Category: Uncategorized

On appeal from [2022] NICA 15

These proceedings challenge the lawfulness of the Northern Ireland Protocol (“the Protocol”), which formed part of the agreement between the United Kingdom (“the UK”) and the European Union (“the EU”) regarding the UK’s exit from the EU. The Protocol was given legal effect by section 7A (“section 7A”) of the European (Withdrawal) Act 2018 (“the 2018 Act”).

The Appellants rely on three grounds of appeal.

Ground One argues the Protocol is incompatible with Article VI of the Acts of Union 1800 (“Article VI”), the Acts which provided for the Union of Great Britain and Ireland. The trade limb of Article VI states “[His] Majesty’s subjects of Great Britain and Ireland shall … be on the same footing … in respect of trade”. The Appellants argued the Protocol means the people of Ireland are not ‘on the same footing’ in respect of trade because, for example, the Protocol requires payment of a charge on goods which may be moved into the EU.

The first instance judge found that if there is any conflict between section 7A of the 2018 Act which incorporates the Protocol into UK law and the Acts of Union 1800, section 7A is to be preferred. The Court of Appeal found that Article VI is modified by the Protocol, via section 7A.

The Appellants also argued that the Crown does not have the power to make treaties that do not comply with Article VI. The lower courts found section 7A takes priority over any incompatible provisions of Article VI.

 

Ground Two relates to section 1(1) of the Northern Ireland Act 1998 (“the NIA 1998”). Section 1(1) of the NIA 1998 says Northern Ireland remains part of the UK unless the majority of the people of Northern Ireland consent via a poll. The Appellants argued there can be no substantial change to the status of Northern Ireland without this, the Protocol changed the status of Northern Ireland, and this was unlawful as the poll procedure was not followed.

The lower courts found section 1(1) of the NIA 1998 did not affect the legality of the changes made by the Protocol.

 

Ground Three challenges the lawfulness of the Protocol on Ireland/Northern Ireland (Democratic Consent Process) (EU Exit) Regulations 2020 (the “2020 Regulations”). Section 8C of the 2018 Act provided the power to make the 2020 Regulations. The 2020 Regulations permitted the Northern Ireland Assembly to vote on the continued application of Articles 5 to 10 of the Protocol without the need for cross-community support as required by section 42 of the NIA 1998. The Appellants argued that section 8C does not enable the making of regulations which are incompatible with the NIA 1998.

The lower courts found that deciding whether the Articles should continue to apply relates to the making of treaties and is within the competence of the UK Government. Cross-community support is not required.

 

HELD – The Court unanimously dismissed the appeals on all three grounds.

 

Ground One: Dismissed as Article VI is subject to the Protocol such that any parts which conflict with the Protocol are suspended.

First, the Protocol is incorporated into UK law by section 7A. Section 7A stipulates that all enactments are to have effect subject to section 7A. Consequently, Article VI is modified to the extent it conflicts with the Protocol via section 7A.

The debate about whether the Acts of Union and/or the Acts enabling the UK’s withdrawal from the EU are statutes of a constitutional character, is academic. The suspension, subjugation, or modification of rights contained in an earlier statute may be effected by express words in a later statute. A clear answer has been provided by Parliament in relation to any conflict between the Protocol and any other enactment. The Acts of Union and Article VI remain in place but are modified to the extent and for the period during which the Protocol applies.

Second, Parliament, by enacting the 2018 Act and the European Union (Withdrawal Agreement) Act 2020, authorised the making of the Protocol. The clear intention of Parliament in enacting these Acts was to permit the Crown to make the Protocol.

 

Ground Two: Dismissed as the Supreme Court has previously held that section 1(1) of the NIA 1998 does not regulate any change in the constitutional status of Northern Ireland other than the right to determine whether to remain part of the UK or become part of a united Ireland. There is no reason to depart from this finding.

 

Ground Three: Dismissed as section 7A amended the existing law such that the system created by the 2020 Regulations was lawful without the requirement of cross-community support. The 2020 Regulations were lawfully made. The Court acknowledged the potential force in the Appellants’ argument that cross-community support is still required for matters outside the Assembly’s legislative competence. However, all enactments are to be read subject to section 7A. Section 7A had already modified section 42 of the NIA 1998. The 2020 Regulations were compatible with section 42 of the NIA 1998 as modified. There is therefore no incompatibility between the 2020 Regulations and section 42 of the NIA 1998.

To read the judgment, please see:

Judgment (PDF)
Judgment on The National Archives (HTML version)
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On appeal from [2020] EWCA Civ 104

The Tate Modern (the Tate), a public art gallery in London, opened a new extension in 2016 called the Blavatnik Building. This building is ten stories high and, on its top floor, has a viewing platform which offers panoramic views of London.

The claimants own flats in a block of flats neighbouring the Tate that are at around the same height above ground as the viewing platform and have walls constructed mainly of glass. On the south side of the viewing platform, visitors can see directly into the claimants’ flats.

At the time of the trial the viewing platform was open every day of the week and was visited by an estimated 500,000-600,000 people each year. The trial judge found that a very significant number of visitors display an interest in the interiors of the claimants’ flats. Some look, some peer, some photograph, some wave. Occasionally binoculars are used. Many photographs have been posted online.

The claimants seek an injunction requiring the Tate to prevent its visitors from viewing their flats from the viewing platform, or alternatively, an award of damages. Their claim is based on the common law of nuisance.

The claims were dismissed by the High Court ([2019] EWHC 246 (Ch)) and, for different reasons, by the Court of Appeal ([2020] EWCA Civ 104). The claimants now appeal to the Supreme Court.

 

The Supreme Court allowed the appeal by a majority of 3 to 2. Lord Leggatt, with whom Lord Reed and Lord Lloyd-Jones agree, gave the majority judgment. Lord Sales, with whom Lord Kitchin agrees, gave a dissenting judgment.

 

(i) Majority judgment

It is no answer to a claim for nuisance to say that the defendant is using its land reasonably or in a way that is beneficial to the public. In deciding whether one person’s use of land has infringed another’s rights, the public utility of the conflicting uses is not relevant. The benefit of land use to the wider community may be considered in deciding what remedy to grant and may justify awarding damages rather than an injunction, but it does not justify denying a victim any remedy at all.

The trial judge made findings that the claimants’ flats are under near constant observation by visitors to the viewing platform. There are hundreds of thousands of spectators each year and many take photographs and post them on social media. The ordinary person would consider this level of intrusion to be a substantial interference with the ordinary use and enjoyment of their home.

By contrast, inviting members of the public to admire the view from a viewing platform is not a common and ordinary use of the Tate’s land, even in the context of operating an art museum in a built-up area of south London. The Tate is therefore liable to the claimants in nuisance. The court heard no argument on the appropriate remedy and so remitted the case to the High Court to decide this question.

The trial judge reached the wrong conclusion as a result of three errors of law:

The judge applied the wrong test by asking whether, in operating the viewing platform, the Tate was making an ‘unreasonable’ use of its land, instead of asking whether it was a common and ordinary use.
The judge considered that the claimants had exposed themselves to visual intrusion into their homes by choosing to live in flats with glass walls. It is right that, if the Tate had been making an ordinary use of its land, the claimants could not have complained about any visual intrusion resulting from the design of their flats. But where, as here, a defendant is using its land in an abnormal and unexpected way, it is no answer to a claim in nuisance to say that the claimant would not have suffered a nuisance if their property had been of different design or construction.
The judge also held that it was reasonable to expect the claimants to take measures to avoid being seen from the viewing platform, such as putting up blinds or net curtains. This wrongly placed the responsibility on the victim to avoid the consequences of the defendant’s abnormal use of their land.

The Court of Appeal recognised that the judge had made these errors but decided that the claim must nevertheless fail because “mere overlooking” cannot give rise to liability for nuisance. It is true that a person cannot complain of nuisance because their flat is overlooked by another building or because people on the top floor of that building can look into their homes and see inside. However, that is not the complaint made in this case. The claimants’ complaint is that the Tate invites members of the public to look out from a viewing platform from which they can, and many do, peer into the claimants’ flats and allows this activity to continue without interruption for most of the day every day of the week.

 

(ii) Minority judgment

The minority considered that this appeal raises two questions. First, whether it is possible, in principle, for the tort of private nuisance to apply in the case of a residential property subject to the visual intrusion of people looking into the living areas of the property. Secondly, if this is possible, whether the Appellants have established that there is an actionable private nuisance by reason of the visual intrusion they experience from the Tate’s viewing platform.

On the first question, the minority agree that it is possible, as a matter of principle, for a private nuisance to exist where residential property is subject to visual intrusion. On the second question, they consider that the answer depends on principles of reciprocity and compromise applicable to the Appellants and the Tate alike and the application of a standard of objective reasonableness informed by the character of the relevant locality, rather than focusing on whether a defendant’s use of its land is ‘ordinary’.

The judge was better placed than an appeal court to determine the answer to the second question. He had not misdirected himself and was entitled to find that the use of the Appellants’ land in the particular locality was not ordinary, that it was possible for them to take normal screening measures to limit the effect of any visual intrusion they experienced and that according to an objective standard of reasonableness the Tate had not committed a nuisance.

To read the judgment, please see:

Judgment (PDF)
Judgment on The National Archives (HTML version)
Judgment on BAILII (HTML version)

For the Press Summary, please see:

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To watch the hearing, please see:

Watch hearing

7 Dec 2021
Morning session
Afternoon session

8 Dec 2021
Morning session
Afternoon session

In this post, Frankie McPeanne, a trainee solicitor, and Emma Pinkerton, a Partner, both in the Real Estate Disputes team at CMS, preview the decision awaited from the Supreme Court in Wolverhampton City Council and others (Respondents) v London Gypsies and Travellers and others (Appellants), which is due to be heard on 8 February 2023.

Background

This case concerns the issue of granting injunctions against persons unknown in respect of unauthorised encampments (colloquially known as “traveller sites”).

The primary consideration for the Supreme Court will be whether the court can grant final injunctions that prevent persons who are unknown and unidentified as at the date of the order (“newcomers”), from occupying and trespassing on land.

Wolverhampton City Council’s application for an injunction

In Wolverhampton City Council v Persons Unknown [2018] EWHC 3777 (QB), Wolverhampton City Council sought an injunction that would restrain the establishment of unauthorised traveller encampments from approximately 60 sites across an area controlled by the local authority. The application was made following an increasing number of unauthorised traveller encampments in the area. Jefford J summarised the impact of these unauthorised encampments as being two-fold. First, the use and enjoyment by other citizens of the public open spaces that were occupied by the encampments was inhibited. Second, there had been numerous instances of antisocial behaviour linked with the unauthorised encampments. These instances were evidenced in witness statements provided by the applicant and included abusive and threatening behaviour towards members of the public.

Jefford J granted an interim injunction for a period of three years coupled with a power of arrest pursuant to Police and Justice Act 2006, s.27. The injunction was granted with a review hearing to take place after 12 months, in order to give Wolverhampton City Council time to establish the transit site it had committed to making available for members of the traveller community, or alternatively, to show the court that it was taking appropriate steps as required by the Equality Act 2010, to ensure members of the travelling community would not be effectively excluded from the whole of the area within Wolverhampton City Council’s control.

Upon review after the initial 12 months, the injunction was continued for another two years, with a further review ordered to take place in July 2020. Following that review, the injunction was further continued until 5 December 2021.

High Court appeal by numerous local authorities (including Wolverhampton City Council)

In London Borough of Barking and Dagenham, Other Local Authorities v Persons Unknown, Other named Defendants v London Gypsies and Travellers, Friends, Families and Travellers, National Federation of Gypsy Liaison Groups [2021] EWHC 1201 (QB), the High Court considered issues in relation to “traveller injunctions”. Numerous local authorities had been granted wide injunctions against persons unknown, prohibiting unauthorised occupation of land; these injunctions were primarily targeted at “traveller sites”. However, a number of issues that were likely to arise in other cases had been identified during a hearing in relation to one of the local authorities’ injunctions.

In particular, the High Court had to consider whether a final injunction granted against persons unknown is subject to the principle that final injunctions only bind the parties to the proceedings at the time the order is made (i.e., they cannot apply to “newcomers”). Local authorities contended that such injunctions should not be bound by this principle. However, Nicklin J ultimately decided that the local authorities’ injunctions would be discharged against newcomers.

The Court of Appeal’s decision

In Barking and Dagenham and Others v Persons Unknown and Others, [2022] EWCA Civ 13 a number of local authorities, including Wolverhampton City Council, sought permission to appeal the decision by Nicklin J. The appeal was allowed.

In his judgment, Vos J stated that Nicklin J had been wrong to hold that the court cannot grant final injunctions that prevent persons unknown and unidentified at the date of the order from occupying and trespassing on local authority land after the date of that order

Vos J made the point that there is no real distinction between interim and final injunctions, particularly when granted against persons unknown. He cited the cases of South Cambridgeshire District Council v. Gammell [2005] EWCA Civ 1429 (“Gammell”), and Ineos Upstream Ltd v. Persons Unknown and others [2019] EWCA Civ 515 (“Ineos”) which respectively decided and confirmed that final injunctions could validly be granted against newcomers, as opposed to only the parties to the proceedings. In such cases it was also held that a person violating a “persons unknown” injunction became a party to the injunction where they had notice of its terms. Further, it was held that certain aspects of the court’s reasoning in Canada Goose UK Retail Ltd. v. Persons Unknown and another [2020] EWCA Civ 303 (“Canada Goose”), which Nicklin J had sought to rely on, did not give proper regard to Gammell, which was binding on the Court of Appeal in Canada Goose.

Vos J stated that the Human Rights Act 1998 is individualised, and as such neither the gypsy and traveller community nor any other community has Article 8 rights (a person’s right to respect for their private and family life, home and correspondence). Further, in unauthorised encampment cases such as this one, newcomers (as individuals) cannot rely on their Article 8 rights in terms of a right to respect for their home, because they have no home on land they have no legal right to.

However, an individual newcomer who makes himself party to an unauthorised encampment injunction would have the opportunity to apply to the court to set aside the injunction, relying on their private and family life right to pursue a nomadic lifestyle (and previous case law has established that the pursuit of a traditional nomadic lifestyle is an aspect of a person’s private and family life). Further this right should also be considered when the court initially considers granting an injunction against persons unknown. It must also be carefully balanced against the landowner’s specific Convention rights under Article 1 Protocol 1 to the peaceful enjoyment of one’s property (which includes land). As such, Vos J held that the only time a court can test whether an order for an injunction against persons unknown interferes with a particular person’s Article 8 rights and whether that order is proportionate, is if that person comes to court to resist the making of such an order or to challenge the validity of the order once it has been made.

London Gypsies and Travellers and others were granted permission to appeal this decision on 25 October 2022. The appeal will be heard by the Supreme Court on 8 February 2023.

Comment

Case law to date has established and supported the principle that individuals can make themselves parties to a “persons unknown” injunction by knowingly breaching the terms of the injunction, and thus it is lawful for the court to grant final injunctions against newcomers.

This appeal brought by London Gypsies and Travellers and others will have important implications on this area of the law surrounding injunctions against persons unknown. Such injunctions are particularly relevant in the contexts of unauthorised encampments and protest activity. Those seeking to obtain and rely on “persons unknown” injunctions in safeguarding their land and other property from future trespass, unauthorised occupation or protest activity will be keen to hear the outcome of this appeal.

Hearings in the Supreme Court are now shown live on the Court’s website.

On Tuesday 7th February 2023 the Court will hear Commissioners for His Majesty’s Revenue and Customs v Vermilion Holdings Ltd (Scotland), on appeal from [2021] CSIH 45. The Court will consider if it was the right or opportunity for Mr Noble to acquire the 2007 Option (a) available by reason of his directorship of VHL (section 471(1) ITEPA); or (b) made available by Mr Noble’s employer (section 471(3) ITEPA), thereby subjecting it to income tax under Chapter 5, Part 7 of ITEPA. The hearing will begin at 10:30 in Courtroom 1.

On Wednesday 8 February 2023 the Court will hand down judgments in the following appeals:

In the matter of an application by Clifford Peeples for Judicial Review) (Northern Ireland) and In the matter of an application by James Hugh Allister and others for Judicial Review (Northern Ireland) [2023] UKSC 5. In these conjoined appeals, the appellants challenge the lawfulness and constitutionality of the respondents’ decisions and actions in the implementation, and operation of the Northern Ireland Protocol (“the Protocol”). Hand-down will take place at 9:45am in Courtroom 1.

Aviva Investors Ground Rent GP Ltd and another v Williams and others [2023] UKSC 6. The Court will determine to what extent a term in a residential lease which allows the landlord to revise the tenant’s share of the service charges invalidated by section 27A(6) of the Landlord and Tenant Act 1985. It will also determine if the effect is that any discretion to re-apportion the service charge is transferred from the landlord to the First-tier Tribunal does section 27A(6) enable the tenant as well as the landlord to invoke the Tribunal’s jurisdiction. The hand-down will take place at 10:30 in Courtroom 1.

On Wednesday 8th and Thursday 9th February 2023 the Court will hear Wolverhampton City Council and others v London Gypsies and Travellers and others. This case will consider whether the Court can grant final injunctions that prevent persons, who are unknown and unidentified as at the date of the order, from occupying and trespassing on land. The hearing will start at 10:30 in Courtroom 1.

 

In this post, Jack Prytherch, Of Counsel in the Tax team at CMS, previews the decision awaited from the Supreme Court in Moulsdale t/a Moulsdale Properties v Commissioners for His Majesty’s Revenue and Customs. The appeal was heard by the Supreme Court on 17 January 2023.

The Supreme Court was asked to consider whether a sale of property by the appellant (“Moulsdale”) was exempt from VAT. More specifically, the Supreme Court considered whether Moulsdale intended or expected that the property sold was or would be a capital item in the hands of the purchaser for the purposes of the Value Added Tax Act 1994 (“VATA”), Sch 10, resulting in Moulsdale’s option to tax being disapplied.

Background

A supply of property (including land and buildings) is normally exempt from VAT. This means that no VAT is chargeable on the supply and, by extension, that the person making the supply cannot recover any input VAT incurred on their own expenses. However, it is possible for the owner of the property to “opt” to tax, meaning that a supply of the property will generally no longer be treated as exempt (and any associated input VAT therefore recoverable).

An option to tax cannot normally be revoked until at least 20 years have passed. However, VATA, Sch 10, contains certain statutory provisions which have the effect of disapplying an option to tax so that a supply of the property in question will nevertheless be treated as exempt. In particular, VATA, Sch 10, paragraphs 12-17, contain “anti-avoidance” provisions originally designed to negate a form of VAT cashflow planning. These anti-avoidance provisions require, inter alia, that the land to which the supply relates must be, or is intended or expected to be, a “capital item” in relation to the grantor or the transferee. The term “capital item” is an item on which the owner incurs VAT bearing capital expenditure pursuant to the VAT capital goods scheme (Value Added Tax Regulations 1995, Pt XV), which broadly requires a person to make input tax adjustments in respect of certain capital items over a period of up to ten years.

In this case, Moulsdale purchased land, on which a block of offices had been built, from a developer in 2001. The developer had opted to tax the property, meaning the purchase price included an amount in respect of VAT. Shortly thereafter, Moulsdale also opted to tax the property and leased the offices to a connected person. Although Moulsdale initially charged VAT on the rent to the connected person, he was later told by HMRC that this was incorrect on the basis that the connected person’s business involved making exempt supplies. As a result, Moulsdale was forced to reclaim the VAT paid on the rent, with the practical effect that he could no longer offset this against the VAT incurred on the purchase of the land.

In 2014, Moulsdale sold the property to an unconnected third party (subject to the continuing lease). Despite the fact that Moulsdale had opted to tax the property, he did not charge VAT on the sale, relying on the anti-avoidance provisions in VATA, Sch 10. The question before the Supreme Court was whether Moulsdale was correct to do so.

The property could not have been a capital item in relation to Moulsdale because the ten-year adjustment period under the VAT capital goods scheme had expired. The dispute was therefore focused on whether Moulsdale intended or expected that the property would become a capital item in relation to the purchaser.

Decisions of the Tribunals

Before the First-tier Tribunal (Tax Chamber) (“FTT”), it was accepted by both parties that there was an inherent circularity in the application of the anti-avoidance provisions in VATA, Sch 10.

If property is the subject of an option to tax, VAT should be chargeable on a supply of that property, thereby (subject to certain conditions) creating a capital item in the hands of the transferee. However, at that point, the anti-avoidance provisions in VATA, Sch 10, would then disapply the option to tax, meaning that VAT would no longer be chargeable on the supply of the property, meaning that a capital item would not be created. In turn, the provisions in VATA, Sch 10 would then be switched off and VAT once again chargeable, and so on.

Both parties agreed that the anti-avoidance provisions in VATA, Sch 10, had to be construed so as to avoid this circularity, but they disagreed on how this should be done. Counsel for Moulsdale argued that one must assess the grantor’s intention or expectation while ignoring any disapplication of the option to tax which the provisions in VATA, Sch 10, might effect. Counsel for HMRC, on the other hand, argued that the capital item created by the grant must be ignored when deciding whether the option to tax is disapplied by the anti-avoidance provisions.

The FTT dismissed the appeal, not favouring either party’s proposed statutory construction. The FTT held that the critical issue was Moulsdale’s subjective intention or expectation at the time of the sale to the third party purchaser. The FTT applied that test by reference to Moulsdale’s knowledge of the transaction rather than the convoluted statutory provisions in VATA, Sch 10: simply put, Moulsdale had not charged VAT and therefore cannot have intended the property would become a capital item in the hands of the purchaser.

On appeal, the Upper Tribunal (Tax and Chancery Chamber) (“UT”) held that the FTT had correctly identified the question as being whether the property was intended or expected to be a capital item in the hands of the purchaser. The UT further held that the FTT’s findings were supported by the agreed facts and their conclusion was one which they had been entitled to reach. Critically, Moulsdale had not provided evidence of his subjective expectation or intention in relation to the status of the property as a capital item in the hands of the purchaser. The UT therefore dismissed the appeal.

Decision of the Court of Session

The Court of Session, by a majority of 2:1, agreed with the FTT and UT and dismissed the appeal.

In the majority, Lords Carloway and Menzies held that, in order to succeed in his appeal, Moulsdale had to demonstrate that the option to tax had been disapplied because he intended or expected that the land would become a capital item in the hands of the purchaser. This involved a subjective test and the burden of establishing it rested with Moulsdale. The problem for Moulsdale was that he did not lead evidence of his subjective expectation or intention on this critical issue and, as such, there were no grounds justifying the reversal of the FTT and UT’s decisions on what was ultimately a matter of fact.

Dissenting, Lord Doherty focused instead on the issue of the circularity in the legislation. It was common ground that the provisions in VATA, Sch 10, had to be construed so as to avoid this circularity. Lord Doherty favoured Moulsdale’s proposed construction, dismissing HMRC’s alternative construction as “untenable”. Although Moulsdale clearly believed that the option to tax would be disapplied, it was a “necessary and integral element” of that belief that the anti-avoidance provisions in VATA, Sch 10, were satisfied – which in turn required that he intended or expected that the property would become a capital item in relation to the purchaser. In Lord Doherty’s view, therefore, the FTT and UT had fallen into error.

Comment

As should be clear from the above, the relevant statutory provisions in this area are highly complex (or, as Lord Menzies put it, “unnecessarily convoluted”). It is hoped that the Supreme Court will finally bring some resolution as to the proper statutory construction so as to avoid the inherent circularity of the anti-avoidance provisions in VATA, Sch 10.

In this post, Erin Crawley, a trainee solicitor in the Infrastructure, Construction and Energy Disputes team at CMS, comments on the case of McCue (as guardian for Andrew McCue) v Glasgow City Council [2023] UKSC 1.

On 11 January 2023, the Supreme Court unanimously dismissed the appeal in McCue (as guardian for Andrew McCue) v Glasgow City Council [2023] UKSC 1, finding that Glasgow City Council’s (“the Council”) charging policy for community care services was not discriminatory. The decision, in favour of the Council, was handed down approximately two months after the case was heard by the Supreme Court.

Factual Background

Terri McCue brought the case on behalf of her adult son, Andrew, who has Down’s Syndrome and is disabled within the meaning of the Equality Act 2010 (“the 2010 Act”), s 6. As a result of his disability, Andrew is entitled in law to community care services from Glasgow City Council, for which the Council is able to seek a contribution from him, in terms of the Social Work (Scotland) Act 1968 (“the 1968 Act”), s 87. Any contribution sought must be reasonable, and the service user must be able to meet it.

The Council bases its charging policy on a minimum income threshold, which is set in reference to guidance from the Convention of Scottish Local Authorities and linked to rates set by the Department for Work and Pensions. If the Council is satisfied that a service user meets its minimum income threshold and as a result should pay a contribution to its care services, it can then apply certain deductions to reduce such contribution. This can include any disability related expenditure (“DRE”).

The Council therefore levied charges for Andrew’s community care services by assessing his means and ability to pay. It was Mrs McCue’s position that in calculating the charges, the Council failed to make sufficient deductions from her son’s assessable income in relation to his DRE. Despite repeated representations to the Council by Mrs McCue on her son’s behalf over several years, the Council was not persuaded, save for a minimal deduction, to reduce the charges.

In failing to make these deductions and therefore lower the charges levied for the community care services, Mrs McCue contended that the Council both unlawfully discriminated against her son on the grounds of his disability within the meaning of the 2010 Act, s 15, and breached their statutory duty to make reasonable adjustments in light of her son’s disability under the 2010 Act, s 20.

Decision of the Lower Courts

At first instance, the Outer House of the Court of Session dismissed Mrs McCue’s claim, agreeing with the Council’s argument that Mrs McCue had a suitable alternative remedy in the form of an application to the Scottish Public Services Ombudsman, which she should have pursued.

The Lord Ordinary also provided reasons for why she would have dismissed the claim based on its merits in any event. Specifically, Mrs McCue did not contest the appropriateness and adequacy of the Council’s support plan, and her failure to do so undermined her claim. In the Lord Ordinary’s view, DRE is the “additional expenditure incurred as a consequence of disability and used to meet the assessed needs of the individual in receipt of social care”. Considering that the support plan was accepted as fully meeting Andrew’s needs, it was determined that the additional expenses claimed for did not qualify as relevant DRE.

Mrs McCue appealed to the Inner House of the Court of Session, which dismissed the appeal on its merits. Mrs McCue argued that the Council’s policy document failed to positively protect her son’s income from reduction due to expenses incurred in connection with his disability and therefore was discriminatory under the 2010 Act.

However, the Inner House determined that the policy document was not discriminatory, and that Mrs McCue’s argument improperly sought to rely on the 2010 Act for payment of sums as DRE, independently of the Council’s statutory obligations under the 1968 Act, s 87. The Inner House held that the statement in the policy document was intended to enable the Council to fulfil its obligations under the 2010 Act, and that the 2010 Act does not create a separate obligation for the Council to pay for DRE not related to services provided under the 1968 Act.

Supreme Court Decision

Mrs McCue proceeded to appeal to the Supreme Court, which dismissed the appeal on grounds differing from the courts below.

The 1968 Act, s 87: charge for community care services

Pursuant to the 1968 Act, s 87, local authorities have discretion to impose a charge for community care services provided and decide at what level the charge should be set. Such a charge, if imposed, must be reasonable and commensurate with the individual’s means. In the event that an individual demonstrates that their means are insufficient such that it would be impractical for them to pay the charge, the authority is precluded from imposing a charge in excess of what is reasonably practical for the individual to pay.

The burden of proof in regard to an individual’s inability to pay falls upon the individual.

In this case, the Council determined that Andew’s means were not so affected as to reduce what was reasonably practical for him to pay in relation to the disputed items of DRE. The Supreme Court held that the Council had properly applied the relevant tests in the 1968 Act, Ss 87(1) and 87(1A) and had not acted in a way that was either irrational or unlawful.

The 2010 Act, s 15: unfavourable treatment

It was accepted that Mrs McCue’s son is disabled for the purposes of the application of the 2010 Act, s 15. The central question was whether the Council had treated Mr McCue’s son unfavourably due to his disability, in terms of the 2010 Act, s 15(1)(a). The Supreme Court contended that to determine this, a comparison had to be drawn between the actual treatment received by Mrs McCue’s son and what would have occurred in a hypothetical scenario without the alleged unfavourable treatment. It was not necessary to identify a non-disabled comparator to establish unfavourable treatment. The comparison raised two fundamental questions of fact: (i) what was the relevant treatment and (ii) was it unfavourable to Mrs McCue’s son?

The relevant treatment in this case was the Council’s application of the 1968 Act, s 87 in determining the charges for services provided to Mrs McCue’s son and evaluating his available means. The Council applied the same basic charging scheme to both disabled and non-disabled individuals and indeed extended a more generous approach to disabled individuals to account for DRE. The Supreme Court held that this approach cannot be considered unfavourable to disabled individuals as it allows for a greater range of deductions to be made when calculating their available means. Therefore, Mrs McCue’s complaint that the treatment was not generous enough did not constitute a valid ground of complaint in terms of the 2010 Act, s 15.

The 2010 Act, s 20: duty to make adjustments

In its provision of community care services to Mrs McCue’s son, the Council was acting within the scope of the 2010 Act, Pt 3. It therefore had a duty to make reasonable adjustments in accordance with the 2010 Act, s 20.

Mrs McCue sought to rely on the 2010 Act, s 20(3), stipulating that when a provision, criterion, or practice of the Council puts a disabled person at a substantial disadvantage in comparison to a non-disabled person, the Council must take reasonable steps to eliminate or mitigate that disadvantage. The Supreme Court found that it was reasonable to infer that the Council had implemented a practice of rejecting certain expenditures. This practice meant that expenses were rejected if they were not directly related to the individual’s disability, were covered by other forms of financial assistance, or were deemed discretionary and not necessary to meet the individual’s specific needs related to their disability. The Supreme Court held that this practice was not unfavourable to disabled people, because it only applies to disabled people, therefore no comparison could be made with non-disabled people. As a result, the Supreme Court held that the 2010 Act, s 20(3) could not apply. Instead, it was held that the practice of allowing deductions at all actually confers an advantage on disabled people.

Decision

In dismissing the appeal, the Supreme Court held that that the Council’s approach to assessing Andrew’s means was not discriminatory and that the Council had fulfilled its duty to make reasonable adjustments under the 2010 Act. The Supreme Court found that the Council had properly considered the impact of Andrew’s disability on his expenditure and had made reasonable deductions.

Comment

The decision sets a precedent for how local authorities in the UK should approach the assessment of charges for community care services provided to disabled persons under the 1968 Act and the 2010 Act. The judgment confirms that local authorities have discretion over whether to charge for services and at what level, but that the onus is on the individual to show that their means are insufficient for them to pay the charges. The court also confirms that local authorities should consider the impact of the disability on the individual’s expenditure and accordingly make reasonable deductions.

The case illustrates the need for local authorities to have policies in place which do not discriminate against disabled persons in the assessing charges and confirms that account should be taken of DRE in the calculation of what is reasonably practical for the individual to pay. This means that local authorities should have policies in place to ensure that they are not treating disabled persons unfavourably when assessing charges for community care services.

Overall, the case provides guidance for local authorities in the UK on how to approach the assessment of charges for community care services provided to disabled persons in a way that is compliant with the 1968 Act and the 2010 Act.

Hearings in the Supreme Court are now shown live on the Court’s website.

On Monday 30th and Tuesday 31st January 2023 the Court will hear Jones v Birmingham City Council and another, on appeal from [2018] EWCA 1189. The issue in this case is whether Part 4 of the Policing and Crime Act 2009 is incompatible with Article 6 of the European Convention on Human Rights. In 2016 an interim injunction was granted preventing the appellant from entering a large part of central Birmingham, save for exceptional circumstances, on account of his alleged involvement in gang-related activities.

On Wednesday 1st February 2023 the Court will hand down judgment in Fearn and others v Board of Trustees of the Tate Gallery [2023] UKSC 4. The Court will determine whether the Court of Appeal erred in failing to hold that the claimants were entitled to a remedy in the tort of private nuisance by reason of the Tate Modern’s use of the top floor of its Blavatnik Building as a viewing platform. The hand down will take place at 09:45 in Courtroom One.

On Wednesday 1st and Thursday 2nd February 2023 the Court will hear the case of Philipp v Barclays Bank UK PLC, on appeal from [2022] EWCA 318. The Court will consider the following issues:

Does the Quincecare duty have any application in a case where the relevant payment instruction was not issued to the bank by an agent of the bank’s customer?
If not, should either (i) the Quincecare duty be extended so as to include the obligations contended for by Mrs Philipp in relation to authorised push payment fraud, or (ii) the law recognise or impose such obligations on a paying bank as incidents of its duty to exercise reasonable skill and care in and about executing an instruction?
Should the Court determine issues 1 and/or 2 above on a summary judgment and/or strike-out application?

The following Supreme Court judgments remain outstanding: (As of 03/02/23)

The Law Debenture Trust Corporation plc v Ukraine (Represented by the Minister of Finance of Ukraine acting upon the instructions of the Cabinet of Ministers of Ukraine) Nos. 2 and 3, heard 9-12 December 2019
East of England Ambulance Service NHS Trust v Flowers and Ors, heard 22 June 2021
Canada Square Operations Ltd v Potter, heard 14th June 2022
R (on the application of VIP Communications Ltd (In Liquidation)) v Secretary of State for the Home Department, heard 4th October 2022
Unger and another (in substitution for Hasan) v Ul-Hasan (deceased) and another, heard 20th October 2022
Chief Constable of the Police Service of Northern Ireland and another v Agnew and others (Northern Ireland), heard 14th-15th December 2022
Smith and another v Royal Bank of Scotland, heard 12th January 2023
Moulsdale t/a Moulsdale Properties v Commissioners for His Majesty’s Revenue and Customs (Scotland), heard 17th January 2023
Republic of Mozambique (acting through its Attorney General) v Privinvest Shipbuilding SAL (Holding) and others, heard 24-25th January 2023
Rakusen v Jepson and others, heard 26th January 2023.
Jones v Birmingham City Council and another, heard 30th-31st January 2023.
Philipp v Barclays Bank UK PLC, heard 1st-2nd February 2023.

In this post, Eilidh Douglas, Senior Associate in the ICE Disputes team at CMS, previews the case of Republic of Mozambique v Privinvest Shipbuilding SAL (Holding) and Ors, which was heard by the UK Supreme Court on 24 and 25 January 2023.

Factual Background

The appellant is the Republic of Mozambique (“the Republic”). The case relates to the development of the Republic’s economy and in particular, the opportunities afforded by its coastline and territorial waters for tuna fishing and gas exploitation.

Through three special purpose vehicles (the “SPVs”) wholly owned by the Republic, it entered into three contracts (the “Contracts”) with Privinvest Shipbuilding SAL and related companies (the “Privinvest Defendants”) for the supply of various vessels and associated shipping infrastructure. The SPVs borrowed the purchase funds for the Contracts, and the Republic granted sovereign guarantees (the “Guarantees”) over the borrowing. The Contracts are each governed by Swiss law and contain an arbitration agreement. The Guarantees, meanwhile, are governed by English law and provide for disputes to be resolved by the English courts.

In what came to be known as the “Tuna Bond Scandal”, the Republic alleged that the Privinvest Defendants and related individuals had bribed corrupt officials to the tune of at least $143 million. The alleged corruption, in turn, exposed the Republic to potential liability under the Guarantees. The Republic commenced an action against the Privinvest Defendants in the English courts. However, the Privinvest Defendants sought a stay of that action, on the basis that the subject-matter of the action was a matter properly to be decided by arbitration pursuant to the Contracts’ arbitration agreements.

Appellate History

In February 2019, the Republic commenced proceedings against the Privinvest Defendants in England in respect of the alleged bribery and corruption. Meanwhile, Privinvest commenced arbitration against the SPVs and the Republic in Switzerland pursuant to the arbitration agreements in the Contracts (although the Republic was not a signatory, Privinvest argued that as a matter of Swiss law the Republic was nevertheless deemed a party to the Contracts).

In November 2019, the Privinvest Defendants sought a stay of the English proceedings, pursuant to Arbitration Act 1996, s 9, which provides at ss (1) that:

“A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter.”

At first instance, the High Court [2020] EWHC 2012 (Comm) held that the claims in the English proceedings were not matters falling within the scope of the arbitration agreements in the Contracts. The claims in respect of bribery and corruption were not “sufficiently connected” with the Contracts and the remedies sought were not concerned with the purchase prices under the Contracts.

The Privinvest Defendants appealed to the Court of Appeal [2021] EWCA Civ 329, which overturned the decision of the High Court. The Court of Appeal noted (at paragraph 63) that a ““matter” is not the same as a cause of action; it includes any issue capable of constituting a dispute under the relevant arbitration agreement.” This included potential defences. The English proceedings would necessarily (in the context of the Privinvest Defendants’ defence that the Contracts were genuine commercial transactions) consider the validity of the Contracts; this was a “matter” referrable to arbitration under the arbitration agreements. The Republic’s claims against the Privinvest Defendants therefore fell within the scope of the arbitration agreements.

The Republic appealed to the Supreme Court and the case was heard by the Supreme Court on 24 and 25 January 2023.

Comment

This appellate history of this case illustrates differing approaches to interpretation of the Arbitration Act 1996, s 9, and whether proceedings “concern” a “matter” “in respect of” which an arbitration agreement applies. A narrow approach such as that adopted by the High Court has the potential to impact the sanctity of parties’ agreement to arbitrate disputes; a broad approach such as that adopted by the Court of Appeal, meanwhile, may produce “unwelcome case management complications” for English proceedings where parts of a claim falling within an arbitration agreement are to be stayed. The Supreme Court’s decision will, it is hoped, provide clarity as to the correct approach.

On appeal from: [2019] EWCA Civ 1999

Foxpace Limited (“Foxpace”), the Fourth Respondent, owned a property known as Nash House in London. This appeal concerns an oral agreement between Foxpace and Mr Barton, the First Respondent, about Nash House. In the High Court it was held that Foxpace agreed to pay Mr Barton £1.2 million if he introduced a purchaser for Nash House who bought it for £6.5 million. The £1.2 million represented deposits and other expenses that Mr Barton had lost on two previous attempts to buy Nash House.

Mr Barton introduced to Foxpace a purchaser who attempted to buy Nash House for £6.55 million. However, it came to light that Nash House fell within an area safeguarded for the purpose of the construction of the HS2 rail link. As a result, Western acquired Nash House for £6 million plus VAT. Since the oral contract between Foxpace and Mr Barton made no provision as to what would happen if Nash House was sold for anything less than £6.5 million, Foxpace argued there was no contractual obligation to pay anything to Mr Barton. Accordingly, Mr Barton brought a claim for the reasonable value of his services.

The first instance judge held that Mr Barton was not entitled to any payment. In case he was wrong, the judge assessed a reasonable fee for Mr Barton’s services as being £435,000. The Court of Appeal allowed Mr Barton’s appeal and held that he was entitled to a reasonable fee. The Appellants now appeal to the Supreme Court.

 

HELD – Appeal allowed, by a 3-2 majority.

 

Foxpace could be contractually bound to pay a fee to Mr Barton in three different ways: (1) an express term; (2) a term implied on the facts; and (3) a term implied by law. Alternatively, Foxpace could be obliged to pay a fee to Mr Barton under the law of unjust enrichment. The majority held that none of these avenues leads to the conclusion that Mr Barton should be paid a fee.

 

The express terms of the contract

There was no express contractual term creating an obligation on Foxpace to pay Mr Barton a fee if Nash House was sold to Western for less than £6.5 million.

 

A term implied as a matter of fact

The majority hold that implying a term that Foxpace is contractually bound to pay Mr Barton an unspecified sum if a purchaser buys Nash House for less than £6.5 million contradicts the express terms of the contract. It was not possible to say that there is any particular fee to which the parties would clearly have agreed, or which is so obvious that it goes without saying.

 

A term implied as a matter of law

Section 15 of the Supply of Goods and Services Act 1982 implies a term that the party contracting with the supplier for services will pay a reasonable charge where consideration for the service is not determined by the contract. The majority hold that this section does not apply in the circumstances of this case because consideration was in fact determined by the contract.

The law also implies a term as an incident of the particular kind of contract in issue. Mr Barton relied on a series of cases in which the courts have implied an entitlement to commission as an incident of informal contracts commonly entered into between sellers of property and estate agents when the property is sold to a purchaser introduced by the estate agent. The majority held that Mr Barton’s contract is not the same as the contracts in those cases.

 

The claim in unjust enrichment

The majority held that Mr Barton’s claim in unjust enrichment also failed. An obligation on Foxpace to pay any commission to Mr Barton when there has been no sale to Western for £6.5 million is at odds with what was agreed and the law of unjust enrichment cannot be relied on to circumvent the terms of a subsisting contract.

 

Dissenting judgments

Lord Leggatt and Lord Burrows dissent and would both dismiss the appeal. Lord Leggatt holds that Mr Barton was entitled to a reasonable remuneration under a term, implied by law, to pay a reasonable sum for the supply of services where no sum is fixed by the contract. He holds that this entitlement to reasonable remuneration is not inconsistent with the inference that, if Nash House sold for less than £6.5 million, Foxpace would not be obliged to pay Mr Barton £1.2 million. Lord Leggatt also holds that the law of unjust enrichment does not assist Mr Barton’s claim.

Lord Burrows holds that there was a term implied by law into the contract that Mr Barton would be paid reasonable remuneration by Foxpace if he successfully introduced the buyer of Nash House to Foxpace. He holds that the express terms of the contract, for payment of £1.2 million if the purchase price of Nash House was £6.5 million, did not exclude this implied term. Lord Burrows also holds that had there been no such implied term, the same result would have been reached in the law of unjust enrichment.

To read the Judgment, please see:

Judgment (PDF)
Judgment on The National Archives (HTML version)
Judgment on BAILII (HTML version)

For the Press Summary, please see:

Press summary (HTML version)

To watch the hearing, please see:

Watch hearing

2 November 2022
Morning session
Afternoon session

In this post, Luke Arnold, Associate in the Real Estate team at CMS, previews the case of Rakusen v Jepson and Ors, which is due to be heard by the UK Supreme Court on 26 January 2023.

Factual Background

The respondent in this appeal, Mr Rakusen, is the leasehold owner of a flat in North London. In 2016, he granted a tenancy of the flat to Kensington Property Investment Group (“Kensington”) which permitted the subletting of individual rooms in the flat. Kensington later entered into separate agreements with the Appellants (Jepson and Ors) granting them each possession of one room.

Both parties accept that by November 2018 the flat was occupied by more than three people forming two or more households and, therefore, constituted a house in multiple occupation which required a licence under the Housing Act 2004. However, neither the respondent nor Kensington applied for a licence in breach of this Act.

The Housing and Planning Act 2016, s 40(1) (“the 2016 Act”) confers power on the First-tier Tribunal to make a rent repayment order (“RRO”) where a landlord has committed specific housing offences, which include the “control or management of unlicenced HMO”. The 2016 Act does not however define ‘landlord’, which leaves some ambiguity as to whether a tenant can only apply for a RRO against its immediate landlord or, alternatively, against a superior landlord which may be a more financially viable target.

Appellate History

In September 2019 the Appellants applied to the First-tier Tribunal (Property Chamber) under s 41 of the 2016 Act for a RRO totalling £26,140 against the Respondent and his partner, who is a joint leasehold owner of the flat. As detailed above, the Respondent is the Appellants’ superior landlord.

The respondent and his partner invited the First-tier Tribunal to strike out the whole of the application on the basis that a RRO could only be made against Kensington, i.e. the Appellants’ immediate landlord, and therefore there was no reasonable prospect of the application succeeding.

While the Tribunal agreed to strike out the claim against the Respondent’s partner (on the basis she was not a named party to the tenancy agreement with Kensington), it refused to do so against the Respondent. It considered it was bound by the earlier decision of the Upper Tribunal in Goldsbrough v CA Property Management Ltd [2019] UKUT 311 (LC) in which it was held that a RRO could be made against a superior landlord. It considered that the Respondent was ‘a’ landlord of the flat, even if he was not ‘the’ landlord of the Appellants and therefore was subject to s 41 of the 2016 Act.

The Respondent appealed to the Upper Tribunal (Lands Chamber) ([2020] UKUT 298 (LC)) which analysed the construction of the 2016 Act and upheld both Goldsbrough and the first instance decision. It concluded that the First-tier Tribunal has jurisdiction to make a RRO against any landlord who has committed a housing offence, including superior landlords.

The Respondent appealed to the Court of Appeal ([2021] EWCA Civ 1150) which allowed the appeal. The court disagreed with the statutory interpretation carried out by the Upper Tribunal and considered it departed from the natural meaning of the legislation, especially as the outcome would otherwise be that a superior landlord could be ordered to ‘repay’ tenants sums of money which they never received in the first place.

The Appellants now appeal to the Supreme Court.

Comment

The Supreme Court decision will have a significant impact on the scope and effectiveness of RROs and, by extension, a tenant’s ability to take action against landlords. This case is particularly timely as the increasing number of financially unsound ‘rent to rent’ companies has created difficulties for tenants and local authorities when trying to take legal action to recover unlawfully demanded rent. However, while the very purpose of the 2016 Act is to protect tenants, the Court of Appeal was keen to emphasise that the court must interpret the statute as it presently stands and should leave it to Parliament to further legislate if appropriate to combat the ‘significant social evil’ of rogue landlords.

Clarification on this issue will be eagerly awaited by tenants and, perhaps, with some trepidation by landlords. Either way, this decision is likely to have wide-reaching and significant consequences for landlords and tenants across the country.