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Cite as: [2003] QB 1397, [2003] ACD 51, [2003] 3 WLR 80, [2003] EWCA Civ 473

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		Neutral Citation Number: [2003] EWCA Civ 473
		Case No: C1/2002/2277

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM ADMINISTRATIVE COURT
(Mr Justice Scott Baker)

Royal Courts of Justice
Strand,
London, WC2A 2LL

3rd April 2003

B e f o r e :

LORD PHILLIPS, MASTER OF THE ROLLS
LORD JUSTICE SCHIEMANN
and
LORD JUSTICE DYSON
____________________

Between:

	THE ASSOCIATION OF BRITISH CIVILIAN INTERNEES – FAR EASTERN REGION	Appellant
	- and -
	SECRETARY OF STATE FOR DEFENCE	Respondent

____________________

(Transcript of the Handed Down Judgment of
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)

____________________

Mr David Pannick QC, Mr Michael Fordham and Mr Ben Jaffey (instructed by Messrs Leigh Day and Co) for the Appellant
Mr Philip Sales and Ms Karen Steyn (instructed by the Treasury Solicitor) for the Respondent
____________________

HTML VERSION OF JUDGMENT
AS APPROVED BY THE COURT
____________________

Lord Justice Dyson :

This is the judgment of the court.

Introduction

The appellant is the Association of British Civilian Internees Far Eastern Region ("ABCIFER"). It is an unincorporated association which represents a substantial number of individuals (and their surviving spouses) who were interned by the Japanese during the Second World War ("the War") as British civilians, and have been refused a £10,000 compensation payment by the Secretary of State for Defence because neither they nor one of their parents or grandparents was born in the United Kingdom.

After many years of campaigning, the British government acceded to pressure, notably from the Royal British Legion, that members of British groups who had been interned by the Japanese should each receive ex-gratia payments of £10,000. On 7 November 2000, Dr Lewis Moonie, the Parliamentary Under-Secretary of State for Defence, announced the introduction of a non-statutory compensation scheme under which a single ex-gratia payment of £10,000 would be made "to each of the surviving members of the British groups who were held prisoner by the Japanese during the second world war, in recognition of the unique circumstances of their captivity". In his announcement in the House of Commons, Dr Moonie said:

"Those who will be entitled to receive the payment are former members of Her Majesty's armed forces who were made prisoners of war, former members of the Merchant Navy who were captured and imprisoned, and British civilians who were interned. Certain other former military personnel in the colonial forces, the Indian army and the Burmese armed forces who received compensation in the 1950s under United Kingdom auspices will also be eligible. As I said earlier, in cases in which a person who would have been entitled to the payment has died, the surviving spouse will be entitled to receive it instead."

In a further announcement to the House on 11 July 2001, Dr Moonie was asked by Mr Nicholas Winterton MP "what changes there have been to the definition of "British" when applied to civilians eligible for Her Majesty's Govenrment's ex-gratia payments to former prisoners of war and internees of the Japanese from 1941 to 1945 since 7 November 2000". Dr Moonie replied:

"The ex-gratia payment announced on 7 November 2000 is being made to the various British groups who had been held prisoner by the Japanese during the Second World War. The eligibility criterion for civilian claimants has recently been clarified, but there has been no change in the intended scope of the scheme. British subjects whom the Japanese interned and who were born in the United Kingdom, or had a parent or grandparent born here, are eligible for the payment."

The Government has proceeded to make payments in accordance with this statement. On behalf of the appellant, Mr Pannick QC submits that, in refusing to make payments unless a claimant who was a British subject at the time of internment was born in the UK or had a parent or grandparent who was born in the UK ("the birth criteria"), the Government has been acting unlawfully.

As we shall explain, the Government decided that it should be a requirement of entitlement to an ex-gratia payment that a claimant should have had "strong links" with the UK at the time of internment, and the birth criteria were introduced to that end.

In summary, Mr Pannick submits that (a) the requirement of strong links with the UK at the time of internment and/or the birth criteria are unlawful on the grounds that they are disproportionate and/or irrational; alternatively (b) there has been breach of a legitimate expectation created by Dr Moonie's announcement of 7 November 2000: it was conspicuously unfair and an abuse of power to change the criteria for compensation (i) so as to exclude those who would previously have been entitled to payment; alternatively (ii) to do so without taking into account the fact that expectations had been raised by the announcement of 7 November 2000 which would be frustrated by the introduction of the birth criteria.

In a reserved judgment handed down on 18 October 2002, Scott Baker J dismissed the appellant's claim for judicial review. This appeal is brought with permission granted by Sedley LJ. It is important when considering the issues that arise to have in mind the fact that under section 1(1) of the British Nationality and Status of Aliens Act 1914 ("the 1914 Act"), "any person born within His Majesty's dominions and allegiance" was deemed to be a "natural-born British subject".

The relevant history

On 7 December 1941, Japan launched a surprise attack on the US Pacific Fleet at Pearl Harbour in Hawaii. In a swift campaign thereafter, the Japanese invaded and occupied many territories in East and South-East Asia, several of which were British colonies, territories or possessions. Between 1941 and 1945, they captured and held as prisoners of war ("POWs") more than 50,000 members of the UK armed forces of whom about one in four did not survive. In addition to the POWs, the Japanese also interned many civilians. The precise number is uncertain. The conditions in which the POWs and the civilians were held, and the manner in which they were treated, were appalling.

In his statement to the House on 7 November 2000, Dr Moonie said that "the unique nature of Japanese captivity in the Far East was recognised in the 1950s, when those who had been held became eligible for modest payments from Japanese assets, made under the provisions of the 1951 San Francisco treaty of peace with Japan". We shall refer to this compensation scheme as "the 1950s scheme". The maximum sums payable under the 1950s scheme were £76.50 for POWs and £48.50 for civilians. A civilian did not qualify for payment under the scheme unless he was a British national normally resident in the UK before internment who had returned to take up residence in the UK on or before the date of application for payment, and was over the age of 21 on 8 December 1941. Approximately 8,500 civilian internees received payments under the 1950s scheme.

Since then, successive British governments and some former British Far East captives have pursued the issue of additional compensation directly with Japan. But the position of the Japanese government is that the issue of compensation was settled under the 1951 Treaty.

On 10 April 2000, Dr Moonie met a delegation from the Royal British Legion at Downing Street. They outlined the case for a one-off ex-gratia payment for the POWs. The position of the civilians was not discussed. Following this meeting, the Prime Minister initiated a reconsideration of the long-standing government policy towards Far East POWs. During the summer of 2000, the Ministry of Defence reviewed the question whether further payment should be made to the POWs. The position of the civilians was only raised to the extent that it was noted that, if it was decided to make payments to former POWs, it was likely that civilian internees would also seek payments.

An Inter-Departmental Working Group was set up in the autumn of 2000. It was chaired by Mr Tom McKane. The Group's advice to Ministers was contained in a note dated 2 November. The note stated that the number of survivors was between 5500 and 6500 POWs (plus 4500 surviving widows), and about 2500 civilians (many of whom had been interned as children). The latter figure had been provided by ABCIFER. The note identified a number of options, and stated (para 13) that it was important that the criteria for the scheme should be carefully defined. If the scheme were to include civilian internees, merchant seamen and their surviving spouses, the additional cost would be approximately £87 million. The note suggested that if a scheme were adopted which included payment to civilians, it should extend to "surviving civilians, who are UK nationals and were interned by the Japanese in the Far East during the second World War".

On 6 November, the Government decided to establish an ex gratia payment scheme to be administered by the War Pensions Agency ("WPA"). Mr McKane says in his witness statement that "The Government's intention was that only civilians with a strong link to the United Kingdom would be eligible for such a payment, but at this stage there was no discussion of the precise criteria on the basis on which such a link would be assessed".

On the following day, Dr Moonie made his statement to the House of Commons. He said:

"In April this year, my right hon. Friend the Prime Minister held a meeting with representatives of the Royal British Legion to discuss the British groups who had been held prisoner by the Japanese during the second world war. He subsequently initiated a reconsideration of the longstanding policy of the Government towards those far eastern prisoners. The review took time to conduct because of the complexity of the issues involved, but it has now been completed.

I am very pleased to be able to inform the House that, as a result of the review, the Government have decided to make a single ex gratia payment of £10,000 to each of the surviving members of the British groups who were held prisoner by the Japanese during the second world war, in recognition of the unique circumstances of their captivity. In cases in which a person who would have been entitled to the payment has died, the surviving spouse will be entitled to receive it instead."

After the passage to which we have referred at paragraph 2 above, he continued:

"We estimate that up to 16,700 people may be eligible for the ex gratia payments, which will accordingly cost up to £167 million to make. I will not go into detail about the new payment scheme now, except to say that this single ex gratia payment will not be taxable, nor will it be taken into account for benefits purposes. We intend to make these payments as quickly as possible, although it will take a little time for the appropriate regulations to be made. We expect everything to be in place by February.

Further details of the scheme are being published today in a leaflet by the War Pensions Agency, which will be administering it. A copy will be placed in the Library of the House. The leaflet and claim form will also be available on the agency's website.

The Government recognise that many UK citizens, both those serving in the armed forces and civilians, have had to endure great hardship at different times and in different circumstances, but the experience of those who went into captivity in the far east during the second world war was unique. We have said before that we believe the country owes a debt of honour to them. I hope that I am speaking for everyone here when I say that today something concrete has been done to recognise that debt."

The leaflet referred to by Dr Moonie was published on the same day. It was entitled "Ex-gratia payment for British groups who were held prisoner by the Japanese during World War Two: Notes for Guidance". It identified five categories of person who were entitled to make a claim for the payment. The fourth category was "(d) surviving British civilians who were interned by the Japanese in the Far East during the Second World War". The Notes for Guidance also stated that claims had to be made on a specified claim form. On the face of the form appeared the following words: "you may be eligible for the ex-gratia award if you are……a surviving British civilian who was interned by the Japanese in the Far East during the Second World War". The form also contained a number of questions. None was directed to the place of birth of the claimant, his parents or grandparents. One of the questions asked: "have you received any other form of ex gratia payment for being imprisoned or interned by the Japanese?"

On 15 November 2000, a meeting took place between the WPA and, among others, representatives of the Royal British Legion and ABCIFER. The minutes record:

" Although WPA did not 'own' the policy, they would funnel all issues around eligibility and entitlement through the cross-Departmental group dealing with the special payment issue.

The following issues concerning entitlement were raised during the meeting.

age – internees under 21 years of age.

dual grounds for qualification – through remarriage, eg civilian internee who is also the surviving spouse of a FEPOW.

nationality – what constitutes 'British' and what is the impact of any change in nationality since imprisonment."

Whether anyone who had already received a payment from the Manx Government would be entitled to a further payment."

Mr Burnham (acting Chief Executive of WPA) states that there was no discussion at this meeting of the definition of "British" or the meaning of "British subject" during the War. Mr Bridge of ABCIFER was concerned to establish whether individuals who had become citizens of countries other than the UK since the War would be ineligible for the payment. Shortly after this meeting, Mr David Smith of the Department of Social Security confirmed that a change of citizenship would not have an impact on eligibility.

The Working Group met on 22 November. They decided that "UK nationals" should be defined "as those civilian internees who were British at the time of their incarceration; those who became British Citizens only subsequently would not be eligible for payment". Mr McKane says that the Group "made no decision, and did not intend to make any decision, as to the definition of "British" for the purposes of the ex gratia payment scheme".

At some point, the Working Group obtained advice on the meanings given to "British" in various Acts of Parliament. It met again on 29 December 2000. Mr McKane says at para 6.4 of his statement:

"On 29 December 2000 the interdepartmental working group gave further consideration to the meaning of 'British' for the purposes of the ex gratia payment scheme. We noted that we had not defined what we meant by 'British' anywhere. We further noted that in many cases there would be no question but that the claimants would fall within the meaning of 'British' because they were born in the UK, worked in, say, Malaysia for a few years before being interned by the Japanese, returned to the UK on release and had lived in the UK ever since. However, claims were also being received from people who were children or young adults when captured by the Japanese. Some of these people, although 'British subjects', would not have been born in the UK but would reasonably consider themselves to have very strong links with this country in view of the birthplace of, for example, their parents. We took the view that such people, with very strong links to the UK, would be eligible if they were resident in the UK. We did not define "very strong links" with the UK and we made no decision as to whether those who had had such strong links with the UK but were not presently resident in the UK should be eligible."

Most of the straightforward claims were processed by the end of January 2001. Payments to more than 14,000 claimants were made on 1 February. At about this time, the WPA informed the Working Group that, in order to process the less straightforward claims, they required, as Mr McKane puts it at para 6.5 of his statement, "clarification" of the definition of "British".

On 8 March 2001, Mr Martin, chairman of ABCIFER, wrote to the WPA stating that some of his members were asking why they had not received payment, when some of their friends had already been paid. He said:

"My own calls to your helpful staff, enquiring as to the general situation, have told me of efforts to confirm internment, by visits of your staff to the IWM and PRO but also that verification of nationality is a problem. Unfortunately some who were born abroad, mainly in China or Hong Kong, and one or both of whose parents were born abroad, have reached the same conclusion and are feeling that some form of discrimination exists. This is a sensitive area which I must draw to your attention and feel it calls for some action before it causes more distress.

I believe you may be trying to get clarification of nationality questions from the policy makers so that you can progress blocks of claims rather than ask individuals for proof which they may find difficulty in obtaining. This sounds sensible, but it does not deal with the growing concerns of people some of whom are elderly and who have heard nothing further from you since initial acknowledgement of their claims.

Unless you anticipate an early resolution of some of these problems, may I suggest that you issue letters to those whose claims are on hold for verification of nationality or internment, tell them what you are trying to do and even ask them to send any documentary evidence or even verbal statements of nationality that you would find acceptable, such as place and date of birth of their father or even paternal grandfather if it was in UK, ultimately verifiable from national records."

On 21 March, the Working Group decided that civilian internees who were born in the UK and those who, though not born in the UK, had at least one parent or grandparent who was born in the UK would count as "British" for the purposes of the scheme. It was by this decision that the birth criteria came into existence. Mr McKane explains in his statement that:

"6.8 In reaching this definition we were guided by our understanding that the Ministerial intention was that there should be a requirement that the claimant should have had strong links with the UK. We initially considered that a strong link with the UK required that either the claimant or at least one of their parents was born in the UK.

6.9 In extending the link to the UK back to grandparents, we bore in mind representations made by ABCIFER in respect of the Government's proposals on a distinct but analogous matter, namely to revise the policy for determining whether a former civilian Far East internee "belongs to the UK" for the purpose of entitlement to a War Pension."

The position with regard to the War Pension was as follows. On 21 September 2000, Hugh Bayley MP, the Parliamentary Under Secretary of State for the Department of Social Security, had written to Mr Bridge asking for his and ABCIFER's views on the Government's proposals for determining whether a former civilian internee "belongs to the UK" for the purposes of entitlement to a War Pension. These proposals included the condition that at least one of the claimant's parents was born in the UK, or was ordinarily resident in the UK immediately prior to the claimant's internment. Mr Bridge replied on 27 September enclosing a submission which proposed that this condition should be amended to refer to the claimant's parents or paternal grandfather. Eventually, on 8 May 2001, Mr Bayley sent to Mr Bridge a copy of the revised policy which incorporated the proposed condition that at least one of the claimant's parents or grandparents was born in the UK and a British subject immediately prior to the claimant's internment. This policy came into effect on 25 June 2001.

Mr McKane says:

"6.12 Whilst the criteria for entitlement to an ex gratia payment were not precisely the same as those for a War Pension, the interdepartmental group considered that the definition of "belonging to the UK" which had been revised following consultation with ABCIFER was highly relevant to its consideration of what was required by a strong link to the UK. In particular, having regard to the debate in the context of eligibility for a War Pension, we were persuaded that claimants should be able to trace their connection to the United Kingdom back to a single grandparent, rather than only to their parents."

In accordance with these criteria, the WPA wrote to those claimants in respect of whom there remained a question regarding their nationality, seeking what was described as "additional information", namely details of the places of birth of their parents and grandparents. The letters stated that this information "would assist us to confirm eligibility within the entitlement criteria set".

In a letter dated 4 April, Mr Martin referred to these letters whose object he understood to be to "assist verification of British nationality" by identifying "a blood-link of claimants to UK not apparent from the original claims submitted". He said that this had caused concern and distress to a number of ABCIFER members who were unable to provide the information requested, but who were regarded as British by the Japanese and interned as such. He concluded his letter in these terms:

"At the time of the 7 November announcement of the Ex Gratia, it was not possible to foresee every aspect which might arise in dealing with claims but the underlying theme was to recognise the unique experience and suffering of British nationals, at the hands of the Japanese and we look to the continuation of a generous interpretation of this intent."

Mr Martin wrote to the WPA again on 9 April saying that a number of ABCIFER members had been interned as British nationals who would not satisfy the birth criteria. He gave an example of one such case, and added:

"There are undoubtedly others, similarly placed, who it seems should be regarded as falling within the statement in Parliament on 7 November as within " .. the British groups that were held prisoner by the Japanese during the second world war in recognition of the unique circumstances of their collective captivity." This was a generous act and should not lead to discrimination between British nationals but rather interpreted liberally."

On 18 April, Mr Martin sent Mr Burnham a further letter and attached a paper setting out ABCIFER's submissions as to the eligibility of civilian internees. The paper identified categories of those claimants who satisfied the birth criteria, and those who did not. The latter category included those who came to and settled in the UK immediately or shortly after the war (category (c)), and those who did not come to and settle in the UK after the war (category (d)). In relation to category (c), the paper argued that "subject to verification of their internment and 1941 nationality status, to authorise their claims would not seem to create a precedent for others who might claim to have been "British subjects" but who are overseas. The rejection of their claim by the UK would mean that they have no other country to turn to for recognition of their suffering and losses". In relation to category (d), the paper acknowledged that their claims "may have to be assessed on some other basis as to how strongly and consistently they demonstrated their claim to be British, weighed against the possibility of creating precedents that would lead to further claims". The expectations of these claimants had been aroused "because it appears to them that they fall within the British government's announcement". Finally, the paper stated:

"It appears that intention of the British government in granting recognition of suffering by means of the Ex Gratia was to be generous. The interpretation of British nationality will be the test of the extent of the generosity of the Government's Ex Gratia. It is a sensitive area for those affected and will be regarded as discriminatory by those excluded. This point is now being made and is causing distress. Decisions which impose a cut-off point are by their nature discriminatory. It should be said that the Japanese did not discriminate when interning them, together with those for whom a bloodline link to UK now assumes importance and that action would have been based on what was accepted as "British at the time".

It is now over five months since the Government's Ex Gratia announcement and eleven weeks since first payments were made. Claimants are elderly people, not all versed in complexities of nationality and of a generation which did not ask questions about their ancestry. They are dying at a steady rate and implementation of the remaining ex gratias should be expedited, in keeping with the record achieved so far.

For these reasons ABCIFER, with its background knowledge, re-iterates its willingness to co-operate with WPA in resolving the hard cases categories."

A meeting took place on 24 April at which Mr Burnham assured Mr Martin and Mr Bridge that he would inform the Working Group of their concerns. On 11 July 2001, Dr Moonie made the further announcement to the House of Commons which we have quoted at paragraph 3 above.

The position was explained to Mr Bridge in a letter dated 20 July 2001 which included the following:

"On the matter of the definition of 'British', I should point out that we have not changed the definition: no definition was given by the Minister in Parliament on 7 November, nor, I believe, was one set out by officials at your meeting with the WPA later the same month.

The definition set out recently has been issued to provide necessary clarification of the meaning of the term 'British' in the context of civilian claimants under this scheme. The Government's intention has always been that eligibility for this group should be dependent on a direct link to the United Kingdom at the time of captivity by birth or by parentage."

Substantive challenge to the criteria

Irrationality v Proportionality

Mr Pannick submits that the requirement of close links with the UK at the time of internment and the birth criteria are disproportionate to the aims of the Government's policy and/or irrational, and that for this substantive reason the scheme in so far as it affects civilians should be declared to be unlawful. A preliminary question that arises is whether proportionality exists as a separate ground of review in a case which does not concern Community law or human rights protected by the European Convention on Human Rights ("ECHR"). Mr Pannick boldly submits that it does. Mr Sales submits that we are bound by previous authority to hold that it does not.

It is true that the result that follows will often be the same whether the test that is applied is proportionality or Wednesbury unreasonableness. This is particularly so in a case in the field of social and economic policy. But the tests are different: see, for example, Lord Steyn in R (Daly) v Secretary of State for the Home Department [2001] UKHL 26, [2001] 1 AC 532, 547A-G. It follows that the two tests will not always yield the same results. A clear instance of this is Smith and Grady v United Kingdom (1999) 29 EHRR 493, where despite the heightened scrutiny test developed in R v Ministry of Defence, ex p Smith [1996] QB 517, 554, the ECtHR upheld the challenge which had failed in the UK domestic courts and said at para 138:

"the threshold at which the High Court and the Court of Appeal could find the Ministry of Defence policy irrational was placed so high that it effectively excluded any consideration by the domestic courts of the question of whether the interference with the applicants' rights answered a pressing social need or was proportionate to the national security and public order aims pursued, principles which lie at the heart of the court's analysis of complaints under article 8 of the Convention."

Support for the recognition of proportionality as part of English domestic law in cases which do not involve Community Law or the ECHR is to be found in para 51 of the speech of Lord Slynn in R (Alconbury Ltd) v Secretary of State for the Environment, Transport and the Regions [2001] UKHL 23, [2001] 2 WLR 1389, 1406; and in the speech of Lord Cooke at para 32 of Daly. See also De Smith, Woolf and Jowell Judicial Review of Administrative Action 5^th edition page 606. It seems to us that the case for this is indeed a strong one. As Lord Slynn points out, trying to keep the Wednesbury principle and proportionality in separate compartments is unnecessary and confusing. The criteria of proportionality are more precise and sophisticated (see Lord Steyn at para 27 of Daly). It is true that sometimes proportionality may require the reviewing court to assess for itself the balance that has been struck by the decision-maker, and that may produce a different result from one that would be arrived at on an application of the Wednesbury test. But the strictness of the Wednesbury test has been relaxed in recent years even in areas which have nothing to do with fundamental rights: see the discussion in Craig Administrative Law 4^th edition pp 582-584. The Wednesbury test is moving closer to proportionality, and in some cases it is not possible to see any daylight between the two tests: see Lord Hoffmann "A Sense of Proportion" (John Maurice Kelly Memorial Lecture 1996 p 13). Although we did not hear argument on the point, we have difficulty in seeing what justification there now is for retaining the Wednesbury test.

But we consider that it is not for this court to perform its burial rites. The continuing existence of the Wednesbury test has been acknowledged by the House of Lords on more than one occasion. The obvious starting point is R v Secretary of State for the Home Department ex p Brind [1991] 1 AC 696. The Home Secretary had issued directives to the BBC and IBA prohibiting the broadcasting of speech by representatives of proscribed terrorist organisations. The applicant journalists challenged the legality of the directives on the ground that they were incompatible with the ECHR, and also on the ground that they were disproportionate in a sense going beyond the established doctrine of reasonableness. Mr Pannick submits that Brind does not stand in the way of this court holding that proportionality has supplanted the Wednesbury test in English domestic law, even where no human right or Community Law issues are raised. We do not agree. It is true, as Mr Pannick points out, that Lord Bridge and Lord Roskill left the door open for the possible future introduction and development of the doctrine of proportionality into English domestic law. But all of their Lordships rejected the proportionality test in that case, and applied the traditional Wednesbury test. In other words, they closed the door to proportionality in domestic law for the time being.

In R v Chief Constable of Sussex ex p International Trader's Ferry Ltd [1999] 2 AC 418, the House of Lords was asked to apply both tests in the context of a case about what was alleged by the applicant to be the inadequate response by the police to the obstruction by protesting animal rights groups of shipments of livestock. The applicant said in relation to domestic law that the police response was unreasonable (ie in the Wednesbury sense). In relation to Community law (the enforcement of the EU Treaty which prohibits restrictions), the applicant's case was that the police response was disproportionate. The challenge failed on both grounds. Separate consideration was given to the two grounds and to the application of the two tests, although Lord Slynn pointed out (p 439F) that "the distinction between the two tests in practice is in any event much less than is sometimes suggested". The suggestion that it is open to this court to hold that the Wednesbury test is no longer part of English domestic law is entirely at odds with the approach of the House of Lords in Brind and in International Trader's Ferry.

Finally, the passages in the speeches of Lord Slynn in Alconbury and Lord Cooke in Daly to which we have referred themselves imply a recognition that the Wednesbury test survives, although their Lordships' clearly expressed view is that it should be laid to rest. It seems to us that this is a step which can only be taken by the House of Lords. We therefore approach the issues in the present appeal on the footing that the Wednesbury test does survive, and that this is the correct test to apply in a case such as the present which does not involve Community law, and does not engage any question of rights under the ECHR.

Are the criteria irrational?

Mr Pannick challenges the criteria at two levels. His first level challenge is that it was irrational to adopt the criterion that a claimant should have had close links with the UK at the time of internment. If this challenge succeeds, then the scheme is unlawful and must be reconsidered. But if the scheme survives this challenge, Mr Pannick's second level challenge is that the birth criteria that were chosen to achieve the objective of securing payment to those who had close links with the UK at the time of their internment is itself irrational. A successful challenge on this ground would also lead to the result that the scheme is unlawful, and must be reconsidered.

The first level challenge: close links with the UK at the time of internment

It is important to bear in mind that, as Mr Sales points out, this was a non-statutory scheme introduced by the Government exercising its common law powers. In setting up the scheme, the Government was painting on a clean canvas. In such a case, there are obvious difficulties in determining what factors are relevant. These difficulties were recognised by Lord Donaldson MR in R v Panel on Take-overs and Mergers ex p Guinness Plc [1990] 1 QB 146, 159E:

"Irrationality, at least in the sense of failing to take account of relevant factors or taking account of irrelevant factors, is a difficult concept in the context of a body which is itself charged with the duty of making a judgment on what is and what is not relevant, although clearly a theoretical scenario could be constructed in which the panel acted on the basis of considerations which on any view must have been irrelevant or ignored something which on any view must have been relevant."

The declared objective of the scheme was to pay the debt of honour owed by the country (ie the UK) to British civilians who were interned by the Japanese during the War. That much is clear from the announcement of 7 November 2000. At this stage, we are not concerned with the question of what was meant by the phrase "British civilians" that was used in the announcement. We shall deal with that issue later. Looking at the matter entirely generally, it seems to us that it would have been possible rationally to establish a scheme for payment to the entire class of those who were British civilians at the time of internment. It would also have been possible, without acting irrationally, to exclude certain categories from the entire class. But the criteria for their exclusion would, by definition, have had to be rational. It would clearly not have been rational to exclude people on the grounds of their physical characteristics or their gender or their religious beliefs. No reasonable decision-maker could decide, when setting up a scheme to meet the debt of honour owed by this country to those British civilians who were interned by the Japanese, that such criteria should be reasons to disqualify a claimant to compensation. Just as in satisfying the requirements of proportionality, so too in meeting the Wednesbury test, the measures designed to further the objective must be rationally connected to it: see Lord Steyn in Daly at page 547B quoting with approval the test propounded by Lord Clyde in De Freitas v Permanent Secretary of Ministry of Agriculture, Fisheries, Lands and Housing [1999] 1 AC 69, 80.

But it would have been rational, for example, to exclude those who were entitled to compensation from another country. It would be reasonable to take the view that the objective of paying the debt of honour to those who were British subjects at the time of their internment did not require payment to be made to internees who were entitled to be compensated by other countries. We do not believe that any of this is controversial.

What is in controversy is whether it is rational to limit the beneficiaries of the scheme to those British subjects who had close links with the UK at the time of internment. In our view, it is impossible to say that the close link criterion is irrational. At the time of internment, large numbers of British subjects had no links with the UK save for their being British subjects by reason of the 1914 Act. By the time the scheme came to be set up, the UK had become a medium-sized European country which had lost its empire. The situation was very different from what it was at the time of the War when Britain controlled a huge empire. No doubt, the Government could have decided to include in the scheme all those who were British subjects at the time of their internment who were not entitled to compensation from their home countries. But its failure to do so was not irrational.

It is instructive to consider R v Ministry of Defence ex p Walker [2000] 1 WLR 806, which bears some similarities to the present case. The House of Lords rejected an argument that the differential treatment under an ex-gratia compensation scheme of British soldiers injured in Bosnia as compared with British soldiers injured in Northern Ireland should be regarded as unlawful on the ground that the distinction could not be regarded as rational. Lord Slynn observed at page 812:

"It is not for the courts to consider whether the scheme with its exclusion is a good scheme or a bad scheme, unless it can be said that the exclusion is irrational or so unreasonable that no reasonable minister could have adopted it."

He said that the distinction between war operations and military activity by warring factions on the one hand and support for the police forces dealing with terrorism on the other may "may be fine", but it was not irrational. Lord Hoffmann said: "I find the distinction a fine one….But I cannot say that the distinction drawn by the ministry is irrational. That is too high a hurdle to surmount".

We do not consider that the distinction that has been drawn in the present case is "fine". There is a very real and obvious distinction between those who had a close connection with the UK at the time of their internment and those who did not have such a connection. The distinction that was drawn was not irrational.

During the course of his reply, Mr Pannick adopted a suggestion put to him by the court that it was irrational for the Minister to adopt criteria which take into account certain circumstances which are subsequent to the date of internment (viz entitlement to compensation from other countries being a disqualifying factor), but which do not take into account other subsequent circumstances, namely the fact that the claimant has a close link with the UK at the date of application for compensation. But in our judgment, the distinctions drawn by the Government do not disclose any irrationality. The basic criterion of a close connection with the UK at the time of internment remains as the factor which controls the scheme. It is permissible to admit an exception to this governing criterion where there is a justification for doing so which is rational and does not destroy the very foundation of the scheme. It was plainly rational to exclude from the scheme (without destroying its essential character) those who are, or may be, eligible for compensation under a different scheme administered by another country with which claimants currently have a closer connection than with the UK. But in our view, it does not follow from the fact that the Government has excluded such claimants that the whole scheme is irrational on the grounds that it has also excluded some of those who currently have a close connection with the UK. There are perfectly rational (but different) reasons for excluding both those who are currently entitled to receive compensation from other countries, and those who currently have a close connection with the UK, but who did not have such a connection at the time of their internment.

The second level challenge: the birth criteria

We turn, therefore, to Mr Pannick's second level challenge. He submits that the birth criteria are irrational in so far as they are intended to further the objective of compensating those who were British subjects enjoying close links with the UK at the time of their internment. There is no link at all between the birth criteria and a claimant's status as a British subject at the time of internment, his treatment by the Japanese or the debt of honour owed by the country to those who were interned. The birth criteria did not exist at the time. They are also irrational because they are arbitrary and produce distinctions which have no rational justification. They mean that two British civilians, ill-treated at the same time and in the same place and for the same reason (because they were "British civilians") are treated differently. Mr Pannick gives the following examples to demonstrate the irrationality of the birth criteria: (1) the person whose grandparent was born in Clapham receives compensation, even though he or she has never set foot in the UK whether before or after the War; and (2) the person who cannot prove that he or she, a parent or a grandparent, was born in the UK receives no compensation, even though that person has lived in Clapham ever since (and even before the War), and is a British citizen.

The strength of the case put forward by Mr Pannick is, he submits, underlined by the facts of the four individual cases that have been selected by ABCIFER as examples of people in "various types of factual situation who have all been refused compensation payments". Isaac Abraham was born in Shanghai. He does not know the place of birth of his parents or grandparents. He was a British subject at the time of his internment by the Japanese. He has been permanently resident in the UK since 1949. The cases of Carlos Lopes, Edward Weidman and Mark Erooga are similar. They were all born outside the UK, and none can prove that a parent or grandparent was born in the UK. They were all British subjects at the time of their internment. They have all lived in the UK since shortly after the end of the War. Each of these claimants now has the most tenuous link with his country of birth, and a very close link with the UK.

Persuasively though the argument was presented by Mr Pannick, we are unable to accept it. When considering these submissions, it is important that we should have in mind that the criteria are required to do no more than rationally define the means by which a claimant must demonstrate that he or she had a close connection with the UK at the time of internment. No doubt, it would be possible to demonstrate such a connection in a number of different ways, and different criteria could have been devised to that end. One way would be to follow the example of the Australian Government which set up a scheme whose criteria in relation to civilian internees include the requirement that the individual was domiciled in Australia immediately prior to internment. The British Government could also have required the close connection with the UK to be demonstrated by a condition of domicile in the UK immediately before internment. It chose to adopt neither of these courses.

Compensation under the 1950s scheme was payable to British civilians who were interned provided that (i) they were regarded as "normally resident in the United Kingdom before captivity", and (ii) they had returned to take up residence in the UK on or before the date of application for payment. The Government could have decided when setting up the compensation scheme simply to replicate the conditions of the 1950s scheme. It chose not to do so. Mr McKane explains the reasoning that led to the adoption of the birth criteria as the means of ensuring that only those who had a close connection with the UK at the time of their internment would qualify for compensation. He says that the Government decided apply more generous criteria than those used for the administration of the 1950s scheme. He says at para 7.7 of his statement:

"In devising different criteria, the Government sought to ensure that they were easily understandable and administratively workable, with a view to ensuring that entitlements under the scheme could be determined speedily and with a minimum of expense. The requirement that the claimant or one of his or her parents or grandparents were born in the UK meets the need for a clear rule."

Mr Pannick criticises the birth criteria on the grounds that they ignore the close links that claimants have developed with the UK since the War. But as we have seen, Government policy was to compensate only those who had close links with the UK at the time of their internment. We have already given our reasons for rejecting the challenge to the rationality of that policy. It was inevitable that the criteria chosen by the Government, if they were to be rationally linked to that policy, would focus on what was required to show the necessary close links at that time. It follows that the failure to take account of the closeness of the links with the UK at the time of the claim for compensation is not a good reason for impugning the rationality of the birth criteria.

If the birth criteria had been confined to a requirement that the claimant or one of his or her parents was born in the UK, it would in our view have been impossible to say that they were irrational. But the criteria go further. It is sufficient for a claimant to show that one grandparent was born in the UK. It would, therefore, have been possible for a claimant to qualify for compensation if one grandparent had been born in the UK and had left the country when a baby, even if no member of his or her family had set foot in the UK at any time thereafter. The possibility of such a case must be acknowledged. It must also be accepted that it is difficult to say of a claimant in such a case that he or she had a close connection with the UK at the time of internment.

It is striking that the evidence does not disclose a single example of such a case. The (perhaps theoretical) possibility that such cases exist is not, in our judgment, a reason for striking down the birth criteria as irrational. In determining whether they are irrational, regard must be had to the scheme as a whole. We also bear in mind that the criteria for eligibility were extended to include a grandparent born in the UK, so as to bring the criteria into line with those applicable to the closely analogous War Pension scheme, and that those criteria had been similarly extended to include the birth of a grandparent in the UK at the request of ABCIFER itself. It has not been suggested that there is a sufficient distinction between the two schemes to justify the view that the inclusion in the criteria of the birth of a grandparent in the UK is rational in the one case, but irrational in the other.

In our view, the Government did not act irrationally in introducing the birth criteria.

Legitimate expectation

Mr Pannick submits that the Minister acted with conspicuous unfairness and was guilty of an abuse of power when he introduced the birth criteria in March 2001 (a) thereby defeating the expectation that had been created by the announcement of 7 November 2000; and/or (b) without recognising and taking into account the fact that he was departing from what he had said on 7 November and that he was thereby defeating the expectation that had been created by what he had said on that occasion.

Clear and unequivocal representation

The first question that has to be determined is how, on a fair reading of what was said by Dr Moonie, the announcement of 7 November would reasonably have been understood by those to whom it was directed, including members of ABCIFER who had been campaigning for compensation from the British Government. Mr Pannick submits that the announcement contained a clear and unequivocal representation that all those civilians who had been British subjects at the time of their internment would receive an ex-gratia payment of £10,000. He relies on the fact that, in relation to the civilians, the figures mentioned in the announcement ("up to 16,700 people may be eligible" and cost of "up to £167 million") were based on figures which had emanated from ABCIFER. We were referred to Annex A to the note made by officials dated 2 November 2000 which under the heading "potential claimants" showed in relation to civilians "No data. ABCIFER claim that 3,700 (including widows) are still alive"; and under the heading "worst case cost" showed "say £37M".

Mr Pannick also submits that the words actually used in the announcement were clear. There was no suggestion that an additional exclusionary rule would or might be introduced. The only meaning that could be given to "British civilians" was that they referred to all those who were British subjects at the time of internment.

Mr Sales submits that the announcement was not clear as to what was meant by "British civilians". The term "British" bears different meanings, and no definition was given in the statement of 7 November. Dr Moonie did not refer to civilians who were British subjects in accordance with the nationality laws prevailing in 1941-45. Moreover, Dr Moonie did not state that all POWs who were British subjects at the time of their captivity would be eligible. On the contrary, he made it clear that only former members of Her Majesty's Armed Forces (ie the UK armed services), and some, but not all, members of colonial forces would be eligible. Accordingly, in relation to military POWs it was clear that not all those who were British subjects at the time of the Second World War would be eligible. It would, therefore, be surprising and contrary to the logic of the scheme to interpret what was said as meaning that the Government had decided to treat the scheme as extending to all former civilian internees who had been British subjects in 1941-45.

In our judgment, the announcement was less clear than it should have been. It stated that the review had taken time to conduct because of the complexity of the issue involved, but that it had now been completed. Mr Pannick emphasises the fact that Dr Moonie was saying that the review had been completed, and that later during the exchanges recorded in Hansard, Dr Moonie said "it has taken us a long time to come to this decision largely because of its complexity and the need to ensure that all those who are properly due the payment will receive it". There is nothing here to suggest that the Government was intending to introduce a qualification which would exclude a significant number of persons who would otherwise be eligible to receive payment.

On the other hand, for those who read carefully the announcement and the leaflet and claim form to which Dr Moonie referred, there were tell-tale signs that the scheme was not, or at least might not be, as all-embracing as might appear at first sight. First, Dr Moonie said that he would not "go into detail about the new payment scheme now". It is true that he went on immediately to say that the payment would not be taxable and would not be taken into account for benefits purposes. But it was not at all obvious what ground the further detail might cover. Secondly, the claim form contained a question asking the claimant whether he or she had received any other form of ex-gratia payment for being interned by the Japanese, and if so, who made the payment, when and how much had been received. There was no hint in the announcement itself that eligibility would or might be affected by the receipt of ex-gratia payments from other sources. We have not been told when this became a relevant criterion. But the important point is that anyone reading the announcement and the specimen claim form carefully should have realised that the scheme did not, or might not, entitle all those who were British subjects at the time of their internment to compensation without qualification. We do not think that the force of these points is diminished by the fact that the figures given by Dr Moonie included the figures provided by ABCIFER. The figures that he gave were maximum figures, and as we have seen were regarded by the Government as the worst case. For that reason, we think that the use of these figures by Dr Moonie does not have the significance for which Mr Pannick contends.

We are less impressed by the points made by Mr Sales. It seems to us that the natural meaning of the phrase "British civilians" is that it was referring to those civilians who were British subjects at the time of their internment. The force of Mr Sales's point based on the comparison with the proposed treatment of POWs might well have been lost on civilian internees who read the announcement. If they had thought about it at all, they might have concluded that there were good (undisclosed) reasons for drawing various distinctions in the way in which POWs were classified for the purposes of eligibility for compensation. It would have been understandable if they had not thought that the way it was proposed to compensate POWs had any relevance to the way in which it was proposed to compensate civilian internees.

Our conclusion is that the announcement did not contain a clear and unequivocal representation that all those civilians who were British subjects at the time of their internment would receive ex gratia payments under this scheme. We are fortified in our view by the evidence as to the way in which ABCIFER seems to have understood the announcement at the time. Most important in this regard are the minutes of the meeting of 15 November, which was held only 8 days after the date of the announcement, and was attended by Mr Martin and Mr Bridge on behalf of ABCIFER. As has already been seen, the minutes record that WPA would "funnel all issues around eligibility and entitlement through the cross-Departmental group dealing with the special payment issue". The minutes then record the specific issues that were raised "concerning entitlement". They included (a) age (the position of internees under the age of 21); (b) dual grounds for qualification (through remarriage); (c) "nationality—what constitutes "British" and what is the impact of any change of nationality since imprisonment"; and (d) whether anyone who had already received a payment from the Manx Government would be entitled to a further payment.

If ABCIFER had understood the announcement of 7 November as meaning that all civilians who were British subjects at the time of their internment would qualify for payment under the scheme, it is very difficult to see why they did not say at the meeting of 15 November that none of the issues "concerning entitlement" arose, since they had all been resolved by the clear and unequivocal announcement of 7 November. The answers to the issues raised would have been: (a) age is irrelevant; (b) dual grounds for qualification are irrelevant; (c) "British" means British subject at the time of internment, and any subsequent change in nationality is irrelevant; and (d) a person who had already received a payment from the Manx Government would be entitled to be paid under the British Government's scheme.

The response of Mr Bridge to this point is to be found at para 13 of his witness statement where he says:

"We did recognise that there were and would be questions needing to be addressed. We also sought to engage with the WPA and with Government as to how those questions were to be answered. But what we were certainly expecting, following the statement in Parliament, and what we were constantly calling upon Government in fairness to honour, was the inclusive and generous approach to "British" which recognised those who were "British" at the time of the Second World War. The Government made clear that the focus was on British at the time of the War. What we and our members consider to be grossly unfair and an affront to those British civilians detained as British civilians is to have defined and excluded those who lacked an additional (blood) link to the United Kingdom. What the Government has done is to adopt an "interpretation" which has served to delete 40% of the projected group."

This is not the language of someone who understood that the question of which civilians would be eligible for compensation had been finally determined by the announcement. Moreover, he does not explain why he thought that the issues raised at the meeting of 15 November were issues at all. The evidence discloses that a substantial number of the civilian internees were children. If age were to be a reason for ineligibility (as it had been under the 1950s scheme) a large number of those who would otherwise have been eligible under the scheme would not qualify for compensation. And yet, there seems to have been no protest at the suggestion that the relevance of a claimant's age should even be on the agenda for discussion. In the event, age was not to become a disqualifying factor.

Mr Sales also relies on other documents as indicating that ABCIFER did not understand the announcement in the sense for which Mr Pannick now contends. These are Mr Martin's letters dated 8 March, 4, 9 and 18 April 2001, and the paper that was enclosed with the letter of 18 April, to which we have referred at paras 22, 27-29 above. If Mr Martin had understood the announcement to be a clear and unequivocal representation that all those who were British subjects at the time of their internment would be eligible for the ex-gratia payments, it is difficult to see why he wrote in the terms that we have seen.

For all these reasons, we conclude that there was no relevant clear and unequivocal representation in the announcement of 7 November 2000.

Abuse of power

Mr Pannick submits that, even if the announcement did not contain the clear and unequivocal representation for which he contends, that is not fatal to his case on legitimate expectation. He relies on R v Inland Revenue Commissioners ex p Unilever Plc [1996] STC 681. In that case, on 30 occasions over a period of more than 20 years, the taxpayer had submitted tax computations more than 2 years after the end of the end of the accounting period to which they related, but the Revenue had not refused the claims to relief against the profits of the current year on those occasions. In 3 subsequent years, however, the Revenue did refuse claims for loss relief on the ground that the claims were not made within the statutory time limit of 2 years after the end of the respective accounting periods. No clear and unambiguous representation had been made by the Revenue that it would grant relief notwithstanding that the 2 year time limit was exceeded. Nevertheless, it was held by this court that the Revenue could not lawfully insist on the taxpayer meeting the time limits because to do so would be so unfair as to amount to an abuse of power.

Sir Thomas Bingham MR said (p 690E) that:

"(1) The courts have not previously had occasion to consider facts analogous to those here. The categories of unfairness are not closed, and precedent should act as a guide not a cage. Each case must be judged on its own facts, bearing in mind the Revenue's unqualified acceptance of a duty to act fairly and in accordance with the highest public standards."

At page 691G, he said "on the unique facts of this case", to reject the taxpayer's claims in reliance on the time-limit, without clear and general advance notice, was so unfair as to amount to an abuse of power.

Simon Brown LJ said at page 694H:

"Of course legal certainty is a highly desirable objective in public administration as elsewhere. But to confine all fairness challenges rigidly within the MFK formulation – requiring in every case an unambiguous and unqualified representation as a starting point – would to my mind impose an unwarranted fetter upon the broader principle operating in this field: the central Wednesbury principle (see Associated Provincial Picture Houses Ltd v Wednesbury Corp [1948] 1 KB 223) that an administrative decision is unlawful if 'so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it' (see Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374 at 410 per Lord Diplock). The flexibility necessarily inherent in that guiding principle should not be sacrificed on the altar of legal certainty.

'Unfairness amounting to an abuse of power' as envisaged in Preston and the other Revenue cases is unlawful not because it involves conduct such as would offend some equivalent private law principle, not principally indeed because it breaches a legitimate expectation that some different substantive decision will be taken, but rather because either it is illogical or immoral or both for a public authority to act with conspicuous unfairness and in that sense abuse its power. As Lord Donaldson MR said in R v ITC, ex p TSW: 'The test in public law is fairness, not an adaptation of the law of contract or estoppel'.

In short, I regard the MFK category of legitimate expectation as essentially but a head of Wednesbury unreasonableness, not necessarily exhaustive of the grounds upon which a successful substantive unfairness challenge may be based."

And at page 695H, he said:

"Any unfairness challenge must inevitably turn on its own individual facts. True, as Lord Templeman made clear in Preston, it can only ever succeed in 'exceptional circumstances'. True, too, the court must always guard against straying into the field of public administration and substituting its own view for that of the administrator. In these circumstances I am very ready to accept that rare indeed will be the case when a fairness challenge will succeed outside the MFK parameters. It is certainly difficult to envisage many situations when, absent breach of a clear representation, a highly reputable and responsible body such as the Revenue will properly be stigmatised as having acted so unfairly as to have abused their powers – here their power to accept late claims. But I am satisfied that there exists no legal inhibition to such a conclusion."

Thus it is clear that it will be only in an exceptional case that a claim that a legitimate expectation has been defeated will succeed in the absence of a clear and unequivocal representation. That is because it will only be in a rare case where, absent such a representation, it can be said that a decision-maker will have acted with conspicuous unfairness such as to amount to an abuse of power. In the Unilever case, the taxpayer had, in effect, been lulled into a false sense of security, and had regulated its tax affairs in reliance on the Revenue's course of conduct, and thereby acted to its detriment. In those circumstances, and in the light of the Revenue's acceptance of its duty to act fairly and in accordance with the highest public standards, it is not surprising that the court felt able to treat this as a wholly exceptional case.

We fully accept that, as Sir Thomas Bingham MR put it, the categories of unfairness are not closed and precedent should act as a guide, and not as a cage. But the facts of the present case are very far removed from those in Unilever. In our view, there is no warrant for treating this case as so exceptional that the need for a clear and unequivocal representation to found a legitimate expectation can be dispensed with. Moreover, for the reasons mentioned previously, ABCIFER were not misled by the announcement of 7 November. They did not act to their detriment in reliance on what was said by Dr Moonie. Even if they had been misled, this is not a case of such conspicuous unfairness as to amount to an abuse of power. Despite the fact that, unwisely, Dr Moonie said that the review had been completed, it was apparent that the details still had to be worked out. It is unfortunate that he did not articulate in his announcement what had been finally determined and what still remained to be worked out. There was, therefore, scope for misunderstanding. But in our view, it went no further than that. The facts fall far short of what would be required to mount a case of conspicuous unfairness and abuse of power.

The alternative case on legitimate expectation.

Mr Pannick's alternative argument is that there was an abuse of power in that the Minister introduced the birth criteria without taking into account the fact that expectations had been raised by the announcement of 7 November which would be defeated by the new criteria. He relies in particular on what was said in R (Bibi) v Newham Borough Council [2001] EWCA Civ 607, [2002] 1 WLR 237 at paras 39-43 of the judgment of the court. At para 39, Schiemann LJ said:

"But, on any view, if an authority, without even considering the fact that it is in breach of a promise which has given rise to a legitimate expectation that it will be honoured, makes a decision to adopt a course of action at variance with that promise then the authority is abusing its powers".

But for the reasons that we have already given, the Minister did not give any promise, still less a promise that gave rise to a legitimate expectation that it would be honoured. On analysis, therefore, there is no distinct legitimate expectation argument here.

Other issues

We have dealt with the points that were the subject of oral submissions before us. In his skeleton argument, Mr Pannick also submitted that the appeal should be allowed on the grounds that the denial of compensation to persons who did not satisfy the birth criteria infringed (a) the provisions of article 1 of the First Protocol of the ECHR when read in conjunction with article 14; and (b) the common law principle of equality. As we understood it, Mr Pannick accepted that these arguments did not add anything of substance to his principal arguments. He did not, however, abandon them. In these circumstances, we propose to express our views on the issues that have been raised, but deal with them fairly briefly.

Article 14 and Article 1 of the First Protocol of the ECHR

Article 14 provides:

"The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status."

The following is common ground. Article 14 has no existence independent of the other ECHR rights: it provides only for equal treatment in the enjoyment of other ECHR rights. The application of article 14 does not necessarily presuppose the breach of any of the substantive provisions of the ECHR. As the editors of Lester and Pannick's Human Rights Law and Practice point out (para 4.14.5), were it otherwise, article 14 would serve no useful purpose. A measure which conforms with the substantive provisions of the ECHR may violate article 14 because it is discriminatory in nature. The question at issue must, however, fall within the scope of one or more of the substantive provisions of the ECHR before article 14 can be engaged. The way it was put by the ECtHR in Petrovic v Austria (2001) 33 EHRR para 28 was:

"The Court has said on many occasions that Article 14 comes into play whenever "the subject matter of the disadvantage….constitutes one of the modalities of the exercise of a right guaranteed", or the measures complained of are "linked to the exercise of a right guaranteed"".

The issue which divides the parties is whether the members of the appellant in the present case have a claim which falls within the scope of Article 1 of the First Protocol which provides:

"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."

The judge held that it was "plain that ex gratia payments, unenforceable by action under domestic law clearly fall outside the scope of Article 1 of the First Protocol".

In his skeleton argument, Mr Pannick submits that the judge was wrong for the following reasons. The ex-gratia compensation scheme is not in the nature of a discretionary gift. A person who fulfils the eligibility criteria has a legal entitlement to the payment, enforceable in public law. Such a legal entitlement, enforceable not as a debt in private law but by judicial review, is a "possession" within the meaning of article 14. A possession can comprise a non-statutory right, recognised by the common law including a right to bring a legal claim.

In his skeleton argument, Mr Sales advances a number of reasons why this submission should be rejected. We find much of what he argues persuasive, but we do not find it necessary to refer to his detailed points in this judgment. The short answer to Mr Pannick's submissions is that they proceed on the basis that the members of the appellant have a right to judicial review of the scheme to vindicate their public law rights to receive compensation. It is these rights which are said to be possessions which fall within the scope of article 1. But if, as we have held, the claimants do not have any such rights, the edifice on which the article 14 case is based collapses. Claims which have been held to be without foundation cannot be possessions which are linked to or within the scope of article 1 of the First Protocol.

The common law principle of equality

In his skeleton argument, Mr Pannick submits that this was an entirely appropriate case for the application of the common law principle of equality. Absent justification for a difference of treatment between two civilian internees who were in a materially identical position as to the basis and nature of their treatment under the scheme, the exclusion of internees on the grounds of the birth criteria offends the conscience of the law. In Matadeen v Pointu [1999] 1 AC 98, Lord Hoffmann (giving the Opinion of the Privy Council) said at page 109C:

"As a formulation of the principle of equality, the court cited Rault J. in Police v Rose [1976] MR 79,81: "Equality before the law requires that persons should be uniformly treated, unless there is some valid reason to treat them differently." Their Lordships do not doubt that such a principle is one of the building blocks of democracy and necessarily permeates any democratic constitution. Indeed, their Lordships would go further and say that treating like cases alike and unlike cases differently is a general axiom of rational behaviour. It is, for example frequently invoked by the courts in proceedings for judicial review as a ground for holding some administrative act to have been irrational: see Professor Jeffrey Jowell QC, "Is Equality a Constitutional Principle?" (1994) 7 CLP 1, 12-14 and de Smith, Woolf and Jowell, Judicial Review of Administrative Action, 5^th ed. (1995), pp. 576-582, paras. 13-036 to 13-045.

But the very banality of the principle must suggest a doubt as to whether merely to state it can provide an answer to the kind of problem which arises in this case. Of course persons should be uniformly treated, unless there is some valid reason to treat them differently. But what counts for a valid reason for treating them differently? And, perhaps more important, who is to decide whether the reason is valid or not? Must it always be the courts? The reasons for not treating people uniformly often involve, as they do in this case, questions of social policy on which views may differ. These are questions which the elected representatives of the people have some claim to decide for themselves. The fact that equality of treatment is a general principle of rational behaviour does not entail that it should necessarily be a justiciable principle – that it should always be the judges who have the last word on whether the principle has been observed. In this, as in other areas of constitutional law, sonorous judicial statements of uncontroversial principle often conceal the real problem, which is to mark out the boundary between the powers of the judiciary, the legislature and the executive in deciding how that principle is to be applied."

Mr Pannick submits that the right question to ask in this case is whether the exclusion of internees on the grounds of the birth criteria was partial and unequal between different internees so as to offend the basic principle of equality. The answer to that question, he says, is: yes.

We do not find it necessary to determine whether there is a free-standing principle of equality in English domestic law, since we did not hear argument on the point. We do not, however, think that the Privy Council in Matadeen was propounding such a principle. It seems to us that what Lord Hoffmann was discussing was how the Wednesbury test should be accommodated in cases of alleged unjustified discrimination. The same point may be made in relation to R v Immigration Appeal Tribunal ex p Manshoora Begum [1986] Imm AR 385, where Simon Brown J said that the question in that case was: "is the requirement [in the rule] that an applicant dependent relative must establish that he has a standard of living substantially below that of his own country "partial and unequal" in its operation as between different classes", or "manifestly unjust", or in any other such extreme fashion unreasonable?"

In our judgment, whether the question is considered in Wednesbury terms, or on an application of a free-standing principle that like cases should be treated alike unless there is a valid reason for treating them differently, the complaint in the present case must be rejected. We have already given our reasons for concluding that the decision to exclude those who did not satisfy the birth criteria was not unreasonable in the Wednesbury sense. If a free-standing principle of equality were to be applied, it would have to be on the basis that the court would give the Minister a margin of appreciation to determine what was a valid reason for treating internees differently. In our view, the Minister's decision to exclude those British subjects who did not satisfy the birth criteria fell comfortably within the margin of appreciation that should be accorded to him by the court. Our reasons are essentially the same as those which led us to conclude that the challenge to the birth criteria fails on an application of the Wednesbury test.

Conclusion

Naturally, we feel very great sympathy for all those who suffered appalling ill-treatment at the hands of the Japanese during their captivity. We also well understand that many civilians had their hopes of receiving compensation raised by Dr Moonie's announcement of 7 November 2000, and that they have been extremely disappointed, and indeed angered, by what they see as a subsequent and unfair change of heart on the part of the Government. But anyone who seeks to challenge as unlawful the content of a non-statutory ex-gratia compensation scheme faces an uphill struggle. We do not think that the introduction of this scheme was well handled by the Government. But for the reasons that we have given, the appellant has failed to satisfy us that the scheme was unlawful. The appeal must therefore be dismissed.

Order: Appeal dismissed with costs of appeal. Permission to appeal to the House of Lords refused.