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On appeal from: [2019] EWCA Civ 112

This appeal raised questions of considerable importance for company law. It provides the first opportunity for the Supreme Court to consider the existence, content and engagement of the so-called “creditor duty”: the alleged duty of company directors to consider, or to act in accordance with, the interests of the company’s creditors when the company becomes insolvent, or when it approaches, or is at real risk of, insolvency.

In May 2009, the directors of a company called AWA caused it to distribute a dividend of €135 million to its only shareholder, the respondent. This extinguished almost the whole of a larger debt which the respondent owed to AWA. At the time the May dividend was paid, AWA was solvent. However, it had long-term pollution-related contingent liabilities of an uncertain amount and an insurance portfolio of an uncertain value. There was a real risk that AWA might become insolvent in the future, though insolvency was not imminent, or even probable.

AWA went into insolvent administration almost ten years later, in October 2018. The appellant, BTI 2014 LLC, is the assignee of AWA’s claims. BTI sought to recover the amount of the May dividend from AWA’s directors. It argued that the directors’ decision to distribute the May dividend was taken in breach of the creditor duty because the directors had not considered or acted in the interests of AWA’s creditors. Both the High Court and the Court of Appeal rejected the creditor duty claim. In the judgment of the Court of Appeal, the creditor duty did not arise until a company was either actually insolvent, on the brink of insolvency or probably headed for insolvency. Its provisional view was that the creditor duty became paramount as soon as the company became insolvent. Since AWA was not insolvent or on the brink of insolvency in May 2009, BTI’s creditor duty claim failed. BTI appealed to the Supreme Court.

 

HELD – Appeal unanimously dismissed. All members of the Court agree that AWA’s directors were not at the relevant time under a duty to consider, or to act in accordance with, the interests of creditors in the circumstances of this appeal.

 

Issue 1: Is there a common law creditor duty at all?

Section 172(1) of the 2006 Act requires directors to act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole. It codifies the long-established common law fiduciary duty to act in good faith in the interests of the company, implementing the recommendations of the Steering Group of the Department of Trade and Industry’s Company Law Review. The Supreme Court held that, in certain circumstances, this duty is modified by the common law rule that the company’s interests are taken to include the interests of the company’s creditors as a whole.

Lord Briggs uses “creditor duty” as a convenient label for this modifying rule. However, he agrees with Lord Reed that it is in truth an aspect of the director’s duty to the company, rather than a free-standing duty of its own. Lord Reed and Lady Arden prefer to describe the modifying rule as “the rule in West Mercia” after the leading case.

 

The creditor duty should be affirmed for the following reasons. First, the duty is supported by a long line of UK case law. Second, the majority hold that the duty is affirmed, or its possible existence is preserved, by section 172(3) of the 2006 Act. Third, the duty has a coherent and principled justification. Creditors always have an economic interest in the company’s assets, but the relative importance of that economic interest increases where the company is insolvent or nearing insolvency. In those circumstances, the directors should manage the company’s affairs in a way which takes creditors’ interests into account and seeks to avoid prejudicing them.

Directors owe their duties to the company, rather than directly to shareholders or to creditors. The creditor duty is not a free-standing duty that is owed to creditors.

 

Issue 2: Can the creditor duty apply to a decision by directors to pay an otherwise lawful dividend?

The Court held that the creditor duty can apply to a decision by directors to pay a dividend which is otherwise lawful, for two reasons. First, Part 23 of the 2006 Act is subject to any rule of law to the contrary (see section 851(1)). Since the creditor duty is part of the common law and is recognised by section 172(3) of the 2006 Act, it is not excluded by Part 23. Second, a decision to pay a dividend that is lawful under Part 23 may still be taken in breach of duty.

 

Issue 3: What is the content of the creditor duty?

Where the company is insolvent, or bordering on insolvency, but is not faced with an inevitable insolvent liquidation or administration, the directors should consider the interests of creditors, balancing them against the interests of shareholders where they may conflict. The greater the company’s financial difficulties, the more the directors should prioritise the interests of creditors.

The interests of creditors are the interests of creditors as a general body. The directors are not required to consider the interests of particular creditors in a special position. Where an insolvent liquidation or administration is inevitable, the creditors’ interests become paramount as the shareholders cease to retain any valuable interest in the company.

 

Issue 4: When is the creditor duty engaged? Was it engaged on the facts of this case?

The creditor duty was not engaged on the facts of this case. This is because, at the time of the May dividend, AWA was not actually or imminently insolvent, nor was insolvency even probable. The duty does not apply merely because the company was at a real and not remote risk of insolvency.

The majority hold that the creditor duty is engaged when the directors know, or ought to know, that the company is insolvent or bordering on insolvency, or that an insolvent liquidation or administration is probable. Lord Reed and Lady Arden agree that the duty applies when the company is insolvent or bordering on insolvency, or when an insolvent liquidation or administration is probable. However, they leave open the question of whether it is essential that the directors know or ought to know that this is the case.

See here for the Judgment (PDF)

See here for the Press summary (HTML version)

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04 May 2021
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On Tuesday 4th October, the Court heard the case of R (on the application of VIP Communications Ltd (In Liquidation)) v Secretary of State for the Home Department. This is on appeal from [2020] EWCA Civ 1564, and considers whether the Secretary of State can direct the Office of Communications not to introduce regulations exempting certain wireless telegraphy equipment from a licensing requirement on national security grounds. You can watch the hearing here: Morning session, Afternoon session.

On Wednesday 5th October, the Court handed down judgment in BTI 2014 LLC v Sequana SA and others [2022] UKSC 25. In this significant case for company law, the Supreme Court considered the existence, content and engagement of the so-called ‘creditor duty’ for the first time. It was held that the duty did exist, and was established through case law dating back to the 1980’s. The Court considered the content of that duty and when it would be engaged. It was held that the duty was not engaged in this case, as at the time of the key facts of the case, the company in question was not insolvent, and nor was insolvency even probable. The duty is engaged only when the directors know, or ought to know, that the company is insolvent or bordering on insolvency, or that an insolvent liquidation or administration is probable.

See the New Judgments section for further details.

The following Supreme Court judgments remain outstanding: (As of 05/10/22)

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
Guest and another v Guest heard 3rd December 2021
Fearn and others v Board of Trustees of the Tate Gallery heard 7th December 2021
Stanford International Bank Ltd (in liquidation) v HSBC Bank PLC, heard 19th January 2022
Commissioners for Her Majesty’s Revenue and Customs v NCL Investments Ltd and another, heard 25th January 2022
DCM (Optical Holdings) Ltd v Commissioners for Her Majesty’s Revenue and Customs (Scotland), heard 8th February 2022
Commissioners for Her Majesty’s Revenue and Customs v NHS Lothian Health Board, heard 8th June 2022
Canada Square Operations Ltd v Potter, heard 14th June 2022
R v Andrewes, heard 21st June 2022
Hillside Parks Ltd v Snowdonia National Park Authority, heard 4th July 2022
DB Symmetry Ltd and another v Swindon Borough Council, heard 12th July 2022.
Reference by the Attorney General for Northern Ireland – Abortion Services (Safe Access Zones) (Northern Ireland) Bill, heard 19th July 2022
R (on the application of VIP Communications Ltd (In Liquidation)) v Secretary of State for the Home Department, heard 4th October 2022.

In this post, Alan McDonald, Senior Associate in the Disputes team at CMS, previews the decision awaited from the UK Supreme Court in the Reference by the Lord Advocate in relation to the Scottish Independence Referendum Bill. The case will be heard on 11 and 12 October 2022. CMS will run a live blog of the oral arguments.

The Scottish Government (“SG”) intends to hold another referendum on whether Scotland should become an independent country before the end of the current term of the Scottish Parliament. The stated intention is to hold this vote on 19 October 2023. The question of whether there should be a second referendum on this issue is the subject of much political debate and contention.

The legal issue at the centre of this debate is whether the Scottish Parliament can legislate to allow a referendum on Scottish independence to take place, without the consent of the UK Parliament. Schedule 5 of the Scotland Act 1998 (“SA”) contains a list of matters that are reserved to the UK Parliament. These are commonly referred to as ‘reserved matters’. The Scottish Parliament, as a devolved legislature, can legislate for all areas not listed as reserved matters.

Prior to the previous vote on Scottish independence which took place on 18 September 2014 (“the 2014 referendum”), the then SG and the then UK Government had entered into an agreement (“the Edinburgh Agreement”). This provided for a legislative consent order (“LCO”), to be granted by the UK Parliament under Section 30 of the SA, allowing the Scottish Parliament to pass legislation that would permit the referendum. The current SG has submitted a request for a LCO in the same terms but, the current UK Government has refused to grant one.

Under paragraph 34 of Schedule 6 to the SA, the Lord Advocate (who is the chief Law Officer for the SG) has the power to refer a question relating to a ‘devolution issue’ to the UK Supreme Court for determination. Such a reference was filed with the UK Supreme Court (“the Court”) on 28 June 2022 (“the Reference”) in relation to the Scottish Independence Referendum Bill (“the Bill”). Oral submissions will be made to the Court by the Lord Advocate, on behalf of the SG, and the Advocate General, on behalf of the UK Government, on 11 and 12 October 2022.

In this post, we consider the written arguments submitted by the Lord Advocate and the Advocate General. The Court has allowed the Scottish National Party (“SNP”) to enter the proceedings as an intervener, but they have not been granted permission to make oral submissions. The SNP’s written submissions have been published and have also been considered. The Lord Advocate and the Advocate General have until 5 October 2022 to lodge written responses to the SNP’s written case.

The Bill

The Bill itself is eight sections long. The Reference is concerned with Section 2 only. It states as follows:

2 Referendum on Scottish independence
(1) A referendum is to be held in Scotland on a question about the independence of Scotland.
(2) The question is—
“Should Scotland be an independent country?”.
(3) The ballot paper to be used for the purpose of the referendum is to be printed—
(a) in the form set out in Parts 1 and 2 of the schedule, and
(b) according to the directions set out in Part 3 of the schedule.
(4) The date on which the poll at the referendum is to be held is 19 October 2023, unless before then regulations are made under subsection (6).
(5) Subsection (6) applies if the Scottish Ministers consider—
(a) that it is impossible or impracticable for the poll at the                                       referendum to be held on 19 October 2023, or
(b) that it cannot be conducted properly if held on that date.
(6) The Scottish Ministers may by regulations appoint a later date as the date on which the poll at the referendum is to be held.
(7) Regulations under subsection (6)—
(a) may include incidental, supplementary or consequential                                    provision,
(b) may modify any enactment (including this Act), and
(c) are subject to the affirmative procedure.

This section of the Bill is a replica of Section 1 of the Scottish Independence Referendum Act 2013, which provided the framework for the 2014 referendum.

The question referred by the Lord Advocate to the Court

“Does the provision of the proposed Scottish Independence Referendum Bill that provides that the question to be asked in a referendum would be “Should Scotland be an independent country?” relate to reserved matters? In particular, does it relate to: (i) the Union of the Kingdoms of Scotland and England (para.1(b) of Schedule 5); and/or (ii) the Parliament of the United Kingdom (para.1(c) of Schedule 5) [of the SA]?”

When it was being drafted, it was conceived that the SA would operate on a basis of ‘everything is devolved unless it is reserved.’ If a matter was specifically reserved in Schedule 5 of the SA, then the UK Parliament would have the exclusive right to legislate in these areas.

Items (i) and (ii) of the Reference are specifically listed in Schedule 5 of the SA. The question is whether the Bill treads into these areas and, as such, whether it is out with the legislative competence of the Scottish Parliament.

Preliminary issues dealt with by the Court

Prior to fixing a date for oral submissions, the Advocate General asked the Court to deal with a jurisdictional question. The UK Government submitted that because no bill had been passed by the Scottish Parliament, the current Reference by the Lord Advocate under paragraph 34 of Schedule 6 of the SA is premature.

Paragraph 34 of the SA states as follows:

“The Lord Advocate, the Attorney General, the Advocate General or the Advocate General for Northern Ireland may refer to the Supreme Court any devolution issue which is not the subject of proceedings.”

In the submission of the Advocate General, the question of whether the Bill was within or out with the legislative competence of the Scottish Parliament, and therefore whether there is a ‘devolution issue’, can only arise once a bill has been passed and prior to it being submitted for Royal Assent.

The Court chose not to rule on this jurisdictional question but instead to hear arguments on that point together with submissions on the substantive questions contained in the Reference.

The Lord Advocate’s Case

(i) The jurisdictional point

In her written submissions, the Lord Advocate first seeks to deal with the jurisdictional point raised by the UK Government.

The provisions of paragraph 34 of Schedule 6 of the SA, it is submitted, confer on the Lord Advocate as the chief Law Officer of the SG, the ability to refer the question contained in the Reference to the Court. The other Law Officer is the Solicitor General, deputy to the Lord Advocate. A Minister of the SG must consult the Law Officers before presenting a bill to the Scottish Parliament for consideration.1 The Law Officers must assess whether, as a matter of law, the bill is within the legislative competence of the Scottish Parliament. It is further submitted that “The issue to which this Reference relates therefore “arises by virtue” of the terms and operation of the SA.” 2

The framework provided by paragraph 34 of Schedule 6 of the SA is intended to allow the Law Officers to ask the question seek guidance from the Court in circumstances where it is not clear whether Scottish Parliament has the power to enact the provisions of a particular bill.

The Lord Advocate also addresses the decision of the Inner House of the Court of Session in Keatings v Advocate General.3 That case was raised by a pro-independence campaigner who asked the Court of Session to provide several declarators that the Scottish Parliament was able to legislate for a referendum on Scottish independence. The case was dismissed on the basis that the questions before the Court of Session were academic; no bill had been put before the Scottish Parliament, at that time, that sought to legislate for a referendum on Scottish independence.

The fact that paragraph 34 of Schedule 6 of the SA specifically gives the Lord Advocate the ability to refer any questions relating to a devolution issue to the Court, it is submitted, sets the Reference apart from the observations made by the Inner House in Keating.4

The submissions then move to consider the historical and constitutional context relative to the Reference. A narrative of the history from the Act of Union of 1707 (“the Union”) to the legislative events following the 2014 referendum, and a note on referendums in the UK, is set out.

(ii) The Reference

The Lord Advocate’s written submissions on the question contained in the Reference are split into an analysis of the legal framework of the devolution settlement and the function of the Court within that framework; whether the Reference relates to the Union; whether the Reference relates to the UK Parliament; and what relevance the LCO made in 2013 by the UK Parliament has to the present proceedings.

Section 29 of the SA, which sets out the restrictions on the legislative competence of the Scottish Parliament with reference to the items listed in Schedule 5, is considered. An in-depth consideration of how a bill in the Scottish Parliament may “relate to” a reserved matter, within the statutory context, is set out by the Lord Advocate.5 This analyses the scope and terms of the restrictions placed upon the Scottish Parliament by the SA.

The Lord Advocate submits that the UK constitution is not a specifically reserved matter but that the Union and the UK Parliament are. It is acknowledged that the question contained in the Bill asks whether the voters in Scotland want to remain part of the Union. The intention of the UK Parliament when passing the SA is considered in-depth. Reference is made to statements, made prior to the SA becoming law, that point to the UK Parliament not intending for the Act to allow the Scottish Parliament to pass legislation that would lead to a referendum on Scottish independence.6

It is further noted by the Lord Advocate that for a provision within a bill of the Scottish Parliament to “relate to” a reserved matter it must have “more than a “loose and consequential” connection to that matter”.7 It is accepted by the Lord Advocate that a referendum on Scottish independence has a significant connection to the reserved matter of the Union.

Whilst the intention of the UK Parliament should be considered, the wording of the SA dictates that the “effect” of the wording of a bill must be considered.8 Section 1 of the Bill states that it is intended to ascertain “the views of the people of Scotland”.9 The legal effect of the Bill and a subsequent referendum would not be to immediately alter the status quo of the Union.10 The referendum would be advisory in nature only.11 The UK Parliament would be required to give effect to the result of a ‘Yes’ vote in a referendum. However, the UK Parliament being sovereign, would not be bound to pass such legislation. It could choose to ignore the result though there would doubtless be political ramifications for doing so.

The terms of the LCO granted by the UK Parliament in 2013 are not relevant to the Reference, in the Lord Advocate’s submission. It was the fruit of an agreement by the then Scottish and UK Governments and did not deal with the question contained in the Reference. It is submitted that “the Edinburgh Agreement contains no assertion or concession, express or implied, that absent the making of the [LCO] it would be outside the Scottish Parliament’s legislative competence to pass an Act providing for the holding of a referendum.” 12

The Advocate General’s Case

(i) Jurisdictional point

The Advocate General has maintained the initial position raised by the UK Government in relation to the jurisdiction question, discussed above. It is argued that the Reference is premature and should only have been made after the Bill was passed by the Scottish Parliament and prior to being submitted for Royal Assent. Until that happens there is no genuine question of law for the Court to consider.13 The view of the Inner House in Keatings14 is therefore applicable to the Reference.

The SA must be interpreted in the same way as any other statute. It does not enjoy special status, as has been suggested by some constitutional and political commentators. It must be read with the intention of the UK Parliament in mind. Paragraph 34 of Schedule 6 of the SA was never intended to allow a reference to the Court prior to an Act of the Scottish Parliament being passed.

The Court ultimately has the discretion to reject the Reference without dealing with the substantive question contained within it. The Advocate General has submitted that if the Court agrees with the initial position taken by the UK Government, it should exercise its discretion in this manner.15

(ii) The Reference

The arguments in relation to the jurisdictional point are adopted by the Advocate General in dealing with the substantive question contained in the Reference. It is repeated throughout the written case for the UK Government that the SA must be interpreted in the same way as any other statute. It is submitted that the Reference should be answered in the positive. There is no doubt, in the submission of the Advocate General, that the Bill concerns reserved matters as provided for by the SA. It is clear from the terms of the statute that it relates to a question concerning the Union and the UK Parliament.16

The Advocate General goes on to argue that the scope and purpose of the Bill, whether in whole or in part, are outside the legislative competence of the Scottish Parliament.17 The Scottish Parliament does not have the ability to legislate for a referendum about Scottish independence.18 This is a matter, as it relates to the Union and the UK Parliament, entirely within the legislative purview of the UK Parliament.19

The fact that the referendum proposed by the Bill would not be binding on the UK Parliament is not a relevant consideration. Merely seeking to confirm the view of the Scottish voting population is an electoral exercise relating to the Union and it remains a reserved matter.20

The effect of a ‘Yes’ vote in such a referendum would have an effect on the constitutional settlement of the United Kingdom, though it is acknowledged21 that the referendum would not be self-executing. It is also clear that the subject matter of the Bill has a clear connection to a reserved matter. There is no ambiguity, from the perspective of the UK Government, on that point.22

The SNP’s Case

As noted above, the SNP has been allowed to lodge written submissions with the Court only. The arguments contained in the SNP’s written case are intended, in their submission, to supplement those of the Lord Advocate. They also submit, as the Lord Advocate does, that the answer to the question in the Reference should be answered in the negative (i.e. to legislate in relation to a second referendum on Scottish independence would not concern a reserved matter).

The main focus of the SNP’s submissions is on “the requirement to construe the [SA] in accordance with – rather than contrary to – the right of all peoples to self-determination.” 23

Consideration is given to the operation of the right to self-determination under international law and the recognition of this right by the UK Government in particular circumstances. The submissions also deal with what constitutes “a people” under international law. It is submitted that the people of Scotland are such a people and are entitled to the inalienable right to self-determination.

The submissions conclude as follows:

“Taking all of the above matters into account, it is the respectful submission of the Intervener that:

1. The people of Scotland are ‘a people’ for the purposes of the right to self-determination;
2. The Scottish people are therefore entitled as a matter of law to protection of their right to determine ‘their political status and freely pursue their economic, social and cultural development’;
3. That right is inalienable and cannot be taken away from the Scottish people; and
4. When reaching a determination on the interpretation of the 1998 Act in the circumstances of this reference, there is a strong presumption that an interpretation must be given to the 1998 Act which does not prevent the exercise by the Scottish people of their right nor render it disproportionately difficult for them to do so by, for example, making their right of self-determination conditional or subject to the approval of another ‘people’. The leaders of the Conservative and Labour parties at Westminster have made clear they will not countenance a referendum on Scottish independence under any circumstances. Regardless of the outcome of any subsequent general election to the UK Parliament, the people of Scotland’s right to self-determination cannot be advanced through that legislature.” 24

The submissions deal with points that sit outside the issues considered by the Lord Advocate and the Advocate General. The conclusion also appears to suggest that the UK Parliament can be bypassed in circumstances where it refuses to act on a wish or want expressed by the Scottish electorate following an election. The Reference is not concerned with that question but instead with whether the SA prevents the Scottish Parliament from passing the Bill in its current form.

Comment

Regardless of how the Court resolves the Reference, the constitutional and political ramifications for Scotland and the rest of the United Kingdom should not be underestimated. The political debate regarding Scottish independence will continue whatever their Lordships decide.

Answering the Reference in the positive will mean that the SG is forced to look at other means of progressing its stated policy aim of achieving Scottish independence. Without a LCO from the UK Government this means that a new political strategy will likely be required. An answer in the negative (in other words that the Bill does not relate to reserved matters) would allow a referendum on Scotland’s independence to be held but it would not immediately give rise to Scotland becoming an independent nation.
Whichever way it goes, the Court’s determination will provide legal clarity in relation to the question of whether it is within or out with the Scottish Parliament’s power to legislate for second referendum of Scottish independence.

In this post, William Crossley, an Associate at CMS, comments on the decision in Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd [2022] UKSC 18, concerning the rights over land granted to telecommunications operators under the Electronic Communications Code.

On 1, 2 and 3 February 2022, the Supreme Court heard the appeals in (i) Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd (the “Compton Beauchamp Appeal”); (ii) Cornerstone Telecommunications Infrastructure v Ashloch Ltd & Anor (the “Ashloch Appeal”); and (iii) On Tower UK Ltd v AP Wireless II (UK) Ltd (the “On Tower Appeal”). The appeals in these cases were heard together due to the similarity of the legal points considered which centre around rights over land granted to “operators” under the Electronic Communications Code (the “New Code”) (Communications Act 2003, Sch 3A). The Supreme Court gave a unanimous judgment in dismissing the Compton Beauchamp Appeal and allowing the On Tower Appeal but, requested additional submissions from the parties to the Ashloch Appeal. Despite the different outcomes, the approach of the Supreme Court is clear and the reasons for each judgment are set out below.

Background

The factual background to all three appeals is similar as each appellant operator had installed electronic communications equipment, on land that they did not own, and acquired rights under the provisions of the previous electronic communications code which was contained in the Telecommunications Act 1984 (the “Old Code”). With the arrival of the New Code and absent agreement with the relevant site owners, the operators each applied to the Upper Tribunal (Lands Chamber) (the “Upper Tribunal”) to acquire better rights in relation to the use of the land under the New Code.

The Supreme Court’s decision to hear these three cases together is logical in light of the factual and legal similarities between them. Each of the appellants are operators who can acquire certain rights under paragraphs 2-3 of the New Code. The conferral of such rights under the New Code aims to allow operators to install and maintain electronic communications apparatus, such as internet cables and relevant structures, without the requirement for prolonged negotiations to allow access and works on the various sites where the operators’ apparatus is located. Such rights can either be obtained by direct agreement between the operator and the occupier of the land or, in the absence of agreement, by order of the Upper Tribunal following the application of the operator as set out in the Communications Act 2003, Sch 3A, Pt 2, para 9 and Pt 4, para 20 respectively.

Decision of the lower courts

The Compton Beauchamp Appeal and the Ashloch Appeal were heard at first instance by the Upper Tribunal and then by the Court of Appeal. The On Tower Appeal was heard by the Upper Tribunal but on appeal was heard by the Supreme Court due to the similar features shared with the former two cases.

Compton Beauchamp Appeal: Cornerstone Telecommunications Infrastructure Ltd (“Cornerstone”) is a joint venture formed by Vodafone Ltd and Telefonica UK Ltd. In 2004, prior to the introduction of the New Code, Vodafone Ltd entered into a 10-year lease (without security of tenure under the Landlord and Tenant Act 1954) (“LTA 1954”) granting rights to install and use certain electronic communications apparatus on land owned by Compton Beauchamp Estates Ltd (“Compton”). Cornerstone served notice under the New Code on Compton, seeking to obtain New Code rights. The Upper Tribunal found against Cornerstone on the basis that it did not have jurisdiction because Compton was not in occupation of the land, Vodafone Ltd was in occupation as the leaseholder. Cornerstone appealed this judgment which was refused by the Court of Appeal confirming that the Upper Tribunal did not have jurisdiction to impose an agreement on a landowner where another operator, here Vodafone Ltd, was occupying the site. Compton was not the “relevant person” for the purposes of the New Code, Communications Act 2003, Sch 3A, Pt 4, para 20.

Ashloch Appeal: Cornerstone, acting against different landowner respondents in this case, has a tenancy pre-dating the New Code with security of tenure under the LTA 1954, Pt 2. Cornerstone served notice seeking rights under the New Code but the Upper Tribunal found that it did not have jurisdiction to impose an agreement under the New Code where the operator is in occupation of the land under a subsisting tenancy protected by the LTA 1954, following the provisions which set out the transition from the Old Code to the New Code, in particular the Digital Economy Act 2017, Sch 2, para 6. The Court of Appeal dismissed Cornerstone’s appeal.

On Tower Appeal: On Tower UK Ltd (“On Tower”) held a 20-year lease over a site, and corresponding rights under the Old Code, which expired in October 2016. On Tower remained in occupation after the expiry under a tenancy at will, as identified by the Upper Tribunal. As such the transitional provisions in the Digital Economy Act 2017 as set out above in the Ashloch Appeal did not apply. On Tower served notice on the freeholder under paragraphs 20 and 27 of the New Code for the Upper Tribunal to grant rights. The Upper Tribunal struck out the application on the basis that it did not have jurisdiction to impose an agreement under the New Code, explicitly following the precedent of the Court of Appeal’s decision in the Compton Beauchamp Appeal concerning operators in occupation. The On Tower Appeal was heard directly by the Supreme Court rather than the Court of Appeal due to the similar features to the other two cases.

Supreme Court decision

The main issue considered by the Supreme Court concerned who is an “occupier of the land” for the purposes of Communications Act 2003, Sch 3A, para 9. The central point made by all three appellants was that they argued, as operators, that despite having electronic communications apparatus installed on the respective land, that they were not occupiers of the land for the purposes of the New Code and, as such, should be able to apply for New Code rights under the Communications Act 2003, Sch 3A, para 20 in the absence of agreement with the landowner under para 9.

The Supreme Court found in favour of the operators’ argument concerning the interpretation of “occupier” and looked at the context in which the word appears and the purpose of the provisions in which it is used. The Supreme Court noted the “Government’s policy is that new improvements to digital infrastructure are rolled out across the country swiftly” (para 119), and that this would be hindered if operators could not apply for New Code rights because they already had electronic communications apparatus installed on land and were therefore identified as occupiers. The Supreme Court held that operators may seek New Code rights despite being in occupation due to their existing electronic communications apparatus and such occupation should be disregarded when applying the provisions of the New Code to an operator’s application.

Applying the above approach to the facts of the appeals, the On Tower Appeal was allowed as On Tower’s occupation with electronic communications equipment should be disregarded and so, as an operator, there is no barrier to applying for New Code rights. The Compton Beaumont Appeal was dismissed as it was held that Vodafone Ltd was in occupation of the site rather than the freeholder, Compton, to which Cornerstone, as operator, had applied for rights and as such, the Supreme Court did not have jurisdiction. In the Ashloch Appeal, due to the security of tenure of Cornerstone’s lease and the prohibition under the transitional provisions of the Digital Economy Act 2017, Sch 2, para 6, on applying to renew rights under the New Code until the expiry of a subsisting agreement, the protected lease in this case, the appeal was not allowed. However, the Supreme Court invited submissions from the parties to the Ashloch Appeal to consider a possible application by Cornerstone to renew its existing rights under the LTA 1954 as an application for rights under the New Code was not possible.

Comment

Whilst the outcome of the three cases was not universally positive for the operator appellants, the approach taken by the Supreme Court in considering the legislators’ intent with the New Code, and disregarding the “occupier” status of operators applying for rights thereunder, provides clarity to operators looking to obtain New Code rights rather than relying on their existing agreements and weaker rights under the Old Code.

It would seem that, prior to this Supreme Court decision, the government was acting to achieve a similar outcome with the Product Security and Telecommunications Infrastructure Bill, Pt 2, which is currently in the House of Lords. The proposed Bill would amend the New Code to explicitly allow an operator in exclusive occupation to apply for and receive rights under the New Code, despite such occupation.

About the HRLA

The Human Rights Lawyers Association (HRLA) is a membership organisation which aims to promote the effective legal protection of human rights and fundamental freedoms in the UK and to further research, education and training in the area of human rights practice. The Young Lawyers’ Committee (YLC) is constituted by young lawyers, trainees, policy workers, paralegals, and law students with a keen interest in human rights law, who work together to provide essential training and resources for young people considering a career in human rights. This is done through the HRLA’s annual Judicial Review Mooting Competition, Careers Day, and for the first time this year, the Lord Kerr Essay Competition, which was set up by the HRLA to honour the legacy and human rights contribution of Lord Brian Francis Kerr, Baron Kerr of Tonaghmore, the former Supreme Court Justice, following a generous donation by his son, Patrick Kerr.

2022 Winning Essay by Cidalia Lewis-Lettington  

The interplay between climate change and Article 3 of the European Convention of Human Rights (“ECHR”) is a more recently emerging legal dimension, the topic of much recent debate. Climate change issues have largely, previously been argued about in the context of Articles 2 and 8 of the ECHR as seen in cases such as Urgenda (2015). However, a rapidly changing social context and the emergence of cases such as Duarte Agostinho (2020) have forced a discussion on whether phenomena such as eco-anxiety can amount to torture or inhuman or degrading treatment or punishment within Article 3 ECHR. The severity thresholds required for maltreatment within Article 3 are notoriously difficult to meet. Context dependent factors make it difficult to categorise eco-anxiety within this legislation. Despite eco-anxiety perhaps struggling to meet the requirements for torture or inhuman treatment or punishment, it is more than likely that it could be classified as degrading treatment or punishment. Throughout this assessment, it is important to remember that this hugely depends on the evolving social context, vulnerability of the victim and the role played by state responsibility, all of which will be discussed in this essay.

In order to properly assess eco-anxiety categorisation in this context, it is important to have a solid understanding of what exactly it is. The meaning and operationalization of the term ‘eco-anxiety’ have not been clearly established yet and there is a wide range of definitions and contexts to which it applies. A broad overview of the use of the term ‘eco-anxiety’ reveals an association with a vast range of negative emotions related to climate change and environmental threats. These include but are not limited to fear, loss, hopelessness, anger, a sense of suffocation and even depression. The definition provided by the American Psychology Association is the closest there currently is to a clear definition and is as follows: “the chronic fear of environmental cataclysm that comes from observing the seemingly irrevocable impact of climate change and the associated concerns for one’s future and that of the next generations”. For the purposes of this essay, we will use this definition coupled with the associated feelings mentioned above to create our understanding of what eco-anxiety is.

To accompany our understanding of eco-anxiety, we must also look at the meaning and normative parameters of torture, inhuman or degrading treatment or punishment under Article 3 ECHR. Article 3 enshrines the absolute right to protection against torture and inhuman or degrading treatment or punishment not subject to derogation. The simple, brief wording of Article 3 leaves it open to varied interpretation which can create obstacles to categorising eco-anxiety within it because of its ambiguity. Article 3 can be separated into three tiered forms of maltreatment that are an affront to physical and mental integrity: (i) torture, (ii) cruel or inhuman treatment or punishment, and (iii) degrading treatment or punishment. The differentiation between the three rests on the ‘kind purpose and severity of the particular punishment’. Torture is limited to a small number of straightforward cases of assault resulting in physical and mental anguish of an especially aggravated character. Whilst this category includes mental anguish cohesive with our definition of eco-anxiety, a purpose is required for inflicting the torture. This is something that would struggle to be proved in the context of eco-anxiety. Thus, it is not a tier of Article 3 that we will examine in this context because it would be exceedingly tenuous to try to attribute a purpose to the infliction of eco-anxiety, particularly because it is heavily subjective and can be self-invoked.

Inhuman treatment or punishment is described as being ‘premeditated…applied for hours at a stretch and causing either actual bodily injury or intense physical and mental suffering’.  Cassese suggests 3 elements necessary for inhuman treatment or punishment – the intent to ill-treat, severe suffering (psychological or physical) and an absence of justification for such suffering. The intent requirement would be difficult to reconcile with eco-anxiety. It is inconsistently applied by the courts so does not necessarily exclude eco-anxiety from being categorised within it. The description indicates a temporary nature of the maltreatment, something that is likely not the case with mental health issues such as eco-anxiety. Particularly in the current climate where these issues are growing and with it the phenomenon of eco-anxiety.

Degrading treatment or punishment is arguably the Article 3 tier of maltreatment that is easiest to reconcile with eco-anxiety. It is described as treatment or punishment that ‘humiliates or debases an individual in such a manner that shows a lack of respect for, or diminishes, his or her human dignity, or arouses feelings of fear, anguish and inferiority capable of breaking an individual’s moral and physical resistance’.

The publicity element is not a requirement here because humiliation can be personally conceived. Eco-anxiety without a doubt arouses the requisite feelings and can even humiliate or debase a victim through social stigmatisation. The obstacle one might encounter preventing eco-anxiety from amounting to degrading treatment or punishment is the requirement that the suffering and humiliation go beyond the inevitable suffering or humiliation resulting from legitimate treatment or punishment. In this context it is exceedingly difficult to identify what the legitimate treatment or punishment may be and perhaps that is the result of the previously limited application of Article 3. Thus, we see the rich jurisprudence surrounding the legislation being yet to have been adapted to include this kind of mental suffering, making it not so easily applicable. It is also difficult to pinpoint objectively verifiable acts or conditions that can be perceived as degrading because the elements of eco-anxiety are primarily psychological. Thus, we find ourselves in a situation where equating eco-anxiety with degrading treatment or punishment is indeed possible but is a hugely relative and subjective determination.

The argument that eco anxiety is capable of amounting to degrading treatment or punishment within the meaning of Article 3 ECHR is supported by the undeniable inclusion of mental suffering and psychological damage in the interpretation of the Article. This is reflected in cases such as First Greek (1969) and East African Asian (1981), which showed that degrading and/or inhuman treatment may be involved if psychological anguish reaches a sufficiently intense and serious level and that a physical manifestation is not essential. This ‘level’ is one that has evolved over time, the intensity of the requirement becoming decreasing mental health becomes more of a societal priority. The recognition of mental suffering in these earlier cases is significant because it demonstrates the gradual move away from solely physical considerations that might eliminate eco-anxiety’s potential to amount to degrading treatment or punishment. It is widely accepted that changing societal contexts and the development of attitudes towards mental health over time require that Article 3 be malleable enough to adapt, in order for it to be an effective living instrument of the international judiciary. In the same vein, human rights standards are evolving over time and mental health is becoming much more of a prominent societal discussion than it has previously been. Therefore, it seems only natural and just that the legislation and its interpretation evolve to reflect this. Thus, it is much more likely in current jurisprudence that mental suffering be given heavier consideration and is more likely to amount to degrading treatment or punishment. Mental health is becoming more of a societal preoccupation and priority, however, there is still stigma attached to it which results in social exclusion, feelings of anguish and depression, all of which can be part of eco-anxiety. The more someone might be marginalised as a result of the phenomenon, the more likely it is to amount to degrading treatment or punishment.

Marginalisation and vulnerability are huge factors in assessing whether eco-anxiety can amount to degrading treatment or punishment. This is particularly pertinent to the assessment of women, children and indigenous people as victims of eco-anxiety. Children are more vulnerable to the effects of climate change on mental health because they have stronger responses to extreme weather events which include Post-traumatic Stress Disorder (PTSD), depression and sleep disorders. Women are also more vulnerable to eco-anxiety, consistent with previous research that females experience greater anxiety than men due to hormonal influences or gender-specific trauma. Eco-anxiety tends to be more prevalent in indigenous communities because some live in areas prone to environmental disaster and they have an interdependence on the natural environment, with cultural and spiritual practices connecting to the natural world. Degrading treatment includes treatment that is humiliating and undignified and whether treatment reaches this level is dependent not only on the duration of the treatment or its physical or mental effects but also the health, sex, age, race and vulnerability of the victim. Discrimination based on race, sex, gender or age may occasion humiliation amounting to degrading treatment. The aforementioned groups are more susceptible to eco-anxiety, making them more vulnerable, and are more susceptible to discrimination on these grounds. Taking into account the vulnerability of a victim allows for a more context-sensitive assessment of factors which allows effective use of the legislation in this area. Failure to have regard for the needs of women, young people and indigenous people may amount to not only a physical but also a mental form of degrading or inhuman treatment. Due to the stigma that still exists around mental health, they may be socially excluded from their communities or forced to carry undue burdens, which is degrading treatment or punishment that Article 3 intends to protect against. This is particularly clear in the context of indigenous people where many cultures still view mental health as taboo or simply non-existent, creating severe, negative social and cultural implications for the victim as a result of eco-anxiety.

It is also useful in this context to examine the role of state responsibility in protecting against eco-anxiety. The presence of state responsibility strengthens the claim that eco-anxiety can amount to degrading treatment because it indicates the possible interpretation of an intention of the legislation to protect against it. For a Member State to incur responsibility for such treatment, they will need to have ‘had or ought to have had knowledge’ of the ill-treatment. Eco-anxiety is a recently emerging concept, but there is sufficient concrete research on it and public awareness of it to create a reasonable expectation that States would have knowledge of it. State responsibility will also arise from the omission of national authorities to take reasonable protective measures against the ill-treatment. In the context of eco-anxiety, protective measures could include imposing a legal framework on all businesses and institutions to curb emissions or ensuring there are sufficient mental health support provisions to aid victims. With regards to curbing emissions, there are some legislative frameworks that aim to curb emissions in member States such as congestion regulations for city centres, but this is by no means an extensive network. In addition, State governments do not seem to take responsibility for their own emissions. This was made clear by the carbon footprint of the recent COP26 climate summit which produced approximately 102,500 tons of carbon dioxide, 60% of which was estimated to come from international flights, the vast majority of which were private jets chartered by world leaders. Thus, it is arguable that States have huge responsibility for eco-anxiety because they are direct contributors to climate change. There is also a notable lack of provision throughout Europe of mental health services, with 56% of patients with major depression receiving no treatment at all. Therefore, the omission and incurred responsibility seems more than sufficient for the mental anguish associated with eco-anxiety to amount to degrading treatment.

The relationship between phenomena such as eco-anxiety and Article 3 maltreatment remains relatively new territory. The lack of clarity in this area can be attributed to infrequent invocation of Article 3 in climate change cases thus far and the subjective nature of mental suffering making it difficult to identify the threshold for maltreatment under Article 3. However, it seems clear that despite falling short of the requirements for torture and inhuman treatment or punishment, eco-anxiety can amount to degrading treatment within the meaning of Article 3 because of the suffering it entails and the resultant social exclusion, stigma, discrimination, and lack of access to support and protective frameworks by fault of national authorities.

 

References:

Urgenda Foundation (on behalf of 886 individuals) v The State of the Netherlands (Ministry of Infrastructure and the Environment), First instance decision, HA ZA 13-1396, C/09/456689, ECLI:NL:RBDHA:2015:7145, ILDC 2456 (NL 2015), 24th June 2015, Netherlands; The Hague; District Court.
Duarte Agostinho and Others v. Portugal and 32 other States, communicated case of 13 November 2020 (No. 39371/20).
Y. Coffey, N. Bhullar, J. Durkin,  S. Islam, K. Usher, Understanding Eco-anxiety: A Systematic Scoping Review of Current Literature and Identified Knowledge Gaps, The Journal of Climate Change and Health, Volume 3, (2021), p.2.
Iberdrola, Eco-anxiety: the psychological aftermath of the climate crisis, https://www.iberdrola.com/social-commitment/what-is-ecoanxiety (Accessed 16/5/2022).
S. Clayton, C.M. Manning, K. Krygsman & M. Speiser, Mental health and our changing climate: impacts, implications, and guidance, American Psychological Association, and EcoAmerica, Washington, DC (2017).
European Convention on Human Rights, Rome, 4.XI.1950, Article 3.
Y. Arai-Yokoi, Grading scale of degradation: Identifying the threshold of degrading treatment or punishment under Article 3 ECHR, Netherlands Quarterly of Human Rights, Vol. 21/3, 385-421, 2003 at p.418.
Y. Arai-Yokoi, Grading scale of degradation: Identifying the threshold of degrading treatment or punishment under Article 3 ECHR, Netherlands Quarterly of Human Rights, Vol. 21/3, 385-421, 2003 at p.386.
Kudla vs Poland, Judgment of 26 October 2000, para. 92; and Kalashnikov vs Russia, Judgment of 15 July 2002, para. 95.
Cassese, A., ‘Prohibition of Torture and Inhuman or Degrading Treatment or Punishment’ in: MacDonald, R.J., Matscher F., and Petzold, H., (eds.), The European System for the Protection of Human Rights, Dordrecht, Martinus Nijhoff, 1993, Ch. 11, p.229.
Price vs United Kingdom, Judgment of 10 July 2001, paras. 24-30; Valaˇsinas vs Lithuania, Judgment of 24 July 2001, para. 117; and Pretty vs United Kingdom, Judgment of 29 April 2002, para. 52.
Tyrer vs United Kingdom, Judgment of 25 April 1978, para. 30; Soering vs United Kingdom, Judgment of 7 July 1989, para. 100; and Vala’sinas vs Lithuania, Judgment of 24 July 2001, para. 102.
First Greek Case, 1969, 12 Ybk, p. 186; East African Asian Case, 1981, 3 EHRR 76, para. 191.
S. Clayton, B.T Karazsia, Development and validation of a measure of climate change anxiety, J Environ Psychol, 69 (2020), Article 10143. P-11.
T.J. Doherty, S. Clayton, The Psychological Impacts of Global Climate Change, Am Psychol, 66 (4) (2011), pp. 265.
S.Clayton, Climate anxiety: psychological responses to climate change, J Anxiety Disord, 74 (2020), p.3.
Equality and Human Rights Commission, Article 3: Freedom from torture and inhuman or degrading treatment (version dated 3 June 2021), https://www.equalityhumanrights.com/en/human-rights-act/article-3-freedom-torture-and-inhuman-or-degrading-treatment (Accessed 17/5/2022).
Twenty-five Applications vs United Kingdom (East African Asian cases), Decision of 10 October 1970, 13 Ybk 928, at p. 994.
C. Heri, The ECtHR’s Pending Climate Change Case: What’s Ill-treatment Got To Do With It?, EJIL:Talk! (2020)
Y. Arai-Yokoi, Grading scale of degradation, p.396.
D.P. J.C. vs United Kingdom, Judgment of 10 October 2002, para. 109.
E. and Others vs UK, Judgment of 26 November 2002, paras. 92, 96 and 99.
E. Newburger, The COP26 conference set a record for CO2 emissions (2021), https://www.cnbc.com/2021/11/12/cop26-climate-summit-record-co2-emissions-air-travel-main-culprit.html (Accessed 17/5/2022).
Joint Action on Mental Health and Well-being, Depression, suicide prevention and E-health (2015), p.37.

 

About the author.

Cidalia is a final year Common Law LLB with French Language student at the University of Glasgow and has just completed a year of study at SciencesPo Paris. She is half-Burundian, half-Scottish and was born and raised in Nairobi, Kenya. Her interests lie in international human rights law, and her personal background and upbringing has motivated her to focus within this field particularly on developing African legal infrastructure and realising pan-African potential. Alongside her studies, she volunteers for SolidariTee- a youth-led charity raising funds to give grants to NGOs that provide legal aid to asylum-seekers and refugees. She also works with Protimos, an NGO which uses the law to promote economic growth and sustainable development across Africa.

 

 

In this post, Sophie Malley, a trainee solicitor at CMS, comments on the decision in Hastings v Finsbury Orthopaedics Ltd and Anor [2022] UKSC 19, the first product liability case to reach the UK Supreme Court.

On 29 June 2022, the Supreme Court unanimously dismissed the appeal in Hastings v Finsbury Orthopaedics Ltd and Anor [2022] UKSC 19. The Supreme Court adhered to the findings of the lower courts in Scotland (previewed here) that the metal on metal prosthesis used for Mr Hastings’ total hip replacement was not defective under the Consumer Protection Act 1987 (the “CPA”), s 3. The decision, in favour of the manufacturers, was handed down approximately two months after the case was heard by the Supreme Court.

Background

Mr Hastings underwent a metal on metal total hip replacement (the “MoM THR”) in March 2009 which was revised in October 2012. The prosthesis used comprised of compatible component parts manufactured by each of the respondents (the “Mitch/Accolade product”). Mr Hastings subsequently brought a claim under the CPA, s 2 for personal injury allegedly caused as a result of the Mitch/Accolade product being defective.

Decision of the lower courts

At first instance, the Outer House of the Court of Session considered whether the inherent propensity of MoM prostheses to shed metal debris once implanted rendered the Mitch/Accolade product defective (that being less safe than persons generally are entitled to expect) under the CPA, s 3. Lord Tyre, the Lord Ordinary, clarified that in order for the Mitch/Accolade product to meet the entitled expectation, “its level of safety would not be worse, when measured by appropriate criteria, than existing non-MoM products that would otherwise have been used”. With reference to the statistical evidence presented to the court, Lord Tyre found that Mr Hastings failed to prove that the product was defective.

Mr Hastings appealed to the Inner House of the Court of Session. The Inner House noted that in order to reverse a determination of fact, it must be satisfied that the Lord Ordinary erred in law, made a finding not based on the evidence or clearly misunderstood, or disregarded, relevant evidence. As none of these requirements were met, the Inner House upheld the first instance decision.

Supreme Court decision

Mr Hastings proceeded to appeal to the Supreme Court. The legal issues concerning the application of the CPA were largely agreed between the parties. The appeal was essentially an attempt to appeal against the Lord Ordinary’s findings of fact. Mr Hastings was previously found to have failed to prove his case on a statistical basis. Therefore, the question for the Supreme Court was whether there was additional evidence Mr Hastings could use to prove that the Mitch/Accolade product did not meet the entitled expectation in terms of the CPA.

The evidence relied on by Mr Hastings comprised the response of: (1) the orthopedic community; (2) the national regulator; and (3) the manufacturers withdrawing the Mitch/Accolade product from the market. The Supreme Court addressed each category of evidence in turn.

Concerns of the orthopedic community

In July 2008, orthopedic surgeons began to express serious professional concerns about high revision rates (the percentage chance that revision surgery will be required to replace a prosthesis) and potential difficulties in performing operations in cases of MoM prostheses. This concern was, however, expressed in relation to MoM prostheses generally and as the Lord Ordinary observed, there was “huge variation in the reported revision rates amongst different brands of MoM Hips”. Taking this into account and the fact that revision rates for MoM prostheses tended to be higher than those for non-MoM prostheses, the Supreme Court held that “the generalised expressions of professional concern” did not assist Mr Hastings in establishing that the Mitch/Accolade product was defective.

Withdrawal of the Mitch/Accolade product

Mr Hastings sought to argue that the manufacturers’ withdrawal of the Mitch/Accolade product from the market was a “calculated action” which prevented him from proving his case by reference to statistical evidence. The court held that this assertion lacked foundation. This was based on the Lord Ordinary’s finding that the withdrawal of the Mitch/Accolade product was based on commercial considerations such as low sales in comparison to rival products, the failure of the manufacturers to renew their supply agreement and the sharp decline in sales of MoM prostheses by 2010. The Supreme Court found that such circumstances and reasoning for withdrawing the Mitch/Accolade product from the market did not support Mr Hastings’ case that the product was defective.

Notices issued in relation to the Mitch/Accolade product

The Medicines and Healthcare Products Regulatory Agency and the manufacturers respectively issued a Medical Device Alert and Field Safety Notice with regard to the Mitch/Accolade product in 2012 (the year after it was withdrawn from the market). These were based on statistical evidence that the revision rate for the Mitch/Accolade product was higher than anticipated, that being 10.7% at four years. This was compared with the guidance issued by the National Institute for Health and Clinical Excellence in 2000 which stated that the best prostheses had a revision rate of 10% at ten years. The manufacturers, therefore, accepted that these notices appeared to support arguments that the Mitch/Accolade product failed to meet the entitled expectation.

The Supreme Court disagreed and stated that “these notices and statistics cannot of themselves be determinative of the issue whether there was a breach of an entitled expectation”. The Supreme Court clarified that in assessing whether an entitled expectation has been met, it should “have regard to material available at the time of proof which was not available in 2012 when the notices were issued”. Therefore, the notices were considered by the Supreme Court in light of the uncontested statistical analysis presented to the Lord Ordinary by an expert witness for the defenders. This evidence was found to contradict the information forming the statistical basis of the notices and therefore undermined Mr Hastings’ ability to rely on them to demonstrate that the product was defective.

Comment

The decision of the Supreme Court confirms the Scottish Courts’ approach to the entitled expectation test. The Court ruled that “there can be no entitlement to an absolute level of safety” for MoM prostheses. This is due to the natural tendency of a MoM prosthesis to shed metal debris that can cause soft tissue damage which cannot, in itself, be classified as a defect.

This judgment will be welcomed by medical device manufacturers. The importance placed on statistical evidence throughout the history of this case highlights the uphill struggle claimants face when attempting to prove a product is defective within the terms of the CPA.

On appeal from [2019] EWCA Civ 1402

This appeal concerned the calculation of annual leave and holiday pay entitlements for workers who work for varying hours during only certain weeks of the year but have a contract throughout that year (“part–year workers”).

The Respondent is a music teacher at a school run by the Appellant. Ms Brazel works a variable number of hours each week and is only paid for the hours that she teaches during term time.

As a “worker” within the meaning of the Working Time Regulations 1998 (“the WTR”), Ms Brazel is entitled to 5.6 weeks of paid annual leave. She takes this leave during the school holidays, but because she is not required to work at all during the school holidays, in practice there are more than 5.6 weeks each year in which she does not work at all.

Before September 2011, Ms Brazel’s holiday pay for the 5.6 weeks was determined by calculating her average week’s pay in accordance with section 224 of the Employment Rights Act 1996 (“the 1996 Act”) and multiplying that by 5.6. At the relevant time section 224 defined a “week’s pay” as the amount of a worker’s average weekly pay in the period of 12 weeks ending with the start of their leave period, ignoring any weeks in which they did not receive any pay (“the Calendar Week Method”).

From September 2011, however, the Harpur Trust changed its calculation method. In line with Acas guidance, they calculated Ms Brazel’s hours worked at the end of each term, took 12.07% of that figure and then paid Ms Brazel her hourly rate for that number of hours as holiday pay (“the Percentage Method”). 12.07% is the proportion that 5.6 weeks of annual leave bears to the total working year of 46.4 weeks. The Harpur Trust therefore treated Ms Brazel as entitled to 12.07% of her pay for the term, reflecting only the hours she actually worked.

The effect of this change was that Ms Brazel received less holiday pay. She brought a claim before the Employment Tribunal for unlawful deductions from her wages by underpayment of holiday pay. The Employment Tribunal dismissed her claim but the Employment Appeal Tribunal allowed her appeal holding that the statutory regime required the use of the Calendar Week Method. The Court of Appeal dismissed the Harpur Trust’s appeal.

 

HELD – The Supreme Court unanimously dismissed the Harpur Trust’s appeal.

 

The Harpur Trust argue that a part–year worker’s leave must be pro–rated to account for weeks not worked. The Harpur Trust contend they must apply what they refer to as the “conformity principle” arising from the EU case law on the Directive.

The Supreme Court concluded, however, that European law does not prevent a state from making a more generous provision than the “conformity principle” would produce. The amount of leave to which a part–year worker under a permanent contract is entitled is therefore not required to be, and under domestic law must not be, pro–rated to be proportional to that of a full–time worker.

The Harpur Trust suggested two alternative methods for calculating holiday pay arguing that adopting one of these is necessary because although Ms Brazel is better off under the Calendar Week Method, other hypothetical workers working other irregular hours patterns would be worse off under that approach than under the Harpur Trust’s suggested methods.

The Supreme Court identified multiple problems with the Harpur Trust’s proposed methods. First, they were directly contrary to the statutory method set out in the WTR in a number of ways. The incorporation into the WTR of the definition of an average week’s pay in the 1996 Act for the purposes of determining holiday pay – including for those who work very irregular hours – was a choice made by Parliament.

Secondly, the two methods proposed by the Harpur Trust would require complicated calculations requiring all employers and workers to keep detailed records of every hour worked, even if they were not paid at an hourly rate.

The Supreme Court also rejected the Harpur Trust’s contention that the Calendar Week Method leads to an absurd result whereby a worker in Ms Brazel’s position receives holiday pay representing a higher proportion of her annual pay than full time or part time workers working regular hours. A slight favouring of workers with a highly atypical work pattern is not so absurd as to justify the wholesale revision of the statutory scheme which the Harpur Trust’s alternative methods require.

 

For 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)

Watch hearing

9 November 2021
Morning session
Afternoon session

On appeal from: [2020] EWCA Civ 1176 and [2020] EWCA Civ 1296

These three conjoined appeals concern the statutory regime governing the deportation of foreign criminals under section 117C of the Nationality, Immigration and Asylum Act 2002 (“the 2002 Act”). A “foreign criminal” for the purposes of these appeals is a person who is not a British citizen, is convicted in the UK of an offence, and who is sentenced to a period of imprisonment of at least 12 months. The 2002 Act divides foreign criminals who have been sentenced to terms of imprisonment into two categories. Those sentenced to at least 12 months, but less than four years (“medium offenders”), can avoid deportation if they can establish that its effect on a qualifying child or partner would be “unduly harsh” (“the unduly harsh test”). This is known as Exception 2. Exception 1, which relates to length of lawful residence and integration, is not in issue in this appeal. Those sentenced to at least four years (“serious offenders”) can avoid deportation if they establish that there are “very compelling circumstances, over and above those described in Exceptions 1 and 2” (“the very compelling circumstances test”). Whether deportation would produce unduly harsh effects for a qualifying partner/child is relevant there too.

It was common ground before the Court that a medium offender who cannot satisfy the unduly harsh test can nevertheless seek to show that the very compelling circumstances test is met. The very compelling circumstances test requires a full proportionality assessment to be carried out, weighing the interference with the rights of the potential deportee and their family to private and family life under article 8 of the European Convention on Human Rights against the public interest in their deportation. This proportionality assessment will be carried out in all foreign criminal cases unless the medium offender can show that either of Exceptions 1 or 2 apply.

HA and RA were medium offenders, whilst AA was a serious offender. In each appeal, the Secretary of State ordered deportation and the First–tier Tribunal allowed the appeal from that decision. The First–tier Tribunal’s decision was then set aside by the Upper Tribunal, which remade the decision and dismissed the appeal. The Court of Appeal allowed the appeal from the Upper Tribunal’s decision. The Secretary of State now appeals to the Supreme Court.

HELD- All three appeals dismissed

 

The Unduly Harsh Test

The meaning of the unduly harsh test was previously considered by the Supreme Court in KO (Nigeria) v Secretary of State for the Home Department [2018] UKSC 53, which the Secretary of State submitted the Court of Appeal failed to follow in HA/RA. In particular, it was submitted that the court wrongly disapproved of comparing the degree of harshness experienced by a qualifying child to that which would necessarily be involved for any child – the “notional comparator” baseline against which undue harshness is to be evaluated – and wrongly lowered the threshold approved in KO (Nigeria).

Lord Hamblen rejects these submissions for, amongst others, the following reasons. The judgment in KO (Nigeria) considered as a whole makes clear no notional comparator test was intended. Such a suggested baseline read literally would include children for whom a parent’s deportation would be of no real significance, despite having a real and subsisting relationship with that parent, leading to a low baseline level of “due” harshness, contrary to the high standard envisaged in KO (Nigeria). There are too many variables in the suggested baseline characteristics for any comparison to be workable. Such an approach is potentially inconsistent with the statutory duty to have regard to the “best interests” of the affected child.

The correct approach is to follow the guidance which was stated to be “authoritative” in KO (Nigeria), namely the direction in the Upper Tribunal case of MK (Sierra Leone) v Secretary of State for the Home Department [2015] INLR 563 (“MK”). That direction said: “… ‘unduly harsh does not equate with uncomfortable, inconvenient, undesirable or merely difficult. Rather, it poses a considerably more elevated threshold. ‘Harsh’ in this context, denotes something severe, or bleak. It is the antithesis of pleasant or comfortable. Furthermore, the addition of the adverb ‘unduly’ raises an already elevated standard still higher”. This recognises both that the level of harshness which is “acceptable” or “justifiable” is elevated in the context of the public interest in the deportation of foreign criminals and that “unduly” raises that standard still higher. It is then for the tribunal to make an evaluative judgment as to whether that elevated standard has been met on the facts and circumstances of the case before it.

 

The Very Compelling Circumstances Test

With regards to the very compelling circumstances test, the principal legal issues concern the relevance and weight to be given to rehabilitation and the proper approach to assessing the seriousness of the offending. In general, the very compelling circumstances test requires all the relevant circumstances of the case to be considered and weighed against the very strong public interest in deportation. Relevant factors will include those identified by the European Court of Human Rights as being relevant to the article 8 proportionality assessment, although the weight to be given to the factors falls within the margin of appreciation of national authorities.

The relevant statutory scheme explicitly requires the court to consider the seriousness of the offence in the proportionality assessment. The Secretary of State criticised the Court of Appeal’s judgment in HA/RA for placing undue emphasis on the sentence imposed as the criteria for establishing seriousness.

A sentence imposed by a court may well reflect various considerations other than the seriousness of the offence. Where, however, an immigration tribunal has no information about an offence other than the sentence imposed, that will be the surest guide to the seriousness of the offence. Even if it has the remarks of the sentencing judge, in general it would only be appropriate to depart from the sentence as the touchstone of seriousness if the remarks clearly explained whether and how the sentence had been influenced by factors unrelated to the seriousness of the offence. In relation to credit for a guilty plea, that will or should be clear. If so, then in principle that is a matter which can and should be taken into account in assessing the seriousness of the offence, contrary to the view of the Court of Appeal.

The other issue raised in relation to the seriousness of the offence is whether it is ever appropriate to place weight on the nature of the offending in addition to the sentence imposed. Whilst care must be taken to avoid double counting, in principle this can be a relevant consideration and this is supported by the Strasbourg jurisprudence.

 

HA (Iraq)

HA is a citizen of Iraq born in 1980. He arrived in the UK clandestinely in July 2000 and claimed asylum. His asylum claim was refused, and he exhausted his appeal rights in February 2004. HA nonetheless continued to live here unlawfully. In 2006 he began a relationship with a British citizen, NT. They have since had three children together, born in 2011, 2014, and 2016. HA, NT and their three children live together. In May 2010 HA was convicted of offences including assisting unlawful immigration and sentenced to 16 months’ imprisonment. In May 2017, the Secretary of State made a deportation order.

The Secretary of State accepted that HA has a genuine and subsisting relationship with his partner and children. The issue was whether it would be unduly harsh for them to remain in the UK without him. Having analysed the decisions of the Upper Tribunal and the Court of Appeal, Lord Hamblen agrees with the Court of Appeal that the Upper Tribunal applied the notional comparator test. For the reasons set out above, that is not the appropriate test. The Upper Tribunal therefore erred in law in deciding whether the unduly harsh test was satisfied, and the case will have to be remitted for fresh consideration.

 

RA (Iraq)

RA came to the UK clandestinely in 2007, aged 14. His claim for asylum was refused in October 2009, but he was given discretionary leave until 1 September 2010. After an application to extend his leave was refused in July 2011, he remained in the UK without leave. In 2012, RA married a British citizen, and they have a British daughter. In August 2016, RA was convicted of an offence for presenting a forged Iraqi passport when trying to visit his mother in Iraq and he was sentenced to 12 months’ imprisonment. In September 2016, the Secretary of State made a deportation order.

The Upper Tribunal and the Court of Appeal considered both the “go” (RA’s daughter lives with him in northern Iraq) and “stay” (RA deported and his wife and daughter stay in the UK) scenarios. The Court of Appeal was right that there was an error of law in relation to the very compelling circumstances test. The Upper Tribunal wrongly stated that the sentencing judge had described the offence as “serious” and rehabilitation was not addressed, although it was a relevant factor. Given that the overturning of the Upper Tribunal’s decision on the “go” scenario has not been challenged, it will have to be reconsidered, and findings made in relation to it may impact on whether there are very compelling circumstances.

 

AA (Nigeria)

AA is a citizen of Nigeria, born in 1988. He arrived in the UK in 1999 (aged 11) with his mother, who abandoned him shortly thereafter, leaving him with an aunt. In 2010 he was issued with a residence card based on his marriage to an EEA national that was valid until July 2015. AA was convicted in November 2013 of two counts of conspiracy to supply class A drugs and sentenced to four and a half years’ imprisonment. At the time of his sentence, AA had met his current partner, C, who is a British citizen. Before this relationship, AA had a daughter, K, born April 2006 with a previous partner. The daughter lives with AA’s former partner. AA and C have a son, A, born February 2014, who lives with them. Another child was born in February 2019. The Secretary of State made a deportation order in June 2017.

The First–tier Tribunal made no error of law, and it was rationally entitled to conclude that the effect of AA’s deportation on C and the children would be unduly harsh, and that there were very compelling circumstances that outweigh the public interest in AA’s deportation. The Upper Tribunal therefore erred in setting the First–tier Tribunal’s decision aside and the Court of Appeal was correct to restore it.

 

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Watch hearing

17 May 2022      Morning session               Afternoon session

18 May 2022      Morning session               Afternoon session

 

On appeal from: [2020] EWCA 1579

This case concerns whether the Proceeds of Crime Act 2002 (POCA) permits a variation to a restraint order to cover reasonable legal expenses in respect of civil proceedings founded on the same or similar allegations or facts as those giving rise to the making of the restraint order.

POCA gives the courts the power to make a restraint order freezing the assets of an alleged criminal, with the overall aim of ensuring that the proceeds of crime can be confiscated by the State in the event a crime has been committed. A variation to a restraint order may be made to allow an alleged criminal to cover reasonable legal expenses except, as set out in section 41(4) of POCA, where those legal expenses “relate to an offence” which gave rise to the restraint order. As a result, alleged criminals cannot seek a variation of a restraint order to meet the legal costs of defending against criminal prosecution for the offence that gave rise to the restraint order, or for instance, in proceedings resisting the imposition of the restraint order.

Andrew Luckhurst, a former professional sportsman, is charged with offences of fraud and theft relating to his alleged involvement in a Ponzi scheme, and his assets are subject to a restraint order under POCA. He is due to stand trial in October 2022. Separately, Mr Luckhurst also faces civil proceedings brought by investors in the alleged Ponzi scheme. Mr Luckhurst applied for a variation to the restraint order so that he could pay £3,000 for legal representation in respect of the civil proceedings. The Crown Prosecution Service (CPS) opposed this variation, arguing that section 41(4) does not permit a variation to cover such legal expenses where the civil proceedings arose from the same or similar facts or allegations as the criminal offence that gave rise to the restraint order.

At first instance, the judge found that such a variation was not permitted by section 41(4) as the civil proceedings did “relate to” the offence giving rise to the restraint order. Mr Luckhurst appealed. The Court of Appeal disagreed with the judge, finding that section 41(4) does not prevent the variation requested by Mr Luckhurst. The CPS then appealed to the Supreme Court.

 

HELD – The Supreme Court unanimously dismissed the appeal.

 

The Supreme Court found that the correct interpretation of section 41(4) of POCA does not prevent a variation of a restraint order to meet reasonable legal expenses in civil proceedings, even in circumstances where those civil proceedings arise from the same or similar facts or allegations as the offence that gave rise to the restraint order.

Lord Burrows sets out the correct modern approach to statutory interpretation, which is that the court is concerned to identify the meaning of the words used by Parliament, and in so doing, the context and purpose of the provision or provisions are important. On a natural reading of the words in their context, legal expenses in civil proceedings do not “relate to” a criminal offence. Any attempt to link legal expenses in civil proceedings to a criminal offence requires reading into the statute a test which is not found in the words of the statute itself.

The purpose behind the relevant statutory provisions is to balance the goal of enabling the confiscation of proceeds of crime with the need to ensure that the alleged criminal can apply for a variation of the restraint order to meet certain types of expenses. Allowing a variation to cover reasonable legal expenses incurred in relation to civil proceedings does not contradict this policy. Therefore, the natural meaning of the words in the light of their context and purpose indicates that legal expenses incurred in respect of civil proceedings are not subject to a blanket prohibition, but rather a variation to a restraint order to cover such expenses is controlled by the courts’ discretion in the same way as other permissible variations, such as living expenses.

For the Judgment, please see:

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

For the Press Summary:

Press summary (HTML version)

To watch the hearing:

Watch hearing

7 June 2022
Morning session
Afternoon session

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

On Tuesday 19th July, the Court will hear the Reference by the Attorney General for Northern Ireland – Abortion Services (Safe Access Zones) (Northern Ireland) Bill. The Court will consider whether clause 5(2)(a) of the Abortion Services (Safe Access Zones) (Northern Ireland) Bill is outside the legislative competence of the Northern Ireland Assembly because it disproportionately interferes with the rights of persons who wish to express their opposition to the provision of abortion treatment services in Northern Ireland. The hearing will take place at 10:30 in Courtroom One.

On Wednesday 20th July, the Supreme Court will hand down three judgments:

Harpur Trust v Brazel [2022] UKSC 21- on appeal from [2019] EWCA Civ 1402

The judgment will consider whether a worker’s right to paid annual leave is accumulated according to the working pattern of the worker and/or is pro-rated.

AA (Nigeria), RA (Iraq) and HA (Iraq) v Secretary of State for the Home Department [2022] UKSC 22 – on appeal from [2020] EWCA 1296 and [2020] EWCA 1176.

There are several issues in this combined appeal, including the correct approaches to several provisions in the Nationality, Immigration and Asylum Act 2002. These include the test for whether “the effect of [a foreign criminal]’s deportation on [their] partner or child would be unduly harsh” within the meaning of section 117C(5), and the test for “very compelling circumstances” for not deporting a foreign criminal under section 117C(6). The Court will also consider the conflicting approaches in  Binbuga v Secretary of State for the Home Department [2019] EWCA Civ 551 and HA (Iraq) v Secretary of State for the Home Department [2020] EWCA Civ 1176 as to the relevance of evidence in relation to the foreign criminal’s rehabilitation and how much weight should tribunals accord to such evidence in the context of the above tests.

R v Luckhurst [2022] UKSC 23 – [2020] EWCA 1579

The proposed appeal relates to the scope of permitted legal expenditure as an exception to a restraint order granted pursuant to section 41 of the Proceeds of Crime Act 2002 (POCA). The Supreme Court is asked to decide whether section 41(4) prohibits an exception for reasonable legal expenses in respect of civil proceedings relating to the same or similar facts as those of the offence(s) giving rise to the restraint order.

The following Supreme Court judgments remain outstanding: (As of 20/7/22)

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
BTI 2014 LLC v Sequana SA and Ors, heard 4 May 2021
East of England Ambulance Service NHS Trust v Flowers and Ors, heard 22 June 2021
Guest and another v Guest heard 3rd December 2021
Fearn and others v Board of Trustees of the Tate Gallery heard 7th December 2021
Stanford International Bank Ltd (in liquidation) v HSBC Bank PLC, heard 19th January 2022
Commissioners for Her Majesty’s Revenue and Customs v NCL Investments Ltd and another, heard 25th January 2022
DCM (Optical Holdings) Ltd v Commissioners for Her Majesty’s Revenue and Customs (Scotland), heard 8th February 2022
Commissioners for Her Majesty’s Revenue and Customs v NHS Lothian Health Board, heard 8th June 2022
Canada Square Operations Ltd v Potter, heard 14th June 2022
R v Andrewes, heard 21st June 2022
Hillside Parks Ltd v Snowdonia National Park Authority, heard 4th July 2022
DB Symmetry Ltd and another v Swindon Borough Council, heard 12th July 2022
Reference by the Attorney General for Northern Ireland – Abortion Services (Safe Access Zones) (Northern Ireland) Bill, heard 19th July 2022.