Ruling on statutory interpretation landed by Supreme Court

Did you know that there was a Sea Fish Industry Authority (SFIA – logo opposite)?  Me, neither.  Fortunately the first paragraph of a 15 June 2011 Supreme Court decision, in Bloomsbury International Limited and others v Sea Fish Industry Authority and Department for Environment, Food and Rural Affairs, is a useful introduction:

[The Authority] is established under the Fisheries Act 1981 with powers granted “for the purpose of promoting the efficiency of the sea fish industry and so as to serve the interests of that industry as a whole” (section 2(1)). For the purpose of financing its activities, the Authority may, by regulations confirmed by ministerial order, “impose a levy on persons engaged in the sea fish industry” (section 4(1) and (2)).

It’s probably appropriate that the judgement starts with a statutory definition, given that the whole case was about the interpretation of the word, “landed”.  What did this mean, in the context of the Fisheries Act, given that, under sections 4(3) to (5):

(3) Regulations under this section may impose a levy either –

(a) in respect of the weight of sea fish or sea fish products landed in the United Kingdom or trans-shipped within British fishery limits at a prescribed rate which, in the case of sea fish, shall not exceed 2p per kilogram; or
(b) in respect of the value, ascertained in the prescribed manner, of sea fish or sea fish products landed or trans-shipped as aforesaid at a prescribed rate not exceeding 1 per cent of that value.

(4) If regulations under this section impose a levy as provided in subsection (3)(a) above the prescribed rate in relation to any sea fish product shall be such that its yield will not in the opinion of the Authority exceed the yield from a levy at the rate of 2p per kilogram on the sea fish required on average (whether alone or together with any other substance or article) to produce a kilogram of that product.

(5) Different rates may be prescribed for sea fish or sea fish products of different descriptions; ….

The meaning of “landed” was considered at the Court of Appeal, which followed the literal rule that the word be given its normal meaning.  This was considered not to include the import of fish by road (ferry or Channel Tunnel) or by air, with no other factors sufficient to displace this interpretation.

The Supreme Court, however, put the emphasis for statutory construction on “the statutory purpose and the general scheme by which it is to be put into effect” (paragraph 10, per Lord Mance).  It decided that the SFIA was set up and given powers in respect of all importers of sea fish, not just those that landed fist directly off fishing vessels in British ports.  This is a classic case of the Supreme Court taking a purposive interpretation of a statutory provision to ensure that there is no potential infringement of European Union law (here, Article 110 TFEU), as it is required to do by European Union case law (Case 73/79 Commission v Italy [1980] ECR 1533).  This European Union case law is incorporated into English law by the European Communities Act 1972 (section 3(2)).  However, the Supreme Court did consider the rule in Pepper v Hart ([1993] AC 593), which allows a court to consider Hansard and Parliament exchanges in order to resolve an ambiguous term in a statute.  Even considering application of the rule, the Supreme Court came down in favour of the broad interpretation of “landed”.

So one the basis of this simplified explanation, you might wonder how the case ever got to the Supreme Court.  There was a significant argument about whether the levy imposed by the SFIA was a “charge having equivalent effect to customs duty”, which is prohibited under European Union law (Articles 28-30 TFEU), or an internal tax for the purposes of Article 110 TFEU.

There was an interesting observation made by the Supreme Court, which emphasised an aspect of statutory interpretation that is rarely considered: customary use.  The applicants in this case sought to overturn the levy in imported sea fish, even though everyone in the industry had been paying levies on the basis of the broad interpretation of the term “landed” for almost 30 years.  The Supreme Court noted that:

there must be, at the very least, a powerful presumption that the meaning that has customarily been given to the phrase in issue is the correct one ” (Paragraph 58, per Lord Phillips)

Bloomsbury International Limited and the other respondents were therefore unsuccessful in avoiding the sea fish levy.  Perhaps a case of trying to be too clever?

ARC: “automatically renewable contract” or “another regulatory/regulation cock-up”?

Ofcom is clearly unhappy about communications providers who seek to handcuff customers to existing service contracts by ensuring that these contracts automatically renew – so called automatically renewable contracts (ARCs).  They set out their proposals to address ARCs in a consultation paper in March 2011.  However, these contracts are not new, which begs the question, why is Ofcom only dealing with these contracts now?

By Ofcom’s own admission, they first considered ARCs in the context of their review of additional charges in December 2008.  A cynic mights suggest that if they identified a problem at the end of 2008, why did it take over 2 years to suggest a solution?  Have Ofcom failed to use their powers of enforcement under the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs)?  Note the date of these regulations – 1999.  Were Ofcom negligent in failing to address ARCs even earlier than December 2008?  Is this a case of “another regulatory cock-up”?

To be fair to Ofcom, even if they had identified that ARCs were a problem at an early stage, then they would have needed the evidence and research to show that the automatic renewal of contracts was unfair, using the test at Regulation 6(1) of the UTCCRs:

“the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent.”

The necessary preliminary work was clearly undertaken, as shown by the annexes to the March 2011 consultation paper.  However, a quick route to dealing with ARCs has proved impossible as a result of a difficulty in the UTCCRs and the originating European Union Directive.  This difficulty surrounds the scope of the regulation/directive.  Put simply, regulators cannot address terms in consumer contracts that deal with price, even indirectly, as a result of Regulation 6(2):

“In so far as it is in plain intelligible language, the assessment of fairness of a term shall not relate–
(a) to the definition of the main subject matter of the contract, or
(b) to the adequacy of the price or remuneration, as against the goods or services supplied in exchange.”

Ofcom have set out how they would address ARCs under the UTCCRs in their guidance on enforcement of UTCCRs (see paragraphs 97 – 103).  Although this suggests that there are plenty of grounds for Ofcom to intervene, the picture can easily be confused by the introduction of price discounts for consumers taking ARCs.  After the Supreme Court decision concerning the Office of Fair Trading and bank charges (Office of Fair Trading v Abbey National), these discounts put these ARCs outside of the reach of the UTCCRs.  This is the inevitable result of the wording of Regulation 6(2), from the 19th recital of Directive 93/13/EEC.

So, from a consumers point of view, this “price or remuneration” loophole is a significant gap in the consumer protection directive/regulation.  Shall we say “another regulation cock-up”?