an annual rate of 2.74% payable from the expiry of the above-mentioned three months until settlement;
4. Dismisses unanimously the remainder of the applicants' claim for just satisfaction.
Done in French, and notified in writing on 3 October 2000, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
S. DolléW. Fuhrmann RegistrarPresident
In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the following separate opinions are annexed to this judgment:
(a) concurring opinion of Mr Loucaides;
(b) concurring opinion of Sir Nicolas Bratza;
(c) dissenting opinion of Mr Costa.
W.F.S.D.
CONCURRING OPINION OF JUDGE LOUCAIDES
I agree with the majority in all respects, but I would like to add the following.
It is true that the provisions of the Act of 2 July 1931, which prohibit publication of any information regarding criminal proceedings in the form of constitution de partie civile, before a judicial decision is taken, are aimed at preventing abuse of such proceedings by the individuals at whose instance they are instituted. However, it should be pointed out that such proceedings constitute an important safeguard against possible abuses by prosecuting authorities. They are the only proceedings through which individuals may put the machinery of criminal prosecution in motion, the prosecuting authorities having, in such cases, no discretionary power to decide whether to proceed or not. The other possible procedures for instituting criminal proceedings are prosecution at the instance of the public prosecutor and prosecution following a complaint. The last two methods, however, depend on the discretion of the prosecuting authorities.
The beneficial effects of the process of the constitution de partie civile on the administration of the criminal law, especially in serious matters of public interest (like the present case), are evident. And they are so important that they counterbalance any possibility of abuse by the individuals who resort to such a process. In any event, as the Court also points out (see paragraph 36 of the judgment), the system provides sufficient protection for the rights of persons affected by the proceedings in question.
The importance of criminal proceedings in the form of constitution de partie civile as a safeguard for the proper enforcement of the criminal law is, in my opinion, by itself, a special reason necessitating the existence of a right of the press to inform the public about them. The existence of public scrutiny of the relevant process will also add to its effectiveness.
CONCURRING OPINION OF JUDGE Sir Nicolas BRATZA
I agree in all respects with the view and reasoning of the majority of the Court in finding a violation of Article 10 of the Convention in the present case and only wish to add a few supplementary remarks.
In an important passage in its judgment in the Worm v. Austria case (29 August 1997, Reports of Judgments and Decisions 1997-V) the Court observed:
“There is general recognition of the fact that the courts cannot operate in a vacuum. Whilst the courts are the forum for the determination of a person's guilt or innocence on a criminal charge ..., this does not mean that there can be no prior or contemporaneous discussion of the subject matter of criminal trials elsewhere, be it in specialised journals, in the general press or amongst the public at large ...
Provided that it does not overstep the bounds imposed in the interests of the proper administration of justice, reporting, including comment, on court proceedings contributes to their publicity and is thus perfectly consonant with the requirement under Article 6 § 1 of the Convention that hearings be public.” (pp. 1551-52, § 50)
It is true that in the Worm case the Court was concerned with an article which commented on trial proceedings rather than, as here, on the fact that a criminal complaint had been introduced. But the principle stated by the Court appears to me to be equally applicable at this earlier stage of criminal proceedings, the important question at all stages being whether the impugned statements overstepped the proper boundaries set to protect the fair administration of justice.
It is true, too, that in the Worm case itself the Court held that the Austrian courts were entitled to conclude that the applicant had overstepped those boundaries and in consequence found that there had been no violation of Article 10. However, it is important to note that the impugned statements, the statutory provisions in question and the application of those provisions by the domestic courts in the Worm case were entirely different from those in the present case.
In that case, the applicant had published a lengthy article commenting on the trial of Mr A. in which, as the Vienna Court of Appeal found, he had clearly stated the opinion that Mr A. was guilty of the charges of tax evasion on which he was being tried. Further, this view had, as that court further found, been formulated in such absolute terms that the impression was conveyed to the reader that a criminal court could not possibly do otherwise than convict Mr A. The applicant had been prosecuted under a statutory provision which made it an offence to discuss the probable outcome of proceedings or the value of evidence “... in a way capable of influencing the outcome of proceedings ...”. The Vienna Court of Appeal, after a careful and detailed examination of the terms of the article, concluded that it was capable of influencing the outcome of the proceedings against Mr A., noting that it could not be excluded that the members of the trial court, more particularly the lay judges, might read the article.
The Court, in finding that the reasons given by the Vienna Court of Appeal were both “relevant” and “sufficient” and that there had accordingly been no violation of Article 10 of the Convention, emphasised that the judgment of the Vienna Court of Appeal had taken into account the incriminated article in its entirety and was entitled to conclude that the article was capable of influencing the outcome of Mr A.'s trial.
By contrast, in the present case the 1931 Act is cast in terms which, as the Paris Criminal Court observed, are both general and absolute: it prohibits the publication of any information concerning a civil-party complaint prior to a judicial decision, irrespective of the nature of the information published or its factual accuracy, and irrespective of whether its publication could have any influence or effect on the outcome of the proceedings or on the presumption of innocence of the persons subject to the proceedings. Moreover, it is clear that, in finding the applicants guilty of infringing the provision, the domestic courts did not subject the impugned article to any analysis in order to determine whether it was capable of breaching the presumption of innocence of Mr Gagneux or otherwise interfering with the fair administration of justice.
In my view, it has not been shown that the applicants' article posed any such threat to the proper administration of justice and the conviction and fine (albeit modest) imposed on the applicants constituted an unjustified restriction on their freedom of expression.
DISSENTING OPINION OF JUDGE COSTA
(Translation)
I. Though unsettled by the reasoning of the majority in the present case, I am not persuaded by it.
The reasoning in paragraphs 33 to 37 of the judgment is in substance the following: convicting the editor of the magazine and the journalist who wrote an article in it was disproportionate to the aims pursued, which were legitimate under paragraph 2 of Article 10 of the Convention. Why? Because the prohibition of the publication of any information concerning applications to join criminal proceedings as a civil party, laid down in section 2 of the Act of 2 July 1931, is general and absolute; because it does not apply to criminal complaints not accompanied by a civil-party application or to proceedings instituted on an application by the public prosecutor's office; and, lastly, because persons to whom such information relates have other means of protection available, such as Article 9-1 of the Civil Code and Articles 11 and 91 of the Code of Criminal Procedure.
Let us consider those three reasons.
Is the prohibition general and absolute? Yes and no. The prohibition on publication is wide, but it is limited in time (“before a judicial decision has been given”). The aim of the prohibition is not only “legitimate”, but eminently praiseworthy: to protect the presumption of the innocence of a person who has not even been placed under investigation but in respect of whom an alleged victim has taken a procedural measure that might lead readers to believe – especially where, as in this case, the information is accompanied by comment – that the person against whom the complaint has been lodged is guilty (in the instant case, of misuse of company property). I would also observe that, according to paragraphs 11 and 12 of the judgment, hardly any time elapsed between the lodging of the complaint by Sonacotra (on 10 February 1993) and the publication of the article reporting on it in L'Evénement du Jeudi (in the issue of 11 to 17 February 1993). In any event, as soon as a judicial decision is given – for example, a decision to place under investigation the person in respect of whom the complaint and civil-party application have been lodged – the prohibition lapses; it is therefore not an absolute one.
Is the prohibition limited to criminal complaints accompanied by civil-party applications? Yes; but does that matter? In practical terms, it is precisely the publication of the fact that a civil-party application has been lodged that jeopardises the presumption of innocence. As the public is well aware, this special form of complaint generally triggers a prosecution; the conditions that have to be satisfied for an investigation to be refused, which are set out in Article 86 of the Code of Criminal Procedure and in the case-law of the Criminal Division of the Court of Cassation, are very stringent. Ordinary complaints do not have the same effect at all. And although a prosecutor's application for a judicial investigation sets criminal proceedings in train, it is the act of a member of the national legal service (magistrat), who is bound by professional confidentiality and plainly cannot be suspected of wishing to breach the presumption of innocence. It is therefore quite natural that the 1931 Act should have sought to safeguard that principle solely in respect of information concerning civil-party applications.
From a logical standpoint, moreover, I find it odd that the majority should conclude that there has been an infringement of freedom of expression on the ground that the Act does not afford sufficient protection of the rights and reputation of others; I fail to see how a restriction on the principle of freedom can be considered excessive on the ground that it is insufficient!
Unnecessary protection of the presumption of innocence? I do not think so. Although the Act of 15 June 2000 legitimately increased that protection (indeed, that was one of its aims), the Act of 2 July 1931 – at the material time, in any event – was not unnecessary, in my opinion. Article 9-1 of the Civil Code, even as worded before the amendment of 24 August 1993 came into force, might perhaps have enabled Mr Gagneux to exercise a right of reply, or even to obtain compensation; but that is doubtful, and the damage would have been done (“if you throw enough mud, some of it will stick”). As regards the provisions of the Code of Criminal Procedure referred to in the judgment (paragraphs 21 and 36), they do not seem to me relevant: Article 11 makes it an offence to breach the confidentiality of judicial investigations, but civil parties are not bound to observe the confidentiality of them (Court of Cassation, Criminal Division, judgment of 9 October 1978, Bulletin no. 263). And Article 91 only applies if (and when) a judicial investigation begun on a criminal complaint accompanied by a civil-party application has resulted in a decision that there is no case to answer, so that, in any event, the possibility of redress is afforded only at a very late stage.
II. As I am very much in favour of press freedom and suspicious of laws affecting civil liberties that were passed in the period before the Second World War, I should have liked, as a matter of principle, to vote with my colleagues in the majority. But facts are facts. Like the Paris Criminal Court, the Court of Appeal and the Court of Cassation, I consider that in the instant case the small fine imposed on the applicants (which, moreover, was never paid) constituted a penalty that was proportionate to the legitimate aim pursued by the Act, namely protection of the presumption of innocence. That is why I did not vote in favour of finding that there had been a violation of Article 10.
| 1 |
MR JUSTICE STADLEN: This is an appeal brought by Mr Amir Maqbul Khan under section 40 of the Medical Act 1983 (as amended) against decisions made by a Fitness to Practise Panel ("the Panel") of the General Medical Council at the conclusion of a fitness to practise hearing that occurred between 10th and 14th December 2007.
The decisions and the hearing arose out of an application made by Mr Khan for a job in Merseyside in 2003 as an orthopaedic surgeon.
Mr Khan, who was born in 1969, is a physician who qualified as a fellow of the Royal College of Surgeons in Ireland, an MSc in England, a medical doctor ("MD") in United States of America, and an MBBS in 1995 in Punjab. It was submitted on his behalf by Miss Foster QC that he is a doctor held in high regard for his clinical, personal and other abilities, as appears from what she described as glowing references, which were before the Panel and are before the court. I accept that submission, having read those references. He is currently a fellow at the Albert Einstein College of Medicine in New York, with US Board certifications in both internal medicine and pulmonology.
In respect of the application that Mr Khan made in June 2003, he was required to submit an application form and a curriculum vitae. It was his case before the panel hearing that he had overlooked the date and, realising only on 10th June 2003 that the deadline was 12th June 2003, in a panic he enlisted the help of his brother and his wife for the purpose of filling out the application. He said that he dictated parts of it while his brother and his wife took turns in typing it out. He said that he signed, but did not check, the application form, and that additions were made to his CV which, in addition to the application form, were not checked for errors by him.
It was accepted by Mr Khan, in front of the Panel and in front of me, that both the application form and the CV, but principally the application form, contained a plethora of errors. It was badly presented, inaccurate, and, on his own admission, capable of misleading in parts.
One of the striking features of those documents is that certain of the errors were manifest either on their face or by reference to obvious inconsistency with other entries. An example is that he described a post at the Veteran Affairs Hospital and the Hospital for Special Surgery as lasting from July 2003 to July 2003. Another example is that he recorded employment at Broomfield Hospital, Chelmsford as having taken place from July 2003 to January 2003.
Mr Khan was required, as were all candidates for the post, to present his certificates before the interviews, which in his case occurred on 18th July 2003, to the university. In addition, it is accepted that he took his complete portfolio, containing published papers, submitted papers, papers in preparation and manuscripts in their original format, to the interview, even though it was not a requirement, and made them available to the university.
The application was unsuccessful. In the course of the application, some of the errors were referred to.
In August 2003, in response to an inquiry by Mr Khan as to why he had not got the position which he had thought that he was well qualified for, and in respect of which he had entertained some confident optimism, he received an e-mail by way of explanation dated 5th August 2003 which read as follows:
"Thank you for your e-mail.
We use a score for the appointment of SpRs at the interview. Your score was the lowest achieved by all interviewed. Your performance overall was extremely poor. The interview panel's opinion was that you did not answer any of the questions properly.
The interviews were highly competitive and the appointed candidates were all deemed to be the best on the day.
I cannot help you further.
Yours sincerely,
Simon P Frostick."
I was told by Miss Foster, and of course I accept, that such was Mr Khan's surprise and disappointment, both at not getting the position, and at the terms of that e-mail, that he put in train inquiries designed to elicit whether his failure had been the result of discrimination. That commenced in October 2003, but was abandoned in December 2003.
It appears that that may have had the undesired collateral effect of stirring up a hornet's nest. Be that as it may, the next thing that happened was that, as long after the interview as April 2006, the Liverpool Deanery, which is the name of the body who conducted the interview, and to whom the papers were sent, made a complaint to the General Medical Council arising out of the application form and the curriculum vitae, which led, on 15th May 2006, to the General Medical Council formally putting allegations to Mr Khan, and, on 2nd April 2007, to the General Medical Council deciding to refer the case to a Fitness to Practise Panel. On 7th November 2007, there was notice of a hearing which took place between 10th and 14th December 2007.
I was told by Miss Foster that initially the communication to Mr Khan notifying him of the allegations did not include any allegation of dishonesty. However, by the time of the hearing, the matter had evolved to the point where there was a very large number of allegations in respect of individual entries on the application form and/or the CV to the effect that they were not only inaccurate but also misleading and dishonest.
When the matter was canvassed before the Panel, counsel for the GMC described Mr Khan's application as "shambolic" and "a litany of errors". It would be difficult to argue with those descriptions and Miss Foster, on behalf of Mr Khan, did not seek to argue with those descriptions. However, in my judgment what is plain is that it is very difficult indeed to see why, at any rate the majority of those allegations, were ever cast in terms of dishonesty. I say that because, as appears when one looks at the detail, in respect of many of those entries, the error, which is undoubted, is either on its face incapable of having been correct, and obvious to any reader as being incorrect, and therefore not something that any rational person, however dishonest, could have thought would lead to anybody being deceived; but also, in addition, contained obvious inconsistencies with other entries, in many cases very close to the original entry, such that any hope of deception would be wholly fanciful. I will refer to a couple of examples later.
Before the Panel, in respect of a number of the allegations, it was accepted on behalf of Mr Khan, or by Mr Khan, that entries were either inaccurate or misleading or both, in some cases. However, he strongly denied any dishonesty. In the event, the Panel, in its decision, acquitted Mr Khan of dishonesty on all but one allegation. The first and central plank of Mr Khan's appeal to this court is against that single finding of dishonesty.
In addition, there are two particular further findings by the Panel of entries which were held to be misleading, against which findings Mr Khan appeals. The Panel, having found that Mr Khan was guilty of dishonesty on that one allegation, proceeded to conclude that his fitness to practise was impaired and, having decided that his fitness to practise was impaired, the Panel determined, by way of sanction, that in order to send a signal to Mr Khan, the profession and the public that his behaviour was unacceptable, it considered that a period of suspension for 4 months was both appropriate and sufficient.
The appeal is, in addition, against the determination that Mr Khan's fitness to practise was impaired, or is impaired, and also, in the alternative, against the imposition of a 4-month suspension.
The challenge, on appeal, to the finding of dishonesty, was put in a number of ways, but in essence in two different ways which were both cumulative and alternative. The first was based on a challenge to the legal test for dishonesty, which the Panel either did apply or, if it did not apply it, which it raised a question mark as to whether it applied it or whether it was in some way affected by it.
The decision letter dated 17th December 2007, which recorded the decision announced by the chairman on 14th December 2007, indicated that the Panel, in reaching its decision in respect of dishonesty:
"... took account of the Privy Council case of Ghosh reference 1982 Q.C. 1053, 75 CR.App.R.154. Lord Lane concluded that 'there are two aspects to dishonesty: the objective and the subjective, and that the tribunal of fact, in determining the issue, would have to go through a two-stage process before it could convict'.
'In determining whether the (Council in this case) has proved that the defendant was acting dishonesty, a (Panel) must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it is not dishonest by those standards, that is the end of the matter and the (case) fails.'
Furthermore Lord Lane also stated:
'If it was dishonest by those standards, then the (Panel) must consider whether the (doctor) himself must have realised that what he was doing was by those standards dishonest. In most cases, where the actions are obviously dishonest by ordinary standards, there will be no doubt about it. It will be obvious that the (doctor) himself knew that he was acting dishonestly. It is dishonest for a (doctor) to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did.'"
Dealing with the entry which forms the basis of this appeal, the decision letter said the following:
"The Panel has found that the inclusion of the article, 'Does PCL retaining or sacrificing [have] any effect on prosthetic knee movements' in the Journal of Biomechanical Engineering, in Mr Khan's list of publications to be dishonest. He gave a reference date of 10 August 2003 as the date of publication. This article was not published on that date, and he knew when he wrote the application in June 2003 that it would not be published then. The Panel has found that he presented this as a published article with a view to butressing the academic weight of his application."
The Panel then went on, in respect of two further allegations, to say:
"... the Panel has found that the charge satisfies the first test of Ghosh. However... the Panel has not found the second limb of the test in Ghosh to be satisfied. Therefore, the Panel has not found 1(c) and 1(d) to be acts of dishonesty."
It is accepted by Miss Foster that the Ghosh test of dishonesty represents the law and is, on its own, entirely unimpeachable. However, Miss Foster relied on the fact that both in the course of the hearing, and in the decision letter itself, reference was made by the chairman of the Panel to a document called "The Indicative Sanctions Guidance", which contains a test of dishonesty which represents bad law. In the decision letter the following was stated, not in the context of any matter taken into account by the Panel in reaching its findings of honesty or dishonesty, but rather in the context of considering whether Mr Khan's fitness to practise was impaired:
"In deciding whether the matters before it are so serious as to raise the question of impairment, the Panel has considered a number of issues. It has noted the GMC's guidance contained within Good Medical Practice (2001 applicable at the time) which states at paragraph 51 under the heading writing reports, giving evidence and signing documents:
'You must be honest and trustworthy when writing reports, completing or signing forms, or providing evidence in litigation or other formal inquiries. This means that you must take reasonable steps to verify any statement before you sign a document. You must not write or sign documents which are false or misleading because they omit relevant information. If you have agreed to prepare a report, complete or sign a document or provide evidence, you must do so without unreasonable delay.'
Mr Kitching, on behalf of the GMC, submitted that there is sufficient evidence to prove that Mr Khan's fitness to practise is impaired by reason of his misconduct. Mr Khan created two documents which were in part inaccurate, in part misleading, and in part dishonest. He signed them to testify to their correctness. It was his responsibility to make sure that these documents were neither inaccurate nor misleading nor dishonest. He failed to do so. Mr Kitching submitted that as a consequence of these actions Mr Khan's fitness to practise is impaired...
The Panel has concluded that Mr Khan's misconduct was a clear departure from the standards set out in Good Medical Practice (2001), and that it fell sufficiently below those standards as to render his fitness to practise to be impaired by reason of his misconduct."
At the very conclusion of the hearing, the chairman of the Panel, who had been questioning Mr Khan, said the following:
"Q Can I just stop you there? You do make reference to good medical practice. If we go to paragraph 51, which relates to writing reports, giving evidence and signing documents in Good Medical Practice, the one that was pertinent at the time when this came before the GMC. It says:
'You must be honest and trustworthy when writing reports, completing or signing forms or providing evidence. This means that you must take reasonable steps to verify any statement before you sign a document.
You must not write or sign documents which are false or misleading because they omit relevant information.'
You have admitted that you did not take reasonable steps. You have admitted that you signed the document before looking at it. You did not take reasonable steps to verify it. You have also made admissions in regard to statements which you made, which were misleading. Can you understand that equipped with this information and with this marked up, highlighted CV and application form, that someone off the street, looking at it, might say that he has failed these tests of honesty and, therefore, he was being dishonest? Can you see that someone might reach that conclusion with this evidence in front of him?"
(Emphasis added).
It was accepted by Mr Saini QC on behalf of the General Medical Council that the extract from the document "Good Medical Practice" which I have cited is incorrect as a matter of law. In particular, the proposition that dishonesty can be established by a failure to take reasonable steps to verify a statement made before a document is signed is plainly bad law. The question, therefore, and the first question that arises upon this appeal in relation to the challenge against the finding of dishonesty, is: what is the impact on that finding of the facts that, first, the chairman, shortly before the end of the hearing, passed that incorrect test to Mr Khan and described it as a test of honesty and asked the question, rhetorically, whether he could understand that someone from the street, looking at Mr Khan's CV and application form, might say that he has failed "these tests of honesty and, therefore, he was being dishonest"?
Mr Saini QC, accepted that the test of dishonesty in the document "Good Medical Practice", which I was told was a document subsequently withdrawn, that was made available to doctors, represents an incorrect legal test of dishonesty. However, he submitted that it is plain from the decision letter that the Panel, in reaching its decision on dishonesty, did not apply that test, but rather applied the test acknowledged by Miss Foster QC to be the correct one, namely the Ghosh test.
In support of that submission, he pointed out, quite rightly, that in rejecting two other allegations of dishonesty, the Panel explicitly did so in their decision letter by reference to the two-stage test in Ghosh, thereby, he submitted, indicating that that was the test which they were applying generally, and, it is to be inferred, also in relation to the one allegation which they found to be proved.
In addition, Mr Saini submitted that the incorrect test to which reference is made in the decision letter, appeared at a later stage of the chain of decision-making which the Panel recorded, namely the stage at which it was deciding whether, having found that he had been dishonest, his fitness to practise was impaired.
I have no doubt whatsoever that it would be wholly wrong, unsatisfactory and unfair for a finding of dishonesty to stand against the background of the circumstances to which I have referred. The first passage, which was where the chairman was questioning Mr Khan, demonstrated that the chairman was plainly labouring under a misapprehension that the paragraph 51 test was either "the" or at any rate "a relevant part of" the test of dishonesty. Nothing is done to extinguish that inference by the fact that in the section of the decision seeking to explain how the Panel reached its decision that Mr Khan's fitness to practise was impaired, there was a further reference to paragraph 51 and an explicit linking of that decision with that test in paragraph 51, as appears from my previous citation. Having said that, in deciding whether the matters were so serious as to raise the question of impairment, the Panel has decided a number of issues, the very next thing that is referred to is the Panel's noting of the incorrect test in paragraph 51. Moreover, the Panel indicated that its conclusion was that Mr Khan's misconduct was a clear departure from "the standards set out in Good Medical Practice (2001), and that it fell sufficiently below those standards as to render his fitness to practise to be impaired by reason of his misconduct", those standards including the incorrect definition of dishonesty.
I entirely accept Mr Saini's submission that as a matter of strict logic, if it were the case that, having found dishonesty without reference to that incorrect test, the Panel went on to apply the wrong test to the question of impairment, that is a matter that would need to be looked at in the context of the challenge to the decision on impairment, but in my judgment that is an artificially narrow way of approaching the matter.
The answer to the clear inference that from the chairman's question she was labouring under a misapprehension as to the correct test, which Mr Saini advanced, namely that, having been advised by the lawyer advising the Panel, the Panel had in its decision made reference to the correct test, is that it is plain, albeit in a different context, from the fact that the Panel went on to repeat reference to the incorrect legal test in paragraph 51, that the work of the legal adviser had not been wholly successful.
If what had occurred after the conclusion of the hearing was that the adviser had advised the Panel that the test in paragraph 51 referred to by the chairman in questioning was incorrect and that there was a much higher threshold, as laid down in Ghosh, then one would not have expected a reference to the incorrect lower test to have survived and indeed been relied on explicitly as justifying a finding of impairment. It is, in my view, artificial and unrealistic to suppose that it would be safe to assume that the Panel, or the chairman at any rate, having been under the misapprehension that paragraph 51 represented the correct test on dishonesty in her questioning, and having remained under that misapprehension in the context of the Panel's decision on the question of fitness to practise, in-between those two moments had been cured of her misapprehension when it came to making findings of fact on dishonesty and applied the correct test.
In my judgment, at the very lowest, it can be said that the later reference to paragraph 51 in the decision letter shows that the offending paragraph was uppermost in the minds of the Panel when they were considering their decisions and had been discussed by them in their deliberations. There is no satisfactory or conclusive evidence that the patent error of interpretation evident in the chairman's questions to Mr Khan had been corrected by the time paragraph 51 was referred to in the decision, or by the time that the Panel came to consider the question of dishonesty.
One of the difficulties is that it is not possible to interrogate the Panel and ask them what their process of ratiocination was. Justice must be seen to be done, as well as being done, and in my judgment nobody reading the transcript or the decision letter could say with confidence that there is no possibility that, either consciously or indirectly, the Panel was influenced by a misapprehension that paragraph 51 represented some part of the correct legal test of dishonesty. In my judgment, it is likely to a greater or lesser extent, expressly or subliminally, that the chairman, and/or one or more members of the Panel, were influenced by, and applied to a greater or lesser extent, the paragraph 51 test. Even if that is wrong, it is impossible to know whether that did in fact occur. The risk that it occurred, or may have occurred, in my judgment would have made it unfair, wholly wrong and dangerous to allow the decision of dishonesty to stand by reference to the finding of the Panel.
The question arises as to what the consequences of my conclusion are. When this matter adjourned on 25th September, I asked Mr Saini what the GMC's submission would be in the event that the court were to overturn the finding of dishonesty. My recollection, and that of Miss Foster, was that Mr Saini replied that, having regard to the length of time since the alleged offence, or the offences which had been found, that the GMC would not invite me to remit the matter, as it would be within my power to do, to a Fitness to Practise Panel to reconsider the matter again, but that I should consider the matter myself.
At the resumed hearing today, Mr Saini indicated that on that occasion he had said that he had been acting without instructions, that I had asked him to get instructions and that his instructions now were that if the court were to overturn the finding of dishonesty on the ground that I have overturned it on, rather than on the alternative or cumulative ground that it was simply wrong, then, rather than hear it again myself, I should remit it to a Panel. It appears that there may have been some crossed wires. I make no comment of any sort on that. However, in my judgment it would be unsatisfactory and unfair to Mr Khan, and not necessary in the interests of justice or the protection of the public, to which, of course, one has to have regard in this sphere, for the matter to go back by way of remission to a new Panel.
The events in question are now nearly five and a half years old. Mr Khan has had this matter hanging over his head for a very long time and in evidence that was placed before the court, it is apparent that the suspension which has itself been deferred pending this appeal, has had direct adverse effects on his career prospects in the United States, where he is currently practising medicine, and in particular in that a job offer which was made to him has been withdrawn because of the finding of dishonesty and the impairment ruling.
In reaching the decision that it is therefore a matter which I should look at myself, I have taken into account the circumstances of the case, and in particular the nature of the allegation and the nature of the evidence relied on. It is of course axiomatic that in the ordinary course an appellate court, even where, as here, the appeal is by way of rehearing (I shall refer to that in a moment), is always slow to interfere or overturn a finding of fact where it has not had the benefit of hearing oral testimony and seeing the demeanour of a witness, which was enjoyed by the tribunal of first instance.
I am also conscious that, in particular in the context of findings of honesty or dishonesty, an appellate court is particularly slow to substitute its own view for that of the tribunal of first instance, particularly where it has not enjoyed the benefit of oral testimony. However, as will appear, this is a rather unusual case, in my judgment, because the nature of the allegation of dishonesty is one which appears from the face of the application form. The answers to it, provided by Mr Khan, themselves appear on the face of the application form, the CV and the admitted background of the job application, including the submission of certificates in advance and the presentation, in his portfolio, of the articles relied on by him in his application and CV.
It was accepted by Mr Saini that, absent any oral testimony, the relevant entry, to which I shall refer, was one in which it could equally be inferred that the explanation for the admitted mistake was innocent rather than dishonest.
Mr Saini, when defending the substance of the finding of dishonesty from the challenge by Miss Foster in her alternative ground (that it was wrong), relied very heavily -- indeed, in my judgment it was his main point -- on what he submitted were evasive answers given by Mr Khan when asked about it at the hearing. Thus, he said, this was a case where the Tribunal was entitled to form its view of Mr Khan's demeanour and, therefore, would not be an appropriate case for the court either to substitute its own view on the merits for that of the Tribunal or, if, as I have done, the court found that the decision is impugned by the paragraph 51 point, not to remit it, rather than deciding it itself.
I have studied very carefully the transcript of the evidence of Mr Khan on this point, I have studied very carefully the submissions of counsel on both sides and I have studied very carefully the relevant documents. In my judgment this is a case in which there would be no injustice to the General Medical Council if the court were to make its own finding of honesty or dishonesty on this point rather than remit it to a Panel. One has to, in this situation, weigh up all the circumstances: on the one hand, the desirability, in principle, of primary questions of fact being decided by a Panel, but on the other the disadvantages and undesirability of constituting a new Panel so long after the alleged offences. In my judgment, taking all these matters into account, I have no doubt that the right thing to do is for me to consider the question afresh.
The relevant entry appeared on the application form and, before referring to it, I note that on the front page of the application form the following admonitions appear:
"2. DO NOT MAKE ANY REFERENCES TO YOUR C.V. SHORTLISTING WILL BE BASED ON THE APPLICATION FORM ONLY.
3. DO NOT INSERT ANY PART OF YOUR C.V. OR LOG BOOK INTO THE APPLICATION FORM...
6. PLEASE ATTACH ONE COPY OF YOUR CURRICULUM VITAE WITH THE APPLICATION FORM".
Under the Heading "MEDICAL EDUCATION & PROFESSIONAL QUALIFICATIONS" there was the following admonition:
"Original certificates to be presented at interview. Failure to produc[e] original and copy at interview will mean you will NOT be interviewed".
It follows that when considering the question of any intention to bolster his prospects by entering a deliberately dishonest and knowingly false entry, one has to approach it on the basis that Mr Khan must be taken to have known not only that his CV would be looked at, or might be looked at, by the panel, or by the deanery, but also one must take into account the fact, to which I have referred, that he himself opted to present his portfolio to the deanery, which included all his published articles and unpublished articles, including the article in question.
Under the heading "PUBLICATIONS" there were five boxes and the rubric was as follows:
"PUBLICATIONS
Please list in chronological order with the most recent first. If you have more than five publications, please list the most recent five. Publications only must be in the Vancouver style".
Within each box there was then provision for filling in the name of the author and the title. There were then two columns, one "Case Report", the other "Full Paper"; under "Status" three options, "Submitted", "In Press" and "Published Work"; under that, the name of the journal; and finally "Full Reference".
Mr Khan filled out all five boxes, but in no case did he circle, in respect of any individual article, whether it was submitted, in press or published work. It was common ground that the words "in press" were meant to refer to an article that had not only been submitted, but had been accepted for publication, but had not yet been published. It was not in dispute, either, that the first four articles which Mr Khan entered were fully published works, that is to say works that had actually been published at the time of interview, or that, in addition to the first four, there were another five articles, which appear in Mr Khan's CV that was attached to the application form that was submitted with the application form. In his CV there was reference to no fewer than five articles, any or all of which would have qualified for entry in this section of publications, and all five would have qualified as fully-published works. That is to say, works which had already been published. I was told that three of them were full academic papers and that two were either case reports or similar short articles.
The fifth entry was in respect of an article, the authors of which were described as Mr Khan, G Bentley and G Blunn, entitled "Does PCL retaining or sacrificing has (sic) any effect on prosthetic knee movements". Neither "Submitted" nor "In Press" nor "Published Work" was circled. The journal was identified as being the Journal of Biomechanical Engineering and the full reference was identified as being 322 (1): 634 10th August 2003. The allegation made, and found to be true by the Panel, was that the combination of not circling the word "Submitted", coupled with the specific reference under the Vancouver style and the date, which of course was in the future at that moment, 10th August 2003, cumulatively constituted a representation that this was an article which, while not actually published -- how could it have been published, since it was in the future -- was nonetheless one which had been accepted for publication and therefore was in the middle category of "In Press". It was not challenged by Miss Foster that that was objectively what the entry represented.
What was found was that not only was this, as was admitted, an inaccurate and incorrect representation, but that it was dishonest. The Panel made an explicit finding in relation to it that:
"... he knew when he wrote the application in June 2003 that it would not be published [on 10th August 2003]. The Panel has therefore found that he presented this as a published article with a view to buttressing the academic weight of his application."
In my judgment, even if I had not found, as I have, that the finding of dishonesty must be quashed by reason of the reference to paragraph 51, that finding is a finding which could not stand. No reasons for the finding were given and no reasons were given for rejecting the submissions which had been made on behalf of Mr Khan as to why that would be an implausible finding.
Literally the very next page of the application form, after that entry, which appears on the top of page 11 of the application form, was a section called "Abstracts". The fourth entry in that category, which Mr Khan said had been entered by his wife and/or brother and/or by himself, was a separate article or abstract entitled "A Cervical Spinal Lesion", which was said to have been published in the British Medical Journal. The full reference given to it was 322 (1): 624 10th March 2001.
There are two aspects of that which are relevant to the issue of whether there was dishonesty. The first is that all the references, bar the date, in both that abstract and the box on the article said to have been dishonest, were identical: 322 (1):634. In my judgment, against a background of a document, an application form and a CV which is littered with obvious errors and sloppy inaccuracies, it is a very strong inference that the explanation for this incorrect entry was that there had been some mistake in filling in the form and that there had been some transposition from one box to another.
Second, and of no less import in my judgment, is the point that in considering whether the correct inference is that there was dishonesty on the part of Mr Khan in seeking to give the false impression that this article had been accepted rather than merely submitted, one has to ask the question: how sensible would it have been, in seeking to practise such a deception, to give a knowingly false reference which was identical to a reference on the very next page, in circumstances where there must have been an obvious risk that anybody reading this application would, or might, notice that the references were identical and therefore that one or other of the references must be wrong? If the intention was dishonestly to represent that this article had been accepted, it would have been a very stupid thing to do to draw attention to that dishonest deception by using precisely the same reference as appeared on another, completely different journal on the very next page.
Moreover, if the intention had been to give the impression dishonestly that this article had been accepted but not yet published, it would again have been a rather stupid thing to do to give a page reference under the Vancouver style to the page in which this was going to appear in a journal in circumstances where it would be, simply as a matter of common sense, rather surprising if a journal which had accepted an article for publication some 3 months down the line had sent it back with the page numbers that it was going to appear in the wider journal, again a matter that would obviously run the risk of raising eyebrows on the part of anybody who read it.
In addition to that matter, the Panel has given no indication of how it dealt with the submission that had been made to it and was repeated in front of me, that the proposition that Mr Khan was dishonestly trying to buttress the academic weight of his application is inconsistent with the fact that he had missed the opportunity of which he could easily have availed himself of filling in that fifth box by reference to any one of the five other articles which had been published and which, it is not challenged by the General Medical Council, could perfectly properly have been entered into that box. Nor, in reaching their conclusion, did the Panel give any indication as to why the submission that it should be inferred from all those other examples that this particular example was itself explicable by an innocent error had been rejected. Nor did the Panel give any reason for holding to its conclusion of dishonesty against the knowledge that the unpublished, but submitted, article in question was in his portfolio and available for inspection, a matter that would have been known to Mr Khan when deciding to practise this deception, as it was found to be.
I point out in passing that there was a typographical or grammatical error in the title, to which I have drawn attention, which of itself would be surprising if this had been the product of cold, calculating dishonesty.
Against all of this background, in my judgment, before one looks at the question of Mr Khan's evidence, the inference is overwhelming that this error was not the product of dishonest intention to deceive, motivated by a desire to buttress his academic standing, but was simply on all fours with the large number of other innocent errors that appear on the face of the two documents.
So far as the impact upon that view the evidence of Mr Khan in the witness box had, or should have had, Mr Saini's submission was that when this error was put to him in questioning, his answers were evasive, and that instead of just accepting and apologising for the error, he made a number of points which were not addressing the sting of the point that was being put to him, and he characterised that evidence as evasive. He said that the evidence did not engage with the thrust of the allegation.
It is, in my judgment, perfectly true that when one reads those passages, Mr Khan does not engage with the thrust of the allegation. However, in my judgment, it is overstating the case to describe those passages as necessarily evasive, not least in the context of a whole series of other answers in his evidence in which he accepted perfectly frankly that he had been not only at error but at fault, both in allowing inaccuracies to enter into the documents, and in failing to check them.
There are all sorts of reasons why, when it is drawn to somebody's attention in the witness box that he made an error that he may not explicitly and openly acknowledge the error, other than the inference being that the explanation is seeking to cover up dishonesty. I bear in mind that there are circumstances in which the question of whether an answer is deliberately evasive so as to disguise dishonesty is a matter that is capable of being one that can only be determined by reference to the demeanour of the witness, but this is, in my judgment, not such a case.
In my judgment, the documents speak for themselves and there is nothing that distinguishes this particular error from a number of other errors which have been either found or admitted, or both, so as to take it out of the category which has been found by the Panel in respect of all other allegations: errors in which the inference to be drawn is an innocent rather than a dishonest one. If one imagines that this case had been put to the Panel on the basis that it had been accepted from the outset that every other entry had been entirely honest and without any intention to deceive or to buttress his standing, in my judgment it is hard to imagine either that the allegation would have been proceeded with by the GMC or, if proceeded with, that it would have led to a finding of dishonesty.
At all events, in my judgment the finding that the motive was a motive to buttress his academic standing is one which cannot stand, both because no sufficient reasons were given for it and because, it is, in my view, unsupported by and inconsistent with the generality of the evidence. I would therefore find that it is wrong, in any event, and for the reasons I have given it would be inappropriate for that matter to be remitted to the Panel. Approaching it, as I now must do, without the benefit of oral evidence, because nobody has suggested that I should have a hearing which involves oral evidence from Mr Khan, I reach the conclusion, without any hesitation, that this was not a dishonest entry.
There is one other matter to which I should refer. There were before me, and there were before the Panel, a number of character references for Mr Khan, and there was one live witness who gave evidence by video link. That was Professor Shim. Professor Shim was the Professor of Medicine at the Albert Einstein College of Medicine where Mr Khan was working, and still is working. He was asked, "can I ask you for your views... of the doctor's integrity and honesty" and his answer was:
"A I am going to talk about the experience that I have over the last two years in practising with him. I cannot say anything about the charges or honesty or dishonesty part...
A I have never experienced dishonesty. He is actually a very thorough worker. Actually, all our Fellows are selected members and they take their work excellent (sic)...
Q Have you ever had any reason to suspect his honesty or integrity in any of the dealings that you have had with him?
A No, sir."
Among his references there were a letter from Professor Shim saying:
"Dr Khan I know in the past 2 years is an honest, hard-working, competent, fully committed physician I respect and enjoy working with."
"He is honest and intellectually curious and is quick to search the literature to learn about the case or subject...
He is fully committed to the care of our patients who are often indigent and uneducated";
a letter from Assistant Professor of Medicine, Robert Foronjy:
"In summary, Dr. Khan is an excellent physician and he has demonstrated to me that he possesses the character traits, intelligence and dedication needed to provide superlative clinical services in the future";
a letter from Ronald Smith, Co-director of the Cardiothoracic Surgery Intensive Care Unit at the Montefiore Medical Center in New York:
"Dr Khan has shown himself to be a highly ethical, consistent, reliable, and pleasant physician and has always maintained excellent working relationships with his superiors, peers, support staff as well as junior house-staff";
a letter from Assistant Professor Rajat Bhatt from the Health Sciences Centre at the Texas Tech University.
"Dr Khan worked closely with me in New York for two years and I have known him now for over five years. I can only say that I am astonished that he could be capable of the errors he stands accused of - he was always a meticulous committed professional colleague who was widely seen as a shining example to others...
I can also attest that Dr Khan is to his core an extremely honest and moral man - this comes from his deeply held religious beliefs but I believe it is more than that - that he has shown through words and actions that practicing medicine is such an honourable and important privilege that his role in promoting the welfare of patients in his care comes above all else";
and finally a letter from Assistant Professor Raghad Said, from the Montefiore Medical Center:
"I have supervised Dr. Khan very closely during his Intensive Care Unit rotation and have been very impressed by his sound intellect, knowledge, honesty and integrity."
In its decision letter, the Panel indicated that it had given careful consideration to all the evidence included in the case, but in its reasoning it did not indicate what weight it had attributed to these glowing references to Mr Khan's integrity. In my judgment, these are very powerful matters that any tribunal should weigh in the balance in considering the plausibility of honesty or dishonesty, and I take them very much into account.
There are two other decisions made by the Panel which are also the subject of factual challenge. The first is in respect of a finding that:
"... in Mr Khan's curriculum vitae his description of himself as 'Mr Amir Khan MD FRCS' was accurate but misleading, insofar as it would suggest to a British reader that his MD was a British higher degree."
This is a reference to the front cover of Mr Khan's CV, which reads:
"Curriculum Vitae of Mr. Amir M. Khan. M.D., F.R.C.S."
This is a finding that has a somewhat bizarre origin in that the complaint, as originally framed by the GMC, was not by reference to that entry on the CV, but rather by reference to an entry in the application form, under the heading of "MEDICAL EDUCATION & PROFESSIONAL QUALIFICATIONS" in which Mr Khan had written under "Qualification/Memberships of Professional Institutes", "MD"; under "Name of Medical School/Institute", "American board of Examinations"; and under "Month and Year of Qualification", "June 2000". The original allegation was that this was misleading, indeed, it was said to be dishonest, because he had in fact only been qualified as an MD since December 2001. But when it came to the hearing, a wholly different point was taken by the Panel itself, of its own motion, and the complaint was not the one made by the GMC, but rather the fact that in the cover sheet of his CV the reference to himself as MD was misleading in that it falsely gave the impression that he had a higher English degree rather than, as was in fact the case, and was accepted by the Panel to be accurate, he was a medical doctor as certified in the United States.
The original allegation tells one a great deal about the very surprising way in which these allegations were put against Mr Khan, because the notion that he can have dishonestly sought to improve his standing by giving the impression that his qualification as an MD went back to June 2000 is undermined by the fact that on page 1 of his CV it is explicitly stated that his MD qualification was obtained in December 2001. It is another example, on all fours, in my judgment, or if not on all fours, very close to the allegation that was found of dishonesty, where the allegedly dishonest inaccuracy or misleading feature was easily demonstrable as being inaccurate by reference to something that appeared elsewhere in the papers.
Be that as it may, the complaint made by, and found by, the Panel of putting in a misleading entry of "MD", in my judgment cannot stand. It is not challenged that it is accurate; American doctors call themselves "MD". It is true that there is in England a higher qualification which is also referred to as "MD", but any notion that the reference on the CV was misleading, in my judgment, is undermined by the fact that on the very next page, first page of the substantive CV, the qualification is described as "M.D. USMLE". That is a reference to the American institute that awarded the MD. It is readily apparent that the reference to MD is not a reference to an English higher qualification, but is simply the standard description of an American doctor. Indeed, Mr Khan made the point that if he had been seeking to pretend, or if it had been intended to give the impression, or if it was objectively misleading by giving the impression that it was an English higher degree, you would have expected it to be after the FRCS rather before, because it would be a later rather than earlier qualification. In my judgment, that finding is plainly wrong and should be quashed.
The second matter is in respect of an entry in the abstracts section of the application form, to which I have already referred. The fourth entry was to a paper to which I have already referred, called "A Cervical Spinal Lesion". The point taken by the GMC, and accepted by the Panel in its decision, was that citing that article as an abstract in the British Medical Journal 2001 was inaccurate. This is on the basis that the article in question was not a shorter version of a longer document, but rather a seven-line entry of a brief case report.
In answer to this Miss Foster, on behalf of Mr Khan, submitted that there is no inaccuracy, because an abstract does not have only to be a shorter version of a longer published article, but can be a free-standing short paper in its own right. In support of that she prayed in aid a letter dated 9th May 2003 to Mr Khan, which refers to abstracts in terms which indicate that there can be either something called an abstract which is a poster, something that would only appear as a poster and, she submits, therefore not an abstract from a longer paper, or something called a "long abstract" to be included in the papers for a conference, which is a different kind of abstract and the more conventionally understood abstract. In addition, it was submitted that there was no expert evidence before the Panel on which it could resolve this issue of fact.
In answer to that, Mr Saini QC submitted that the Panel were themselves experts and it is perfectly obvious that the common understanding of the word "abstract" is a reference to a shorter version of a longer published document.
I have not found this decision an easy one to make, but in my judgment there is force in Mr Saini's submission. In my judgment, the Panel was entitled to take the view that, in a document such as the application form, the invitation to identify abstracts as distinct from publications was intended to be understood as being a reference to a shorter version of a longer document. In those circumstances, in my judgment, that finding of the Panel cannot be overturned.
Before I turn to the question of impairment and sanction, I should add something about the question of authority in relation to the issue of the correct approach on disturbing a finding of dishonesty. Reference was made to the decision of the House of Lords in Watt or Thomas v Thomas [1947] AC 484, the headnote of which is in the following terms:
"When a question of fact has been tried by a judge without a jury and it is not suggested that he has misdirected himself in law, an appellate court in reviewing the record of the evidence should attach the greatest weight to his opinion, because he saw and heard the witnesses, and should not disturb his judgment unless it is plainly unsound. The appellate court is, however, free to reverse his conclusions if the grounds given by him therefor are unsatisfactory by reason of material inconsistencies or inaccuracies or if it appears unmistakably from the evidence that in reaching them he has not taken proper advantage of having seen and heard the witnesses or has failed to appreciate the weight and bearing of circumstances admitted or proved."
(Emphasis added).
The question of what is the correct approach in deciding whether to overcome a finding of honesty in an appellate court such as this of course only arises insofar as Miss Foster's second challenge to the finding is concerned, namely that based on the submission that the finding of dishonesty was wrong. It does not arise in relation to the primary challenge, which I have also accepted, namely that the finding was undermined by the application, or the possible application, of the wrong legal test; nor does it apply to the approach that I have to take when deciding the matter afresh, as I have to do in the light of the decision which I have made that it is not appropriate that I should remit the case to a new Panel for a new hearing but should make a new finding myself, because, having found that the original decision was wrong, as being undermined by the possible application of the wrong legal test, the question has to be looked at afresh, either by me or by a new Panel. So what I am saying now applies only to the alternative submission, which I have accepted, that the finding of dishonesty is in any event wrong.
The words emphasised in the headnote indicate that one of the bases upon which an appellate court is free to reverse the conclusions of the tribunal of first instance is where that tribunal has failed to appreciate the weight and bearing of circumstances which are admitted or proved. In my judgment, for the reasons I have given, that is a circumstance which applies in this case. That is a reference to a passage from the speech of Lord Macmillan in which he said as follows at page 491:
"So far as the case stands on paper, it not infrequently happens that a decision either way may seem equally open. When this is so, and it may be said of the present case, then the decision of the trial judge, who has enjoyed the advantages not available to the appellate court, becomes of paramount importance and ought not to be disturbed. This is not an abrogation of the powers of a court of appeal on questions of fact. The judgment of the trial judge on the facts may be demonstrated on the printed evidence to be affected by material inconsistencies and inaccuracies or he may be shown to have failed to appreciate the weight or bearing or circumstances admitted or proved or otherwise to have gone plainly wrong."
It is common ground that an appeal such as this arises by virtue of the relevant practice direction as a re-hearing. In the case of Meadow v General Medical Council [2007] QB 462, Auld LJ, in a passage with which Sir Anthony Clarke MR and Thorpe LJ agreed, referred to the test applied by Collins J in the court below. In that passage Auld LJ referred to the test applied by Collins J in these terms:
"119. The Judge dealt shortly with the test for the High Court on an appeal under section 40. He noted, at para 31, that such an appeal is not limited to a review, but said that the court would not interfere unless persuaded that a decision, whether in respect of a finding of misconduct or of sanction was 'clearly wrong', the test with which, without further gloss, he said he would apply."
At paragraph 125, Auld LJ held:
"For the following reasons, I can see no basis for faulting Collins J's simple expression of the test, save that I doubt whether the adverbial emphasis of 'clearly' adds anything logically or legally to an appellate court's characterisation of the decision below as 'wrong'."
Auld LJ added:
"127... whether the appeal is by way of 'review' under CPR r 52.11(1) or a rehearing under CPR r 52.11(1)(b) by reason of the Practice Direction, the material test for quashing a decision of the FPP is whether, as provided in CPR r 52.11.3(a), it is 'wrong'."
Auld LJ went on to hold, referring to the judgment of May LJ in EI Dupont de Nemours & Co v ST Dupont (Note) [2006] 1 WLR 2793, paragraphs 92-98:
"128... even when a review is a full rehearing in the sense of considering the matter afresh, if necessary by hearing oral evidence again and, even admitting fresh evidence, the appellate court should still, said May LJ, at para 96, 'give to the decision of the lower court the weight that it deserves'. This elasticity of meaning in the word 'rehearing' in CPR r 52.11 should clearly apply also to the same word in the Practice Direction. It all depends on the nature of the disciplinary tribunal, the issues determined by it under challenge and the evidence upon which it relied in doing so, how the High Court should approach its task of deciding whether the decision of the tribunal was, as provided by CPR r 52.11(3)(a) 'wrong', and, whether on the way to reaching such a conclusion, it draws, pursuant to CPR r 52.11(4) 'any inference of fact which it considers justified on the evidence'."
In my judgment, answering the question of whether the decision of the Panel on the question of honesty was wrong, the answer is, drawing inferences of fact which I consider to be justified on the evidence, that it was. In saying that, I am conscious also of the guidance given by the Court of Appeal in the decision of Raschid v General Medical Council [2007] 1 WLR 1460. Laws LJ, in considering how the jurisdiction should be exercised by the High Court under the new statutory regime held:
"16. In these circumstances it seems to me to be clear that we should follow the guidance given in the cases decided before the change in the appeal system effected on 1 April 2003. First, the Privy Council is of course a source of high authority; but secondly, we are in any event considering an effectively identical statutory regime. As it seems to me there are in particular two strands in the relevant learning before 1 April 2003. One differentiates the function of the Panel or committee in imposing sanctions from that of a court imposing retributive punishment. The other emphasises the special expertise of the Panel or committee to make the required judgment."
Laws LJ further held:
"19... As it seems to me the fact that a principal purpose of the Panel's jurisdiction in relation to sanctions is the preservation and maintenance of public confidence in the profession rather than the administration of retributive justice, particular force is given to the need to accord special respect to the judgment of the professional decision-making body in the shape of the Panel. That I think is reflected in the last citation I need give. It consists in Lord Millett's observations in Ghosh v General Medical Council [2001] 1 WLR 1915, 1923, para 34:
'the board will afford an appropriate measure of respect to the judgment of the committee whether the practitioner's failings amount to serious professional misconduct and on the measures necessary to maintain professional standards and provide adequate protection to the public. But the board will not defer to the committee's judgment more than is warranted by the circumstances.'
20. These strands in the learning then, as it seems to me, constitute the essential approach to be applied by the High Court on a section 40 appeal. The approach they commend does not emasculate the High Court's role in section 40 appeals: the High Court will correct material errors of fact and of course of law and it will exercise a judgment, though distinctly and firmly a secondary judgment, as to the application of the principles to the facts of the case."
A question has been raised, not in this case, but on other authorities as to whether there is any gap between the approaches laid down by the Court of Appeal in those two authorities, having regard in particular to the reference by Laws LJ to the judgment exercised by the High Court as being distinctly and firmly a secondary judgment. Nothing on this case turns on whether there is any such a gap and, if so, of what it consists. I note that in the Meadows case Thorpe LJ stated:
"280. Whilst the Privy Council was, and now the Queen's Bench Judge is, free to upset the decision of the panel if clearly wrong, it has always been recognised that the appellate court must accord due deference to the evaluation of a panel substantially composed of doctors for the obvious reason that they are better placed to make a peer judgment. There can be no doubting that proposition where the charge before the panel relates to clinical work. But where the only charge relates to the doctor's evidence given during legal proceedings there is no similar foundation for deference."
That observation has some significance in the current context, because on the question of whether the relevant entry in respect of the publication was honest or dishonest, there is not, in my judgment, any aspect of that decision which turns on any medical expertise, whether related to clinical work or otherwise. It is a classic case with which the courts are confronted all the time, and which could occur as well in a non-medical context as a medical context, namely as to what inference one draws from an error in a document, and whether the innocent inference is to be drawn or a dishonest inference is to be drawn.
Insofar as the decision in this case turned solely on whether, in my judgment, the decision of the Panel that the relevant entry was dishonest was wrong, in my judgment it was wrong and I would so hold. As I have indicated, for all the reasons above, in my judgment the outcome of this case, so far as the decision of dishonesty is concerned, does not in fact depend on my reaching that conclusion. For the reasons I have given, the decision must fall because of the paragraph 51 point. I then, quite apart from the question of whether it was otherwise wrong, would have to, and do, address that question again, as, in effect, a tribunal of first instance.
I turn now to the question of what are the implications of the findings which I have made, so far as impairment and sanction are concerned. My understanding, in the hearing which was adjourned, was that it was accepted by Mr Saini that, in the event that the dishonesty finding was overturned, I should deal with the question of impairment and/or sanction myself. Having taken instructions, his position before me today is somewhat modified. As I understand it, Mr Saini's position, on instructions, is as follows: if, as has happened, I overturned the finding of dishonesty and/or, as has happened, one of the findings of misleading, I should then remit the question back to the Panel, either newly constituted or reconstituted, to decide on whether there should be a finding of impairment.
He also submitted that if, contrary to that submission, I decided not to remit it, that I should find that there is impairment. He thereafter submitted that if I find that there is impairment, that that is sufficient sanction, in all the circumstances, and that no other sanction is necessary. However, with this caveat, that if I was of the view that it is appropriate that there should be a warning, that is not a matter that I have jurisdiction to order. Therefore, I should remit the matter to a Panel for the sole and specific purpose of them issuing a warning in terms which I would direct them to do. That arises under section 40(7) of the Medical Act 1983, which provides:
"(7) On an appeal under this section from a Fitness to Practise Panel, the court may—
(a) dismiss the appeal;
(b) allow the appeal and quash the direction or variation appealed against;
(c) substitute for the direction or variation appealed against any other direction or variation which could have been given or made by a Fitness to Practise Panel; or
(d) remit the case to the Registrar for him to refer it to a Fitness to Practise Panel to dispose of the case in accordance with the directions of the court..."
Section 35D(3) of the Act provides:
"Where the Panel find that the person's fitness to practise is not impaired they may nevertheless give him a warning regarding his future conduct or performance."
That is a power that is in terms conferred only on the Panel, and it was common ground between counsel that the giving to the person of a warning is not something that the High Court, on appeal, has power to do under section 40(7). Thus, if the court were of the view that the appropriate course is that there should be a formal warning, the way in which it should give effect to that view would be to remit it under section 40(7)(d) to the registrar for him to refer it to a Fitness to Practise Panel to dispose of the case in accordance with the directions of the court.
Miss Foster submitted very vigorously that I should myself deal with the question of impairment for the same reasons as she submitted I should deal with the question of dishonesty, namely that this matter having been hanging over Dr Khan for as long as it has it would be very unfair to prolong the uncertainty and the cost, not least having regard to the fact that the current position is hanging like a sword of Damocles over him and his professional career. I accept that submission.
In my judgment, although in the ordinary case it would have been appropriate to remit this to a Fitness to Practise Panel, because in the ordinary case it is desirable that questions of fitness to practise should be determined by a Panel rather by the court for the obvious reason that the Panel is composed of people with a closer interface with the profession, nonetheless, in the exercise of my discretion and in the interests of justice, it is appropriate that I should deal with it myself today.
I should say this by preface: nothing that I have said, or say hereafter in this judgment, should be taken as in any way indicating that the court takes a relaxed view of a doctor who, in an application for a hospital appointment, or an academic appointment, makes an application which contains inaccurate or misleading entries. It is to the highest degree important that hospitals and public bodies, when considering medical applications, should be able to do so confident that the applications are accurate and not misleading. It is in the interests of the public, and for the protection of the public, that such an approach is adopted, both by the Fitness to Practise Panel and, on review, by the High Court.
It is the case that the application and the CV in this case included a number of entries that were either inaccurate or misleading or both. However, it is also the case that there was, in this case, no dishonesty, as I have found and that there were very special circumstances which gave rise to the inaccuracies. Those circumstances were that Mr Khan, who had been working in America, had omitted to appreciate that the closing date for this application was 12th June, and therefore had to fill it out in a great hurry with the assistance of his wife and brother, and that those circumstances are, in my judgment, both unusual and very unlikely to repeat themselves. This is a doctor who, on all the evidence before me, is a doctor of not only integrity but great ability, with a good career both behind and in front of him. In my judgment, applying the test as to impairment of fitness to practise, in the circumstances that come before the court, that test is not satisfied.
Section 35C of the 1983 Act provides that:
"(2) A person's fitness to practise shall be regarded as 'impaired' for the purposes of this Act by reason only of—
(a) misconduct..."
That is the section relied on in this case.
In the case of Roylance v General Medical Council [2000] 1 AC 311, which dealt with the test of serious professional misconduct, as it then was, the House of Lords held that:
"... while an exhaustive definition of 'serious professional misconduct' was inappropriate, misconduct involved some act or omission, falling short of what would be proper in the circumstances, which was linked to the profession of medicine, though not necessarily occurring in the carrying out of medical practice, and serious..."
That is not the test that is to be applied under section 35C(2) of the 1983 Act, which refers to misconduct.
In my judgment, having regard to all that I have heard and read, this is not a case in which I am satisfied that, by reason of the inaccurate and/or misleading entries on the application form and/or CV, Mr Khan's fitness to practise should be regarded as impaired. Had I found otherwise, it is accepted by Mr Saini on behalf of the GMC that it would not have been appropriate for there to have been any further sanction. I agree with that submission. If, therefore, I am wrong in my finding that there should be no finding that Mr Khan's fitness to practise is impaired, I would in any event, and do in any event, quash the decision of the Panel that the registration of Mr Khan should be suspended for 4 months.
The final question that arises is whether it is appropriate that I should direct the registrar to remit the case to a Panel for the purpose of the Panel issuing a warning in accordance with the direction given by me.
It is submitted by Mr Saini that any admonitory words used in my judgment would not be an adequate substitute for a formal warning given by a Panel, in that only such a formal warning would be formally recorded and available for perusal by medical authorities in this country and abroad. In my judgment, this is not an easy matter. There are two questions for me to consider. One is the question of sending a message, both to the profession and to the public, that putting in a sloppy application form, or a sloppy CV, or both, when applying for a hospital job is not acceptable. The second question is specifically referable to Mr Khan.
So far as the first question is concerned, in my judgment that matter can adequately be addressed by remarks that I have made and do make in this judgment. So far as the question referable to Mr Khan is concerned, it is urged upon me vigorously by Miss Foster that it would be unfair and inappropriate for there to be a remission to a Panel with a direction to issue a formal warning, because such a warning would remain on the record for 5 years from the date on which it was issued. In this case, the warning would arise out of matters that were done and not done by Mr Khan as long ago as June 2003. It is not possible to know when a reconstituted, or the same Panel constituted again, could meet in order to issue such a warning, but, whenever it was, it would have the effect that such a warning would be on his record for a period going forward at least until the autumn of 2013, if not beyond.
This is not an easy matter to decide, because, as I have indicated, this court does not take lightly the submission of an inaccurate and/or misleading application for a public post in a hospital by a doctor. It is plain that Mr Khan should have taken more care, notwithstanding the urgent circumstances in which he had to complete the application form, to ensure that it was accurate and not misleading. However, it is urged upon me by Miss Foster that it is extremely unlikely that Mr Khan will ever make this kind of mistake again. It has already had the effect that he has had a suspension for 4 months hanging over his head, with the very real impact on his career in that at least one, if not two, job offers have been withdrawn.
He expressed, as one sees from the transcript, contrition at the hearing; it is not suggested that he either has repeated this, or anything like this kind of approach, again; and in my judgment it is not likely, in the light of the consequences that have flown from his application, that he will do so, with or without a warning. In those circumstances, in my judgment, it is not necessary that I should remit this matter to the registrar for him to reconstitute or constitute again the same Panel to issue a formal warning. It is sufficient that Mr Khan reads, as no doubt he will, the terms of this judgment, in which, having expressed the views that I have, I indicate the further view that if he were ever to make any kind of application to any hospital, adopting the same approach as he did in June 2003, it is very likely that the authorities in whichever jurisdiction would take a very, very serious view of it. In my view, it is unlikely that that will in fact arise for the reasons which I have given.
MISS FOSTER: My Lord, I am extremely grateful on behalf of Mr Khan that you felt able to give the judgment this afternoon, which is an enormous help, particularly since he is out of the jurisdiction waiting your word. If falls to me now only to apply for my costs, which I do not believe are opposed.
MR JUSTICE STADLEN: I order that the GMC pays Mr Khan's costs.
MISS FOSTER: Thank you very much.
MR JUSTICE STADLEN: Is there anything else?
MR SAINI: No, my Lord.
MR JUSTICE STADLEN: Can I thank you both very much indeed for your very helpful submissions, both oral and written, which I found very helpful. Thank you very much.
MR SAINI: Thank you.
MISS FOSTER: Thank you, my Lord.
MR JUSTICE STADLEN: I am sorry I kept the court staff and counsel waiting, but it seemed to me desirable to give judgment straightaway.
MISS FOSTER: We are really very grateful you did that. It is very much appreciated. Thank you. | 2 |
CITATION:
Peterborough
(City) v. Kawartha Native Housing Society Incorporated,
2011 ONCA 146
DATE: 20110225
DOCKET: C50793
COURT OF APPEAL FOR ONTARIO
Rosenberg, Armstrong and Juriansz JJ.A.
BETWEEN
The Corporation of the City of Peterborough
Plaintiff (Respondent)
and
Kawartha
Native Housing Society Incorporated and Otonabee Native Homes Inc.
Defendants (Appellants)
Frank Bennett and Vilko Zbogar, for the appellants
Douglas O. Smith, for the respondent
Mervyn D.
Abramowitz, for the receiver Mintz & Partners Limited
Murray Klippenstein and Basil Alexander, for the
interveners Co-operative Housing Federation of Canada, Ontario Non-Profit
Housing Association, and National Aboriginal Housing Association
Heard: June 10, 2010
On appeal from the order of Justice Barry G. A. MacDougall of
the Superior Court of Justice dated June 17, 2009.
COSTS ENDORSEMENT
Introduction
[1]
This endorsement addresses two matters:
(i) The costs of a re-argued motion before
MacDougall J. of the Superior Court of Justice; and
(ii) The costs of the appeal.
(i)
The costs of the re-argued
motion
[2]
We
released our reasons for judgment in this matter on October 26, 2010. In para. 44 of those reasons, we said that
the boards of the corporations were
entitled to reimbursement for the
costs of the corporations for the re-argument of the March 14, 2008 motion, which
was re-argued on February 2, 2009. The March
14, 2008 motion resulted in the extension of the receivership for one year, the
approval of certain of the receivers accounts and a disclosure order in favour
of the boards. The motion judge also
ordered the receiver to pay, from the funds of the corporations, costs of
$32,230.64 for counsel retained by the boards of the corporations.
[3]
On the re-argued motion on February 2, 2009 the
motion judge effectively reversed his position on costs and concluded that the
boards did not have the right to retain counsel after the receivership order
was made, based on his interpretation of the operating agreements between the
City of Peterborough and the corporations. The motion judge rescinded his previous costs order of $32,130.64. Although he had concluded that the boards did
not have the right to retain counsel he made a costs order in favour of the
boards in the amount of $15,000. He declined
to award the boards costs for non-litigation legal work of $9,412.60.
[4]
Much of the argument in the re-argued motion was
directed to the issue of whether the boards had the right to retain
counsel. The boards now seek costs of
the re-argued motion, which they claim on a partial indemnity scale in the amount
to $34,304 and on a full indemnity scale in the amount to $46,716, now reduced
to $44,000.
[5]
The appellant corporations are public sector
organizations, which operate affordable rental housing for approximately 300
persons from the Aboriginal community in the Peterborough area. We would not expect public sector
organizations to pay full indemnity hourly rates. In any event, whether one applies the hourly
rates on either a full indemnity scale or a partial indemnity scale to the
number of docketed hours for the re-argued motion, it produces an unreasonable
result.
[6]
On the original motion argued on March 14, 2008,
this court awarded $7,500 in costs to the boards, a sum suggested by counsel
for the boards. Counsel for the boards
submits that the re-argued motion was based on a broader record, which
justifies a greater costs award. The
total hours docketed by counsel for the boards is 156.1. Although we accept that this was the time
spent by counsel, it appears to us excessive. Also, a number of orders made on the original motion were not the
subject of the re-argued motion. The
principal issue on the re-argued motion was the right of the boards to retain
counsel. This is an important issue and
arguably attracts a costs award greater than $7,500. That said, we do not agree that it warrants 156.1
hours of lawyer time.
[7]
We fix the costs of the re-argued motion in the
amount of $15,000, inclusive of disbursements and applicable taxes.
(ii)
The costs of the appeal
[8]
After
the notice of appeal was delivered in this case, the appellants moved before
Blair J.A. in chambers for,
inter alia
,
direction concerning whether the appellants may be represented in the appeal by
counsel and a declaration that the appellants have the right to have their
legal fees and expenses for the appeal paid out of the appellants funds.
[9]
Blair
J.A. ordered that the appellants were entitled to retain counsel for the appeal
and that the boards of directors of the appellants were entitled to retain
counsel on their behalf. Blair J.A. also
ordered,
that
the reasonable legal fees and expenses
of counsel so retained are to be paid out of the Corporations assets, after
assessment.
[10]
Paragraph
47 of our reasons for judgment provides that the appellants shall have their
costs of the appeal in accordance with the order of Blair J.A.
[11]
The
appellants have requested that we fix the costs rather than require them to
proceed to an assessment as provided for in the order of Blair J.A. The respondent takes no issue with the
appellants request.
[12]
We have decided to fix the costs as it will no
doubt save valuable time required to educate an assessment officer on the
factual and legal issues in the appeal.
[13]
The
appellants bill of costs shows docketed time for Mr. Zbogar (a 2002 call) of
170.7 hours and 30 hours for Mr. Bennett (a 1970 call). The partial indemnity hourly rate for Mr.
Zbogar is $150 and $500 for Mr. Bennett. The substantial indemnity hourly rates are $200 and $750. While these rates appear to reflect rates charged
by counsel for private sector clients, we are of the view that the rates of Mr.
Bennett are high for a public sector client. The boards of the appellants filed bills of costs claiming $63,370 on a
full indemnity scale and $46,533 on a partial indemnity scale.
[14]
As
in the case of the re-argued motion, we are of the view that the
hours
times rates approach produces an unreasonable result
whether on a full indemnity or partial indemnity scale. This essentially single issue appeal simply
does not attract costs in the range sought by counsel for the appellants.
[15]
In
our view, a reasonable award of costs in respect of work done of this kind for
public sector clients is $30,000. We
therefore fix the costs of the appeal payable to the boards of the appellants
in the amount of $30,000 including disbursements and applicable taxes.
M. Rosenberg J.A.
Robert P. Armstrong J.A.
R. Juriansz J.A.
| 0 |
SECOND SECTION
CASE OF SİNGAR v. TURKEY
(Application no. 13467/05)
JUDGMENT
STRASBOURG
22 September 2009
FINAL
22/12/2009
This judgment may be subject to editorial revision.
In the case of Singar v. Turkey,
The European Court of Human Rights (Second Section), sitting as a Chamber composed of:
Françoise Tulkens, President,Ireneu Cabral Barreto,Vladimiro Zagrebelsky,Danutė Jočienė,Dragoljub Popović,Nona Tsotsoria,Işıl Karakaş, judges,and Sally Dollé, Section Registrar,
Having deliberated in private on 1 September 2009,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 13467/05) against the Republic of Turkey lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Turkish national, Mr Mahmut Singar (“the applicant”), on 30 March 2005.
2. The applicant was represented by Ms R. Doğan, a lawyer practising in İstanbul. The Turkish Government (“the Government”) were represented by their Agent.
3. On 10 September 2008 the President of the Second Section decided to give notice of the application to the Government. It was also decided to rule on the admissibility and merits of the application at the same time (Article 29 § 3).
THE FACTS
4. The applicant was born in 1966 and lives in Ağrı.
5. On 28 January 1995 the applicant was arrested in Istanbul on suspicion of being a member of an illegal organisation. On 15 February 1995 he was remanded in custody.
6. On 24 April 1995 the public prosecutor filed a bill of indictment against the applicant and nineteen other accused with the Istanbul State Security Court. On 2 May 1995 the trial commenced. On 10 May 2001 the applicant was released pending trial.
7. By Law no. 5190, in June 2004 State Security Courts were abolished. Subsequently, the Istanbul Assize Court acquired jurisdiction over the case.
8. On 23 October 2008 the Istanbul Assize Court ordered that the criminal proceedings against the applicant be terminated on the ground that the statutory time limit under Articles 102 and 104 of the Criminal Code had expired.
THE LAW
9. The applicant complained that the length of the proceedings had been incompatible with the “reasonable time” requirement of Article 6 § 1 of the Convention, which reads as follows:
“In the determination of ... any criminal charge against him, everyone is entitled to a ... hearing within a reasonable time by [a] ... tribunal...”
10. The Government argued that the applicant was no longer a victim since the proceedings against him had been terminated because the statutory time-limit had expired. They further stated that the applicant had failed to exhaust domestic remedies as the criminal proceedings against him were still pending at the time when he lodged his application with the Court. Finally, referring to Article 141 of the New Criminal Procedure Code (no. 5271), they contended that the applicant could have sought a remedy under domestic law.
11. As to the Government’s first two objections, the Court reiterates that it has already examined and rejected similar objections by the Government in previous cases (see, in particular, Mahmut Aslan v. Turkey, no. 74507/01, § 14, 2 October 2007, in respect of the first objection, and Tutar v. Turkey, no. 11798/03, §§ 12-14, 10 October 2006, and Ertürk v. Turkey, no. 15259/02, §§ 21-22, 12 April 2005, in respect of the second objection). The Court finds no particular circumstances in the instant case which would require it to depart from its findings in the above-mentioned applications. It therefore rejects the Government’s objections under these heads. As to the third objection concerning Article 141 of the New Criminal Procedure Code, the Court observes that this provision provides for the possibility of compensation for those who were kept in pre-trial detention for a long time. As the present application concerns the length of the criminal proceedings, the Government’s objection cannot be upheld.
12. 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.
13. As to the merits of the complaint raised under Article 6 § 1 of the Convention, the Court observes that the period to be taken into consideration began on 28 January 1995 and ended on 23 October 2008. It thus lasted thirteen years and eight months at one level of jurisdiction. 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 and the conduct of the applicant and the relevant authorities (see, among many other authorities, Pélissier and Sassi v. France [GC], no. 25444/94, § 67, ECHR 1999-II).
14. The Court has frequently found violations of Article 6 § 1 of the Convention in cases raising issues similar to the one in the present application (see Pélissier and Sassi, cited above). 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. The Court therefore considers that the length of the proceedings was excessive and failed to meet the “reasonable time” requirement. There has accordingly been a breach of Article 6 § 1.
15. Concerning just satisfaction, the applicant claimed 4,285 Euros (EUR) in respect of pecuniary damage. Emphasising the length of the proceedings, he left the determination of the award for non-pecuniary damage to the discretion of the Court. The Government contested the claims. The Court does not discern any causal link between the violation found and the pecuniary damage alleged; it therefore rejects this claim. However, the Court considers that the applicant must have suffered non-pecuniary damage, such as distress and frustration, on account of the duration of the proceedings, which cannot be sufficiently compensated by the finding of a violation alone. Taking into account the circumstances of the present case, and ruling on a equitable basis, the Court awards the applicant EUR 12,000 in respect of non-pecuniary damage.
16. The applicant further requested EUR 6,260 for the costs and expenses before the Court, solely referring to the Istanbul Bar Association’s scale of fees. However, 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, the applicant has not established that he actually incurred the costs claimed. Accordingly, the Court makes no award under this head.
17. The Court further finds it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT
1. Declares the application admissible;
2. Holds that there has been a violation of Article 6 § 1 of the Convention;
3. Holds
(a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, EUR 12,000 (twelve thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage, to be converted into Turkish liras 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;
4. Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 22 September 2009, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Sally DolléFrançoise TulkensRegistrarPresident
| 0 |
Leave granted in S.L.P. NOS.4424, 13245-547, 18110- 18113/93, 4064/94,2363/94, SLP /94 OCC 24681 ,2260, 4223, 2588/94, 20136/93, 4882/94, SLP/94 CC 25141 , 9901, 2428, 11084-11095/94, SLP /94 OCC 26551 , 18784,19083/94. These appeals raise a companymon question of law whether each of the respondents was liable, to be superannuated only on attaining die age of 60 years. All the respondents have been working in various departments of the appellant-State as Draftsman, Senior Draftsman, Architectural Asst. Draftsman, Architectural Draftsman, Planning Assistant, Carpenter, Heavy Vehicle Driver, Mechanic, Foreman, Motor Grade, Operator, Ferro Printer, Welder, Concrete Mixture Driver, Junior Machineman, Pump Mechanic, Pump driver-cum- Mechanic, etc. etc. On attaining the age of superannuation of 58 years, when they were sought to be, retired, they approached the Administrative Tribunal, Orissa, which in the impugned Orders has held that they were workmen and entitled to companytinue in service, until they attained the age of 60 years as provided for under the second proviso to Rule 7 a of the Orissa Service Code for short, the Code . It is number necessary to deal in detail with the facts of each case for they we number different from each other. However, facts of the case of Adwait Charan Mohanty, respondent in A. No. 1497/93 companyld be referred to as exempler case. While working as a Draftsman in the office of the Executive Engineer, Minor Irrigation Division, Cuttack, he attained the age of 58 years on July 12, 1990. When he was to retire on July 31, 1990, he challenged the numberice of retirement, Annex-A therein, companytending that he is a workman within the meaning of the Code. The Tribunal held him to be a workman and that, therefore, he was entitled to companytinue in service till he companypleted the age of 60 years on July 31, 1994 with all the benefits of salary and allowances etc. The question is whether the respondents are entitled to companytinue until they attained the superannuation age of 60 years? The Orissa Civil Services Classification, Control and Appeal Rules, 1962, for short, the Rules , defines government servant in Rule 3 f to mean a person who is a member of a service or who holds a civil post under the State and includes any such person on foreign service or whose services arc temporarily placed at the disposal of the Union Government or any other State Government or a local or other authority and also any person in the service of the Union Government or any other State Government or a local or other authority whose services are temporarily placed at the disposal of the State Government. Under Rule 8 the posts under the State other than those ordinarily held by persons to whom the Rules do number apply, are by general or special order of the government classified as i State Civil Posts, Class I, ii State Civil Posts, Class II, iii State Civil -Posts, Class 111, iv State Civil Posts, Class IV. Schedule-B of the Rules enumerates all classes of posts. Class III service and posts have been enumerated in which all the afore-stated posts have been specified. Class IV posts have also been specified and in numbere of the Class IV posts, the posts held by the respondents find place. Rule 29 of the Code defines Ministerial servant to mean a government servant of a subordinate service whose duties are entirely clerical, and any other class of servant specially defined as such by general or special order of the State Government. The Note appended thereto defines that Inspectors 1 and Sub-Inspectors of Police employed purely on clerical duties and Sub-Registrar are number ministerial servants. Rule 52-A reads as follows- Unless otherwise expressly provided by the State Government in any statutory rules the minimum age-limit for entry into Government service shall be as follows number below twenty-one years in the case of gazetted Government servants in Class 1, Class 11 or Class III service number below twenty in the case of numbergazetted Government servants in Class III service other than Ministerial servants number below eighteen years in the case of number-gazetted Class III Ministerial servants and Class IV Government servants. Rule 71 a provides superannuation which is relevant for the purpose of this Case, reads thus- Except as other wise provided in the other clauses of this rule the date of companypulsory retirement of a Government servant, except a ministerial servant who was in Government service on the 31st March 1939 and Class IV Government servant, is the date on which he or she attains the age of 58 years subject to the companydition that a review shall be companyducted in respect of the Government servant in the 35th year of age in order to determine whether he she should be allowed to remain in service up to the date of the companypletion of the age of 58 years or retired on companypleting the age of 55 years in public interest. The second proviso reads as follows- Provided further that a workman who is governed by these rules shall ordinarily be retained in service up to the age of 60 years. He may, however, be required to retire at any time after attaining the age of 55 years after being given a months numberice or a months pay in lieu thereof, on the ground of impaired health or of being negligent or inefficient in the discharge of his duties. He also may retire at any time after attaining the age of 55 years, by giving one months numberice in writing. Note- For this purpose, a workman means a highly skilled, skilled or semiskilled and unskilled artisan employed on a monthly rate of pay in any Government establishment. The Note was subsequently amended with effect from October 13, 1989, which reads Note - For this purpose, a workmen means a highly skilled, skilled, semi-skilled or unskilled artisan employed on a monthly rate of pay in any industrial or workcharged establishment. The question, therefore, is whether a Class III Government servant, on attaining the superannuation age of 58 years, is required to retire or whether he is entitled to remain in service until he attains superannuation age of 60 years as a workman within the meaning of the Code. Shri Dipanker Gupta, learned Solicitor General,contended that all the respondents belong to respective subordinate services of the State governed by the Rules framed under proviso to Article 309 of the Constitution. The Rules enumerate the class of service. For superannuation of the maximum age has been prescribed by Rule 71 a . Therefore, the Government servants in the respective class of services who hold civil post are required to retire on attaining the age of superannuation specified in the Code. The expression workman defined in the Code is referable to the workman who must be, an artisan. An artisan is one who practices or cultivates an art as an artist or one who is employed in any of the industrial arts such as Mechanic. The respondents, therefore,, are number artisans. It is also companytended that an artisan essentially is one who produces an article of some kind with the help of tools and brings into existence a product for sale. In other words, he produces an article of companymercial goods with the aid of tools or with an element of creativity introduced by the artisan into the product which he creates. None of the respondents companyld be, treated to be an artisan. Therefore, they are number entitled to companytinue in service up to the age of 60 years. It is also further companytended that the workman, must, of necessity, by reason of definition, means one working in an industrial or workcharged establishment of the Government. None of the respondents is companytinuing either in an industrial establishment or a workcharged establishment. He Tribunal, therefore, companymitted grievous error of law in directing that the respondents shall be retained in service till they attained the age of 60 years. The companye companytentions of the several learned companynsel appearing for the individual respondents, run thus The superannuation age of 58 years having been prescribed for a government servant under the Code, unless retired on attaining the age of 55 years in public interest on the grounds enumerated therein by all the employees in Class 1, II and III, exception has been carved out to Class IV government servants. The definition of workman in the second proviso brought out another exception to the main part of Rule 71 a . Every workman, highly skilled, skilled, semi-skilled or unskilled working either in Class 1, 11 or III services have been treated as a class, as being an artisan and given exception as regards age of their retirement. All of them have been treated as a class and declared that they are also to retire on attaining the superannuation of 60 years. Otherwise it would be violative of Article 14. Differing instructions were given by various departments bring out discriminatory treatment in superannuation of the workman. The word workman, in this background, should be understood broadly. Any government employee, be he highly skilled, skilled, semiskilled or unskilled, should be given the benefit of the superannuation of 60 years envisaged by the exception to the general rule in the second proviso. The industrial establishment must equally be understood broadly and number in a technical sense. The workshop etc. maintained in any department of the government or the driver mechanics etc. working in different departments and all the respondents in these cases answer the definition of workman. The workman defined under the Industrial Disputes Act has been widely interpreted by this Court in diverse judgments. The Driver of the government vehicle was also held to be workman. In the light of the service jurisprudence, the respondents have rightly been declared to be entitled to superannuation on attaining 60 years. The Tribunal has rightly given the benefit to the respondents. Exercising the power under Article 136, this Court may decline to interfere with the benefit given by the Tribunal. It is also companytended that they have worked pursuant to the orders of the Tribunal and that, therefore, they should number be saddled with the liability to refund the amount already paid by way of salary and allowances. The crucial question is whether the respondents are entitled to the benefit of superannuation age of 60 years. Government servants are governed by the Statutory Rules. The Code prescribes the minimum age required for a person to enter into the government service and the age of his superannuation. Rule 71 a clearly envisages superannuation of all the government servants except the Ministerial servants companytinuing as on March 3 1, 1939 and Class IV servants. In this case, we are number companycerned with the Class IV government servants and numbere of the Ministerial servants companytinuing as on March 31, 1939, remains in service. All others including Class III government servants shall be required to retire on attaining the age of 58 years unless the government exercises its power of review which shall be companyducted by the State Government in the 55th year of the government servant. Whether the government servant should be allowed to remain in service up to the date of companypletion of the age of 58 years or retire on companypleting the age of 55 years in the public interest is a matter which depends on exercise of power companyferred on the government in that regards. Per force every government servant in Class I to III specified in the Rules, read with Schedule-B of the Rules, is required to retire from service on attaining the age of 58 years subject to the companydition of the exercising of the power by the State Government in the public interest as stated supra. It is number in dispute that all the respondents are in Class III service. Perforce, therefore, they shall be required to retire on attaining the age of 58 years. The question is whether they are entitled to the benefit of the second proviso to Rule 71 a of the Code. It is unfortunate that the Tribunal had turned its blind eye to the rules and blissfully omitted to advert to the main part of Rule 71 a of the Code and the Rules read with Schedule-B of he Rules. The entire focus was companycentrated only on the companysideration of the word workman and the establishment enumerated in the Note to the proviso. Rule 71 a of the Code and the second proviso and the numbere appended to it must be read together harmoniously to give effect to every part of it. A reading thereof would indicate that Class 1, 11 and III government servants shall retire on attaining the age of 58 years and Class IV employees are excluded from its operation. The highly skilled, skilled, semi-skilled or unskilled workman-artisan working in an industrial establishment or workcharged establishment of the government and governed by the statutory rules also are given the benefit of the age of superannuation on attaining the age of 60 years on par with the Class IV employees. It is settled service jurisprudence and all the Rules of the Central Government and the State Governments, prescribe the superannuation of a government servant working as Class IV employee as on attaining the age of superannuation of 60 years. Having given the benefit of that class, the workman, be it highly skilled, skilled, semi-skilled or un-skilled, must be an artisan and is on monthly rate of pay working in industrial or workcharged establishment of the government. Such government servant also appears to have intended to be given the benefit of superannuation age of 60 years. The amended Note clearly brings out the above object although it is ineptly woven out and elusively companyched. For the purpose of the proviso, a workman means highly skilled, skilled, semi-skilled or unskilled artisan employed on a monthly rate of pay in an industrial or workcharged establishment. Shorter Oxford English Dictionary, 3rd Ed. Vol-1, p. 103, defined artisan means - 1. one who practices and cultivates art an artist. 2. one occupied in any industrial art a mechanic handicraftsman. Artist has been defined to mean one who pursues some practical science a follower of manual art. Websters Third New International Dictionary, Vol 1, defines artisan one who practices an art 2. one trained to manual dexterity or skill in a trade. Blacks Law Dictionary defines artisan one skilled in some kind of trade, craft, or art requiring manual dexterity, e.g. a carpenter, plumber, tailor, mechanic. The word artisan, therefore, has to be understood in companymon parlance in a wider sense as an art or an artist or one employed in any of the industrial art or produces an article of companymercial value or utility with manual dexterity, either by manual labour or with the help of tools or machine and brings into existence a product for the sale or service. An element of number only creativity would be applied to bring into existence an article or companymercial goods with dexterity employing manual or technical labour or with the aid of tools etc. However, it Is number exhaustive. Each case must be companysidered on its own facts and attendant circumstances to find whether the workman is an artisan. However, if he is a Class IV government servant, he too is entitled to superannuation on attaining 60 years of age. In Prithipal Singh v. Union of India, 1991 Supp 1 SCC 32, Driver of a staff car who is also a mechanic who knows repairing the engine or vehicle was held to be an artisan. In Chandigarh Administration through the Chief Engineer v. Mehar Singh, 1992 Supp 3 SCC 43, this Court held that a workman within the meaning of Clause b of Fundamental Rules, 56, has to satisfy the twin tests of workman and also an artisan employed on a monthly pay in an industrial or workcharged establishment, to qualify for superannuation at the age of 60 years. Therein since the facts were number clearly established, this Court remitted the appeal to the Tribunal after laying down the law, and directed the Tribunal to decide the question. In Bangalore Water Supply Sewerage Board v. A. Rajappa, 1978 2 SCC 213, a Bench of seven Judges of this Court companysidered the question under the Industrial Disputes Act - whether the Bangalore Water Supply Sewerage Board is an industry. In that case, it was a statutory Board under companysideration and number a government department. In that companytext, this Court while interpreting the word industry, the question whether the government department is an industry or number was specifically left open. Though the word industry has been amended under the Industrial Disputes Act, the amended definition as on date has number been brought into force. Therefore, it renders little assistance. It is true that in Des Raj v. State of Punjab, 1988 2 SCC 537, a Bench of two Judges of this Court, following Bangalore Water Supply and Sewerage Boards case, held that Irrigation Department of the State Government of Punjab an industry within the meaning of Industrial Disputes Act. We are number companycerned with the dispute under the Industrial Disputes Act. Therefore, the need to go into the companytroversy of the companyrectness of the ratio of Des Rajs case does number arise. Suffice it to state that all the respondents are governed by the statutory rules made under proviso to Article 309 of the Constitution. Therefore, the interpretation should be companyfined to the language employed therein. If the interpretation sought to be put up by the companynsel for the respondents are given acceptance, it would render the very object of the Rules ridiculous and all Classes of government servants would be brought into the vortex of artisan. Class III companysists of gazetted as well as numbergazetted employees. The government servants in Class III shall retire on companypletion of 58 years. If the interpretation that every artisan is a workman if he produces an article with dexterity or service with dexterity by manual or technical labour, he would be entitled to remain in service till the companypletion of 60 years. For example, even a Director of Town Planning or Chief Architect companyld be companysidered to be an artisan and, therefore, they too would be workmen entitled to superannuation up to the companypletion of 60 years of age. Similarly several officers in specified governmental activities would answer the definition of workman, in particular, the Note to the proviso. It does number appear to be the object. As stated earlier, the object appears to be to bring artisan-workman governed by the statutory rules but at par with Class IV employee and he alone is required to retire on companypletion of 60 years of age but number the gazetted or number-gazetted Class III government servants or even in Class 11 or 1. Therefore, we are of the companysidered view that the government employee in Class III service shall retire on companypletion of 58 years of age. Even an artisan-work-man who was promoted or appointed to Class III service be it gazetted or numbergazetted shall retire on companypletion of 58 years of age. An artisan-workman who is working in an industrial or workcharged establishment but he is at par with Class IV employee is to retire on attaining the age of 60 years under the second proviso to Rule 71 a of the Code. In this view, it is number necessary to decide whether any industrial establishment in a government department, number specified, expressly, is an industry or a factory as companytended by the respondents. The Code clearly gives benefit to them. | 7 |
Mr Justice Underhill:
INTRODUCTION
In May 2004 the Claimants in this case ("PJH"), who are a firm of solicitors, settled a claim for negligence brought against them by clients called Mr. and Mrs. Fox. The settlement was in the sum of £110,000 plus £160,000 in respect of costs. The Defendants, Mr. Peter Susman QC and Mr. David Batcup, are leading and junior counsel instructed by Mr. and Mrs. Fox in relation to the same matter but against whom they did not proceed. PJH say that the Defendants were also negligent and were responsible for the same loss, and they accordingly seek a contribution from them pursuant to s. 1 of the Civil Liability (Contribution) Act 1978.
The negligence alleged by Mr. and Mrs. Fox against PJH (and by PJH against the Defendants) consisted in a failure to advise them of the time limit applicable to a potential claim against their previous solicitors, Messrs. Wellers. The lost claim against Wellers would itself have been a claim for negligence in failing to advise Mr. and Mrs. Fox of the time limit applicable to a claim against another firm of solicitors, Lindars Leech (and/or the responsible partner, Mr. Alan Leech) ("LL"). The lost claim against LL would have been for negligent advice given to Mr. and Mrs. Fox which it was said led to them losing the opportunity of the favourable settlement of a complicated dispute arising out of a property development project in Spain. The advice in question was given in late October 1985, and (subject to an immaterial qualification which I discuss at para. 43 below) the settlement opportunity was lost by the end of that month. Accordingly any claim for that loss would prima facie have had to have been brought by the end of October 1991, and any action against Wellers for failure to advise Mr. and Mrs. Fox of that deadline would have had to have been brought by the end of October 1997: that is the deadline which it is said that PJH and the Defendants failed to draw attention to.
PJH have been represented before me by Miss Sue Carr QC and Ms. Anneliese Day and the Defendants by Mr. Roger Stewart QC and Mr. Jamie Smith. I am grateful for their cogent and helpful submissions.
THE FACTS
As the bald summary given in para. 2 above suggests, the history of this matter is lengthy and involved and, from Mr. and Mrs. Fox's point of view at least, makes a sorry story. I have been taken through voluminous (though not entirely complete) files spanning the entire history of Mr. and Mrs. Fox's travails with the law over twenty years. Although I shall try to confine myself as much as possible to those aspects which are essential to the resolution of the issues before me, I cannot avoid giving a fairly full account. As is inevitable, there are many obscurities about the details. My account will derive very largely from the contemporary documents. Although the witness statement of Mr. Fox in his proceedings against PJH is formally in evidence before me, he was not available to be cross-examined on it; and, as will appear, he has been demonstrated to be, while not in any way dishonest, an unreliable historian. The "live" witnesses from whom I heard – that is, two partners in PJH, Ms. Sally Hartwell and Mr. Stewart Hinds, and the two Defendants – did not claim to be able to remember much beyond what could be reconstructed from the documents, and I will only occasionally need to refer to their witness statements or to the oral evidence.
A. THE ORIGINAL DISPUTE AND THE SETTLEMENT OFFER
Mr. and Mrs. Fox
Mr. Fox was born in 1919. Between leaving school at the age of fifteen and his (early) retirement in 1966 he had a successful career in business, latterly as Managing Director first of Fine Fare Supermarkets and then of Robinson Rentals. He obtained no professional qualifications but he was clearly a man of considerable vigour, ability and independence of mind. He has recently suffered a serious decline in his health, and he was unable to give evidence in these proceedings, though I have the witness statement (dated 9th January 2004) which he prepared for the purpose of his claim against PJH, together with several other statements of varying degrees of formality and a great deal of correspondence generated by his earlier claims.
Although Mrs. Fox was to a greater or lesser extent concerned with some aspects of Mr. Fox's business affairs, the evidence before me suggests that her involvement, at least in dealings with the lawyers, was very limited. I may in what follows refer sometimes to Mr. Fox alone in circumstances where I should strictly be referring to Mrs. Fox as well, but if so the inaccuracy should not affect any matter of substance.
The Original Dispute
In 1970 Mr. and Mrs. Fox undertook a development of holiday apartments at Cala Vinas in Majorca through a company owned by them called Promociones Calas SA. The project absorbed most of Mr. Fox's savings. After a while it ran into difficulties. In 1980 Mr. Fox entered into an arrangement under which a company called Rantlodge Ltd. would help to finance the completion of the project. The precise details of the arrangement are obscure, but the terms that matter for present purposes are (a) that Mr. Fox's interest in the project, valued at £350,000, would be vested in a Spanish company controlled by Rantlodge, in return for shares in an English company, and (b) that in order to help secure borrowings by Rantlodge he would deposit a sum of £70,000 in an account in its name with Banco de Bilbao. The prime mover behind Rantlodge was a Mr. Anthony Hanson. Other individuals associated with Mr. Hanson were a Mr. Farnsworth, a Mr. Cobb and a Mr. Rey (a Swiss businessman): the various individuals and companies associated with Mr. Hanson have been referred to in these proceedings as "the Hanson interests".
There were further problems affecting the project. The most serious was that in the course of insolvency proceedings brought against Promociones Calas in Majorca Mr. Fox was in October 1981 unexpectedly thrown into prison in Palma, where he remained for over four months. There is no suggestion that Mr. Fox was guilty of any wrongdoing. Who should be regarded as responsible for what happened to him is unclear: several interests were involved in the development and its affairs were complicated.
Following that episode relations between Mr. Fox and Mr. Hanson deteriorated. Rantlodge went into liquidation. Mr. Fox did not receive – and, to anticipate, has never received – either the return of his deposit or any shares or payment in respect of his interest in Cala Vinas. He believed that Mr. Hanson was reneging on their original agreement and that he had deliberately set out to cheat him and had indeed helped to procure his imprisonment in Majorca. I need not for the purpose of these proceedings decide whether those beliefs were justified, save to observe that on any view Mr. Fox had invested a good deal of money in the project and got nothing back. What matters is that he felt passionately that he had been the victim of a grave injustice and that Mr. Hanson and his associates were dishonest.
The Fontana Proceedings
In 1984 Mr. Fox instructed solicitors, Messrs. Stoneham Langton & Passmore ("SLP"). He had the benefit of legal aid. His case was handled by SLP's "Senior Litigation Manager", Mr. Geoffrey Lines, at their office in Croydon. Mr. Lines was not a solicitor but an experienced managing clerk. It is fair to record that, although one aspect of Mr. Lines's advice has since been criticised, he appears to have acted throughout in a diligent and conscientious way; and Mr. Fox, even when he did not accept his advice, went out of his way to pay tribute to the service that he had received from him.
There were some earlier legal skirmishes with which I need not be concerned (including the lodging of a claim in the winding-up of Rantlodge), but in November 1984 Mr. Fox learnt that the £70,000 which he had deposited with Rantlodge had been transferred to an account with Banco de Bilbao in London in the name of a Panamanian company called Fontana Holdings Inc. ("Fontana"). He issued proceedings against Fontana for the recovery of the money (plus interest) and obtained a Mareva injunction which was effective to freeze some US$181,000 in the hands of the bank. Mr. Fox intended also in due course to bring proceedings against Mr. Hanson and/or his associates based on what he believed to be their dishonest conduct against him from 1980 onwards, which would involve a much larger claim; but SLP's advice appears to have been to defer doing so for the time being. Fontana instructed Titmuss Sainer & Webb ("TSW"), who also represented the Hanson interests as a whole. Mr. Fox sought summary judgment but in June 1985 Fontana was given leave to defend. A defence was served on 2nd July.
The Settlement Discussions of October 1985
The Hanson interests appear from at least mid-1984 to have been interested in settlement and various discussions took place. Outline settlement offers were made in early 1985 and again in June 1985. SLP advised that these should be pursued but Mr. Fox regarded them as unsatisfactory. Mr. Jolyon Grey of counsel advised Mr. Fox in August 1985 that his claims – both his current claim against Fontana and his contemplated claims against the Hanson interests – faced "a catalogue of problems" and continued:
I am therefore firmly of the view that the right approach to the Plaintiff's predicament is to get for him what money can assuredly be obtained by way of settlement in 1985, rather than by way of hope of future recovery in proceedings whose outcome cannot safely be predicted. Such a settlement will not be achieved by further legal expense or threats at this stage, but rather by hard-headed commercial negotiation.
Mr. Fox in a letter to SLP dated 15th August 1985 politely but firmly rejected this advice. He expressed himself perfectly willing to settle on the right terms but made it clear that the terms then on offer were in his view inadequate.
On 7th September 1985 there was a telephone discussion between Mr. Fox and Mr. Farnsworth on behalf of the Hanson interests which resulted in an agreement in principle on the terms set out in the following without prejudice letter from Mr. Fox to Mr. Farnsworth dated 8th September:
Further to our telephone conversation yesterday I am, as requested, writing to confirm my acceptance of the firm settlement proposals you have put to me on behalf of your associates and/or associated companies.
The offer is as follows:-
1. The payment to Mr Fox of £125,000 upon completion of a settlement agreement.
2. Four payments of £80,000 thereafter over a period of four years.
3. The instalment payments to be suitably secured and guaranteed in a manner acceptable to my solicitors.
In return Mrs Fox and I will undertake to:-
(a) Acknowledge that we have no claim against Fontana Holdings Inc. or A.J. Hanson, or V.M. Cobb and that we shall withdraw the claim in the liquidation of Rantlodge Limited.
(b) Cease all communication either personally, by mail or otherwise with any business associate, professional or banking contact of Mr Hanson, Mr Cobb or Mr Rey, or any member of the Press or Intermediary of any such person or persons, for the purpose of discussing or commenting upon any of the affairs or interests of Mr Hanson, Mr Cobb or Mr Rey.
(c) Refrain absolutely from holding ourselves in any way as being connected with or interfere in any way with or do anything which might affect the development and sale of the project known as the "Cala Vinas project in Mallorca".
I now assume that my solicitors Messrs Stoneham Langton & Passmore will hear from your solicitors in due course … .
The total amount payable, over the five-year period, was thus £445,000. That payment would be in full and final settlement of the entirety of Mr. and Mrs. Fox's claims against the Hanson interests, covering the wider potential claims referred to in para. 11 above.
Discussion then followed between Mr. Lines of SLP and Mr. Thomas of TSW with a view to concluding the agreement in principle which had been reached by Mr. Fox and Mr. Farnsworth. A crucial question requiring to be resolved was how the future instalments totalling £320,000 were to be "suitably secured and guaranteed" as per head 3 in Mr. Fox's letter. On 24th September 1985 TSW sent SLP a draft Agreement ("the first draft"). This provided for an immediate payment of £125,000 by bankers draft. As regards the future payments, cl. 3.2 of the draft Agreement provided that Fontana should
… confirm to Mr. Fox and Mrs. Fox that four non-discountable Bills of Exchange of £80,000 making a total face value of £320,000 have been deposited with [ ] on specific instructions to deal with each of the Bills of Exchange in the manner set out in paragraph 3.2.1 on each of the four consecutive anniversaries of the date of this Agreement.
3.2.1 [ ] will make available to Mr. Fox and Mrs. Fox the relevant Bill of Exchange on each of the anniversary dates of this Agreement referred to in paragraph 3.3 in order to enable Mr. Fox and Mrs. Fox to obtain payment from the [ Bank] in the amount of £80,000 drawn on the account of Fontana.
3.2.2 The Bills of Exchange shall be guaranteed by U.B.I. by way of an indorsement upon the back of each Bill of Exchange to that effect, and should Fontana be unable to meet the amount of any or all of the said amounts of £80,000 U.B.I. shall be liable to pay any amounts outstanding forthwith.
("U.B.I." was defined in para. 2.1 as "U.B.I. Service Industry Holdings S.A.", which was a company owned or controlled by Mr. Rey.) In return, by para. 4.1 of the draft Agreement Mr. and Mrs. Fox abandoned all their claims against the Hanson interests and entered into a number of ancillary undertakings: I need not set these out in full, but they included undertakings not to volunteer information to the regulatory authorities or to other named parties who were in dispute with the Hanson interests, and to deliver up documents relating to the dispute (subject to a promise that such returned documents would not be used as the basis of a claim for defamation against them). Para. 4.2 of the draft provided as follows:
For the avoidance of doubt it is hereby agreed that should any term on the part of Mr. Fox and Mrs. Fox be broken by them either separately or by both of them, the obligations on the part of Fontana and U.B.I. referred to in paragraph 3 will lapse and become null and void and in the event that any term is broken Mr. Fox and Mrs. Fox undertake to reimburse Fontana any amount paid to them prior to the breach of any such term or terms.
The proposed scheme as regards the future instalments thus was that an unidentified third party would hold the bills for the amounts in question but would be under instructions to deliver them to Mr. and Mrs. Fox on their due dates: they could at that point be presented, and, if Fontana failed to pay, UBI would be liable. It is not clear to me what the advantage was thought to be of using bills of exchange in this way, given that the bills were not to be delivered to Mr. and Mrs. Fox in advance of the due dates (and indeed, though this provision would in those circumstances seem to be redundant, were expressed to be non-discountable). The same substantive result could have been achieved by a straightforward promise to pay, supported by UBI's guarantee. Mr. Stewart submitted that the adoption of this elaborate mechanism was an indication that the Hanson interests were not making their offer in good faith.
Mr. Lines sent a copy of the draft to Mr. Fox. Mr. Fox apparently discussed it on the telephone with Mr. Farnsworth. While they were considering it Mr. Thomas of TSW sent a telex message pressing for agreement on the basis that "both parties are anxious to settle this matter as soon as possible". Mr. Fox and Mr. Lines agreed that it was unacceptable that the bills should be guaranteed by UBI. SLP wrote to TSW on 1st October making that point and suggesting that Mr. Rey indorse the bills personally. Mr. Lines and Mr. Thomas then had a telephone conversation on 3rd October. On the following day TSW wrote to SLP saying that they were seeking instructions on the identity of a "reputable institution in the U.K." which could act as guarantor. He again emphasised the need for urgency in reaching agreement.
On 7th October Mr. Lines and Mr. Thomas spoke again. Mr. Thomas told Mr. Lines that the offer now was that the bills would be indorsed by a bank called Swiss Volksbank ("SV"), which had a London branch, and that SV would also probably act as the "holders" of the bills - not, that is, as holders in the technical sense but as the party that would retain possession of them until their due date as provided under cl. 3.2 of the draft. They discussed (and Mr. Lines marked up in manuscript on his copy of the first draft) the various amendments that would be needed in the light of this proposal, together with some other changes. Having made some enquiries to establish the identity and apparent reputability of SV, Mr. Lines told Mr. Thomas that, subject to contract, they now had a deal; but he said that he intended to put the draft Agreement to counsel in order to have the detailed drafting checked. It is clear – although, as will appear, Mr. Fox later came to remember things differently – that Mr. Lines told Mr. Fox what had happened and what he was doing and that Mr. Fox did not demur.
On 10th October Mr. Lines sent instructions to Mr. Grey asking him to "re-settle" the first draft of the Agreement. He enclosed a re-typed version of TSW's draft incorporating the changes which he had discussed with Mr. Thomas ("the second draft"). I should note the following points from his Instructions:
(1) He opened by saying that he was sure that counsel would be delighted to hear that "after considerable efforts by all concerned Mr. Fox has been persuaded to accept a settlement package …" - which he goes on to summarise. This way of putting it may not quite do justice to the fact that the basic deal had in fact been procured by Mr. Fox himself and was – if properly secured - a significant improvement on anything so far offered; but no doubt it reflects the fact that both Mr. Lines and Mr. Grey regarded Mr. Fox's case as one that ought to settle but had doubted whether a settlement acceptable to Mr. Fox was likely to be forthcoming. It also clearly shows that Mr. Lines understood Mr. Fox to have agreed to settle on these terms.
(2) He emphasised the importance of getting the drafting watertight because of the provision (cl. 4.2) allowing for the Hanson interests to resile in the event of breach by Mr. and Mrs. Fox; and he suggested that in the event of such a breach being alleged it might be better if the agreement provided for "this to be a matter which must be brought back to the court".
(3) He asked Mr. Grey to advise within two or three days since "both parties to this case are desirous of effecting an early settlement and Fontana's solicitors are imposing rigorous time limits". He referred to the risk that the Hanson interests might pull out if there was delay, but he thought that that was unlikely if the revised draft were submitted promptly.
Mr. Grey returned a marked-up draft of the Agreement the following day, October 11th (a Friday). Mr. Lines had it re-typed ("the third draft") and sent that same day to Mr. Fox asking him to look at it over the weekend and get back to him on the Monday, i.e. the 14th, with his comments. The third draft broadly followed the shape of the first two drafts. Mr. Grey gave effect to the proposed involvement of SV by providing that (a) the four bills for £80,000 (still described as "non-discountable") should be drawn by Fontana on SV and indorsed for acceptance by it (cl. 3.2) and (b) that the bills so indorsed should be deposited with SV who would be instructed to deliver them to Mr. Fox or his representatives on the relevant anniversaries (cls. 3.2.1 and 3.2.2) so that they could then be presented for payment. Notwithstanding the introduction of SV as acceptors, Mr. Grey left in the provision for indorsement by UBI (cl. 3.2.3). He did not incorporate any changes implementing Mr. Lines's suggestion that the Hanson interests be required to raise any alleged breaches by Mr. Fox in court proceedings.
Mr. Lines sent the third draft, i.e. Mr. Grey's re-draft, to TSW. He and Mr. Thomas discussed it on the telephone on 15th October. They agreed certain further changes which Mr Lines marked up on his draft. The precise terms of those changes are unclear but the substance was to delete the provision for SV to accept the bills and substitute a provision that SV "guarantee" payment: they also agreed that the provision for a guarantee by UBI was now redundant. Those changes meant that it was necessary to have sight of the terms of the proposed guarantee from SV (as well, of course, as its confirmation that it was prepared to give it). It seems that Mr. Thomas promised that these would be supplied shortly. Mr Lines sent a copy of his marked-up draft ("the fourth draft") to Mr Fox.
The position as at 15th October was thus that agreement in principle had been reached between Mr. Fox and the Hanson interests for the settlement of his claim for £445,000 payable over a period of five years, but that that was subject to the agreement of detailed provisions, principally (but not only) those providing for the instalment payments to be properly secured. As to the agreement of such provisions, SLP and TSW had reached agreement – subject to contract – on a draft, with the important exception of the terms of the guarantee to be given by SV. SV had neither itself confirmed to SLP that it was willing to give such a guarantee nor supplied a draft. The absence of that crucial element means that it is not strictly accurate to describe the Hanson interests as having made an offer – at least in the contractual sense. Nevertheless, in commercial terms there was a deal on the table, albeit one whose acceptability could only be assessed once SV's position had been confirmed; and I refer elsewhere in this judgment to the settlement "offer" in that sense. The terms of the guarantee which SV was prepared to offer were not simply a matter of mechanics. If it was framed as a guarantee in the strict sense, it would have protected Mr. Fox against the risk of "mere" non-payment as a result of insolvency or otherwise, but it would not have assured him of payment if the Hanson interests chose to assert that he was himself in breach of his obligations under cl. 4.1 and to invoke their rights under cl. 4.2. That risk, of which Mr. Lines was aware, could only be precluded if SV were willing to accept an independent obligation to pay. That seems unlikely, and it would indeed have been inconsistent with the mechanism under which the bills were to be "held" by SV and only released on their clients' authority: it may also be significant in this context that TSW had departed from the proposal that SV accept the bills. The absence of such protection would not have rendered the proposed guarantee from SV worthless, but it meant that Mr. and Mrs. Fox could not rely on having a summary remedy if Fontana failed to pay.
B. OCTOBER l985 – JANUARY 1991: LINDARS LEECH
There are two aspects to the involvement of LL – (a) the involvement of Mr. Leech in relation to the settlement offer from the Hanson interests discussed above; and (b) the subsequent conduct of litigation on Mr. Fox's behalf. The former is of central importance in this case, and I need to set out the facts in considerable detail. The latter is of lesser importance and can be dealt with much more summarily, even though it covers several years.
(a) LL's Advice on the Settlement Offer
Although it was he who had procured the original settlement offer, Mr. Fox was by the week-end of 12th/13th October 1985 beginning to have second thoughts about whether the Hanson interests could really be trusted to deliver on the later instalments. It was, understandably, a big step for him to give up his claim in return for a package most of which would be received only in the future; and he wanted to be as sure as possible that the £320,000, which represented the lion's share of the financial recovery and his family's future financial security, would be paid. He appears to have discussed the position at length over the week-end both with members of his family and with a Mr. Cutting who was also engaged in litigation against the Hanson interests. He decided that he needed to take a second opinion. Mr. Cutting recommended Alan Leech of LL, who had acted for him and another Rantlodge creditor called Geoffrey Wood in their disputes with the Hanson interests and had, so Mr. Cutting said, experience of the devious way in which they operated.
Mr. Fox rang Mr. Lines on 15th October. He explained his concerns and said that he wanted to get a second opinion on the Agreement. Mr. Lines sought to dissuade him, but Mr. Fox went to see Mr. Leech later that day. He took with him a copy of the draft Agreement which Mr. Lines had sent him on 11th October (i.e. what I have called the third draft). Mr. Fox has given various, and conflicting, versions of the detail of what transpired at that meeting, helpfully and painstakingly analysed for me in a note supplied by Mr. Stewart and Mr. Smith as part of their closing submissions. Even the earliest of these were written some years later, and the details need to be treated with caution. But the broad picture which he gives is corroborated by the contemporary documents, particularly two letters written by him the following day (see paras. 25-26 below). In summary, Mr. Fox's account is that Mr. Leech gave him "forceful" advice that the terms of the draft Agreement were unacceptable, both because the undertakings being sought from himself and Mrs. Fox were too wide (and thus gave scope for the Hanson interests to raise spurious allegations of breach) and because the mechanisms proposed for ensuring payment of the future instalments were inadequate. He seemed to know something about Mr. Fox's dealings with the Hanson interests already, apparently from Mr. Cutting and/or Mr. Woods. He emphasised, from his own experience of dealing with the Hanson interests, that they could not be trusted. He made it clear that he believed that, because of that experience, he thought he would be better at dealing with them than SLP. Mr. Leech's manner was "dominant" and inspired confidence. In the course of the meeting he asked to speak to Mrs. Fox on the telephone, and he summarised to her in strong terms the points which he had made to Mr. Fox. In some accounts – most notably the "ten-page note" described at para. 47-49 below - Mr. Fox gives the impression that the essence of Mr. Leech's advice at the meeting was that all negotiations should be discontinued and that he should proceed at once down the litigation route (indeed in a later note he suggests that Mr. Leech offered to undertake such proceedings on a contingency basis). His witness statement in the proceedings against PJH gives a different impression and is to the effect that the emphasis was still very much on obtaining a settlement based on the original agreement with Mr. Farnsworth: what Mr. Leech said was that he would be able to obtain a "watertight" settlement. I need not seek to resolve those differences here, save to say that I am sure from the overall history and from his contemporary letters that Mr. Fox was still very willing to settle if he could get reasonable assurance of payment of the future instalments. It is at least clear that Mr. Leech advised Mr. and Mrs. Fox in strong terms that the Agreement as it then stood was unacceptable and that in consequence of that advice they decided to transfer the handling of the matter forthwith from SLP to LL.
On 16th October Mr. Fox wrote to Mr. Lines, in terms drafted by Mr. Leech, asking him to transfer the papers to LL. He expressed his reasons as follows[1]:
I have expressed to you my deep concern about the terms of settlement being offered by Fontana/Hanson etc; I am particularly concerned about the extensive undertakings which are being required from me and the fact that payment is being spread over 4 years on terms that would give the opposition scope for argument over whether there had been proper compliance with these extremely wide undertakings.
I am apprehensive that they could use this as an excuse for non-payment of stage payments as they fall due. I am also concerned that if I was to proceed on these terms I would be in constant peril of an action to try and snatch back any money actually paid to me.
You must be aware that the entire cause of my complaint about the persons who make up the opposition in this case is that their professed bona-fides are never to be taken at face value and I have no trust whatsoever in any of them.
He said that he knew that it was Mr. Lines's strong view that the settlement terms should be accepted and that it was not possible to obtain a second opinion, funded by legal aid, while SLP continued to act for him; and that accordingly a transfer to another firm was the only option. He continued:
I am not closing my mind entirely to the prospect of settlement but simply wish to ensure that I get the best possible terms.
In this context it is important that I should feel secure and that my wife and I have peace of mind in the knowledge that we have done the best thing.
I cannot proceed with confidence on the terms currently on offer.
I and my wife are aware of the risks of delaying acceptance of the terms and of seeking to negotiate further if we are advised to do so. However we consider the risks of proceeding with the terms on offer to be far greater.
We have considered the position very carefully before arriving at this conclusion and we hope you will not take it amiss or as a reflection on your own abilities.
On the same day, i.e. 16th October, Mr. Fox also wrote to Mr. Leech in the following terms:
Further to our meeting in your office yesterday when I sought your advice regarding the proposed financial settlement of my claim against Rey/Hanson/Fontana etc, I am now enclosing a copy of the latest Draft Agreement (no. 3) that includes the Swiss Volksbank Guarantee, plus other amendments, all of which my present solicitors, Messrs Stoneham Langton & Passmore, have approved.
After my wife and I spoke to you yesterday we both thought you understood our problem of being very anxious to proceed with the completion of the Fontana Agreement but being a little hesitant due to our mistrust of Mr Hanson and our fear of his clever trickery.
This is why, after discussing the situation with John Cutting he suggested we consulted you for a second opinion and guidance on the Agreement and the proposals.
However, we both thought you were so definite and convincing in advising us not to sign the Fontana Agreement that in accordance with your instructions I have today posted off to Mr Lines the letter you prepared for me.
I will though, definitely telephone you tomorrow to obtain your views and opinions on this latest Draft Agreement and to discuss your proposal to take over my litigation and to issue Writs for Conspiracy to Defraud against Mr Rey, Mr Hanson, Mr Cobb and others.
I will then be able to telephone Mr Lines of SLP to discuss the contents of the letter I have sent him and what the latest position is with the Fontana proposals.
The copy draft Agreement enclosed was the copy which he had received that day from Mr. Lines marked up in manuscript with the changes agreed with Mr. Thomas on 15th October, which I have referred to as the fourth draft: see para. 20 above. The principal difference was that SV would now be giving a "guarantee" rather than accepting the bills. Mr. Fox referred to it as "no. 3" because it was the third of which he was aware, the others being TSW's first draft and Mr. Grey's re-draft: he had not seen (or needed to see) the intermediate version which I have called the second draft (see para. 18 above).
On 17th October Mr Lines and Mr. Fox spoke and it was agreed that Mr. Lines would deal directly with Mr. Leech. Over the next few days, they spoke and steps were put in train for the transfer of the legal aid certificate, although for reasons that are unclear the transfer did not go through until February 1986.
Meanwhile TSW were becoming restive. On 21st October they wrote to SLP pressing for confirmation that the terms of the draft Agreement were now satisfactory. They acknowledged that SLP had not yet received a draft of "the Guarantee to be provided by Swiss Volksbank": they said that SV had confirmed that a draft would be forthcoming but they were having problems with their word processors. But they said that that was no reason for not finalising the rest of the Agreement.
It seems that Mr. Fox and Mr. Leech spoke again by telephone on more than one occasion. On 23rd October 1985 Mr. Leech wrote Mr. Fox a letter of advice in the following terms:
I refer to our various recent conversations and confirm that Stoneham Langton & Passmore have indicated to me that they require no further written authorisation from you in relation to changing the conduct of the dispute from them to me and they are writing to the Law Society today indicating their consent to an amendment to the Certificate showing that my firm now has conduct of the matter. I enclose a copy of my letter to the Secretary to the General Committee.
Following my last telephone conversation with you, Mr Lines and I spoke again by telephone (overcoming the difficulties of the power cut which had apparently affected his office) and discussed the mechanics of hand over and the letter he had received from Mr Thomas from Titmuss Sainer and Webb this morning. That letter was in essence chasing for response and reciting, with variable degrees of accuracy, a telephone conversation Mr Thomas and Mr Lines had had last week. I told Mr Lines, and he agreed, that it was not appropriate for him to respond to that letter but he is sending a copy, noted with his comments, so that I may make a full response when notifying Titmuss Sainer and Webb of the change of solicitors, which I propose to do tomorrow. The only principal matter of interest in the letter is that Thomas has come up with an excuse for not supplying the form of Guarantee which it is proposed the Swiss Volksbank will give in support of the terms of the settlement on offer. We are told that they are having problems with a word processor so the terms are not available at present !
As I have advised you in conversation I consider that there are a number of extremely serious defects in the draft agreement currently under discussion. Principally these go to the clauses demanding the handover by you of all the documents relating to the matters in dispute and the persons involved, which I think is a far too onerous commitment for you. If any documents are to be handed over, that is an obligation which should be severely curtailed. As to the so called Bills of Exchange, it is in my view that references to Bills of Exchange in the Agreement are a complete red herring. Unless the Bills are delivered to you (and it is proposed that they should be withheld from you) they would be practically valueless because you would not be in a position to sue on them unless you were the holder. It is not enough that they are held on deposit by an independent party who is susceptible of being subverted by an instruction not to part with them. Furthermore, unless the bills are going to be endorsed by a responsible party, there is no point whatever in having Bills of Exchange. Certainly you do not want to be in a position where the only possible target for an action on the Bills of Exchange (if you were able to obtain possession of them) would be Fontana Holdings Inc, so that you would have to undertake the same rigmarole of serving Fontana as you did when the current action commenced.
If there is to be no delivery of properly endorsed bills to you, it would be far more honest of the opposition and to your advantage that a Court Order is made specifically in terms that payment of whatever instalments are agreed should be made on particular days so that that order could be enforced immediately on default without having to embark on subsequent fresh litigation. That order itself could form the subject of a Guarantee given by a suitable person, possibly Swiss Volksbank, as security for the payments.
I also take the seriously considered view that the Undertakings being required from you are far too wide and susceptible to further argument. However, if Titmuss Sainer wish to insist on wide undertakings, there is a method of accommodating them to a large extent if the sanction backing up the Undertaking were changed. Rather than permitting Fontana and the guarantor bank to withhold payment from you as the Bills fall due and even to claw back payments already made, the undertakings you give could be made to the Court itself so that if the opposition wanted to make a fight over breach of undertaking, their only proper route to do so would be by way of contempt proceedings against you. That would mean they would have to air their grievances in front of a judge as soon as they make them, as opposed to putting in spurious Defences and Counter Claims as is their normal tactic when Bills of Exchange they have given in the past are bounced by them, or issuing writs with specious Statements of Claim in an effort to terrorise an opponent smaller than themselves into an unfavourable out of Court settlement. In my years of experience of litigating against Mr Rey and his associates, I have seen both tactics used by them to reasonably good effect. It is essential that every effort is made to avoid falling into any trap so that such tactics are available to them in your case.
There are other grounds for objecting to the terms, which we have discussed. I certainly do not like the idea of the only person on the opposition's side being bound by the agreement as Fontana when at the same time, you are being asked to enter obligations for the benefit of Rey and all of his associates (even those who have not been named). Certainly a promise by Fontana that you would not be sued for defamation is worthless as any of the others would be quite free to do so. I know that this is not a particular fear of yours, since you feel you can justify anything you have said by pleading that it is all true or fair comment. On the other hand, libel suits are expensive and one can foresee a further weapon being added to the Rey armoury if this provision were allowed to go through without comment.
After several discussions with you, I believe you appreciate that there can obviously be no guaranteed outcome of the change of solicitors and it may well be that, knowing me well as John Cutting's solicitor, Titmuss Sainer & Webb initially refuse to negotiate further with me on your behalf and try to call the whole deal off. If they were to do so there can be no real certainty when negotiations may resume, if at all. However, if that is the line the opposition adopt, I shall be more than happy to continue the litigation against them with the full force available to me and you can be assured of my commitment to pursue the matter on your behalf.
I shall keep you advised of all developments as they occur.
Mr. Leech's letter is full and explicit, and prima facie is the best evidence of his definitive and considered advice on the matters which it covers. Broadly, it is consistent with the advice which Mr. Fox says that he had been given a week earlier. But it is necessary to bear in mind that by the time that it was written Mr. Fox had already been persuaded by Mr. Leech's initial oral advice to instruct LL in place of SLP with a view to, at the very least, seeking a radical re-negotiation of the draft Agreement and perhaps to abandoning it altogether and proceeding to litigation; and that transfer had already been put in train. It should also be noted that Mr. Leech on 23rd October had before him a different draft from that which he was considering on 15th October; but that point may be less significant, in that the essential features which he found objectionable in the later draft were present in the earlier.
There is no attendance note from LL of his conversations with Mr. Fox at this time (save for one from 31st October referred to below) – though it is not certain whether this is because none were made or because they have not survived. Nor has there ever been any witness statement from Mr. Leech.
It is a central question in this case whether the advice given by Mr. Leech to Mr. Fox was negligent. I defer consideration of that question at this stage. It is however convenient to note here what seem to be the main factual points about that advice:
(1) Mr. Fox's letter to LL of 16th October – which is the nearest contemporary evidence of what happened on the 15th - supports his earlier accounts to the effect that Mr. Leech advised him to "reject" the proposed settlement and issue proceedings against the Hanson interests. But that letter also shows that he was still interested in settlement, and LL's letter of 23rd October does not advise that negotiations should be broken off: indeed the clear implication of the penultimate paragraph is that Mr. Leech would attempt to pursue the negotiations with TSW on the basis of the existing deal but on terms that gave Mr. Fox a better level of security as regards the future payments (albeit that he warned that the attempt might fail). That makes sense. Mr. Fox had himself negotiated the underlying deal and there is every reason to suppose that he would have wanted to go ahead with it if payment of the future instalments could be assured. Although the signs are that Mr. Leech did indeed talk on 15th October about issuing further proceedings against the Hanson interests, that is likely to have been only as a weapon to secure a better deal and only if it were necessary. That is certainly the thrust of the letter of 23rd October.
(2) However, although Mr. Leech's advice seems to have been to try to re-negotiate the deal, the extent of the re-negotiation which he envisaged would in practice be likely to be seen by the Hanson interests as a rejection. His objections to the terms of the draft Agreement as set out in the letter of 23rd October would have required dispensing altogether with the mechanism under which bills of exchange were "held" by a third party, as well as requiring some modification in the obligations on Mr. and Mrs. Fox. It is true that those could be characterised as mere changes of machinery, to which the Hanson interests could have had no legitimate objection; but given the history of the negotiations up to that point that is unlikely to be how they would have been perceived.
(3) Mr. Leech said in his letter of 23rd October that he intended to notify TSW of the change of solicitor "tomorrow" (i.e. 24th October): he does not say whether he intended to do so in the first instance by telephone or in writing.
(4) Mr. Leech gave Mr. Fox a clear warning that the effect of instructing him might be that the Hanson interests withdrew from the negotiations, at least for the time being, in which case litigation would be necessary.
The warning given by Mr. Leech about the Hanson interests' possible response to his being instructed proved correct. On 25th October 1985 Mr. Thomas was told by Mr. Lines that Mr. Fox was transferring his instructions to LL (though it is possible that he had already heard it: NB the use of the word "confirmed" in the letter quoted below). On 28th October TSW wrote to SLP in the following terms:
We refer to our telephone conversation of the 25th October 1985 when you confirmed that Mr Fox wished to change his solicitors and instruct Lindars Leech. We have not heard from Lindars Leech confirm [sic] this as yet and we are therefore writing to you.
Our clients have instructed us to inform you that because Mr Fox now intends to raise certain issues that have always been considered by our clients to be non-negotiable, and because Mr Fox now intends to change his solicitors and indeed this is yet another example of his lack of seriousness and genuine desire to negotiate a settlement of the whole matter, all offers made to date, whether without prejudice or otherwise, are withdrawn.
If necessary, please draw this letter to the attention of your client and to Lindars Leech.
Precisely what prompted TSW's letter is unclear. The reasons given by them for the withdrawal of the offer are that Mr. Fox was "now" seeking to raise non-negotiable issues and that he was intending to change solicitors; but they do not specify what the supposed new demands were or how they had been communicated. At first sight the most likely explanation might appear to be that Mr. Leech had contacted Mr. Thomas, as he had told Mr. Fox that he intended to (see para. 32 (3) above); and that whatever he said was regarded by Mr. Thomas or his clients as raising new issues. It certainly appears to have been Mr. Fox's original understanding that Mr. Leech had spoken to TSW and "rejected" the offer. However, there is no letter or attendance note from Mr. Leech evidencing any contact between Mr. Leech and Mr. Thomas before 28th October. What is more, the first paragraph of TSW's letter implies that Mr. Leech and Mr. Thomas had not spoken; and an attendance note made by Mr. Leech on 31st October recording a discussion with Mr. Fox says that he had thought it better not to contact TSW until the legal aid formalities had gone through. It is possible that the references in question mean only that LL had not written to TSW to say that they were on the record, and that they do not exclude a telephone conversation having occurred between Mr. Leech and Mr. Thomas; but that is not the natural reading, and it seems much more likely that TSW had indeed not heard at all from Mr. Leech. In that case the allegation in the letter that Mr. Fox intended to raise non-negotiable issues remains puzzling. One possibility is that Mr. Thomas was drawing an inference that some re-negotiation was intended from the mere fact of LL being instructed, of which he had heard from Mr. Lines – why else change solicitors ? – but it is also possible that Mr. Lines had said something to Mr. Thomas which indicated Mr. Fox's concerns, or that Mr. Thomas or his clients had heard something through other channels. In this uncertain state of the facts it is impossible now to decide whether Mr. Fox, or LL on his behalf, are to be regarded as having rejected the settlement offer – either explicitly or by raising significant new points – or whether what occurred was in substance a withdrawal by the Hanson interests, albeit because they (rightly) anticipated an attempted re-negotiation. Ultimately, it does not much matter: by one means or another it was plainly the advice given by Mr. Leech which led to the breakdown in negotiations.
Mr. Stewart invited me to infer that the explanations offered by TSW for their withdrawal were in truth only excuses and that it in fact demonstrates that the Hanson interests had no real desire to settle and/or that they could not give adequate security to SV to persuade them to proceed with the promised guarantee. I think this is unlikely. However the breakdown came about, I see no reason to doubt that what caused it, by one route or another, was the instructing of LL. TSW's letters up to that point give the clear impression that they were very keen to reach an agreement and that Mr. Thomas believed that a guarantee from SV would be forthcoming. That was clearly Mr. Lines's impression. Although it is possible that TSW were being fooled by their clients I see nothing to suggest that that was so. Of course the form of guarantee eventually offered by SV might have fallen short of what either SLP or LL would have advised was adequate, and the Hanson interests might well have wanted a form of agreement which gave them some "wriggle room"; but that is different from them not intending to settle at all.
(b) October 1985 - March 1991: the Conduct of Mr. Fox's Claims
As explained above, I need not set out in detail the steps taken by LL following TSW's withdrawal of the settlement offer. The essential points are as follows.
The Hanson action. The withdrawal of the settlement offer meant that further proceedings were necessary in respect of Mr. Fox's wider claims against the Hanson interests: such proceedings had of course always been contemplated - see para. 11 above. Their preparation took an inordinately long time, but eventually in March 1988 a generally-indorsed writ was issued in the Chancery Division against no fewer than sixteen defendants (the first-named four being Messrs. Rey, Hanson, Cobb and Farnsworth). The indorsement, which was signed by Mr. Gwyn Price-Rowlands of counsel (who practised from common law chambers), ran to some seventeen pages and alleged fraud, conspiracy and a variety of other wrongs. Counsel produced a draft Statement of Claim, but it was thought that Chancery expertise was needed, and assistance was sought from Mr. Peter Griffiths of counsel, who was highly critical of the draft pleading. In circumstances which are not clear to me Mr. David Wade, also Chancery counsel, was in February 1989 instructed by a different firm of solicitors, Thomas Boyd Whyte ("TBW"), to provide a written Opinion. This too was also highly critical of the draft pleading, and Mr. Wade also drew attention to a number of other difficulties, including limitation, and advised that the Hanson action did not merit legal aid. (He did however give more positive advice about the Fontana action.) Notwithstanding TBW's involvement LL retained the conduct of the Hanson action. The precise sequence of events over the following year is unclear. The gist is that Mr. Fox was obliged to abandon the claim against the great majority of the defendants named on the original writ, with consequent liabilities for costs; but that Mr. Timothy Sewell of counsel was able to advise in February 1990 that the action remained viable against Mr. Rey, Mr. Hanson and Mr. Cobb. In the event, however, the claim against Mr. Rey was also struck out on 19th October 1990 and the claim against Mr. Cobb on 25th January 1991, with further liabilities in costs being incurred. Accordingly the only claim left was against Mr. Hanson. It seems that the legal aid certificate in force, as transferred from SLP to LL, did not cover the issue of the proceedings, with the result that Mr. Fox had no protection against the costs liabilities to the defendants against whom the action had been dismissed or discontinued. There is some suggestion in the papers before me that the claims being brought by Mr. Fox and by LL's other clients, Mr. Cutting and Mr. Wood, were being treated by LL as mutually supportive: this may have been wholly unobjectionable, but there was at least some potential for conflict of interest.
The Fontana action. From October 1985 to July 1989 no further steps were taken in the original Fontana proceedings. On 21st July 1989 Auld J. discharged the Mareva injunction on the grounds that the underlying action had not been proceeded with. An appeal to the Court of Appeal was procedurally defective, and LL failed to respond to an invitation to show cause why it should not be dismissed. The appeal was accordingly formally dismissed on 13th December 1989. There then followed a remarkable series of events. LL made a fresh application for summary judgment (notwithstanding that an earlier application under O. 14 had been unsuccessful in 1985), and in support of that application made a fresh application for Mareva relief - without, it seems, disclosing the previous history. Potter J. granted the order. It appears that Banco de Bilbao at that stage still retained the funds. In March 1990 Judge Baker, sitting as a Deputy High Court Judge, granted summary judgment and continued the Mareva in support of judgment. Fontana appealed. In March 1991 – after LL had ceased to be instructed, but it is convenient to deal with it here - the Court of Appeal allowed Fontana's appeal against the summary judgment order and discharged the Mareva. It was, echoing Auld J., highly critical of the delay in prosecuting the Fontana action between 1985 and 1989. It also noted LL's procedural failures on the attempted appeal from Auld J.'s order, and it described LL's conduct in obtaining the second Mareva as "outrageous". The discharge of the Mareva meant that the Fontana action – being against a Panamanian company with no assets in the jurisdiction – became for practical purposes valueless.
Mr. Leech may at some point – the evidence is unclear - have engaged in some settlement discussions with the Hanson interests, but if he did they got nowhere.
It in fact appears from a decision of the Solicitors' Disciplinary Tribunal dated 4th October 1990 that during the period after 1985 Mr. Leech suffered some kind of nervous breakdown which led to him not giving proper attention to his clients' affairs. This may account for at least part of the lack of progress with Mr. Fox's claims. On 31st January 1991 LL was dissolved. It also seems that at about this time Mr. Leech was made bankrupt, though I do not have any details; and he was in due course struck off the roll.
Potential negligence by LL: "the lost settlement claim"
It was clearly LL's duty, following TSW's withdrawal of the settlement offer, to get on with Mr. Fox's claims against the Hanson interests – both the Fontana action and the projected wider proceedings. No doubt the primary object would be to bring them back to the table with an offer that could be accepted – whether that were the previous offer, with the question of the "guarantee" satisfactorily resolved, or some different offer. The history of the conduct of both claims from 1985 to 1991, as summarised at paras. 37-38 above, shows that there was – to put it at its lowest - an arguable case that LL were in breach of that duty. The unsatisfactory way in which the writ in the Hanson action was first drafted in such extravagant terms and then had to be drastically pared back might also reflect a breach or breaches of duty on the part of LL. When any such breach or breaches first occurred would no doubt be debatable, but even if time started to run in contract in, say, 1986 or 1987 it seems unlikely that Mr. Fox could be regarded as having suffered any damage, such as to start time running in tort, until July 1989 at earliest, when the Mareva in the Fontana action was discharged.
However, these proceedings are not directly concerned with any claim against LL for breaches of the kind discussed in the previous paragraph (though, as will appear, they feature significantly in the narrative) but with what PJH say was a discrete claim arising out of the advice given by Mr. Leech, and any associated acts or omissions, in October 1985. I will not at this stage express any view on the merits of such a claim, but it is important to identify its nature. What PJH say, adopting what Mr. Fox said in his claim against them, is that the criticisms made by Mr. Leech of the terms of the settlement offer were misconceived, and that the consequent advice which they say that he gave that the offer should be rejected was unreasonable. It is their case that the only proper advice to Mr. Fox was that given by SLP, namely that the offer should be accepted subject to an acceptable guarantee being offered by SV – which there was no reason to believe would not be forthcoming. Mr. Leech's negligent advice, it is said, set in train the sequence of events which led to the offer being withdrawn.
If such a breach were established, time would start to run in contract from the dates that the advice in question was given – that is, in the period 15th to 23rd October 1985. As regards a claim in tort, the obvious trigger point for the damage caused by the breach would be the date of the withdrawal of the offer, i.e. 28th October 1985. Both parties before me were agreed that an argument might be made for loss to run from a somewhat later date, on the basis that it was Mr. Leech's duty to follow up TSW's letter of 28th October and attempt to secure the reinstatement of the offer and the conclusion of a satisfactory settlement based on it, which he apparently did not do; but it was common ground that in respect of any claim on that basis time would start to run, in contract or in tort, within at most a few weeks of 28th October. Given the later sequence of events, that is an unnecessary refinement, and I can for practical purposes treat time on such a claim as running from the end of October 1985.
PJH refer to the claim against LL analysed at paras. 42 and 43 above as "the lost settlement claim". Mr. Stewart submitted that that term is ambiguous because the chance of settling the Fontana and Hanson actions at some subsequent date between 1986 and 1991 was one of the losses suffered as a result of LL's mishandling of those actions. I accept that it is necessary to be on the look-out for possible confusion; but I nevertheless regard the term as a useful shorthand provided it is understood to what it refers – that is, a discrete claim that as a result of negligent advice given by Mr. Leech in October 1985 Mr. Fox lost the opportunity to settle the claim for £445,000 at that time, being a claim in respect of which time started to run at the end of October 1985.
C. JANUARY 1991 - MARCH 1996: WELLERS
By late 1990 or the very beginning of 1991 it had become clear to Mr. Fox that he could not continue to instruct LL. In January 1991 he instructed Wellers and asked LL to transfer their papers to them. Wellers continued to act until March 1996. However, as with LL, although for different reasons, it is necessary to consider their involvement over two distinct periods. The negligence alleged against Wellers is their failure to advise on the expiry of the time limit for suing LL in relation to the lost settlement claim. As discussed above, time in relation to that claim started to run at the end of October 1985 and accordingly expired at the end of October 1991. It is common ground that at no time prior to that date did Wellers appreciate that there might be a relevant time limit or give any advice in relation to it. The question is whether they should have done so, and I need to examine the events of this period in order to see whether the instructions and information which they received from Mr. Fox were such as to put them on notice that he might have a discrete claim against LL in relation to which both breach and loss occurred prior to the end of October 1985. The period after 28th October 1991 is relevant only as background, albeit important background, to the alleged later negligence of PJH and the Defendants in failing to identify the possibility of a claim against Wellers. Accordingly, save as regards one or two particular points, I can deal with events in this period more summarily.
(a) January-October 1991
The immediate matter requiring attention by Wellers following their being instructed was the conduct of the Fontana and Hanson actions, and in particular the pending appeal to the Court of Appeal in the Fontana action. Mr. Fox was of course by now highly critical of the service which he had received from LL, referring in a letter to Wellers of 2nd February 1991 to "five wasted and negligent years"; but he does not appear at that stage explicitly to have asked for advice about suing them. However, following the decision of the Court of Appeal in the Fontana action, which effectively put paid to any prospect of recovery in those proceedings, Miss Nickson, the partner handling the matter, advised Mr. Fox to seek legal aid to bring proceedings against LL. The statement, dated 8th March 1991, which he made for the purpose of his legal aid application, drafted by Miss Nickson but no doubt reflecting her instructions from Mr. Fox, complained of the conduct which had led to the loss of the Mareva in the Fontana action and of Mr. Leech's dilatoriness and incompetence in initiating the Hanson action; but there was no complaint, express or implied, about the advice given in October 1985. Wellers did not at that stage have full papers from either SLP or LL: they received the former in December 1991 and the latter in March 1992.
The ten-page note
On 2nd May 1991 Mr. Fox had a meeting with Miss Nickson at which she asked him for some further information in connection with his legal aid application. On 6th May he sent her some "notes". There was a dispute before me as to what the notes in question were. Complete certainty is not possible; but the probability is, and I accordingly find, that they consisted of a ten-page untitled document which appears in the trial bundle at pp. 2182-2191, described before me as "the ten-page note". I make that finding because Miss Nickson in her reply dated 8th May, thanking Mr. Fox for "your helpful summary with [sic] your dealing with Alan Leech", asked for copies of two identified letters which had evidently been referred to in the document; not only are both those letters referred to in the ten-page note but a pencil X appears in the margin next to the references to them, and the natural inference is that those markings were made contemporaneously by Miss Nickson as a reminder to herself to bespeak copies. Mr. Fox sent the two letters (one of them being Mr. Leech's letter of 23rd October 1985[2]) by return.
The significance of the ten-page note is that it sets out in considerable detail the circumstances in which Mr. Fox first came to instruct LL. The passage relating to his advice about the settlement agreement, at pp. 3-4 of the note, reads as follows:
I informed Stoneham Langton & Passmore of our intention and proceeded to arrange a meeting at the office of Lindars Leech in Kensington, London. At this meeting Alan Leech told me he already had a clear understanding of my litigation and knew about my financial difficulties and I confirmed to him that my actions were being undertaken under the Legal Aid Scheme.
Following consideration of the Fontana agreement Alan Leech told me that there were serious defects in the settlement arrangements and that he strongly advised me not to proceed with the matter. During the meeting he also telephoned my wife to emphasise his opinion that we should reject the agreement and let him undertake on our behalf the litigation against Fontana/Rantlodge et al.
On the 23rd October 1985 Alan Leech wrote to me confirming his views in no uncertain terms, following which I and my wife were persuaded to change solicitors. On 24th October Stoneham Langton & Passmore wrote to the Law Society stating they had no objection to the transfer to Lindars Leech of the two Legal Aid Certificates Numbers 1/1/83/5465R and 1/1/84/9304K.
I think it relevant to record that during the initial meeting and discussion with Alan Leech concerning the agreement, my wife and I clearly indicated that the settlements of £125,000 down and the 4 annual payments of £80,000 each were, with the undertakings, quite satisfactory but his adamant opinion that we would never receive the annual payments and would be in danger of having to repay the £125,000 had persuaded us to take his advice.
This passage, and in particular the final paragraph, seem to me to carry a fairly clear implication that Mr. Leech's advice to reject the settlement was misjudged. But there is no explicit criticism, still less any allegation of negligence; and most of the rest of the note is concerned with an account, in much more explicitly critical terms, of the work of Mr. Leech, and counsel instructed by him, in connection with the Hanson action. The final page of the note reads as follows:
It was now apparent from his conduct and comments that Alan Leech was hoping to frighten Mr Rey/Hanson/Cobb into offering me once again the very same settlement terms that he had advised my wife and I to reject in 1985 by issuing a Statement of Claim for Conspiracy to Defraud that he had been strongly advised by three separate Barristers "could not be pleaded and would be struck out".
This was a gamble that Alan Leech was determined to take without any thought, care or attention to the consequences or what the resulting effect would be for me and my family.
Combined with this neglect was the careless failure to pay attention to the prosecution of the action against Fontana Holdings Inc., which he had completely ignored for four years despite our continual requests to Alan Leech to activate the action.
Alan Leech has been negligent in the conduct of the litigation matters of my wife and I and this has resulted in the following losses ...
A. The benefit of the Settlement Offer made to us in October 1985 by Fontana Holdings Inc.
B. The loss of our funds deposited at the Banco de Bilbao, London branch
C. The costs awarded to Mr Rey which resulted in a charge on our house, impending eviction with distress, anxiety & misery.
Ms. Carr submitted that the ten-page note, and in particular the final page and "head A" in the concluding summary, contains a clear allegation that Mr. Leech's advice to reject the offer constituted a negligent "gamble" and accordingly that it explicitly raises the lost settlement claim. I do not think that is right. The thrust of the final page, and indeed of the document as a whole, is that Mr. Leech had mishandled the Hanson litigation: the gamble to which Mr. Fox refers is Mr. Leech's conduct in serving a pleading which he knew was liable to be struck out simply in the hope that it would frighten the Hanson interests into a settlement offer. It is true that logically that conduct cannot have caused the loss of "the benefit of the settlement offer made to us in October 1985"; but I think that the natural reading of the passage, although it is rather elliptically expressed, is that Mr. Leech's incompetence, which resulted in a position where the most that Mr. Fox could hope for was the restoration of an offer which had been made and rejected five years previously, meant that there had been no point in his rejecting the offer first time round. In other words the focus of Mr. Fox's criticism was not on the initial advice but on the subsequent incompetence. Having said that, it remains the case that the note, read with LL's letter of 23rd October 1985, put Wellers on notice of the advice given by Mr. Leech; that Mr. Fox was at least implicitly critical of that advice; and that he complained that by LL's conduct overall he had lost the benefit of the settlement offer that had been available in October 1985.
Wellers' initial instructions to Mr. Batcup
On 31st July 1991 Wellers sent instructions to Mr. Batcup to advise on a claim for damages against LL and to draft proceedings if he felt in a position to do so. The instructions explained that Wellers had not yet had Mr. Leech's file but said that on the basis of the papers so far available "the areas of possible negligence" were twofold – the conduct leading to the loss of the Mareva in the Fontana action and thus in practice of the sum claimed in the action; and the dilatory and incompetent handling of the Hanson action leading to the costs liabilities to the defendants against whom proceedings had been dismissed or discontinued. Item 3 in the enclosures to the Instructions was described as "undated statement of Robert Fox". This cannot be identified with certainty, but in my view it was probably the ten-page note. If, as I have found, Miss Nickson had been sent this in May it would have been very odd if she had not included it in the materials which she sent to counsel: in addition, there is a copy in the papers marked with a "3" written on the front page. Mr. Batcup's evidence was that he did not think that he had seen the ten-page note at this time; but he accepted that his recollection might well be wrong.
Mr. Batcup gave some initial advice on the telephone on 6th August 1991 but made it clear that he needed a conference. That conference did not in fact take place until 27th November. No further information of any significance had been supplied by Mr. Fox. By the time that the conference took place the limitation period for proceeding against LL on the lost settlement claim had of course expired.
Potential Negligence by Wellers
Again, I will defer my consideration of whether Wellers had been negligent in failing prior to the end of October 1991 to identify the possibility that Mr. Fox had a discrete cause of action against LL arising out of the advice given in October 1985 and thus to advise on the limitation period applicable to such a claim. I will only observe at this stage that any case to that effect would need to depend largely on the ten-page note. That was the only documentary material before Wellers which might arguably have put them on notice of the lost settlement claim.
(b) October 1991- March 1996
Mr. Batcup's initial advice
There is no note extant of the conference with Mr. Batcup on 27th November 1991. It would be natural for it to have focused on the issues identified in his instructions, and I note that a further lengthy statement from Mr. Fox provided shortly before the conference says nothing about the events of October 1985. It appears, however, from subsequent correspondence between Mr. Fox and Wellers that there was at least some discussion of the settlement offers made by the Hanson interests up to and including October 1985 and that Mr. Batcup asked to see further documents in that regard. Some further documents were duly supplied: it is not clear what they were, though they certainly included Mr. Leech's letter of 23rd October 1985 (which Wellers in fact already had – see para. 47 above). It is impossible to be sure, and I do not have to decide, whether at the conference Mr. Fox was explicitly critical of the advice which Mr. Leech gave him in October 1985. He may have been, given the terms of the letter which he later wrote to Wellers (see para. 55 below); but I think it unlikely that he adumbrated any claim for negligence based on that advice or that Mr. Batcup was asked to advise on the merits of such a claim.
Mr. Wadsworth's advice
Mr. Batcup did not at that stage proceed to produce an Advice or draft pleadings for the purpose of the proposed claim against LL, but he was in February 1992 instructed in the Hanson action. He successfully resisted a strike-out application on behalf of Mr. Hanson (now the sole remaining defendant) and drafted an Amended Statement of Claim. In June 1992 he recommended that leading counsel be instructed to advise, for the purposes of legal aid, on the prospects both of the Hanson action and of the proposed LL proceedings. After a long delay, Mr. James Wadsworth Q.C. was instructed. He provided a written Opinion dated 31st March 1993 to the effect
(a) that the Hanson action had insufficient prospects of success to justify the continuation of legal aid (he recommended continuation of legal aid to defend a counterclaim by Mr. Hanson, but that was unlikely to be persisted in if the claim were discontinued); and
(b) that there was sufficient prospect of success in a claim against LL to justify further investigation.
He made it clear, however, that he would welcome a consultation and that his advice should be regarded as provisional pending any such consultation.
Mr. Fox was very disappointed by Mr. Wadsworth's advice on the Hanson action and confirmed that he would like a consultation in order to discuss that advice. He also, however, saw the consultation as an opportunity to raise a further issue. On 18th May he wrote to Wellers as follows:
At our forthcoming meeting with Mr Wadsworth QC I would like to obtain his opinion on the fateful meeting I had with Alan Leech on the 16th [sic] October 1985 and if the advice he gave me was negligent and in breach of his duty of care.
I have tried to abbreviate the matter to the enclosed single page statement which may or may not help.
However, I will certainly not refer to this subject at the meeting if you do not approve or consider it unhelpful.
The enclosure was a one-page statement along similar (though not identical) lines to the passage from the ten-page note which I have set out at para. 48 above. It contained no explicit criticism of Mr. Leech's advice not to settle on the terms of the draft Agreement; but of course the covering letter made it quite plain that Mr. Fox was raising – for the first time in unambiguous terms - a potential allegation of negligence on the part of LL in October 1985 and thus in practice the lost settlement claim.
For the purpose of the consultation Wellers returned Mr. Wadsworth his original papers together with Mr. Fox's statement. It is not clear whether they also included his covering letter, but their Note to counsel described the statement as raising "allegations of negligence against … Alan Leech arising out of a meeting in 1985". They questioned whether the existing legal aid certificate extended to advice on this aspect, since it pre-dated the start of the Hanson proceedings.
The consultation took place on 8th July 1993. Mr. Fox, Miss Nickson and Mr. Batcup attended. Mr. Wadsworth dealt primarily with the merits of the Hanson action, on which he maintained the views expressed in his Opinion, to the chagrin of Mr. Fox. But he did also address the issue of Mr. Leech's advice in October 1985, as raised by Mr. Fox's statement. Wellers' note of the consultation records that:
Leading Counsel did not think that Leech had been negligent in advising Mr. Fox to reject the offer of settlement in the Hanson matter.
Unequivocal though that advice appears to have been, it is fair to point out that it is unclear what material Mr. Wadsworth had about the events of October 1985. It is not possible to reconstruct what his papers consisted of, but given the scope of the matters on which he had originally been asked to advise it does not seem likely that he had any of the drafts of the Agreement, and it is far from certain whether he had Mr. Leech's letter of 23rd October or the ten-page note. He may well have had to form his view on the basis of Mr. Fox's short statement which Wellers had sent him, together with anything else that he can have gleaned from Mr. Fox himself in the course of the consultation (which may not have amounted to much in the light of Mr. Batcup's recollection that the consultation was rather "bad-tempered"). It should also be noted that what Mr. Wadsworth appears to have addressed was only the substantive question of whether Mr. Leech had been negligent: he did not, at least if the note is accurate, address the question of limitation. That might be a surprising omission (albeit strictly immaterial if there was no claim in any event) if Mr. Wadsworth had been formally instructed to give full-dress advice on the question; but if limitation was indeed not dealt with that reinforces the impression that the question of the events of October 1985 was dealt with only summarily. Mr. Batcup's recollection, prior to seeing Wellers' note, was that there had been no discussion at all at the consultation of the events of October 1985. That is plainly mistaken; but it may be further confirmation that the discussion was not very full.
Following the consultation Mr. Fox produced a further note for the attention of Mr. Wadsworth. This did not refer to the lost settlement claim. On 26th October 1993 Mr. Wadsworth wrote a short Further Opinion confirming that his views were unchanged, although he did advert to the possibility of Mr. Fox seeking a second opinion. The Hanson action remained effectively dormant thereafter. Mr. Fox remained very dissatisfied with the position. He complained that Wellers had not given Mr. Wadsworth proper instructions and continued over the next eighteen months to press for the Hanson action to be pursued. He was also unhappy that owing to what seemed to have been a procedural error by Wellers Mr. Hanson had in 1992 been able to enter judgment on his counterclaim, although it was in fact doubtful whether that had any substantive effect.
Mr. Batcup's advice about limitation
Accordingly the focus of Wellers', and Mr. Batcup's, attention reverted to the claim against LL, in respect of which no writ had yet been issued. On 19th November 1993 there was a telephone conversation between Mr. Batcup and Mr. Simister of Wellers, who had recently taken over the conduct of the matter from Miss Nickson. In the course of the conversation Mr. Batcup expressed the view that because the time for bringing proceedings against LL in relation to the loss of the Mareva arguably ran from when it was first discharged by Auld J. it might have expired "this autumn". This was obviously wrong, since the Mareva had been discharged in July 1989, i.e. only four years previously; but Mr. Batcup had been telephoned cold and had no papers, and the likelihood is that between them he and Mr. Simister (who was new to the case) had simply got muddled about dates. However, the conversation understandably alarmed Mr. Simister, who on 23rd November sent formal instructions to Mr. Batcup "to advise on limitation periods in respect of all potential claims arising out of the conduct of this matter by [LL]". Ms. Carr asked me to note the word "all" in those instructions, but I think it most unlikely that Mr. Simister himself attached great significance to it: there is, in particular, no reason to suppose that he consciously had in mind the possibility of a claim arising from Mr. Leech's advice in October 1985.
Mr. Batcup asked for a conference. That took place on 21st February 1994. According to Wellers' note, he started by identifying the "two aspects to the potential claim against [LL]", namely (1) the sums which had been secured by the Mareva and (2) Mr. Fox's liability in costs to the defendants in the Hanson action against whom the claim had been dismissed or discontinued. Those were of course essentially the claims identified in his original instructions of July 1991 (see para. 50 above), and it is clear that he regarded them as being the only matters in relation to which he was instructed: specifically, he did not regard the instructions to advise on "all" potential claims as requiring him to cast his net any wider. Presumably he had either forgotten Mr. Fox's raising with Mr. Wadsworth of a potential claim for negligent advice in October 1985 or he regarded that claim as having been put to rest by Mr. Wadsworth's negative advice. The conference appears to have been quite wide-ranging, and Mr. Fox did mention the events of October 1985; but there is no suggestion in the note that he sought to revive the possibility of a claim against LL in relation to the advice then given. Mr. Batcup gave some preliminary advice in relation to the two specific claims that he had identified, but since there was no suggestion being made to him that Mr. Fox had any claim arising out of the advice given in October 1985 he said nothing about the limitation period applicable to any such claim.
Following the conference Mr. Batcup provided a written Advice dated 9th March 2004. Para. 1 of the Advice posed the question for consideration as being "the limitation period in relation to a claim against [LL] for negligence in relation to the dismissal of the Mareva injunction against Fontana". He advised that the earliest that time could start to run in relation to such a claim was 13th December 1989, being the date of the dismissal of the appeal against the discharge of the first Mareva (although in the conference he had expressed the view that it might run from run from the date of the original discharge, i.e. 21st July 1989). In the penultimate paragraph of the Advice Mr. Batcup said:
I confirm my earlier advice that at the present I do not feel that there are limitation difficulties in relation to the proposed negligence proceedings against Mr. Leech.
That is more generally expressed than the actual advice given in the preceding paragraphs. I think, however, that Mr. Batcup's approach was that the loss of the Mareva represented the only element in the claim which might give rise to concern: his understanding was that the first losses suffered from LL's conduct of the Hanson action did not occur until a good deal later. The reference to "my earlier advice" was no doubt to his advice at the conference where he did indeed (according to Wellers' note) advise that there was no limitation problem in relation to any claim for the mishandling of the Hanson action.
The formulation of the claim against LL
Progress with the potential claim against LL remained painfully slow. This may have been at least partly because Wellers became concerned about whether they should continue to act in the light of Mr. Fox's complaints about their handling of the Hanson action (see para. 58 above). However, at a meeting on 6th February 1995 Mr. Simister and Mr. Fox discussed the LL claim, among other matters, and in particular a note prepared by Mr. Fox headed "Negligence Action against Lindars Leech Solicitors - Matters for the Statement of Claim". This identified four heads of claim. Nos. 2 and 3 were the familiar claims for the loss of the amount secured by the Mareva and Mr. Fox's liability for costs to the Hanson defendants; and no. 4 was a general claim for damages for distress. But head 1 was described as:
The loss of the settlement offer by Fontana Holdings Inc in 1985 which was rejected by reason of the recommendation of Mr. Alan Leech but which was revealed as being negligent advice made without due care and attention to the best interests of Mr. and Mrs. Fox.
Thus Mr. Fox was quite explicitly seeking to revive the lost settlement claim which he had first clearly adumbrated in his note for Mr. Wadsworth (see para. 55 above).[3] Again, the allegation of negligence is completely unparticularised, and the formulation "which was revealed as" may suggest that at least part of Mr. Fox's thinking, as in the ten-page note, may have been that the decision to reject the offer was only "wrong" because of Mr. Leech's subsequent incompetence. Nevertheless, it is on its face a clear allegation of negligent advice in October 1985. Mr. Simister's note states:
Mr. Fox appreciates that certain of the headings of the claim may already be time barred, such as the offer of settlement which Mr. Leech advised Mr. and Mrs. Fox to reject in 1985.
That Mr. Fox understood that there was a limitation difficulty about the lost settlement claim is confirmed by a letter which he wrote to Wellers the following day. He referred to the fact that at the end of the meeting he had specified £200,000 as the minimum amount that he expected to receive from LL. He then said:
I would like to point out that I had hastily arrived at this figure after excluding that part of the Negligent Claim for the loss of the £445,000 settlement offer made by Fontana Holdings Inc in 1985 as I have to take account that this claim may unfortunately be considered "out of time".
However, if you are able to include this important section into the action, then of course the settlement figure could be substantially improved.
It does however appear from the latter paragraph that he retained a hope that the difficulty might not be insuperable.
The language of Mr. Simister's note of the meeting of 6th February is ambiguous as to whether Mr. Fox was already aware of the limitation problem about the lost settlement claim or whether Mr. Simister pointed it out to him. The latter seems to me more likely, since, as has appeared from the foregoing narrative, there is no record of Mr. Fox having previously been given any advice about the limitation period applicable to such a claim; and it might be thought that he would not have included the claim in his note if he had believed it to be statute-barred (though that is by no means certain). Even, however, if the note is to be read as meaning that Mr. Fox was already alive to the limitation difficulty, it does not follow that he must have previously received specific advice on the question. He had had a good deal of advice on the limitation issues affecting other claims, and he would have been perfectly capable of applying the relevant principles for himself.
On 30th June 1995 Wellers sent instructions to Mr. Batcup to settle a general indorsement for a writ against LL or (in view of the dissolution of the partnership) the partners as individuals, together with a draft Statement of Claim and an "Opinion on the extent of the claims, if any, which can be made against Alan Leech/Lindars Leech". It was believed – apparently preferring Mr. Batcup's advice in conference to his advice in writing – that time might have started to run on 21st July 1989. The instructions included the "Matters for Statement of Claim" document discussed at para. 62 above. They also included "an unsigned statement from Mr. Fox which confirms how the financial settlement of the claim against Rey/Hanson came to be refused, upon the advice of Mr. Leech in late 1985". This was a two-page document, clearly drafted by Mr. Fox himself, giving a rather fuller account of the events of October 1985 than had previously been given in the ten-page note or the document supplied to Mr. Wadsworth, though along similar lines. Like those, it did not make any explicit allegation of negligence. There is however a clearly detectable undercurrent of criticism, partly to the effect that Mr. Leech had been over-emphatic and overbearing in his advice but partly again to the effect that he had made promises about how he would proceed if the settlement did not go ahead on which he then failed to deliver. Although the Instructions did not explicitly ask Mr. Batcup to consider including in the writ, or to advise on, a claim that Mr. Leech gave negligent advice which resulted in the settlement being lost, I think that such a request could clearly be inferred from the terms of those enclosures, and most particularly from head 1 of "Matters for Statement of Claim". The events of October 1985 were not of course new to Mr. Batcup, and even though he might not previously have understood them to be within the scope of his instructions it should not have been a complete surprise to him to see the question which Mr. Fox had raised with Mr. Wadsworth being raised again with him. There had in fact been some previous discussion between Mr. Batcup and Mr. Simister about what he needed to be sent, and a note made by Mr. Simister on 15th June records Mr. Batcup asking for "confirmation of the advice as to the settlement which Mr. Fox refused". By one route or another, therefore, Mr. Batcup plainly understood that the lost settlement claim now came within the scope of his instructions.
Mr. Batcup duly drafted a general indorsement in the following terms:
The Plaintiff's claim is for damages and interest thereon pursuant to Section 35A of the Supreme Court Act 1981, against the Second Defendants, a firm of solicitors, and the First Defendant a partner in the said firm for loss and damage for negligence and/or breach of contract as solicitors for the Plaintiffs, suffered as a result of negligent advice between 1985 and 1991 in proceedings eventually issued in the Chancery Division under Ch 1988 F No 2360 and in the Queens Bench Division under 1984 F No 18, on behalf of the Plaintiffs whereby inter alia the Plaintiffs:-
(i) Lost a settlement offered by parties to the litigation;
(ii) Sustained losses of fees paid to the Defendants and to counsel for an inadequately pleaded case;
(iii) Sustained losses for costs orders made against the Plaintiffs in favour of parties wrongly or negligently joined to the said actions at a time when the Plaintiffs should have had the benefit of being legally aided;
(iv) Failed to ensure the actions were proceeded with, with due diligence and expedition and in compliance with directions of the Court so that a Mareva injunction in the Queen's Bench action was discharged on the 21st July 1989 so that funds frozen were lost to the Plaintiffs;
(v) Failed to ensure the Plaintiffs were at all stages legally aided in the said proceedings
In my view, though it is (perfectly properly) wholly unparticular, in the light of Mr. Batcup's instructions as summarised above, head (i) can only have been intended by him to refer to negligent advice given by Mr. Leech in October 1985 leading to the loss of a settlement available at that time.
A writ in those terms was issued against both LL as a firm and Mr. Leech as an individual on 19th July 1995. Both Mr. and Mrs. Fox were plaintiffs.
Mr. Batcup was asked to produce a draft Statement of Claim and an opinion on the merits. He asked for a conference, which took place on 17th October 1995. The note of the conference is not very clear, but it seems that Mr. Batcup asked for further documentation, including in relation to the events of October 1985. The documents were not supplied until 29th March 1996: it is not clear exactly what they consisted of. As discussed below, a draft Statement of Claim was eventually provided in May 1996, but by that time Wellers had effectively ceased to act. The Solicitors Indemnity Fund ("SIF"), as LL's insurers, had been informed of the issue of the writ and had indicated that they were willing to grant the extensions necessary for a full Statement of Claim to be pleaded.
D. APRIL 1996 - MAY 1999: PRITCHARD JOYCE & HINDS
As already mentioned, Wellers had for some time been concerned whether they could continue to act for Mr. Fox in view of the allegations which he was making about their conduct of the Hanson action. In May 1995 Mr. Gavin Hamilton of counsel had advised them that they should not; but it was agreed that in the interests of continuity they should remain instructed in the LL action until a writ had been issued and counsel had drafted a Statement of Claim. In August 1995 Mr. Fox asked PJH to accept instructions in the action against LL, but they indicated that they could not do so until legal aid was transferred, and it was confirmed that they should come into the case once the Statement of Claim had been drafted. In the event, no doubt because that took so much longer than had been anticipated, they took over somewhat sooner. Ms. Ispani of PJH attended a conference with Mr. Batcup and Mr. Fox on 25th April 1996, although Wellers remained involved for hand-over purposes and a formal transfer of the papers does not appear to have taken place until 19th May. Once the transfer occurred, conduct of the case was in the hands of Ms. Hartwell of PJH, who although she was herself a partner discussed the case on a regular basis with a more senior partner, Mr. Hinds.
I should mention here that PJH instructed Mr. David Matthias of counsel to advise on possible action against Wellers. He saw Mr. Fox and Ms. Hartwell in conference on 14th December 1995 and 23rd January 1996 and advised about the possibility of a claim arising out of Wellers' conduct of the Hanson action: he advised that it would only be possible to get legal aid for such a claim if leading counsel could be found who would contradict Mr. Wadsworth's negative advice about the merits of the Hanson action. He was not asked to, and did not, advise about their handling of any potential claims against LL (though he confirmed that it would be inappropriate for Wellers to continue to act in that action). No proceedings were ever commenced against Wellers in relation to the Hanson action.
It is, again, convenient to divide the narrative into two periods. The time limit for a potential claim against Wellers for failing to advise on the limit applying to the lost settlement claim expired at the end of October 1997. Thus the crucial period from the point of view of liability is between April 1996 and that date. Events after October 1997 are not directly material, but they remain relevant in so far as they cast light on the understanding of the parties in the earlier period.
April 1996 – October 1997
The Statement of Claim
As noted above, Mr. Batcup had a further conference with Mr. Fox on 25th April 1996 to assist him in the drafting of the Statement of Claim. It appears from the note taken by Ms. Ispani that Mr. Fox covered, along with much else, the advice which he received from Mr. Leech in October 1985; and immediately after the conference he sent Mr. Batcup and PJH a witness statement from Mrs. Fox about her telephone conversation with Mr. Leech on 16th October 1985.
On 7th May 1996 Mr. Batcup supplied a draft Statement of Claim accompanied by an Advice. The Advice did not, however, address the merits of the claim but was essentially confined to advising that the case merited the extension of legal aid for leading counsel to be instructed. A Statement of Claim conforming to his draft was served shortly afterwards.
The Statement of Claim was arranged (after some introductory paragraphs) under two heads – "the Fontana Action", at paras. 7-22, and "the Hanson action" at paras. 23-44. I need not give any details of the matters pleaded under the latter head. As regards the former, the course followed by Mr. Batcup was as follows:
(1) At paras. 7-11 he pleaded the history of the Fontana action up to the service of the Defence.
(2) At para. 12 he referred in fairly general terms to the negotiations between SLP and TSW and the conclusion of a draft Agreement (to which it was said that the Plaintiffs would refer at trial). The sums payable under the Agreement – totalling £445,000 – were pleaded.
(3) Paras. 13-15 were in the following terms:
13. On the 15 October 1985 the First Plaintiff consulted the First Defendant for a second opinion as to the terms of the proposed Agreement and was advised in the clearest possible terms by the Defendant not to sign it. The Second Plaintiff was telephoned by the First Defendant during the course of the said meeting and given the same advice. The First Defendant represented he had years of experience with dealing with a man called Mr Rey and his associates, who ultimately controlled Fontana, and was aware of the tactics they might use to avoid payments under the proposed Agreement.
14. The First Defendant further advised the Plaintiffs that he was experienced in dealing with Mr Hanson, that he had experience in litigating against Mr Rey, who he described as a dishonest man, and that they would be intimidated by his approach. He advised he might be more experienced in dealing with these people that the person who had been handling their affairs.
15. The First Defendant drafted a letter dated 16 October 1985 for the First Plaintiff to send to SLP, requesting that the matter should be transferred to the First Defendant and the Second Defendant. SLP agreed and the Second Defendant thereafter took over representing the Plaintiffs.
(4) Para. 16 pleaded the legal aid position.
(5) At paras. 17-21 Mr. Batcup set out the subsequent history of the Fontana action culminating in the loss of the Mareva injunction, which rendered the further pursuit of the proceedings futile.
(6) Para. 22 made a general allegation of breach, supported by the following Particulars:
The First and/or Second Defendants:
i) Failed to prepare papers for Counsel and obtain Counsel's advice on the proposed terms of the settlement in accordance with the terms of the Legal Aid Certificate he had transferred to him;
ii) Failed to take any step in the Fontana Action from the moment he took over the case in October 1985 until Fontana applied for a discharge of the Mareva in July 1989;
iii) Failed to advise the Plaintiffs of the risk of delay and of discharge of the Mareva;
iv) Failed to act on the Opinion of Mr Wade of Counsel dated the 3 February 1989, who had been instructed by Thomas Boyd Whyte, solicitors, who the Plaintiffs had instructed between January and March 1989 (but which was shown to the First Defendant who continued to act for the Plaintiffs), that Legal Aid should be extended in the Fontana Action since the prospects of success were good and a Judgment could be enforced;
v) Continued to advise against acceptance of the settlement, but failed to secure a settlement better than that on offer totalling £445,000 or any settlement at all, which he had advised the Plaintiffs he would secure and which was the basis upon which, on his advice, they had instructed him and continued to instruct him;
vi) Failed to notify the Court before the 18 July 1989 that he was the solicitor acting for the First Plaintiff;
vii) Failed to seek any amendment to the Legal Aid Certificate, which was limited to negotiating a settlement and obtaining Counsel's Advice.
Para. 45 pleaded the Plaintiffs' damage. Heads (iii)-(viii) were concerned with the Hanson action. The only quantified items amounted to some £67,000, though there were some unquantified heads of doubtful value. Heads (i) and (ii) were as follows:
(i) Loss of US$180,000 damages in the Fontana Action 1984-F-no. 1810
(ii) Further or in the alternative loss of £445,000 in settlement of the said Fontana action.
There was considerable debate before me as to whether, or in what sense, that pleading raised the lost settlement claim as defined at para. 44 above. This is not straightforward. The structure of the pleading is somewhat disjointed. Paras. 13-15 set out in some detail the advice which Mr. Leech is said to have given, and it would be natural to expect that they were leading up to an averment that that advice was negligent. But there is no such pleading in the Particulars of Negligence at para. 22. The nearest approach to it is sub-para. (v). That, however, is not an allegation that the pleaded advice was negligent but that it was negligent to "continue" to advise against settlement: no averment of any such continuing advice is in fact pleaded, but in any event it does not appear to be a reference to October 1985. Rather, the thrust of the sub-paragraph appears to be that Mr. Leech failed, having advised Mr. Fox against accepting the original settlement, to obtain a better one: this echoes Mr. Fox's approach in the ten-page note (cf. para. 48 above). Further, although para. 45 (ii) pleads the "loss of £445,000 in settlement of the … Fontana action", there is no pleading of how or when that loss occurred: neither any rejection of the offer by Mr. Fox or LL nor the withdrawal by TSW is pleaded. Presumably some connection is to be inferred between the breach of duty pleaded at para. 22 (v) and the pleaded loss of the settlement, but what that connection might be is left unstated. There is an additional oddity, namely that, to the extent that the lost settlement claim is pleaded at all, it is treated as an aspect of "the Fontana action", whereas if the £445,000 had indeed been paid the lion's share would have represented the value of the claims subsequently advanced in the Hanson action. Mr. Batcup in his evidence before me emphasised that he had structured the pleading in the way that he had advisedly.
I do not believe that the Statement of Claim raised, or was intended by Mr. Batcup to raise, an overt claim that the advice given by Mr. Leech in October 1985 was negligent, or that the settlement offer represented by the draft Agreement was lost as a result of that negligent advice. I believe that Mr. Batcup intended only overtly to plead a claim along the lines of the ten-page note - that is that, having advised Mr. Fox to reject the offer, Mr. Leech was under a duty to achieve a better result by progressing both the Fontana and Hanson actions, and that he failed to do so. That pleading may not be entirely logical, since Mr. Leech would have been under a duty to handle both claims competently whether or not he had advised rejection of a settlement previously offered, but one can see how, that fact might be said, at least rhetorically, in some way to intensify his obligations. And the "lost" amount of the offer would remain relevant on this basis as a measure of the amount lost by LL's negligence.
However, Mr. Batcup would – and in any event certainly should – have been aware that the case as so pleaded fell short of the claim that Mr. Fox wished to advance, i.e. a case of negligent advice in October 1985 leading to the loss of the offer at that time. That would (or should) have been apparent to him from head 1 of Mr. Fox's "Matters for Statement of Claim" note, possibly reinforced by the further discussion in the two conferences which he had had (see paras. 68 and 72 above); and such a claim was indeed made in the general indorsement. He would of course also have been aware that any such claim was prima facie statute-barred. It is true that he had never clearly been asked to advise on that question, nor had he done so; but the point was as plain as a pikestaff. In my view the explanation for the somewhat fuzzy formulation of the pleading is that Mr. Batcup had decided that to plead the lost settlement claim in overt terms would inevitably flag up that it was statute-barred, but that he could in practical terms keep it in play by pleading the essential facts as if they were material to a loss which continued beyond July 1989: that is indeed broadly the explanation that he himself gives in his first witness statement (see para. 38) and repeated in cross-examination. It is clear from the various contemporary attendance notes that Mr. Batcup was, entirely reasonably, expecting SIF to make an offer at a fairly early stage; and it was avowedly his tactic to plead the case as widely as possible, in the knowledge that parts might have to be jettisoned in due course. It was particularly important to advance a claim to the £445,000 if at all possible, since the other quantified elements in the claim amounted to less than half that amount.
The pleading of the limitation point
A Defence on behalf of Mr. Leech was served by Wansbroughs Willey Hargrave ("WWH"), instructed by SIF, on 11th September 1996. Mr. Lindars, the other partner in LL at the material time, had not been served, and the Defence was accordingly only served on behalf of Mr. Leech. Wholly unsurprisingly, para. 1 of the Defence pleaded that any cause of action arising prior to 19th July 1989 was statute-barred. It appears that WWH had had at least some instructions from Mr. Leech. The averments in paras. 12-15 of the Statement of Claim were pleaded to with some particularity. Among other things, it was denied that Mr. Leech had advised Mr. Fox "in the clearest possible terms" not to sign. Those advising Mr. Leech seem to have taken the view, whatever the obscurities of the Statement of Claim, that his advice in October 1985 was being alleged to have been negligent: it was positively averred in the Defence that the advice was correct and, further, that Mr. Fox had decided to reject it in any event because he put the value of his claim at between £1m. and £2m.
On 11th September 1996 Ms. Hartwell had a preliminary discussion of the Defence with Mr. Fox. According to her note, he told her that he was not troubled by the limitation defence because counsel had already advised "in the clearest possible terms" that his claim was not statute-barred. Mr. Fox can only have been referring to Mr. Batcup's advice in February and March 1994: see paras. 60-61 above. As I have there made clear, that advice did not relate to the lost settlement claim. Either Mr. Fox had forgotten that or he was referring only to the claims for mishandling the Fontana and Hanson actions – which, after all, were the only claims clearly pleaded. He had of course as recently as the previous year acknowledged the limitation difficulty relating to any claim for the loss of the settlement in October 1985 (see para. 63 above).
On 19th September 1996 Ms. Hartwell and Mr. Fox had a further meeting to discuss the terms of the Defence in detail. In commenting on para. 11 of the Defence, which made it clear that LL had seen a version of the draft Agreement which referred to the involvement of SV, Mr. Fox said that "until relatively recently" he had only been aware of "the original draft" – i.e. the draft providing for the bills to be guaranteed by UBI – and that although he now realised that Mr. Lines had negotiated a "second draft" with Mr. Thomas and had sent that draft to LL, neither Mr. Lines nor Mr. Leech had informed him of those changes or sent him the draft. He said that, "having now seen the second draft of the Agreement, both Mr. and Mrs. Fox felt that they would have accepted the same with the amendments which had been incorporated".[4] Mr. Leech, he said, had never advised him on the second draft. This was simply wrong. As set out at paras. 16-20 above, Mr. Fox was kept fully in the picture by Mr. Lines, who had sent him both the "third" draft Agreement as settled by Mr. Grey[5] and the "fourth" version, being the version of the third draft annotated following his later conversation with Mr. Thomas; and it was indeed Mr. Fox who had supplied both versions to Mr. Leech. There is no reason to believe that Mr. Fox was deliberately telling an untruth: it would be wholly unsurprising if, almost fourteen years later, he had forgotten the precise sequence of events.
On 30th September 1996 Ms. Hartwell sent Instructions to Mr. Batcup to draft a Reply. These enclosed Ms. Hartwell's attendance note of the instructions obtained from Mr. Fox. The body of the Instructions drew attention specifically to what Mr. Fox said about not having seen a copy of the revised draft: Ms. Hartwell had not at that point analysed the documents to see whether they supported what she was being told. The instructions also enclosed a copy of Mr. Batcup's advice of 25th March 1994 on (aspects of) the limitation issue (see para. 61 above).
Mr. Batcup was engaged in a trial outside London at the time, but WWH were unwilling to grant any long extension. In the event, he had to consider the papers and provide a draft overnight. The Reply as so drafted was served on 23rd October 1996. Two substantive answers to the limitation point were pleaded:
(1) It was averred that Mr. Fox did not have the necessary knowledge for the purpose of s. 14A of the Limitation Act 1980 until after 19th July 1989.
(2) Mr. Batcup pleaded s. 32 (1) (b) and (c) of the 1980 Act – i.e. deliberate concealment and mistake.
In support, apparently, of both points Mr. Batcup relied on Mr. Leech's alleged failure to tell Mr. Fox about the revised draft of the Agreement. Para. 4 of the Reply reads as follows:
The Plaintiffs were unaware until on or about the 14th September 1996 that the First Defendant had received a second draft of the Agreement (referred to in paragraphs 12 and 13 of the Statement of Claim herein) which had resulted from further negotiations between Mr Lines of SLP and Mr Thomas of Titmuss Sainer & Webb on the 15th October 1985. They believed the advice they received was as to the first draft and were denied the opportunity of considering and accepting the terms as amended.
Although Ms. Carr submitted that Mr. Batcup's decision to plead each of these points betrayed an inadequate understanding of the relevant law and was indeed (because it involved an allegation of bad faith against Mr. Leech for which he had insufficient support) unprofessional, I need not for present purposes decide whether those criticisms are well-founded. The important question is what the formulation of the Reply shows about Mr. Batcup's understanding of the claim and about the limitation position. As a matter of strict pleading the Reply could not raise any new claim: it did, and could do, no more than aver matters relevant by way of answer to the limitation defence. But the very fact that Mr. Batcup pleaded the matters which he did necessarily implies that he believed that there was a claim in respect of which it was arguable that time expired before 19th July 1989: otherwise the whole pleading was redundant. In fact, because of the way in which the Statement of Claim had been pleaded (as discussed above), what that vulnerable claim was is nowhere explicitly stated. But given that, by definition, it was a claim where the loss had crystallised before 19th July 1989, it could only in practice be a claim for negligent advice leading to the "loss" of the settlement offer at some point prior to that date; and, although no date for that loss was pleaded it could only have occurred at the date when the offer was withdrawn or rejected. That analysis is indeed confirmed by the terms of para. 4 of the Reply, which pleads that Mr. Leech's concealment of the revised draft had denied Mr. and Mrs. Fox the opportunity to accept the offer (which can only be a reference to late October 1985). Accordingly, therefore, the terms of the Reply confirm that Mr. Batcup was in late 1996 hoping, by one means or another and despite the absence of any explicit pleading, to advance the lost settlement claim: he appreciated that that claim was prima facie statute-barred, but it now appeared that there was a possible answer to the limitation defence.
It should be noted that Mr. Fox's instructions about the concealment of the revised draft of the Agreement not only, if they were right, gave a possible answer to the limitation defence but reinforced the primary claim. The alleged concealment of the revised draft would be either a breach of duty in its own right or in any event a further particular of a general allegation of negligent advice. It had not been formally pleaded as such, but it was at least now pleaded as a fact, which might make it more difficult for LL later to complain about the absence of any proper pleading in the Statement of Claim. That said, the lost settlement claim was advanced long before those instructions were given and was not dependent on them.
WWH had also served a Request for Further and Better Particulars. Ms. Hartwell drafted the response herself, without reference to Mr. Batcup. It was served on 15th November 1996. She, like Mr. Batcup in the Reply, relied on Mr. Fox's instructions about not having seen the revised draft of the Agreement. In response to request 3 - which asked, in relation to sub-para (ii) of the Particulars under para. 22 of the Statement of Claim, what steps it was said that Mr. Leech should have taken - she pleaded (at 3.3) as follows:
The first step which the First Defendant should have taken after assuming responsibility of the Plaintiffs' litigation on 16th October 1985 was to have placed himself on the Court Record as acting for the Plaintiffs and to have served Notice of Acting upon TSW. At the same time, the First Defendant should have immediately applied for a transfer of the Plaintiffs' Legal Aid Certificate and thereafter should have filed the Amended Legal Aid Certificates with the Court and served Notice of Amendment upon TSW. After the Plaintiffs had disinstructed their former solicitors SLP on or around 16th October 1985 the First Defendant received from SLP a substantially revised form of the proposed form of Agreement to be entered into between Mr Fox and Fontana Holdings Inc. The revised terms had been negotiated between Mr Lines of SLP and Mr Thomas of TSW in a telephone conversation on 15th October 1985 and were incorporated in a second draft Agreement.
The First Defendant failed to notify the Plaintiffs of the terms of the second draft Agreement or to submit a copy of the same to the Plaintiffs for their consideration. The revised terms of the Agreement dealt with the defects which had concerned the First Defendant on 15th October 1985 and which had caused the First Defendant to advise the Plaintiffs to reject the terms of the original draft Agreement. The First Defendant never advised the Plaintiffs of the existence of the second draft Agreement, the terms of which were acceptable to the Plaintiffs, and upon which they could have proceeded to reach a negotiated settlement with Fontana Holdings Inc.
Furthermore, in a letter the First Defendant wrote to the Plaintiffs on the 23rd October 1985 and, in addition, a letter that the First Defendant prepared, drafted and instructed the Plaintiffs to send to the Law Society on the 19th December 1985, the First Defendant made no reference at all to the revised form of Agreement and improved terms and concentrated on quoting the terms contained in the first draft of the Agreement as a justification for the advice which he gave to the Plaintiffs on the 15th October 1995.
The First Defendant, upon receiving instructions to act for the Plaintiffs, should have taken steps to conclude the terms of the proposed Agreement to be entered into between Mr Fox and Fontana Holdings Inc. to the best possible advantage of the Plaintiffs.
Request 26 asked, in relation to head (ii) in the claim for damages under para. 45:
Of ".......loss of £445,000 in settlement of the Fontana Action":
26.1 State whether it is alleged that the First Defendant should have advised the Plaintiffs to accept that sum in settlement of the Fontana Action; and
26.2 If so, state whether it is alleged that the £445,000 would actually have been paid and, state all facts and matters relied on in support of the allegation.
Ms. Hartwell's response was in the following terms:
Reply
26.1 The Plaintiffs were content to accept the sum of £445,000 in settlement of the Fontana Action provided that the terms of the Agreement between the parties could be concluded to the Plaintiffs' satisfaction. The First Defendant failed to advise the Plaintiffs of the revised terms of the Agreement which had been negotiated on 15th October 1985 or to give the Plaintiffs the opportunity to accept the same.
26.2 The Plaintiffs believe that the payments set out in the revised form of the Agreement (of which they were unaware) would have been made, as the initial payment of £125,000 was to be made by banker's draft directly to the First Plaintiff's solicitors (Stoneham Langton & Passmore) and the subsequent payments totalling £320,000 were to be made by Bills of Exchange to be deposited with Swiss Volksbank and which were to be guaranteed by Swiss Volksbank in the event that Fontana Holdings Inc. was unable to effect payment.
Whether or not Ms. Hartwell so understood it, the particulars under Request 3 were in practice for the first time explicitly alleging a breach of duty by LL in October 1985; and, although this was not quite explicit, the particulars under Request 26 implied a loss crystallising at or about that time. They went some way therefore to repairing the deficiencies of the Statement of Claim, though it would have been open to Mr. Leech to object that they were not so much a particularisation of the existing pleading as a fresh head of negligence.
The application for a preliminary issue and the instruction of Mr. Susman
On 30th April 1997 WWH informed PJH that they proposed to apply to strike out those parts of the Statement of Claim which were statute-barred. By letter dated 15th May PJH asked Mr. Batcup to advise whether the views on limitation expressed in his Advice of 24th March 1994 remained unchanged. This formulation reflected a failure on the part of Ms. Hartwell to appreciate that that Advice had not dealt with the totality of the matters sought to be covered (albeit rather unsatisfactorily) in the pleadings now served on behalf of Mr. Fox. There was a preliminary telephone discussion on 16th May between Ms. Hartwell and Mr. Batcup. Ms. Hartwell's note contains a record of Mr. Batcup saying:
… the one concern to me was the "lost settlement" – did we actually lose ? This was put in the alternative – deliberately … Mr. Batcup cannot see how the Fontana action element could be deleted – the "loss" didn't crystallise until after the Mareva was discharged … .
There was a dispute on the evidence before me as to whether in the course of the conversation Mr. Batcup told Ms. Hartwell that he was concerned that the lost settlement claim might be statute-barred. Mr. Batcup believes that he did but Ms. Hartwell believes that he did not. The note is too cryptic to help resolve the matter. Since it is clear that Mr. Batcup was plainly alive to the problem and Ms. Hartwell was soon made aware of it if she was not already (see para. 90 below), I do not believe the dispute is of any real significance. If it were necessary to resolve it, I would think it more likely that Mr. Batcup did indeed mention his concerns. The principal advice given by Mr. Batcup in the course of the conversation was that leading counsel should be instructed. In a further telephone conversation on 8th July he repeated that advice. Ms. Hartwell's note records him saying that "negligence would not crystallise until there had been applications to strike out". That is, again, too obscure to shed any light on what Mr. Batcup may have been thinking about the merits of the limitation defence as it affected the lost settlement claim. Mr. Batcup did not in fact ever supply any written advice pursuant to PJH's instructions of 30th April.
It was not until 16th July 1997 that WWH made good on their threat to issue a summons, which in the event applied not for a strike-out but for a preliminary issue on the question of limitation. The supporting affidavit proceeded on the basis that part of the pleaded case against Mr. Leech was a claim of negligent advice in October 1985 leading to the loss of the settlement offer; and it was pointed out that the offer was withdrawn on 28th October 1985. As in the Defence, therefore, WWH clearly understood Mr. and Mrs. Fox, notwithstanding the opacity of their pleadings, to be advancing the lost settlement claim.
PJH obtained authority from the legal aid board to instruct Mr. Susman to resist the application for a preliminary issue. (This seems to have been on Mr. Batcup's recommendation: Mr. Susman had been his pupil-master.)
Mr. Susman advised in consultation on 22nd August 1997. There survive both his own note made in preparation for the consultation (though possibly subject to some limited revision following it) and Ms. Hartwell's note. It is not possible – but, fortunately, nor is it necessary - to reconstruct from these every detail of his advice. It is right to bear in mind that the main focus of the consultation was Mr. Leech's pending application rather than the ultimate prospects of the action, and definitive advice on the merits was not required: Mr. Susman had indeed not been sent the full papers available to PJH. Subject to that, I need to note the following points:
(1) It seems, in particular from Mr. Susman's note, that he understood the "essence" of the claims pleaded at paras. 7-22 of the Statement of Claim to be that "the Defendant was instructed because he indicated that he could procure a better offer, but he failed to do so, and failed to progress the action at all". That of course broadly reflects my own analysis of the pleading (see para. 76 above): it does not cover any claim that Mr. Leech's advice in October 1985 was itself negligent. His advice was that the claim as so understood ought not to be held to be statute-barred because damage would not crystallise until the Fontana and/or Hanson actions collapsed.
(2) It seems, however, that Mr. Susman at least considered the possibility of a claim based on negligent advice in October 1985. He is recorded in Ms. Hartwell's note of the consultation as saying:
1985 ? contractual lim. Has well expired. Would need to commence by 1991. ? contract lim. gone.
It is hard to make sense of that statement except on the basis that Mr. Susman was addressing, however parenthetically and briefly, a claim that the advice given by Mr. Leech in October 1985 was negligent. There is nothing surprising about his doing so, given the terms of the Reply and of the Further and Better Particulars which he will have seen.
(3) Ms. Hartwell also notes someone – apparently either Mr. Susman or Mr. Batcup – saying:
Loss of deal (Fontana) – one view that this had long since gone
The natural interpretation of this is that it is at least well arguable that any claim based on the loss of the settlement offer was now statute-barred.
(4) There was some discussion of the terms of the settlement offer made by the Hanson interests in October 1985 and of the different drafts. The discussion was in the context of the "knowledge" and s. 32 answers to the limitation point pleaded in the Reply. The note is not explicit as to what the cause of action which those answers might or might not "save" was understood to be.
(5) Mr. Susman is recorded in Ms. Hartwell's note as giving his view that there was a "good claim for £70k – but highly speculative [claim] for the alleged half a million". The "half a million" is a reference to the £445,000 settlement offer. Read by itself that need not be a reference to the lost settlement claim, since the settlement amount had been pleaded by Mr. Batcup as a measure of the value of the lost Fontana action; but in the context of the earlier references it seems more likely that the lost settlement claim was being referred to. If so, the note does not state why Mr. Susman described it as "speculative"; but the most obvious problem about it was that it was prima facie statute-barred, and Mr. Susman had not been asked, or put in a position, to advise definitively on the merits of the claim.
In my view it is clear from those references that Mr. Susman, and Mr. Batcup and Ms. Hartwell, understood that the lost settlement claim in the sense that I have defined it at para. 44 above was part of the claim that Mr. Fox wished to pursue.
Mr. Susman advised that he expected that the application for a preliminary issue on limitation would be refused. The broad tactic was both to attempt to show that there was no good limitation defence but also to demonstrate that, even if such a defence was arguable in respect of part of the claim, that there would be no saving in time in having that issue determined separately.
The collapse of the concealment argument
Following the consultation, Mr. Susman drafted an affidavit for Ms. Hartwell to swear in opposition to LL's summons. This set out the facts relied on by Mr. and Mrs. Fox, including those relevant to the alleged concealment: in particular, it gave Mr. Fox's account of never having seen any revised version of the Agreement involving SV. As regards the nature of Mr. Fox's claims, the affidavit followed closely the approach of the Statement of Claim, characterising the negligence complained of as being LL's negligence in pursuing the Fontana and Hanson claims from 1985 to 1981. Loss was only said to have been suffered "in 1991 when the Mareva injunction in the Fontana action was finally discharged, because it was at that point of time that the Plaintiffs lost the chance of compromising all their claims for £445,000" (para. 15). That formulation slurs some difficult questions, but no doubt that was tactically wise. The affidavit also relied, "in the case of the loss of the opportunity to settle for £445,000", on the alleged concealment by LL of "the improved offer" (para. 16): although logically that plea was only necessary if the cause of action had expired prior to 19th July 1995, which on the case as advanced in para. 15 it had not, there is nothing in the affidavit to suggest that a case was being put on the basis of negligent advice in October 1985 (and the loss of the settlement offer at that time).
In response to Ms. Hartwell's affidavit WWH pointed out, initially in correspondence but subsequently by affidavit, that Mr. Fox's account of never having seen the revised version of the Agreement was demonstrably untrue, for the reasons given in para. 80 above. This had not previously been appreciated by either PJH or counsel. It did not, fortunately, prevent them from successfully resisting LL's application, which was refused by Master Leslie on 15th October 1997. But Mr. Susman advised that it was necessary to get to the bottom of the point as soon as possible. PJH tracked down Mr. Lines of SLP, who was now retired. They appear to have spoken to him first on 21st October. Having considered the papers, he telephoned Ms. Hartwell on 4th November to say that he was quite sure that Mr. Fox had seen the relevant draft of the Agreement and that there was no question of concealment; but he also expressed the view that an acceptable settlement was achievable and that negotiations with TSW should have been pressed to a conclusion. By this date, the limitation period for any claim against Wellers had expired, but it is convenient to complete the story of Mr. Lines's involvement. Mr. Fox at first disputed what Mr. Lines said, but PJH asked Mr. Lines to prepare a full statement. This, when finalised in March 1998, showed quite irrefutably that Mr. Fox was wrong, and he was constrained finally to accept (albeit not without some qualifications and subsequent backsliding) that that must be the case. The statement also, however, asserted in clear terms Mr. Lines's view that if SLP's instructions had not been withdrawn the remaining documentation – including, crucially, the guarantee from SV – would have been finalised and the settlement agreement concluded. He emphasised that he believed that Mr. Fox was, subject to those points, willing to settle and that such a settlement would have been in his interests.
At no point in this period did either PJH or the Defendants advise Mr. Fox about whether he had any claim against Wellers for failing to advise him of the time limits applicable to the lost settlement claim, or that time to bring such a claim against Wellers would prima facie expire at the end of October 1997. I defer consideration of whether that omission was negligent.
November 1997 – May 1999
As noted above, the events of this period are not as such material to the issues which I have to decide, but I need to deal with them to the extent that they cast light on the thinking of the parties during the period up to the end of October 1997.
On 24th November 1997 Ms. Hartwell telephoned Mr. Susman to discuss a problem which had arisen with Mr. Fox, who was asking PJH to instruct Mr. Lines not to speak to WWH and also seemed to be wanting to influence the substance of his evidence. Because the issue was evidently a delicate one Mr. Susman made a note of his advice immediately after the conversation. He gave some (entirely proper) advice about how that problem should be dealt with. But he then went on to say something about the impact of Mr. Lines's evidence on the merits of the claim. His note reads:
I said that even if Mr. Leech did not conceal the offer from Mr. Fox, the allegation remained that Mr. Leech advised him not to accept it. That was the originally pleaded case, and in my view remained a good case of negligence.
That characterisation of the claim is inconsistent with Mr. Susman's earlier analysis of the "essence" of the case (see para. 90 (1) above) because it appears to treat the "originally pleaded case" as focusing not on LL's failures between 1985 and 1991 but on the advice given by Mr. Leech in October 1985. It is fair to bear in mind that Mr. Susman was writing this note without access to the papers (although the hearing had only been some six weeks previously). It was also written currente calamo and it may be no more than an ill-expressed version of the point that, having advised Mr. Fox to reject the offer, LL were under a duty so to handle the litigation as to secure a better offer. But on balance I think that it evidences a recognition on the part of Mr. Susman that Mr. Fox regarded Mr. Leech's advice in October 1985 as negligent and that that allegation, however ambiguously pleaded, was one which was intended to be advanced in the action so far as possible. That is consistent with the comments recorded from the consultation on 22nd August (see para. 90 (2)-(3) and (5)) and – as will appear – with how Mr. Susman in due course sought to present the claim at trial.
As the action against Mr. Leech proceeded towards trial, there was discussion from time to time between Ms. Hartwell and Mr. Fox about the merits of the claim and what might be an appropriate amount for which to settle. Mr. Fox believed that he should recover over £1 million. Ms. Hartwell advised him that he was unlikely to recover anything like that amount and referred to limitation difficulties. On two occasions, in June and again in August 1998, Mr. Fox told her that he thought that she was being over-pessimistic about limitation, but that if she were right he would then have a good claim for negligence against Wellers for having failed to issue proceedings against LL in time; and he raised the issue with her again in April 1999. It is unnecessary, in the light of the issues which I have to decide, to try to analyse precisely what limitation difficulties either Ms. Hartwell or Mr. Fox had in mind.
Trial of the action against Mr. Leech was fixed for 13th April 1999. Mr. Susman and Mr. Batcup were instructed. It had by that stage become clear that WWH were not going to be able to adduce any evidence from Mr. Leech himself: he had "gone to ground". There was a consultation on 6th April. Ms. Hartwell made a reasonably full note of the consultation, but it is not at all points possible to work out exactly what was being said. However I need only focus on the points of relevance to the present claim. Mr. Susman made it plain that he had not at that point had the chance to read the papers in full. He said that while in 1997 he would have advised settlement at £100,000 he was now more optimistic because of (a) the "excellent" statement which had been obtained from Mr. Lines and (b) "Mr. Leech's disappearance". It should be noted that at least the first of those factors would appear to be relevant only to the lost settlement claim: Mr. Lines's evidence did not go to any other point (save the concealment issue, on which it was extremely unhelpful). Mr. Susman then proceeded to examine Mr. Fox's various causes of action. One variant which he considered was a claim that LL "did not get you the deal in 1985"; and he advised, inevitably, that in respect of such a claim Mr. Fox "should have sued in 1991" and that it was accordingly statute-barred, subject to the s. 32 points which now seemed hopeless on the facts. As regards the causes of action based on LL's mishandling of the Fontana and Hanson actions, he thought the prospects were good, though the amount of the damages would be much less than the £1m. which Mr. Fox sought. He did however warn of the risk that the claim might fail in its entirety; and it seems, though this is less clear, that that warning was at least in part on the basis that there might be a limitation defence to the whole action. In the course of a general discussion of an appropriate settlement figure Mr. Susman warned that there was no guarantee that Mr. Fox would recover anything. He said, according to Ms. Hartwell's note:
If it goes wrong and you get nothing ? that will be the end of it. No appeal.
Unless you have some hope with Wellers ? will lose everything
Emphasise the fact that you may get nothing
Mr. Susman accepted in cross-examination that the reference to "some hope with Wellers" was plainly a reference to the possibility of suing Wellers for failing to advise him to issue proceedings earlier in relation to the parts of the claim that were statute-barred, i.e. the lost settlement claim. Even if the reference was brief it will have come as no surprise to Mr. Fox, who had of course already discussed with Ms. Hartwell having to sue Wellers if he lost on a limitation point (see para. 97 above).
In the event the date of trial was postponed to 4th May 1999. Mr. Susman prepared a written opening. This can be analysed, so far as necessary for present purposes, as follows:
(1) The opening sets out the background to Mr. Fox's claims against the Hanson interests, the settlement discussions of October 1985 and Mr. Leech's advice. It then says, at para. 20:
It is therefore Mr and Mrs Fox's case that in the circumstances outlined the scope of the obligation that Mr Leech owed to them was:-
20.1 an immediate obligation to exercise reasonable skill and care in advising them whether the draft Agreement settled by counsel … and/or the revisions of it later agreed between solicitors … constituted a satisfactory comprise of their Claims, with adequate safeguards of the payment to them of the four further instalments of £80,000 each;
20.2 an immediate obligation to spend a reasonable time making a reasonable effort trying to achieve a better offer while taking reasonable steps to try to keep the existing draft Agreement open for acceptance in case no better offer was made;
20.3 if all else failed, a continuing obligation at least to pursue the existing Fontana Action with reasonable diligence (which Mr Leech in effect promised to do …);
20.4 a continuing obligation to exercise reasonable skill and care in relation to the formulation and pursuit of any other claims.
(2) The opening proceeds, under the heading "Negligence", to allege that "Mr. Leech was in breach of duty in each of those respects", sc. the four obligations identified at 20.1-20.4. Para. 22 sets out the breach alleged of the first obligation, as follows:
The compromise proposed by the Hanson Interests fairly represented the value of the Claims, and Swiss Volksbank's acceptance and/or guarantee of payment of the bills of exchange was an adequate safeguard for Mr and Mrs Fox, and Mr Leech should have told them so.
(3) Paras. 23-26 go on to allege breaches of the other obligations – specifically, that Mr. Leech never tried to obtain a better offer (para. 23) and that he failed to pursue the Fontana and Hanson actions with reasonable diligence (paras. 25 and 26).
(4) Paras. 28-30 deal with damages. Para. 28 sets out the loss suffered as a result of the mishandling of the Fontana action. It points out that $181,000 had been caught by the Mareva and that Mr. and Mrs. Fox
… would have recovered at least that sum, because the compromise offer of £445,000 in 1985 is the best evidence of the value of Mr. and Mrs. Fox's claims against the Hanson Interests.
(That seems something of a non sequitur because the Fontana action was not concerned with the wider claims against the Hanson interests; but Mr. Susman was perhaps trying to follow the pattern of the Statement of Claim, where this confusion first arose.) Para. 28 then proceeds:
It is conceded that Mr. and Mrs. Fox cannot now recover in this respect damages of as much as £445,000, or of more than US$181,000. Mr. and Mrs. Fox are, however, entitled to recover damages of that sum ... .
(5) The way that that concession is phrased suggests that Mr. and Mrs. Fox might once have been entitled to recover £445,000 in relation to the Fontana action but "now" could not. This is somewhat opaque. It is not clear on what basis it was being said that Mr. and Mrs. Fox could ever have recovered £445,000 in relation to the Fontana action. The most probable explanation is that the reference is to the case that Mr. Leech's negligent advice in October 1985 had led to the loss of the settlement offer. It is true that the preceding paragraphs of the Opening had not unequivocally made such a claim, but paras. 20.1 and 22 had come very close to doing so. On that basis the "now" presumably reflects a recognition that such a claim was statute-barred.
(6) Paras. 29-30 set out the loss suffered in relation to the Hanson action. This amounted to some £62,000. There was also a claim for an indemnity against any further costs liabilities which might yet accrue to Mr. Fox from the Hanson action (which, though moribund, had not been formally disposed of).
(7) Para. 31 deals very shortly with the question of limitation by asserting that Mr. and Mrs. Fox suffered each of the losses suffered no earlier than 19th July 1989. No attempt was made to rely on the s. 32 points: on the way that the case was now put there was indeed no need to do so.
The effect of the opening was thus (a) to allege – for the first time explicitly - that Mr. Leech had been negligent in advising Mr. and Mrs. Fox not to accept the settlement (see in particular para. 22 of the opening); but (b) not to claim any damages resulting from that negligent advice; and (c) explicitly to abandon the pleaded claim to damages by reference to the £445,000 "lost" offer. This approach was the result of some careful and anxious reconsideration by Mr. Susman. He saw no real prospect of recovering on the lost settlement claim: quite apart from any view as to its substantial merits, it was plainly statute-barred. He was also concerned that raising any claim which required reliance on the s. 32 points would be highly damaging to Mr. Fox's credit, since his pleaded account of what versions of the draft he had seen was demonstrably wrong; and there were also hints from WWH that if Mr. Leech was shown, as alleged, to have acted dishonestly in concealing documents SIF would not indemnify him. He believed that it was best to focus attention away from the £445,000 altogether and concentrate on the remaining claims. Given that he was thus abandoning the claim to the £445,000, it may seem odd that he nevertheless came out unequivocally with the claim that Mr. Leech's advice had been negligent, but it appears that he (understandably) thought that there was prejudicial value in criticising Mr. Leech's advice.
A draft of Mr. Susman's proposed opening was discussed in consultation on 19th April 1999. Mr. Susman summarised his advice, as regards the lost settlement claim, as follows (as recorded in Ms. Hartwell's note):
He had viewed all aspects of the limitation period and felt that we were on extremely difficult ground in persuading the Judge that the element of the claim relating to the compromise agreement had been brought within the limitation period. This would be an uphill struggle from the start. He placed the percentage chance of success of arguing this as 5%/95% against us.
He said that he would much rather put the Judge in a clear frame of mind by confirming that we were only pursuing that element of the claim where, in his view, there could be no doubt with regard to the limitation period and he felt that this would be a lot easier for the Judge to deal with. His advice therefore was that we should go for a smaller amount and forget the compromise agreement.
After considerable discussion Mr. Fox accepted that advice and accordingly that the opening should be lodged.
Mr. Susman also produced a single-page document headed "Calculation of settlement offer" which he proposed to give Mr. Leech's counsel for the purpose of settlement. This put the "100% value" of the claim, including interest, at £311,329 but proposed a 25% discount to produce an ultimate settlement offer of £230,000 (plus the indemnity referred to at para. 99 (6) above).
On the morning of the trial SIF increased their offer to £150,000 plus costs. Mr. Susman, believing that this was in the circumstances a very good offer (as indeed it would seem to have been), advised Mr. and Mrs. Fox to accept. They did so.
Although the reference in the note of the consultation of 6th April is the only documentary reference to the Defendants identifying a possible claim against Wellers, it was in fact the evidence of Mr. Susman that he and Mr. Batcup did discuss the possibility of such a claim at about this time. At para. 45 of his witness statement he said:
I remember that Mr. Batcup and I discussed about this time, probably after the consultation on 19 April 1999, but certainly before the trial date of 4 May 1999, the question whether Wellers should have been sued before the end of October 1997 for failing to sue Mr. Leech before the end of October 1991 for negligently advising Mr. Fox not to accept a compromise effectively guaranteed by Swiss Volksbank. I also remember that at that time I did not consider this to be a matter of great concern.
He went on to give his reasons for that unconcern, which were essentially that he did not believe that the Hanson interests ever meant to settle, so that nothing had really been lost. In cross-examination he amplified his evidence about this conversation a little, but also corrected what he had said about the likely date. His evidence was as follows:
I remember a conversation with Mr Batcup in chambers. He had come to see me about something, and my guess is that he had come to see me so I could show him the six different agreements, which means that it probably was before this conference [that is, the consultation of 6th April]. But I'm guessing, and it's no more than a guess. Because I can't think of any other reason why he would have come to my room. I am certain that Wellers was brought up. And I think it's likely that he brought it up and that my response was something to the effect: oh, well, it doesn't really matter.
Mr. Batcup did not recall this conversation; but he did not suggest in cross-examination that it did not occur. On the basis of Mr. Susman's revised recollection, which seems to me to make better sense, the reference to a possible claim against Wellers in the consultation of 6th April is likely to have reflected the conversation with Mr. Batcup which he had had only shortly before. It was put to both Defendants in cross-examination that, now that they had (albeit belatedly) identified the possibility that a time limit against Wellers had been missed at a time when they had both been instructed it was their duty to draw this possibility to Mr. Fox's attention, and that it was wrong that they should take it on themselves to make the judgment as to whether the potentially lost claim had in fact any value; but I need not rule on this criticism since by that date the relevant damage had already been done.
E. MAY 1999 – MAY 2004: THE CLAIM AGAINST PJH
On 18th May 1999, i.e. immediately following the settlement of the claim against LL, Mr. Fox sought PJH's advice as to whether Wellers had been negligent in not issuing proceedings against LL in 1991, as a result of which
… we have … been denied the opportunity of our claim for the loss of the "compromise settlement offer" being settled by the Court.
It was not until 1st December 1999 that he was able to discuss the point with Ms. Hartwell. He suggested that Mr. Batcup's advice be sought, but Ms. Hartwell pointed out that he would be likely to have a conflict since he had been instructed by Wellers in 1991. She also pointed out that any claim against Wellers might itself now be statute-barred and that in that case PJH might themselves be open to criticism. Mr. Fox asked her nevertheless to approach Mr. Batcup. She did so and, as anticipated, he said that it would not be proper for him to advise. PJH accordingly instructed Mr. Matthias of counsel (who had of course had some previous involvement: see para. 70 above).
Mr. Matthias advised in conference on 19th June 2000. Ms. Hartwell's note of the conference (approved by Mr. Matthias) shows that Mr. Fox took counsel in detail through the history of the negotiations with TSW in October 1985. He emphasised that at the time that he first saw Mr. Leech he was "totally unaware that the original form of the agreement had been revised and re-drafted to take into account his concerns" and said that "the ultimate form of the agreement negotiated by Mr. Lines would have been satisfactory to him". He said that in particular he was unaware that the bills "were to be guaranteed by [SV]". This of course is the version of events which Mr. Fox had advanced in 1997 and which had been demonstrated to be quite wrong. Surprisingly, this was not pointed out to Mr. Matthias, who had not been supplied with any of the contemporary papers and accordingly took what he was told at face value. Against that background, he advised (a) that LL had been in breach of duty in October 1985 by failing to advise Mr. Fox of the availability of an acceptable form of the offer; (b) that that breach had led to the offer being lost; (c) that that loss had occurred by no later than the end of October 1985, so that the time for bringing proceedings based on it expired at the end of October 1991; (d) that Wellers were in breach of duty in not advising that proceedings should be issued prior to October 1997; but (e) that any claim against Wellers was now statute-barred. He described the (now lost) claim against Wellers as "beautifully simple".
Mr. Fox then took other advice. Proceedings were in due course commenced by Mr. and Mrs. Fox against PJH for failing to advise them of the time limit for bringing proceedings against Wellers. The claim was brought with the benefit of a contingency fee agreement. It was quantified at almost £1m. PJH initially vigorously defended the claim. But at a mediation in April 2004 PJH agreed to pay £110,000 in full and final settlement, together with £160,000 in costs. Mr. and Mrs. Fox did not proceed against either Defendant, nor did PJH seek to join them as Part 20 defendants: they did apparently seek to engage them in the mediation but they were not interested.
THE ISSUES
PJH's claim is, as I have said, based on the provisions of s. 1 of the 1978 Act. No point arises as to the effect of the sub-section, but for ease of reference I reproduce the relevant parts as follows:
(1) Subject to the following provisions of this section, any person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with him or otherwise).
(2)-(3) …
(4) A person who has made or agreed to make any payment in bona fide settlement or compromise of any claim made against him in respect of any damage (including a payment into court which has been accepted) shall be entitled to recover contribution in accordance with this section without regard to whether or not he himself is or ever was liable in respect of the damage, provided, however, that he would have been liable assuming that the factual basis of the claim against him could be established.
The issues, or potential issues, raised by PJH's claim in the present proceedings can be analysed as follows:
(1) Were the Defendants liable to Mr. and Mrs. Fox for failing to advise them prior to the end of October 1997 of the potential claim against Wellers and of the time limit applicable to that claim ? Since any such liability would have arisen in tort that issue resolves into two sub-issues:
(a) Was either of the Defendants in breach of the duty of care owed by them to Mr. and Mrs. Fox ?
(b) If so, did Mr. and Mrs. Fox suffer any loss as a result of such breach(es) ? This involves an assessment of their prospects of success (i) in the "lost" action against Wellers and (ii) in the lost settlement claim against LL.
(I must in principle consider the case separately as against each Defendant; but, as is evident from the fact that they are instructing the same solicitors and counsel, this is not a case where different answers seem practically possible.)
(2) If so, would PJH have been liable to Mr. and Mrs. Fox for the same damage if "the factual basis of the claim against [them]" had been established ?
(3) Was PJH's settlement with Mr. and Mrs. Fox bona fide ?
(4) If on consideration of the foregoing issues the Defendants are liable to contribute to the amount of the settlement in what amount should they do so ?
I take those issues in turn.
ISSUE (1): THE LIABILITY OF THE DEFENDANTS
Although it might appear strictly more logical to consider breach and damage in that order, it will in fact be more convenient to approach the sub-issues in chronological order, i.e. to consider first the value of the lost settlement claim and then that of the putatively lost claim against Wellers before proceeding to consider the potential liability of the Defendants.
THE CLAIM AGAINST LL (THE LOST SETTLEMENT CLAIM)
My task is not to seek to decide definitively whether LL were liable in negligence to Mr. and Mrs. Fox for the amount of the lost settlement, but simply to decide whether that claim had a real and substantial prospect of success and thus constituted a thing of real value: the numerous authorities to this effect are helpfully reviewed and their effect analysed by the Court of Appeal in Dixon v. Clement Jones [2005] PNLR 6 ([2004] EWCA Civ 1005), esp. per Rix LJ at paras. 24-42. Even if there may sometimes be cases where it is open to the Court to, in effect, try the lost action, this is certainly not one of them: too little of the evidence which would be crucial for a fair determination is available. In performing that task I ought to take into account the principle deriving from Armory v. Delamirie (1722) 1 Stra. 505 that if the negligence of the defendant has led to evidence being unavailable which might otherwise have assisted the victim of that negligence he should have the benefit of any consequent doubt. I should, strictly, consider the question as at October 1991, when the claim was lost.
In my judgment the lost settlement claim against LL, viewed as at that date, had substantial value. My reasons are as follows.
I should start by saying that the substantive points made in Mr. Leech's letter of 23rd October 1985, taken by themselves, seem unimpeachable. The various problems which he identified with the draft Agreement were, as discussed at para. 21 above, real. The only way of ensuring payment of the future instalments, within the framework as agreed at that date, would have been for SV's "guarantee" to take the form of an undertaking to pay in the event of default irrespective of any alleged breaches of the Agreement. No such undertaking from SV had been proffered, and it was unlikely that the promised guarantee when (or if) tendered would go that far.
It does not however follow that the only sensible course for Mr. and Mrs. Fox was to reject the offer. It remained to be seen whether the SV guarantee in fact materialised and if so what its terms amounted to. And even if, as seemed likely, they did not give 100% protection, a judgment would have to be made as to whether the risks of default (which would not necessarily mean ultimate non-payment but would entail further litigation) outweighed the risks of continuing with the litigation. All agreements involving deferred payments carry some risk of default, and all agreements involving mutual obligations carry the risk that the other party will allege breach and claim damages in consequence. These risks were inevitably inherent in an agreement of the kind which Mr. Fox had negotiated with Mr. Farnsworth. Mr. Lines and Mr. Grey both believed that the risks inherent in an agreement of the kind apparently on offer were preferable to the risks of litigation against the Hanson interests. Thus the real question about Mr. Leech's advice is not whether his analysis of the draft Agreement was wrong but whether it was negligent of him to have advised as emphatically as he apparently did that Mr. Fox should seek to re-negotiate and should be prepared to litigate if re-negotiation proved impossible; and, importantly, that for those purposes he should (immediately) change solicitors.
I believe that there is a serious argument that that advice was indeed negligent. Mr. and Mrs. Fox had been receiving careful advice from competent solicitors and counsel who had had every opportunity not only to consider the Agreement but also to assess the risks of the alternative course of embarking on further litigation. Mr. Leech was in no position to form any useful view on the latter element in the equation. He knew about the merits (and value) of the claim against the Hanson interests only what Mr. Fox could tell him in a single meeting (supplemented by what he may have already heard from Mr. Cutting and/or Mr. Woods – who, however, may not have been entirely disinterested). In those circumstances, for Mr. Leech to give the advice which Mr. Fox says that he did may have been not just bold but reckless. It is arguable that any prudent solicitor should have advised at least that Mr. and Mrs. Fox should continue to retain SLP until the terms of the SV guarantee were known, and should have taken advantage of the interval to acquaint himself more fully with the real prospects of the potential claim against the Hanson interests. Mr. Leech was well aware that the mere fact that he had been instructed in place of SLP might lead the Hanson interests to withdraw: he told Mr. Fox so in the letter of 23rd October. The fact that he warned him of that risk, even if he did so before the die was cast (as to which there is no evidence), would not necessarily be enough to "save" his substantive advice if that was otherwise negligent.
Even if it was not negligent for Mr. Leech to give the advice which he did between 15th and 23rd October, there is the further question of his communications, or the lack of them, with TSW in the days following Mr. Fox's decision to instruct him. As explored in para. 34 above, the facts are obscure. But if Mr. Leech did indeed make no attempt to contact TSW, thus leaving the negotiations effectively in limbo at a crucial point, that too was arguably negligent. Whatever the deficiencies of the draft Agreement, the priority, from the point of view of Mr. Fox's interests, was to see if they could be remedied; and it appears that that was what Mr. Leech told Mr. Fox he intended to try to do.
I therefore believe that Mr. Fox's potential claim for negligence against LL was a thing of real value as at October 1991. It was of course by no means unproblematic. As I have acknowledged, there does not appear to have been much wrong with Mr. Leech's legal analysis. The primary challenge had to be to his tactical advice, which is in principle a more difficult target. And since the advice on which the claim would largely depend was given orally, and the challenge to it would centre on its tone as much as its content, much would hang on Mr. Fox's credibility and reliability as a witness. But in my judgment the sequence of events between 15th and 28th October is sufficiently unusual that a Court would have wished to look quite hard at Mr. Leech's conduct (including the extent to which he was having regard only to Mr. Fox's interests as opposed to his own and that of his existing clients). It is also legitimate to bear in mind that any Court considering in the early 1990s a claim arising out of Mr. Leech's advice in October 1985 would do so in a context highly unfavourable to LL. It would know of the negligent way in which the Fontana and Hanson actions had been handled (indeed the lost settlement claim would presumably form part of an action in which that negligence was also claimed for); of the Court of Appeal's criticisms of Mr. Leech when discharging the second Mareva; of Mr. Leech's nervous breakdown (with the consequent complaint to the Law Society); and of his bankruptcy.
I also acknowledge that there are question-marks as to whether the Hanson interests ever meant to settle; as to whether a guarantee from SV would in fact have been forthcoming; and, even if all was in order on that side, as to whether, even apart from Mr. Leech's advice, Mr. Fox might not in the end have got terminal cold feet about the proposed deal. Difficulties and uncertainties of this kind would certainly affect the settlement value of the claim, but I am in no position to reach a firm view that all or any of those problems would have prevented the settlement eventuating. The evidence falls well short of establishing either that the Hanson interests were not negotiating in good faith, or that SV would not have provided a guarantee, or that Mr. Fox would, even if SLP had remained instructed, have pulled out of the settlement. It is to be noted that at any trial the Court would have had the benefit of the evidence of Mr. Lines, who strongly believed not only that settlement was available (and that he would have agreed to it if sensibly advised) but also that a settlement on proper terms was available.
I reach this view on my own assessment of the evidence available to me. I note Mr. Wadsworth's negative advice about the prospects of the lost settlement claim. As I point out at para. 57 above, it is in fact unclear what information he was given; but I can in any event be confident that he did not have the issues as fully explored with him as I have. I also note Mr. Susman's advice in August 1997 that the claim was "highly speculative" (see para. 90 (5)) and what he gave in his witness statement as his reasons for not being concerned in April 1999 about the time limit for suing Wellers having passed (see para. 104). I consider in more detail below what basis Mr. Susman had for those views: at this stage I need only say that, to the extent that it was his view at the time that a claim against LL on the lost settlement claim had never had any realistic prospect of success, I cannot agree.
In summary, therefore, I believe that the lost settlement claim had a substantial value. I do not, given the peculiar nature of these proceedings, have to form any more precise view about that value.
If Mr. Fox had appreciated that the lost settlement claim against LL would become statute-barred at the end of October 1991 I have no doubt that he would have insisted on steps being taken that would have preserved that claim. Although it took him a little time to focus on the lost settlement claim, once he did so he was always keen that it should be advanced. The most obvious course would have been simply to issue before the end of October 1991 the proceedings against LL which were eventually issued almost four years later, pleading the lost settlement claim in those proceedings in a more straightforward way than had to be resorted to subsequently. There would have been no difficulty in doing so within the scope of the legal aid already granted.
THE CLAIM AGAINST WELLERS
As with the lost claim against LL, it is not necessary for me to reach a definitive view as to whether the lost claim against Wellers would have succeeded but only to decide whether (as at October 1997) it had a substantial value. I have not found this altogether easy. It does not follow from my conclusion that the lost settlement claim had a substantial value that Wellers were negligent in failing to advise about it prior to the end of October 1991. That depends on what they were told by, or should reasonably have elicited from, Mr. Fox about the events of October 1985. I can see a powerful argument that Wellers were not told enough to put them on notice of the potential claim until after the crucial date. They were initially instructed for the purpose of conducting the Fontana and Hanson litigation. Although it became clear from an early stage that the way in which that litigation had been handled gave rise to a potential claim for negligence against LL, there is nothing either in Mr. Fox's witness statement for the purpose of the PJH proceedings or in the documents before me to suggest that he explicitly raised with Wellers an allegation that the advice given in October 1985 was negligent. His application for legal aid referred only to negligence in the handling of the litigation. Although the ten-page note, which Mr. Fox sent to Miss Nickson in May 1991, did give Wellers an account of the events of October 1985 it fell short of clearly alleging negligent advice or raising the lost settlement claim: see para. 49 above. It was not until May 1993 that he explicitly did so: see para. 55.
On careful consideration, however, I am not prepared to say that there was no real prospect that a claim against Wellers could have succeeded. I think that it is at least arguable that Mr. Fox's account in the ten-page note of the advice which he was given in October 1985 should have put Wellers on notice that there might be grounds for criticising that advice and that it was necessary carefully to go over what had happened with Mr. Fox. (In this connection it is interesting to note that on reading the ten-page note Miss Nickson did in fact ask for, and receive, a copy of Mr. Leech's letter of 23rd October; but she does not appear to have pursued her enquiries further.) If that point is reached, it almost certainly follows that Wellers should have appreciated that any such review needed to be conducted before the end of October 1991. If there had been a focused discussion of the point, either between Mr. Fox and Miss Nickson or in an earlier conference with Mr. Batcup, it is likely that the criticisms which Mr. Fox eventually made in May 1993 would have been raised earlier and that appropriate advice about limitation given would have been given. Mr. Stewart emphasised to me that Mr. Fox was a man who knew his own mind and that if he had wanted to make a claim against LL based on negligent advice in October 1985 he would have done so. But even clear-thinking and decisive clients need to have their minds focused by their lawyers. The germ of the complaint which emerged in May 1993 was present in the ten-page note: it is arguable that Miss Nickson should have spotted the claim that was latent in Mr. Fox's criticisms even if he had not yet spotted it himself.
Despite that conclusion, I must frankly say that on the materials before me I am inclined to think that a claim against Wellers on this basis would have been rather weak; but what matters is that its prospects of success were more than negligible. Much would depend on a detailed examination of the communications (oral as well as written) between Miss Nickson and Mr. Fox in mid-1991, which would form an important background to how the ten-page note should be read. Such an examination is not now possible; but, on the hypothesis (which I have to adopt for these purposes) that that is the result of the negligence of PJH and the Defendants, the benefit of any reasonable doubt would have had to go to Mr. Fox. I also note that at a trial in, say, 2000 Mr. Fox would have been helped by the fact that there were other serious criticisms of Wellers' conduct. Whether or not any other claims of negligence could be advanced against them, their conduct of the Hanson action and the claim against LL was unimpressive and painfully slow.
I have considered whether it may not also be legitimate to bear in mind that, subject to any excess, SIF stood behind both LL and Wellers, so that the knowledge that even if a limitation defence in the LL action succeeded (as regards the lost settlement claim) that might only mean that the loss came out of another pocket might have induced SIF to pay up in the LL claim. Mr. Stewart rightly warned me to be cautious about this line of argument because of the complications caused by the presence of an excess and by the fact that SIF could not simply treat both its insureds as interchangeable, and I would reach the same conclusion even if I ignored it; but I do not in fact think that it is a wholly negligible factor in assessing whether even a comparatively weak claim against Wellers might have had a real value to Mr. Fox.
Again, I reach this view on the basis of my own assessment of the material available to me. But, notwithstanding the qualifications expressed in para. 106, it gains some limited support from the fact that Mr. Matthias of counsel advised in June 2000 that there would, but for limitation, have been a good claim against Wellers.
Again too, I have no doubt that if Mr. Fox had been advised that the time limit for bringing proceedings against Wellers expired at the end of October 1997 he would have taken whatever steps were necessary to preserve his rights. The issue of a protective writ would have been a straightforward matter: the evidence of Mr. Hinds was that legal aid would almost certainly have been available for that purpose, but even if it was not no doubt Mr. Fox could have raised the necessary sum. (A still cheaper alternative would have been to agree with Wellers and/or SIF to "toll" limitation, which might well have been possible.)
It is a distinct question whether Mr. Fox would not only have taken the necessary steps to preserve his rights against Wellers prior to the end of 1997 but would have pursued them thereafter to trial or settlement. In Harrison v. Bloom Camillin [2000] Lloyd's Rep. P.N. 89 Neuberger J. held that that question falls to be resolved on the balance of probabilities rather than simply as part of the "loss-of-a-chance-based" valuation of the claim (see at p. 95). Although I do not find the question entirely easy, I respectfully agree with his conclusion. I have no doubt that Mr. Fox would have wished to pursue proceedings against Wellers unless he were able to achieve full (or at least substantial) recovery in respect of the lost settlement claim in the LL action: he made it quite clear in 1998 and early 1999 that he would sue Wellers if his claim against LL was eventually prejudiced by their failure to issue proceedings in time (see para. 97 above). Mr. Fox did not apparently in 1997 or 1998 have substantial assets apart from his home, and he would thus at that date have been dependent on receiving legal aid or finding a solicitor willing to act on a conditional fee basis. That might not have been straightforward given my doubts over the strength of the case that Wellers had been negligent. But I do not believe that the difficulties facing Mr. Fox would have been insuperable. He would, as I have found, have had no difficulty in issuing an initial writ. The sensible tactic thereafter would have been to seek to keep the proceedings on hold until the LL action was determined. I think it likely that SIF (who would very likely in practice have had the conduct of the defence) would have been agreeable to that course. Even if they were not, I think that Mr. Fox could have found the limited funds necessary to keep the action going until mid-1999, when he received his damages from LL.[6] Although it would have been something of a gamble for him to invest a substantial part of those hard-earned fruits in further litigation, I think that he would have been prepared to do so if he had to. He was nothing if not tenacious. I note that he was willing to fund privately the obtaining of advice from Mr. Matthias in June 2000. I do not however think it at all unlikely that he would have been able to find solicitors willing to pursue the matter on a conditional fee basis. Despite my own doubts about the strength of the claim against Wellers, I note how Mr. Fox was able to persuade Mr. Matthias of its merits. I also note that his eventual proceedings against PJH were pursued under a CFA. Although certainty is not possible, I find on the balance of probabilities that Mr. Fox would have been able to fund a claim against Wellers until trial or earlier settlement.
THE CLAIM AGAINST THE DEFENDANTS
From at least the receipt of his instructions dated 30th June 1995 onwards Mr. Batcup was, and in any event should have been, aware that the lost settlement claim formed part of the claim which Mr. Fox wished to bring against LL[7]. That was apparent in particular from the terms of the "Matters for Statement of Claim" note included with those instructions: see paras. 62 and 65 above. His understanding to this effect is apparent (though admittedly not always readily apparent) in the way that he pleaded the case: see paras. 73-77 and 82-83 above. It preceded, and was independent of, the introduction by Mr. Fox in September 1996 of his allegations about Mr. Leech's concealment of the revised draft of the settlement offer, although until those allegations were definitively shown to be ill-founded (which did not occur until after the end of the relevant period) they may have reinforced Mr. Batcup's perception that the claim was a viable one.
I believe that the same was equally apparent to Mr. Susman from, at latest, the date of the consultation of 22nd August 1997. Despite the obscurities of the pleadings with which he had to grapple, it is clear that he – correctly – understood that Mr. Fox wished to claim that Mr. Leech's advice was negligent and had caused him to lose the £445,000 settlement offer; and that that case was not dependent on the concealment allegations. That is adequately apparent from his observations in that consultation (see para. 90 above), but it is confirmed by his note of 24th November 1997 (see para. 96) and by the way in which he analysed and presented the claim in the period leading up to the trial in 1999 (see para. 99). So far as the latter points are concerned, they of course post-date the relevant period, and I accept that by the time that Mr. Susman came to prepare the opening he had much fuller papers than he had had in 1997; but the fuller detail which was available was not such as fundamentally to change the nature of the claim. It is true that Mr. Susman, like Mr. Batcup in the pleadings, fought shy, in his drafting both of Ms. Hartwell's affidavit in 1997 and of the opening in 1999, of explicitly advancing such a claim; but there were particular tactical reasons for taking that course.
Since both Defendants understood that Mr. Fox wished to advance the lost settlement claim it was plainly incumbent on them to consider whether it was statute-barred: the question of limitation obviously arose, given the dates in question, and it was in any event brought into focus by LL's defence. And it is in fact both clear and accepted that both Defendants did indeed during the relevant period consider the limitation issue and that they understood that it posed a serious problem. In the case of Mr. Batcup, he never advised on the point explicitly; but his appreciation that the lost settlement claim was prima facie statute-barred can be inferred from the way in which he pleaded the Statement of Claim and the Reply. And in the case of both counsel the point was addressed in the consultation on 22nd August 1997. Even though there is no note of any unambiguous advice to this effect until the consultations in April 1999, it is in my view adequately clear that both counsel appreciated well before the end of October 1997 that the lost settlement claim was on the face of it statute-barred; and even if they did not, they plainly should have done. It is of course true that on the basis of Mr. Fox's instructions there might have been a s. 32 answer to the limitation defence; but no-one was suggesting that that answer was so strong that there need be no concern about limitation, and by the end of October 1997 it was beginning to look very questionable.
Mr. Batcup knew that at the time that the limitation period for bringing the lost settlement claim expired Wellers were instructed. Mr. Susman may not have known exactly when Wellers were first instructed, but he knew of their prior involvement. In those circumstances I believe that it was the duty of both of them to raise with Mr. Fox the question whether Wellers may have been at fault in failing to take steps to preserve the lost settlement claim. I accept that they could not have given any definitive advice without being told more about what information and instructions Mr. Fox had given Wellers; but it was necessary to alert him to the fact that such a claim might lie and that the time for bringing it would expire at the end of October 1997. No doubt as a general proposition a lawyer may not be under a duty to advise his client about a potential claim which falls outside the scope of the matters on which he is instructed; but a claim against a previous adviser who has allowed a time limit to pass is so closely related to proceedings in which that limit is in issue that it will necessarily, even if only by implication, fall within the scope of the instructions of an adviser instructed in those proceedings to bring the possibility of such a claim, and any relevant time limits, to his client's attention. It is then of course up to the client to decide whether he wants further advice and whether, subject to such advice, he wishes to bring proceedings. But he must at least be given the opportunity to choose. The duty arises even if the barrister believes that the claim in question is weak or otherwise not worth pursuing: unless it is evidently so hopeless that the client could not reasonably decide to pursue it, the advice must be given. In this connection Mr. Stewart sought to rely on Lady Hale's observation in Moy v. Pettman Smith [2005] 1 WLR 587 to the effect that it is legitimate for a barrister to give the client the benefit of his opinion rather than his doubts (see at para. 28). But the question in this case is not whether the Defendants should have given more or less robust advice but whether they should have advised on the existence of a claim (and the imminent time bar) at all.
Mr. Stewart submitted in his opening, though the point was not actively pursued thereafter, that, even if the Defendants might otherwise have been under a duty to draw Mr. Fox's attention to the possibility of a claim against Wellers, no such duty could arise in circumstances where Mr. Matthias had already been instructed to advise on such a claim (see para. 70 above). But Mr. Matthias had not been asked to advise on this aspect of the case, and there is no evidence that either Defendant understood that he had. Mr. Stewart also submitted that the Defendants were entitled to place faith in the s. 32 arguments. I do not accept this: there could be no confidence, even as at 22nd August 1997 (and diminishingly over the following two months) that s. 32 would suffice to defeat the limitation defence.
Neither Defendant gave such advice before the end of October 1997. It was the evidence of each of them that the possibility of a claim against Wellers did not occur to them at that time. It follows from what I have said above that I believe that it should have done; and that view is reinforced by the fact that the possibility certainly did occur to them, without any radical change in the circumstances, in April 1999 (see paras. 98 and 104 above). Mr. Susman was adamant in his evidence that he was under no such duty. In cross-examination he said this:
You are suggesting that it was my obligation to tell Mr. Fox that he might have an action against somebody who I thought had not been negligent for not suing somebody else who I thought in this respect had not been negligent for losing something which I thought he never had. I don't think that was my obligation.
That was a powerful piece of advocacy, the more so because I am sure that it reflected Mr. Susman's sincerely held belief. Mr. Stewart and Mr. Smith thought it sufficiently powerful to make it the epigraph to their closing submissions. But I do not think that it accurately reflects the position in the summer of 1997. I am not convinced that Mr. Susman had in 1997 reached a firm view that there had in October 1985 been no prospect of settling with the Hanson interests ("something which … he never had") nor that Mr. Leech's advice was not negligent: indeed he was not in a position to have done so. And he was certainly not in a position to form any view as to whether Wellers had been negligent. In any event, the entire formulation overlooks the fact that, provided that the claims were realistically arguable, it was for Mr. Fox to decide whether to seek to pursue them.
Accordingly I believe that both Defendants were in breach of duty. PJH's Statement of Claim pleads that Mr. Batcup should have given the advice in question at various dates in 1996 and 1997 as well as, with Mr. Susman, on 22nd August 1997. It is unnecessary for me to consider those specific allegations: it is enough to say that the advice should have been given at that consultation if not before, and that the breach continued until the limitation bar came down at the end of October 1997. It is only fair to add that the breaches of duty on the part of both Defendants were specific and limited. Though Ms. Carr tried to interest me in a number of other criticisms of Mr. Batcup's advice between 1991 and 1997, it is unnecessary that I should form any view about them; and, whether or not some may have been justified, I should record my clear view that Mr. Batcup was throughout his long involvement with Mr. Fox anxious to do his best for him and took a lot of trouble over the case. As for Mr. Susman, from the time that he was first instructed he did a great deal of careful and thoughtful work on the case and gave competent and professional service both in relation to LL's application in 1997 and in relation to the proposed trial in 1999 and the settlement.
However, that is not the end of the matter. Both Mr. Susman and Mr. Batcup gave evidence that if the possibility of a claim against Wellers had occurred to them their advice would have been that no such claim should be pursued. Mr. Stewart submitted that such advice would not have been negligent and that accordingly any breach of duty on their part had caused no loss and the Defendants could not be liable. He relied on Bolitho v. City & Hackney Health Authority [1998] AC 232. In that case a doctor negligently failed to attend a sick child who (as it turned out) required intubation in order to prevent brain damage; but her evidence, which the Judge accepted, was that even if she had attended she would not have intubated, and the Judge held that such a course would not have been negligent. In those circumstances he held that her negligence in not attending had caused no loss; and the House of Lords upheld his reasoning.
I should start by noting that the basis for the Defendants' evidence that they would have advised against proceeding against Wellers is not that they did not believe that Wellers had been negligent. So far as that is concerned, Mr. Susman knew nothing about the nature of Mr. Fox's instructions to Wellers; and although Mr. Batcup was better placed than Mr. Susman in that regard, he too was certainly in no position to form a definitive view about whether Wellers were on notice of the lost settlement claim before the end of October 1991. Rather, their evidence was based on the view which Mr. Susman in particular says that he had at the time, and still has, that the lost settlement claim would not have been worth pursuing against LL in any event. I am bound to say that I think that there is an element of hindsight about this. It is true that Mr. Susman had in the consultation on 22nd August 1997 described the claim as "highly speculative", but, as I have already observed, he was not at that time in a position to advise definitively on the merits and his judgment is likely to have been based principally on the limitation difficulties. Even if it did in fact represent his view of the substantive merits of the claim, "speculative" is not necessarily the same as "hopeless" (though I appreciate that it is sometimes used euphemistically); and he certainly regarded the lost settlement claim as sufficiently strong to be worth deploying in his opening in 1999, albeit in the rather unusual way described in para. 100 above. If I had to make a finding as to what advice Mr. Susman and Mr. Batcup would have given in mid-1997 if they had been asked whether the lost settlement claim would have been worth pursuing against LL but for the limitation problems, I think that they would have advised that it was. I do not doubt the genuineness of the belief which they now hold to the contrary; but it is no easier for them than for me – in fact, in some ways less easy – to reconstruct what they would have thought if the distorting influence of the limitation issue had been taken away. For the reasons which I give at paras. 112-121 above, there was in fact a strong case for pursuing the lost settlement claim as part of the overall action against LL, and I would expect Mr. Susman and Mr. Batcup as competent practitioners to have recognised it.
That finding may not by itself dispose of Mr. Stewart's point. The strength of the lost settlement claim was not the only question affecting the viability of a claim against Wellers: it was also necessary to consider whether Wellers had been negligent. If I found (a) that Mr. and Mrs. Fox would have been advised that the case that Wellers had been negligent was too weak to justify the bringing of proceedings and (b) that such advice would not have been negligent, then the factual premise of his submission would survive. However, I still cannot accept his contention, for the following reasons.
In the first place, the position about what advice Mr. and Mrs. Fox would have received on the issue of Wellers' negligence, if the issue had been addressed, is far from clear-cut. I should start by noting that it is unlikely that the advice in question would have been given by either of the Defendants. Mr. Batcup would almost certainly have regarded himself as conflicted out (as he did when the point eventually arose in late 1999 (see para. 105 above)); and Mr. Susman, though not himself directly conflicted, might, as he acknowledged in cross-examination, have found it awkward to accept instructions. If PJH could not have obtained advice from Mr. Susman or Mr. Batcup, it is a plausible speculation that they would have instructed Mr. Matthias, as they in due course did (see para. 106). In that case it is tempting to say that we know what he would have advised, namely that there was a "beautifully simple" claim against Wellers. That may in fact be too glib, since he or any other counsel considering the claim against Wellers at a time before the limitation bar had come down (including Mr. Susman if he had in fact accepted instructions) would have been required to consider the merits rather more narrowly than Mr. Matthias had to in the circumstances in which his advice fell to be given. My doubts about the true strength of the case against Wellers mean that I must contemplate that counsel advising on the question in mid-1997 might well have been cautious. But I think it very unlikely that he or she would have advised that the case was hopeless. There is thus no precise parallel with the position in Bolitho, where the Judge was able to make a clear finding as to what the doctor would have done.
More fundamentally, however, it is important to recognise that the question in the present case is not what the putative tortfeasor, or a third party, would have done but for the initial negligence but what they would have advised. In Bolitho the decision that would have avoided the loss would have been that of the doctor. In the present case the decision would have been Mr. Fox's. As I have made clear at paras. 127-8 above, I have no doubt that even if Mr. Fox had in 1997 received cautious, or downright pessimistic advice, about the prospects of a claim against Wellers he would nevertheless have insisted on proceedings being issued (or an agreement reached with SIF) in order to preserve the limitation position and that he would have pursued the claim thereafter.
I have in reaching the conclusions expressed above striven to avoid hindsight. I have also reminded myself, in accordance with the warning given by Lord Hope in Moy v. Pettman Smith (above; see at para. 19), that the question is not whether I myself, or other barristers in the Defendants' position, might have given the advice in question but whether any reasonably competent barrister should have done so.
ISSUE (2): THE LIABILITY OF PJH
The matters which I have identified in paras. 129-130 above as being apparent to the Defendants as counsel were, and certainly in any event should have been, equally apparent to Ms. Hartwell as a competent litigation solicitor. She knew about the lost settlement claim: indeed it was she who had most fully pleaded it, albeit at a stage when it was somewhat distorted by Mr. Fox's allegations about concealment of the revised draft, (see para. 85 above). She should have appreciated at the consultation on 22nd August 1997, if no earlier, that there was a strong risk that it was statute-barred and that that raised the question whether Wellers had been negligent in not issuing proceedings before the bar came down. I accordingly hold that PJH were liable to Mr. and Mrs. Fox on the facts alleged in the proceedings against them. Mr. Stewart had some fun with the fact that Ms. Hartwell had until the settlement of Mr. and Mrs. Fox's claim robustly denied any negligence, but had appeared to undergo a change of heart by the time that she came to write her witness statement in these proceedings. But that is no more than a debating point. The question whether Ms. Hartwell was negligent is for me to judge rather than her.
ISSUE (3): PJH's SETTLEMENT WITH MR. AND MRS. FOX
The Defendants now accept that PJH's settlement with Mr. and Mrs. Fox was bona fide. I understood them also to have accepted, if this is a different and material question, that it was reasonable in amount: even if they did not do so, I so find. If Mr. and Mrs. Fox had recovered in full from PJH the value of the lost settlement claim plus interest it would have been worth almost £1m. The sum of £110,000 finally agreed thus represented a very big discount on the 100% value of the claim and could on no view be regarded as an unreasonable amount to pay if there were any substantial risk on liability.
Mr. Stewart indeed submitted that the very smallness of the settlement amount was evidence that the lost claim against Wellers and/or the lost settlement claim were both extremely weak and so reinforced his arguments that the Defendants were not at fault in not drawing them to the attention of Mr. and Mrs. Fox and/or that if they had been identified prior to October 1997 Mr. and Mrs. Fox would have been advised not to pursue them. I have considered and rejected those arguments above. The smallness of the settlement sum does not trouble me in this context. I have already acknowledged the difficulties with both "lost" claims and I am not surprised that Mr. and Mrs. Fox were prepared to accept a very large discount. There are likely also to have been other considerations, unrelated to the objective merits of their claim, favouring a settlement, even at a very big discount.
ISSUE (4): THE EXTENT OF THE DEFENDANTS' CONTRIBUTION
By s. 2 of the 1978 Act I am obliged to apportion the relevant contributions of the parties as I find "just and equitable having regard to the extent of [the parties'] responsibility for the damage". There is on the facts of this case no difference between the extent of the relative causative contributions of the negligence of PJH and the Defendants. The crucial question is the extent of their relative responsibility. In my judgment counsel must bear the greater share of the blame for failing to advise Mr. and Mrs. Fox of the potential claim against Wellers and the effect of the time bar. Their relationship was of the conventional kind in which PJH as solicitors looked to counsel for authoritative guidance on the major strategic questions concerning the conduct of the litigation and associated issues. In my judgment the just apportionment of contribution would be 75:25 between counsel on the one hand and PJH on the other. Mr. Stewart and Ms. Carr were agreed that it was unnecessary that I should make any apportionment as between the two Defendants.
The parties are agreed that PJH's entitlement to contribution extends not only to the sum of £110,000 but also to their agreed liability for Mr. and Mrs. Fox's costs in the sum of £160,000. The pleaded claim to a contribution to their own costs in defending the action is not pursued.
Note 1 Here and in other documents quoted I have silently corrected minor typographical errors. [Back]
Note 2 Mr. Stewart in his closing submissions raised the possibility that the letter sent may not have been the letter of advice set out at para. 29 above but a letter which Mr. Leech sent on the same day to the Legal Aid board. That seems to me very unlikely, because it was only the former letter which was identified in the ten-page note. [Back]
Note 3 In a note produced by Mr. Fox on 18th April 1999 he said that it was Mr. Simister who, at the meeting on 6th February, suggested that “head 1” should be included in the Statement of Claim. He said that he was surprised at this in the light of Mr. Wadsworth’s advice but that Mr. Simister said that he had reconsidered the point in the light of LL’s disclosure and the affidavit of Mr. Thomas in the Fontana proceedings, both of which suggested that Mr. Leech had failed to contact TSW at all. I do not think this is right. Mr. Simister’s attendance note clearly suggests that Mr. Fox’s note pre-dated the meeting, so that it could not have been influenced by anything which he had said. This is one of many instances in the papers where Mr. Fox can be seen to misremember the precise sequence of events. [Back]
Note 4 It seems that Mr. Fox first made this “discovery” when going through boxes of documents returned to him by Wellers after they ceased to be instructed.
[Back]
Note 5 As noted above, Mr. Fox called this the “second draft” because he was unaware of the intermediate stage represented by the draft created by Mr. Lines following his conversation with Mr. Thomas on 7th October and sent to Mr. Grey; but that does not affect any point of substance. [Back]
Note 6 It must in fact have been on the cards (as discussed at para. 125 above) that the very fact of an action being commenced against Wellers would have brought about a settlement in the LL action that gave Mr. Fox full compensation, or something like it, for the lost settlement claim. But I ignore that possibility for present purposes.
[Back]
Note 7 He had of course been made aware of this as a potential claim at the time of the consultation with Mr. Wadsworth, if not before; but he was probably entitled to regard it as having been put to bed by Mr. Wadsworth’s negative advice. But I need not reach any concluded view about this earlier period since on any view the claim was revived by the June 1995 instructions. [Back] | 2 |
Master Campbell:
This judgment addresses the following issue which arises at the outset of the detailed assessment of the costs of the Claimant ("Mr Findlay") which are payable by the Defendants ("Cantor Index") following Mr Findlay's acceptance of an offer under CPR part 36 on 18 May 2007 : is Cantor Index entitled to disclosure of a Conditional Fee Agreement ("CFA") made between Mr Findlay and his solicitors, Russell Jones & Walker on 12 June 2006, and to an opinion of counsel referred to in a risk assessment prepared by those solicitors, on the grounds that privilege in both has been waived?
The issue was argued before me by Mr Bowden, instructed by Linklaters, LLP for Cantor Index, and by Mr Wignall of counsel instructed by Russell Jones & Walker for Mr Findlay. The application for disclosure had been issued on 5 August 2008 and was supported by a witness statement made by James Russell of Linklaters dated 30 July 2008 to which Mr Paul Daniels of Russell Jones & Walker had responded on 15 August 2008. In addition, Mr Bowden lodged a skeleton argument. Having heard argument I reserved judgment.
THE BACKGROUND
This can be stated shortly. Mr Findlay is a former managing director of Cantor Index. Following a dispute with the company, he ceased his employment on 30 January 2006 and commenced proceedings on 13 March that year claiming damages for breach of his employment contract. Subsequently, on 28 July 2006, Mr Findlay brought a claim in the Employment Tribunal for unfair dismissal. The claim in respect of his employment contract was resolved following his acceptance of the Part 36 offer; the Employment Tribunal claim has also been settled on terms confidential to the parties. Greater detail about the background (if it is required) is set out in a judgment of Holland J dated 23 March 2007 [2007] EWHC 643 (QB).
Mr Findlay served Notice of Commencement of detailed assessment proceedings on 23 October 2007, his bill claiming a grand total of £1,038,316.30 inclusive of disbursements, VAT and the fee payable to the court on lodgement. On 18 October 2007, Linklaters served points of dispute running to 81 pages (their length being indicative of scant regard having been paid to s.35.2 of the Costs Practice Direction (CPD) to CPR 47.9). Point 4 says this:
"Costs claimed pursuant to a Conditional Fee Agreement
The bill of costs claims a success fee of 100 per cent under a purported Conditional Fee Agreement.
The claimant has failed to provide a statement of reasons for setting the level of success fee in accordance with s.32.5 of the Costs Practice Direction to CPR 47.
In accordance with CPR 44.3B the claimant is not entitled to recovery under the funding arrangement for any percentage increase for failure to comply with the Costs Practice Direction.
Furthermore the defendants requested disclosure of the Conditional Fee Agreement in accordance with the principles of openness set out in the authorities referred to above. The claimant has rejected this request and it is not understood why the claimant's solicitors should refuse such a request for disclosure.
The defendants have a genuine concern over the level of the success fee claimed. The claimant has failed to provide any information to justify a success fee, let alone a claim for the maximum that can be recovered under a Conditional Fee Agreement …
…the defendants reserve their position to make further submissions with regard to the claimant's entitlement to claim costs under the Conditional Fee Agreement following receipt of information and disclosure of the agreement."
On 15 May 2008, Russell Jones & Walker served replies to the points of dispute. The reply to point 4 says this:
"Whilst the defendants request disclosure of the Conditional Fee Agreement, the paying party are reminded that this is of course a CFA governed by the new Regulations and accordingly the receiving party see no other explanation for the request for disclosure than a speculative fishing expedition, the nature of which the courts of course discourage.
The bill of costs was signed by a partner at Russell Jones & Walker to confirm that there has been no breach of the indemnity principle …it is for the paying party to particularise a genuine issue with the CFA and no such issue has been raised to be answered.
Whilst the bill claims for a 100 per cent success fee, it should be noted that the success fee was (as is common practice in such matters) set on a sliding scale basis, of 50 per cent prior to the receipt of Directions issued by the court, 75 per cent between the issue of Directions and notification of the Trial window by the Court and only at 100 per cent from thereafter. The Defendants had the opportunity to settle the matter earlier and avail themselves of a lower success fee but did not do so."
Concurrent correspondence between Linklaters and Russell Jones & Walker also addressed the CFA (see exhibit JR 1). On 13 November 2007, Linklaters had written to Russell Jones & Walker in these terms:
"We also note that a substantial proportion of the costs claimed by your client relate to a success fee of 100 per cent charged in accordance with the Conditional Fee Agreement between your firm and your client. Our costs draftsman has requested a copy of this agreement to assist him in this process."
On 23 November 2007, the request was repeated:
"We note that you have still not responded to our request that our costs draftsman be provided with a copy of the Conditional Fee Agreement to assist him in the process of advising our client in this regard. Without sight of this agreement our costs draftsman is unable to advise as to the recoverability of the uplift you are claiming, which will necessarily need to be excluded from the calculation of any interim payments which our clients are minded to make …"
On 30 November 2007 Russell Jones & Walker replied:
"With regard to disclosure of the CFA we cannot see your reasoning behind such a request and see it entirely as a fishing expedition, which of course the courts strongly discourage. The bill of costs has been signed by a partner at Russell Jones & Walker to confirm that there has been no breach of the indemnity principle and we would respectfully refer you to Cole v MGN before Master Haworth at the Supreme Court Costs Office (whose comment is regularly upheld by the court) that it is for the defendants to particularise the genuine issue within a CFA and that it is for the Costs Judge to adjudicate on this under the Pamplin procedure prior to a claimant being put to his election whether or not to disclose the CFA.
Section 58 compliance has been confirmed and in accordance with standard practice and court guidance we shall not be disclosing our client's CFA.
In any event, our client's CFA and risk assessment in respect of the CFA are privileged documents which contain information relevant to all our client's claims and we are therefore not prepared to disclose them in advance of the conclusion of the Tribunal proceedings. This is an entirely reasonable position for us to take in the circumstances."
On 7 March 2008 Linklaters had repeated their request for disclosure:
"Our client's points of dispute set out in detail the numerous and serious deficiencies in your Bill of Costs … we note in this regard that you have still failed to provide your Conditional Fee Agreement (as encouraged by Hollins v Russell) even though both sets of proceedings have now concluded and your original reason for failing to provide this agreement is no longer valid. Please now provide a copy of your CFA by return …"
Russell Jones & Walker responded on 1 April 2008:
"You are aware of our position in respect of the issues raised in that letter as has been set out in previous correspondence and we maintain that position. These are now matters for the judge at the detailed assessment hearing to consider. We shall be serving a reply in respect of your clients' points of dispute in due course."
Linklaters wrote again on 2 May 2008:
"…We further note from your letter of 1 April your continued refusal to provide a copy of your Conditional Fee Agreement to us, notwithstanding that your success fee pursuant to this agreement, for which you are claiming reimbursement, amounts to approximately a third of the total of your client's bill. This is despite the fact that there is no longer any litigation between the parties – the principal reason which you have previously advanced in defence of your position. In the circumstances, we can only conclude that you have little confidence that the terms of this agreement stand up to scrutiny. Please note that your continued unreasonable refusal to provide a copy of this agreement to our clients at an appropriate stage of this dispute (contrary to the overriding objective and case law) will be brought to the attention of the court in due course."
Russell Jones & Walker responded on 15 May 2008:
"We take this opportunity to again respond to your repeated requests for a copy of our client's Conditional Fee Agreement. This is plainly just a speculative fishing expedition, which is without basis. You have completely failed to provide any valid reason as to why this should be disclosed. It is a strict matter of policy (like most other large firms, (and insurers) conducting thousands of CFA cases per annum) that we do not provide such a document without a proper basis for doing so. This approach is expressly endorsed by the courts and your costs clerk appears to be under a misconception in respect of the courts' approach to this issue. For the avoidance of doubt this is simply a matter of policy and our following the CPR. With respect, we would be grateful if you will please now focus on the core issues in this matter and kindly do so in a proportionate and reasonable way."
Linklaters wrote again on 23 May 2008:
"Our costs draftsman is also concerned that, in breach of s.32.5 of the Costs Practice Direction (and as requested on page 15 of our points of dispute) you have refused to provide a statement of reasons for the setting of the success fee pursuant to the CFA. Without prejudice to our position that a copy of the CFA itself should be provided (which disclosure will be pursued once proceedings have commenced) we therefore require you to set out your statement of reasons by return which, for the avoidance of doubt, should include:
(i) a detailed explanation of how the success fee is calculated and why such calculation is appropriate;
(ii) what the definition of 'success' is under the CFA;
(iii) the scope of the CFA including proceedings covered by the CFA; and
(iv) the hourly rates set out in the CFA.
As regard your time estimates for a detailed assessment hearing in your letter of 1 May 2008, we consider that the three days proposed will be required simply to deal with the preliminary issues we have raised and that at least a further five days will be required for the substantive hearing."
Russell Jones & Walker replied on 26 June 2008:
"With regard to the CFA, firstly please find attached herewith our client's risk assessment [emphasis added]. Whilst we must maintain that your have failed to raise any valid reasoning as to why the CFA ought to be disclosed other than the attempt to embark upon a fishing expedition, we can confirm that the CFA provides as follows:
(i) a success fee set at 50 per cent prior to receipt of directions issued by the court, 75 per cent between the issue of directions and notification of the trial window by the court and 100 per cent thereafter.
(ii) success under the CFA arises where the Claimant recovers compensation from the Defendants.
(iii) the CFA provides for the client's legal representative to pursue a claim against the Defendants regarding the claim set out in the Particulars of Claim.
(iv) hourly rates set out in the CFA – Grade A £250-£325 per hour, Grade B £200-£260 per hour, Grade C £150-200 per hour, Grade D £100-£150 per hour …"
The risk assessment was dated 1 June 2006 and (where relevant) said this:
MERITS
LIKELIHOOD OF DEFENDANT ADMITTING LIABILITY, COMPROMISING CLAIM OR LOSING AT TRIAL IN PERCENTAGE TERMS
Csl says CD 75%
(see opinion) Breach of contract re declaration – complicated PIDA – better than 50%
WHAT FACTORS FOR SUCCESS HAVE YOU TAKEN INTO ACCOUNT?
IS THIS CASE SUITABLE FOR A CFA
Yes
EXPLAIN WHY Likely to settle. V good merits
The reference to "Csl" is to counsel and "CD" under "Merits" is to constructive dismissal. The reference to "PIDA" is to the Public Interest Disclosure Act 1998.
Following a request for a detailed assessment hearing, Mr Findlay's bill was balloted to me and I listed the detailed assessment to take place over four days commencing Tuesday, 2 September 2008.
On 5 August 2008, Linklaters issued their application returnable before me on 18 August 2008 for orders and directions set out in an attached draft order. Paragraph 3 of the draft order says this:
"The claimant to produce to the court at the hearing listed for this application and disclose to the defendants a copy of the CFA dated 12 June 2006 pursuant to which a success fee has been claimed within the bill of costs (item 250) and any other funding agreement in relation to these proceedings and the Employment Tribunal proceedings together with a copy of counsel's opinion referred to in the preliminary assessment form disclosed on 26 June 2008."
At the hearing on 18 August 2008, I reserved judgment in respect of paragraph 3 of the draft order. The balance of the application and other issues arising under the draft order will be dealt with on Tuesday, 2 September, 2008.
THE LAW REFERRED TO IN THE CORRESPONDENCE AND POINTS OF DISPUTE AND THE SKELETON ARGUMENT
"Section 58"; this reference is to the Courts and Legal Services Act 1990 as amended by s.27(1) Access to Justice Act 1999 and deals with the basic requirements of a CFA eg that it should be in writing.
"Section 32.4 – Costs Practice Direction": this (et seq.) provides:-
"If the detailed assessment is in respect of an additional liability [success fee] only , the receiving party must serve on the paying party and all relevant persons the following documents….
(c) The relevant details of the additional liability …
S.32.5 The relevant details of an additional liability are as follows:
(1) in the case of a conditional fee agreement with a success fee...
(b) a statement of the reasons for the percentage increase given in accordance with Regulation 3(1)(a) of the Conditional Fee Agreements Regulations or Regulation 5(1)(c) of the Collective Conditional Fee Agreements Regulations 2000. [Both sets of Regulations were revoked by the Conditional Fee Agreement (Rectification) Regulations 2005 but continue to have effect in relation to the Conditional Fee Agreements and Collective Conditional Fee Agreements entered into before 1 November 2005.]"
"CPR 44.3B"; this provides:-
"Limits on recovery under funding arrangements
(1) A party may recover as an additional liability-
(c) any additional liability for any period in the proceedings during which he failed to provide information about a funding arrangement in accordance with a rule, practice direction or order; "
"CPR 44.5(3) PD 11.7"; this provides:-
"… when the court is considering the factors to be taken into account in assessing an additional liability, it will have regard to the facts and circumstances as they reasonably appeared to the solicitor or counsel when the funding arrangement was entered into …"
"CPR 43 PD 4.5(3)"; this provides:-
"The background information including a Bill of Costs should set out:
(3) a brief explanation of any agreement or arrangement between the receiving party and the solicitors which affects the costs claimed in the bill."
"Hollins v Russell"; this is a reference to Hollins v Russell [2003] 3 Costs LR 423
The "Pamplin procedure"; this is a reference to Pamplin v Express Newspapers Ltd. [1985] 1 WLR 689 ( Hobhouse J ). The "procedure" is set out on page 695 at G;
"...the principle that each party must have the right to see any relevant material which his opponent is placing before the tribunal, and which that tribunal is taking into account in arriving at its decision , must prevail. In the final resort, the claimant must be put to his election whether he wishes to waive privilege and use the material, or to assert his privilege and retain the confidentially of the document which the respondent is asking to see...."
This procedure is now embodied in the CPD at s 40.14 which provides:-
"The court may direct the receiving party to produce any document which in the opinion of the court is necessary to enable it to reach its decision. These documents will in the first instance be produced to the court, but the court may ask the receiving party to elect whether to disclose the relevant document to the paying party in order to rely on the contents of the document and instead rely on other evidence"
THE SUBMISSIONS FOR CANTOR INDEX
Mr Bowden submitted that his clients' request for disclosure of the CFA was not a "fishing expedition" given that over £300,000 turned on the level of success fee. His clients had set out the minimum amount of information which was needed from Mr Findlay in order to argue what success fee should be allowed. That information (as set out in Linklater's letter of 23 May 2008) encompassed:
(1) a detailed explanation of how the success fee had been calculated;
(2) a definition of "success";
(3) the scope of the proceedings covered by the CFA; and
(4) the hourly rates set out in the CFA.
Mr Bowden did not advance his case at this stage on the grounds that he wished the Pamplin procedure to be implemented. On the contrary, it was the position of Cantor Index that in disclosing the risk assessment, Mr Findlay had waived privilege in the CFA and the counsel's opinion upon which the success fee had been premised and that his client was thereby entitled as of right to immediate disclosure of both.
Mr Bowden relied on the following to justify his submission (see especially his skeleton paragraph 27). First, disclosure of the risk assessment had been voluntary. Accordingly privilege had been waived in a document in respect of which Mr Findlay had previously claimed privilege in his solicitor's letter of 30 November 2007. Second, the opinion of counsel referred to in the risk assessment was an annexure to that document which the paying party was entitled to see. Third, the CFA fell within the same series of privileged documents as the risk assessment and counsel's opinion. Fourth, references to the contents of the CFA had been made in open correspondence upon which his clients had intended to rely in the context of the present application. In summary, Mr Bowden argued that:
"The claimant should be ordered to disclose the CFA on the basis that the claimant's waiver of privilege in the risk assessment form gives rise to a collateral waiver of privilege in the CFA and/or that the claimant has expressly waived privilege in the CFA by referring to and relying on its contents, which references relate to substance, rather than merely the existence, of the CFA." (paragraph 27 op.cit.)
Mr Bowden relied on three authorities – Bennett v Chief Executive Officer v Australia Customs Service [2004] FCAFC 237, Great Atlantic Insurance Company v Home Insurance Company [1981] 1 WLR 529 and R v Secretary of State for Transport ex parte Factortame (The Times May 16 1997). In Bennett, the Court had held that it was an error of law to draw a distinction between the conclusion expressed in legal advice on the one hand, and the reasons for that conclusion on the other and to take the view that disclosure of the conclusion did not involve disclosure of the reasons (paragraph 62 per Gyles J); further, the voluntary disclosure of the gist or conclusion of legal advice amounts to waiver in respect of the whole advice to which reference is made including the reasons for the conclusion (paragraph 65). It is not possible to sever material from a document over which privilege has been asserted unless the additional matter deals with entirely different incidents and;
"… could in effect be divided into two separate memoranda, each dealing with a separate subject matter … It would not be satisfactory for the court to decide that part of a privileged document can be introduced without waiving privilege with regard to the other part in the absence of informed argument to the contrary and there can be no informed argument without the disclosure which would make argument unnecessary …"
(See judgment of Templeman LJ in Great Atlantic at 536 A-C et seq). .
A party is not entitled to "cherry pick" parts of a privileged document from a sequence of privileged documents relevant to the same issue (Factortame). It followed in Mr Bowden's submission, that fairness demanded that Cantor Index should be told of the reasons that had enabled counsel to estimate prospects of success at 75 per cent. Using the "ready reckoner", this would have given a success fee of 33 per cent rather than the 100 per cent claimed. Since Russell Jones & Walker had voluntarily introduced material with a view to relying on it at the detailed assessment, fairness demanded that his clients should see the entirety of that material in order to reach a considered view whether 100 per cent or some lower success fee was reasonable in all the circumstances.
THE SUBMISSIONS FOR MR FINDLAY
Mr Wignall took issue with the proposition that if privilege is waived in detailed assessment proceedings, the court must order disclosure of the relevant document. On the contrary, in detailed assessment proceedings, the Rules of Court do not permit the court to order disclosure but only to direct a receiving party to produce documents to the Costs Judge (see CPD s. 40.14). Accordingly, paragraph 3 of the draft Order was wrong and in so far as it sought an order for the CFA and counsel's instructions to be handed over to Cantor Index, the application was misconceived.
Mr Wignall further submitted that there had been no waiver of privilege. The risk assessment was a document generated by Russell Jones & Walker for the firm's internal purposes, namely for presentation to an internal committee to decide whether the case could be conducted on a CFA. In Pamplin, Hobhouse J had addressed the issue of waiver in the context of detailed assessment (then called taxation). At B on page 698 he had said this:
"In any given instance, it will be a matter for the Master to consider how far the waiver of privilege has gone. In taxation, it will normally be a matter of express waiver only. It should always be possible to avoid having to get involved with implied waiver, but when, exceptionally, questions of implied waiver do arise, the Master should decide them by applying the principle of fairness as between the parties in the conduct of the taxation. The claimant should not have imposed on him an unintended waiver unless fairness to both parties really does necessitate that result."
In the present case, there had been neither express nor implied waiver. Information had been disclosed, for example that counsel's view of prospects was 75 per cent, but it did not need, in addition, the contents of his opinion to be revealed for there to be a fair hearing. Nor had there been waiver by conduct such as would make a fair adjudication impossible without such waiver. It followed that the application should be refused.
DECISION
The starting point, in my judgment, is to address the nature and contents of the risk assessment disclosed by Russell Jones & Walker on 26 June 2008. The first observation to be made is that the document is not the same risk assessment which would have been carried out when the CFA was completed on 12 June 2006. On the contrary, it is plain that the document was prepared by Russell Jones & Walker for use by the firm's CFA Committee in order to decide whether the case could be conducted on a CFA; it is headed "EMPLOYMENT DEPARTMENT CONDITIONAL FEE AGREEMENT ASSESSMENT FORM" and is dated 1 June 2006. It follows that any privilege in the risk assessment belongs not to Mr Findlay but to Russell Jones & Walker and that any reference to "CFA", was to a putative document that had yet to come into existence.
Mr Bowden advanced his case on the footing that having waived privilege in the risk assessment, privilege had also been waived in the documents referred to therein which formed part of the risk assessment (counsel's opinion, his instructions etc – see skeleton argument paragraphs 17 and 27). I disagree. In my judgment, in serving the risk assessment, Russell Jones & Walker could not on any view have been waiving privilege in a document that did not come into existence until twelve days after the risk assessment. The reference to "CFA" was to an agreement which might, or might not be completed in the future depending upon the outcome of the committee's deliberations and not to the actual document which the parties signed on 12 June 2006. Since I am satisfied that the reference to "CFA" in the risk assessment was not to the document that Mr Findlay and Russell Jones & Walker later completed, Mr Bowden's submission that privilege in it was waived, must fail.
I find likewise with regard to the suggestion that the mere mention of "CFA" in open correspondence such as in the letter at page 57 of JRS1, is some sort of waiver of privilege, entitling Cantor Index to see the document (see skeleton paragraph 27). It is often the case that inter-solicitor correspondence will say "we have written a letter to our client for instructions" or "we have taken counsel's opinion on the point and will revert to you when we have considered his advice". In my judgment it would be fanciful to suggest that any such reference involves a waiver of privilege in the documents in question, still less does the mere mention of the existence of such documents in open correspondence, confer any right on the opponent to see them. If it be otherwise, the requirement in the CPD at section 19 to CPR 44.15 that a party must provide information about the existence of a CFA (via Form N 251) which contains a success fee, would also mean that the document itself would need to be disclosed, but it was not advanced as part of Cantor Index's submission that this is the case. It follows that I consider there is nothing persuasive in Mr Bowden's argument and the point fails.
That deals with the CFA. What of counsel's opinion and his instructions? In my view it is more likely than not that counsel's opinion formed part of the risk assessment , since the CFA Committee had been urged to read it and it is reasonable to suppose that at some stage it would either have been attached to the risk assessment or at least put before the Committee.
Mr Bowden's case is that there can be no "cherry picking" and a party who waives privilege in part of a document, waives privilege in the whole (see Great Atlantic ante). If that be correct as a proposition of law, it is also subject to exceptions. As Mr Wignall observed, this is not a trial in which each party is bound to give disclosure under CPR 31. On the contrary, on detailed assessment it is only the receiving party who is required to disclose documents, but only in so far as CPR 43-48 oblige him to do so and the choice is broadly his in deciding what material he wishes to deploy in support of his bill. This is plain from Pamplin page 695 at F:
"Taxation, although adversarial, is not subject to all the incidents of ordinary litigation. RSC Order 62 [predecessor to CPR 43-48] is, for present purposes, a self-contained code. The provisions of other orders for discovery and inspection of documents, etc, do not apply. However it cannot be disputed that the rules of natural justice apply to taxation proceedings and the question of principle which I have to decide on the present appeal is how the requirements of justice are best served in taxation proceedings, having regard to the fact that many of the relevant documents will be privileged and the claimant may have a legitimate interest in protecting that privilege."
Mr Bowden drew attention to the fact that Pamplin is an old authority long pre-dating the introduction of success fees. That is correct, but it is an also an authority which has been repeatedly approved post the implementation of the CPR, (see for example Hollins v Russell paragraph 80). It follows that whilst Mr Bowden is right that the rules of natural justice apply, it is plain from Pamplin that the Costs Judge must achieve a fair balance between the parties, in particular with reference to material over which the receiving party has asserted privilege. Therefore the issue for decision is whether Mr Findlay withdrew his assertion in relation to the opinion and instructions to counsel and if so does it follow that Cantor Index is automatically entitled to see the documents?
In my judgment, it is plain that Mr Findlay did not waive privilege either expressly or by implication. As to the former, there is no letter written by Russell Jones & Walker to the effect "we claimed privilege in our letter of 30 November; we are now instructed to waive that privilege". The only document handed over was the risk assessment, which, as I have said, is an internal document prepared for the use of Russell Jones & Walker CFA Committee) and then only after relentless requests by Linklaters LLP for information about how the success fee was calculated (see letters quoted at paragraphs 6-14 above). Nowhere in that correspondence is it stated in terms that privilege is waived.
As to the latter, in my opinion, no waiver can be implied. Hobhouse J in Pamplin gives guidance about implied waiver ( page 698 at B):
"However, as was stressed in the General Accident case at page 114, "The underlying principle is one of fairness in the context of the trial and does not go further than that". Applying that principle to the conduct of a taxation, it will be seen that the requirement of fairness means that a claimant must often be allowed to be more selective.
In any given instance, it will be a matter for the Master to consider how far the waiver of privilege has gone. In taxation it will normally be a matter of express waiver only. It should always be possible to avoid having to get involved with implied waiver, but when, exceptionally, questions of implied waiver do arise, the Master should decide them by applying the principle of fairness as between the parties and the conduct of the taxation. The claimant should not have imposed on him an unintended waiver unless fairness to both parties really does necessitate that result."
The reference to "General Accident" is to General Accident Fire and life Assurance Corporation Ltd. v Tanter [1984] 1 WLR 100.
In my judgment, an unintended waiver of counsel's opinion and his instructions should not be imposed on Mr Findlay where, as here, the risk assessment was handed over in response to repeated requests for information about the success fee and in circumstances where the principles of natural justice can still be met via the election procedure provided for in CPR 40.14 . I say this also in the context that it is by no means clear to me that Cantor Index have any entitlement to information about why the success fee was calculated at 100%; it is agreed that as the CFA post- dated 31 October 2005, the compliance obligations imposed under the CFA Regulations 2000 do not apply. It follows that in my judgment, CPD S. 32.5 (1) (b) did not oblige Russell Jones and Walker to disclose any statement of reasons for the success fee (such as a risk assessment attached to the CFA), as would have been the case had the CFA been signed before the 2000 Regulations were revoked. For these reasons the application on waiver fails.
In Pamplin, Hobhouse J also considered Great Insurance and concluded that the requirement of fairness meant that on detailed assessment, the receiving party must often (emphasis added) be allowed to be more selective, so the severance argument advanced by Mr Bowden is unpersuasive and also fails.
For all these reasons, the application for disclosure on the grounds of waiver is dismissed.
NEXT STEPS
This outcome does not affect the application of Cantor Index for disclosure of the same documents by the election procedure in CPD 40.14 provided a genuine factual issue can be identified which is not sham or fanciful (see Pamplin page 696 at H). In this regard, I have drawn the parties attention to Hollins v Russell on this point. At paragraphs 74 and 80, Brooke LJ said this;
"In our view the combination of the indemnity principle and a significant increase in the paying party's liabilities results in there ordinarily being a sufficient ground in cases involving a CFA (whether or not a CFA contains a success fee) for the paying party to require the receiving party to be put to her election to produce the CFA or rely on other evidence (74)...
We conclude, therefore, that if, in costs proceedings, a party seeks to rely on the CFA, as a matter of fairness she should ordinarily be put to her election under the Pamplin procedure...(80)"
That all said, I am in no doubt that Cantor Index's case as advanced so far is no more than the type of satellite litigation about costs which has been condemned by the Court of Appeal (see Burstein v Times Newspapers [2002] EWCA Civ 1739 at paragraph 29 and Hollins v Russell at paragraph 226). In this respect, however, my wrath has been somewhat tempered by the fact that had Russell Jones & Walker been instructed to hand over the CFA in the first place (and the Court of Appeal in Hollins has said that this should become "normal practice" see paragraph 220), it would have been unnecessary for the parties to have engaged in this round of satellite litigation; a fortiori where, as here, the CFA in question was made after 31 October 2005 and is free from the cumbersome compliance requirements of the 2000 regulations which Cantor Index might otherwise have used to contend that the entire agreement was unenforceable and that, by operation of the indemnity principle, there were no costs to indemnify so their liability to Mr Findlay was nil. It is to be hoped that the CFA will now be handed over without further ado. | 2 |
SIR MARTIN NOURSE:
Introduction
The principal question on this appeal is whether a liability to repay benefit, in this case jobseeker's allowance, which, subsequent to the claimant's bankruptcy, is determined to have been a recoverable overpayment pursuant to section 71(1) of the Social Security Administration Act 1992 ("the 1992 Act") is, at the date of the bankruptcy, a "contingent liability" and thus a "bankruptcy debt" within section 382 of the Insolvency Act 1986 ("the 1986 Act"). If it is a contingent liability, it is agreed that, when the claimant is discharged from bankruptcy, he is also, by virtue of section 281(1) of the 1986 Act, discharged from liability to repay the amount of the overpayment. Although the answer to the principal question depends on the true construction of section 382 of the 1986 Act, it is first necessary to give careful consideration to the provisions of section 71(1) of the 1992 Act. There is also a subsidiary question which will only arise if section 382 is held to apply.
The facts
On or about 10th December 1999 the claimant, David William Steele, made a claim to the Secretary of State for jobseeker's allowance. In filling up the necessary form he represented that he was not in receipt of an occupational pension, when in fact he was. It is important to note at the outset that the Secretary of State does not allege that the misrepresentation was fraudulent. On 21st December 1999 Mr Steele was awarded jobseeker's allowance with effect from 10th December of that year. On 14th September 2001, on his own petition, it was ordered by the Birmingham County Court that Mr Steele be adjudged bankrupt. On 1st March 2002 the Secretary of State, pursuant to section 71 of the 1992 Act, made a determination that Mr Steele had been overpaid £1,684.29 jobseeker's allowance between 10th December 1999 and 29th March 2001. The determination, headed "Overpayment Decision", stated:
"On 20 December 1999 Mr David Steele misrepresented the material fact that on signing his JSA3 form he declared that he was not in receipt of an Occupational Pension, when in fact he was in receipt of an Occupational Pension.
As a consequence, Jobseeker's Allowance amounting to £1684.29 from 10 December 1999 to 29 March 2001 (both dates included), as detained on the schedule, was paid which would not have been paid but for the misrepresentation.
Accordingly, that amount is recoverable from Mr David Steele."
In addition to jobseeker's allowance, Mr Steele was entitled to receive, and was receiving, incapacity benefit. Following the determination, pursuant to section 71(8) of the 1992 Act and the relevant regulations, the Secretary of State began to recover the overpayment of the jobseeker's allowance by means of a weekly deduction from Mr Steele's incapacity benefit. On 16th June 2003 Mr Steele informed the Department of his bankruptcy, whereupon the Secretary of State, in exercise of his discretion, decided to suspend recovery of the overpaid jobseeker's allowance until Mr Steele's bankruptcy had been discharged. It was discharged as from 14th September 2003 by a further order of the Birmingham County Court made on 6th October 2003. On 19th November 2003 the Secretary of State wrote to Mr Steele stating:
"You were informed of the overpayments after the date of the bankruptcy order and you are still liable for this debt. Your bankruptcy order has now been discharged and we will now pursue recovery."
The letter also gave notice of an intention to resume weekly deductions from Mr Steele's incapacity benefit.
On 8th December 2003 Mr Steele issued a judicial review claim form challenging the decision made in the letter of 19th November 2003. On 18th April 2003 the application came for an effective hearing in the Administrative Court before Gibbs J who, in a judgment delivered on the following day, granted it and quashed the decision. He granted the Secretary of State permission to appeal and the appeal has now come before us.
The statutory provisions - social security
Section 71 is the first section in part III of the 1992 Act entitled "Overpayments and Adjustments of Benefit". Section 71 is headed "Overpayments-General". For the purpose of considering the principal question it is only necessary to examine subsection (1), which provides:
"Where it is determined that, whether fraudulently or otherwise, any person has misrepresented, or failed to disclose, any material fact and in consequence of the misrepresentation or failure -
(a) a payment has been made in respect of a benefit to which this section applies; or
(b) any sum recoverable by or on behalf of the Secretary of State in connection with any such payment has not been recovered,
the Secretary of State shall be entitled to recover the amount of any payment which he would not have made or any sum which he would have received but for the misrepresentation or failure to disclose."
By subsection 11(aa), it is provided that the section applies to a jobseeker's allowance.
The following features of section 71(1) are clear and not in dispute:
(1) Before any benefit can be recovered it is necessary for the Secretary of State to make a determination to that effect.
(2) Before a determination can be made it is necessary for there to have been a misrepresentation of, or a failure to disclose, a material fact, in consequence of which an overpayment of benefit has been made.
(3) Where a determination has been made the Secretary of State is not obliged to recover the amount of the overpayment; he is "entitled" to do so.
Two further provisions of the Social Security legislation should be mentioned. First, the effect of section 187 of the 1992 Act is that entitlement to benefit does not pass to the trustee in bankruptcy of a recipient of benefit. Second, section 12 of the Social Security Act 1998 gives a right of appeal to a Social Security Appeal Tribunal against a determination under section 71(1).
The statutory provisions - insolvency
That being the state of affairs under the Social Security legislation, it is now necessary to refer to section 382 of the 1986 Act which, so far as material, provides:
"(1)'Bankruptcy debt', in relation to a bankrupt, means... any of the following -
(a) any debt or liability to which he is subject at the commencement of the bankruptcy,
(b) any debt or liability to which he may become subject after the commencement of the bankruptcy (including after his discharge from bankruptcy) by reason of any obligation incurred before commencement of the bankruptcy,...
(3) For the purposes of references in this Group of Parts to a debt or liability, it is immaterial whether the debt or liability is present or future, whether it is certain or contingent or whether its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion; and references in this Group of Parts to owing a debt are to be read accordingly.
(4) In this Group of Parts, except in so far as the context otherwise requires, 'liability' means (subject to subsection (3) above) a liability to pay money or money's worth, including any liability under an enactment, any liability for breach of trust, any liability in contract, tort or bailment and any liability arising out of an obligation to make restitution."
Section 281(1) of the 1986 Act provides:
"Subject as follows, where a bankrupt is discharged, the discharge releases him from all the bankruptcy debts..."
Subsection (1) goes on to provide that the discharge has no effect on the outstanding functions of the trustee in bankruptcy or on the operation, for the purposes of the carrying out of those functions, of the material provisions of the 1986 Act. Subsections (2) to (7) provide for exceptions from the discharge, including (by subsection (3)) a provision that it does not release the bankrupt from any bankruptcy debt which he incurred in respect of any fraud. It is agreed that none of the exceptions applies to this case, so that, if section 382 applies, Mr Steele will, subject to the outcome of the subsidiary question, have been discharged from liability to repay the amount of the overpayment.
The principal question
It is a requirement of subsection (1) of section 382 that the debt or liability should be one to which the bankrupt is subject at the commencement of the bankruptcy. Subsection (3) then provides that it is immaterial (amongst other things) whether the debt or liability is present or future or whether it is certain or contingent; subsection (4) that "liability" means (subject to subsection (3)) a liability to pay money or money's worth, including any liability under an enactment. It is not suggested that Mr Steele's liability at the date of the commencement of his bankruptcy was anything more than contingent. So the principal question is reduced to this: Was the amount of jobseeker's allowance which was subsequently determined to be recoverable from him a "contingent liability" of Mr Steele on 14th September 2001?
There being no definition of the expression "contingent liability" in the 1986 Act, it is necessary to resort to general principles of insolvency law to be derived from decided cases on the question. Mr Stagg, for Mr Steele, submits that, the misrepresentation having been made as part of the claim for jobseeker's allowance, Mr Steele came under an immediate liability to repay the overpaid benefit, which only needed to be crystallised by a formal decision that it was recoverable. Accordingly, he says, it was a liability which was contingent within the meaning of section 382(3), the contingency being the issuing of a formal decision by the Secretary of State. That was the view of Gibbs J who said (para 49):
"In my judgment, the liability to repay on the part of the claimant is a liability which has already arisen. In that sense it can be contrasted with a liability to pay costs which arises in future. Only the extent of enforcement of the liability and the method of enforcement are to be determined by the [Secretary of State] as actual or potential creditor of the claimant."
The contrast made by the judge between the present case and one where there is a potential liability to pay costs was occasioned by the reliance placed by Mr Kolinsky, for the Secretary of State, on the decision of this court in Glenister v Rowe [2000] Ch 76, a decision which must be considered with some care. There Mr Glenister had acted as Mrs Rowe's solicitor, and in 1985 she began proceedings against him for alleged negligence and breach of trust. In June 1991 the proceedings were struck out in the High Court and Mrs Rowe was ordered to pay the costs. On 29th July 1991 Mrs Rowe lodged an appeal against that order. On 24th June 1992 Mr Glenister was made bankrupt. On 24th June 1995 Mr Glenister was discharged from his bankruptcy. On 25th July 1995 the Court of Appeal allowed Mrs Rowe's appeal and ordered her costs to be paid by Mr Glenister up to 8th June 1992 (that was not a significant date). Those costs were later taxed and made the subject of a statutory demand which Mr Glenister sought to set aside. It was held by this court (Butler-Sloss, Thorpe and Mummery LJJ) that the costs which were the subject of the order made on 25th July 1995 were not a contingent liability of Mr Glenister at the date of his bankruptcy on 24th June 1992. The statutory demand was held to be good.
In giving the leading judgment, Mummery LJ examined the earlier authorities, both on costs and in other contexts. In the latter category the principal authority referred to was Re Sutherland Deceased [1963] AC 235, where the House of Lords, by a majority of three to two, held that, for the purposes of section 50(1) of the Finance Act 1940 (a provision relating to the value of a deceased's estate for the purposes of the charge to estate duty under section 55 of that Act)) an existing legal liability was not essential to the creation of a contingent liability. That decision was much relied on by counsel for Mr Glenister. My impression is that Mummery LJ, at any rate for insolvency purposes, preferred the dissenting judgment of Lord Hodson, from which he read a passage at p.83D. But whether that be right or wrong, at p.84F Mummery LJ dealt with Re Sutherland Deceased in this way:
"(4) Even if, as Mr Arnold forcefully contends on the authority of Re Sutherland Deceased, a contingent liability can exist for insolvency purposes without any existing or underlying obligation, the discretionary nature of the court's power to order costs indicates that there is no liability, contingent or otherwise, in the absence of a court order."
Whether or not there be a conflict between Re Sutherland Deceased and Glenister v Rowe (as to which I express no opinion), it is plain that, in an insolvency case, we are bound by the latter decision.
Earlier, at [2000] Ch p.84A, Mummery LJ had reached the conclusion that the claim for costs of Mrs Rowe was not a contingent liability of Mr Glenister at the date of his bankruptcy. His first three reasons for reaching that conclusion were expressed as follows:
"(1) Costs of legal proceedings are in the discretion of the court. Until an order for payment of costs is made there is no obligation or liability to pay them and there is no right to recover them.
(2) Once legal proceedings have been commenced there is always a possibility or a risk that an order for costs may be made against a party and, in certain circumstances, even against a non-party or the representative of a party. I would accept that an order for costs is a 'contingency' which may or may not happen at some stage during or at the conclusion of the proceedings.
(3) The fact that an order for costs (a) creates an obligation to pay money and (b) is a contingency in legal proceedings is not sufficient, however, to make a claim that the court should exercise its discretion to make such an order a 'contingent liability' of the person against whom such an order may ultimately be made. It is accepted that before an order is made there is no present liability to pay. Nor can there be a future liability: there is no certainty that the court will exercise its discretion to make such an order. If, as some of the authorities hold, a contingent liability must arise out of an existing or underlying liability, no such liability can exist simply by reason of a claim for costs made in a writ, summons, application or notice of appeal to the judge or to the Court of Appeal."
At p.82D Thorpe LJ said:
"In my judgement Mr Arnold's endeavour to uphold the judge founders on his inability to distinguish between liability and risk of liability. Of course when his client issued his strike-out application he exposed himself to the risk of a liability for costs contingent on the future exercise of the court's discretion when determining the pending application. The element of contingency is certainly satisfied but, in my judgment, the element of liability is not. The future exercise of the court's discretion might eliminate that risk of liability. Equally it might elevate the risk of liability into an actual liability, either present, in diem, or subject to taxation. This essential distinction between incurring a liability and exposing oneself to the risk of liability should not be undermined."
In my judgment the reasoning of Mummery and Thorpe LJJ in Glenister v Rowe (with which Butler-Sloss LJ agreed) is equally applicable to the present case. Until the Secretary of State had made his determination under section 71(1) Mr Steele was under no obligation or liability to repay the overpaid benefit. Since it was necessary, before the determination was made, for the Secretary of State to be satisfied that there had been a misrepresentation of a material fact in consequence of which the overpayment had been made, it is impossible to treat the determination as being a mere formality. To adapt the words of Mummery LJ, on 14th September 2001 there was no present liability to pay, nor, since there was no certainly that the determination would be made, could there be a future liability. I must respectfully disagree with the judge's view that it was only the extent of the enforcement of the liability and the method of enforcement that were to be determined.
Mr Stagg has further submitted that the Secretary of State, being a party interested in the outcome of the determination, is in a different position from the court in exercising its discretion as to costs. I am unable to see why that should be a material distinction. Other considerations apart, a claimant against whom a determination is made has a right of appeal to an independent appeal tribunal which decides the case for itself on the material before it.
Mr Stagg has advanced an alternative submission in relation to the principal question. He says that Mr Steele was under a common law obligation to make repayment of the overpaid benefit by way of restitution as soon as he was paid it. Accordingly, Mr Stagg submits that Mr Steele was under an "obligation incurred before the commencement of the bankruptcy" within section 382(1)(b) of the 1986 Act. This submission was based on a misunderstanding of something which was said by myself (Millet LJ expressed himself in similar terms) in Chief Adjudication Officer v Sherriff (4th May 1995) Ref CIF/545/1992. The main question in that case was whether the claimant had had the necessary mental capacity to make a claim. At p.5 I said:
"The claim and the misrepresentation being indivisible, if the claimant lacked the capacity to make a misrepresentation, she lacked the capacity to make the claim. In that event benefit was paid to her in the mistaken belief that a claim that had not been made had been made and, there being no power to pay without a claim, is recoverable by the Secretary of State, not under section [71(1)] but on ordinary principles of restitution."
Millet LJ spoke to the same effect at p.7. It is clear that our observations were directed simply to the case where the benefit is paid without a claim having been made. Once a claim is made, the machinery of section 71 is invoked and there is no room for recovery at common law, whether by way of restitution or otherwise. Mr Stagg's alternative submission must be rejected.
For these reasons I would decide the principal question in favour of the Secretary of State. That makes it unnecessary to consider a further possible argument, by which I have been much attracted, to the effect that the absence of an obligation on the Secretary of State to recover the amount of the overpayment, once a determination has been made, is in any event decisive of the principal question. In this connection it is clear from the observations of Sedley LJ in the recent case of B v Secretary of State for Work and Pensions (20th July 2005) [2005] EWCA Civ 929, at paras. 41 to 43, that the discretion not to enforce recovery is independent of the determination, real and important. However, Mr Kolinsky was not disposed to advance this argument as a second string to his bow and I therefore express no view on it.
The subsidiary question
Had the liability to repay the overpayment been held to be a bankruptcy debt within section 382 of the 1986 Act, it would have been necessary to decide whether, by virtue of section 281(1), the discharge of Mr Steele's bankruptcy on 14th September 2003 had the effect of precluding the Secretary of State's recovery of the overpayment by means of deductions from Mr Steele's incapacity benefit. Having now held that the liability was not a bankruptcy debt, I prefer to express no opinion on that question.
Conclusion
I would allow the appeal, discharge the judge's order and reinstate the Secretary of State's decision of 19th November 2003.
LADY JUSTICE ARDEN: Section 71(1) of the Social Security Administration Act 1992, set out in paragraph 5 of the judgment of Sir Martin Nourse, creates a self-standing remedy whereby, subject to the satisfaction of a number of conditions, the Secretary of State can recover overpaid jobseeker's allowance. The question on this appeal is whether a person who meets those conditions but in relation to whom, as at the date of his bankruptcy, the Secretary of State has not yet made a determination under section 71(1), is subject to contingent liability in respect of the claim of the Secretary of State for the purposes of section 382(1) and (2) of the Insolvency Act 1986. At that date the Secretary of State is not entitled to recover any sum from the debtor, and therefore there is no legal obligation on him.
As Sir Martin Nourse has explained, in Re Sutherland deceased, Winter v IRV [1963] AC 235, the House of Lords by a majority of three to two held that, for the purposes of section 50(1) of the Finance Act 1940, an existing legal liability was not essential to the creation of a contingent liability. In the words of Lord Reid, for instance, a contingent liability "is a liability which, by reason of something done by the person bound, will necessarily come into being if one or more certain events occur or do not occur" (page 249). The holding of the majority gives a very wide meaning to contingent debt. It does not follow, however, that the concept of contingent liability has the same meaning for all purposes. It is not a term of art. Its meaning depends on the context. Thus, for example, for the purposes of the statutory accounts of a company, provision must be made not simply for those liabilities for which there is an existing liability, but also for those liabilities which are "likely to be incurred" (Companies Act 1985, schedule 4, para 89). Accordingly a manufacturer of goods may need to set up a provision in its accounts for claims by ultimate consumers for defective products which it expects to receive, even though this provision may exceed the amount of claims which have actually been made or arisen, out of products supplied in the relevant period, by the date on which the accounts are approved.
This appeal, however, concerns a very different statute from that under consideration in Re Sutherland. We are concerned with section 382 of the Insolvency Act 1986. If a liability may be described as a contingent debt for the purposes of section 382 even though at the date of the bankruptcy order there is no legal obligation, then the range of liabilities which are provable in a bankruptcy is enlarged. Such liabilities would include the case where a party is exposed to a risk of an order for costs because he is involved in litigation but has not yet become subject to a liability to pay costs because the court has not made an order for costs against him. This was the situation in Glenister v Rowe [2000] Ch 76, where, as Sir Martin Nourse has explained, this Court held that the risk of an order for costs did not give rise to a contingent liability for the purposes of section 382, the very provision with which we are concerned on this appeal.
This narrower meaning of contingent liability is also applied for the purposes of deciding who is a contingent creditor who may apply to the court for a winding up order against a company. The meaning of this expression as used in a statutory predecessor of the current section, namely section 224(1) of the Insolvency Act 1986 (the predecessor section being section 224(1) of the Companies Act 1948), considered by Pennycuick J in Re William Hockley Limited [1962] 1 WLR 555, at 558. Pennycuick J held that, although the expression "contingent creditor" was not defined in the Companies Act 1948, it denoted "a person towards whom under an existing obligation, a company may or will become subject to a present liability on the happening of some future event or some future date". This decision was applied by the High Court of Australia in Community Development Pty Ltd v Engwirda Construction Company Ltd [1969] 120 CLR (Barwick CJ, and Kitto, Taylor Windeyer & Owen JJ). This case concerned the provision of the Australian Companies Act 1961 to 1964 which, so far as material, also provides for the power of the court to make a winding up order on the application of a contingent creditor. Kitto J noted that "the importance of these words [of Pennycuick J] for present purposes lies in their insistence that there must be an existing obligation and that out of that obligation a liability on the part of the company to pay a sum of money will arise in a future event, whether it be an event that must happen or only an event that may happen."
Pennycuick J appears to have been of the opinion that the expression "contingent liability" includes the case where a company will become subject to a present liability on some future date. Likewise Kitto J appears to have been of the view that a contingent liability includes a liability to pay a sum of money on a future event which must happen. With respect to both learned judges, these liabilities would in my judgment be future or prospective liabilities, not contingent liabilities. But that point does not affect the fact that both judges considered that for there to be a contingent liability for the purposes of provisions with which they are concerned there had to be an existing legal obligation.
I agree that it follows from the authorities cited by Sir Martin Nourse that a person who may become subject to a determination under section 71(1) of the 1990 Act but who was not so subject at the date of his bankruptcy is not subject to a contingent liability for the purposes of section 382 of the Insolvency Act 1986. That conclusion is supported by a decision of Pennycuick J in Re William Hockley Ltd. I say that because the same basic rule as to proof of debt applies to both corporate and individual insolvency. That is contained in Insolvency Rule 12.3(1) which provides that:
"Subject as follows, in both winding up and bankruptcy, all claims by creditors are provable as debts against a company or, as the case may be, the bankrupt, whether they are present or future, certain or contingent, ascertained or sounding only in damages.
This basic rule thus includes contingent claims. There is an obvious relationship between section 124 of the Insolvency Act 1986 and the Insolvency Rule 12.3. A creditor with a contingent claim should be able to apply for the winding up of a company if he has a provable claim but not otherwise.
I would add that both Re William Hockley Limited and Community Development were cited in the argument of counsel in Glenister v Rowe, and a summary of that argument may be found in the judgment of Mummery LJ in that case. I would also add that I am only considering the meaning of contingent liability for the purposes of section 382 of the Insolvency Act 1986. It may well have a different meaning for the purpose of other statutory provisions or for the purposes of a particular written instrument.
I turn to a separate point. In my judgment, it is not necessary on this appeal to express a view on the question whether section 71 supersedes any remedy at common law. Mr Steele's liability under section 31 arose after the bankruptcy order was made against him. That liability cannot therefore be a bankruptcy debt which was released on his discharge from bankruptcy. In my judgment that would be the position even if there were at the date of the bankruptcy order a separate liability at common law to repay benefits overpaid; and that liability constituted a provable debt (as to which I express no view) which was released on Mr Steele's discharge or was displaced by the determination of the Secretary of State under section 71(1). In other words, if Mr Steele were to be subject at the date of his bankruptcy order to a liability at common law, and thereafter to a liability under section 71(1), I do not consider that those liabilities should be treated as a single, continuing liability for the purposes of section 281(1) of the Insolvency Act 1986. If the position were otherwise, the Secretary of State might find that the liability to him under section 71(1) had been released before he had ever made the determination.
I agree that it is not necessary to decide the subsidiary question identified by Sir Martin Nourse on which I express no view. I likewise express no view on the question considered by him as to the question whether the absence of an obligation of the Secretary of State to recover the amount of the overpayment once the determination has been made is, in any event, decisive of the principal question.
For the reasons which I have given, and subject as above, for those given by Sir Martin Nourse, I would allow this appeal.
(Appeal allowed). | 2 |
K.SABHARWAL, J. Leave granted. The appellant plaintiff filed a suit seeking specific performance of the agreement dated 1st June, 1991 executed by respondent No.1 in his favour in respect of agricultural lands. Respondent No.2 was impleaded in the suit as a proforma defendant. The execution of the agreement was admitted by respondent No.1. The suit was, however, resisted on the plea that the said agreement was number intended to be a real agreement for sale as it was executed only as a security for the loan advanced by the appellant to respondent No.1. On the pleadings of the parties the trial companyrt framed the following issues Whether defendant number1 was in need of Rs.20,000/- and in this companycern, on the demand of money from the plaintiff he had asked to execute an agreement and sale deed by way of security to the loan and the intention of both, the parties was number regarding the re-sale? Whether defendant number1 had received only Rs.20,000/- in relation to the disputed agreement deed dated 1.6.1991? Whether according to the agreement deed dated 1.6.1991 the plaintiff was always willing to execute the registered sale deed? If so its effect? Whether the plaintiff had given numberices to defendant number1 on 9.3.92, 25.5.92, 1.6.92 and 22.1.1994? Whether the agreement under dispute was made with a minor. If so, its effect? 6 a Whether the plaintiff has filed this suit against defendant number1 frivolously? If so whether defendant number1 is entitled to get companypensatory companyts from the plaintiff under section 34A CPC of amount of Rs.20,000/-? Relief and Costs. Defendant number1 did number produce any evidence before the trial companyrt. His prayer for grant of adjournment to adduce evidence was declined by the trial companyrt and the case was closed after recording the statement of the plaintiff and his witnesses. The trial companyrt on appreciation of evidence decreed the suit. In the first appeal before the High Court it was companytended that the trial companyrt had companymitted serious illegality in declining the prayer for adjournment made by defendant number1 to adduce evidence and depriving him an opportunity in that behalf. It was, therefore, submitted that the judgment and decree of the trial companyrt be set aside and the case may be remanded to the trial companyrt with direction to afford opportunity to defendant number1 to lead evidence. The grant of such an opportunity was opposed on behalf of the plaintiff who was a respondent in the appeal before the High Court. The High Court in judgment under appeal held that the defendant might have been pressurized to execute the sale agreement only as a security for recovery of the loan and also came to the companyclusion that there existed loan transaction between the parties and on the basis of these findings, the judgment and decree passed by the trial companyrt was set aside and suit dismissed. Thus, the plaintiff is in appeal before us. We have heard learned companynsel and perused the record. It was for defendant number1 to prove that the sale agreement, execution whereof was admitted by him, in fact, was number intended to be a real sale agreement and it was only a security for the loan advanced to him by the plaintiff. Defendant number1 companyld number lead any evidence as adjournment to produce the evidence was denied to him. Whether there was any pressure on defendant number1 and or the sale agreement was executed only as a security for loan, it was for him to prove. We do number wish to say anything more lest it may prejudice the case of any of the parties. As earlier numbericed, defendant number1 in his appeal before the High Court sought remand of the suit to the trial companyrt for an opportunity to lead evidence. On the facts and circumstances of the case, the relief that companyld be given to defendant number1 was to grant an opportunity to him to lead evidence before the trial companyrt instead of recording a finding as above without any evidence and on that basis dismissing the suit. | 3 |
Judgment of the Court (First Chamber) of 12 November 1981. - Marco Airola v Commission of the European Communities. - Officials - Rate of exchanage for calculating remuneration. - Case 72/80.
European Court reports 1981 Page 02717
Summary
Parties
Subject of the case
Grounds
Decision on costs
Operative part
Keywords
OFFICIALS - REMUNERATION - ALLOWANCE COMPENSATING FOR THE SEPARATION ALLOWANCE PAID PRIOR TO THE STAFF REGULATIONS - PAYMENT OF A CURRENCY OTHER THAN THE BELGIAN FRANC - APPLICATION OF UPDATED EXCHANGE RATES - INAPPLICABILITY OF WEIGHTINGS
( STAFF REGULATIONS OF OFFICIALS , ARTS 63 , 64 AND 106 )
Summary
ARTICLE 106 OF THE STAFF REGULATIONS MUST BE UNDERSTOOD AS MEANING THAT IT ENTITLES AN OFFICIAL TO RECEIVE A SEPARATION ALLOWANCE THE AMOUNT OF WHICH , EXPRESSED IN BELGIAN FRANCS , HAS BEEN FROZEN AT THE 1961 LEVEL . THAT AMOUNT MUST BE CALCULATED IN THE NATIONAL CURRENCY OF THE PLACE WHERE AN OFFICIAL IS EMPLOYED AT THE RATE FIXED IN ARTICLE 63 OF THE STAFF REGULATIONS AS IN FORCE WHEN THE ALLOWANCE HAS TO BE PAID . THE WEIGHTING REFERRED TO IN ARTICLE 64 OF THE STAFF REGULATIONS DOES NOT APPLY TO THAT ALLOWANCE .
Parties
IN CASE 72/80
MARCO AIROLA , RESIDING AT ANGERA ( VARESE ), ITALY , AN OFFICIAL OF THE COMMISSION OF THE EUROPEAN COMMUNITIES EMPLOYED AT THE JOINT RESEARCH CENTRE AT ISPRA , REPRESENTED BY CESARE RIBOLZI OF THE MILAN BAR , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF VICTOR BIEL , ADVOCATE , 18A RUE DES GLACIS ,
APPLICANT ,
V
COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY ORESTE MONTALTO , A MEMBER OF ITS LEGAL DEPARTMENT , ACTING AS AGENT , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE JEAN MONNET BUILDING , KIRCHBERG ,
DEFENDANT ,
Subject of the case
APPLICATION IN THE TERMS SET OUT IN THE PLEADINGS ,
Grounds
1 BY APPLICATION LODGED AT THE COURT REGISTRY ON 7 MARCH 1980 PURSUANT TO ARTICLE 91 OF THE STAFF REGULATIONS OF OFFICIALS , THE APPLICANT , MR AIROLA , AN OFFICIAL OF THE COMMISSION EMPLOYED AT THE JOINT RESEARCH CENTRE AT ISPRA IN ITALY , BROUGHT AN ACTION AGAINST THE COMMISSION OF THE EUROPEAN COMMUNITIES IN WHICH HE ASKS THE COURT TO :
( 1 ) ANNUL THE DECISION OF 21 NOVEMBER 1979 WHEREBY THE COMMISSION REJECTED THE COMPLAINT SUBMITTED BY THE APPLICANT IN SO FAR AS THAT DECISION INFRINGES ARTICLE 106 OF THE STAFF REGULATIONS AND BREACHES GENERAL PRINCIPLES GOVERNING THE APPLICATION OF SECONDARY COMMUNITY LAW ( THE PRINCIPLES OF NON-DISCRIMINATION , OF PROTECTION OF ACQUIRED RIGHTS AND OF GOOD FAITH );
( 2)DECLARE UNLAWFUL , ON THE FOREGOING GROUNDS THE REDUCTION OCCURRING AS FROM THE PAYMENT OF THE REMUNERATION FOR APRIL 1979 IN THE BASIC AMOUNT IN BELGIAN FRANCS OF THE ALLOWANCE DUE TO THE APPLICANT UNDER ARTICLE 106 OF THE STAFF REGULATIONS ;
( 3)DECLARE , IN THE EXERCISE OF ITS JURISDICTION TO DECIDE THE SUBSTANCE OF THE MATTER , THAT THE APPLICANT IS ENTITLED TO RETAIN THE SAID AMOUNT UNALTERED AND TO HAVE THE UPDATED EXCHANGE RATE OR , ALTERNATIVELY , THE EXCHANGE RATE RESULTING FROM THE COMBINED PROVISIONS OF REGULATIONS NOS 3085/78 AND 3086/78 APPLIED TO IT WHEN IT IS CONVERTED ;
( 4)DECLARE , FURTHER , THAT , PURSUANT TO THE ADMINISTRATIVE PROVISIONS OF 21 JANUARY 1976 , THE APPLICANT IS ENTITLED TO ARREARS OF PAYMENTS ARISING FROM THE APPLICATION , FROM NO LATER THAN 15 FEBRUARY 1976 , OF THE UPDATED RATE OF EXCHANGE TO THE ALLOWANCE IN QUESTION .
2 IN THE VERSION IN FORCE UNTIL THE END OF 1978 , ARTICLES 63 AND 64 OF THE STAFF REGULATIONS OF OFFICIALS PROVIDED THAT : ' ' AN OFFICIAL ' S REMUNERATION SHALL BE EXPRESSED IN BELGIAN FRANCS . IT SHALL BE PAID IN THE CURRENCY OF THE COUNTRY IN WHICH THE OFFICIAL PERFORMS HIS DUTIES . REMUNERATION PAID IN A CURRENCY OTHER THAN BELGIAN FRANCS SHALL BE CALCULATED ON THE BASIS OF THE PAR VALUES ACCEPTED BY THE INTERNATIONAL MONETARY FUND ON 1 JANUARY 1965 . AN OFFICIAL ' S REMUNERATION EXPRESSED IN BELGIAN FRANCS SHALL . . . BE WEIGHTED AT A RATE ABOVE , BELOW OR EQUAL TO 100% DEPENDING ON LIVING CONDITIONS IN THE VARIOUS PLACES OF EMPLOYMENT . . . THE WEIGHTING APPLICABLE TO THE REMUNERATION OF OFFICIALS EMPLOYED AT THE PROVISIONAL SEATS OF THE COMMUNITIES SHALL BE EQUAL TO 100% AS AT 1 JANUARY 1962 . ' '
3 ON 21 DECEMBER 1978 THE COUNCIL ADOPTED REGULATION ( EURATOM , ECSC , EEC ) NO 3085/78 ( OFFICIAL JOURNAL L 369 , P . 6 ). ARTICLE 1 THEREOF PROVIDES THAT ARTICLE 63 OF THE STAFF REGULATIONS IS TO BE REPLACED BY THE FOLLOWING PROVISION :
' ' OFFICIALS ' REMUNERATION SHALL BE EXPRESSED IN BELGIAN FRANCS . IT SHALL BE PAID IN THE CURRENCY OF THE COUNTRY IN WHICH THE OFFICIAL PERFORMS HIS DUTIES .
REMUNERATION PAID IN A CURRENCY OTHER THAN BELGIAN FRANCS SHALL BE CALCULATED ON THE BASIS OF THE EXCHANGE RATES USED FOR THE IMPLEMENTATION OF THE GENERAL BUDGET OF THE EUROPEAN COMMUNITIES ON 1 JULY 1978 .
THIS DATE SHALL BE CHANGED , AT THE TIME OF THE ANNUAL REVIEW OF REMUNERATION PROVIDED FOR IN ARTICLE 65 , BY THE COUNCIL ACTING BY A QUALIFIED MAJORITY UPON A PROPOSAL FROM THE COMMISSION AS PROVIDED IN THE FIRST INDENT OF THE SECOND SUBPARAGRAPH OF ARTICLES 148 ( 2 ) OF THE EEC TREATY AND OF 118 ( 2 ) OF THE EURATOM TREATY .
WITHOUT PREJUDICE TO THE APPLICATION OF ARTICLES 64 AND 65 , THE WEIGHTINGS FIXED PURSUANT TO THESE ARTICLES SHALL , WHENEVER THE ABOVE DATE IS CHANGED , BE ADJUSTED BY THE COUNCIL , WHICH , ACTING IN ACCORDANCE WITH THE PROCEDURE MENTIONED IN THE THIRD PARAGRAPH , SHALL CORRECT THE EFFECT OF THE VARIATION IN THE BELGIAN FRANC WITH RESPECT TO THE RATES REFERRED TO IN THE SECOND PARAGRAPH . ' '
ARTICLE 4 OF THE REGULATIONS PROVIDES THAT THE REGULATION IS TO ENTER INTO FORCE ON 1 JANUARY 1979 AND THAT IT IS TO APPLY FROM 1 APRIL 1979 .
4 ON 21 DECEMBER 1978 THE COUNCIL ALSO ADOPTED REGULATION ( EURATOM , ECSC , EEC ) NO 3086/78 ADJUSTING THE WEIGHTINGS APPLICABLE TO THE REMUNERATION AND PENSIONS OF OFFICIALS AND OTHER SERVANTS OF THE EUROPEAN COMMUNITIES FOLLOWING THE AMENDMENT OF THE PROVISIONS OF THE STAFF REGULATIONS CONCERNING THE MONETARY PARITIES TO BE USED IN IMPLEMENTING THE STAFF REGULATIONS . ARTICLE 1 ( 1 ) OF THE REGULATION FIXES AMONGST OTHER THINGS THE WEIGHTING APPLICABLE TO THE REMUNERATION OF OFFICIALS AND OTHER SERVANTS .
5 THE RULES IN FORCE BEFORE 1 JANUARY 1962 PRIOR TO THE ADOPTION OF THE STAFF REGULATIONS PROVIDED FOR A SO-CALLED ' ' SEPARATION ' ' ALLOWANCE EQUAL TO 20% OF THE BASIC SALARY TO BE PAID TO OFFICIALS WHO COULD PROVE THAT THEIR PLACE OF EMPLOYMENT WAS MORE THAN 70 KILOMETRES ( 25 KILOMETRES UNDER THE STAFF REGULATIONS OF THE EUROPEAN COAL AND STEEL COMMUNITY OF 1956 ) FROM THEIR PLACE OF ORIGIN . NATIONALITY WAS NOT TAKEN INTO CONSIDERATION .
6 THE STAFF REGULATIONS WHICH ENTERED INTO FORCE ON 1 JANUARY 1962 REPLACED THAT ALLOWANCE BY THE ' ' EXPATRIATION ' ' ALLOWANCE , SO-CALLED BECAUSE AN OFFICIAL HAS TO WORK IN A MEMBER STATE OTHER THAN THAT OF WHICH HE IS A NATIONAL . AS A TRANSITIONAL PROVISION ARTICLE 106 PROVIDED THAT :
' ' ANY OFFICIAL IN RECEIPT OF A SEPARATION ALLOWANCE BEFORE THESE REGULATIONS WERE APPLIED WHO DOES NOT QUALIFY FOR AN EXPATRIATION ALLOWANCE UNDER ARTICLE 4 OF ANNEX VII SHALL BE ALLOWED THE SAME AMOUNT AS THAT WHICH HE WOULD HAVE RECEIVED BY WAY OF SEPARATION ALLOWANCE UNDER THE SCALE OF REMUNERATION EXISTING BEFORE THE STAFF REGULATIONS ENTERED INTO FORCE . SUCH AMOUNT SHALL NOT IN FUTURE BE VARIED FOR ANY REASON WHATEVER , SAVE WHERE THE OFFICIAL QUALIFIES FOR AN EXPATRIATION ALLOWANCE BY SATISFYING THE REQUIREMENTS THEREFOR . ' '
7 ARTICLE 106 WAS APPLIED AFTER MAY 1974 AND WITH RETROACTIVE EFFECT FROM 1 FEBRUARY 1973 TO OFFICIALS WHO HAD BEEN RECRUITED BETWEEN 19 JUNE 1960 AND 31 DECEMBER 1961 BY THE FORMER COMMISSION OF THE EUROPEAN ATOMIC ENERGY COMMUNITY AND HAD NEVER RECEIVED THE SEPARATION ALLOWANCE . BY LETTER OF 14 MARCH 1974 OFFICIALS IN THAT CATEGORY BELONGING TO THE JOINT RESEARCH CENTRE WERE SENT A CIRCULAR IN WHICH THE AMOUNT OF THE SEPARATION ALLOWANCE WAS EXPRESSED IN BELGIAN FRANCS ON THE BASIS OF THE BASIC SALARY , LIKEWISE EXPRESSED IN BELGIAN FRANCS , SHOWN IN THEIR LETTERS OF EMPLOYMENT .
8 THE ALLOWANCE IN QUESTION CONTINUED TO BE PAID TO OFFICIALS ON THE BASIS OF THE EXCHANGE RATE OF 1 BELGIAN FRANC TO 12.50 ITALIAN LIRE . ACCORDING TO THE APPLICANT AN ADMINISTRATIVE DECISION TAKEN IN JANUARY 1976 BUT WHICH WAS NEVER BROUGHT TO THE NOTICE OF THE STAFF , PROVIDED FOR THAT ALLOWANCE , AMONGST OTHERS , TO BE PAID ON THE BASIS OF UPDATED EXCHANGE RATES . HOWEVER , THAT DECISION WAS NEVER APPLIED TO THE SEPARATION ALLOWANCE BECAUSE , ACCORDING TO THE COMMISSION , AFTER A CHECK OF THE VARIOUS BUDGETARY ITEMS IT CONSIDERED THAT THE DECISION SHOULD NOT BE APPLIED TO THAT ALLOWANCE ON THE GROUND THAT ARTICLE 106 OF THE STAFF REGULATIONS PROVIDES THAT IT MAY NOT BE VARIED FOR ANY REASON WHATEVER .
9 AFTER THE ENTRY INTO FORCE OF REGULATIONS NOS 3085 AND 3086/78 THE APPLICANT FOUND THAT IN HIS SALARY STATEMENT FOR APRIL 1979 THE AMOUNT EXPRESSED IN BELGIAN FRANCS WAS CONSIDERABLY REDUCED WHILST THAT PAID IN ITALIAN LIRE REMAINED UNCHANGED .
10 BY LETTER OF 27 JUNE 1979 HE CONSEQUENTLY SUBMITTED TO THE COMMISSION A COMPLAINT UNDER ARTICLE 90 ( 2 ) OF THE STAFF REGULATIONS AGAINST THE ' ' REDUCTION IN REAL TERMS ' ' OF THE ALLOWANCE . HE COMPLAINED NOT ONLY OF THE REDUCTION OF THE AMOUNT IN BELGIAN FRANCS WHICH WAS APPARENT FROM HIS SALARY STATEMENT FOR APRIL 1979 BUT ALSO OF THE NON-APPLICATION OF THE ADMINISTRATIVE DECISION OF 1976 . THE COMMISSION REJECTED THAT COMPLAINT AND THE APPLICANT BROUGHT THIS APPLICATION .
11 THE APPLICANT ' S MAIN CLAIM , RELATING TO THE PERIOD BEGINNING ON 1 APRIL 1979 , SHOULD BE EXAMINED FIRST . HE MAINTAINS THAT THE AMOUNT OF THE SEPARATION ALLOWANCE SHOULD BE PAID AT THE UPDATED EXCHANGE RATE FROM APRIL 1979 . THAT , HE CLAIMS , FOLLOWS FROM ARTICLE 63 OF THE STAFF REGULATIONS AS IT NOW STANDS . THE COMMISSION CONTESTS THAT ARGUMENT . IT MAINTAINS THAT UNDER ARTICLE 106 OF THE STAFF REGULATIONS AN OFFICIAL MAY RECEIVE ONLY THE AMOUNT WHICH HE WOULD HAVE RECEIVED BY WAY OF SEPARATION ALLOWANCE UNDER THE SCALE OF REMUNERATION EXISTING PRIOR TO THE ENTRY INTO FORCE OF THE STAFF REGULATIONS . THAT AMOUNT MAY NOT IN FUTURE BE VARIED FOR ANY REASON WHATEVER . IT FOLLOWS THAT THE AMOUNT OF THE ALLOWANCE IN THE NATIONAL CURRENCY OF THE PLACE WHERE OFFICIALS ARE EMPLOYED WAS FIXED BY APPLYING THE EXCHANGE RATE IN 1961 AND THAT THIS AMOUNT MAY NOT BE CHANGED .
12 THE COMMISSION ' S ARGUMENT CANNOT BE ACCEPTED . IT IS COMMON GROUND THAT OFFICIALS ' REMUNERATION WAS EXPRESSED IN BELGIAN FRANCS BEFORE THE STAFF REGULATIONS WERE ADOPTED AND THEREAFTER THE AMOUNT OF REMUNERATION OF EACH OFFICIAL HAS BEEN FIXED IN BELGIAN FRANCS , EVEN IF THE REMUNERATION IS PAID IN NATIONAL CURRENCY . ARTICLE 106 OF THE STAFF REGULATIONS MUST THEREFORE BE UNDERSTOOD AS MEANING THAT IT ENTITLES AN OFFICIAL TO RECEIVE A SEPARATION ALLOWANCE THE AMOUNT OF WHICH , EXPRESSED IN BELGIAN FRANCS , HAS BEEN FROZEN AT THE 1961 LEVEL . THAT AMOUNT MUST BE CALCULATED IN THE NATIONAL CURRENCY OF THE PLACE WHERE AN OFFICIAL IS EMPLOYED AT THE RATE FIXED IN ARTICLE 63 OF THE STAFF REGULATIONS AS IN FORCE WHEN THE ALLOWANCE HAS TO BE PAID .
13 IT FOLLOWS THAT THE APPLICANT IS ENTITLED TO THE DIFFERENCE BETWEEN THE AMOUNT PAID TO HIM BY THE COMMISSION AFTER 1 APRIL 1979 BY WAY OF SEPARATION ALLOWANCE AND THE AMOUNT WHICH WOULD BE OBTAINED FROM THE APPLICATION OF THE UPDATED EXCHANGE RATE AND TO THAT EXTENT THE COMMISSION ' S DECISION MUST BE ANNULLED .
14 THE SEPARATION ALLOWANCE , TO WHICH THE WEIGHTING REFERRED TO IN ARTICLE 64 OF THE STAFF REGULATIONS HAS NEVER BEEN APPLIED , MUST NOT BE WEIGHTED EITHER AFTER THE ADOPTION OF THE UPDATED RATES .
15 AS TO THE APPLICANT ' S CLAIM FOR A RULING THAT UPDATED EXCHANGE RATES MUST BE APPLIED TO THE ALLOWANCE DURING THE PERIOD FROM 1 JANUARY 1976 TO 31 MARCH 1979 , A STUDY OF THE FILE ON THE CASE LEADS TO A DIFFERENT CONCLUSION .
16 ON 6 NOVEMBER 1974 THE COMMISSION TOOK THE DECISION TO APPLY AS FROM 1 NOVEMBER 1974 UPDATED EXCHANGE RATES TO THE REFUND OF CERTAIN EXPENSES INCURRED BY OFFICIALS OF THE COMMISSION . THAT DECISION DID NOT CONCERN THE SEPARATION ALLOWANCE . BY AN INTERNAL INSTRUCTION FROM THE DIRECTOR OF PERSONNEL , WHICH WAS APPROVED ON 21 JANUARY 1976 BY THE DIRECTOR-GENERAL FOR PERSONNEL AND ADMINISTRATION , THE COMMISSION ' S DECISION WAS EXTENDED AS FROM 1 JANUARY 1976 ' ' TO ALL EMOLUMENTS PAID BY THE COMMISSION OR TAKEN INTO ACCOUNT IN ORDER TO PAY AN AMOUNT ON THE BASIS OF THE STAFF REGULATIONS OF OFFICIALS OR THE CONDITIONS OF EMPLOYMENT OF OTHER SERVANTS OF THE COMMUNITIES , WHERE THOSE AMOUNTS ARE NOT WEIGHTED UNDER ARTICLE 64 OF THE STAFF REGULATIONS ' ' EXCEPT FOR SOME SPECIFIC AMOUNTS EXPRESSLY REFERRED TO IN THE SECOND PARAGRAPH OF THE INSTRUCTION .
17 FOLLOWING THAT INSTRUCTION THE OFFICERS OF THE COMMISSION DREW UP A LIST OF THE BUDGETARY ITEMS TO WHICH IT HAD TO BE APPLIED . AMONGST THOSE ITEMS THERE WAS MENTION OF ALLOWANCES IN ACCORDANCE WITH ART . 106 , ART . 95 , 96 ECSC STAFF REGULATIONS . SHORTLY AFTERWARDS , AT ANY RATE BEFORE PAYMENTS WERE ACTUALLY MADE PURSUANT TO THE INSTRUCTION , A CHECK WAS CARRIED OUT ON THE VARIOUS ITEMS COMPRISED IN THAT LIST . IT WAS ASCERTAINED THAT THE SEPARATION ALLOWANCE WAS GOVERNED BY ARTICLE 63 OF THE STAFF REGULATIONS WITH THE RESULT THAT THE INSTRUCTION WAS NEVER APPLIED WITH RESPECT TO THAT ALLOWANCE .
18 IT IS COMMON GROUND THAT WHATEVER ITS LEGAL VALUE MAY BE THE INSTRUCTION WAS NEVER BROUGHT TO THE NOTICE OF STAFF , WHICH THE APPLICANT HIMSELF ACCEPTS . IT WAS NOT UNTIL HE MADE HIS COMPLAINT ON 27 JUNE 1979 THAT HE FIRST ASKED FOR UPDATED EXCHANGE RATES TO BE APPLIED IN RESPECT OF THE PERIOD PRIOR TO 1 APRIL 1979 .
19 IT FOLLOWS FROM THE CONSIDERATIONS SET FORTH ABOVE THAT THE ALLOWANCE IN QUESTION MUST BE REGARDED AS AN AMOUNT EXPRESSED IN BELGIAN FRANCS , BUT WHICH , PURSUANT TO ARTICLE 63 OF THE STAFF REGULATIONS , MUST BE PAID IN THE NATIONAL CURRENCY OF THE PLACE AT WHICH AN OFFICIAL IS EMPLOYED AT THE RATE APPLYING ON THE DATE ON WHICH THE ALLOWANCE HAS TO BE PAID . THE COMMISSION THEREFORE RIGHTLY DECIDED TO APPLY UNTIL 1 APRIL 1979 THE EXCHANGE RATE REFERRED TO IN ARTICLE 63 OF THE OLD VERSION OF THE STAFF REGULATIONS . IT FOLLOWS THAT IN SO FAR AS THE APPLICANT ' S CLAIM RELATES TO THE PERIOD PRIOR TO 1 APRIL 1979 IT MUST BE DISMISSED .
Decision on costs
20 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS .
Operative part
ON THOSE GROUNDS ,
THE COURT ( FIRST CHAMBER )
HEREBY :
1 . ANNULS THE COMMISSION ' S DECISION OF 21 NOVEMBER 1979 REJECTING THE APPLICANT ' S COMPLAINT CONCERNING THE EXCHANGE RATE TO BE APPLIED FOR THE PAYMENT OF THE SEPARATION ALLOWANCE FROM 1 APRIL 1979 .
2.ORDERS THE COMMISSION TO PAY TO THE APPLICANT THE DIFFERENCE BETWEEN THE AMOUNTS PAID FROM 1 APRIL 1979 BY WAY OF SEPARATION ALLOWANCE AND THOSE WHICH WOULD HAVE BEEN OBTAINED FROM THE APPLICATION OF THE UPDATED EXCHANGE RATE .
3.DISMISSES THE REMAINDER OF THE APPLICATION .
4.ORDERS THE COMMISSION TO PAY THE COSTS . | 5 |
FIFTH SECTION
CASE OF LUTSENKO v. UKRAINE (No. 2)
(Application no. 29334/11)
JUDGMENT
STRASBOURG
11 June 2015
FINAL
11/09/2015
This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision.
In the case of Lutsenko v. Ukraine (no. 2),
The European Court of Human Rights (Fifth Section), sitting as a Chamber composed of:
Mark Villiger, President,Angelika Nußberger,Boštjan M. Zupančič,Ganna Yudkivska,Vincent A. De Gaetano,André Potocki,Aleš Pejchal, judges,and Claudia Westerdiek, Section Registrar,
Having deliberated in private on 12 Mai 2015,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 29334/11) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Ukrainian national, Mr Yuriy Vitaliyovych Lutsenko (“the applicant”), on 6 May 2011.
2. The applicant was represented by Ms Valentyna Telychenko, Mr Igor Fomin and Mr Arkady Buschenko, lawyers practising in Kyiv. The Ukrainian Government (“the Government”) were represented by their then Agent, Mr Nazar Kulchytskyy, from the Ministry of Justice.
3. The applicant complained, in particular, under Article 3 of the Convention, about the material conditions of his detention in the Kyiv detention facility and that the medical care he had received was inadequate. He also alleged that he had been held in a small and poorly ventilated room while waiting for the hearings, and in a metal cage during the hearings themselves.
4. On 14 February 2012 the application was communicated to the Government.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
5. The applicant, Mr Yuriy Vitaliyovych Lutsenko, is a Ukrainian national who was born in 1964.
A. Background of the case
6. The applicant was the Minister of the Interior. He occupied this post from 2005 to 2006 and from 18 December 2007 to 11 March 2010. Since 27 August 2014 he has been the leader of the Bloc of Petro Poroshenko party.
7. On 2 November 2010 the General Prosecutor’s Office (hereinafter “the GPO”) instituted criminal proceedings against the applicant and another individual, Mr P., on suspicion of abuse of office under Article 191 § 3 of the Criminal Code. On 5 November 2010 the applicant was formally charged. On the same day he gave a written obligation not to abscond.
8. On 11 December 2010 the GPO instituted another criminal case against the applicant for exceeding his official powers under Article 365 § 3 of the Criminal Code, on the ground that he had arranged for the allocation of a one-room apartment to his driver, Mr P.
9. The two criminal cases were joined together.
10. On 13 December 2010 the GPO completed the investigation in the case and formally charged the applicant with both offences, having reclassified his actions specified in the first charge under Article 191 § 5 of the Criminal Code (misappropriation, embezzlement, and conversion of property by malfeasance).
11. On 26 December 2010 the applicant was arrested and detained in the Security Service Detention Centre (Слідчий Ізолятор Служби Безпеки України).
12. On 27 December 2010 the Pechersk District Court (Печерський районний суд) (hereinafter “the Pechersk Court”) ordered that the preventive measure in respect of the applicant be changed from a written obligation not to abscond to remand in custody.
13. On 28 December 2010 the applicant was transferred to Kyiv Pre-Trial Detention Centre no. 13 (Київський Слідчий Ізолятор №13) (hereinafter “the SIZO”).
14. On 17 May 2011 the GPO submitted the applicant’s criminal case to the Pechersk Court which, on 27 February 2012, rendered a judgment sentencing the applicant to four years’ imprisonment. The case received extensive attention in both national and international media which were present at court hearings. Photographs depicting the applicant behind metal bars were published soon after the court hearings.
15. On 7 March 2012 the applicant appealed, seeking the quashing of the first-instance judgment on the ground of lack of guilt.
16. On 16 May 2012 the Kyiv Court of Appeal (Апеляційний суд міста Києва) upheld the judgment of the Pechersk Court.
17. On 31 August 2012 the applicant was transferred to Mena colony in Chernihiv Region to serve his prison sentence.
18. In a judgment of 3 April 2013 the Higher Specialised Court of Ukraine for civil and criminal cases (Вищий спеціалізований суд України з розгляду цивільних і кримінальних справ) upheld the applicant’s prison sentence slightly reducing the amount of compensation that he had to pay.
19. On 7 April 2013 the former President of Ukraine issued a decree of pardon in respect of a number of individuals, including the applicant, who was released the same day.
B. The applicant’s health and the medical care provided to him
20. Prior to his arrest the applicant was diagnosed with diabetes mellitus type 2 and chronic gastritis and pancreatitis.
21. Upon his admission to the SIZO on 28 December 2010, the applicant was examined by the head of the medical unit and a duty doctor. He underwent clinical, laboratory and X-ray examinations. On the basis of those examinations and the applicant’s anamnesis, he was diagnosed with symptomatic hypertension and it was recommended that his arterial pressure be constantly monitored. According to the applicant, the prison doctors did not pay attention to his chronic diseases which were mentioned in the medical report submitted to the Pechersk District Court and indicated orally by him on a number of occasions.
22. According to the Government, during the period from December 2010 to April 2011 the applicant was under constant supervision by doctors of the SIZO medical unit who visited him on 29, 30 and 31 December 2010, 1-9, 17 and 24 January, 10, 18 and 25 February, 1, 10 and 20 March and on 1 April 2011. During this period, no complaints were received from him and his state of health remained satisfactory. Doctors regularly measured his blood pressure and pulse rate and carried out his general examination. The applicant denied that he had not complained about problems connected with his state of health. According to him, during the three first months of his detention, he lost more than 20 kilograms, his low-grade fever and spastic stomach pain was constant.
23. Following the applicant’s complaints about the deterioration of his health, on 24 February 2011, a private medical laboratory took blood samples from him for analysis. Inflammation was diagnosed as a result. The doctor who arrived at that conclusion presumed that it was probably a mixed viral and bacterial infection. A provisional diagnosis of rheumatoid arthritis was also made. For more specific diagnoses, further specialist examinations were required.
24. On 9 March 2011 the applicant was diagnosed with arthritis by SIZO doctors.
25. On 15 March 2011 a new blood analysis showed some negative changes in the applicant’s immune system. His requests for examination by the cardiologist/rheumatologist who issued the above conclusion were without success.
26. According to the Government, on 6 and 13 April 2011 the applicant was examined by the head of the SIZO medical unit. He complained of pain in the joints. He was diagnosed with symptomatic hypertension and generalised osteoarthritis, and blood pressure monitoring was recommended.
27. On 21 April 2011 the applicant went on hunger strike in protest at his continued pre-trial detention.
28. According to the Government, between 22 April and 10 May 2011 the applicant was under daily supervision by doctors of the SIZO medical unit. From time to time he complained of dizziness and general weakness. His state of health remained satisfactory during this period.
29. On 29 April 2011 the SIZO administration placed him in a solitary-confinement cell and demonstrated forced-feeding facilities (such as handcuffs, a mouth widener and a rubber tube). Those were apparently never applied to him.
30. According to the Government, on the same day, the applicant was examined by the head of the SIZO medical unit. He complained of heart pain, which he said was worse when he made turning movements. The applicant was diagnosed with symptomatic hypertension, generalised osteoarthritis, and myositis of the left major pectoral muscle. At the same time, he informed the doctor that he had eaten no food for several days and had only had tea without sugar and coffee with sugar. An analysis of the applicant’s urine was carried out. There was a one-plus reaction for acetone. General monitoring of the applicant’s state of health, of the acetone level in his urine, and of his blood pressure was recommended.
On 1 May 2011 the applicant was examined by a panel of doctors from the State Prison Service of Ukraine (Державна пенітенціарна служба України) (hereinafter “the SPS”). He was prescribed an “anti-starvation food mixture” (semolina or oatmeal, butter, sugar, milk, eggs, boiled meat, salt, and ascorbic acid, with a total caloric content of 1,638.5 kcal) and the following medication: NaCL solution, vitamins Bl and B6, and Riboxin solution. On the same date a general blood analysis, a blood sugar-level test and a urine acetone test were carried out for the applicant - (a “three-plus” reaction was obtained). On the same date the applicant consumed 500 ml of “anti-starvation food mixture”.
On 2 May 2011 the SPS medical panel found his general state of health stable and held that positive progress was being made in overcoming dizziness and general weakness. A urine test for acetone was carried out for the applicant (a “three-plus” reaction was obtained).
On 3 May 2011, upon another examination by the SPS medical panel, a urine acetone test was carried out for the applicant. A “three-plus” reaction was obtained. On the same date the applicant consumed 400 ml of “anti-starvation food mixture”. It was recommended that he undergo further biochemical and general blood tests, a general urine analysis, a blood-sugar-level test and a urine acetone test, and also ultrasonic examinations of his abdominal cavity and kidneys. Injections of Reosorbilact solution and of glucose in solution were given to the applicant.
On 4 May 2011 the SPS medical panel saw the applicant again. He was found to have moderate diffuse changes in the liver, chronic cholecystitis and chronic pancreatitis. On the same date the applicant consumed 500 ml of “anti-starvation food mixture”. Injections of Reosorbilact solution and of glucose in solution were given to the applicant.
31. On 5 May 2011 the applicant’s wife asked the SIZO administration to carry out medical examinations of her husband in her presence. By that time, the applicant had lost about fourteen kilograms in weight. On the same day, according to the Government, the applicant was examined by the SPS medical panel. A general blood test, a blood-sugar-level test and a test of the urine for acetone were carried out at the Dila Laboratory. The test results were low-grade positive. The applicant was diagnosed with chronic cholecystitis and chronic pancreatitis. It was also found that the applicant’s state of health reflected his starvation. On the same date, the applicant refused to eat food or to undergo fluid-maintenance therapy to restore the balance of water, protein, and electrolytes in the body.
32. On 6 May 2011 the applicant was transferred to the SIZO medical unit. According to the Government, he was examined by a panel of doctors from civilian medical institutions. He was diagnosed with hypertension of the 1st degree, cardiac insufficiency, type 2 diabetes mellitus in a mild form at the compensation stage, chronic cholecystitis in unstable remission, chronic pancreatitis in unstable remission, osteoarthritis without exacerbation, disseminated osteochondrosis of the spine, and thoracic kyphosis. It was recommended that the applicant: (1) undergo an exercise electrocardiography (ECG) test and ultrasonic examination of the heart in order to exclude ischaemic heart disease; (2) take antihypertensive medication (Prestarium Combi) when the blood pressure was higher than 140/90 mm Hg; take Metoprolol in order to stop the tachycardia which occurred when the pulse rate was higher than 100 beats per minute. The applicant received this medical treatment in full.
33. According to the Government, on 7 May 2011 he was once again examined by the SPS medical panel. A check test of the urine for acetone was carried out (a “two-plus” reaction was obtained) and a general urine test was also done for the applicant. The panel confirmed the previous diagnosis. The applicant refused to consume any of the “anti-starvation food mixture” or to undergo fluid maintenance therapy.
On 8 May 2011 he was examined by a panel of doctors from Kyiv-based medical institutions of the Ministry of Health. The previous diagnosis was confirmed and it was additionally found that the applicant had chronic gastritis in unstable remission. The panel noted that the applicant’s hunger strike was significantly affecting his general state of health. Electrocardiography and echocardiography tests were carried out for the applicant. The urinary reaction for acetone was one-plus. The applicant was refusing to consume the “anti-starvation food mixture”. He was subjected to fluid-maintenance therapy with Aminoven. It was also recommended that the applicant broaden the variety of foods he ate, limiting the consumption of easily digestible carbohydrates (sugar, honey, and sweets); consistently take graduated physical activity; take Duphalac or Guttalax (to normalise bowel function) and probiotics (Lacium or Symbiter).
On 9 and 10 May 2011 the applicant was examined by the SPS medical panel. The urinary reaction for acetone was low-grade positive. He refused to consume “anti-starvation food mixture”. He was subjected to fluid-maintenance therapy with a physiological solution, vitamins Bl, B6, C, Riboxin, and Reosorbilact.
34. According to the applicant, before 10 May 2011 his medical monitoring had been limited to measuring his blood pressure and weighing him, along with a superficial examination by the SIZO doctor.
35. On 10 May 2011 he was taken to the Kyiv Clinical Emergency Hospital (Міська клінічна лікарня швидкої медичної допомоги) (hereinafter “the Emergency Hospital”). On the following day, the management of the hospital informed the investigator that the applicant was suffering from chronic pancreatitis in the aggravated stage, chronic gastroduodenitis, cardial-type neurocirculatory dystonia, and type 2 diabetes. His condition was evaluated as moderately serious.
36. On 18 May 2011 the deputy medical director of the Emergency Hospital gave additional details to the applicant’s wife as regards his health. In addition to the aforementioned diagnoses, he noted the following illnesses: chronic cholecystitis, gall bladder polyposis, autoimmune thyroiditis, euthyroidism, seborrheic dermatitis, myopia, osteochondrosis, chronic sinusitis, right-ear deafness, duodenal ulcer, gastric erosion and duodenogastric reflux.
37. On 23 May 2011 the applicant ended his hunger strike.
38. According to the Government, on 24 May 2011 he was examined by doctors of the SIZO medical unit. On the same date he ate gruel. He was also subjected to fluid-maintenance treatment with Aminoven and Pariet. Generally, although he continued to complain of general weakness, his condition improved considerably once he had ended the hunger strike.
The SIZO doctors saw the applicant also on the next day. They concluded that the applicant was suffering from the following illnesses: exacerbated chronic pancreatitis, chronic cholecystitis, gall-bladder polyposis, chronic duodenal ulcer, autoimmune thyroiditis, euthyroidism, type 2 diabetes mellitus, cardial-type neurocirculatory dystonia of medium severity, seborrheic dermatitis, cervical osteochondrosis, toxic-dyscirculatory encephalopathy of endogenic origin (degree I-II), duodenal ulcer, papillomatous gastropathy, and gastric erosions. On the same date the applicant ate gruel and drank water and carrot juice. The applicant underwent fluid-maintenance treatment and anti-ulcer treatment.
On 26 and 27 May 2011 the doctors of the SIZO medical unit confirmed the previous diagnosis. The applicant received fluid-maintenance and anti-ulcer treatment and underwent a urine test (which indicated no acetone), a blood test for sugar, and biochemical analysis of the blood. A consultation with a gastroenterologist was also scheduled for the applicant.
On 28 May 2011 the applicant was examined by a panel of doctors from civilian medical institutions. As a result of the examination, the panel found the applicant’s general state of health to be satisfactory. The applicant was diagnosed with the following conditions: peptic duodenal ulcer, post gastrointestinal haemorrhage condition, erosive gastritis, and mild post haemorrhagic anemia. It was recommended that he receive anti-ulcer treatment as an in-patient basis at a gastroenterology clinic. If it was impossible to arrange in-patient treatment for him, he would have to continue to take Pariet; again undergo a fibrogastroscopy with biopsy, a general blood test, electrolytes (potassium, phosphorus, fecal occult blood test) and eat five small meals a day, sticking to a diet with a high protein content.
39. According to the applicant, on 28 May 2011 he was examined in the SIZO and diagnosed with a duodenal ulcer in the progressing phase, gastrointestinal bleeding, erosive gastritis, and toxic-metabolic encephalopathy. Moreover, all his previously diagnosed diseases were confirmed.
40. According to the Government, on 29 May 2011 he was examined by SIZO doctors, who confirmed the previous diagnoses. He continued to receive the anti-ulcer treatment and multiple small-portion meals.
41. On 30 May 2011 the applicant underwent a urine acetone test, which revealed no acetone, a blood test for sugar, and a general blood test. The examination results confirmed the previous diagnoses.
42. On 31 May and 1 June 2011 he was examined by SIZO doctors who confirmed the previous diagnoses. Analyses of his blood and urine were carried out. He continued to receive the anti-ulcer treatment and appropriate diet.
43. On 8 June 2011 the governor of the SIZO informed the President of the Pecherskyy Court of some further diagnoses regarding the applicant’s health, established during his examination of 28 May 2011, and sought leave for him to be examined in the Emergency Hospital. According to the Government, the letter was sent to the court only on 9 June 2011.
44. In his reply of 14 June 2011 the judge of the Pechersk Court stated that the court did not object to the applicant’s being examined in a civilian hospital. A copy of this letter was sent to the Convoy Service of the Ministry of the Interior with a request for escorted transport for the applicant.
45. On 23 June 2011 the Convoy Service replied that the applicant’s medical care was the responsibility of the SIZO administration.
46. On 24 June 2011 the applicant’s wife and his legal representative made a new request to the court that he be hospitalised. They alleged that the applicant had constant stomach pain and had lost more weight, 24 kg in total. On 29 June 2011 the judge replied that the court had no objection.
47. According to the Government, from 2 June to 2 July 2011 the applicant was examined daily by SIZO doctors. In line with the instructions given following the previous examination by the medical panel, the applicant had regular clinical, biochemical, and general blood tests and urine analyses (these took place on 7, 8, 15, 18, 19, and 30 June 2011). The applicant was receiving anti-ulcer treatment, the recommended diet, and the prescribed outpatient treatment. During this period, the above-mentioned diagnoses remained valid. Furthermore, on 24 June 2011 the doctors found that his peptic duodenal ulcer had begun to cicatrise, which indicated a gradual improvement in his state of health.
48. According to the Government, the court gave its permission for the applicant’s examination at the Emergency Hospital on 14 July 2011.
49. On 15 July 2011 the applicant was examined at the Emergency Hospital. Fibrogastroscopy and ultrasonic scans were performed for the applicant. The examination revealed that he had esophageal varicose veins with 1st degree dilatation, moderate portal hypertensive gastropathy, chronic cholecystitis, gall-bladder polyposis, chronic pancreatitis, and urolithic diathesis. It was recommended that the applicant undergo a biochemical blood test, a general blood test, analyses for hepatitis B, C, and D antibody titers, abdominal ultrasonic scanning with Doppler sonography. According to the applicant, he did not receive any of the prescribed medicines.
50. On 21 July 2011, blood samples were taken from the applicant in the presence of his lawyer for complex liver function tests (hepatitis B, C, and D). At the applicant’s request, in order to ensure an objective analysis, the samples were sent to two laboratories: Eurolab and Synevo.
51. On 22 July 2011 the applicant underwent abdominal ultrasonic scanning with Doppler sonography at the Emergency Hospital. On the basis of the examination, the following diagnosis was made: signs of diffuse damage to the liver in a chronic hepatosis pattern, portal hypertension of the P’ degree, splenomegaly of the lst degree, and chronic cholecystitis. In pursuance of the recommendation, the applicant was tested for hepatitis B, C, and D markers, and liver function tests were done.
52. On 23 July 2011 the applicant was prescribed the following medication: Ursofalk, Essentiale Forte, Primer, Chophytol, and Duspatalin.
53. According to the Government, from 2 to 30 August 2011 the applicant was under daily supervision by SIZO doctors. His state of health remained unchanged. He continued complaining of discomfort in the upper abdomen. He received the medical treatment prescribed for him earlier.
54. On 30 August 2011 two senior civilian doctors examined the applicant in the SIZO. They diagnosed cirrhosis of the liver supposedly triggered by the earlier hunger strike. Furthermore, two internal haemorrhages were noted. It was recommended that the applicant undergo a more thorough examination in a specialist civilian hospital. In the meantime, he needed to get proper nutrition.
55. According to the Government, on 2 September 2011, following a court decision, the SIZO was visited by a panel of doctors (gastroenterologists, an endoscopist, and an ultra-sonographer). The applicant refused to be medically examined, to have blood samples taken, or to undergo ultrasonic examinations and fibrogastroduodenoscopy, which had been recommended by the medical panel.
56. On 6 September 2011 a commission of the Ministry of Health examined the applicant in the SIZO. It recommended that he undergo examination with special equipment so that specific diagnoses could be made.
57. On 7 and 8 September 2011 blood samples and faeces were taken from the applicant for laboratory tests.
58. On 13 September 2011 the applicant’s wife again requested the Pechersk Court to allow her husband to be hospitalised and given proper treatment.
59. On 15 September 2011 the applicant was hospitalised and examined in the Kyiv City Diagnostic Centre, which diagnosed the initial signs of portal hypertension, as well as signs of chronic cholecystitis, angiomyolipoma of the right kidney, and parenchymatous cyst of the left kidney. On the same date the applicant underwent an abdominal ultrasonic scan, which discovered signs of gall-bladder polyps and pancreatic diffuse changes, and confirmed the aforementioned kidney pathologies.
60. On 20 September 2011 the applicant underwent a colonoscopy which showed sigmoid colon diverticulitis. On the same day a newly appointed commission of the Ministry of Health examined him and diagnosed fatty liver disease. Dietetic therapy, mineral-vitamin complex, proton pump blockers and hepato-protectors were prescribed.
61. According to the Government, on 22 September 2011 the applicant consulted a haematologist. In view of a decreased number of white blood cells (leukocytes) and thrombocytes in his blood, it was recommended that he again undergo a general blood test at two independent laboratories, to be identified by the Ministry of Health. Once the results of those examinations were known it was recommended that the applicant again consult a haematologist.
62. On 23 September 2011 the applicant’s blood samples were sent to the laboratory for a general blood test. On 26 September 2011, following the haematologist’s recommendation, a blood sample was sent to the Sinevo laboratory for a coagulation profile test.
63. On 28 September 2011 the applicant again consulted the haematologist. The results of the previous examinations led the doctor to find that he had no blood system disorders.
64. On 24 October 2011 the applicant completed the course of medical treatment prescribed by the panel of doctors from civilian medical institutions on 20 September 2011.
65. On 29 September 2011 it was proposed that he undergo a liver biopsy, which he declined.
According to him, the biopsy is a surgical intervention, after which the patient should stay in the medical institution under medical supervision for a period the doctor considers necessary to monitor any post-operative complications. However, the applicant was not provided with guarantees that the medical care would be adequate and that he would stay in the hospital after the biopsy. He considered that removing him immediately to the SIZO would hurt his state of health. Besides, the applicant feared that proper medical care would not be provided to him in the SIZO if there were complications after the biopsy. He referred in this connection to his previous experience.
66. On 4 October 2011 the applicant’s relatives brought him the proton pump blockers and hepato-protectors which had been prescribed by the Ministry of Health commission specialists as early as 20 September 2011.
67. According to the Government, on 2 November 2011 the applicant was examined by SIZO doctors. When examined, he complained of general weakness, dragging pain in the right hypochondrium, and discomfort in the upper abdomen and in the intestine area. He was diagnosed with fatty liver disease, signs of incipient portal hypertension, erosive haemorrhagic helicobacter-associated gastritis, and diverticular disease of the sigmoid colon. As the applicant had completed the prescribed course of outpatient treatment, it was proposed that he undergo laboratory and instrumental tests. The applicant submitted a written statement refusing to undergo fibrogastroduodenoscopy and rectosigmoidoscopy.
68. On 3 November 2011 blood samples were taken from the applicant for laboratory examination at the Kyiv diagnostic centre. In particular, he underwent clinical, general, and biochemical blood tests and a coagulation profile test.
69. On 5 November 2011, upon a court decision, the applicant was examined by a panel of doctors from civilian medical institutions. He was diagnosed with the following conditions: fatty liver disease, signs of incipient portal hypertension, chronic helicobacter associated gastritis, and diverticular disease of the sigmoid colon. It was recommended that the applicant undergo an abdominal ultrasound scan, a faecal occult blood test, and a faecal analysis for helminth eggs and protozoa, consult a urologist, receive diet-based treatment, take a mineral-vitamin complex, and continue to take proton-pump inhibitors.
70. On 8 November 2011 the applicant underwent abdominal ultrasonic scanning at the Kyiv City Diagnostic Centre. He was diagnosed with gall bladder polyp signs, moderate pancreatic changes, angiomyolipomas of the right kidney, and small cysts of the left renal sinus. However, he refused to consult a urologist.
71. On 9 November 2011 he received a parcel with the necessary medication.
72. According to the Government, during November 2011 the applicant’s state of health remained satisfactory. From time to time he complained of general weakness, discomfort in the large intestine area, and pain in the right hypochondrium. During that period, he was examined daily by doctors of the SIZO medical unit, and regularly provided with the prescribed medical treatment. The diagnosis remained unchanged.
However, the applicant continued to complain of periodic discomfort in the large intestine area. He received the medical treatment prescribed by the panel of doctors from civilian medical institutions on 5 November 2011.
73. On 14 December 2011 the applicant was examined by a panel of doctors from civilian medical institutions. The results of the earlier examinations led the doctors to diagnose the applicant with the following conditions: fatty liver disease, signs of incipient portal hypertension, chronic helicobacter-associated gastritis, irritable bowel syndrome, and diverticular disease of sigmoid colon, but no signs of blood disorder were found. The doctors recommended that the applicant undergo some additional examinations: electrocardiography, irrigoscopy, and an analysis of faeces for dysbiosis, to determine pancreatic (faecal) elastase, and a faecal occult blood test. Also, the applicant was prescribed the following medical treatment: diet-based treatment; Spasmomen or Meteospasmyl; Posterisan suppositories; Kreon; Validolum, to stop pain in the stomach; Chophytol, to continue to take from 19 December 2011. However, on 19 December the applicant on his own initiative refused to start the medical treatment prescribed.
74. In early January 2012 the applicant complained to the SIZO administration of stomach and intestinal pains.
75. On 5 and 14 January 2012 he underwent various laboratory tests in respect of his chronic gastrointestinal diseases, and on 11 January 2012 an ultrasonic examination of his abdominal cavity was conducted.
76. On 19 January 2012, during a court hearing, the applicant complained that he did not feel well. An ambulance was therefore called. The doctor diagnosed exacerbation of chronic pancreatitis and administered some medication to the applicant. The applicant’s overall state of health was assessed as satisfactory.
77. On 20 January 2012 the applicant was examined by a panel of medical specialists delegated by the Ministry of Health which established the following diagnoses: fatty liver disease (steatosis), signs of incipient portal hypertension, chronic helicobacter-associated gastritis, irritable bowel syndrome, and diverticulosis of sigmoid colon. While the commission acknowledged a deterioration of the applicant’s health due to “nutrition-regime disturbance and psycho-emotional overload”, it found his health generally satisfactory and not warranting in-patient treatment in a specialist civilian hospital. The physicians recommended normalisation of the nutrition regime and reduction of the psycho-emotional pressure. They also prescribed some medication.
78. On 23 January 2012 the Ministry of Health delegated another panel, of three gastroenterologists, to examine the applicant in the SIZO. The doctors found him to be in a generally satisfactory state of health, and concluded that he did not require hospitalisation. They also specified the medication to be administered to the applicant, and repeated the earlier recommendation regarding his nutritional needs.
79. On 24 February 2012 the applicant was examined by a panel of doctors from civilian medical institutions. They noted that his state of health had improved. The applicant was diagnosed with fatty liver disease (steatosis), signs of incipient portal hypertension, chronic helicobacter-associated gastritis, irritable bowel syndrome, and diverticulosis of sigmoid colon. It was advised that he receive rational nutrition diet, continue to take Duspatalin and take Kreon, Valeriana extract, and suppositories with belladonna. The applicant received that medication in full.
80. On 6 April 2012 he was transferred from the SIZO to the Emergency Hospital for further examination.
81. According to the applicant, despite numerous check-ups, there was no proper medical treatment or medicine available to him in the SIZO. He received proper medical treatment in the Emergency Hospital on 10 May 2011 and 6 April 2012, but was discharged from the hospital on 23 May 2011 and 20 April 2012 respectively, upon an arbitrary decision by the Prison Service authorities, rather than upon a decision of the doctors treating him at the hospital. He was provided with medication which was incompatible with his general state of health, and although they treated his immediate health problem they contributed to the deterioration of his general state of health.
C. Material conditions of the applicant’s detention in the SIZO
82. Upon his admission to the SIZO, the applicant was placed in cell no. 158, measuring 8.58 square metres. He shared the cell with one or two other inmates. According to him, the cell had poor ventilation and lacked personal hygiene facilities. Its walls had mould traces. Furthermore, there was no access to drinking water. Except for period from 28 April to 8 May 2011 (see paragraph 110 below), he shared this cell with two other detainees.
83. According to the Government, the cell had a proper ventilation system and natural lighting. The applicant had had daily exercise in the fresh air, except on days when lengthy court hearings were held. He was permitted to receive drinking water from relatives. He was allowed to take a shower once or twice a week.
84. From 8 to 10 May 2011, the applicant was held in cell no. 257 in the SIZO medical unit, which measured 23.21 square metres.
85. From 10 to 23 May 2011 he was a patient in the Emergency Hospital.
86. On 23 May 2011 the applicant was transferred to cell no. 260, measuring 22.32 square metres, in the SIZO medical unit, which he shared with another person. He remained there until 1 July 2011.
87. On 1 July 2011 he was transferred to cell no. 158, which he shared with another inmate.
88. On 27 March 2012 he was moved to cell no. 136.
89. On 6 April 2012 the applicant was transferred to the Emergency Hospital. He returned to cell no. 136 on 20 April 2012.
D. Conditions of the applicant’s detention during the court hearings
90. From the documents provided by the Government, in particular the minutes of the hearings held before the Pechersk Court (see annex), it appears that between 23 May 2011 and 16 February 2012 the court held seventy-nine hearings at which the applicant was present. At the hearing of 27 February 2012, it pronounced the judgment convicting the applicant. During thirty-five hearings, the court did not withdraw for deliberation on intermediate procedural issues but at least one break was announced, during twelve hearings the court both withdrew to deliberate and announced at least one break, and eleven hearings were interrupted by deliberations on intermediate procedural issue of the court but otherwise were carried out without a proper break. On 14 and 19 July, 22 August and 29 September 2011, 17, 27 and 31 January, 1, 2, 6, 7, 9, 14 and 15 February 2012 the court announced breaks for lunch. However, on 14 July 2011 the applicant had been removed from the courtroom for the rest of the hearing because of his improper behavior before the lunch break was announced.
Moreover, eighteen hearings were carried out without any deliberation and the court did not announce any break. In particular, on 12 October 2011 the hearing lasted two hours and 51 minutes, on 18 October 2011 it took three hours and 36 minutes, and on 16 and 21 November 2011 the hearings lasted almost three hours.
91. The applicant continued his hunger strike up to 23 May 2011. He was informed beforehand that the preliminary hearing would be held on that day. According to him, he was woken up at 4.30 a.m. to be taken to the court building for a hearing which started at about 11 a.m. He had to wait in a small convoy room of about 1.5 square metres. Overall, for about twelve to fourteen hours, he was allegedly held without food and drinking water, in poorly ventilated premises. On the same day, he terminated the hunger strike, which had lasted for about a month.
92. According to the Government, this information was incorrect. The applicant left the hospital at 7 a.m., reaching the court-house at 7.20 a.m. At 10.30 a.m. he was transferred to the courtroom.
93. According to the applicant, he was brought to the court hearing with an open bleeding stomach ulcer, although this condition required immediate hospitalisation. After the eight-hour hearing he was driven to the SIZO. He was transferred to the medical unit of the SIZO only after he had lost consciousness. Despite this, no treatment was recommended for him. Late at night the applicant’s state of health suddenly worsened.
94. According to the Government, as long as the applicant was in hospital, his health was under constant supervision by medical specialists there. In the event that his state of health did not permit him to take part in a hearing, this would be notified by the medical staff and the applicant would not then have been convoyed to the court hearing.
95. According to the applicant, he suffered from the absence of drinking water and nutrition, as well as the lack of rest, during the later court hearings too, while being kept in a metal cage in the courtroom.
96. On 20 January 2012 the applicant, in his request under Rule 39 of the Rules of Court, which was subsequently not granted, maintained that on 17 and 18 January 2012 the Pechersk Court had held the hearings daily despite his complaints of deteriorating health and acute pain in his stomach. According to him, the hearings had lasted from 9 a.m. until 6:30 p.m. usually with one thirty-minute break. On 19 January 2012 the court hearing had lasted from 9 a.m. until 11:30 p.m. The applicant stated that after having left the SIZO, he had not been provided with any food or water until his return. Moreover, on 19 January 2012 the court called the ambulance for him four times.
97. According to the information submitted by the Government, on the days of the hearings detainees received food packs from the prison authorities: the applicant refused these in writing on 1 December 2011 and 11, 19 and 20 January 2012, noting that he had his own food supply.
98. The Government submitted tables of the schedule of the hearing days (see annex) containing the information about the time when the applicant was put in the car and reached the courtroom, when the hearings started and were closed and the time when the applicant was put in the car and arrived back in the SIZO. They also submitted the minutes of the court hearings held before the Pechersk Court.
II. RELEVANT DOMESTIC LAW
99. Criminal Code 2001
Article 365. Exceeding authority or official powers
“1. Exceeding authority or official powers, namely the intentional commission of acts by an official which go manifestly beyond the scope of the rights and powers vested in him or her and which cause serious damage to the State or the public interest or to the lawful interests, rights and freedoms of natural or legal persons
shall be punishable by ...
2. Exceeding authority or official powers combined with violence or use of a weapon, or combined with humiliating acts or acts causing pain to the victim, provided that such acts do not fall within the scope of torture
shall be punishable by ...
3. Acts as described in paragraphs 1 or 2 of this Article, if they have caused grave consequences
shall be punished by imprisonment for seven to ten years with a prohibition of up to three years on occupying certain posts or carrying out certain activities.”
100. Code of Criminal Procedure 1961
Article 148. Purpose and grounds for the application of preventive measures
“Preventive measures shall be imposed on a suspect, accused, defendant, or convicted person in order to prevent him from attempting to abscond from an inquiry, investigation or the court, from obstructing the establishment of the truth in a criminal case or pursuing criminal activities, and in order to ensure the execution of procedural decisions.
Preventive measures shall be imposed where there are sufficient grounds to believe that the suspect, accused, defendant or convicted person will attempt to abscond from the investigation and the court, or if he fails to comply with procedural decisions, or obstructs the establishment of the truth in the case or pursues criminal activities ...”
Article 165-2. Procedure for selection of a preventive measure
“At the pre-trial investigation stage a non-custodial preventive measure shall be selected by a body of inquiry, investigator [or] prosecutor.
If a body of inquiry [or] investigator considers that there are grounds for remand in custody [it or] he shall, with the prosecutor’s consent, submit an application to the court. A prosecutor is entitled to submit a similar request. When considering the matter the prosecutor shall familiarise himself with all the material containing grounds for remand in custody, check whether the evidence was lawfully obtained and whether it is sufficient to bring charges [against the suspect].
The application shall be considered within seventy-two hours of the arrest of the suspect or accused.
If the application concerns the remand in custody of a person who is at liberty, the judge shall have the power to issue a warrant for the arrest of the suspect or accused and his escort to the court. In such a case, the detention shall not exceed seventy-two hours, or, if the person concerned is outside the locality in which the court operates, [the detention] shall not exceed forty-eight hours from the time the arrested person is brought to the locality.
Upon receipt of an application, the judge who is assigned [to the case] in accordance with Article 16-2 of this Code shall study the materials of the criminal case file submitted by the inquiry team, investigator [or] prosecutor, question the suspect or accused, and, if necessary, obtain explanations from the person dealing with the case, hear the prosecutor, [and] the defence lawyer if [the latter] has appeared before the court, and deliver an order:
(1) refusing the preventive measure, if there are no grounds for its application;
(2) ordering the remand in custody of the suspect or accused.
The court shall only decide on the remand in custody of a person in his absence if that person is on the international wanted list. In such cases, after the arrest of the person and no later than forty-eight hours from the time of his transfer to the place where the proceedings are pending, the court, with the participation of the person [concerned], shall consider [whether to] apply a preventive measure in the form of remand in custody or [whether to] change [such a measure], and shall issue an order accordingly.
If the court has refused to remand the suspect [or] accused in custody, it shall have the power to apply a non-custodial preventive measure to him or her.
The court’s order may be appealed against to the court of appeal by the prosecutor, suspect/accused, his counsel or representative within three days of its delivery. The introduction of an appeal shall not suspend the execution of the court’s order.
If remand in custody necessitates a review or additional information concerning the character of the arrested person or other circumstances of importance in order for a decision to be taken on this issue, the judge may extend the period of detention for up to ten days, or, at the request of the suspect/accused, for up to fifteen days, and shall issue an order accordingly. Whenever it is necessary to decide this issue in respect of a person who has not been arrested, the judge may defer consideration of the matter for up to ten days and take measures to ensure his/her good behaviour during this time or may order the arrest of the suspect or accused for this period.”
Article 274. Selection, discontinuation and change of a preventive measure by a court
“In the course of consideration of a case the court may issue a ruling changing, discontinuing or selecting a preventive measure in respect of a defendant, if there are grounds for this.
The procedure for selecting detention as a preventive measure shall be governed by the relevant provisions of Chapter 13 of the Code.”
101. Health Care Act 1992
Section 6. Right to health care
“Every citizen of Ukraine has a right to health care, which includes:
(a) living standards, including food, clothing, accommodation, medical services and care which are necessary for maintaining a person’s health;
(b) qualified medical and/or welfare assistance, [which] includes the free choice of a doctor [and] methods of treatment in accordance with a doctor’s recommendations ...
(e) correct and timely information about his/her state of health and the state of health of the population, including potential risk factors and the scale of their severity;
(f) compensation for injuries to health;
(g) the right to an independent medical examination if a person disagrees with the conclusions of state medical experts, and a prohibition on enforced treatment or any [other] activities which might violate a person’s rights and freedoms ...”
102. Pre-Trial Detention Act 1993
Section 7. Security in pre-trial detention facilities
“[Detainees’] belongings, as well as deliveries and incoming parcels addressed to them, shall be subject to inspection ...”
Section 11. Welfare and Medical Care of Persons in Custody
“Persons remanded in custody shall be provided with living conditions which comply with sanitary and hygiene requirements.
The standard space available to a person in a cell cannot be less than 2.5 square metres ...
Those under arrest under the regulations of the Cabinet of Ministers are entitled to free food, a personal sleeping space, bedding, and other necessities. Where appropriate they shall be provided with clothing and shoes ....
Health care and rehabilitation services, ... are organised and provided in accordance with the Health Care Act.
Orders granting medical treatment to persons under arrest, using hospitals, and examinations by doctors shall be determined by the [State Prison Service] of the Ministry of Defence and the Ministry of Health.”
103. Order of the Ministry of the Interior of Ukraine, Ministry of Justice of Ukraine, General Prosecutor’s Office, Supreme Court of Ukraine, State Security Service of 16 October 1996 No. 705/37/5/17-398 1-3/503/239 “Approval of the Instruction on procedures for escorting and holding in courts of accused (convicted) persons at the request of judicial authorities”
“Pursuant to the Law of Ukraine “Internal Forces of the Ministry of the Interior of Ukraine” ... an ORDER:
1. To approve the Instruction “Approval of Instruction on procedure for escorting and holding in courts of accused (convicted) persons at the request of judicial authorities” (enclosed) ...
Instruction : Approval of Instruction on Procedure for Escorting and Holding in Courts of Accused (Convicted) persons at the request of judicial authorities ...
In courtrooms accused persons are to be held in an area equipped with a wooden bench and wooden barrier one metre in height, both of which to be bolted to the floor ... In every judicial institution up to 50% of courtrooms in which criminal cases are considered are to be equipped with metal bars separating accused persons from the body of the court and the citizens present ...
Bars are to be fitted to the windows of those courtrooms.”
III. RELEVANT MATERIALS OF THE COUNCIL OF EUROPE
104. Recommendation Rec(2006)2 of the Committee of Ministers to member states on the European Prison Rules, adopted on 11 January 2006 at the 952nd meeting of the Ministers’ Deputies (“the European Prison Rules”)
Which provide a framework of guiding principles for conditions of detention and health services. The relevant extracts from the Rules read as follows:
“Allocation and accommodation ...
18.1 The accommodation provided for prisoners, and in particular all sleeping accommodation, shall respect human dignity and, as far as possible, privacy, and meet the requirements of health and hygiene, due regard being paid to climatic conditions and especially to floor space, cubic content of air, lighting, heating and ventilation.
18.2 In all buildings where prisoners are required to live, work or congregate:
a. the windows shall be large enough to enable the prisoners to read or work by natural light in normal conditions and shall allow the entrance of fresh air except where there is an adequate air conditioning system;
b. artificial light shall satisfy recognised technical standards; ...
18.4 National law shall provide mechanisms for ensuring that these minimum requirements are not breached by the overcrowding of prisons.
18.5 Prisoners shall normally be accommodated during the night in individual cells except where it is preferable for them to share sleeping accommodation ...
Hygiene
19.1 All parts of every prison shall be properly maintained and kept clean at all times.
19.2 When prisoners are admitted to prison the cells or other accommodation to which they are allocated shall be clean.
19.3 Prisoners shall have ready access to sanitary facilities that are hygienic and respect privacy.
19.4 Adequate facilities shall be provided so that every prisoner may have a bath or shower, at a temperature suitable to the climate, if possible daily but at least twice a week (or more frequently if necessary) in the interest of general hygiene.
19.5 Prisoners shall keep their persons, clothing and sleeping accommodation clean and tidy.
19.6 The prison authorities shall provide them with the means for doing so including toiletries and general cleaning implements and materials.
19.7 Special provision shall be made for the sanitary needs of women.
Clothing and bedding
20.1 Prisoners who do not have adequate clothing of their own shall be provided with clothing suitable for the climate.
20.2 Such clothing shall not be degrading or humiliating.
20.3 All clothing shall be maintained in good condition and replaced when necessary.
20.4 Prisoners who obtain permission to go outside prison shall not be required to wear clothing that identifies them as prisoners.
21. Every prisoner shall be provided with a separate bed and separate and appropriate bedding, which shall be kept in good order and changed often enough to ensure its cleanliness ...
Health care
39. Prison authorities shall safeguard the health of all prisoners in their care.
Organisation of prison health care
40.1 Medical services in prison shall be organised in close relation with the general health administration of the community or nation.
40.2 Health policy in prisons shall be integrated into, and compatible with, national health policy.
40.3 Prisoners shall have access to the health services available in the country without discrimination on the grounds of their legal situation.
40.4 Medical services in prison shall seek to detect and treat physical or mental illnesses or defects from which prisoners may suffer.
40.5 All necessary medical, surgical and psychiatric services including those available in the community shall be provided to the prisoner for that purpose.
Medical and health care personnel
41.1 Every prison shall have the services of at least one qualified general medical practitioner.
41.2 Arrangements shall be made to ensure at all times that a qualified medical practitioner is available without delay in cases of urgency ...
41.4 Every prison shall have personnel suitably trained in health care.
Duties of the medical practitioner
42.1 The medical practitioner or a qualified nurse reporting to such a medical practitioner shall see every prisoner as soon as possible after admission, and shall examine them unless this is obviously unnecessary ...
42.3 When examining a prisoner the medical practitioner or a qualified nurse reporting to such a medical practitioner shall pay particular attention to ...
b. diagnosing physical or mental illness and taking all measures necessary for its treatment and for the continuation of existing medical treatment ...
f. isolating prisoners suspected of infectious or contagious conditions for the period of infection and providing them with proper treatment ...
43.1 The medical practitioner shall have the care of the physical and mental health of the prisoners and shall see, under the conditions and with a frequency consistent with health care standards in the community, all sick prisoners, all who report illness or injury and any prisoner to whom attention is specially directed ...
Health care provision
46.1 Sick prisoners who require specialist treatment shall be transferred to specialised institutions or to civil hospitals when such treatment is not available in prison.
46.2 Where a prison service has its own hospital facilities, they shall be adequately staffed and equipped to provide the prisoners referred to them with appropriate care and treatment.”
105. The relevant extracts from the Report to the Ukrainian Government on the visit to Ukraine carried out by the European Committee for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment (CPT) from 9 to 21 September 2009 (published on 23 November 2011) read as follows:
“5. Conditions of detention of the general prison population
a. pre-trial establishments (SIZOs)
i) the SIZO in Kyiv
100. The SIZO in Kyiv occupies a complex of buildings in one of the central areas of Kyiv. Some of the detention buildings had been constructed some 140 years previously. Three smaller, more recent blocks provided accommodation for sentenced working prisoners, women and juveniles. A new block for women was in the process of construction, but that process had virtually been halted due to lack of resources.
With an official capacity of 2,950 places, on 8 September 2009 the establishment was holding 3,440 inmates, including 217 women and 69 juveniles. The vast majority of the inmate population was on remand. The establishment was also holding 297 inmates awaiting the outcome of their appeal (including 41 life-sentenced prisoners), 93 prisoners in transit and 100 sentenced inmates assigned to work in the prison’s general services and maintenance. Further, there were 11 inmates who had been subject to forensic psychiatric assessment and who were awaiting a final decision concerning their criminal responsibility. The prisoner population comprised 210 foreign national prisoners (of whom 170 were from countries of the Commonwealth of Independent States).
Since 2001, following amendments to the CC, a section referred to as an “arrest house” had been set up for first-time offenders serving sentences of up to 6 months ...
103. Material conditions prevailing in the section for women were somewhat better [than those in the section for men]. In particular, the cells were less overcrowded (e.g. 6 inmates in a cell measuring 8 m²; 16 prisoners in a cell measuring 27 m²). The cells had good access to natural light, but ventilation was inadequate and prisoners complained that in the summer the cells became very hot. The in-cell sanitary annexes were fully partitioned and had both cold and hot water taps. Some of the cells had been decorated by the inmates themselves and gave a homely impression ...
104. The section for sentenced working prisoners provided the best conditions of detention in comparison with the other sections. The dormitories were adequately lit, well ventilated and clean. They were suitably furnished (beds, tables and chairs or stools, some shelves and lockers) and inmates could have their own radio or television. Further, the section comprised a sports hall, a spacious “club” where prisoners could watch films and play table tennis, and a chapel.
105. The prison did not provide inmates with personal hygiene products other than soap. As mentioned in paragraph 88, access to the shower was limited to once a week.
As regards food, prisoners were provided with three meals a day. The quantity of the food appeared to be sufficient, but many prisoners complained about its poor quality and lack of variety. In particular, there was no fresh fruit, eggs or milk (not even for juvenile prisoners). To supplement their diet, prisoners relied to a great extent on food parcels from their families and purchases from the prison shop ...
The SIZO had a library with a collection of some 27,000 books. The delegation was surprised to learn that remand prisoners were not allowed to receive books (other than the Bible) or newspapers from outside. The CPT would like to receive the Ukrainian authorities’ comments concerning this prohibition.
The only regular out-of-cell activity was outdoor exercise of one hour per day, which took place in a series of exercise yards located on the top of the accommodation blocks. By virtue of their size and configuration, these high-walled, bare areas (measuring between 16 and 60 m²) did not allow prisoners to exercise themselves physically.
The CPT recommends that the Ukrainian authorities make strenuous efforts to offer organised out-of-cell activities (work, recreation/association, education, sport) to prisoners at the Kyiv SIZO. Further, the Committee recommends that steps be taken to construct more appropriate exercise yards which allow prisoners to exert themselves physically, as well as indoor and outdoor sports facilities ...
6. Health care
a. introduction
123. In the course of the 2009 visit, the delegation was informed of a proposal to set up a working group to study the transfer of prisoners’ health care to the Ministry of Health. The CPT can only encourage this initiative, which is consistent with the remarks made in paragraph 142 of the report on its 1998 visit, namely that a greater involvement of the Ministry of Health in the provision of health-care services in prison will help to ensure optimal health care for prisoners, as well as implementation of the general principle of the equivalence of health care with that in the outside community. The Committee wishes to be informed of the action taken on the above‑mentioned proposal.
In this context, the CPT also wishes to stress the need for continued professional training for prison health-care staff, with a view to enabling them to perform their duties satisfactorily. The Committee would like to be informed of the national policy in this respect.
124. The reports on previous visits by the CPT to Ukraine contain a number of recommendations, comments and requests for information in the area of provision of health care to prisoners. Despite efforts made by the Ukrainian authorities in recent years and the goodwill and commitment of health-care staff at the penitentiary establishments visited, the provision of health care to inmates remains problematic, due to the shortage of staff, facilities and resources. During the visit, the delegation heard a number of complaints from prisoners at the establishments visited concerning delays in access to a doctor, lack of medication, and the inadequate quality of care.”
106. The relevant extracts from the Report to the Ukrainian Government on the visit to Ukraine carried out by the European Committee for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment (CPT) from 29 November to 6 December 2011 [CPT/Inf (2012) 30] read as follows:
“... 48. On the occasion of this visit and in the light of reports recently received by the CPT, the delegation also examined in detail the health care being provided to certain persons who were being held at the Kyiv SIZO and, in particular, Mr Valeriy IVASHENKO, Mr Yuriy LUTSENKO and Ms Yulia TYMOSHENKO.
In this connection, the CPT would like to stress that the role of medical members of a visiting delegation is not that of a treating doctor; their task is to assess the quality of health care and, more specifically, the access to medical treatment of detained persons. The Committee also wishes to recall that the prison authorities are responsible for the health care of all prisoners; all efforts possible must be made to ensure that a precise diagnosis is promptly established and that adequate treatment required by the state of health of the person concerned is provided to all prisoners.
The CPT must express its concern that in respect of each of the three above-mentioned persons, considerable delays occurred – for various reasons – in arranging specialised medical examinations outside the SIZO. Problems of this kind have repeatedly been observed by the CPT during all previous visits to the Kyiv SIZO as well as to other penitentiary establishments in Ukraine. The Committee urges the Ukrainian authorities to take all the necessary measures to ensure that in future, all prisoners who are in need of specialist treatment/examinations are transferred to an outside hospital without undue delay.”
IV. OTHER RELEVANT INTERNATIONAL MATERIALS
107. On 9 June 2011 the European Parliament adopted a resolution on Ukraine. The relevant part of the resolution reads as follows:
“The European Parliament,
... G. whereas 12 former high-ranking officials from the Tymoshenko government are in pre-trial detention, including the former Interior Minister, Yuri Lutsenko, one of the leaders of the People’s Self-Defence Party, who has been charged with abuse of office and misappropriation of funds and was arrested on 26 December 2010 for alleged non-cooperation with the prosecution, ...
H. whereas Mr Lutsenko was not released from pre-trial detention when his trial opened on 23 May 2011, despite the fact that detention for alleged non-cooperation in the investigation of his case is an extremely disproportionate measure,
I. whereas a preliminary report of the Danish Helsinki Committee for Human Rights on the Lutsenko ... trials has listed massive violations of the European Convention on Human Rights ...
1. Stresses the importance of ensuring the utmost transparency in investigations, prosecutions and trials, and warns against any use of criminal law as a tool to achieve political ends;
2. Is concerned about the increase in selective prosecution of figures from the political opposition in Ukraine as well as the disproportionality of measures applied ...
3. Reminds the Ukrainian authorities that the principle of collective responsibility for the decisions of the government does not permit the prosecution of individual members of the government for decisions that were taken collegially ... ”
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 3 OF THE CONVENTION ON ACCOUNT OF THE CONDITIONS OF DETENTION
108. The applicant complained about the material conditions of his detention in the SIZO. He relied on Article 3 of the Convention, which reads as follows:
“No one shall be subjected to torture or to inhuman or degrading treatment or punishment.”
A. Admissibility
109. 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
110. The Government submitted that on his arrival in the SIZO on 28 December 2010, the applicant had been kept in cell no. 158, measuring 8.58 square metres, where he had remained until 8 May 2011, sharing it with two other persons and having thus at his personal disposal 2.86 square metres. However, in connection with the hunger strike from 28 April to 8 May 2011 the applicant was held in this cell alone. From 8 to 10 May 2011 he had been held in the SIZO medical unit in cell no. 257, measuring 23.21 square metres. Between 10 and 23 May 2011 the applicant had been hospitalised. Having returned to the SIZO on the latter date, he had been placed in the SIZO medical unit in cell no. 260, measuring 22.32 square metres. As he was sharing this cell with another person, he had had at his disposal 11.16 square metres. Finally, from 1 July 2011 to 6 April 2012 the applicant was again detained in cell no. 158 which, during this period of time, he was sharing with another person, having therefore at his personal disposal 4.29 square metres. The Government submitted photographs of these three cells.
111. The Government further stated that the applicant had had an opportunity to receive drinking water and bedding from his relatives, but the SIZO had also been properly supplied with bedding. In any case, the applicant had not complained on this account to the SIZO administration. Moreover, since his admission until 23 May 2011, when his case had been sent to the Pechersk Court, the applicant had had the right to daily exercise in the fresh air. After that date he had had exercise, except on those days when lengthy court hearings had been held.
The Government concluded that the conditions of the applicant’s detention complied with the requirements of Article 3 of the Convention.
112. The applicant submitted that upon his admission to the SIZO he had been placed in cell no. 158, measuring 8.58 square metres, which had previously been used for detainees who had been expecting the execution of a death sentence. The cell had only cold water. Instead of a proper toilet there was only a hole in the floor, which was not separated from the rest of the cell, which moreover was poorly ventilated, and therefore had a strong odor of human excrement. The cell was cold and damp, the temperature never rising above 16o C. The applicant had been allowed to take a shower once or twice a week. He had not been in this cell from 8 to 10 May 2011, when he had been transferred to cell no. 257 in the SIZO medical unit, from 10 to 23 May 2011, when he had been in the Emergency Hospital, and from 23 May to 1 July 2011, when he was once again in the SIZO medical unit, in cell no. 260. Accordingly, he had spent a total of 408 days in cell no. 158. He had shared this cell with one or two co-detainees.
113. The applicant added that on 27 March 2012, prior to the visit of the members of the Monitoring Committee of the Parliamentary Assembly of the Council of Europe, he had been transferred to cell no. 136, which was equipped with a proper toilet bowl and a LCD TV set. He was also placed in this cell on 20 April 2012, after his discharge from the Emergency Hospital.
2. The Court’s assessment
114. The Court notes at the outset that the parties’ observations cover the period from 28 December 2010 to 20 April 2012 (see paragraphs 110, 112 and 113 above). It will therefore limit its examination of the conditions of the applicant’s detention to this period of time.
115. It reiterates that Article 3 enshrines one of the fundamental values of a democratic society. The Convention prohibits in absolute terms torture or inhuman or degrading treatment or punishment, irrespective of the circumstances or the victim’s behaviour (see, for instance, Labita v. Italy [GC], no. 26772/95, § 119, ECHR 2000‑IV).
116. If a person is detained, the State must ensure that the conditions are compatible with respect for his human dignity, that the manner and method of the execution of the measure do not subject him to distress or hardship of an intensity exceeding the unavoidable level of suffering inherent in detention, and that, given the practical demands of imprisonment, his health and well-being are adequately ensured by, among other things, providing him with the requisite medical assistance (see Kudła v. Poland [GC], no. 30210/96, § 94, ECHR 2000‑XI). Moreover, when assessing conditions of detention, account has to be taken of the cumulative effects of those conditions and the duration of the detention (see Ostrovar v. Moldova, no. 35207/03, § 80, 13 September 2005).
(a) The period from 28 December 2010 to 8 May 2011
117. The Court observes that the applicant was brought to the SIZO on 28 December 2010 and put in cell no. 158 measuring 8.58 square metres where he remained until 8 May 2011 (see paragraphs 82, 110 and 112). Except for the period from 28 April to 8 May 2011 (see paragraph 110 above), he shared this cell with two other detainees, having therefore at his personal disposal 2.86 square metres. Moreover, given that the cell also contained sanitary facilities, furniture and fittings, the floor area available to the applicant had been further reduced.
118. In the light of its jurisprudence (see, e.g., Melnik v. Ukraine, no. 72286/01, § 103, 28 March 2006; Iglin v. Ukraine, no. 39908/05, §§ 51‑52, 12 January 2012; and Zinchenko v. Ukraine, no. 63763/11, § 66, 13 March 2014), the Court finds that the lack of personal space afforded to the applicant in detention during the relevant period itself raises an issue under Article 3 of the Convention.
119. Regard being had to the above considerations, the Court considers that the conditions of the applicant’s detention in cell no. 158 in the Kyiv SIZO during the period from 28 December 2010 to 28 April 2011 were degrading.
120. There has accordingly been a violation of Article 3 of the Convention on account of the conditions of the applicant’s detention in the detention facility from 28 December 2010 to 8 May 2011.
(b) The periods from 28 April to 10 May 2011, from 23 May 2011 to 6 April 2012 and on 20 April 2012
121. The Court notes that during the remaining part of his stay in the Kyiv SIZO the applicant had more than four square metres of individual space at his disposal (see paragraphs 86, 110, 112 and 113 above) and that at that time there was no shortage of sleeping places in the cells concerned. The Court does not have any information about the size of cell no. 136 but the applicant does not raise any complaint in this respect. As during the relevant period of time the size of the cells by itself does not raise an issue under the Convention, the Court will have to determine whether the cumulative effect of other aspects of the physical conditions of the applicant’s detention was such as to amount to inhuman and/or degrading treatment in breach of Article 3 of the Convention.
122. The Court accepts in this respect that the applicant could have experienced certain problems on account of the material aspects of his detention in the cells in question. At the same time, it is unable to determine whether such drawbacks affected him in any significant way. Nor is there any evidence that the internal lighting or ventilation systems were deficient. Moreover, the applicant was allowed a one-hour period of outdoor exercise daily. Windows in the cells were not fitted with metal shutters or other devices preventing natural light from penetrating into the cells, and the applicant did not complain that the cells were not additionally equipped with artificial lighting.
123. As regards sanitary and hygiene conditions, the Court noted, having assessed the material evidence presented by the parties including the photographs submitted by the Government (see paragraph 110 above), that the table, the lavatory pan, the fridge and the bed were located inside the applicant’s cells, sometimes very close to each other. However, from the material in its possession, the Court can establish neither the condition of the toilet – except for cell no. 260 - nor whether it was separated from the rest of the cells. Cold running water was normally available in the cells and detainees, including the applicant, had access to showers at least once every seven days. The Court adds that the applicant admitted that the conditions in cell no. 136 were adequate.
124. The Court is of the opinion that taking into account the cumulative effect of these conditions, they did not reach the threshold of severity required to characterise the treatment as inhuman or degrading within the meaning of Article 3 of the Convention (see Fetisov and Others v. Russia, nos. 43710/07, 11248/08, 27668/08, 31242/08, 52133/08 and 6023/08, §§ 137-138, 17 January 2012).
125. The Court therefore concludes that there has been no violation of Article 3 of the Convention on account of the applicant’s detention in the detention facility from 28 April to 10 May 2011, from 23 May 2011 to 6 April 2012 and on 20 April 2012.
II. ALLEGED VIOLATION OF ARTICLE 3 OF THE CONVENTION ON ACCOUNT OF THE MEDICAL TREATMENT PROVIDED TO THE APPLICANT
126. The applicant further complained that the medical care he received was inadequate, and that this was a breach of Articles 2 and 3 of the Convention.
127. The Court, being the master of characterisation to be given in law to the facts of the case, considers that the applicant’s complaint should be examined under Article 3 of the Convention.
A. Admissibility
128. 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
129. The Government maintained that upon his admission to the SIZO the applicant had been examined by the head of the medical unit and a doctor on duty. He had undergone clinical, laboratory and X-ray examinations, and had been diagnosed with symptomatic hypertension. Moreover, from the extract of his outpatient card it appeared that in 2010 the applicant had been suffering on a number of occasions from gastritis, fatty hepatosis, dyskinesia of the bladder, chronic pancreatitis at the incomplete remission stage, diabetes mellitus and pancreatic insufficiency.
130. Referring to the chronology of the treatment of the applicant, the Government noted that during the period preceding his hunger strike the applicant had not submitted any complaint regarding his medical treatment. His health deteriorated as a result of his hunger strike, when all the illnesses from which he had previously been suffering reappeared. New conditions, such as an ulcer, also appeared. According to the Government, the national authorities had taken all necessary measures to reduce possible consequences and influence on the applicant’s organism. Thus, during his hunger strike, the applicant had been examined by the doctors on a daily basis, necessary laboratory researches aimed at monitoring of consequences of hunger strike had been conducted, and measures had been taken which were intended to reduce the consequences of the hunger strike. Moreover, the applicant had been repeatedly offered a food compound.
131. The Government further stated that one of the reasons which had to a large extent contributed to the appearance of new illnesses had been the psychological and emotional burden to which the applicant had been subjected as the result of having been in detention and the criminal proceedings against him. Hence, the national authorities could not bear responsibility for the appearance of these illnesses, as it was not connected with the provision of medical treatment in the SIZO or with the material conditions of detention in the SIZO. The Government underlined that the applicant had received regular and appropriate medical treatment for the new conditions which had appeared. He had been examined by SIZO doctors, he had been repeatedly examined by medical commissions numbering the best specialists from civilian hospitals, had received everything he had been prescribed and had had all the indicated examinations; when necessary he had been admitted to a civilian hospital. The Government considered that the medical treatment provided to the applicant had complied with Article 3 of the Convention.
132. The applicant submitted that the failure to provide him with adequate medical care, such as proper examination and treatment of his diseases, concealment of his true state of health, as well as his arbitrary discharge from the hospital and forced attendance at the court hearings despite his poor state of health, all proved that there had been a breach of the Government’s positive obligation to prevent prisoners’ suffering which exceeded the unavoidable level of suffering inherent in detention. The failure of the Government to provide him with adequate medical care proved that he had received inhuman treatment and the intention of the Government was to create feelings of despair and inferiority in him and to humiliate and belittle him, as well as to prove his vulnerability. Such treatment of the applicant is in breach of Article 3 of the Convention.
2. The Court’s assessment
133. The Court reiterates that when assessing the adequacy of medical care in prison, it must reserve, in general, sufficient flexibility in defining the required standard of health care, which must accommodate the legitimate demands of imprisonment but remain compatible with human dignity and the due discharge of its positive obligations by the State. In this regard, it is incumbent upon the relevant domestic authorities to ensure, in particular, that diagnosis and care are prompt and accurate (see Hummatov v. Azerbaijan, nos. 9852/03 and 13413/04, § 115, 29 November 2007; Melnik v. Ukraine, no. 72286/01, §§ 104-106, 28 March 2006; Yevgeniy Alekseyenko v. Russia, no. 74266/01, § 100, 8 January 2009; Gladkiy v. Russia, no. 3242/03, § 84, 21 December 2010; Khatayev v. Russia, no. 56994/09, § 85, 11 October 2011; and, mutatis mutandis, Holomiov v. Moldova, no. 30649/05, § 121, 7 November 2006), and that, where necessitated by the nature of a medical condition, supervision by proficient medical personnel is regular and systematic, and involves a comprehensive therapeutic strategy aimed at successfully treating the detainee’s health problems or preventing their aggravation (see Hummatov, cited above, §§ 109 and 114; Sarban v. Moldova, no. 3456/05, § 79, 4 October 2005). The mere fact of a deterioration in an applicant’s state of health, albeit capable of raising, at an initial stage, certain doubts concerning the adequacy of the applicant’s treatment in prison, cannot suffice, by itself, for the finding of a violation of the State’s positive obligations under Article 3 of the Convention, if, on the other hand, it can be established that the relevant domestic authorities have in a timely fashion provided all reasonably available medical care in a conscientious effort to hinder development of the disease in question (see, among many others, Jashi v. Georgia, no. 10799/06, § 61, 8 January 2013).
134. Turning to the present case, the Court notes that it transpires from the voluminous case-file materials and submissions by the parties that the applicant’s health received considerable attention from the domestic authorities. The applicant was examined by doctors immediately upon admission to the SIZO. He underwent clinical, laboratory and X-ray examinations. On the basis of those examinations, he was diagnosed with symptomatic hypertension. Moreover, it cannot be disregarded that according to his medical record he had already been suffering from gastritis, hepatosis, dyskinesia of the bladder, chronic pancreatitis at the incomplete remission stage, diabetes mellitus, and also from pancreatic insufficiency, before his detention (see paragraphs 20 and 129 above).
135. The Court observes that during his detention in the SIZO, the applicant was under regular supervision by doctors of the SIZO medical unit and the SPS medical panel. Moreover, the applicant was examined by civilian doctors and received proper medical treatment in the Emergency Hospital during two hospitalisations.
136. The Court further observes that the applicant was on hunger strike for 33 days (see paragraphs 27 and 37 above) and lost weight considerably. On 8 May 2011 the medical panel noted that the hunger strike was significantly affecting the applicant’s general state of health (see paragraph 33 above). During the period when he was refusing to consume food, the applicant was examined by doctors on a daily basis. Later on, necessary laboratory tests aimed at monitoring the consequences of the applicant’s hunger strike were conducted, and measures were taken to reduce those consequences. The applicant was repeatedly offered a food compound. As regards the new illnesses which could have been caused by the hunger strike, the applicant had been constantly receiving adequate medical treatment.
137. These considerations enable the Court to conclude that the domestic authorities afforded the applicant comprehensive, effective and transparent medical assistance.
138. However, the Court does not overlook the fact that despite their knowledge of the applicant’s difficult state of health, the national authorities failed to assure his rapid transfer to the hospital in order to carry out complementary medical examinations recommended by the doctors on 28 May 2011 (see paragraph 38 and 43 above). The Court observes in this respect that while the judge had given his approval for the applicant’s transport on 14 June 2011 (see paragraph 44 above), the applicant was driven to the hospital only on 15 July 2011 (see paragraph 49 above). However, taking into account the character of the medical examination, the Court does not consider that the inaction of the national authorities reached the threshold of Article 3 of the Convention (see, a contrario, Kupczak v. Poland, no. 2627/09, §§ 58-68, 25 January 2011).
139. There has accordingly been no violation of Article 3 of the Convention.
III. ALLEGED VIOLATIONS OF ARTICLE 3 OF THE CONVENTION ON ACCOUNT OF THE CONDITIONS OF THE APPLICANT’S DETENTION ON HEARING DAYS IN THE LIGHT OF THE STATE OF HIS HEALTH
140. The applicant further complained about the conditions of his detention during court hearings, in particular that he had been held in a small and poorly ventilated room waiting for the hearings and that he had not been provided with drinking water or food and had had no opportunity to rest.
A. Admissibility
141. 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. Parties’ submissions
142. The Government maintained that during most of the eighty hearings held in the applicant’s criminal case, breaks had been announced. Of the thirty-four hearings during which breaks had not been announced there had only been seven which had finished after 1 p.m., and none of them had lasted until the end of the working day. Of the remaining forty-six hearings, twenty-five had had one break, ten had had two breaks, six had had three breaks, and the hearing of 30 June 2011 had had five breaks. These breaks had lasted from ten minutes to one or two hours.
143. The Government further submitted that on the days when the Pechersk Court hearings had been held the applicant had left the SIZO between 7 and 8 a.m., most often after 7.30 a.m., as the court hearings usually started at 9 a.m. They emphasised that he had always been able to have breakfast. Moreover, the court hearings had usually ended at about 6.20 p.m., but if the applicant reached the SIZO before 3 p.m. he could have a walk in the fresh air. Besides, as the applicant was consuming only his own food, he was not restricted to eating at the times when food was provided in the SIZO. Accordingly, he always had the opportunity to have a proper meal after his return to the SIZO.
144. The Government also maintained that the applicant had sufficient sleeping hours, while they admitted that on one occasion the hearing before the Pechersk Court had ended at 11.16 p.m. and that the applicant had reached the SIZO only at 11.30 p.m. However, as there was no hearing on the next three days he had had sufficient time to recover.
145. The Government further explained that during his detention the applicant had refused to consume the food prepared in the SIZO and to receive ready-to-eat food packs, as he had been provided with his own food by his relatives. Accordingly, he had had the opportunity to receive and consume food on hearing days. This was corroborated by a letter from the president of the Pechersk Court, who confirmed that the applicant had been allowed to consume food during breaks in the court hearings. The Government added that even if the applicant had not received food from his relatives, the national legislation set out a procedure for nourishment for individuals being escorted to court to attend hearings. In particular, on 13 and 19 October 2011 and 19 January 2012, despite the applicant’s refusal, lunch had been delivered to the court in accordance with the national legislation. Moreover, the court had announced breaks for lunch at the request of the applicant, other accused or their lawyers on 14 July 2011, 19 January and 1, 2, 6, 7, 9, 14 and 15 February 2012. The Government also noted that on 19 July 2011 and 6 February 2012 the applicant had been granted a one-hour break to consume food, as the medical recommendation was that he must eat three times per day.
146. In respect of the court hearing held on 23 May 2011, the Government admitted that the applicant must have been in a weakened condition because of his hunger strike, and that therefore the court hearing and escort procedures would not have been easy for him. Nevertheless, the medical staff had not indicated that his state of health would not be compatible with his appearance in court. The Government also maintained that the court hearing had started at 11 a.m. and had lasted about four hours, which was a comparatively short period of time. During the hearing two breaks had been announced by the court, of one hour and half an hour respectively. The Government stated that the applicant had had the opportunity to consume food and drink water. Moreover, he had not sought to have the hearing postponed so that he could be provided with medical treatment, or be given time to rest or eat. The hearing had ended at 3.09 p.m., and the applicant had been driven back to the SIZO, where he had been placed in the medical unit. Besides, there were no hearings for the next six days, so the applicant had sufficient time to rest.
147. Within the Rule 39 procedure (see paragraph 96 above) the Government submitted, inter alia, that at the hearing of 17 January 2012, which started at 9:09 a.m. and ended at 5:55 p.m., the court announced two technical breaks and a break for lunch which lasted from 1:11 to 1:55 p.m. Moreover, the court was in the deliberation room from 9:39 to 10:25 a.m. On 18 January 2012 the hearing began at 9:12 a.m and ended at 2:15 p.m. during which the court announced a break to have a rest and lunch from 12:19 to 12:39 p.m. Furthermore, the hearing held on 19 January 2012 started at 9:09 a.m. and ended at 11:16 p.m. During the hearing, the court announced six breaks lasting from 1:20 to 2:05 p.m., from 2:14 to 3:56, from 4:30 to 4:37, 4:40 to 5:26 p.m., from 5:27 to 5:40 and from 8:32 to 8:49 p.m. In addition, the court deliberated from 5:50 to 6:04 p.m. The Government further noted that the court hearing of 20 January 2012 lasted for five minutes.
According to the Government, during the hearings held on 17, 18 and 19 January 2012 the applicant had been allowed to take food, to have a rest and do any other need. He had had that opportunity not only during the special breaks for rest and food but also during the technical breaks as well as during the court deliberations.
148. The applicant argued that he had been given no food or water on the hearing days prior to 21 January 2012. He disputed the Government’s argument that he had refused to consume SIZO food and had relied upon parcels delivered to him from home. He noted in this connection that under point 18 of the Instruction on Escort and Detention in Courtrooms of Detainees at the Request of the Judiciary, a detainee could take only documents, relevant to his hearing to the court-house. No parcels, utensils, food, bottles of water or anything else were allowed. Furthermore, under point 28 of the Instruction, any food or beverage consumed by a detainee shall be provided by the detention facility only. However, due to his severe gastroenterological diseases and liver malfunction, and the lack of special diet food provided by the SIZO, the applicant usually consumed food delivered by his family while in the SIZO. Point 23 of the Instruction strictly prohibited any parcels or other deliveries to detainees in court. Moreover, under section 7 of the Law on Preliminary Detention any parcel for a detainee was to be delivered to the detention centre at designated times only, and was subject to monitoring by the authorities. Accordingly, the applicant was not able to consume his own food after the court hearings.
149. The applicant added that he was not given a designated place or time to consume any food in court. Throughout all the court hearings he was held in a metal cage which he could only leave to go to the lavatory. It would have been humiliating for him to consume food while sitting in a courtroom with journalists, reports and photographers, even if he had had any, in a metal cage without any utensils or table. As a result, he had remained without any food or beverage during all the court hearings; the one which took place on 19 January 2012 lasted fourteen hours. He stated that this breach of a proper nutrition regime had worsened his state of health, as was also stated in the medical certificate of 20 January 2012 provided by the Government.
150. In respect of the Government’s comments regarding the breaks during the court hearings held on 17, 18 and 19 January 2012 (see paragraph 147 above), the applicant noted that on 17 January 2012 there had been two breaks, lasting eleven and sixteen minutes respectively, when the participants to the proceedings had been allowed to use the facilities, then there had been a forty-minute break for lunch, which he had been deprived of because he had stayed in the metal cage. He added that when the judges went to their retiring room the participants had remained seated and were not allowed to leave the courtroom under the national legislation.
In respect of the hearing of 19 January 2012 the applicant stated that all breaks referred to by the Government had been announced following the worsening of his state of health and his inability to participate in the court hearing and because of his treatment by the ambulance which had to come four times.
151. In respect of the first hearing day of 23 May 2011 the applicant submitted that he had been escorted to the court-house directly from the hospital from which he had been discharged that very morning with a diagnosis of chronic pancreatitis, diabetes mellitus, chronic cholecystitis and duodenal ulcer. He had been woken up at 4.30 a.m. in order to reach the courthouse by 6.30 a.m. On arrival he had been held in the waiting metal cage, which was approximately 1.5 square metres in area. At 10.30 a.m. he had been transferred to the courtroom, which was small and hot, with no air conditioning. After staying in the courtroom until 3 p.m. he was driven back to the SIZO at about 6 p.m. According to the applicant, he was given no water or food the whole day, though the SIZO administration and the court were aware of his deteriorating state of health, which had not improved at the hospital. Exhausted, the applicant had stopped his hunger strike in order to be able to take part in future court hearings.
152. The applicant further stated that his state of health had worsened later that night. He had fainted the next day, and SIZO doctors had been called. However, the applicant had refused to be examined by them and civilian doctors had not been allowed to see him. He stated that no record had been made in his medical file and he had not been provided with appropriate medicines. The civilian doctors appointed by the Ministry of Health were allowed to examine the applicant only on 28 May 2011; they diagnosed him with acute 12-duodenal ulcer, post-gastrointestinal bleeding, and erosive gastritis, and recommended immediate treatment in a specialised gastroenterological hospital. According to the civilian doctors, since the applicant had been discharged from the Kyiv Clinical Emergency Hospital without any internal bleeding, the bleeding must have occurred between 23 and 28 May 2011 as a result of the premature termination of the specialised inpatient treatment.
153. Accordingly, the SIZO administration, by arbitrarily transferring the applicant from the Emergency Hospital and subjecting him to the lengthy court hearing on 23 May 2011 without any medicine or water supply, had caused him disproportionate suffering and contributed to the further worsening of his health.
2. The Court’s assessment
154. The Court notes at the outset that the applicant referred in his original application form to the court hearing held on 23 May 2011. Moreover, within the Rule 39 procedure, he added further complaints regarding the court hearing days from 17 to 19 January 2012 during which his health problems were not taken adequately care of (see paragraph 96 above). The Court does not, however, overlook the fact that, on the whole, the applicant attended seventy-nine hearings held before the Pechersk Court (see paragraph 90 above), that the applicant’s health deteriorated after his hunger strike, what the Government do not deny (see paragraph 130 above) and that the period of about eight months elapsed between the first hearing of 23 May 2011 and the three hearings held in January 2012, during which the applicant suffered from different illnesses necessitating continued medical treatment (see paragraphs 38-76 above). In addition, there is no indication in the case-file that the conditions of the applicant’s detention during the hearing days were adapted accordingly.
155. As it has already been mentioned above, the State must ensure that a person is detained in conditions which are compatible with respect for his human dignity, that the manner and method of execution of the measure of detention do not subject him to distress or hardship of an intensity exceeding the unavoidable level of suffering inherent in detention, and that, given the practical demands of imprisonment, his health and well‑being are adequately secured (see paragraph 116 above). The Court considers that these principles also apply to the conditions of detainees’ transportation to and from a court-house and of their confinement in the court-house including a proper catering (see Yevgeniy Bogdanov v. Russia, no. 22405/04, §§ 101-105, 26 February 2015; Romanova v. Russia, no. 23215/02, §§ 88‑92, 11 October 2011; Kovaleva v. Russia, no. 7782/04, §§ 62-65, 2 December 2010; Yakovenko v. Ukraine, no. 15825/06, §§ 103-113, 25 October 2007).
156. In the present case, the Court observes that during the hearing days the applicant left the SIZO generally between 7 a.m. and 8 a.m, usually reaching the court-house in 20 to 30 minutes. While the Government did not submit information about the time when the applicant was escorted from the car to the waiting room, the Court has information at its disposal concerning the moment when he reached the court-house and the beginning of the hearings. It will therefore presume that the applicant spent the time awaiting the hearings either in the car or in the waiting room. From the evidence presented by the Government and the indications given by the applicant it appears that the waiting room was a small barred cell containing a bench.
157. Against the background of the whole proceedings (see paragraph 154 above), the Court finds that on 23 May 2011 and on 17, 18 and 19 January 2012 the applicant had to face particular hardship. It observes in this respect that on 23 May 2011 he spent three hours and forty-four minutes in the waiting room and took part in the hearing which lasted four hours and four minutes, without any proper break being announced, while it was known that he was on hunger strike which significantly affected his general state of health (see paragraphs 33 and 136 above).
After having previously attended fifty-nine court hearings, lastly on 16 January 2012, the applicant was driven to the next hearing, held on 17 January 2012, which lasted eight hours and forty-six minutes, with two breaks of 11 and 16 minutes, respectively and a break for lunch. Before the hearing begun, the applicant had to stay in the waiting room thirty-nine minutes.
On the next day, he spent in the waiting room one hour and two minutes before the beginning of the hearing which lasted five hours and three minutes. The Court notes that, contrary to the Government’s information (see paragraph 147 above), it appears from the minutes of the hearing that the court granted one ten minute technical break, but not a break for rest and lunch.
Finally, the Court observes that on 19 January 2012 the applicant spent in the waiting room fifty-four minutes and was present at the hearing which, having started at 9:19 a.m., lasted thirteen hours and fifty-seven minutes. During the hearing, the doctors had to be called four times in order to provide the applicant with medical help. The Pechersk Court did allow a break for rest at the beginning afternoon. However, it appears that the applicant stayed in the metal cage during the break (see paragraph 149 above). Moreover, late in the afternoon, the court did not grant the requests of the applicant’s lawyers to adjourn the hearing and to have a break for food, but continued to hold the hearing until 11:16 p.m., ordering the next hearing for the next hearing at 8:05 a.m.
158. It further appears that the applicant did not receive wholesome food on the four days in question, when he was transported to the court, which would be in line with the state of his health. Relying on the material in its possession, the Court is not convinced by the Government’s assertion that the applicant could take with him the food provided by his family. In any event, the Court is of the opinion that permission to take one’s own food cannot substitute for appropriate catering arrangements, because it is primarily the State that is responsible for the well-being of persons deprived of their liberty. Besides, it does not find the suggestion, that the applicant could have consumed the food in the waiting room or metal cage prior to or during the hearings, at all realistic.
159. The Court has previously found a violation of Article 3 of the Convention in many cases on account of applicants’ confinement in cramped conditions in detention units of court-houses and a lack of proper food on court days (see, e.g., Vlasov v. Russia, no. 78146/01, § 96, 12 June 2008; Salmanov v. Russia, no. 3522/04, § 64, 31 July 2008; and Starokadomskiy v. Russia, no. 42239/02, § 58, 31 July 2008).
160. Having regard to the foregoing, the Court considers that in the circumstances of the present case the cumulative effect of malnutrition and state of health of the applicant on the court hearings held on 23 May 2011 and on 17, 18 and 19 January 2012 must have been of an intensity such as to induce in the applicant physical suffering and mental fatigue. This must have been further aggravated by the fact that the above treatment occurred during the applicant’s trial, a time when he most needed his powers of concentration and mental alertness. The Court therefore concludes that the applicant was subjected to inhuman and degrading treatment contrary to Article 3 of the Convention (see, for similar reasoning, Strelets, cited above, § 62).
161. Accordingly, there has been a violation of Article 3 of the Convention.
IV. ALLEGED VIOLATION OF ARTICLE 3 OF THE CONVENTION ON ACCOUNT OF THE APPLICANT’S PLACEMENT IN A METAL CAGE DURING THE TRIAL
162. The applicant finally complained, relying on Articles 2 and 3 of the Convention, of his confinement in a metal cage in the courtroom during the hearings before the Pechersk Court.
163. The Court finds it appropriate to examine the applicant’s complaint under Article 3 of the Convention.
A. Admissibility
164. 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. Parties’ submissions
165. The Government maintained that the applicant had been held behind the metal bars in the courtroom in accordance with the relevant domestic legislation. They explained that the bars were intended to separate defendants upon whom the preventive measure of detention had been imposed from the bench and those present in the courtroom, so that those individuals could be securely guarded during the court hearings.
166. The Government argued that the State authorities had not intended to humiliate or debase the applicant. He had been held behind the metal bars in the interest of public safety. Furthermore, the measure of holding the applicant behind metal bars could in no way have caused him distress or humiliation of an intensity exceeding the unavoidable level of suffering or humiliation inherent in detention.
167. The applicant submitted that the national legislation did not state that the accused should be put in metal cages during public hearings. According to him, nothing in his behaviour or personality could have justified such a security measure, because he had no previous convictions, no record of violent behavior, and was accused of a non-violent crime. Despite that, he had been kept in the cage throughout the trial, exposed to the public, which had humiliated him and aroused in him feelings of inferiority.
2. The Court’s assessment
168. The Court reiterates that a measure of restraint does not normally give rise to an issue under Article 3 of the Convention where this measure has been imposed in connection with lawful detention and does not entail a use of force, or public exposure, exceeding that which is reasonably considered necessary. In this regard it is important to consider, for instance, whether there was a danger that the person concerned might abscond or cause injury or damage (see, e.g., Öcalan v. Turkey [GC], no. § 182, ECHR 2005‑IV).
169. The Court has previously examined the issue of holding a person in a metal “cage” during court hearings in a number of cases (see, lastly, Svinarenko and Slyadnev v. Russia [GC], nos. 32541/06 and 43441/08, §§ 113-139, 17 July 2014), a practice which is still present in a few Member States including Ukraine (cited above, § 75). In those cases, in which the Court found a violation of Article 3, the applicants were accused of non-violent crimes, they had no criminal record, there was no evidence that they were predisposed to violence, and the “security risks” were not supported by any specific facts. Furthermore, those applicants’ trials attracted considerable media attention. Therefore, the reasonable balance between the different interests at stake was upset.
170. In the case at hand, it appears from the documents submitted by the parties that the applicant was held in a cage with metal bars during all the eighty hearings which took place between 23 May 2011 and 27 February 2012 (see paragraph 14 above). It is not for the Court to examine this practice in the abstract, but to assess whether in the applicant’s case the measure was justified in the light of the above criteria.
171. In this connection, the Court notes that no evidence before it attests to the applicant’s having a criminal record. Likewise, he was not suspected of having committed a violent crime. It is therefore not convinced by the Government’s argument that the applicant was placed in the metal cage in the interest of public safety. It emerges that the dock with metal bars was permanently installed in the courtroom, and that the applicant, who was a largely known politician (see also Ashot Harutyunian, cited above, § 126 et seq.; and Khodorkovskiy v. Russia, no. 5829/04, §§ 120 et seq., 31 May 2011), was placed there during all the hearings held before the Pechersk Court from May 2010 to February 2012. The Court further notes that the criminal procedure was closely observed by journalists, and photographs depicting the applicant behind metal bars were published soon after the court hearings (see paragraph 14 above). The Court also takes into consideration that the proceedings against the applicant had gained a high profile. Thus, the applicant was exposed behind bars not only to those attending the hearings but also to a much larger public who were following the proceedings in both national and international media.
172. Although, in contrast with the cases referred above, the applicant was not handcuffed, the Court considers that, given their cumulative effect, the security arrangements in the courtroom were, in the circumstances, excessive, and could have been reasonably perceived by the applicant and the public as humiliating.
173. There has, therefore, been a violation of Article 3 of the Convention, in that the treatment was degrading within the meaning of this provision.
V. APPLICATION OF ARTICLE 41 OF THE CONVENTION
174. 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.”
175. The applicant did not submit a claim for just satisfaction. Accordingly, the Court considers that there is no call to award him any sum on that account.
FOR THESE REASONS, THE COURT,
1. Declares, unanimously, the application admissible;
2. Holds, by six votes to one, that there has been a violation of Article 3 of the Convention on account of the conditions of the applicant’s detention in the detention facility from 28 December 2010 to 28 April 2011;
3. Holds, unanimously, that there has been no violation on account of the conditions of his detention in the detention facility from 28 April to 10 May 2011, from 23 May 2011 to 6 April 2012 and on 20 April 2012;
4. Holds, unanimously, that there has been no violation of Article 3 of the Convention on account of the medical treatment in the detention facility;
5. Holds, unanimously, that there has been a violation of Article 3 of the Convention on account of the conditions of the applicant’s detention on the hearing days;
6. Holds, unanimously, that there has been a violation of Article 3 of the Convention on account of the applicant’s placement in a metal cage during the trial.
Done in English, and notified in writing on 11 June 2015, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Claudia WesterdiekMark VilligerRegistrarPresident
In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the separate opinion of Judge Pejchal is annexed to this judgment.
M.V.C.W.
PARTLY DISSENTING OPINION OF JUDGE PEJCHAL
I am in full agreement with my colleagues regarding their conclusion declaring the application admissible. I am also in full agreement with them regarding their finding that there has been no violation on account of the conditions of the applicant’s detention in the detention facility from 28 April to 10 May 2011, from 23 May 2011 to 6 April 2012 and on 20 April 2012; that there has been no violation of Article 3 of the Convention on account of the medical treatment in the detention facility; that there has been a violation of Article 3 of the Convention on account of the conditions of the applicant’s detention on the hearing days; and that there has been a violation of Article 3 of the Convention on account of his placement in a metal cage during the trial.
However, to my regret I have to dissent regarding the finding of a violation of Article 3 of the Convention on account of the conditions of the applicant’s detention in the detention facility from 28 December 2010 to 28 April 2011.
The Commentary on Rule 18 of Recommendation Rec(2006)2 of the Committee of Ministers (the European Prison Rules) reads as follows:
“The [European Committee for the Prevention of Torture and Degrading Treatment or Punishment], by commenting on conditions and space available in prisons in various countries has begun to indicate some minimum standards. These are considered to be 4m2 for prisoners in shared accommodation and 6m2 for a prison cell. These minima are, related however, to wider analyses of specific prison systems, including studies of how much time prisoners actually spend in their cells. These minima should not be regarded as the norm.”
Paragraph 83 of the judgment reads:
“According to the Government, the cell had a proper ventilation system and natural lighting. The applicant had had daily exercise in the fresh air, except on days when lengthy court hearings were held. He was permitted to receive drinking water from relatives. He was allowed to take a shower once or twice a week.”
The Court’s assessment, as set out in paragraphs 117-120, does not contain any closer analysis of the specific conditions in this particular prison, nor does it deal with the opinion of the Government. The Court only states in paragraph 117 that the applicant had “at his personal disposal 2.86 square metres.”
The case-law listed in paragraph 118 does not seem to correspond to the instant case. The conditions of the applicants in the cases of Melnik v. Ukraine (no. 72286/01, 28 March 2006), Iglin v. Ukraine (no. 39908/05, §§ 51-52, 12 January 2012), and Zinchenko v. Ukraine (no. 63763/11, 13 March 2014) were much worse than those of the present applicant in the period from 28 December 2010 to 28 April 2011.
Every international treaty must be interpreted within the limits of international law. Any consideration of the Court is also bound by international law. The general rule of interpretation of international treaties is provided for in the Vienna Convention on the Law of Treaties, in Article 31 § 1, which reads as follows:
“A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.”
The sweeping deliberation of the Court and its uncritical interpretation of Article 3 of the Convention (which I think is contrary to the Vienna Convention on the Law of Treaties) may be dangerous as regards the implementation of the Court’s case-law on the national level.
Furthermore, this sweeping kind of decision-making of the Court is not quite in line with its subsidiary role.
In view of the absence of a detailed consideration of what, in fact, transpired at national level, and in the light of the facts which can be ascertained from the judgment, I cannot agree that there has been a violation of Article 3 of the Convention.
ANNEX
Date
of the hearing
Time when the applicant was put in the car
Arrival
in the courthouse
Beginning
of the hearings
End of the hearings
Time when the car with the applicant left the courthouse
Time of reaching the SIZO
1
23.5.2011
-
7.20 am.
11.04 am.
3.08 pm.
3.30 pm.
4.10 pm.
2
27.5.2011
7.30 am.
7.50 am.
11.00 am.
1.49 pm.
3.00 pm.
3.15 pm.
3
9.6.2011
7.00 am.
7.20 am.
10.04 am.
4.19 pm.
5.00 pm.
5.30 pm.
4
20.6.2011
7.10 am.
7.35 am.
10.05 am.
4.33 pm.
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| 1 |
Opinion of Mr Advocate General Mischo delivered on 26 January 1999. - Eurowings Luftverkehrs AG v Finanzamt Dortmund-Unna. - Reference for a preliminary ruling: Finanzgericht Münster - Germany. - Freedom to provide services - Trade tax - Add-back to the taxable amount - Exemption inapplicable to the lessee where the proprietor of the goods leased is established in another Member State and is therefore not liable to the tax. - Case C-294/97.
European Court reports 1999 Page I-07447
Opinion of the Advocate-General
1 In proceedings between Eurowings Luftverkehrs AG (`Eurowings'), an aviation company incorporated under German law, and the Finanzamt (Tax Office) Dortmund-Unna concerning payment of the `Gewerbesteuer' (trade tax), the Finanzgericht Münster has asked the Court to give a preliminary ruling on the interpretation of Article 59 of the EC Treaty in relation to certain aspects of the Gewerbesteuergesetz (Trade Tax Law, `the GewStG').
The national rules
2 Paragraph 2 of the GewStG of 21 March 1991 (1) provides that any permanent business establishment operating in Germany is subject to trade tax.
3 Trade tax is a non-personal tax on the business establishment as such, irrespective of the resources or the personal circumstances of the taxpayer owning the establishment.
4 Paragraph 6 of the GewStG provides that the taxable amount consists of the trade earnings and the trade capital. (2)
5 `Trade earnings' are the profits of the business establishment, determined in accordance with the income tax laws or the corporation tax laws. These profits are subject to certain add-backs and deductions, in accordance with Paragraphs 8 and 9 of the GewStG. The purpose of the add-backs and deductions is to determine the objective earnings of the business, irrespective of whether the capital employed belongs to the business itself or to a third party.
6 Thus Paragraph 8 of the GewStG, entitled `Add-back to the taxable amount', provides in subparagraph (7) that there must be added to the earnings of the business:
`half of the rental payments made for the use of fixed business assets, other than real property, owned by another person. This does not apply where the payments are to be taken into account for the purposes of trade tax on the lessor's earnings, unless the lease is of an undertaking (Betrieb) or part of an undertaking and the rental payments exceed DEM 250 000. The amount to be taken into account is that which the lessee has to pay to a lessor for the use of business assets which he does not own in the business establishment within a municipality'.
7 The GewStG therefore generally supposes that the net income derived from the leased asset corresponds to one half of the rental paid.
8 `Trade capital' corresponds to the value for tax purposes of the business capital determined in accordance with the law laying down the criteria for assessment, adjusted to take account of the amounts added back pursuant to Paragraph 12(2) of the GewStG and the deductions provided for in Paragraph 12(3) of the GewStG. The purpose of these add-backs and deductions is to determine the capital belonging to the business and to third parties which is objectively employed in the business.
9 Paragraph 12(2)2 of the GewStG, entitled `Trade capital', thus provides that the following amounts are to be added to the taxable value of the business:
`the (current) value of business assets, other than real property, used for the purposes of the business but owned by a member of the business or by a third party, to the extent that they are not included in the taxable value of the business. This does not apply where the assets form part of the lessor's trade capital, unless a business or part of a business is leased and the (current) value of the leased assets of the business (or part of a business) included in the lessor's trade capital exceeds DEM 2.5 million. The amount to be taken into account is the total value of the business assets made available by the lessor to the lessee for use in the business establishment within a municipality'.
10 Like the second sentence of Paragraph 8(7) in relation to rental payments, the second sentence of Paragraph 12(2)2 thus provides that the value of business assets owned by a third party is not to be added back in so far as those assets are already subject to trade tax in the hands of the lessor.
11 It is apparent from the observations submitted to the Court by Eurowings that trade tax is calculated in two stages. First, trade capital is subject to a `tax coefficient' set at a uniform rate throughout Germany at 0.2% for trade capital and 5% for trade earnings; the `weighted taxable amount' thus obtained is then multiplied by a `rate' determined by each municipality. In 1993 this rate varied between 0%, notably in the municipality of Norderfriedrichskoog (Schleswig-Holstein), and 515% in Frankfurt-am-Main. In Dortmund, where Eurowings has its registered office, the rate applicable in 1993 was 450%.
Background to the dispute
12 Eurowings operates scheduled and charter flights in Germany and in Europe. In 1993 it leased an aircraft from Air Tara Ltd, a company incorporated under Irish law based at Shannon; the rental was DEM 467 914. The current value of the aircraft, calculated according to its use on German territory, was DEM 1 320 000. By decision of 21 May 1996 the Finanzamt Dortmund-Unna assessed the trade tax payable for 1993 by adding back to the trade earnings, in accordance with Paragraph 8(7) of the GewStG, half the rental payments actually made, namely DEM 233 957. Pursuant to Paragraph 12(2) of the GewStG the Finanzamt also added back the current value of the leased aircraft, DEM 1 320 000, to the trade capital.
13 On 13 June 1996 Eurowings lodged a complaint against the decision of the Finanzamt Dortmund-Unna, which the latter rejected by a decision of 8 July 1996. On 11 July 1996 Eurowings brought an action before the Finanzgericht Münster; it claimed that Paragraphs 8(7) and 12(2) of the GewStG were incompatible with Article 59 et seq. of the EC Treaty.
14 The Finanzgericht observes that under Community law Eurowings is able to rely on discrimination contrary to Article 59 of the Treaty even though such discrimination does not directly affect Eurowings but affects the lessor incorporated under Irish law.
15 The Finanzgericht further observes that Irish limited companies are comparable to German share companies within the meaning of Paragraph 1 of the German corporation tax law and that if such companies leased aircraft in Germany their activities would be regarded entirely as business activities under Paragraph 2(2) of the GewStG.
16 The Finanzgericht points out that the scheme of the add-back provisions relating to trade tax is based on the legislative intention to ensure that the asssets employed by a domestic business undertaking are taxed, and taxed only once, irrespective of whether they were financed by the business or from outside and of whether the trade capital is owned by the undertaking for the purposes of civil law. This was achieved by adding back rental payments and the value of the economic assets to the earnings of the business. It is necessary in such a system, therefore, for an exception to be made in cases where the rental payments or assets in question are already subject to trade tax in the hands of the lessor.
17 The national court observes, however, that the fiscal treatment of a lessee who leases an asset from a lessor established in another Member State is less favourable than where the lessee leases such an asset from a lessor established in Germany, which might constitute covert discrimination contrary to Article 59 of the Treaty.
18 The national court considers it doubtful whether the intention to ensure coherence of taxation can justify the add-back provisions of the GewStG. The Court of Justice has held (3) that the aim of ensuring the cohesion of the tax system can justify a difference in treatment between residents and non-residents only where the fiscal disadvantage imposed on the national of a Member State is compensated by a corresponding fiscal advantage which that national is able to enjoy, so that in reality there is no discrimination against him. A mere link between the fiscal advantage conferred on one taxpayer and the unfavourable fiscal treatment of another taxpayer cannot justify discrimination between residents and non-residents. In that regard, the national court observes that in a decision of 30 December 1996 (4) the Bundesfinanzhof considered that there was serious doubt whether the add-back provisions in the second sentence of Paragraph 8(7) and the second sentence of Paragraph 12(2)2 of the GewStG were compatible with the prohibition on discrimination in Article 59 et seq. of the Treaty, although it had accepted in an earlier decision that they were. (5)
19 Last, the Finanzgericht wonders whether it is necessary to take into consideration the fact that the Irish lessor pays no tax comparable to the German business tax and enjoys `Shannon privileges' in the form of corporation tax at 10%. In the present case such fiscal advantages might neutralise the theoretical restriction of freedom to provide services and mean that if the lessor enjoyed the same exceptions to the add-back provisions as German lessors it would be the latter that were victims of discrimination. The Finanzgericht is not certain that such an argument can be upheld, however, since the Court has also held that the compensation of fiscal disadvantages by other fiscal advantages cannot justify discrimination. (6)
20 The Finanzgericht Münster therefore decided to refer the following question to the Court for a preliminary ruling:
`Are the add-back provisions in the second sentence of Paragraph 8(7) and the second sentence of Paragraph 12(2)2 of the [GewStG] compatible with the principle of freedom to provide services under Article 59 of the Treaty on European Union of 7 February 1992?'
Preliminary observation
21 As the Commission correctly observes, the question as formulated is inadmissible, since the Court is requested to rule on the compatibility of provisions of German law with Community law.
22 The Court has consistently held, however, that although the Court may not, under Article 177 of the Treaty, rule on the validity, in regard to Community law, of a provision of domestic law, as it would be possible for it to do under Article 169 of the Treaty, it nevertheless has jurisdiction to supply the national court with an interpretation of Community law on all such points as may enable that court to determine the issue of compatibility for the purposes of the case before it. (7)
23 The question referred by the Finanzgericht Münster must therefore be understood as seeking to ascertain, in essence, whether Article 59 of the Treaty prohibits national rules such as those laid down in the second sentence of Paragraph 8(7) and the second sentence of Paragraph 12(2)2 of the GewStG.
Analysis
Principles laid down in the case-law of the Court
24 I shall begin by examining the principles laid down in the Court's case-law which are material to the issue before the Court. The dispute before the national court falls within the field of direct taxation. The Court has consistently held that `[a]lthough, as Community law stands at present, direct taxation does not, as such, fall within the purview of the Community, the powers retained by the Member States must nevertheless be exercised consistently with Community law'. (8) In this field too, therefore, the Member States must observe the fundamental freedoms laid down in the Treaty, including the freedom to provide services.
25 Second, it should be observed that the provisions at issue are drafted in neutral terms, in that they are in no way meant to apply specifically to providers of services of another nationality or to those intending to carry out their activities in Germany while based in another Member State. In the present case, moreover, it is the application of that provision to a German company operating in Germany that is disputed.
26 The situation in question therefore concerns a restriction which is indirect, in the sense that the application of the German law to a German undertaking has the effect of dissuading it from having recourse to the services offered by a provider of services established in another Member State.
27 As the Finanzgericht Münster, Eurowings and the Commission have correctly pointed out, it follows from the case-law (9) that Article 59 of the Treaty confers subjective rights not only on the provider of services but also on the recipient.
28 As regards the matters prohibited by Article 59 of the Treaty, the Court has consistently held that that provision may be infringed not only where there is direct discrimination based on nationality or indirect discrimination based on the residence of the provider of services, but also where national rules applicable to all traders without distinction have the effect of making the provision of services between Member States more difficult than the provision of services purely within one Member State. (10)
Impact of the rules in issue
29 Having outlined the framework established by the Court's case-law, I can now go on to consider the rules at issue.
30 It should be noted at the outset that the objective pursued by the German legislature, as described by the Finanzgericht (point 16 above), is not something which is open to challenge.
31 Nor can the principle that a German lessee is subject to the Gewerbesteuer, irrespective of the State of establishment of the lessor, be subject to challenge, it being merely an instance of the fiscal sovereignty of the Federal Republic of Germany.
32 Where the problem does arise, on the other hand, is at the level of the rules which determine how the lessee is taxed, depending upon whether the lessor is in Germany or in another Member State.
33 The German legislature has provided that the lessee is exempt from the add-back procedure if the amounts which should have been added back are already assessed for the purposes of the Gewerbesteuer in the hands of the lessor, which by definition can never be so where the lessor is established in another Member State.
34 The Finanzgericht Münster has already drawn the following conclusion in the order for reference: (11)
`Comparison between domestic and foreign lessors means ... that payments to a foreign lessor entail a fiscal disadvantage for a person subject to domestic trade tax, which may be in breach of the prohibition of discrimination in the EC Treaty where the foreign lessor has the nationality of another Member State or has its seat or head office there'. The Finanzgericht goes on to state that this system represents a competitive disadvantage for a provider of services established in another Member State, since it `may lead the German lessee - all other things being equal - to contract with a German lessor'.
35 As thus described by the national court, the national rules and their effects give reason to think that they constitute a restriction on freedom to provide services.
36 That they do is disputed, however, by the Finanzamt Dortmund-Unna and by the German Government, who put forward four arguments in that regard.
Arguments put forward in defence of the rules in issue
37 The German Government maintains, first, that the contested provisions entail not only no direct discrimination but also no `hidden indirect discrimination' against providers of services established in other Member States, because lessees are also required to add back the relevant amounts in respect of assets leased from lessors established in Germany where the lessors are not subject to the GewStG.
38 That would be the case where a chemist who had ceased to practise granted a lease on his chemist's shop in Germany. Since he no longer had any business activity the chemist would not be liable to trade tax. The lessee's activity would be subject to that tax, however, and it would therefore be necessary to add back to the earnings of that activity half the rental payments made in respect of the chemist's shop, in accordance with the first sentence of Paragraph 8(7) of the GewStG.
39 That would also be the case where the lessor was exempt from trade tax or where, like the Federation, the Länder or the municipalities, it was exempt as a sovereign authority. Thus where a harbour town leased a crane to a harbour company it would be necessary, pursuant to the first sentence of Paragraph 8(7) of the GewStG, to add back half the rental payments to the company's earnings.
40 Eurowings and the Commission point out, however, that it is only in very rare cases that domestic lessors are not liable to pay trade tax. Depending on the type of activities in which they are involved, entities which are not subject to the GewStG engage in rental or leasing operations only on an ancillary basis and occasionally, if at all.
41 In the light of what was submitted at the hearing that fact can be regarded as established.
42 Rules in a Member State which confer a fiscal advantage on the majority of domestic operations and always deprive cross-border operations of that advantage undeniably constitute a restriction on the freedom to provide services.
43 In Safir (12) the Court held that the tax at issue in that case was capable of being higher in the majority of cases than the tax on purely domestic operations.
44 The German Government attempts, second, to justify the tax scheme in question by the need to preserve the cohesion of the tax system, which was upheld by the Court in Bachmann. (13)
45 The Commission contends that the situation at issue in that case was not comparable, since the disadvantage suffered by the taxpayer (non-deduction of insurance premiums) was counterbalanced as far as the taxpayer was concerned by a subsequent advantage (non-taxation of the insured amount).
46 The national court and Eurowings correctly point out, moreover, that in the recent Wielockx and Svensson and Gustavsson judgments the Court held that there must be a direct link between the deduction made and the unfavourable tax consequence. There is no such link in the present case, since the more favourable fiscal treatment of one taxable person, the lessee, is motivated by the collection of tax from another taxable person, the German lessor. On this point they also refer to a decision of the Bundesfinanzhof of 30 December 1996 (14) to the effect that:
`Such a direct link is in any event lacking where the preferential tax arrangement applies to one taxable person whereas the fiscal disadvantage dictated by cohesion affects another taxable person; there the relationship between the two tax rules is only indirect.
The same applies to the rules provided for by the trade tax: the possibility that the rental or lease payments and the value of the leased asset may be deducted by the taxable person in his capacity as lessee is only justified, according to the principle of single taxation inherent in the trade tax, by the fact that the corresponding sums are taxed in the hands of another taxable person, the lessor. The prohibition on effecting such a deduction where the lease is concluded with a lessor established in another Member State of the Community is therefore liable to restrict the freedom to provide services. The fact that that ultimately makes no difference, because the amount of the rental payments is influenced either by the fiscal burden in the form of trade tax borne by the lessor or by that borne by the lessee, is irrelevant. The decisive factor is that the (domestic) lessee may be encouraged to deal with domestic lessors rather than with those established abroad in order to avoid the fiscal charge resulting from the add-back provisions in Paragraphs 8(7) and 12(2)2 of the GewStG. The market opportunities of foreign competitors in comparison with those of a domestic competitor with the same offer are therefore reduced.
... It is extremely doubtful whether the add-back provisions in the second sentence of Paragraph 8(7) and the second sentence of Paragraph 12(2)2 of the GewStG are compatible with the prohibition on discrimination in Article 59 of the EC Treaty.'
47 Eurowings observes that since the Bundesfinanzhof was required to determine a procedural issue, namely an application to suspend enforcement of the fiscal decision, rather than the substance of the case, it was unable to refer the matter to the Court for a preliminary ruling.
48 The Bundesfinanzhof's analysis is in any event entirely consistent with the Court's case-law, including on the question of fiscal cohesion. An overriding requirement associated with the need to preserve the cohesion of the tax system cannot therefore be accepted in the present case.
49 Third, the German Government claims that there is no longer any justification for adding back the relevant amounts to the lessee's taxable amount where the (German) lessor is also liable to pay the trade tax, since to do so would lead to double taxation of the rental payments and the value of the leased assets. Where an asset is supplied by a lessor who is liable to pay the GewStG the lessor incorporates the tax in the amount of the rental payments and thus passes it on to the lessee. From an economic aspect it is therefore the lessee who ultimately bears the tax burden.
50 That argument seeks in essence to demonstrate that in all circumstances it is the lessee who bears the tax burden. Where the lessor is not subject to the GewStG the lessee pays the tax directly by means of the add-back procedure, whereas where the lessor is subject to the GewStG the lessee pays the tax indirectly by virtue of the fact that the lessor passes it on in the price.
51 I do not find that explanation convincing.
52 As Eurowings observed, without being contradicted by the German Government on that point, in the context of a German lease the lessee is always exempt purely because the lessor is subject to the GewStG, irrespective of the ways in which the latter may avoid actually paying the tax. Unlike a lessee in a cross-border lease, the lessor has a number of means of reducing the level of the tax, such as, inter alia, the fact that it is the book value rather than the market value of the assets that is taken into account, the fact that half rather than the whole amount of the long-term payments are added back, the use of flat-rate financing to purchase the assets in order to reduce the trade capital and the fact that only actual earnings on assets leased in Germany, rather than half the rental payments, are taken into account. Moreover, German banks offer `leasing funds', the prospectuses of which show that tax on trade earnings is not payable and that tax on trade capital is payable for only part of the contract period. Furthermore, since a lessor of aircraft is not tied to a town with an airport it can establish itself in a municipality which has fixed a very low rate, or even a zero rate, for the GewStG.
53 It may very well be the case, therefore, that in reality the leased assets are not actually taxed in the hands of the German lessor under the GewStG, although the lessee is not subject to the add-back procedure. Thus the advantage which the lessee derives from exemption from the add-back provisions is not in any way linked to the amount paid by the lessor under the GewStG.
54 I also consider that even if the assets were taxed in the hands of the German lessor it would be impossible to conclude that that fiscal burden would be automatically passed on in full in the rental payments in such a way that the burden would be borne by the lessee.
55 Other than in the case of VAT, which is specifically designed to ensure that the actual burden of the tax is borne by the end user, it is never safe to presume that a fiscal charge is the same for the consumer irrespective of whether it is paid by the consumer qua taxable person or is paid by the supplier and incorporated in the price.
56 In a competitive system there can be no presumption that a fiscal charge is passed on either in full or automatically in the price of goods or services; whether and to what extent that is so depends entirely on the competitive conditions prevailing in the market at a particular time. There would need to be an agreement in existence between German lessors (and it is by no means certain that such an agreement would be legal) before there could be any guarantee that the fiscal burden would automatically be passed on in full. Even if by some remote chance that were the case, I fail to see how national rules could cease to be illegal merely because their effect was neutralised by the conduct of traders.
57 The German system cannot therefore be regarded as neutral for competition purposes as between German lessors and those established in other Member States. It actually encourages German lessees of fixed assets other than real property to deal with a lessor established in Germany, since such a lessor is able to offer its customers a service the value of which will not be taken into account for the purpose of determining the basis on which the trade tax payable by its customers will be assessed, even though the price of the service does not necessarily include a fiscal charge representing that tax.
58 Fourth, it remains to consider an argument raised by the defendant in the main proceedings, the Finanzamt, to the effect that `in order to determine whether there is a restriction on the free movement of services, it is necessary to compare the fiscal circumstances as a whole (meaning that in the present case the lower taxes in Ireland must be taken into consideration)'. The national court asks whether it is necessary to take into consideration the fact that the leasing company established under Irish law pays no tax comparable to the German Gewerbesteuer. However, it doubts that such an argument can be upheld, having regard to the Court's case-law. (15)
59 The Finanzgericht's doubts are well founded. One can only share the Commission's opinion that accepting such justification `would interfere with the foundations of the internal market. If differences in the direct taxation of undertakings could be "neutralised" by compensatory levies imposed by Member States on intra-Community movements of goods, services and capital, little would remain of those fundamental freedoms. Virtually all goods and services moving between Member States would be subject to one compensatory levy or another ... Member States and undertakings must in principle accept differences in fiscal charges in the same way as differences in social charges or labour costs'.
60 At the hearing the Agent of the Federal Republic of Germany also accepted that the existence or otherwise of a comparable tax in other Member States was not to be taken into consideration.
61 Last, it remains to consider whether the tax regime in issue is the only one capable of allowing the Federal Republic of Germany to achieve the objective pursued, or whether there are other means of attaining that objective.
62 One possible method might be to reduce the charge represented by the Gewerbesteuer on the `transnational' provision of services to the level applicable in the case of the `domestic' provision of services. This method must remain purely theoretical, however, as long as the rate of the GewStG may vary between 0% and 515%, depending on the municipality concerned, and as long as the question whether the Gewerbesteuer is or is not passed on to the lessee by the lessor remains wholly uncertain.
63 Another method of achieving equality of treatment would be to require the lessee to add back the relevant amounts even where the leasing contract was concluded with a German lessor and, in return, to exempt the lessor from the trade tax.
64 In so doing the German authorities might find inspiration in the system already applicable where an undertaking (Betrieb) or part of an undertaking is leased and the rental payments exceed DEM 250 000 (see the `exception to the exception' in the second sentence in fine of Paragraph 8(7)).
65 The law provides that where the rental payments have thus been added back to the hirer's or lessee's business assets the basis for assessment of the tax is reduced by a corresponding amount in the hands of the lessor or owner of the leased assets (Paragraph 9(4) of the GewStG).
66 For lease agreements of this type the same rules applied to the determination of the trade capital (Paragraph 12(2)2 and (3)3) until 31 December 1997, the date on which this capital ceased to be taken into account for the purpose of determining the trade tax.
67 The system at issue therefore also fails to meet the condition of being `objectively necessary' to attain the end pursued.
68 Having completed my reasoning, I must therefore conclude that a system such as that at issue in the main proceedings establishes a restriction on the freedom to provide services because the recipient of a cross-border service is always taxed, whereas it is by no means certain that the recipient of a domestic service is required, in one form or another, to bear a comparable burden or even any burden whatsoever.
Conclusion
69 I therefore propose that the Court answer the question referred by the Finanzgericht Münster in the terms proposed by the Commission, namely that:
Article 59 of the EC Treaty is to be interpreted as prohibiting a Member State from subjecting the recipient of a service to a higher tax on his business if the provider of the service in question is established in another Member State than if the provider of the service is established in its own territory, by means of provisions on adding back to the taxable amount certain items relating to the earnings and capital of the business.
(1) - BGBl. I, p. 814.
(2) - Since 1 January 1998 the taxable amount has been limited to the trade earnings.
(3) - Case C-80/94 Wielockx v Inspecteur der Directe Belastingen [1995] ECR I-2493 and Case C-484/93 Svensson and Gustavsson v Ministère du Logement et de l'Urbanisme [1995] ECR I-3955.
(4) - BStBl. II, 1997, p. 466.
(5) - Judgment of 15 June 1983 (BStBl. II, 1984, p. 17).
(6) - Case 270/83 Commission v France [1986] ECR 273, paragraph 21, and Case C-107/94 Asscher v Staatssecretaris van Financiën [1996] ECR I-3089.
(7) - See, in particular, Joined Cases C-304/94, C-330/94, C-342/94 and C-224/95 Tombesi and Others [1997] ECR I-3561.
(8) - See, in particular, Case C-279/93 Finanzamt Köln-Altstadt v Schumacker [1995] ECR I-225, paragraph 21.
(9) - See, in particular, Joined Cases 286/82 and 26/83 Luisi and Carbone v Amministrazione delle Finanze dello Stato [1984] ECR 377 and Svensson and Gustavsson, cited above.
(10) - See, in particular, case C-381/93 Commission v France [1994] ECR I-5145, paragraph 17.
(11) - Part II, 5(a), third paragraph.
(12) - Case C-118/96 Safir v Skattemyndigheten i Dalarnas Län [1998] ECR I-1897.
(13) - Case C-204/90 Bachmann v Belgian State [1992] ECR I-249.
(14) - Cited above.
(15) - See point 19 above. | 6 |
Order of the Court of First Instance (Second Chamber) of 29 April 2009 – S.F. Turistico Immobiliare v Council and Commission (Case T-408/08) Actions for annulment – Act complained of not attributable to the Council – Partial inadmissibility Actions for annulment – Action against a decision applying guidelines for State aid for regional purposes – Act attributable solely to the Commission – Action brought against the Council and Commission – Partial inadmissibility (Art. 230 EC) (see paras 9-13) Re:
APPLICATION to annul Commission Decision 2008/854/EC of 2 July 2008, on a State aid scheme, Regional Act No 9 of 1998 – Misapplication of aid N 272/98 (OJ 2008 L 302, p. 9).
Operative part
1.
The appeal is dismissed as inadmissible insofar as it is against the Council of the European Union.
2.
SF Turistico Immobiliare Srl is ordered to pay the costs of the Council and its own costs of the proceedings on the plea of inadmissibility. | 0 |
Judgment of the Court of 13 October 1977. - Renato Manzoni v Fonds national de retraite des ouvriers mineurs. - Reference for a preliminary ruling: Tribunal du travail de Charleroi - Belgium. - Case 112-76.
European Court reports 1977 Page 01647
Greek special edition Page 00487
Portuguese special edition Page 00571
Summary
Parties
Subject of the case
Grounds
Decision on costs
Operative part
Keywords
1 . SOCIAL SECURITY FOR MIGRANT WORKERS - SOCIAL SECURITY BENEFITS - OVERLAPPING - LIMITATION - ENTITLEMENT BY VIRTUE OF A NATIONAL LEGISLATION ALONE - REDUCTION - PROHIBITION
( EEC TREATY , ARTICLE 51 ; REGULATION NO 1408/71 OF THE COUNCIL , ARTICLE 46 ( 3 ))
2 . SOCIAL SECURITY FOR MIGRANT WORKERS - INSURANCE PERIODS - DUPLICATION - SOCIAL SECURITY BENEFITS - RULES AGAINST OVERLAPPING - APPLICATION - CONDITION
( REGULATION NO 1408/71 OF THE COUNCIL , ARTICLE 46 ( 3 ))
Summary
1 . AN APPLICATION OF ARTICLE 46 ( 3 ) OF REGULATION NO 1408/71 WHICH WOULD LEAD TO A DIMINUTION OF THE RIGHTS WHICH THE PERSONS CONCERNED ALREADY ENJOY IN A MEMBER STATE BY VIRTUE OF THE APPLICATION OF THE NATIONAL LEGISLATION ALONE IS INCOMPATIBLE WITH ARTICLE 51 . ARTICLE 46 ( 3 ) OF REGULATION NO 1408/71 IS INCOMPATIBLE WITH ARTICLE 51 OF THE TREATY TO THE EXTENT TO WHICH IT IMPOSES A LIMITATION ON BENEFITS ACQUIRED IN DIFFERENT MEMBER STATES BY A REDUCTION IN THE AMOUNT OF A BENEFIT ACQUIRED UNDER THE NATIONAL LEGISLATION OF A MEMBER STATE ALONE .
2 . THE APPLICATION OF RULES PREVENTING THE OVERLAPPING OF BENEFITS WHERE THERE IS DUPLICATION OF INSURANCE PERIODS IS POSSIBLE ONLY WHERE FOR THE ACQUISITION OR CALCULATION OF THE WORKER ' S RIGHT IT IS NECESSARY TO HAVE RECOURSE TO AGGREGATION OF THE INSURANCE PERIODS AND APPORTIONMENT OF THE BENEFITS .
Parties
IN CASE 112/76
REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE TRIBUNAL DU TRAVAIL ( LABOUR TRIBUNAL ), CHARLEROI , FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN
RENATO MANZONI , CHATELINEAU
AND
FONDS NATIONAL DE RETRAITE DES OUVRIERS MINEURS , BRUSSELS ,
Subject of the case
ON THE INTERPRETATION OF ARTICLE 51 OF THE EEC TREATY AND ARTICLE 46 ( 3 ) OF REGULATION NO 1408/71 OF THE COUNCIL OF 14 JUNE 1971 ON THE APPLICATION OF SOCIAL SECURITY SCHEMES TO EMPLOYED PERSONS AND THEIR FAMILIES MOVING WITHIN THE COMMUNITY ( OJ , ENGLISH SPECIAL EDITION 1971 ( II ), P . 416 ),
Grounds
1 BY A JUDGMENT DATED 18 NOVEMBER 1976 , RECEIVED AT THE COURT REGISTRY ON 25 NOVEMBER 1976 , THE TRIBUNAL DU TRAVAIL , CHARLEROI , REFERRED CERTAIN QUESTIONS UNDER ARTICLE 177 OF THE EEC TREATY ON THE INTERPRETATION OF ARTICLE 51 OF THE EEC TREATY AND ARTICLE 46 ( 3 ) OF REGULATION NO 1408/71 OF THE COUNCIL OF 14 JUNE 1971 ON THE APPLICATION OF SOCIAL SECURITY SCHEMES TO EMPLOYED PERSONS AND THEIR FAMILIES MOVING WITHIN THE COMMUNITY ( OJ , ENGLISH SPECIAL EDITION 1971 ( II ), P . 416 ).
2 THESE QUESTIONS HAVE BEEN REFERRED IN THE CONTEXT OF AN ACTION CONCERNING THE WAY IN WHICH THE COMPETENT BELGIAN INSTITUTION CALCULATED THE INVALIDITY PENSION OF AN ITALIAN NATIONAL , THE PLAINTIFF IN THE MAIN ACTION , WHO WORKED FIRST IN ITALY AND THEN IN BELGIUM AS AN UNDERGROUND WORKER IN THE MINES .
3 IN BELGIUM THAT WORKER SATISFIED ALL THE CONDITIONS LAID DOWN BY THE NATIONAL LEGISLATION FOR ENTITLEMENT TO AN INVALIDITY PENSION UNDER THE SCHEME FOR MINEWORKERS .
4 ON THE OTHER HAND , FOR HIS ENTITLEMENT TO BENEFIT IN ITALY , HE HAD TO HAVE RECOURSE TO THE PROVISIONS OF ARTICLE 45 OF REGULATION NO 1408/71 ; FOR THE PURPOSES OF CALCULATING THAT BENEFIT , THE PERIODS ACTUALLY COMPLETED IN BOTH MEMBER STATES WERE AGGREGATED AND THE ITALIAN BENEFIT WAS APPORTIONED .
5 RELYING ON THE RULE FOR THE LIMITATION OF BENEFITS LAID DOWN BY ARTICLE 46 ( 3 ) OF REGULATION NO 1408/71 , THE BELGIAN INSTITUTION BELIEVED IT COULD REDUCE THE INVALIDITY PENSION BY THE AMOUNT OF THE APPORTIONED ITALIAN BENEFIT AND CLAIMED REPAYMENT OF THE AMOUNT OVERPAID .
6 IT IS ASKED FIRST : ' IF THE PENSION PAID BY THE BELGIAN STATE UNDER THE PRESENT INVALIDITY PENSION SCHEME FOR MINEWORKERS ESTABLISHED BY THE ROYAL DECREE OF 19 NOVEMBER 1970 AND SUBSEQUENT AMENDING DECREES IS REDUCED ON THE BASIS OF ARTICLE 46 ( 3 ) OF REGULATION ( EEC ) NO 1408/71 BY REASON OF THE BENEFITS PAID BY OTHER MEMBER STATES , IS SUCH REDUCTION IN ACCORDANCE WITH ARTICLE 51 OF THE TREATY OF ROME?
'
7 IT IS THEN ASKED : ' ARE THE COMPETENT INSTITUTIONS ENTITLED TO REDUCE BENEFITS PAYABLE BY THEM BY APPLYING ARTICLE 46 ( 3 ), WHERE THE OVERLAPPING OF THE BENEFITS AWARDED BY THE VARIOUS MEMBER STATES RESULTS IN THE GRANT OF BENEFITS ON THE BASIS OF DUPLICATED INSURANCE PERIODS?
'
FIRST QUESTION
8 THE REGULATIONS IN THE FIELD OF SOCIAL SECURITY FOR MIGRANT WORKERS HAVE AS THEIR BASIS , THEIR FRAMEWORK AND THEIR BOUNDS ARTICLES 48 TO 51 OF THE TREATY .
9 ARTICLE 51 REQUIRES THE COUNCIL TO ADOPT IN THE FIELD OF SOCIAL SECURITY SUCH MEASURES AS ARE ' NECESSARY ' TO PROVIDE FREEDOM OF MOVEMENT FOR WORKERS , PROVIDING FOR THE AGGREGATION , IN PARTICULAR FOR THE PURPOSE OF ACQUIRING AND RETAINING THE RIGHT TO BENEFIT AND OF CALCULATING THE AMOUNT OF BENEFIT , OF ALL PERIODS TAKEN INTO ACCOUNT UNDER THE LAWS OF THE SEVERAL COUNTRIES .
10 THE AIM OF ARTICLES 48 TO 51 WOULD NOT BE ATTAINED IF , AS A CONSEQUENCE OF THE EXERCISE OF THEIR RIGHT TO FREEDOM OF MOVEMENT , WORKERS WERE TO LOSE ADVANTAGES IN THE FIELD OF SOCIAL SECURITY GUARANTEED TO THEM IN ANY EVENT BY THE LEGISLATION OF A MEMBER STATE ALONE .
11 ARTICLE 46 ( 3 ) APPEARS TO BE A RULE LIMITING THE AMOUNT OF THE VARIOUS APPORTIONED BENEFITS AND THE COUNCIL , IN THE EXERCISE OF THE POWERS WHICH IT HOLDS UNDER ARTICLE 51 CONCERNING THE COORDINATION OF THE SOCIAL SECURITY SCHEMES OF THE MEMBER STATES , HAS THE POWER , IN CONFORMITY WITH THE PROVISIONS OF THE TREATY , TO LAY DOWN DETAILED RULES FOR THE EXERCISE OF RIGHTS TO SOCIAL BENEFITS , INCLUDING INVALIDITY BENEFITS , WHICH THE PERSONS CONCERNED DERIVE FROM THE TREATY .
12 HOWEVER , AN APPLICATION OF ARTICLE 46 ( 3 ) OF REGULATION NO 1408/71 WHICH WOULD LEAD TO A DIMINUTION OF THE RIGHTS WHICH THE PERSONS CONCERNED ALREADY ENJOY IN A MEMBER STATE BY VIRTUE OF THE APPLICATION OF THE NATIONAL LEGISLATION ALONE IS INCOMPATIBLE WITH ARTICLE 51 .
13 IT IS THEREFORE PROPER TO CONCLUDE THAT ARTICLE 46 ( 3 ) IS INCOMPATIBLE WITH ARTICLE 51 OF THE TREATY TO THE EXTENT TO WHICH IT IMPOSES A LIMITATION ON BENEFITS ACQUIRED IN DIFFERENT MEMBER STATES BY A REDUCTION IN THE AMOUNT OF A BENEFIT ACQUIRED UNDER THE NATIONAL LEGISLATION OF A MEMBER STATE ALONE .
SECOND QUESTION
14 THE BELGIAN LEGISLATION ON THE SPECIAL INVALIDITY SCHEME FOR MINERS PROVIDES THAT THE INVALIDITY PENSION SHALL BE GRANTED TO A WORKER WHO HAS BEEN EMPLOYED FOR A MINIMUM OF TEN YEARS IN THE MINES .
15 THE PERSON CONCERNED WORKED AS A MINER IN BELGIUM FOR MORE THAN 20 YEARS .
16 THE APPLICATION OF RULES PREVENTING THE OVERLAPPING OF BENEFITS WHERE THERE IS DUPLICATION OF INSURANCE PERIODS IS POSSIBLE ONLY WHERE FOR THE ACQUISITION OR CALCULATION OF THE WORKER ' S RIGHT IT IS NECESSARY TO HAVE RECOURSE TO AGGREGATION OF THE INSURANCE PERIODS AND APPORTIONMENT OF THE BENEFITS .
17 ENTITLEMENT TO A PENSION UNDER BELGIAN LEGISLATION WAS ACQUIRED IN THE PRESENT CASE ON THE BASIS OF PERIODS OF WORK COMPLETED IN BELGIUM ALONE .
18 ACCORDINGLY THE SECOND QUESTION DOES NOT CALL FOR AN ANSWER .
Decision on costs
COSTS
19 THE COSTS INCURRED BY THE BELGIAN GOVERNMENT , THE ITALIAN GOVERNMENT AND THE COMMISSION OF THE EUROPEAN COMMUNITIES , WHICH HAVE SUBMITTED OBSERVATIONS TO THE COURT , ARE NOT RECOVERABLE .
20 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 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 TRIBUNAL DU TRAVAIL , CHARLEROI , BY JUDGMENT OF 18 NOVEMBER 1976 , HEREBY RULES :
ARTICLE 46 ( 3 ) OF REGULATION NO 1408/71 IS INCOMPATIBLE WITH ARTICLE 51 OF THE TREATY TO THE EXTENT TO WHICH IT IMPOSES A LIMITATION ON BENEFITS ACQUIRED IN DIFFERENT MEMBER STATES BY A REDUCTION IN THE AMOUNT OF A BENEFIT ACQUIRED UNDER THE NATIONAL LEGISLATION OF A MEMBER STATE ALONE . | 5 |
CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 82 of 1953. Appeal under article 134 1 c of the Constitution of India from the Judgment and Order dated the 16th August, 1953, of the High Court of Judicature at Hyderabad in Criminal Appeal No. 1557/6 of 1950, arising out of the Judgment and Order dated the 16th October, 1950, of the Court of Special Judge, Warangal, in Case No. 28/2 of 1950. A. Peerbhoy, J. B. Dadachanji and Rajinder Narain for the appellant. Porus A. Mehta and P. G. Gokhale for the respondent. 1954. May 6. The Judgment of the Court was delivered by GHULAM HASAN J.-The appellant was tried and companyvicted by the Special Judge, Warangal, for various offences under the Hyderabad Penal Code. These companyrespond to sections 302, 307, 347 and 384 of the Indian Penal Code, the sentences awarded under the first two sections respectively being death and life imprisonment, and separate sentences of two years rigorous imprisonment under the latter two. The. two learned Judges of the High Court, who heard the appeal, differed, Manohar Pershad J. upholding the companyvictions, and the sentences and M. S. Ali Khan J. acquitting the appellant. The third learned Judge, A. Srinivasachari J., on reference which was Occasioned by the difference of opinion agreed with Manohar Pershad J. Leave to appeal to this Court was granted by the two agreeing Judges. The occurrence which led to the prosecution of the appellant took place on September 13,1948, which was the beginning of the first day of Police action in Hyderabad. The appellant, who was Reserve Inspector of Police stationed at Mahbubabad at the material time, according to the prosecution story, visited two villages Rajole and Korivi accompanied by a number of Razakars and the Police. He arrested Janaki Ramiah P.W. 5 and Nerella Ramulu P.W. 9 at Rajole and took them to Korivi. Outside this village in the waste land he spotted four men going to their fields and shot at them with his gun. The deceased Mura Muthiah and Somanaboyanna Muthandu P.W. 2 were injured in the knee, while the other two Kotta Ramiah P.W. 3 and Kancham Latchiah P.W. 4 were uninjured. The latter two hid themselves behind the babul trees. P.W. 2 also ran away and hid himself in the bajra fields a few yards away but the deceased remained where he fell. The appellant searched for the three persons who had run away. He caught P.W. 3 and P.W. 4 and brought them to the spot where the deceased was lying but he companyld number trace W. 2. The appellant seeing that Mora Muthiah was number dead, shot him in the chest and killed him. The whole party companysisting of P.W. 3, P.W. 4, P.W. 5 and P.W. 9 then went to Korivi village. The appellant stayed at the house of one Maikaldari in the village and spent the night there. Maikaldari and one Berda Agiah P.W. 8 both asked the appellant why he had arrested P.W. 3 and P.W. 4, for they were number Congress men. Upon this the appellant released them. The prosecution story proceeds that the father P.W. 1 of the deceased saw the appellant in the night of the 13th September and asked him why he had killed his son. The appellant without saying more advised him to cremate the dead body. P.W. I borrowed wood from the people and cremated the body. Four months later the appellant went and ,stayed at the Government bungalow Korivi, -sent for P.W. I and offered him Rs. 200/- as hush-money for number disclosing the offence. The offer was refused. P.W. 3 and P.W. 4 who had been released told the father of P.W. 2 next morning that his son was lying injured in the bajra field. He went and had P.W. 2 removed to the hospital where his injuries were attended to. On the same morning the appellant, who had detained P.W. 5 and P.W. 9 in custody, asked them to pay Rs. 200/- when they would be released. P.W. 5 went with a companystable to the house of P.W. 6 and P.W. 7 and borrowed Rs. 100/- from each of them. On this being paid he was released. P.W. 9 was unable to pay any money and he was let off. The defence was a denial of the offence. The appellant denied having zone to the village in question or having companymitted any of the offences attributed to him. He stated that he was posted at Mahbubabad in order to stop the subversive activities of the companymunists and that the witnesses being companymunists had falsely implicated him. He produced witnesses in defence. The First Information Report was lodged on April 14,1949. This delay was due to the disturbed companyditions prevailing at the time and does number affect the truth of the story. The appellant was prosecuted and the charge sheet submitted against him on October 30, 1949. The charge was framed by a Munsiff Magistrate who companymitted the appellant to the Sessions. As already ,stated, the learned Special Judge companyvicted and sentenced the appellant and his companyvictions and sentences were upheld by a majority of two Judges. It has been argued by Mr. Peerbhoy, learned companynsel on behalf of the appellant, that his client had numberfair trial and has detailed a number of circumstances as supporting his companytention. We think it unnecessary to deal with each and every one of these circumstances as in our opinion they do number affect the substance of the matter and are too trifling to justify the companyclusion that the appellant suffered any prejudice or that any miscarriage of justice had resulted. We shall companyfine ourselves only to a few of them which need examination. It was companyplained that the appellant was number furnished with companyies of the statements of prosecution Witnesses recorded by the Police and this hampered the appellant in cross-examining the witnesses with reference to their previous statements. It appears that the appellant filed an application through companynsel on August 28, 1950, asking for companyies of such statements under section 162 of the Code of Criminal Procedure. The companyresponding section of the Hyderabad Penal Code is 166 which is number the same as section 162. While under section 162 it is the duty of the Court to direct a companyy of the statement of a witness recorded by the Police in the companyrse of investigation to be furnished to the accused with a view to enable him to crossexamine such a witness with reference to his previous statement, numbersuch duty is imposed by section 166 and the matter is left entirely to the discretion of the Court. This application was made for re-cross-examination of witnesses which obviously refers to the last stage of the prosecution evidence. The order passed on the application as translated is unintelligible and does number companyvey the real intention of the Court. The original which was shown to us, however, leaves numberdoubt whatever that the Court ordered that the case diaries and the statements were in Court and the appellants companynsel companyld look into them with a view to help him in the re-cross-examination of the witnesses but if the Court later felt the necessity of furnishing companyies, the matter would be companysidered. No companyplaint was made before the Special Judge about any prejudice having been caused to the appellant by this order, number was this point taken before the High Court. Had the appellant any legitimate ground for grievance on this score, he would numberdoubt have raised it before the High Court. We think, therefore, that there is numbersubstance in this point. It was also companytended that the prosecution should have produced the duty register of the appellant who wasa Government servant in order to put the matter beyond doubt whether,the accused had left the Headquarters on the crucial date. We do -.lot think that it was any part of the duty of the prosecution to produce such evidence, particularly in view of the fact that direct evidence of the offence was produced in the case. It appears, however, that the appellant himself summoned the Sub-Inspector of Police with the attendance register for 1358 Fasli, companyresponding to October, 1948. The Deputy Superintendent of Police in his letter had stated that the entries for October were made in the register for 1357 Fasli and that register was destroyed during the Police action. The appellants companynsel inspected the register and on numbericing that the entry for October did number find a place therein and had been made in the previous register for 1357 Fasli, which was destroyed during the Police action, he withdrew the witness. The appellant satisfied himself from the inspection of this register that the desired entries were number to be found. Since the register companytaining the material entries was destroyed, it was impossible for the prosecution to discharge the alleged burden of proving the entries in the duty register on the material date. It was also faintly companytended that there was numberevidence to show that Mura Muthiah had actually died. The father of the deceased gave evidence that the dead body of his son was cremated by him and in this he was supported by other witnesses. There is numberforce in this point. Upon the whole we are satisfied that the appellant has number been able to substantiate his companytention that he did number have a fair trial. The next companytention advanced by the appellants learned companynsel is that there was a misjoinder of charges, -that though the charges of murder and attempt to murder companyld be joined and tried together, the charges of extortion and wrongful companyfinement were distinct offences for which the appellant should have been charged and tried separately as required by the mandatory provisions of section 233 of the Code. The first two offences took place on September 13, 1948, in the night, while the act of extortion took place next morning on the 14th and the latter charge had numberhing whatever to do with the offences companymitted on the previous night. Learned companynsel companytends that where, as here, there is disobedience to an express provision as to the mode of trial companytained in section 233, the trial is wholly vitiated and the accused is number bound to show that the misjoinder has caused any prejudice to him. The companytention is based on the case of Subramania Ayyar v. King-Emperor 1 showing that the misjoinder of distinct offences being prohibited by the express provision of the Code renders the trial illegal and does number amount to a mere irregularity curable by section 537. This was a case in which the accused was charged with 41 acts extending over a period of two years which was plainly against the provisions of section 234 which permitted trial only for three offences of the same kind if companymitted within a period of twelve months. The decision of Lord Halsbury, Lord Chancellor, in this case was distinguished in the case of Abdul Rahman v. The King-Emperor 1 by the Privy Council. That was a case of companyviction on a charge of abetment of forgery in which the depositions of some witnesses were number read over to the witnesses but were handed over to them to read themselves. It was held that though the companyrse pursued was in violation of the provisions of section 360, it was a mere irregularity within section 537 and that as numberfailure of justice had been occasioned, the trial was number vitiated. Both the above cases were referred to by the Privy Council in Babulal Chaukani v. King-Emperor 1 The question in that case arose as to the true effect of section 239 d , which provides that persons who are 1 28 I.A. 257. 2 541.A. 96, A.I.R. 1938 P.C. 130, accused of different offences companymitted in the companyrse of the same transaction may be charged and tried together. The question was whether the companyrectness of the joinder which depends on the sameness of the transaction is to be determined by looking at the accusation or by looking at the result of the trial. It was held that the relevant point of time is the time of accusation and number that of the eventual result. The charges in this case were companyspiracy to steal electricity and theft of electricity both under the Electricity Act and under the Penal Code. The Privy Council referred to the fact that the parties had treated an infringement of section 239 d as an illegality vitiating the trial under the rule stated in Subramania Ayyar v. King Emperor 1 as companytrasted with the result of irregularity as held in Abdul Rahman v. The King,, Emperor 2 . The Privy Council merely assumed it to be so without thinking it necessary to discuss the precise scope of the decision in Subramanias case, because in their view the question did number arise. Again in Pulukuri Kottaya and Others v. Emperor 3 the Privy Council treated a breach of the provisions of section 162 of the Code as a mere irregularity curable under section 537 and as numberprejudice was caused in the particular circumstances of that case, the trial was held valid. Reference was made to Subramania Ayyar v. King-Emperor 1 as one dealing with the mode of trial in which numberquestion of curing any irregularity arises but if there is some error or irregularity in the companyduct of the trial, even though it may amount to a breach of one or more of the provisions of the Code, it was a mere irregularity and in support of this reference was made to Abdul Rahman v. The King-Emperor 1 . Several decisions of the High Courts were referred to in companyrse of the arguments with a view to showing what is the true state of the law in view of the Privy Council decisions referred to above but we do number think that that question arises in the present case. We are of opinion that the present is number a case under section 233 of the Code and it is, therefore, unnecessary to companysider whether the violation of its provisions amounts to an illegality vitiating the trial altogether 1 28 I.A. 257. 2 54 I.A. 96. A.I.R. 1947 P.C. 67. or it is a mere irregularity which can be companydoned under section 537. Section 233 embodies the general law as to the joinder of charges and lays down a rule that for every distinct offence there should be a separate charge and every such charge should be tried separately. There is numberdoubt that the object of section 233 is to save the accused from being embarrassed in his defence if distinct offences are lumped together in one charge or in separate charges and are tried together but the Legislature has engrafted certain exceptions upon this rule companytained in sections 234, 235, 236 and 239. Having regard to the facts and the circumstances of this case, we are of opinion that the present case falls under section 235. It provides that if in one series of acts so companynected together as to form the same transaction, more offences than one are companymitted by the same person, he may be charged with, and tried at one trial for, every such offence. The prosecution story as disclosed in the evidence clearly shows that the offence of extortion companymitted on the 14th September was one of a series of acts companynected with the offence of murder and attempt to murder companymitted on the previous day in such a way as to form the same transaction. The prosecution case was that when the appellant accompanied by his party came, he caught hold of two persons P.W. 5 and P.W. 9 at Rajole and proceeded to Korivi. He took them into custody without any rhyme or reason. Then outside the village seeing the deceased, P.W. 2, P.W. 3 and P. W. 4 he shot at them. The deceased fell down while the others ran away. He pursued them and brought two of them back to the spot where the deceased was lying but was yet alive. He shot him in the chest and killed him. Then he proceeded to the village itself where he stayed for the night. He released P. W. 3 and P. W. 4 on the intercession of certain persons but kept W. 5 and P. W. 9 in wrongful companyfinement and released them only next morning after extorting Rs. 200 from P. W. 5. These incidents related in the evidence leave numbermanner of doubt that from the moment the appellant started from the Police Station, he companymitted a series of acts involving killing, injuring people, unlawfully companyfining others and extorting money from one of them. We are satisfied that the series of acts attributed to the appellant companystitute one transaction in which the two offences which are alleged to be distinct were companymitted. The case falls squarely within the purview of section 235 of the Code and we are, therefore, of opinion that such misjoinder was permitted by the exception. No question of companytravention of any express provision of the Code such as section 233 arises and in the circumstances it is number necessary for us to companysider how far the violation of any express provisions of the Code relating to the mode of a trial or otherwise companystitutes an illegality which vitiates the trial as distinguished. from an irregularity which is curable under section 537. This companyclusion in our opinion disposes of the companytention about misjoinder of the charges. The fact that the offence of extortion was companymitted at a different place and at a different time does number any the less make the act as one companymitted in the companyrse of the same transaction. Turning to the merits of the matter, we are number satisfied that any prejudice was caused to the appellant in fact. It is number possible to say that the Court being influenced by the evidence on the question of extortion was easily led into the error of believing the evidence on the question of murder. The witnesses on the point of extortion are P.W. 5 and P.W. 9. These are the two persons who were taken away from village Rajole and were wrongfully companyfined, P.W. 5 being released on payment of Rs. 200 and the other let off without payment. These two witnesses are also witnesses to the fact of murder, in addition to the other three witnesses, P.W. 2, P.W. 3 and P.W. 4. P.W. 5 was injured by the gun-shot but survived. The other two were scared on hearing the gun-shot and ran away taking protection under the babul tree. It is number possible to companytend that the Sessions Judge having believed the evidence of extortion from P.W. 5 must have been persuaded into believing that the story of murder deposed to by him must be companyrect, for there is number only the evidence of P. W. 5, but three other independent witnesses. Lastly it was companytended that the judgment of one of the agreeing Judges Manohar Pershad J. is purely mechanical and does number show that he has applied his mind to the facts of the case. No such companyplaint is made about the judgment of the other agreeing Judge Srinivasachari J. It is true that the learned Judge has made companyious quotations verbatim from the evidence of the witnesses and his companyment upon the evidence is number as full and detailed as might be expected but this practice of writing judgments in this way seems fairly general in Hyderabad though we cannot help saying that it is number to be companymended. It is the obvious duty of the Court to give a summary of the evidence of material witnesses and to appraise the evidence with a view to arriving at the companyclusion whether the testimony of the witness should-be believed. We do number think, however, that the criticism that the judgment is mechanical and does number show a proper appreciation of the evidence is well-founded. The prosecution evidence was believed by the trial Judge and the defence evidence to the effect that the deceased was killed by the Military and that the appellant was number present at the time of the occurrence was disbelieved. This finding was accepted by both the learned agreeing -Judges. This Court cannot interfere with the finding arrived at, on an appreciation of the evidence. We are satisfied that there is numbergood ground for disturbing the companyviction of the appellant. The only question which remains for companysideration is whether the sentence of death is the appropriate sentence in the present case. No doubt there are numberspecial circumstances which justify the imposition of any other but the numbermal sentence for the offence of murder. | 4 |
LORD JUSTICE ALDOUS: I will ask Lord Justice Dyson to give the first judgment.
LORD JUSTICE DYSON: The claimant in this case, who is the respondent to the appeal, served as a soldier in the Royal Green Jackets from 14th September 1972 until 25th March 1989. He started proceedings on 22nd April 1999 against the defendant, claiming damages first for loss of hearing allegedly caused by excessive exposure to the noise of firearms when in service, and secondly for failure by the defendant to inform him prior to his discharge from the army that he was suffering from hearing loss.
On 3rd March 2000 the claim for damages for loss of hearing, a claim in respect of personal injury, was struck out on the ground that the defendant's limitation defence was bound to succeed. The appeals are concerned with the failure to warn the claimant (which I shall refer to as "the second claim").
On 14th August 2000 Mrs Recorder Harman dealt with three matters. The first was an application by the defendant to strike out the second claim or enter summary judgment against the claimant on the grounds that it had no reasonable prospects of success at trial. The Recorder dismissed this application.
She then heard an application by the defendant that section 14A of the Limitation Act 1980 did not apply to the second claim. She held that it did.
Finally, she tried as a preliminary issue the question whether the second claim was barred by the Limitation Act. She held that it was not. The defendant now appeals against all three decisions.
The facts can be stated shortly at this stage. The claimant was born in 1956. He enlisted with the Royal Green Jackets in September 1972. He left the army in 1977 but reenlisted in 1980. The defendant conducted hearing tests on him in 1980, and again in May 1987 and November 1988. The later tests showed that he had a high frequency sensorineural hearing loss on his left side. This was consistent with his own perception of his hearing, a topic to which I shall have to return.
The claimant did not ask for, nor was he given, the results of these hearing tests. After his discharge in March 1989 he sought other work. He was a self-employed plumber for two years. He had other work on a self-employed basis until 1993. A key date is 31st May 1996 when, having applied for employment with Toyota, he was given an audiological test. Following the Toyota test he was advised that his hearing was unsatisfactory and that his loss of hearing was likely to have been caused by exposure to the sound of gunfire.
On 1st October 1997 the claimant was examined by Mr Jones, a Consultant Otolaryngologist. The opinion of Mr Jones was that the claimant had a marked left-sided sensorineural hearing loss which was due to exposure to firearms. He also had mild tinnitus in the left ear, which was also due to noise exposure in the armed forces. The medical records relating to the hearing tests that had been conducted by the defendants were released to him in 1999. As I have said, proceedings were started on 22nd April 1999.
So far as the first application is concerned, the claimant puts his case in the following way. He says that in breach of its duty owed to him as his employer, the defendant failed to inform him whilst he was so employed that he was suffering from hearing loss, and the extent of that loss. He further says that, as a result of that breach of duty, he was unable to make a fully informed decision as to his future, and in particular as to whether he should remain in service in the army. If he had been told of the existence and extent of his hearing loss, he would not have sought discharge from the army on 25th March 1989, but would have remained in service until the end of his open engagement, which would have been in 1998.
On behalf of the defendant it was submitted that the second claim should be struck out on the grounds that it was bound to fail. It was contended that the defendant was not under a duty to inform the claimant of his loss of hearing. But it was also argued that there was no causal link between the alleged breach of duty and the alleged loss.
The Recorder refused to strike out the claim. She held, but unfortunately gave no reasons for so holding, that the claimant had raised arguable points on both the duty of care issue and the causation issue. There is no appeal before this court against the decision of the Recorder in relation to the duty of care issue. But there is an appeal on the other aspect of the matter.
The point is a very short one. It is submitted by Miss Bradley, on behalf of the defendant, that the claimant's case is that he would not have left his employment with the defendant if he had been informed of the result of the tests. But she submits that those tests would have disclosed to him no more about the extent of his hearing loss than he already knew and yet he left the army. In those circumstances, it is difficult to see how the claimant had any reasonable prospects of showing the necessary causal link between the failure to inform him of the results of the tests and the damage claimed; namely his leaving the service with, he says, reduced prospects of employment.
It is central to the claimant's case that the defendant failed to reveal the results of tests which would have indicated to him the extent of his hearing loss. The complaint is not that there was a failure to inform him of the cause of that hearing loss; or of any possible treatment that would be required to cure it; merely as to the fact and extent of the hearing loss.
In my judgment, the claimant had no reasonable prospects of establishing that causal link and I would allow the appeal against the decision of the Recorder on that basis. However, I go on to consider the limitation issues.
The primary limitation period for the second claim, not being a personal injury claim, was six years - see sections 2 and 5 of the 1980 Act. It is common ground that the cause of action accrued, whether in contract or in tort, no later than the date when the claimant was discharged. Accordingly, the claim was statute-barred unless the claimant could successfully invoke section 14A of the 1980 Act, which, so far as material provides:
"(3) An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4) below.
(4) That period is either-
(a) six years from the date on which the cause of action accrued; or
(b) three years from the starting date as defined by subsection (5) below, if that period expires later than the period mentioned in paragraph (a) above.
(5) For the purposes of this section, the starting date for reckoning the period of limitation under subsection (4)(b) above is the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action.
(6) In subsection (5) above `the knowledge required for bringing an action for damages in respect of the relevant damage' means knowledge both-
(a) of the material facts about the damage in respect of which damages are claimed; and
(b) of the other facts relevant to the current action mentioned in subsection (8) below.
(7) For the purposes of subsection (6)(a) above, the material facts about the damage are such facts about the damage as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment.
(8) The other facts referred to in subsection (6)(b) above are-
(a) that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence; ..."
It is unnecessary to read the rest of subsection (8):
"(10) For the purpose of this section a person's knowledge includes knowledge which he might reasonably have been expected to acquire-
(a) from facts observable or ascertainable by him; or
(b) from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek; but a person shall not be taken by virtue of this subsection to have knowledge of a fact ascertainable only with the help of expert advice so long as he has taken all reasonable steps to obtain (and, where appropriate, to act on) that advice."
The issue that was raised therefore was whether the claimant could take advantage of the three-year period provided for under section 14A(4)(b). He could only do this by showing that he first acquired the knowledge required for bringing the claim after 22nd April 1996. In the absence of agreed facts or admissions, that could only be done by adducing evidence before the Recorder. It seems unusually that it was agreed in this case to deal with the section 14A point in two stages. The first was to decide whether the section applied at all. This was done without evidence, although during the course of argument reference was made to the claimant's witness statement and to some of the documents. The second was to go on to hear evidence and to decide whether the claimant could rely on section 14A or whether his claim was statute-barred.
In my judgment, there should not have been two stages. Either the claimant could show that his claim was not statute-barred by reason of section 14A or he could not. Certainly, in a case such as this it seems to me that in the absence of admissions or agreed facts, that could only properly be done by hearing evidence.
In deciding that section 14A applied, the Recorder accepted the arguments advanced on behalf of the claimant, which she summarised in her judgment as follows:
"But the claimant says that the important issue is the knowledge on the part of the claimant of the failure of the army to inform regarding the hearing loss and this was actually only established in 1998, 1999 when, in the context of the personal injury claim which has now been abandoned, the medical records were disclosed.
In 1997 the claimant was in possession of expert evidence which confirmed the link between hearing loss and the firearms use but still at that time there was no knowledge of the damage as no claim would necessarily lie against the army for hearing loss alone.
The essence of the claim, says the claimant, is the failure of the army to notify of the hearing defect and therefore the fact that employment options were thereby limited. The claimant says that this is not knowledge of negligence which the defendant rightly says did not enable a claimant to take advantage of section 14A but knowledge of the fact that the army failed to notify and thereby limited employment options. The claimant says that this is clearly a latent damage case and I accept his argument and accept that section 14A applies."
At the next stage the claimant did give evidence. A central issue was whether the claimant was aware before he was discharged from the service that he was suffering a loss of hearing. It is necessary to refer to some of the evidence that he gave.
He was asked in cross-examination by Miss Bradley about the events of 1980, and he referred to the tinnitus that he was suffering from at that stage, which he described as "ringing in his ears", and said that he presumed that that came from shooting. He was then asked many questions about his state of knowledge about his hearing in 1987 and 1988. I refer to the evidence that he gave, starting at page 38B:
"Q.So can you tell me why if medical examinations in 1987 and 1998 showed that your hearing was down significantly on the left-hand side you needed a doctor to tell you that?
A. I had also had a problem with wax. I had had my ears syringed during my service.
Q. That would be an intermittent problem. As soon as the wax has been removed, you can hear again.
A. You can hear, yes, better than before.
Q. And your hearing since 1987 has never improved, has it?
A. No.
Q. So it is a constant matter that on the left-hand side you cannot hear as well as you can on the right?
A. Correct.
Q. And you will constantly be aware that if people are speaking on your left-hand side you cannot hear them as well as if they are sitting to your right?
A. I do have a problem to my left, yes.
Q. And you do not need a doctor to tell you that you cannot hear as well on the left as on the right, do you?
A. No.
Q. So in 1987 you would have been aware that you could not hear as well on the left as you could on the right?
A. Probably, yes."
He was asked more questions about that on page 40. He said:
"A. I knew I had a problem but I didn't know the extent of it or the reason why. I knew I did have it. I presumed it was wax. I had suffered with that.
Q. But we have been over that point, have we not, that wax comes and goes----
A. It doesn't just come and go. It does not come straightaway and then vanishes.
Q. When it is removed, your hearing improves again?
A. It does, yes.
Q. And we have been over the point that your hearing has never improved since 1987.
A. No."
He gave other answers not dissimilar to these, but I do not find it necessary to refer to any further extracts from his evidence.
In addition, there was material before the court in the shape of the report of Mr Jones (to which I have already referred), and he said in relation to the claimant's hearing loss:
"Mr Sage is aware that his left hearing is poorer than his right. He has noticed that when he is in an environment, particularly if there is any background noise, that he struggles to hear what anyone says to him if they are positioned to his left. He has noticed this over the last 3-4 years."
In her judgment on the preliminary issue the Recorder said, at page 52E:
"In 1997 and 1988 he insisted when he had hearing tests that he was not told of any problem but he was aware of some hearing loss but that he attributed that to wax in his ears. Again, I think that is not an unreasonable account. I do not accept, as was said on behalf of the defendant, that acknowledging that there was some hearing loss was a concession on the claimant's part that constituted actual knowledge of hearing loss.
It was in 1996, in fact in an examination to gain employment at Toyota, that for the first time the claimant was aware of the link between his hearing loss, which was told to him for the first time that it was actually occupationally disabling, and gunfire.
It is correct, in my view, that the claimant left the army with no knowledge of the hearing defect and was under the impression that occasional hearing loss, which would have been gradual, was down to problems with wax. The claimant gradually became aware of hearing loss in a social situation but was not aware of the extent of the hearing loss and the attributability to firearms until the Toyota examination in 1996. He was not aware of his disadvantage and of the army's failure until the medical notes were released in 1998 to 1999."
In summary, therefore, the Recorder found (a) that the claimant did not know until 1996, the time of the Toyota test, of his hearing loss or that the loss of hearing was attributable to gunfire and (b) that, until 1998 or 1999 when the medical records were released, he did not know of his disadvantage and of the army's failure.
The claimant had to prove, the burden being on him, that it was not until after 22nd April 1996 that he acquired the knowledge required for bringing this action "for damages in respect of the relevant damage." The relevant damage was his leaving the army when suffering from a hearing deficit which would impair his prospects of obtaining alternative employment. The knowledge required for bringing an action for damages in respect of that damage was knowledge of the material facts about that damage, as defined in subsection (7), and the knowledge of the other relevant acts defined in subsection (8).
I take subsection (7) first. The material facts about the damage in this case were that the claimant was suffering from loss of hearing; the defendant had conducted hearing tests so that it was aware of the hearing loss; the defendant had not informed the claimant of the results of the tests; and the claimant had left the army. Those facts had to be such as would lead a reasonable person who had suffered the damage to consider it sufficiently serious to justify instituting proceedings against a defendant who did not dispute liability and was able to satisfy a judgment.
There is no doubt that the claimant was aware of the second, third and fourth of the material facts to which I have referred. The critical fact was the first, namely whether the claimant knew that he was suffering from a loss of hearing.
In my judgment, it was not reasonably open to the Recorder to find that the claimant was not aware of his loss of hearing until 1996, having regard to the evidence that she heard. It is quite clear from the evidence, to some of which I have referred, that the claimant did know that he had a loss of hearing before he was discharged and that it was a significant problem. It is true that he raised the issue of earwax, but he plainly accepted that the hearing problems caused by wax were intermittent and were improved by syringing; whereas the underlying hearing problems from which he suffered in his left ear were constant and had never improved, at any rate after 1987.
It seems to me that the tests conducted in 1987 and 1988 did no more than measure in medical terms the extent of the hearing loss from which the claimant knew that he was suffering.
Some reference has been made by Mr Fortune in his submissions to the question of seriousness, but we have been told that the question of seriousness was not in issue before the Recorder. Had it been, Miss Bradley tells us that she would have wished to cross-examine the claimant about it and would have wished to draw the attention of the Recorder to some of the authorities which explain what is meant by seriousness for the purposes of section 14A(7). In any event, it seems to me that, on the material before this court, the hearing loss in 1987 and up to 1989 was no less serious than it was in 1996, or indeed in 1999 when the claimant finally decided to institute these proceedings.
I would hold, therefore, that the claimant was aware of the material facts about the damage within the meaning of section 14A(6)(a).
I can turn briefly to subsection (8) and the "other relevant facts". The only relevant sub-paragraph is (a):
"that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence; ..."
The omission which is alleged to constitute negligence here is the failure to inform. It is the claimant's case that this failure to inform caused him to leave the army.
Obviously, the claimant was aware that the defendant had failed to inform him of his hearing loss before his discharge. The Recorder failed to make a finding to that effect, perhaps it was rather because it was too obvious. But I suspect that it was because, in my judgment, the Recorder misdirected herself. Instead of making that finding, she made the irrelevant finding that the claimant was not aware that his loss of hearing was attributable to gunfire. The damage in respect of which damages are claimed in the second claim is the claimant's discharge from the army when he was suffering from a loss of hearing. Naturally he was aware of his discharge. For the reasons that I have given, he was also aware that he left the army suffering from a defect in his hearing. The fact that he may have been unaware of its cause has no relevance to section 14A. I would hold therefore that the claimant plainly had knowledge before April 1996 that his damage was attributable to the omission of which he complains.
The result is that in my judgment the Recorder should have decided that the claimant could not satisfy the requirements of section 14A, and that therefore the claim was statute-barred. I would therefore also allow the appeals against her second and third decisions.
LORD JUSTICE ROBERT WALKER: I agree.
LORD JUSTICE ALDOUS: I also agree.
ORDER: Appeal allowed; order of the Recorder set aside; claim dismissed with costs, not to be enforced without leave of the court; legal aid assessment of the Claimant's costs.
(Order not part of approved judgment) | 7 |
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