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?

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"Life is not fair; get used to it."

Yesterday for the first time the handing down of a Supreme Court judgement was a major news event.  The outcome of OFT -v- Abbey National & ors was eagerly awaited.  Many bank customers had hoped for some good news and some cash back from their banks – always handy just before Christmas.  Sadly, the Supreme Court appears to have played Scrooge or the Grinch, and in today’s press the Court is given a rough ride for seeming to side with the banks.  This is slightly unfair, but as Bill Gates is often quoted as saying, “Life is not fair.  Get used to it.”

Fairness was not, as many reports wrongly assume, the central issue for the Supreme Court.  They did not rule that the banks’ charging mechanisms for unauthorised overdrafts were fair.  Instead, the Supreme Court decided that the banks charges for unauthorised overdrafts  (and other bank charges at issue) were part of the banks’ price and remuneration for providing retail banking services.  On that analysis, given that Regulation 6(2)(b) of the Unfair Terms in Consumer Contracts Regulations 1999 (the “Unfair Terms Regulations”) states that the assessment of the fairness of a term in a contract “shall not relate . . .to the adequacy of the price or remuneration, as against the goods or services supplied in exchange”, it was clear that the Office of Fair Trading did not have jurisdiction to assess whether the banks’ unauthorised overdraft charges are fair using its powers under the Unfair Terms Regulations.

So how did this case reach the Supreme Court?  A crude summary suggests that at High Court the overdraft charges were considered not to be “in exchange” for any service, so fell outside the scope of Regulation 6(2)(b).  In the Court of Appeal, the charges were considered to be part of an overall package of services provided by the banks, but were considered to be “incidental or ancillary” and not part of the “core or essential bargain” between the banks and their customers.  As “incidental or ancillary”, the charges were ruled not to be within the scope of Regulation 6(2)(b). This meant that the OFT had power to assess the fairness of the charges.  Clearly, the banks thought otherwise and have been vindicated in their appeal to the highest court.

So is this the end of the battle for repayment of unauthorised overdraft charges?  As the Supreme Court were at pains to make clear, they were only called upon to make a ruling upon a narrow point of law.  It remains open for the OFT to consider if the terms governing the banks’ overdraft charges are unfair “if, contrary to the requirement of good faith, [they cause] a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer” (Regulation 5(1)), as in almost all cases consumers accept banks’ standard terms and do not negotiate their retail banking services agreements.

Circular law (and constitutional crises)?

In our role as quasi-parliamentary draftsmen for some of our overseas clients, we are all too aware of how the “law of unintended consequences” can alter the effect of a legal provision.

Human Rights Act 1998 Chapter 42

Human Rights Act 1998 Chapter 42

As a topical example in this week of their party conference, we note that the Conservative Party is considering introducing a Bill of Rights to replace the Human Rights Act 1998 (“HRA”).  However, within the HRA is a mechanism to permit a court to declare that any provision of a primary statute is incompatible with the HRA (under s.4).  However, a provision subject to a declaration continues to have full force and effect.

Did the draftsmen of the mechanism foresee the possibility that an attempt to repeal the HRA would itself be a provision incompatibile with the HRA, particularly if the provision was within a Bill of Rights that arguably restricted or limited the rights a citizen enjoys under the European Convention of Human Rights incorporated into UK law by the HRA?

It is a difficult question, which may end up having to be answered by the new Supreme Court, in what would almost certainly be their first confrontation with Parliament since its creation and the true separation of powers in the UK between the fused executive and legislature on one hand and an independent judiciary on the other.