England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE CO/2162/99

Royal Courts of Justice

Strand

London WC2

Friday, 6 August 1999

B e f o r e:

MR JUSTICE MOSES

- - - - - -

THE QUEEN

- v -

THE SECRETARY OF STATE FOR TRADE AND INDUSTRY

Respondent

EX PARTE

(1) MERCURY PERSONAL COMMUNICATIONS LIMITED

(2) MERCURY PERSONAL COMMUNICATIONS

(A FIRM TRADING AS "ONE2ONE")

Applicants

- - - - - -

(Computer Aided Transcript of the Palantype Notes of

Smith Bernal Reporting Limited, 180 Fleet Street,

London EC4A 2HD

Tel: 0171 421 4040

Official Shorthand Writers to the Court)

- - - - - -

MR DAVID PANNICK QC & MS DINAH ROSE (Instructed by Messrs Simmons & Simmons, London, EC2M 2TX) appeared on behalf of the Applicants

MR RICHARD FOWLER QC & MR JONATHAN CROW (Instructed by The Treasury Solicitor) appeared on behalf of the Respondent

MR PUSHPINDER SAINI (Instructed by Messrs Baker & McKenzie) appeared on behalf of Orange Personal Communications Services Limited, a directly affected Third Party.

- - - - - -

J U D G M E N T

(As approved by the Court )

- - - - - -

©Crown Copyright

MR JUSTICE MOSES: This application concerns the Secretary of State's exercise of statutory powers in relation to procedures for bidding for licences to provide a new generation of mobile telecommunication services, such as multi-media, mobile, office and video services, all of which, in the new millennium, may be obtained while on the move. Oh brave new world that has such service in it.

The applicant is a mobile network operator holding a public telecommunications operator licence. The application for judicial review is brought by that applicant with One2One and supported by Orange Personal Communication Services Ltd ("Orange").

The application consists of a challenge to the legality of a decision taken by the Secretary of State in the exercise of his discretion under Section 3 of the Wireless Telegraphy Act 1998 ("the 1998 Act").

The decision which it is sought to impugn is a decision of the Secretary of State for Trade and Industry announced on 6 May 1999. In that decision he announced that he intended to introduce regulations pursuant to Section 3 of the 1998 Act by which existing mobile telephone operators would be required to accept an amendment to their existing licences under the Telecommunications Act 1984 ("the 1984 Act") to incorporate a roaming condition as a precondition of being able to bid in the auction for a third generation mobile telephone licence.

There are currently four mobile network operators holding licences under the 1949 and 1984 Acts. They provide what are described as second generation telecommunications services. In the first generation operators provided through their networks simple analogue voice telepathy. Second generation services are services which include data services, like fax and e-mail, added to the basic voice service with time capabilities. The proposed third generation services will provide what are described in the press notice as "high speed, high quality interactive services on the move". The more established and profitable operators are Vodafone and BT Cellnet who had obtained their licences back in 1983 and launched their networks in 1985. One2One and Orange are relatively new to the market. They launched their commercial networks in 1993 and 1994 and although I was told they are still loss making I was happy to see that at least Orange seems to have moved into the black, at least according to my newspaper.

The third generation spectrum is to be auctioned some time before 1 January 2002. It is asserted by the Secretary of State that pursuant to decision No. 1-H/1999/EC the necessary authorisation system for such an auction must be in place before 1 January 2000. The conduct of the auction will be governed by the terms of the notice issued under a statutory instrument to be made pursuant to Section 3 of the 1998 Act. No such statutory instrument has as yet been issued but the document containing the decision as promulgated on 6 May 1999 sets out the basic terms to be included. A successful bidder will be awarded a licence under the 1949 Act and required to obtain a 1984 Telecommunications Act licence if that bidder does not already have one.

The Decision Challenged

The decision under challenge is, as I have said, set out in the press notice of 6 May 1999. Paragraph 3 refers to an announcement made in February concerning the offer of third generation licences:

"... the offering of five licences (one more than the existing number of mobile operators) with a larger licence reserved for a new entrant; and

the terms and conditions of roaming agreements to allow the customers of new entrants to use the second generation networks of existing operators until new entrants' networks are established. Roaming is the use by a customer of one mobile operator of another mobile operator's network to make or receive a call - usually because the customer is out of range of his home network."

By paragraph 6 of that notice it is said:

"Existing operators will need to accept an amendment to their Telecoms Act licences to incorporate a roaming condition as a precondition of being able to bid in the auction for a third generation licence. The Director General of Telecommunications will shortly commence the necessary statutory consultation on the amendments."

The policy underlying the proposal to set in place the auction on the terms set out in the press notice is explained in an affidavit from Mr Clayton, who is the director of the radiocommunications agency. He explains that the incumbents, that is those who are existing licence holders, have many competitive advantages over potential new entrants. They have existing network infrastructure, much of which can be reused to support a third generation network. They also have established mobile telegraphy grounds and substantial customer bases. Further, they are able to offer combined second and third generation services to their customers covering most of the UK at the outset if they hold a third generation licence which a new entrant could not do without accessing another operator's network. Taken together, these advantages put incumbents in an excessively powerful competitive position in relation to potential new entrants to the market. Paragraph 24:

"By the same token these advantages mean that, without some levelling of the playing field, potential new entrants are likely to have a steep uphill struggle to establish themselves and survive in the mobile telecommunications market."

(I forgive the mixed sporting metaphor). He goes on in paragraph 35 to say:

"In the light of those considerations .. the Secretary of State has reached the firm view that optimal use of the electro-magnetic spectrum will best be achieved by encouraging new entrants into the provision of 3G services and giving any such new entrant the opportunity to roam over the 2G network of an Incumbent who is also providing 3G services, so that they are better able to compete with such Incumbents." (see paragraph 35)

In summary, the Government and the Director General of Telecommunications regard it as essential for the success of the auction of third generation licences that customers of new entrants be permitted the use of existing second generation licence holders' network.

It is agreed that the existing licences of second generation operators protect their networks to the extent that a new entrant could not obtain the facility of roaming without modification of those existing licences. The essential challenge in this application is on the ground that the proposal to require acceptance of modification to an existing licence as a condition for permission to bid for a third generation licence amounts to a proposal to exercise statutory powers in a manner which conflicts with existing statutory rights.

It is accepted that the Secretary of State's statutory powers in relation to bidding could only be exercised by statutory instrument; no such statutory instrument has been issued but it is equally accepted that the legality of the decision should be tested on the basis of the proposal announced on 6 May 1999; the sooner the issues are resolved the better lest the exciting new prospect of video conferences on the move be delayed.

The Statutory Provisions

The powers which the Secretary of State proposes to exercise are conferred by Section 3 of the 1998 Act:

"3 Bidding for licences

(1) Having regard to the desirability of promoting optimal use of the electro-magnetic spectrum, the Secretary of State may by regulations provide that, in such cases as may be specified in or determined by him under the regulations, applications for the grant of wireless telegraphy licences must be made in accordance with a procedure which-

(a) is set out in a notice issued by him under the regulations, and

(b) involves the making by the applicant of a bid specifying an amount which he is willing to pay to the Secretary of State in respect of the licence.

...

(3) Regulations under this section may make provision with respect to the grant of the licences to which they apply and the terms, provisions and limitations subject to which such licences are issued and may, in particular-

...

(b) specify requirements (such as, for example, technical or financial requirements, requirements relating to fitness to hold the licence and requirements intended to restrict the holding of two or more wireless telegraphy licences by any one person) which must be met by applicants for a licence,

...

(f) specify the other terms, provisions and limitations subject to which any licence is to be issued."

The provisions with which such an exercise of power is said to conflict are contained in Sections 12 to 15 of the Telecommunications Act 1984. These are provisions which, so it is contended, provide statutory protection against the modification of existing rights:

"12 Modification of licence conditions by agreement

(1) Subject to the following provisions of this section, the Director may modify the conditions of a licence granted under section 7 above.

(2) Before making modifications under this section, the Director shall give notice-

...

(4) In the case of a licence granted to a particular person, the Director shall not make the modifications except with the consent of that person: and, in the case of a licence granted to all persons or to persons of a class, the Director shall not make the modifications unless either-

...

(5) The Director shall also send a copy of a notice under subsection (2) above to the Secretary of State; and if, within the time specified in the notice, the Secretary of State directs the Director not to make any modification, the Director shall comply with the direction.

(6) The Secretary of State shall not give a direction under subsection (5) above unless-

(a) it appears to him that the modification should be made, if at all, under section 15 below; or

(b) it appears to him to be requisite or expedient to do so in the interests of national security or relations with the government of a country or territory outsdie the United Kingdom.

...

13 Licence modification references to Commission

(1) The Director may make to the Monopolies and Mergers Commission (in this Act referred to as ´the Commission') a reference which is so framed as to require the Commission to investigate and report on the questions-

...

(8) In determining for the purposes of this section whether any particular matter operates, or may be expected to operate, against the public interest, the Commission shall have regard to the matters as respects which duties are imposed on the Secretary of State and the Director by section 3 above."

...

14 Reports on licence modification references

(1) In making a report on a reference under section 13 above, the Commission-

(a) shall include in the report definite conclusions on the questions comprised in the reference together with such an account of their reasons for those conclusions as in their opinion is expedient for facilitating proper understanding of those questions and of their conclusions:

(b) where they concluded that any of the matters specified in the reference operate, or may be expected to operate, against the public interest, shall specify in the report the effects adverse to the public interest which those matters have or may be expected to have: and

(c) where they conclude that any adverse effects so specified could be remedied or prevented by modifications of the conditions of the licence, shall specify in the report modifications by which those effects could be remedied or prevented.

(2) Where, on a reference under this section, the Commission conclude that any person who is authorised by the licence to run a telecommunication system is a party to an agreement to which the Restrictive Trade Practices Act 1976 applies, the Commission in making their report on that reference, shall exclude from their consideration the question whether the provisions of that agreement, in so far as they are provisions by virtue of which it is an agreement to which that Act applies, operate, or may be expected to operate, against the public interest: and paragraph (b) of subsection (1) above shall have effect subject to the provisions of this subsection.

(3) Section 82 of the 1973 Act (general provisions as to reports) shall apply in relation to reports of the Commission on references under section 13 above as it applies to reports of the Commission under that Act.

(4) A report of the Commission on a reference under section 16 above shall be made to the Director.

(5) On receiving such a report, the Director-

(a) shall send a copy of the report to the Secretary of State and, in the case of a licence granted to a particular person, to that person; and

(b) subject to any direction given under subsection (6) below, shall publish the report in such manner as he considers appropriate for bringing the report to the attention of persons likely to be affected by it.

(6) If it appears to the Secretary of State that the publication of any matter in such a report would be against the public interest or the commercial interests of any person, he may, before the end of the period of 14 days beginning with the day on which he receives the copy of the report, direct the Director to exclude that matter from the report as published under subsection (5) above.

15 Modification of licence conditions following report

(1) Where a report of the Commission on a reference under section 13 above-

(a) includes conclusions to the effect that any of the matters specified in the reference operate, or may be expected to operate, against the public interest:

(b) specifies effects adverse to the public interest which those matters have or may be expected to have;

(c) includes conclusions to the effect that those effects could be remedied or prevented by modifications of the conditions of licence; and

(d) specifies modifications by which those effects could be remedied or prevented

the Director shall, subject to the following provisions of this section, make such modifications of the conditions of the licence as appear to him requisite for the purpose of remedying or preventing the adverse effects specified in the report.

(2) Before making modifications under this section, the Director shall have regard to the modifications specified in the report.

(3) Before making modifications under this section, the Director shall give notice-

(a) stating that he proposes to make the modifications and setting out their effect;

(b) stating the reasons why he proposes to make the modifications; and

(c) specifying the time (not being less than 28 days from the date of publication of the notice) within which representations or objections with respect to the proposed modifications may be made,

and shall consider any representations or objections which are duly made and not withdrawn.

(4) A notice under subsection (3) above shall be given by publication in such manner as the Director considers appropriate for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be affected by them and, in the case of a licence granted to a particular person, by sending a copy of the notice to that person.

(5) The Director shall also send a copy of a notice under subsection (3) above to the Secretary of State: and if, within the time specified in the notice, the Secretary of state directs the Director not to make any modification the Director shall comply with the direction.

(6) The Secretary of State shall not give a direction under subsection (5) above unless it appears to him requisite or expedient to do so in the interests of national security or relations with the government of a country or territory outside the United Kingdom."

The duties imposed upon the Secretary of State, the Director General of Telecommunications and the Competition Commission, which has now taken the place of the Monopolies and Mergers Commission, to which Section 13 refers, are those set out in Sections 3(1) and Section 3(2) of the 1984 Act. Section 3(2) reads:

"(2) Subject to subsection (1) above, the Secretary of State and the Director shall each have a duty to exercise the functions assigned or transferred to him by or under Part II or Part III of this Act in the manner which he considers is best calculated-

(a) to promote the interests of customers, purchasers and other users in the United Kingdom....

(b) to maintain and promote effective competition ....

(c) to promote efficiency and economy ...."

The power to grant the licence and the terms upon which licences under the 1984 Act are to be granted are set out in Section 7(1) and Section 7(5)(a) which read as follows:

7 Power to license systems

"(1) A licence may be granted- (by the Secretary of State or the Director)

...

(5) A licence granted under this section may include-

(a) such conditions (whether relating to the running of a telecommunication system to which the licence relates or otherwise) as appear to the Secretary of State or the Director to be requisite or expedient having regard to the duties imposed on him by section 3 above:"

The features of this statutory scheme are as follows:

1. The Director General of Telecommunications has no power to modify a licence held by a licence holder under Section 12 save by consent.

2. The only other method by which an existing licence may be modified is after reference to the Competition Commission:

a. where the Secretary of State gives a direction to the Director General not to make a modification because it appears to him that a modification should, if at all, only be made after a report to the Competition Commission (see Section 12(5) and Section 12 6(a)); or

b. where the Director General has exercised his power to refer to the Competition Commission (see Section 13) the Competition Commission has made a report, and the report includes one of the matters identified in Section 15.

3. The 1984 Act imposes a duty upon the Secretary of State, the Director General and the Competition Commission to exercise their respective functions so as to achieve far wider objectives than the single factor of promoting the optimal use of the electro-magnetic spectrum, to which the Secretary of State must have regard when deciding whether to exercise powers in relation to bidding for licences under Section 3 of the 1998 Act.

The Legal Principle

The legal principle in play is not in dispute. Regulations made under Section 3 must not conflict with statutory rights already conferred by other primary legislation. The source of that proposition can most readily be found in the recent decision of the R v the Secretary of State for Social Security ex parte JCWI [1997] 1 WLR 275. At page 290B Simon Brown LJ said:

"Specific statutory rights are not to be cut down by subordinate legislation passed under the vires of a different Act."

Waites LJ said:

"The principle is undisputed. Subsidiary legislation must not only be within the vires of the enabling statute but must also be so drawn as not to conflict with statutory rights already enacted by other primary legislation."

The applicants' submission starts with the proposition that the Secretary of State cannot use his powers under Section 3 of the 1998 Act directly to modify an existing licence held under Section 7 of the 1984 Act. It follows, so Mr Pannick QC on behalf of the applicants contends, that the Secretary of State cannot indirectly achieve the same result through the Director General by using powers under Section 3 of the 1998 Act so as to seek to put pressure upon applicants for the third generation licence to agree to variation of their existing licences or face a penalty of exclusion from making a bid. The use of that power, so he submits, conflicts with the applicants' rights under the 1984 Act not to have a modification imposed save after following the careful statutory procedure involving a reference to and a report from the Competition Commission unless the applicants to the third generation licence consent to that modification.

The success of that contention depends upon the proper construction of the Secretary of State's Section 3 powers. Mr Fowler QC on behalf of the Secretary of State contends that there is a power, conferred by Section 3 of the 1998 Act, to modify an existing licence. That power, so he submits, is contained in Section 3(3)(b) of the 1998 Act. He submits that since there is express power to restrict the holding of two or more licences by one person it must follow that there is power to impose what he describes as the lesser restriction of modification of an existing licence. Thus, he submits, the proposal to exercise powers under Section 3 does not entail a conflict with any rights under the 1984 Act.

I disagree. The specific statutory power conferred by Section 3(3)(b) is confined to the potential mischief of one operator holding more than one licence. There is no warrant for extending that power so as to permit the Secretary of State to take away existing rights. It is wrong, in any event, to describe the interference with an existing right as a lesser restriction than prohibition on holding more than one licence. The prohibition under Section 3(3)(b) does not involve removal of any existing rights at all. It merely empowers the Secretary of State to prohibit an additional licence.

Further, the notion that the Secretary of State may exercise powers under Section 3 of the 1998 Act so as to take away existing rights sits uncomfortably with what one might reasonably suppose to be a consistent statutory scheme. The 1984 Act sets out a regime for modification of existing licences. It would be odd if the powers conferred in relation to bidding for new licences were intended to trench in any way upon the existing statutory regime under the 1984 Act. Section 3 of the 1998 Act focusses upon the procedure for obtaining new licences and the terms upon which those new licences will be issued; save for the reference to existing licences under Section 3(3)(b), in the context of the power to prohibit a second licence, Section 3 has no application to existing licences at all.

Finally, it should be recalled that the public interest objectives which the Secretary of State, the Director General and the Competition Commission must seek to achieve in exercising their functions under the 1984 Act are much wider than the purpose for which Section 3 powers are designed to be exercised under the 1998 Act. It is difficult to suppose that Parliament intended to allow the Secretary of State to cut down existing rights by reference to a narrower criterion than the criteria according to which the rights were granted in the first place.

I conclude that the powers conferred by the 1998 Act are designed to be exercised consistently with the statutory scheme for modification to be found under the 1984 Act. The 1998 Act does not confer a power to impose a modification of an existing licence.

Mr Fowler QC also contended that there exists a power to modify an existing licence under Section 3(3)(f). Such a modification of an existing licence could be achieved by inserting a requirement that an existing licence be modified as a condition of the third generation licence. However it is not contended by the Secretary of State that the general power conferred by Section 3(1) of the 1998 Act can be exercised in a way which conflicts with existing statutory rights, hence the Secretary of State's reliance upon a supposed specific power under Section 3(3)(b). Section 3(3)(f) does not confer a more specific power than that conferred by Section 3(1). The power under Section 3(3)(f) cannot be exercised in a way which infringes existing statutory rights any more than the power under Section 3(1).

Mr Fowler QC's second response is that the proposal to require a modification as a condition of being permitted to bid does not in any event conflict with existing statutory rights. There is, as he points out, no statutory right to bid and in any event it is open to the Secretary of State to invoke Section 3(3)(b) of 1998 to prevent any existing licence holder from bidding. It is open, so the Secretary of State contends, to any of these applicants to choose not to accept modification. But if an existing licence holder chooses to bid that licence holder must accept a modification. That is the bargain in return for permission to bid. If an existing licence holder accepts the bargain then that holder will, within the meaning of Section 12(4) of the 1984 Act, be consenting to modification.

There has been a debate in the affidavits as to the commercial effect of not participating in the auction for third generation licences. The applicants assert that there is no realistic alternative but to compete in that which the Secretary of State recognises will be an important expansion of the provision of telecommunication services. The resolution of this application does not depend upon whether the applicants are right or wrong in their fear of commercial disaster if they are not allowed to compete.

The answer in my judgment follows from the conclusion in relation to the first issue. If, as I have concluded, the Secretary of State has no express power directly to impose a modification of existing rights under second generation licences, then he cannot use his Section 3 powers indirectly to achieve the same result.

The statutory scheme for modification requires in relation to a proposed controversial modification reference to the Competition Commission and imposition of a modification only if the Competition Commission considers that the public interest will be adversely affected if there is no modification and that that modification will achieve that objective (see Section 15(1) of the 1984 Act). To secure a modification by the indirect means of depriving an existing licence holder of the opportunity to bid, unless consent to the modification is forthcoming, undermines that statutory scheme. Parliament in the 1984 Act envisaged either consent to a modification or reference to the Competition Commission. It does not permit of any compulsion or threat in order to secure consent. To describe the process whereby an existing licence holder may agree to abandon existing rights in return for the opportunity to bid as a process of bargaining is to ignore the impact of the existing statutory regime for modification. The use of Section 3 powers to secure agreement to a modification as a condition for bidding erodes the statutory protection contained within the 1984 Act. The statutory scheme provides for the opportunity to agree to a modification or a reference to the Competition Commission, not for the imposition of a sanction if an existing licence holder refuses to agree.

That the prohibition on bidding is a sanction cannot be doubted. The Secretary of State himself speaks of the advantages of the new third generation licences and his proposed arrangements assume that second generation licence holders will, for their commercial benefit, bid for third generation licences and indeed succeed. If they do not, new entrants will not be able to use second generation licence holder's spectrum, the very thing that the Secretary of State considers necessary for a successful auction. To use Section 3 to deprive an existing licence holder of the opportunity to bid is inconsistent with the statutory regime under Sections 12 to 15 of the 1984 Act. That scheme confers a right to preserve existing licence rights save where consent is given or the Competition Commission so decides in the public interest.

Mr Fowler QC's third argument relied upon the distinction between the specific matter to which the Secretary of State must have regard under Section 3(1) of the 1998 Act and the public interest matters which must be promoted under the 1984 Act. The distinction does not assist the Secretary of State. As I have already noted, the very fact that the public interest objectives under the 1984 Act are wider than the factor to be considered under Section 3 of the 1998 Acts tells against the Secretary of State. There is no reason why existing licence holders' existing rights should be cut down on narrower grounds than those on the basis of which they were granted in the first place.

I conclude that the decision is unlawful. It proposes to use Section 3 powers to take away existing rights under the 1984 Act. There is no express power to do so. Absent any express power those powers cannot be exercised in such a way as to conflict with the existing statutory right to refuse to consent to modification or in cases of conflict to have the matter referred to the independent scrutiny of the Competition Commission.

The application succeeds.

MR PANNICK: I am very much obliged to your Lordship. The remedy that we seek is the declaration, my Lord. We set out, if your Lordship still has it, in our skeleton argument at paragraph 17 the terms of the declaration? It will be a declaration that the respondent is acting ultra vires and unlawfully by requiring existing mobile telephone operators to accept an amendment to their existing licences under the 1984 Act to incorporate a roaming condition as a precondition of being permitted to bid in the auction for a third generation mobile telephone licence. That is the declaration we seek. We also seek costs.

MR JUSTICE MOSES: Shall I deal with them one at a time?

MR PANNICK: Certainly.

MR JUSTICE MOSES: What do you say about the terms of the declaration?

MR FOWLER: My Lord, the terms of the declaration meet -----

MR JUSTICE MOSES: I think they meet what I have decided.

MR FOWLER: Save possibly that there might be reference to -without a reference to the Competition Commission. Without awaiting the outcome of the Competition Commission.

MR JUSTICE MOSES: It would not be anything but a condition. The Competition Commission would just say: "You have to modify as a condition of bidding". I am not sure - do you suffer? I do not think that it matters.

MR PANNICK: It is drafted in this way because it focusses upon the existing suggestion and your Lordship is saying that the existing proposal is unlawful. Your Lordship's judgment makes it perfectly clear what the department could do should they wish to adopt some other approach.

MR JUSTICE MOSES: No, I am going to make a declaration in those terms.

MR PANNICK: I am grateful, my Lord.

MR JUSTICE MOSES: Your next application is for costs.

MR PANNICK: My Lord, yes.

MR FOWLER: I cannot resist an application for costs -----

MR JUSTICE MOSES: By that applicant.

MR FOWLER: By that applicant although -----

MR JUSTICE MOSES: You want to say although - sorry.

MR FOWLER: I was going to say although I would resist one by the second applicant.

MR JUSTICE MOSES: Yes. Are you asking for costs as well, Mr Saini? You made a very valuable point under Section 12 that Mr Pannick did not make and I referred to in my judgment. You could have passed that on to Mr Pannick. Even he might have absorbed it.

MR SAINI: Perhaps I can just say my clients were intending to make an application as well on the same basis. We did not make an application for costs first. There was consideration given to allowing Mr Pannick and somebody to represent my client as well because, as your Lordship will know, we are cutthroat competitors with Mercury. It was very difficult and we did try and do this, to undertake any exchange of information because it was

impossible -----

MR JUSTICE MOSES: But I mean you were allowed to say that it was disastrously ( Inaudible) and that no other information was necessary.

MR SAINI: We did put evidence in to that effect and it was replied to.

MR JUSTICE MOSES: Yes, it is very difficult when you are preparing knowing quite what is relevant and what is not. It is purely a question of statutory construction really, is it not?

MR SAINI: Indeed, but that certainly was not the way the respondent saw it.

MR JUSTICE MOSES: I am terribly grateful for your assistance - I mean that genuinely - and I am not at all surprised that you were there. There is always this problem when you have to make a commercial decision. But at the moment, unless there is anything more you want to say, there will be no separate orders as to costs.

MR SAINI: The only other thing I would say is that we have been modest in our representation because consideration was given as to whether we should instruct leading counsel as well.

MR JUSTICE MOSES: You have not been modest at all. To use you, Mr Saini, is not modest at all - a privilege for them and for me.

MR SAINI: My Lord, I cannot say anything further.

MR JUSTICE MOSES: No, thank you very much. Is there anything else, Mr Fowler?

MR FOWLER: My Lord, I would apply for permission to appeal.

MR JUSTICE MOSES: Yes, I am minded to give it. I think under the new directions the Court of Appeal like you to refer, if there is a sort of pure point of law, even if you think it is blindingly obvious.

MR PANNICK: Can I suggest respectfully why your Lordship should pause and refuse leave to appeal?

MR JUSTICE MOSES: Yes.

MR PANNICK: There are two reasons. First of all, your Lordship does not appear to have regarded this as a particularly difficult point of statutory construction.

MR JUSTICE MOSES: That is just hubris and we know what follows hubris.

MR PANNICK: No doubt, but if the Court of Appeal is going to grant leave to appeal on every occasion where there is a point of statutory construction, whether or not the court regards it as a difficult point or not, the Court of Appeal -----

MR JUSTICE MOSES: Have you seen that practice direction?

MR PANNICK: Yes, I have, my Lord.

MR JUSTICE MOSES: It seems rather extraordinary if it does mean in every case.

MR PANNICK: Indeed. It cannot possibly mean that. There must remain an area of discretion, an area of judgment. If your Lordship is in a position of regarding this as not being a particularly difficult point once analysed, then I submit that your Lordship should not grant leave to appeal. The second factor is this. In the circumstances of this case to grant permission to appeal will inevitably prolong a position of uncertainty which is highly undesirable given what we all agree is the urgency of having this matter -----

MR JUSTICE MOSES: That slightly goes against you, does it not, because in a way the next stage will be consistent - I have not heard Mr Fowler yet, but I can lay strong odds that they will then have to convene the court and ask for permission from the Court of Appeal so that you have still got that and there is one further stage.

MR PANNICK: The reality, as your Lordship well knows, is that if leave to appeal is granted then it is treated not as an encouragement to appeal but as promoting the likelihood of an appeal. If your Lordship is genuinely in the position of regarding this as not a difficult point on which the Secretary of State is most unlikely to succeed in the Court of Appeal then I do respectfully submit that your Lordship should say so. The Secretary of State then, given the urgency of the matter, will be encouraged by those advising them no doubt to reflect on whether it really is desirable to prolong the agony on this or whether it would be more sensible to sit down and consider ways of resolving the problem. That is my submission.

MR JUSTICE MOSES: Yes, Mr Fowler?

MR FOWLER: This is a matter of very substantial importance to the Secretary of State and is part of the present arrangements and is a matter on which the intermediate step, if your Lordship refuses leave to apply to the Court of Appeal itself, will almost certainly be necessary. In those circumstances I submit it would be wrong to impose that condition, step. It is a short point. Your Lordship has dealt with it robustly and very clearly in the judgment.

MR JUSTICE MOSES: The words do, yes.

MR FOWLER: Of course everything your Lordship has said can be taken into very deep consideration in considering the way forward, but nevertheless there remains very much an important point there as to whether or not consent in the circumstances can be taken to be given and that point remains, in my submission, alone as a matter of importance.

MR JUSTICE MOSES: No, I shall give permission, but I will state my reason.

The matter is very important and I just have a strong hunch that whatever I say the Secretary of State will want to take it further; I am not encouraging him to do so. There is a general trend, as I understand the practice direction, that where there are further points of law those are the occasions when permission to appeal should be given. But I make it quite clear, although guilty of hubris, that I think the point is a short, simple and clear one and if the only criterion in granting permission to appeal is confidence in the outcome why then I would not have granted permission for leave to appeal.

MR PANNICK: Thank you, my Lord.

MR JUSTICE MOSES: Once again I will not go on to say anything, Mr Pannick, because we were able to deal with it because of all your help in the legal arguments, the affidavits and in the skeleton arguments.

MR PANNICK: Thank you, my Lord.

-------------------------------