England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand London WC2
		19th July 1996

MR. JUSTICE HIDDEN:

The applicants are two of the trustees of the National Hospital Trust (NHT) which is a registered charity whose objects include the promotion of the relief of sickness for the public benefit by purchasing and assisting in the purchase of equipment and facilities for use by the National Health Service.

When this application was originally made by the applicants' Form 86A, the relief then sought included orders of certiorari and prohibition, an interim injunction and a declaration.

The decision sought to be impugned was that of the Director of Legal Services of the respondent Royal Borough of Kensington and Chelsea, communicated in letters dated 6th, 12th, 14th and 19th March 1996, purporting to revoke the registration with the respondents of 100 National Hospital Trust Societies under section 5 and Schedule 1 of the Lotteries and Amusements Act 1976 as amended, and/or to treat them as not registered.

The Form 86A alleged that the respondent had acted ultra vires in purporting to revoke the registration of those societies or to treat their registration as revoked.

There was an oral hearing of the leave application before Macpherson J on 19th March 1996, at the end of which he granted leave to move and an interim injunction restraining the respondent until trial or further order from revoking or deleting registration of those one hundred societies and from taking any other action for the purposes of the same.

Once the respondent had filed evidence, it became clear that the respondent was not saying that it had validly exercised a power to revoke the registrations, nor indeed was it claiming it possessed any such power. Instead, the respondent invited the court to deny relief on the basis set out in the affidavit of Mr. Phillips, at paragraphs 25 and 26, that "there had been no decision to revoke" and that "the present scale of the lottery means that given the requirement of the 1976 Act as amended, the Council is not the appropriate registration body."

Thus it was that when the matter came before me, the only relief then being sought was a declaration that the respondent had validly exercised its powers under Schedule 1, paragraph 3 of the Act to register the societies and that the societies are validly registered.

The one hundred societies were listed in the Schedule to Form 86A and were said to be "separate unincorporated associations which constitute branches of the National Hospital Trust with separate committees and memberships representing various areas of Great Britain".

The National Hospital Trust first promoted lotteries in 1988 but such lotteries ceased in April 1989 when new regulations were brought in by the Lotteries (Amendment) Regulations Act 1988 which prohibited that scheme. A further different scheme was then run by the N H T between 1989 and 1995 but that scheme is not the subject of this application. It is the present scheme which was launched in May or June 1995 with which this court is concerned.

Under that scheme there are, or purport to be, one hundred different lotteries run by the 100 branches of the NHT. There is a common entry form for all the 100 lotteries which requires the player to choose five different numbers between 1 and 49 and enter them on the form. On that entry form the player is asked to indicate whether the entry is to be allocated to the society nearest to the entrant's address or whether the entry may be allocated to any branch. If the entrant chooses the first option, his entry is allocated either to the society whose geographical area covers his post code or, if that lottery is full, in the sense that the value of tickets sold is up to the maximum under the requirements of the 1976 Act, then the entry is put into the next nearest society lottery which is not full. All entries are by post.

The winning numbers for each society lottery are chosen at the same time each particular week and are the same numbers for each of the 100 societies. The results of the societies lotteries are broadcast on Channel 4 television under the NHS Lotto banner.

In addition to the societies' draw, each week there is a free prize draw where a second set of five winning numbers is drawn. Each paying entrant is automatically entered for that draw unless he has asked not to be and anyone else who wishes to enter that particular draw may enter it without charge and without entering the societies' draw. The top prize of each society's lottery each week is £10,000 and the top prize for the free prize draw into which all the entrants from each of the 100 societies lotteries and any non-participants in those lotteries who wish to put their names forward can be entered is one of £1 million.

All 100 branches of the N H T were separately registered with the respondent on 24th May 1988 under the then unamended 1976 Act and their 100 registrations have been renewed annually ever since. In each case annual returns and others required under the provisions of the 1976 Act have been filed.

It is unnecessary to list all the trusts named in the schedule to the Form 86A but, by way of example, number one is the Cambridge National Hospital Trust, number 2 the Norwich National Hospital Trust, number 50 the Exeter and District National Hospital Trust, and number 99 the Highlands and Islands National Hospital Trust.

It is now necessary to look at the legal framework in relation to the Lotteries and Amusements Act 1976 (the 1976 Act). Part I deals with the general illegality of lotteries by enacting in section 1 that:

"All lotteries which do not constitute gaming are unlawful, except as provided by this Act."

In contra distinction section 5 enacts that provided certain requirements are met, societies lotteries are lawful. Section 5(1) provides that:

" In this Act `society's lottery' means a lottery promoted on behalf of a society which is established and conducted wholly or mainly for one or more of the following purposes, that is to say -

(a) charitable purposes."

Section 5(3) provides:

"Subject to the provisions of this Act, a society's lottery is not unlawful if -

(a) it is promoted in Great Britain; and

(b) the society is for the time being registered under Schedule 1 to this Act; and

(c) it is promoted in accordance with a scheme approved by the society."

Section 5(3)A provides:

"The appropriate Schedule for the purposes of subsection 3(b) above -

(a) is Schedule 1 to this Act if none of subsections (3B) to (3D) below applies to the lottery;

(b) is Schedule 1A to this Act if any of those subsections applies to the lottery."

Subsections (3B), (3C) and (3D) apply to lotteries in which the total value of tickets is in each case greater than the value in each of the 100 separate society lotteries. It is therefore said that Schedule 1 applies to the society lotteries and not Schedule 1A. Subsections 3(B) to 3(D) read:

"3(B) This subsection applies to a lottery if the total value of the tickets or chances sold or to be sold in the lottery is more than £20,000.

3(C) This subsection applies to a lottery if the total value of -

(a) the tickets or chances sold or to be sold in the lottery, and

(b) the tickets or chances sold or to be sold in all earlier lotteries held by the same society in the same year, is more than £250,000.

3(D) This subsection applies to a lottery if subsection 3(B) or 3(C) above applied to any earlier lottery held by the same society in the same year or any of the three preceding years."

Schedule 1 of the Act is concerned with the registration of societies by local authorities. Paragraph 1 as amended reads:

"(2) in this Act `registration authority' in relation to any society, means -

(a) In England, a London borough council, a district council, the Common Council of the City of London, or the Council of the Isles of Scilly;

(b) In Wales, a district council,

being the authority within whose area the office or head office of the society is situated."

Paragraph 3 of Schedule 1 deals with registration and says that:

"Subject to the provisions of this Schedule, upon application being duly made on behalf of a society and upon payment of a fee of £35 the registration authority shall register the society in a register to be kept for the purposes of section 5 above and notify the society in writing that they have done so."

Limited powers of refusal or revocation are given to the local authority by paragraphs 3A, 4 and 4A.

Schedule 1A, on the other hand, which applies to societies where the value of tickets is greater than the limits set out in section 5(3)(B) to (3)(D), provides for the registration of such societies not to be carried out by a local authority but to be effected by the Gaming Board which has, under the Schedule, greater powers of refusal or revocation than the local authority and powers of direction and of requiring to provide information and documents under paragraph 12 of the Schedule. It can thus be clearly seen that the powers of the Gaming Board over the larger lotteries required to be registered with them are demonstrably greater than those of the local authority in relation to the smaller lotteries: (see also the affidavit of Mr. John Buckle of the Gaming Board at paragraphs 6 to 8 at page 190).

Finally, it is necessary to refer to the interpretation section of the Act, section 23, which provides that:

"`Society' includes any club, institution, organization or association of persons, by whatever name called, and any separate branch or section or such a club, institution, organization or association.

`Society's lottery' has the meaning assigned to it by section 5(1) above."

What are said to be the decision letters in this application are dated 6th, 12th, 14th and 19th March 1996, but it is only necessary to refer to one, that of the 6th March, which is at pages 120 and 121 of the bundle which I will now read. It is a letter to Mr. Sparks, solicitor for the applicants, from Mr. Phillips, the Director of Legal Services for the respondent:

"National Hospital Trust

I write further to the meeting of 28th February last.

As I mentioned at the meeting the Royal Borough considers the registration of 100 separate branches does not fit comfortably within the provisions of the Lotteries and Amusements Act 1976.

You invited me to look at the legislation again which I have done and I have also applied the facts. Following that exercise my reservations about the Royal Borough being the appropriate registering authority are entirely justified.

Section 5(3)(b) requires the society on whose behalf a lottery is to be promoted, to be registered under the appropriate schedule. Schedule 1 requires registration with a local authority and schedule 1A requires registration with The Gaming Board. Section 3(3A) determines which is the appropriate Schedule.

A society is defined in section 23 (1) to include any club, institution, organisation or association of persons by whatever name called, and any separate branch or section of such a club, institution, organization or association.

In my view, having a separate branch does not mean that there is a separate society. The definition of society embraces the society and all its branches.

The society for the purposes of section 5 of The Lotteries and Amusements Act 1976 is the National Health Trust being a charity established and governed by the trust deed of 30th March 1988.

Even if you argue that the legislation envisages separate branches of a society being registered, do such branches exist? Separate constitutions do not in my view determine the issue and are illusory.

I have reread the correspondence and noted what was said at the meeting. It is clear that the trustees of the branches are the same. The meetings are held at the same place, and at the same time. The bank account for all branches is centrally located. The arrangements with the service provider are identical. There are no separate addresses for branches. All this is at variance with what would commonly be regarded as a branch of any organisation.

In reality, therefore, there is one society (the NHT) and one lottery (the NHS Loto).

Section 5(3A) determines which is the appropriate registration authority. If the total value of the tickets or chances sold in the lottery is over £20,000 or is over £250,000 in one year then the society needs to be registered with the Gaming Board. Home Office Circular No 1 1994 makes it clear that the purpose of the 1993 amendments was to ensure that the Gaming Board would have sole responsibility for the registration and oversight of societies promoting larger lotteries. The NHS Loto is a larger lottery.

From the returns made in 1994 and from the Trust's accounts produced for the year ending 31st July 1994 it is clear that the tickets or chances sold by the NHS Loto if taken as a whole in the year ending 1994 was over £250,000.

In such circumstances, and whatever the original intention was in 1988, the legislation with the facts determines that the proper registering authority is the Gaming Board. It is the trustees responsibility to register with the appropriate registering authority. If they do not an offence is being committed if a lottery is being promoted.

Given the above it is not for the local authority to follow the revocation process. The local authority does need however under paragraph 15 of Part 11 of Schedule 1 to notify the Gaming Board if it appears to the registering authority that section 5(3C) applies. This I will put in hand.

I of course invite you to respond to this letter. I would however reiterate my observations that all questions about registration could be removed at a stroke by registering with the Gaming Board. This is clearly an option available to the trustees.

In any response please provide me with an explanation why this is not being pursued urgently. A decision not to pursue this option only invites observations that the trustees do not want Gaming Board scrutiny.

Given the uniqueness of this situation, I am copying this letter not only to the Charity Commission, the Gaming Board and Mishcon De Reya but also to the Home Office which did not have a representative at the meeting.

I propose to make a final decision on this matter on 13th March. If on that date I still consider the Gaming Board is the appropriate registering authority I will return the sum of £1,750 to you and confirm that you are no longer registered with this Council."

There followed the letters of 12th, 14th and 19th March to which I need not separately refer.

Before me have appeared Miss Booth for the applicants, Mr. Goudie for the respondent Borough and Miss Fitzgerald for the Gaming Board, who has been served with the proceedings as a person directly affected in the matter.

Miss Booth took me through the history of the lotteries run by the NHT and its branches and said that the setting up of the 100 separate trusts had two purposes, to reflect the local nature of the National Health Service itself and to keep administrative costs down to the minimum. That was the reason that the N H T was divided into 100 regions with all administration being carried out centrally. The sums brought in by the lotteries were divided, as they had to be by statute, as to 50 per cent for prizes, 25 per cent for the National Health Service and 25 per cent expenses.

She spoke of the big changes in 1995 with the advent, not only of the national lottery, but also the amendments to the 1976 Act by the National Lottery Act 1993, the 1993 Act. As to the latter, the position was that before 1995, if the prizes exceeded £10,000, the scheme had to be registered with the Gaming Board, but those legal changes meant that from 1995 if the takings, put shortly, were under £20,000, registration had to be made with the local authority, whereas if the takings were higher, it had to be with the Gaming Board. That was the legal effect of the changes in 1995, but there was also the commercial effect of the arrival on the scene of the national lottery which meant that the applicants' lotteries had to be more attractive. They were therefore relaunched with a media campaign on Channel 4. The lottery was organised by individual societies to a maximum value of £10,000 with a £1 ticket and an additional free prize draw.

She went into the mechanism of the free prize draw but I do not need to complicate this judgment with the details thereof, since it is agreed between the parties that it is not relevant to the issue before the court and that there would need, in any event, to be more evidence were the question of the legality or otherwise of that free prize draw to be a matter which had to be decided.

Miss Booth said that there was one issue here which is whether the N H T branches are registered with the right body. She said that if they were invalidly registered, then it was for the applicants to regularise the position. She said that the applicants' intention in registering 100 separate societies was that they wanted to reflect the local nature of the National Health Service. That was the advice they had at the time and they wanted to continue that approach. She said there was nothing in the amendments to the Act which made that unlawful, and the fact that the applicants chose to administer the lotteries centrally did not prevent that from being for the benefit of the branches.

She referred me to the documents in the bundle which provided, by way of example, the minutes of a branch meeting of the Cambridge branch where those present were the first and second applicants as Chairman and Treasurer respectively, and one other person, a Mr. Cummings, as honorary secretary. The meeting was held at 11, St. James' Square, SW7 on Friday, 30th September 1994, and amended the constitution of the branch to comply with the provisions of the National Lottery Act 1993. The two applicants before me were appointed managers for the purposes of the 1976 Act as amended and a Miss Beata Brookes was resolved to be elected to be a member of the branch committee if she signified her willingness to act as such. A copy of the proposed contract for the provision of lottery services to the branch by Pascal & Co Ltd was examined, and it was agreed that the Chairman and Treasurer be authorised to execute a contract with the company. The minutes were dated 17th October 1994.

She referred me also to the constitution of the Cambridge branch at page 97 and the agreements between the NHT and its branches set out from pages 99 to 105.

She referred me to the affidavit of the first applicant at bundle 3, page 1, which referred in paragraph 4 to local managers and committees being "under a statutory duty to encourage voluntary fund raising for their hospitals." Miss Booth fairly conceded that it was not actually a statutory duty but it was a power under section 96A of the National Health Service Act 1977.

At paragraph 7 of his first affidavit, the first applicant referred specifically to three other charities, the NSPCC, the R N I B and the Red Cross, in support of the views set out in his affidavit. Paragraphs 7 and 8 appear at page 4 of the affidavit and read as follows:

"This system of branches of a national charity is a well known phenomenon in the charity world and is adopted by such charities as the NSPCC, the RNIB and the Red Cross. It is recognised as legitimate by the Charity Commissioners."

He produced a copy of Accounting by Charities, Statement of Recommended Practice published by the Charity Commissioners and referred to paragraph 45 and Appendix 1 of it. He then referred to the Inland Revenue practice, saying that:

"Furthermore, the Inland Revenue (s832(1) ICTA 1988) recognize the existence of unincorporated branches acting as trading arms of charities and levies assessments upon them for the purposes of corporation tax, for example in relation to charity Christmas cards.

8 It is not unusual for such branches, although separate entities, to have similar trustees and to share administrative offices. That way the branches can benefit from economies of scale."

At a later stage I shall have to refer to what was said about those contentions in the first applicant's first affidavit in the affidavit of Mr. Graham Burns, a solicitor employed by the respondent Borough at page 273.

Miss Booth took me to the rules of the scheme which appear at page 248 and are headed NHS Lottery Rules, in particular, rules 10 and 12. Rule 10 reads:

"Each branch shall be responsible for the operation of its own lottery, each lottery being run normally at weekly intervals. Entrants may select which branch lottery they wish to enter. If it is full your entry will be placed in the lottery of the branch which is closest in distance to the original one and which remains open at the date of receipt of your entry unless you have given instructions that your entry shall be placed in any available branch lottery. In the case of multiple entries using one form such entries must be entered into the same branch's lotteries so that a full lottery in your week 1 means that your entry for that week and all subsequent lotteries will be transferred with your week 1's entry and placed in the same alternative branch's subsequent lotteries.

12. All funds received will be held by the Trustees in the Trust Account until the morning of the draw in question when entrants funds will be transferred to the various branch draws as referred to above."

Miss Booth reminded me of the well known pronouncement by Lord Tomlin in his speech in Inland Revenue Commissioners v Duke of Westminster [1936] Ac 1, page 19:

"Every man is entitled if he can to order his affairs so as that the tax attaching under the appropriate acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result then however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to an increased tax."

She submitted that if there was ambiguity in the statutory provisions and their application to the facts, the courts should construe the provisions strictly in favour of the applicants since the respondent's case entails stigmatising the conduct of the applicants as criminal although the mischief originally aimed at was the loss of scarce money by poor people. In support of that proposition, she referred to the words of Lord Widgery C.J. in Readers Digest Association Limited v Williams [1976] 1 WLR 1109, at 1113.

She submitted that the societies are properly registered with the respondent local authority, that there were 100 societies and 100 lotteries. She relied on the following six propositions: that there were 100 regional branches, that each branch was a society within the meaning of the Act, that each society administers and promotes a lottery, that each of the 100 lotteries was distinct from the other 99 lotteries, that each lottery falls below the relevant financial threshholds and consequently the societies are properly registered with the respondent. She said that each of the 100 lotteries was promoted by the 100 regional branches. Each was an unincorporated association governed by its own constitution. She submitted that the definition of society in section 23 was deliberately framed in broad generic terms which excluded the need to examine the legal nature of the body in question. She said, moreover, the definition expressly encompassed "any separate branch or section of a club, institution, organization or association." She submitted that, therefore, the legal nature of such a separate branch or section did not matter either.

In support of that submission, she took me to Dimbleby & Sons Limited v. National Union of Journalists [1994] I C R 386, 409F-410E. She submitted that the fact that the regional branches share the same trustees and address did not prevent them constituting separate societies for the purpose of the Act. The division of the N H T into separate regional branches reflected the division of the National Health Service. Each regional branch of the NHT aimed to return funds raised in that region to the hospitals in the region. She referred me to the sort of figures that had been returned back in the time that the present lottery scheme had been running. In virtually that last year the figure amounted to something between £250,000 and £300,000 that had been taken. She said that as a matter of ordinary language, the societies were branches or sections of the NHT. She submitted that each of the societies promotes and administers a lottery and each is separate from and independent of each of the other 99 lotteries. She said that the prize fund for each regional lottery is derived from the entry monies collected by the NHT branch operating that particular lottery. Each lottery was thus self generating and its individual identity was not altered by the fact that funds raised by each lottery were collected centrally by the N H T. That did not, she said, impact on the viability of the lotteries individually but only impacted on how profits were distributed, nor, she contended, was the individual identity of each lottery altered by the existence of the free prize draw.

Mr. Goudie for the respondent Council, while acknowledging that a very worthy cause was being provided for, none the less, said bluntly that there should be a registration with the Gaming Board and not with the local authority. He said that there were no apparent economies of scale demonstrated in this case and that while the Duke of Westminster case was still good law, it should not be taken too far. He took me to WT Ramsay Limited v. Inland Revenue Commissioners [1982] AC 300 at 323, where Lord Wilberforce said at G:

"Given that a document or transaction is genuine, the court cannot go behind it to some supposed underlying substance. This is the well-known principle of Inland Revenue Commissioners v Duke of Westminster [1936] AC 1. This is a cardinal principle but it must not be overstated or overextended. While obliging the court to accept documents or transactions, found to be genuine, as such, it does not compel the court to look at a document or a transaction in blinkers, isolated from any context to which it properly belongs. If it can be seen that a document or transaction was intended to have effect as part of a nexus or series of transactions, or as an ingredient of a wider transaction intended as a whole, there is nothing in the doctrine to prevent it being so regarded: To do so is not to prefer form to substance, or substance to form. It is the task of the court to ascertain the legal nature of any transaction to which it is sought to attach a tax or a tax consequence and if that emerges from a series or combination of transactions, intended to operate as such, it is that series or combination which may be regarded."

He also referred me to Ensign Tankers (Leasing) Ltd v. Stokes (Inspector of Taxes) [1992] 1 AC 655 at 669. There Lord Templeman said:

"The dictum of Lord Tomlin, applied to the obligations of the Duke, is not inconsistent with later authority. But if the dictum of Lord Tomlin implied that any tax avoidance scheme which was not a sham and not unlawful must be allowed to succeed, subsequent authorities have determined otherwise. The Westminster case does not assist the appellant in the present case. In the Westminster case the fiscal consequences claimed by the Duke corresponded to the legal consequences of the transaction as construed by the majority of this House. In the present case the fiscal consequences claimed by the appellant do not correspond to the legal consequences of the scheme documents read and construed as a whole."

As to the way in which these lotteries were conducted, Mr. Goudie took me to Singette Ltd v. Martin [1971] AC 407 at 423. In the speech of Lord Pearson there appear these words:

"The third contention of the appellants is that in any case the competitions are not lotteries because they have an element of skill. The question which arises here is to a large extent answered by what has been said above. The decided cases show that (1) a lottery is a distribution of prizes by lot or chance, (2) for a competition to be a lottery the winning of a prize must depend solely on chance and not on skill and (3) in deciding whether a competition is a lottery or not a realistic view should be taken and regard should be had to the way in which the competition is actually conducted."

Mr. Goudie was of course relying on the last words of that quotation. Finally, he referred me to Moore v. Elphick [1945] 2 All ER 155 at 156, in which Humphreys J. said:

"Another thing that has been the subject of judicial decision is that it is not sufficient for a person charged to show that on the face of it his scheme is a legal scheme; the court will go deeper than that into the real scheme as it emerges from a close examination. The court deals with realities and not with the mere appearance. Subject to that, the court will take notice of the fact, because certainly in one respect it is material, that in this case there is no question as to the bona fides of the appellant."

Mr. Goudie submitted that the question in this case was whether each of these societies was a separate branch and submitted that "separate" was a crucial adjective in the Act in relation to the branches. He said that as to that crucial test, it had never been shown how each one was said to be separate. He put forward ten points to support that attack: first, they all had the same address in London and the same phone number; second, the legal personality was identical in that the same individuals were involved in each branch; third, there were no separate members; fourth, there did not appear to be any separate bank accounts; fifth, they had identical constitutions, save for one; sixth, they were all marketed under the NHS lotto trade name; seventh, they all had the same administration; eighth, they all had the same promoter; ninth, the branches were based on postal codes; tenth, they made virtually the same applications for registration with a lump sum cheque for all of them. He said that there was only one form for all societies and there was thus, for what was said to be, 100 lotteries, only one form, only one draw and only one set of winning numbers. As to the free prize draw, he accepted that the legality or otherwise thereof was not a matter for me to determine, but he said that it was relevant as of itself, determining that its involvement meant that there were not separate branches or separate lotteries here.

By agreement, he put in as evidence four short videotapes of the presentation on television on Channel 4 of the actual draw which effected these 100 lotteries in weeks June 1995, September 1995 and two from June of this year. He submitted that the television publicity made it abundantly clear that there was one lottery and only one here, not a lottery run by each of the one hundred branches. He said that the situation was altogether different in relation to the structure of the Red Cross and the RNIB which were genuine concerns with a genuine existence and genuine autonomy. He drew my attention to paragraph 2 of the affidavit of Mr. Graham Burns, a solicitor employed by the respondent at page 272, which answered the first affidavit of the first applicant. It read at paragraph 3:

"Since receiving Sir Adrian's affidavit I have made enquiries of the Red Cross as to its position for these purposes. I spoke to Andrew Bond, the Red Cross' Regional Events Co-Ordinator. He provided me with the following information: (i) the British Red Cross consists of 86 branches. Each is a separate legal entity and is registered as a charity. Each branch operates from its own premises. Each branch is managed by separate and independent trustees, a President, and a branch director, and has its own employees. (ii) although, by reason of a structural review which is currently taking place it is anticipated that during 1997 the branches will lose their separate charitable status, there will be no other alteration of the separate structure of each branch; (iii) the Red Cross National Headquarters is currently running its third National Raffle, and for these purposes is registered as a society with the Gaming Board. Each of the branches is able to participate in the national raffle and receives books of tickets produced and controlled by National Headquarters. The collection and storage of tickets at the end of the draw is carried out by National Headquarters and the prizes are awarded centrally; (iv) if any of the individual branches wish to organise its own lottery it registers as a society in its own right either with the relevant local authority or with the Gaming Board in accordance with the requirements of the 1976 Act (as amended) and depending on the number of tickets which are put on sale."

Mr. Goudie submitted that it was abundantly clear that there was one lottery here and not one hundred, and that by reason of the financial levels involved, registration should be under schedule 1A with the Gaming Board and not under Schedule 1 with the respondent.

Miss Fitzgerald for the Gaming board said that the Board wished to be represented at the hearing of this matter so as to be able to assist the court on any matters relevant to its statutory role and its involvement in the matter. It believes that the societies ought to be registered with the Board and it had concerns about the operation of those lotteries. She said that as to whether or not the societies ought to be registered with the Board, the Board respectfully agreed with the matters put forward on behalf of the respondent Council in various paragraphs of its skeleton argument. As to the concerns which the Board felt about the present situation, they included the fact of the free prize draw and its ramifications, though she too conceded that decisions on the legality or otherwise were not for me. She also drew attention to the fact that the 50 per cent limit for prizes had, on returns that had been filed with the relevant Council, shown that on the 5,200 returns the limit of fifty per cent had been exceeded on 156 occasions, that being either 3 per cent or three times a week depending on how one looked at it. Again, however, she accepted that that was not a matter directly for me, but did inferentially refer to the amount of supervision that a local authority could give, bearing in mind its powers under the Act, compared with the greater level of supervision that the Gaming Board could exert.

She submitted that the problems she had indicated were illustrations of the type of problems that are encountered with societies lotteries and submitted finally that the Board was set up and well used to dealing with such matters, whereas local authorities generally did not have the machinery or the experience to do so. She submitted further that the Board had powers under paragraph 12, Schedule 1A of the 1976 Act to require a society to provide the Board with such information relating to a lottery as the Board may require, to allow the Board to inspect and take copies of documents and to inspect any aspect of the management of a lottery. She drew the distinction between the local authority's powers which were limited to inspection and copying, as was seen in paragraph 1 of Schedule 1.

I am satisfied that despite the attractive submissions of Miss Booth, her submissions that there is here not one lottery but one hundred cannot be upheld. It is clear to me that, for the powerful reasons submitted by Mr. Goudie and Miss Fitzgerald, Miss Booth's submissions cannot stand. There is, in my view, only one lottery here, organized entirely by the National Hospital Trust and organized as one lottery. There is only one common entry form, only one draw and only one set of winning numbers for each of what are said to be one hundred separate lotteries. The individual entrant does not even necessarily know, according to the way the applicant put its case, for which of the one hundred lotteries he is entered since if the one relating to his post code were full, his entry would be passed on to the nearest lottery which was not full. When one looks at the reality, therefore, and on the authorities I have quoted it is to the reality that one must look, one sees that what the entrant is doing is seeking to buy and what the National Health Trust by its publicity is seeking to sell, a ticket in one lottery, centrally run by the N H T, which will mean that his numbers may stand a chance, first, of winning up to £10,000, and then of winning a different prize of up to £1 million in the free prize draw. That free prize draw is only relevant, I find, as showing, in Miss Fitzgerald's memorable phrase, "the cement which sticks together the one hundred separate lotteries."

The definition of "society" in section 23 of the 1976 Act includes "any separate branch or section" and I am satisfied, as a matter of construction, that what are said to be the separate branches in this case are in truth not separate at all. Unlike the example of the Red Cross given in evidence in this case, there is no basic reality to or activity in any of them. They perform no other function than facilitating as a paper exercise the running of the weekly draw for the applicants. As Mr. Goudie pointed out in his ten points, where the crucial test is the separate nature of the branches, it has not been shown in the evidence before me that each one is in any way separate. The names of the Chairman, the Treasurer and the Honorary Secretary are in each case identical, as is the address of each of the branches at 11, St. James' Square, London, SW7, and its telephone numbers. They all share the same bank account, despite the suggestion in the rules that there is a movement of money out of the bank account on the morning of the draw day. Miss Booth admitted to me that that was a notional transfer. The branches all have identical constitutions, are identically marketed, have the same administrator and the same promoter and have no separate members. Most importantly, again unlike the Red Cross, they have no other activity whatsoever than to be used as a vehicle for the running of the N H T Lottery. They are a paperwork facade beyond which the court has to look in order to see the reality. It follows that they cannot be a separate branch and therefore they do not fall within the provisions of section 23 of the 1976 Act. It is thus impossible for me to hold that the societies are validly registered which is the declaration that the applicants seek in this case. It follows that this application for such a declaration must be dismissed.

MR. STILITZ: May I address you on the question of remedy. Mr. Goudie indicated to me that during the course of submissions, he submitted on behalf of the respondent Council that should your Lordship's decision be in the respondent's favour, in order to clarify the matter, in order to clarify the respondent's position, it would be helpful for a declaration to be given to the effect that the NHS lotto as presently constituted is not properly registerable with the respondent. Plainly, that would be a matter which would assist the respondents in how they deal with the matter in the future. I understand that was raised in submissions. I was not here at the time.

MR. JUSTICE HIDDEN: He mentioned it in his own submission. It was not picked up or countered by other counsel. We will discover the position. Miss Booth, what do you think?

MISS BOOTH: In relation to that, in reply, I indicated that I would prefer you to either give the declaration that we sought or not at all. We would consider, as a result of your Lordship's judgment, how to regularise the position. That could involve registering with the Gaming Board or it may involve reconstituting separate branches. I did not want a declaration which might limit our options.

MR. JUSTICE HIDDEN: There is no one from the Gaming Board here.

MR. STILITZ: The only point we make on that is that the declaration that we seek would not limit the applicants' option. We seek a declaration in accordance with your Lordship's judgment, that the lotto as presently constituted is not properly -- I stress those words, as presently constituted -- registerable by the respondent. It may be that in the future the scheme is reconstituted or re-arranged. It may be that that re-arrangement would be such that it would become once again registerable by the respondent. We do not seek to limit the options that they may have. We ask for a declaration as at the present state of affairs. From your Lordship's judgment, it is clear that, as things stand, the respondent is not the appropriate body to register the lottery.

MR. JUSTICE HIDDEN: If you look at the penultimate sentence, I have said: "It follows that they cannot be `any separate branch' and therefore they do not fall within the provisions of section 23 of the 1976 Act." I go on to say: "and thus it is impossible for me to hold that the societies are validly registered, which is the declaration that the applicants seek in this case." That sentence makes it clear what I found. I am not minded to add to my judgment anything further than that.

MR. STILITZ: The next matter that arises is one of costs.

MR. JUSTICE HIDDEN: I think Miss Booth will find it difficult to resist that.

MISS BOOTH: May I raise one matter about the judgment? I did notice, when your Lordship gave it orally, that when your Lordship was referring to Miss Fitzgerald's submissions, you referred to the returns that had been filed in relation to the lottery 3 times a week. Your Lordship said that they were filed with the Gaming Board. In fact, they were filed with the local authority. I was trying to find that. I cannot find it. When the transcript comes out, your Lordship could note that.

In relation to the costs of the hearing before your Lordship, I would not oppose paying the respondent's costs. I would raise the matters of costs reserved by Macpherson J in relation to our application in March for injunctive relief. I do that because it is accepted by the respondent that they do not have power to premptorily revoke our registration which is what they purported to do. Their powers were limited, either to inviting a prosecution which, if we were convicted, would enable them to revoke our registration, or they could themselves have applied to the court to clarify the law. They chose not to do that. They chose to take the law into their own hands. In those circumstances, given that the costs in relation to the injunction are to be dealt with, I ask your Lordship to make no order in relation to the respondent's costs in relation to that matter.

MR. JUSTICE HIDDEN: I need to look at the wording of the letter. It is the letter at 120.

MISS BOOTH: 120 is the letter of 6th March. We were told there was going to be a final decision on 13th March.

THE JUDGE: The words the letter ends with are: "I confirm that you are no longer registered with this council."

MISS BOOTH: There was an exchange of correspondence. We asked for more time. We were told not. We were told it would be extended to Tuesday, 19th March.

MR. JUSTICE HIDDEN: Were costs on the occasion of the appearance before Macpherson J reserved?

MISS BOOTH: No. Costs were not dealt with. I have looked at the records of the order. It makes no reference to the costs at all.

MR. JUSTICE HIDDEN: What are you saying I should do about that?

MISS BOOTH: I would invite your Lordship either to give us our costs or, alternatively, to not order that we should pay the respondent's costs.

MR. STILITZ: First of all, at paragraphs 17 to 23 of the respondent's skeleton argument -- I do not think it is necessary to go into the details -- the respondent's case is that they would have had a power to revoke the registration. It is not quite correct for my learned friend to say that it is accepted that we have no such power. An argument is set out that such a power would exist. That is a secondary point. The submission in this case is that in the event no revocation or purported revocation was carried out. It is accepted that the respondent wrote repeatedly to the applicants seeking clarification of the position and making clear that they did not regard themselves as the proper registration body.

MR. JUSTICE HIDDEN: I have read those letters.

MR. STILITZ: In the event, there was no revocation. Costs ought to follow the event. The respondent has been proved correct. That letter of 6th March states the position impeccably by my instructing solicitor. In those circumstances, we ought to have our costs of the application as well.

MISS BOOTH: I would say in relation to that that the reason they were not revoked was that we came to court and got the injunction which Macpherson J granted after argument.

MR. JUSTICE HIDDEN: I shall make an order that the applicants pay the respondent's costs, such costs not to include those of the hearing before Macpherson J on 19th March.

MISS BOOTH: I ask for leave to appeal. I am sure you are conscious of the importance of this matter. We would like to test this matter further. If you were to grant leave to appeal, we would ask you that, in order to preserve our position in the interim, the injunction should continue. If you are not prepared to grant leave to appeal, we would ask you to extend the injunction in order to enable us to apply to the Court of Appeal.

MR. STILITZ: We submit that leave ought not to be granted. The position adopted by the respondent throughout has been supported entirely by the Gaming Board and has, in the event, in clear and unequivocal terms been upheld by your Lordship. We submit that whilst it is an important matter, it is clear cut. Given that, the findings are such that it is for the applicants to apply to the Court of Appeal for leave. On the question of the injunction continuing, we would submit that, consistent with the findings of your Lordship, it will be on the basis that the lottery is not properly registered, as things stand, with the respondent, and they ought not to be restrained from taking any lawful action that they are entitled to consequent upon that finding.

MISS BOOTH: I would ask for an order that preserves our position. The lottery takes place every week.

MR. JUSTICE HIDDEN: I think you will have to go to the Court of Appeal for leave, bearing in mind the state of the load upon that court. It must be a matter for them whether or not they give leave. As to your position in relation to running a lottery that runs on from week to week, I might be prepared to look favourably upon a short extension of the injunction. It would have to be short. If I were prepared to extend the injunction for one month further, what would be the adverse effects on the lottery?

MISS BOOTH: Our problem will be because of the vacation. If it was June a month would give us time to get before the Court of Appeal. I am not sure whether we would get a hearing on the basis that this is vacation business. That is our only problem.

MR. JUSTICE HIDDEN: You will probably be able to get before the Court of Appeal within the next eight days.

MISS BOOTH: One would hope so.

MR. JUSTICE HIDDEN: If you emphasise the importance to your clients particularly.

MISS BOOTH: I would hope so. If we gave some undertaking to file an application, then your Lordship could extend the injunction until the application was heard. That might be another way of doing it.

MR. JUSTICE HIDDEN: That might be a useful route.

MISS BOOTH: If we gave an undertaking to file an application within a week, then, if your Lordship would extend the injunction until that application was heard, and if we do not file for an application for leave to appeal, then the injunction will terminate.

MR. JUSTICE HIDDEN: Shall I make it two weeks? That covers you for the remainder of the term.

MR. STILITZ: Our position is that we would resist any extension of this injunction. It is a serious matter to have the respondent restrained from dealing with this matter which has been hanging over them for a long time. One of the difficulties is that they have sought clarity and resolution for a very long time. What we submit is that, consistent with both the decision your Lordship has reached and with your Lordship's refusal of leave to appeal, it would seem that there is no basis for granting a continuation of this injunction in this case. Furthermore, in view of what has come from your Lordship, it would seem to me that to continue with the lottery on the basis as things stand, the legal position being that it is not properly registered, is something that one would imagine the applicant would be extremely circumspect about. In practical terms, the injunction does not serve any purpose for them if it is continued. We would resist any continuation of the injunction at this stage. If your Lordship is minded to grant it, we ask you to make it as short a time as is possible.

MR. JUSTICE HIDDEN: Miss Booth, I am minded to help as much as I can. If I were to extend the injunction to August 1st upon your undertaking to apply for leave to the Court of Appeal by that date, would that suit matters?

MISS BOOTH: If we apply to the Court of Appeal by 1st August but we have not been heard by then, I suppose you may say we will have to argue with the Court of Appeal about that, but it does impose on the Court of Appeal a ---.

MR. JUSTICE HIDDEN: I was envisaging an application on notice at which you could seek to extend the injunction. That is the order I will make. I extend the injunction to August 1st on your undertaking to make an application for leave to the Court of Appeal by that date.